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ARCHIVED DISCUSSION FROM 1/18/2001
All times are U.S. Mountain Time

(Yesterday's Discussion.)

tg (01/18/01; 23:57:38MT - usagold.com msg#: 45885)
INTERESTING
http://www.fiendbear.com/view1200.html
from Nick Chase

What is interesting is that we may be on the verge of a major (read: high profits) bull market in bonds, of the kind that occurred here during the Great Depression, or in Japan in the 1990s. Now that does not indicate a bright future for the stock market.... four years of bear followed by a decade of economic stagnation.... but clearly we are on a deflationary track. The Federal Reserve has (until recently) been expanding the money supply at a 10%-plus rate, with little effect on the Consumer Price Index (even after adjusting for the government's fudging of the numbers); leading inflation indicators are turning down after having risen earlier in 2000; utilities are clearly in a bull market; junk bonds are sinking in value, even defaulting at historically high rates. In other words, the rate of asset deflation (exhibit A: the NASDAQ) greatly exceeds that of money creation, whether by the Federal Reserve (monetary base) or as multiplied by the banks or by Wall Street (derivatives, government-enterprise real estate loans). Because we have had such a long period of uncorrected excesses.... certainly since 1995, and one could make an argument for years (1989, 1987) extending back to 1982.... now that the bust is upon us, I would expect it to be of much greater magnitude than the last, fairly mild, recession in 1990

Pandagold (01/18/01; 23:40:38MT - usagold.com msg#: 45884)
'Hype'(er)inflation.
No, the US has never suffered 'hyperinflation' - at least not pre-world war 2 German style, but they hold the record for the inflation of 'hype' (from Hollywood, Wall Street and all the way to the White House).

Peter Asher (01/18/01; 22:14:18MT - usagold.com msg#: 45883)
Al Fulchino (01/18/01; 21:12:44MT - usagold.com msg#: 45880)

Hey Al, that's positively awesome!!!

It belongs in the Hall of Fame for sure. Consider this a nomination.

Re: "If Bush cannot stand for something in his presidency and one more term of a weak, Nero like leader such as Clinton takes office, we will have passed our time in history as a Republic."

I happened to catch today's interview on CNN and, being a non-TV-owner, this is the very first time I have seen him, live, rather than reading the printed word. This is my observation:

When people talk of Bush being a bit "slow" and perceiving him to be "not so bright" they are witnessing someone who is not programed for instant response. He is not a "Stepford" man. I see him actually thinking for himself about what he is being asked and formulating his personal answer. That slight delay is, in my opinion, the process of a basically honest man. This was not someone thinking of the "correct" answer. When asked about California's power problem, he straightforwardly said that we need to relax some environmental standards that are keeping some plants from being on line. This was not a politically correct statement to make in the midst of the Cabinet hearings.

I was especially encouraged by his viewpoint about drug use punishment. He said (paraphrased) that first time offenders should not be hit with these draconian sentences; that prison space had better uses; and that drug dependency should be seen and addressed as an "illness." Then he said, "This is why I advocate faith-based (methods)." Regardless of which faith one may agree or disagree with, faith is not punishment and faith is NOT psychiatry!

We may be at a major turning point in the downward spiral of our society. My family and I choose to believe this.



Genoo (01/18/01; 21:57:41MT - usagold.com msg#: 45882)
BIS BASH
to Turkey Hunter
re msg #45877

Thank you for your posting that informs that yet another firm of financial substance has filed against BIS.

It's amazing to me that REUTERS are somehow unable to get out the 4 worded label GATA,in their rather extended blurb. We do all recognize, do we not, that the HOWE/GATA suit is bankrolled by GATA and that GATA is supported primarily by 'the little guy'.
All I can say is that when this baby blows, meaning the control of the gold cartel, there's going to be s**t in places we previously had thought to be virgin, sacred, and totally squeaky clean.

In the meantime, I like the company that GATA seems to be attracting.


auspec (01/18/01; 21:46:01MT - usagold.com msg#: 45881)
Trail Guide Post # 45846
Hello Golden Leader! We have rounded "The Curve" and now I find myself in The Twilight Zone of clarity, in regards to this post. Maybe I'm missing something, but this time I don't seem to be missing anything from this read. What gives? There are only a few possibilities: 1. You got tired of communicating in Alan Greenspandex-speak {smiling back at ya}. We ARE getting late and it's time for all to get aboard. 2. Maybe I just had a couple lucid moments. Critical mass cometh? 3. Transparency is now the norm. The ESF & Fed will have full disclosure as of next Monday, and FK will have open doors for audit/inspection. The total above-ground gold supply will soon be known as well as holders of same.

Anyway, thanks for the very concise message! May we all be considered FsOFOA! auspec {in the "zone"}

Al Fulchino (01/18/01; 21:12:44MT - usagold.com msg#: 45880)
Truth and Strategies Against It
In the Jesse Jackson story, there are some disturbing points that I hope all have noticed. The principles I observed in Jackson's political tactics are striking. The following from the Drudge Report:

Jackson urged Clinton to take a contrite tone in his public explanation of the Lewinsky affair:

"Keep your eyes open and your mouth shut. And don't panic."

"If you respond with a contrite heart," Jackson told Clinton, "that obligates the public to respond with mercy."

me again: Note what needs to be read here and observed.Jackson understands that we are and can be MADE to feel obligated. This from a man who upon his transgression being exposed sees fit to retire, temporarily at least. But while he knew of his transgression "advised" his President on what to do in order to retain power. You see, to Mr Jackson, Mr Clinton was "his" president. Small "p" intended. And the "right" and "what is right" is not going to tamper with the power and privilege that comes to a person like Mr Jackson who knows he owns a president. And he will do and say ANYTHING to protect his fiefdom. He and his type KNOW that if the truth ever makes inroads, on those who foster deciet, then their days are numbered. Follow me on this. You have become the leader of a movement of so called justice and morality, you have an ally in the president, all seems well. Power to the undisciplined needs to be fed. To satisfy your sexual or ego needs you let the "so called admiration of a follower/supporter into an area designated for your wife. You "handle" the situation that develops. Your president gets into a similar situation. You have covered your tracks, so make quick and help him. Again look at these words above. "Keep your eyes open......" me: he says to Clinton look around....scan the political scenery.....latch onto those that will forgive easily..ingratiate yourself to them, flatter them and absorb them while they puff up with their prominence, this lessens your opposition afterall how can they dispute Godly men? .... his words again"keep your mouth shut...." me: you can't say anything here, wait for the opposition to make its move, someone on the right will overreact, focus on their mistake, let us, your allies, jump on them and tie ALL opposition to your behavior to these that have overreacted. Label them the FAR right etc.
Him again..."If you respond with a contrite heart, that obligates the public to respond with mercy"...me: WOW! Powerpacked in its corruptness. We can manipulate the publics emotions. Instead of healing wounds and working on letting sorrow purify the soul, we get a political operative whose mode is full gear to operate on the publics psyche. We have a man who is determined to keep in power the man who helps him keep his own power. All the while choosing to ignore his own responsibilities in life. This reminds me of something I read today by Emmanuel McLittle. He said "Some of us have gone through our entire lives believing that not seeing is a protection of sorts" Wow! Here, Jackson had had many moments of truth to own up to his own failings, as each of us must do and he denied the truth. Worse when he was put, in my opinion by Divine Providence, in the position of using his own experience to his advantage and correct not only his own actions but that of his puppet president, he denied the Truth again. Mr Jackson had the opportunity but like many of us have in our own lives, chose to deny the truth for personal ego salvation. Think of this. He had to consciously utter the words of strategy, all the while knowing that he was lying to protect, all the while knowing that the public, you and me could be made to conjure up our forgiveness, because so many of us do not wish to be unforgiving.

Now why write this little piece here? Simple. We are afficionados of good money. We calculate all manner of means to understand why gold is not valued higher, when it will go higher etc. Waste of time. Total waste of time. True value of sound money is not a supply and demand issue it is and always has been an honesty issue. Don't kid yourself. That is a distraction. Afficonados of good money need only to understand the human ego. The ego wished in the garden, if we are to believe the story, to be what God had not intended. Mr Jackson and Mr Clinton can go to church all they wish, but if their ego is where Adam's was, truth will depart. If collectively,the citizens of this or any other country admire or bond to, or choose to be ego's of their own we will never have honest money, politicians, or any other worthwhile thing. Bank on it. When you watch Crossfire, Politically Incorrect, Geraldo, the Nightly News among others you are watching the battle for your mind, your soul and in the end what is Good and not good. Some will go to no end to convince you that what you see isn't really what you see. In fact, I remember a gentleman from the Clinton security team in Arkansas, saying that they had a joke amongst themselves. Whenever Clinton would commit another of his discretions, they would look at each other and say "Lying eyes" and laugh. The thing they learned he said was that it was pointless to try to cover all that he would do. But they found that the average person only had to be approached and asked this question. "what are you going to believe, me or your lying eyes?" Simple and if a bit of force had to be added so be it. Most people will buckle fairly easily.

The reason we never get anywhere on this gold front is simple. Most are too hard at work to follow the bouncing ball on money, real money. And if properly managed the whole inflation money printing scheme is one of the most profitable and easily hidden of all lies. The printers are smart like Jackson. They keep their eyes open. They keep their mouths shut.

We need to keep our eyes open and we need to choose our words carefully so as not to be marginalized by the press. We need to sit quietly with our families and friends and multiply our disciples. It is the only way to gain our freedom from despots back. If Bush cannot stand for something in his presidency and one more term of a weak, Nero like leader such as Clinton takes office, we will have passed our time in history as a Republic. You will likely be happy you have gold, but any strong force will easily take it if we are absent of a civilization that respects private property. So are you ready to protect what you still have?



ax (01/18/01; 20:41:34MT - usagold.com msg#: 45879)
Gold Price Tested Nov 1 Lows

Gold Price touches Nov 1 2000 low of approximately 263.75
at approximately 263.65 spot Monday Jan 15 2001 and pulls
upward today.

This is bullish

AX



gidsek (01/18/01; 20:25:55MT - usagold.com msg#: 45878)
Van Rip
inflation (68-82)isn't good for stocks, nor excessive deflation. corporations (well... everybody)thrive when debtors can pay and creditors can collect. inf/de flation skews this relationship.

gidsek

turkey hunter (01/18/01; 20:00:59MT - usagold.com msg#: 45877)
BIS Lawsuit
I haven't seen this on the forum today. Towards the end of the article it states that the BIS central bank masters hold 80% of all the gold reserves.

French firm takes BIS buyout battle to court

By Brian Love
PARIS, Jan 18 (Reuters) - A French firm contesting the terms of a compulsory buyout of private shareholders in the Bank for International Settlements said on Thursday it had started court action against BIS advisers J.P. Morgan and Arthur Andersen.

Deminor, a corporate governance consultancy company, said it was taking U.S. investment bank J.P. Morgan and the audit firm Arthur Andersen to court in Paris in a bid to get the terms of the controversial buyback reassessed independently.

The firm, which represents a portion of an estimated 15,000 private holders of BIS shares, wants the offer price raised and and has warned it will take wider legal action if necessary.

"We made our decision on the basis that there were numerous irregularities and contradictions in the report drawn up by J.P. Morgan on the evaluation of the price for the withdrawal of BIS shares," Deminor said in a statement on the Paris court move.

"The plaintiffs also argue J.P. Morgan lacked independence vis-a-vis the BIS and, more importantly, vis-a-vis the central banks that are the BIS's majority shareholders and the ultimate beneficiaries of the share buyback," it said.

The Swiss-based BIS <BIZZ.S> <BIZZ.PA> -- founded in 1930 to handle German war reparations -- has got into a bind since it hatched plans to buy out private investors who hold 13.73 percent of its capital alongside the main BIS shareholders, central banks across the world.

LEGAL TUSSLE ESCALATES

Despite legal actions or threats of litigation on both sides of the Atlantic, the BIS's central bank shareholders endorsed the buyout plan on January 8, backing an offer price of 16,000 Swiss francs -- which is based on an evaluation by J.P. Morgan that was reviewed and approved by Arthur Andersen.

The BIS, the main coordinating body for the world's central banks, declined comment on Deminor's latest move.

It has said in the past that the price is fair and that it was conducting the buyback because having private shareholders is no longer compatible with its role in the surveillance of bank standards and financial markets across the globe.

J.P. Morgan's French division, which conducted the disputed evaluation, was not immediately available for comment.

"We believe the price proposed for the withdrawal was fair," said Arthur Andersen France spokeswoman Sabine Roux de Bezieux.

Deminor's Fabrice Remon, whose firm is heading several other high-profile campaigns on the rights of minority shareholders, said he hoped the Paris court, the Tribunal de Grande Instance, would order an independent price assessment in a few weeks.

"What we want is a genuine evaluation," Remon said. "We are not trying to block the transaction but we are trying to secure more money retrospectively," he told Reuters.

Remon also said that J.P. Morgan, which recently merged with Chase Manhattan Corp to form J.P. Morgan Chase & Co <JPM.N>, was a dominant force in the world gold market.

This, he said, made it even more important to seek another estimate on the BIS share price, given that the BIS's central bank masters held 80 percent of the world's gold reserves.

"We're not making any judgment on this," Remon said. "(But) they could perhaps have easily found a bank where there was no question at all of a potential conflict of interest."

Deminor has been waging the battle in Europe, but the BIS is also under attack in the United States over the buyout of the shares which were recently delisted in Paris and Zurich.

On a separate count, U.S. gold trader Reginald Howe has filed a suit alleging that the BIS colluded with other central banks to depress the world gold price. Howe, who is himself a private BIS shareholder, has also complained about the buyback.

SocGen First Eagle Fund has also filed a complaint.


USAGOLD (01/18/01; 19:34:02MT - usagold.com msg#: 45876)
To FOA. . .A challenging question from the C-Man. . . .
FOA: "The fed must create an inflation on top of an inflation. To not do so, they will immediately concede the currency world to the 'old world's' new currency and it's physical friend. Gold! Even most Euro doubters are beginning to see this new light. . ."

Including me. I saw in the Economist the other day that Goldman Sachs is calling for a euro price this year of $1.22! Bold and telling. . . This is a currency price based on "an inflation on top of an inflation". . . .Yes?

Cavan Man called today. And as is frequently the case the conversation got around to you and Another, the economy, currency values, etc. It is always good to hear from this fellow knight and traveller, and in the midst of the conversation he asked, as I have come to learn is his customary fashion: "Why doesn't Greenspan do something about this. He must see what's coming." I tried to answer that question, but I wonder how you would respond. Here (Greenspan) is a man who spent his middle years as one of us. Then he became Fed chairman charged with the responsibilities of lender of last resort and something changed. . .Or did it? I answered the question as best I could but it is one that does not lend itself to an easy answer. And perhaps only Alan Greenspan himself could answer it to real satisfaction. I venture a guess that he might respond smiling slyly with "I didn't know there was a problem." (Thought of that after I hung up the phone, Cavan Man.)

FOA, I wonder if you, or perhaps Another, have any thoughts on this. I think the question might open the door to some interesting discussion. If anyone else would like to take a stab at it, I think we might all gain by your thoughts. And I hope I am not usurping prime posting privileges, C-Man. It is a good question and I didn't want to take the chance that you might pass on a great Forum opportunity. (I hope you don't mind.) Now you've stimulated us all.

P.S.(and an aside) An editorialist asked this morning: "What do you get when you cross the Chairman of the Fed and the Godfather." Answer: An offer you can't understand.



TheStranger (01/18/01; 19:03:15MT - usagold.com msg#: 45875)
Some excerpts from Morgan Stanley's Preview of the Year 2001
> In their forecast for 2001, Morgan Stanley economists Joaquim Fels and
> Stephen Li-Jen expressed their concerns about the dollar as follows:
>
> "...we believe the next three to six months are likely to be characterized
> by downside surprises in global trade and GDP growth, accompanied by a
> difficult equity (stock) market and M&A (mergers and acquisitions)
> environment. With the U.S economy and markets at the core of these
> developments, we expect the U.S. Dollar to weaken in 2001..."
>
> Meanwhile, Morgan Stanley's metals and mining analysts sum up gold's prospects as
> follows:
> "Gold may be a safe haven during a hard landing. Gold was one of the
> best-performing asset classes in two of the last three recessions. IN 1974,
> the price rallied by some 75%to $175 per ounce as the oil shock unfolded.
> In 1980, it rallied by 110%to over $640 per ounce as the oil crisis again
> took hold. Gold is historically viewed as a hedge during political
> uncertainty, rising inflation or severe deflation."

auspec (01/18/01; 19:02:00MT - usagold.com msg#: 45874)
The "Shadow Presidency"
CLINTON WON'T LEAVE!!

Cavan Man (01/18/01; 19:01:26MT - usagold.com msg#: 45873)
FYI
There is another stranger around here sheriff. His sobriquet is, "the Stranger". He's the guy we've been reading here for so many months.

John Doe (01/18/01; 19:00:31MT - usagold.com msg#: 45872)
@auspec
I've always thought it would interesting to hook up a voice analyzer to WJC's pronouncements and see if there is any pause whatsoever in the endless mendacity. Or is he so good at it that nothing would register?

TheStranger (01/18/01; 18:54:52MT - usagold.com msg#: 45871)
VanRip's Question and a Money Supply Update
VanRip - I wouldn't say that the U.S. has ever really experienced HYPERinflation. Nor do I expect things to get that bad this time around. Still I suppose it depends on what is meant by "hyper".

Randy is right, however, about the effects of inflation being positive for some stocks while negative for others. But, for most stocks and for the averages (the Dow Jones Industrials, for example), high rates of inflation are destructive.

During the 1970s, the best period for which we have an example, the incentive to invest in securities was lost on just about anyone who was aware of the fabulous returns achieveable by investing in leveraged real estate or other tangibles. Furthermore, high inflation produced high interest rates, which complicate matters for businesses of all kinds.

**********

Meanwhile, the latest money supply numbers came out today. M-3 was up another $15.3 billion! We are watching history in the making, folks! That is now 177 billion new dollars created in only seven weeks. Mama Mia! Multo Inflazzione!


PH in LA (01/18/01; 18:45:20MT - usagold.com msg#: 45870)
Warning: OFF TOPIC INTERMISSION
www.PROdigitalRecords.com

In case there are any classical music fans here tonight, my website (http://www.prodigitalrecords.com/) has been updated. New graphics along with a whole new department: MP3 Downloads. The MP3 files are free and one features me playing a short piece by Hans Sitt for viola and piano. (http://www.prodigitalrecords.com/PROdownloads.html)

If anyone does go by to check it out, please let me know what you think: ph@prodigitalrecords.com.

Hope nobody is offended by this off-topic message. Might liven things up there in the tower a little tonight, Randy...

Anyway... now back to the regularly-scheduled material!

mhchuck (01/18/01; 18:44:47MT - usagold.com msg#: 45869)
Inflation and Debt: Jouneyman, Christopher.

Hi Journeyman, Christopher, All.

Journeyman, In addition to the other responses, I would think that "getting out of debt" is definitely the strategy for Deflation. With the deflation in the thirties, and dollars being hard to come by, those who had excessive debt had to default and saw their homes and property repossessed. Since 1913 we have had a gradual, but nonetheless significant inflation that has proceeded in stops and starts. The Fed is always threatening to "pull the plug" (the fighting inflation rhetoric which is in essence a claim that it, (Fed) is always fighting itself). If you KNEW we would have hyperinflation, or even moderately accelerating inflation, then going into debt is a sound strategy. The problem is that we are not privy to that information. And as much as all indicators point to inflation, tomorrow the Fed might change its mind and pull the plug. That is only one reason why this private and arbitrary system of money creation is so unfair.

Christopher, I certainly was thinking that the rapid build up of corporate debt in past few years is revealing a clue about future monetary policy. I thought I had recently seen a chart that indicated that corporate debt had quintupled since 94-95, but am not certain my memory is accurate, and asked if someone could provide more specific information. As to maxing out your credit cards? In a rapidly accelerating inflation it would work, but then, nobody would be extending you credit. I think it's better to buy gold. There is trouble with the monetary system, the knowledge of which is being withheld from the world. That is why gold is only at $265 an ounce.

mhchuck


Cavan Man (01/18/01; 18:26:07MT - usagold.com msg#: 45868)
Trail Guide
USAGOLD 45842 & 45846
Sophia. Let he who hath ears pull up a barstool.

MO VER MEG (01/18/01; 18:21:17MT - usagold.com msg#: 45867)
Journeyman - Re: Debt
I believe the debt we need to be rid of in inflationary times includes debt with variable interest rates, debt which would be difficult to service in a faltering economy and debt with balloons or acceleration clauses.

However, debt on an asset outside the above caveats might be valuable. For example, an investment in a mobile home park financed with a fixed term and fixed rate might work well. A mobile home park could possibly be an asset with a strong pay back during hard times (people have to live somewhere). I chose mobile home parks as an example because they worked well for me in the late 80's.

I hope this helps.

auspec (01/18/01; 16:49:28MT - usagold.com msg#: 45866)
2 Days Left!
The 1st Lips Will Be Moving Again Tonight
Just wondering what is so important that must be personally spun by Sick Willie hizzelf, in a precedent setting manner?
Maybe it's just one more "for the show" from the guy that's having a hard time letting go.
Just part of the blame game, reminding the believers how great everything was on hiz watch, right before all hell breaks loose--markets, recession, etc.
Could be even more significant as he would surely know of any meaningful departure from recent {YEARS!} Treasury m.o., that is soon heading our way.
Watch closely, if you are able, read his moving lips and discern what the underLIEing reality is.

Randy (@ The Tower) (01/18/01; 16:23:45MT - usagold.com msg#: 45865)
VanRip: "If we have hyperinflation, does that mean the stock market will hyperinflate also?"
Depending on the particular company whose stock you are evaluating...some will rise, others will not. Of course it ultimately comes down to investor willingness to hold corporate assets, but some companies will thrive and some will fail based on the same conditions mentioned earlier to Journeyman regarding income stream...can the particular company maintain sales volumes (domestically and/or overseas) and also have the ability to raise prices to compensate for the higher costs of overhead? Those with a focus on exports would tend to do better than others.

And I join with FOA to point out another item. Not only will gold run with the best of the pack on the response to inflation of the currency, the physical metal will also uniquely enjoy an additional springboard effect on its price level from a disolution of the price-setting gold derivatives markets.

VanRip (01/18/01; 15:33:36MT - usagold.com msg#: 45864)
Hyperinflation and Future of Stock market - Anyone/Stranger ger
Since I was a boy in the '30's, I have seen an enormous amount of inflation (I also remember the nickel movies). In addition, I have seen the stock market more than keep pace, a lot more. If we have hyperinflation, does that mean the stock market will hyperinflate also? If not, why not?

Journeyman (01/18/01; 15:05:23MT - usagold.com msg#: 45863)
Getting out debt II @Randy@TheTower

Hi Sir from the Tower!

I guess that makes sense. Also, you know how I feel about predicitons (Yogi) so we could be wrong, people run up a lot of debt and then hyperinflation doesn't happen soon.

Of course, there's always bankruptcy! A lot of company there lately.

Regards,
Journeyman


Randy (@ The Tower) (01/18/01; 14:46:25MT - usagold.com msg#: 45862)
Journeyman...debts
"Anyone know where the idea of paying-off your debts under such economic conditions [hyperinflation] came from?"
------------
Where generalized advice goes untailored for the masses, that is probably the safest route to take for the advisor.

Why? Because although it seems attractive to load up on debt to repay it later with cheaper dollars, there is no guarantee that the debtor will still have an income stream. As the inflation first erodes the purchasing power of the nation's "savings accounts", some businesses may suffer from slack sales and be forced to cut back on production with layoffs, or shutdowns in a worst-case.

On an individually tailored basis, the advice to reduce or increase debt upon the reasonable certainty of runaway inflation would have to take into account the ***reliability*** of that individual's future income stream, or of the availability of adequate assets that can be sold for the necessary quantity of currency when needed.

Makes sense?

Journeyman (01/18/01; 14:20:22MT - usagold.com msg#: 45861)
Getting out of the dungeon! @Al Fulchino

Hi Sir Al!

I vaguely remember you consigning yourself to the dungeon for making some sort of error in being mis-led by some post or another.

You worry me a lot!! You may be setting a precedent - - - and I'll end up in the dungeon in short order for making an error myself!!

COME OUT OF THERE!!

Regards,
Journeyman


Journeyman (01/18/01; 14:08:28MT - usagold.com msg#: 45860)
Getting out of debt?? @Black Blade, mhchuck, ALL

Hi Black Blade, mhchuck, ALL!

It seems to be the commonly offered advice to "get out of debt." However, if someone is anticipating hyperinflation, what is the logic? As per mhchuck (01/18/01; 13:39:29MT - usagold.com msg#: 45858), you can emulate 1922 German businesses and go into debt, knowing you'll be able to pay back that borrowed money with inflated money.

Anyone know where the idea of paying-off your debts under such economic conditions came from? Is it just banking disinformation, wrong-headed cultural blather - - - or is there some logic to it that escapes me?

Regards,
Journeyman


Christopher (01/18/01; 14:04:18MT - usagold.com msg#: 45859)
mhchuck usagold#45858
I am slow, but after reading your post(which I found very interesting) it seems to my addled brain that you may be trying to make a connection between the German agglomerators' pre-inflation accumulation of debt, and a similar occurrence that has been going on in this country since the mentioned time period of 1994-95. Is that the case? Very interesting indeed.

Could not a poor man like myself emulate the agglomerators by maxing out my credit cards with the purchase of things of value, and paying off the loans after the inflation has taken its toll on the currency? I have been thinking of doing just that, and have been pondering the prudence of such an action. I would appreciate your opinion, and further insight into this matter.

Christopher

mhchuck (01/18/01; 13:39:29MT - usagold.com msg#: 45858)
Leigh: Definition of hyperinflation?

Thought yourself and others might be interested in this excerpt from Max Shapiro's "The Penniless Billionaires" (1980)

From the level of 122.5 billion marks on January 1, 1922, the total number of marks streaked to 206.6 billion, by the end of July, and increase of over 80 billion in just seven months. The glut of paper marks reflected itself on the foreign exchange market: from a price of 174 to the dollar on January 1, 1922, the mark sank to the quoted price of 770 to the dollar (having been worth 20-odd cents before the war, it had an exchange rate of 1/35 of a cent in July 1922).
Although foreign exchange fluctuations were of vital concern to speculators, businessmen, and the government, they had no recognizable significance for the average German. But the sweep of inflation had and unmistakable impact. During the seven month period (January through July 1922) the wholesale price index leaped from 34.9 to 100.6.
In the hot, sullen summer of 1922, Berliners were paying prices that were 100 times as those prevailing before the outbreak of the war in the comparatively carefree summer of 1914.
A pair of shoes that could have been bought for 10 marks in 1914 was now priced at 1000 marks. A pumpernickel loaf, priced at 40 pfenning (four-tenths of 1 mark) in prewar days now sold at 30 marks. A coarse shirt that would have found few buyers in 1914 at 3 marks would---in the summer of 1922----disappear the moment a weary salesgirl displayed it in the store window, despite its price tag of 500 marks. It would be snapped up because the buyer wanted to get rid of his ever-cheapening money and because he knew that next week he could find someone willing to pay 600 marks. The second buyer, like the first, would not need the shirt; he---like everyone else in the population-was merely getting rid of his depreciating money and put it into anything that retained its value. The race to dispose of money and to put it into 'Sachwerte' ("things that retained their value") became a way of life, in fact, it became a major portion of life of life by mid-1922.

The powerful industrialists, of course, had understood the necessity of putting cheap money into 'Sachwerte' before 1922. From 1920 on, with money borrowed from banks and other financial institutions (money that had been ostensibly fabricated to finance the deficits of the government), they systematically built up their plants. And in the process of inflation swelled their profits, they repaid their debts with the great quantity of cheap marks they took in. "It was absolutely necessary to have large debt," Minoux (one of the agglomerators of the period) once said. "You borrowed 100 million marks in a year when your profit was only 40 million. You then spent your borrowings on building up your plant. Two years later---with the mark down to 1/50 of its worth from the time you borrowed, and your profits up to 2 billion marks-you could repay your whole debt of 100 million marks with only 1/20 of your bigger profits. By that time the worth of your plants that had cost you 100 million (but which really did not cost you anything since you used other people's money to build) were now worth over 5 billion marks. Really, you did not have to be clever in those (1920-1923) days to make a fortune; all you had to do is borrow and put the money into solid things."

What Minoux did not add, however, was that in order to borrow one had to be considered "creditworthy," and that the banks extended their swollen deposits and bank notes almost entirely to a small group of entrepreneurs----for the most part the officers and directors of the cartels who frequently owned or controlled the banks themselves.

And while industry was piling up assets, the losers---the rentiers and other members of the middle class---were being pauperized as they had been during the previous hyperinflationary episodes. The hundreds of Lotte Hendlichs (see USA post #44090 Dec 19, 00) who had squirreled away a modest fortune from which they had hoped to secure an income of 2,000 or 3,000 marks a year, and a genteel existence, were already ruined. Like their French counterparts during the early 1790's the pensioners, the aged, and anyone living on fixed income gradually sold the few 'Sachwerte' they still owned and applied for woefully inadequate public assistance (which could not keep up with leaping prices) or slipped into the final, death-producing malnutrition. But the winners were not greatly disturbed by the hard fate of the losers. In mid-1922, Hugo Stinnes, arch agglomerator of the period (who, by using borrowed funds, had amassed more industrial, banking, and mining companies than any other individual in recorded history) printed a public appeal in one of his newspapers for the issuance of additional marks by the Reichsbank….Stinnes's newspaper exhorted, "There is a shortage of money. We must have additional money to maintain industry and order"

Comment: Leigh, (there is much more to this story) this inflation accelerates millions of percent from where I ended the excerpts and ends with the total destruction of the currency. The numbers get truly astronomical as evidenced by this next excerpt…."By the end of November (1923) with the mark having been rendered virtually worthless--the cost of living was driven to sickening heights. The wholesale price index as of November 30th had skyrocketed to an extraterrestrial height of 1,42,900,000,000 (almost one trillion four hundred twenty three billion times its 1913 level)"

Comment: There is hyperinflation, and then there is the German hyperinflation. The Debt taken on by US corporations since 1994-1995 is staggering, does anyone have these figures from Doug Noland's work?

mhchuck


Al Fulchino (01/18/01; 13:15:54MT - usagold.com msg#: 45857)
You are on to more than meets the eye
Journeyman (1/18/2001; 10:49:22MT - usagold.com msg#: 45852)
What the BIG miners (and Bill Griffeth) think about gold - - - AND copper @ALL

-Bill Griffeth: ~"But what about the supply and demand for gold? Isn't the
demand for gold greater than the supply? ~"The central banks are the OPEC of
gold. They will control the price of gold by selling untill they change
their minds." . . . "There are only three weeks of copper left. When the
price of copper goes to $4 or $5, people will be saying, 'Why didn't anybody
tell me this?'" -James Moffett, Freeport-McMoRan Chmn. & CEO, CNBC, Jan 18,
2001, ~12:43PM EST

ME

What has to be understood is the psychology of the human being. Aside from gold's good fundamentals and its its historical importance is the addictive nature of 99.9% of the human race.

Most investors today are no different than womanizers, drug addicts, alcoholics or addicted smokers. Don't believe me? Simply note that the markets are now so heavily invested by single investor types vs the institutions. Who ran up the Nasdaq? Answer, as if you don't already know, is the guy next door. And there are thousands upon thousands of them.....all waiting around the corner for the next cycle to latch onto. I have seen it at Mobil meetings...."did you see YAHOO today?" "Yep I put another 10k into it!"...over and over and over it was the same story....I was left wondering the last couple of years who was running their businesses. People are addictive. Don't believe it? Your eyes are not open. When gold goes this time, whenever that may be, there will be hoards of investors who have money and many who don't, who will be looking for the next shiny investment that looks like it will take them for a ride to riches. Alcohol takes you away from your problems. Drugs do the same and make you king for a day. Cigarettes give you that "whew, I needed that break" from life. Many who invest today, simply do not want to work any more. Period. Nasdaq promised it for awhile and gold will too. That is the added jump we will all see. Watch your fundamentals. This way you can have the fun whilst the rest can get or go mental. Gold will , in its time, provide itself to be used as an opiate for many. as it climbs, we will hear, "'Why didn't anybody tell me this?'"
. Many bankers will know,

Back to the dungeon. when I get time I will clean up my Second Ammendment post, I have learned a good many things in the last couple of months.



Christopher (01/18/01; 11:53:02MT - usagold.com msg#: 45856)
Blackouts for 2nd straight day
http://www.washingtonpost.com/wp-srv/aponline/20010118/aponline101026_000.htm
Link to article about todays crisis in the PRK. This quote in particular stuck out for me.

"State regulators came Wednesday within 1,300 megawatts – enough electricity to power 1.3 million homes – of ordering the first statewide blackouts since World War II."



Old Yeller (01/18/01; 11:38:47MT - usagold.com msg#: 45855)
Silver lease rates
Up strongly across the board.

1 month;1.273%,up 0.36
2 month;1.236%,up 0.33
6 month;1.423%,up 0.20
1 year;1.775%,up 0.22

Golden Truth (1/18/2001; 11:31:14MT - usagold.com msg#: 45854)
NEWS FLASH!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Rolling power blackouts to start at 09:50am in California,according to BLOOMBERG T.V.

Also said this would save 1000 Megawatts.

I say this is a bandaid solution, it will not help longterm and this problem is really changing by the "HOUR"

To quote a favorite poster of mine----- "and the grasshoppers played and danced and sang all summer long"
:-)))))
G.T

USAGOLD (1/18/2001; 11:01:47MT - usagold.com msg#: 45853)
The Rocket School of Economics
I would like to welcome Professor von Braun and his Rocket School of Economics to the USAGOLD web site. A personal friend and confidant, the good Professor remains one of the people that I bounce my thinking off to see if there are any holes in it. He is astute. He writes well. And most importantly, he offers a message nurtured through many years experience in the gold industry. I believe our clientele and visitors will find his writings refreshing and usually ahead of the curve.

Welcome, my friend. We are proud to have you join the fine group of writers and thinkers we have assembled here for our mutual benefit and financial well being.

I would like to commend Randy as well for a another job well done.

Blast off!!

Journeyman (1/18/2001; 10:49:22MT - usagold.com msg#: 45852)
What the BIG miners (and Bill Griffeth) think about gold - - - AND copper @ALL

-Bill Griffeth: ~"But what about the supply and demand for gold? Isn't the
demand for gold greater than the supply? ~"The central banks are the OPEC of
gold. They will control the price of gold by selling untill they change
their minds." . . . "There are only three weeks of copper left. When the
price of copper goes to $4 or $5, people will be saying, 'Why didn't anybody
tell me this?'" -James Moffett, Freeport-McMoRan Chmn. & CEO, CNBC, Jan 18,
2001, ~12:43PM EST

Regards, J.


Randy (@ The Tower) (1/18/2001; 10:46:40MT - usagold.com msg#: 45851)
USAGOLD proudly welcomes Professor von Braun aboard with his "Rocket School of Economics"
http://www.usagold.com/gildedopinion/RocketSchool/20000115.html
The good professor combines wit, style, and clarity in sharing his keen view of gold mining and the gold markets.

Here is a sample of his direct message (regarding physical gold) from a lecture offered at this time last year:
--------
Physical Gold
Buying physical gold at these levels and taking delivery is a very effective way of hedging against future turmoil, including delivery problems that must occur in the gold futures markets, as well as ludicrous stock market valuations that cannot go on forever. It's safe, convenient, won't evaporate and it's yours. Even if further declines in the gold price occur, still a real possibility, it is likely that they will be short lived.
+
Taking delivery now provides more leverage than most people believe. You own the gold and as this market eventually returns to something that reflects the reality of the supply and demand situation, the premium will be on physical metal. Given the nature of the markets at present, the amount of paper currencies in the system, the potential for all sorts of "corrections" and the fact that paper promises are at the end of the day worthless, holding physical metal as a percentage of ones assets, is definitely prudent.
+
There is no speculation involved in deciding the actual content of either a gold coin or a 10 ounce bar. The content is what it is, 99%+ pure gold, and as such is not dependant upon dubious market perceptions, management accounting practices, or the greater fool theory. Nor does it need to be watched every day. (As an aside, I have not heard of too many bullion dealers receiving daily phone calls asking for quotes on the current purity of their clients' gold bullion).
------------------
Be sure to look into the whole series as your time allows...(accessible via the Gilded Opinion index page)

slingshot (1/18/2001; 10:17:30MT - usagold.com msg#: 45850)
Silver. Change is better
Finally, a discussion which is just as important as acquiring gold and silver. Yes, How to spend your assets and what will you accept for change. Just trot on down to your local bank, drop a couple eagles on the counter and pick up a few of those fiat dollars we all like to spend. Sounds simple enough. There are many reasons why people buy gold and silver as stated in message 45817. You can "Flation" yourself to death. Bottom line, gold and silver are at the top of the food chain when it comes to financial transactions in very stressfull times. History proves this out. Yet, water in the desert and food when your hungry could be a higher value. Is the trick to use one to get the other at a fair price? What is Fair Price? How much gold or silver. Will the price be driven by supply and demand or the precieved value of the buyer and seller. Further arguement can be made as to use coinage or bullion. Aye, Matey, me thinks you shave too much off me silver bar! Coins after 1964 have no value to me. To me silver is the way back to stability. Silver in the coins and notes backed buy silver.
Can not stand this new paper money. Monopoly Money. I WANT SOMETHING OF REAL WORTH! I will accept silver as change. No paper mony please. Say if there is hyperinflation and the fiat money is worthless, Who gets to set the price of gold and silver. The banks or us?

DaveC (1/18/2001; 10:14:31MT - usagold.com msg#: 45849)
Hyperinflation Anecdote
My mother, who grew up and still lives in the Detroit area and is 78 years old, used to go to the movies for a nickel. Yes $0.05. This was in the early 30s.

In the first week of the new year my wife and I were in Manhattan visiting family and went to see Castaway.

Price: $9.50.

We do get color now though. But what happened with all the new technology in the last 60 years? I'll have to ask Easy Al next time I see him.




Journeyman (1/18/2001; 9:51:55MT - usagold.com msg#: 45848)
Hyperinflation @Leigh, ALL

Hi Lady Leigh!

There is an easy rule of thumb: If everyone is talking about "inflation" at the super-market check-out, etc. you're in a hyper-inflation.

"Hyperinflation" is a less than precise term --- mostly because the rate of change of inflation during hyperinflation is variable and high. That's because it all happens very quickly. The result is that the rate of inflation is a quickly moving target and it allows different folks to pick their own figure.

In a sense, we've had hyperinflation since they abrogated the gold standard in 1933 - - - the dollar has hyperinflated in that period to be worth less than seven cents (7%) of it's value in 1933.

Regards,
Journeyman


Journeyman (1/18/2001; 9:40:33MT - usagold.com msg#: 45847)
California blackouts and the dollar @ALL

Is it realistic to talk about the dollar declining in what could be described as a "crash?"

~"When they deregulated [electricity], The State of California did
everything wrong. They are now on a sinking ship and they're going down
unless they stop fighting among themselves. The state is going to have to
buy power and sell it to the utilities. There is no other solution now.
Who will pay? The taxpayers will pay. This may not prevent bankruptcy of
these companies anyway. Will bankruptcy of these utilities crash the
dollar? I don't think the dollar will crash, but this will definitely
put pressure on it." -Chief Commentator Bill Seidman, CNBC, Jan. 18, 2001

Regards, Journeyman


Trail Guide (1/18/2001; 9:32:39MT - usagold.com msg#: 45846)
Comment
Randy (@ The Tower) (1/17/2001; 11:20:40MT - usagold.com msg#: 45784)Excellent! Here is only a small excerpt from MK's FULL report today -----------

Randy,
Yes, that MK is something! While I cannot get his entire News & Views, what you have provided speaks volumes of a mind endowed with good reasoning. His vision is well positioned to navigate and understand this modern money world around us.

------------

I have this to add:

Who among us, ten or twenty years ago, would have ever thought the fed would still be exploding our dollar production today? Back then, such an "inflation of the currency", over this long a time span, was unthinkable. It would surely lead to an immediate destruction of the dollar. But, here we are, watching as dollar production is gunned for the ????? time.

Everyone with any knowledge at all, the Ruffs, the Browns, the Schultzs, etc.,,,, all knew any such currency inflation, as we see today, would send the world off the dollar standard! Where would we all go for money relief? Why, gold and silver, of course! But, what happened? Well, the world
economic structure changed and those extra years sold time to others for the creation of Another currency.

You see,,,,,,, this was the trick (or ploy) of "one world trade". This concept alone produced the extra demand that needed "trading dollars". This short term transition, aided with cheap oil deals, demanded "digital money" for trade, not savings. It was this new "one worldeconomic expansion
demand" that put our dollar so much more "in play" for it's settlement function. It's value as a savings utility was not in demand, but it's need to denominate and close settlement was. This exceptional surge in trading demand overcame it's loss of demand as a "holder of value".

However, this "digital need" would not alone, negate the run into gold others forsaw. For that sector, our new currency creators needed an overflow valve that would cover this demand. Paper gold! A devise pushed at first by all dollar users.

But what of all the dollar instruments floating around? Cash dollars, near dollar like securities and even Treasury issues? Even they are not the static holdings we knew them as twenty years ago. These paper digits are but commerce receipts and are now a 1000 times more fluid. In fact, few of us can say that we actually have an account that these things are deposited in. Yesterday, instead of real deposits, we owned "deposit credits" and account credits. Bad enough to own them then as it created doubts of redemption. Today, however, we own "deposit credits" of "deposit credits"! In other words, our entire money universe if completely liquid and fluid in nature. We as an American
Western society own no form of a stable currency structure. It is completely a "digital settlement receipt" money.

In this fashion, no form of trade slow down can be allowed. Economic slowdown today, is the death of dollars on a scale never known. Where dollar assets and liabilities, matched on banking books, would once cancel out, creating just a simple alarming deflation,,,,,,,,, today, one dollar loss wipes out hundreds of dollar derivatives assets based and created against that one single deposit credit asset. Even a minor slow down will have the effects of a colossal banking failure. Therefore, the Fed is now in a different universe than the one most economic forecasters are following. It's not a case of changed rules,,,,,, it a case of a completely different environment.

The fed must create an inflation on top of an inflation. To not do so, they will immediately concede the currency world to the "old world's" new currency and it's physical friend. Gold! Even most Euro doubters are beginning to see this new light:

----"Picking a new currency to switch into may seem tricky, but there are only a few sound choices. The euro, a currency nobody ( including us ) had a nice word for in a year, is now one." --
---http://www.gold-eagle.com/gold_digest_01/schultz011901pv.html----

So,
This, my friend, is the new dollar money world we have evolved into. A process that has expended the value and timeline of any and all dollar based assets. As Another said; "your wealth, it not what your dollar say it be". Indeed, what we own is but a shell of a transitional world currency system. Somewhat like owning the common stock of a trading shell company. No assets, but still has a useful bid? It leaves us with little value once it's digital bid, it's "USE FACTOR" moves on and that factor will leave if the world economy slows in the slightest way. In common language, a recession will bring the Western dollar world a modern hyperinflation the likes none of us have ever seen or
read about in our time!

Major players in the gold world have not been blind to this ending dollar timeline. Physical gold is not off their radar screen, just paper substitutes hard money assets not backed by Euro governments! They are not blind to the continued use and need for paper gold to govern the dollars slow demise. Collapse this paper gold world too fast,,,, and the dollar is toast,,,,, too fast!

Indeed, without a Euro to take over the dollars "digital roll" we would be headed for an full blown economic nuclear event. Something oil producers are loath to accept. To this end, the Euro is forced to survive,,,,, warts and all! It will also be physical gold that carries the bulk of past dollar inflation, and the wealth that represents, in the form of gigantic dollar gold price increases. The world's wealth, as denominated in money will not disappear, it will only change hands and form as it supports a new currency system. CB gold is today, traded as an asset, not sold as a liability. Only Western Media reports 1/2 this fact to extend paper gold's decent.

Gold substitutes? Who needs them when their value is based on a failing paper price structure.

Today, who knows the price for physical gold?
It has no market price in our dollar world!

Physical Gold Tomorrow? It will outperform every other asset ---- because it's value as wealth is so misplaced in our time------

As MK so boldly observes;
-----"There comes a day of reckoning..."-----------

more





Randy (@ The Tower) (1/18/2001; 8:00:05MT - usagold.com msg#: 45845)
Something is up
[Bridge News] Johannesburg--Jan. 18--South African gold producer AngloGold and Canadian
rival Barrick Corp on Thursday declined to comment on mounting speculation that
the two companies were preparing to launch a joint hostile bid for control of
Gold Fields, South Africa's second-biggest producer. A reliable source had
earlier told I-Net Bridge the joint bid was expected to be made by the end of
this week.
-------------------------
When a <wink> hedge fund (such as Barrick) is looking to get into the gold mining business directly (via Gold Fields), one cannot help but think that things are seizing up in the physical market. Of course you know, just looking at prices you would not be able to detect signs of this tightening due to the "off market" method of price discovery that is used for gold. No one is running out of contracts to sell(!) Rather than look for the gold derivative prices to show a rise, look instead to expect this paper gold to be trading at a discount to the prices offered for true metal. Paper can be everywhere, but gold...either you have the metal or you do not, at ANY price.

The Hoople (1/18/2001; 7:54:47MT - usagold.com msg#: 45844)
Housing starts, permits
CNBC news banner: December housing starts +0.3 to 1.575m rate
Now for the rest of the story

actual starts Dec 00 - Dec 99 -12.5%
actual permits " " -17.7%

Just like all fiction coming out of the government seasonally adjusting figures takes the truth out. These are the largest single month drops in a long time. Actual permits are important because it gauges business 60-120 days forward. The spin now must be "the second half story" because they know the next few months are assured disasters.

Randy (@ The Tower) (1/18/2001; 7:34:08MT - usagold.com msg#: 45843)
Trail Guide...glad you liked my choice (with MK's full blessing) for your page...seemed fitting, both beginning and end
http://www.usagold.com/goldtrail/

I shall be telling this with a sigh
Somewhere ages and ages hence:
Two roads diverged in a wood, and I--
I took the one less traveled by,
And that has made all the difference.
-------------

All the difference, indeed.

Trail Guide (1/18/2001; 7:26:19MT - usagold.com msg#: 45842)
Comment
Hello all!

Some of my friends (and apparently many readers) often ruminate on why I am so fractured when writing. Often giving the impression of rambling on, not to mention a poor english structure, spelling and grasp. Someone asked, "Your not that way in person, so why such a literary style?" I'll try to
answer what I did strive to explain once some time ago.

My full grasp of english is somewhat poor. But, that's because of a mental structural problem induced by a worldly exposure. With that simple reply, I'll leave it to your best imagination's ability, to decipher (smile).

A better reply, though, would be; it's just my way of following a format introduced by Another. In other words, in his words to me with my (words added) -----

"one should not tell readers (his) exact knowledge, position in life, or what (other's) thoughts should be. Such (talk) extols the self and lessens the reason pursued. (Rather,) let anyone that will listen, think your Thoughts (thru), seldom exposing (them) to (your) fully concluded points. They (people) gain our understanding on (their) own terms, in (their) own way, in (real) events, over time". He
often said; "we are not (here) to prove things, my friend, time will do (that) for us. It (time) will (also) expose (our) standing in world of Thoughts" and "is it not better to stand (in) a crowd and speak softly to (the) nearest ear" and "truth (is) never hidden or (not) exposed, it (is) simply not reasoned by exposure to understanding".

So, (smile)

Two roads diverged in a yellow wood,
And sorry I could not travel both
And be one traveler, long I stood
And looked down one as far as I could
To where it bent in the undergrowth;

This is the first part of Robert Frost's fabulous classic, as printed above the USAGOLD Walking The Gold Trail page. I'm not sure if it was Randy or MK that choose it, but it was perfect in all the ambiguity such words could convey. For thinking, reasoning people it creates an air of where we
are today. We have rounded "The Curve" of understanding and now must contemplate the trail to follow. Truly, most everyone knows, now, that there are two paths we can go down. Each path denotes following it's own economic block, world currency block and gold price structure block.
Indeed, our future quality of life may depend on how much we understand about these two paths.

more



The Invisible Hand (1/18/2001; 7:03:14MT - usagold.com msg#: 45841)
Hyperinflation - Milton Friedman's definition
In his essay 'The Supply of Money and Changes in Prices and Output', Milton Friedman defines hyperinflation as the kind of price rise that seriously distorts the effective use of resources.

Pandagold (1/18/2001; 6:44:36MT - usagold.com msg#: 45840)
The Luck o' the Irish

Is this the 'luck o' the Irish', or those dear little Leprechauns at it again?

"THE Emerald Isle has a "border of gold" between Armagh and Monaghan, which has begun to yield its rich bounty, according to the Irish exploration company prospecting in the area."
(The Irish News)


ThaiGold (1/18/2001; 6:41:04MT - usagold.com msg#: 45839)
Other HyperInflation Indicators...
... Any of these should alert you ...
(1) Grandmother sends you to the store to buy a quart of milk:
and she gives you her 1920 copper penny to pay for it.
(2) A dime has more intrinsic value than a thirteen dollar bill.
(3) You experience Sticker-Shock at the price of a bread loaf.
(4) Tuna Cans are displayed above the Prime Beef Section.
(5) Eggs are already colorfully painted. And hollow.
(6) You pour Grandma's milk: Find that it's powder. Add water.
(7) Dollars are Traded at CBOT, like Wheat: In Bushels.
(8) Gold trades at COMEX at $265.50/oz
(9) Your calculator no longer has enuf digits to show the DJIA.
(10) Don't worry. You will never see HyperInflation in the USA:
The government will call it something else: "Stable Prices".



The Invisible Hand (1/18/2001; 6:33:36MT - usagold.com msg#: 45838)
Hyperinflation
In the glossaries in his investment books, Harry Browne defines hyperinflation as runaway inflation.
He defines runaway inflation as a rapid increase in prices aggravated by a widespread drop in the _demand for money_ .

Pandagold (1/18/2001; 6:24:34MT - usagold.com msg#: 45837)
Inflation/hyperinflation

Inflation does have a redeeming feature, it allows you to live in a more expensive neighborhood without the expense, and bother, of moving

ThaiGold (1/18/2001; 6:10:36MT - usagold.com msg#: 45836)
HyperInflation
Attn: Leigh
Hi Leigh
It's HyperInflation, when you go into your favorite SuperMarket
and find that everything appears to be priced in Yen.


Leigh (1/18/2001; 6:01:20MT - usagold.com msg#: 45835)
Hyperinflation
To Anyone: How high does inflation have to be before it's hyperinflation? I believe FOA once mentioned about prices rising 50% a MONTH. Then yesterday I read 25% a year inflation being called hyperinflation. Does anyone have a good definition? Thank you!


The Invisible Hand (1/18/2001; 5:49:25MT - usagold.com msg#: 45834)
Bank holidays to be declared in the Philippines
http://www.inquirer.net
Monetary officials move to halt rumours of bank holidays
Posted: 8:07 PM (Manila Time) | January 18, 2001
By AFP

MONETARY officials on Thursday quelled rapidly spreading rumours that the banking industry was in dire straits amid a political turmoil resulting from President Joseph Estrada's virtual acquittal on graft charges.
"The banking system is inherently sound and there is no reason for banks to declare a bank holiday," Central Bank of the Philippines deputy chief Alberto Reyes said in a statement.

Reyes said the central bank "recognizes that rumor-mongering can be attributed to the general concern on current political developments."

Philippine stocks and shares have been taking a beating after the country was plunged into political turmoil this week when the Senate voted along party lines to virtually acquit President Joseph Estrada on an array of graft charges.

At least 10 major business organizations have also joined massive protests calling on the president to stand down, while labor groups vowed to stage a work stoppage in the coming days.

Reyes said he issued the statement after banks reported having received continuing queries from clients on supposed impending bank holidays to sweep the industry.

He said the rumours were also being circulated through text messages on cellular phones.

The central bank however "stands ready to defend the integrity of the financial system and to provide immediate assistance" to banks in case of need, Reyes stressed. AFP

Black Blade (1/18/2001; 5:45:14MT - usagold.com msg#: 45833)
Gold and silver up, Chinese favor Euro, etc. "Interesting Times" ahead?
Gold is perking up this morning +$1.80, at $265.20, and silver is up 3 cents. Only 45 minutes until the usual NY splash-down though. Euro up, USD down, petroleum up, and round and round. Futures are mixed with no firm direction. Could get interesting today as Chinese are said to favor moving to Euro reserves over the US Dollar. It just might get fun if Wall Street catches on. Only 2 more days until the Clinton PPT crowd hand off the ball to the Bush team. Monday might signal a shift in direction, then again it just might be business as usual. Looks like George Dubya Bush will wear the mantle of the Hoover legacy before long while Bubba slinks outta town.

ThaiGold (1/18/2001; 5:26:34MT - usagold.com msg#: 45832)
European TAX Answers
Attn: WAC (Wide Awake Club) (1/18/2001; 4:25:18MT - usagold.com msg#: 45828)
Thanks WAC. --- 1% gold -vs- 17.5% silver. Why so different.?.


ThaiGold (1/18/2001; 5:09:13MT - usagold.com msg#: 45831)
Contest: Bush Era: Initial Prices
No Prize, but think of your Fame if you win.!.
Then, Monday, January 22, 2001 will mark the First day of
the Bush PPT Manipulation Era.

Let's have a Contest to guess those First Closing Prices for:

GOLD: NY Spot:
SILVER: NY Spot
DOW-30:
NASDAQ:

There's no prize offered. Just the Fame and Disgust you will
feel knowing that nothing's going to change.

My Guesses:

POG: $265.50
POS: $4.95
DOW: $10,401.00
NASDAQ: $2,401.00


ThaiGold (1/18/2001; 5:03:54MT - usagold.com msg#: 45830)
Contest: Clinton Era: Final Prices
No Prize, but think of your Fame if you win.!.
Tomorrow, Friday, January 19, 2001 will mark the final day of
the Clinton PPT Manipulation Era.

Let's have a Contest to guess those Final Closing Prices for:

GOLD: NY Spot:
SILVER: NY Spot
DOW-30:
NASDAQ:

There's no prize offered. Just the Fame and Relief you will feel
that it's finally come to an end.

My Guesses:

POG: $265.50
POS: $4.95
DOW: $10,401.00
NASDAQ: $2,401.00


Black Blade (1/18/2001; 4:33:42MT - usagold.com msg#: 45829)
DJ Barrick Declines Comment On Rumored Move For Gold Fields
http://www.thebulliondesk.com/DJNews/4035508.htm

By Adam Aljewicz and Mark Heinzl
Dow Jones Newswires

TORONTO (Dow Jones)--A Barrick Gold Corp. (ABX) spokesman declined to comment on rumors the gold producer might be planning a bid for South Africa's Gold Fields Ltd. (GOLD) in conjunction with AngloGold Ltd. "We don't comment on rumor and speculation," the Barrick spokesman said. Market sources in South Africa said they believe Barrick may be examining teaming with AngloGold to acquire Gold Fields, a major producer. But the talk involving Barrick remains speculative. Barrick, one of the world's largest gold producers, has often been named in rumored deals that have never materialized. AngloGold has long been seen as a suitor for Gold Fields,which last year had attemped to merge with Canada's Franco-Nevada Mining Corp. (T.FN) That merger was thwarted by South Africa's finance ministry, and the planned tie-up appears scrapped. But the ministry is taking another look at the proposal, which may provide a possibility for the merger to be resurrected. Shares of Gold Fields slipped 3.125 cents to $3.375 on the Nasdaq Stock Market Wednesday in 4 p.m. trading.

-Mark Heinzl, Dow Jones Newswires; 416-306-2014

Black Blade: I hope that this isn't true! If you have Gold Fields shares, register them in your own name, or transfer them to a Drip-Type account such as BuyandHold.com so you can vote the proxy to stop such a tragedy! If Barrick and Anglo puts their claws on unhedged Gold Fields, they will short the hell out of all production and further damage the gold industry and push gold down beyond recovery. These scumbags must be stopped! Also, write to Gold Fields institutional shareholders and work to convince them that this is a terrible idea! Maybe adopt a "poison pill" to prevent that kind of disaster would be a very good idea!


WAC (Wide Awake Club) (1/18/2001; 4:25:18MT - usagold.com msg#: 45828)
@ThaiGold Gold Tax Questions for European posters
We pay 1% on Gold bullion and 17.5% on Silver bullion.

ThaiGold (1/18/2001; 4:04:15MT - usagold.com msg#: 45827)
Gold Tax Questions for European posters
Attn: Pandagold; Holtzman; Others of Europe...
My questions concern the taxation upon an individual person
whenever he/she might purchase Gold or Silver coins/bullion
at their local European coin shops:

Is there a Sales-ax or VAT Value Added Tax they must pay.?.

And are they secondly, taxed every year afterwards on a
personal-belongings-property tax upon those coins/bullion.?.

If so, what are the various tax rates applicable.?.

I'm just wondering, to see if the taxes in Europe affect in any
way the demand for personal bullion and hence it's price there.

Thanks in Advance for any answers/comments.

ThaiGold@OperaMail.Com


Black Blade (1/18/2001; 2:45:52MT - usagold.com msg#: 45826)
Dodging Bullets - From Oil and Gas Journal
Are we out of the woods yet? Not entirely...

Winter gas storage
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
The American Gas Association said that US natural gas storage levels appear adequate for the rest of the winter. AGA said November and December 2000 were the coldest such months on record, according to the National Weather Service, resulting in higher gas bills for consumers. David Parker, AGA president and CEO, said, "Residential natural gas customers got hit with a double-whammy this winter: record cold weather in November and December, on top of nationwide increases in the wholesale price of each unit of gas."

Parker said because of the very cold weather the last 2 months, levels of gas in reserves were lower at the end
of December 2000 than at any comparable time during the 7 years the association has been tracking working gas
levels in underground storage. But he emphasized that storage levels appear to be adequate to meet remaining
winter needs. "Today, there is more natural gas held in underground storage -- 1.73 tcf -- than has ever been removed from storage during the remainder of any of the last five winter heating seasons," Parker said. Gas storage accounts for about 20% of the volume used in the winter heating season, from Nov. 1 through Mar. 31.

Higher prices
~~~~~~~~~~~~~~~~~~~~~~
Meanwhile, the US Energy Information Administration said consumers may pay 70% more for natural gas this winter. In its latest short-term energy outlook, EIA said, "Very large increases in heating-related demand appear to have materialized in November and December, resulting in a sharp reduction of gas available in storage to well below the previous low recorded by EIA. "The end-December 2000 estimated working gas storage level is approximately 10% below the previous low seen since 1973, which occurred in 1976. Continued strong demand (from normal weather) this winter would keep gas stocks at minimal levels for the remainder of the heating season and ensure strong injection-season demand next spring and summer. "We see average gas wellhead prices as averaging about $5.20/Mcf in 2001 (compared to an estimated $3.70 in 2000) and about $4.50/Mcf in 2002."

EIA said homeowners using distillate oil will pay about 40% more this winter, despite recent drops in crude oil prices. EIA said heating oil lower prices were offset by higher demand, particularly in November and December, both of which had 28% more heating degree-days in the Northeast in 2000 than they did in 1999. "While prices have eased some in recent weeks, the heating oil market is still relatively tight and subject to significant volatility. Still, it is worth noting that, despite very cold temperatures over the last 2 months, the heating oil market has held up
rather well."


Black Blade: We may have dodged a few bullets this winter, however, the winter season is not yet over and draw-downs will continue throughout the summer for NG-fired power generation. Power use will likely be high as people will continue to use air-conditioning and the so-called "New Economy" draws on ever increasing energy for high tech equipment and computers. Also note that every available drill rig is in use and there are no more, yet NG stores are lower. What does this portend for next winter? It should also be noted that these storage levels are based on national averages, and that regional stores and decline rates will vary - definition: some areas may yet run out of NG supplies.


Pandagold (1/18/2001; 2:43:22MT - usagold.com msg#: 45825)
Euro and gold
Watch for the Euro reaching dollar parity and FIRMING, then sit back and ride the GOLD WAVE. It will be just ripples at first, growing into bigger ones later - you know, the kind you can surf on.

Pandagold (1/18/2001; 2:37:19MT - usagold.com msg#: 45824)
Harry on Gold
As Harry also says (as so do I ) the media always shouts with some degree of jubilation when gold is being sold - and who sold it. But they are most silent about who is buying it. For every ounce sold, an ounce is bought -" they don't just push it over a cliff"

"Moscow says it'll not buy diamonds in 2000-2001 but instead to buy gold. GATA comment: "West selling gold as East buys it. They forget old motto: He who has the gold makes the rules."

H. Schultz



Black Blade (1/18/2001; 1:22:34MT - usagold.com msg#: 45823)
PGMs down in Europe, gold ends flat
http://biz.yahoo.com/rf/010117/l17265105.html

LONDON, Jan 17 (Reuters) - Gold managed to pick up from 16-month lows set early in the session, finding sustained physical support at the lower levels, traders said on Wednesday. The platinum group metals (PGMs) spiked briefly after comments from the head of state precious metals and gems repository Gokhran that the signing of export quotas for Russian PGMs would be delayed until February.

Gold ended the session around half a dollar firmer after dipping to fix in the morning at $263.10 a troy ounce -- the lowest fix since September 22, 1999. Traders said the market would remain under pressure and rangebound ahead of next Tuesday's Bank of England auction of 25 tonnes bullion, but physical demand was reasonable around the low $260s. ``Gold is finding sustained physical support...as indeed it should do at this time of year, but the speculative elements are playing the market from both sides and the bias remains downward in a narrow range ahead of next Tuesday,'' said Rhona O'Connell of Canaccord Capital. By the close, spot gold <XAU=was at $263.30/$263.80, unchanged from Tuesday's New York close.

Silver <XAG=was unaffected by gold's poor performance, ending at $4.73/$4.75 from $4.67/$4.69 at the New York close. The fix was up at 466.75 cents a troy ounce vs 460.50 cents. ``Silver is still holding up well. A little surprising bearing in mind the gold, but overall I think silver will run out of steam soon,'' said one trader.

In the PGMs, palladium <XPD=hit a session high of $1,030 bid, spending most of the day in negative territory amid profit taking. A brief price spike came after Gokhran official Valery Rudakov told Reuters export quotas had not yet been signed. ``To be honest, even though they (Russians) had said exports would resume in January, noone was going to believe them until the stuff (metal) actually arrived,'' said another dealer. ``So it's not really changed much, people are stockpiling as noone knows how long the disruption could last.'' Palladium was last quoted at $1,000.00/$1,040.00 from $1,020.00/$1,060.00. Platinum <XPT=followed palladium's moves and was last at $622.00/$629.00 from $629.60/$639.60.

Black Blade: Don't expect anything out of Russia. This is a long played scenario – Russia claims that it will ship PGMs. Reality – none shipped. Reality – Japanese TOCOM traders are extremely gullible and buy against all hope. Reality – PGM stockpiles are depleted. Also, rumor is that our good ole friend Andy Smith (Gold Bear) of Mitsui Metals is talking down palladium now. He is losing credibility fast in the investment community with such outrageous drivel. Shorts could easily get horrifically whip-sawed if not careful, especially now.




Black Blade (1/18/2001; 1:14:07MT - usagold.com msg#: 45822)
Interesting Harry Schultz Article
http://www.gold-eagle.com/gold_digest_01/schultz011901.html
So, reading this article, can I assume that there will emerge a US Dollar "carry-trade?" Hmmm...

Black Blade (1/18/2001; 0:47:39MT - usagold.com msg#: 45821)
OPEC cuts but oil and distillates drop anyway
Wednesday January 17 6:18 PM ET

Dow Jones News Service, Via The Associated Press
NEW YORK (Dow Jones News) - Crude futures fell sharply at the New York Mercantile Exchange Wednesday in the market's initial reaction to a decision by the Organization of Petroleum Exporting Countries to cut output by 1.5 million barrels a day from Feb. 1. Nearby crude futures plunged more than $1 in intraday trading, however, traders hedging their bets at the close amid thin volume trimmed about half the losses of crude and heating oil futures. February's crude contract finished the day at $29.60 per barrel, down 69 cents. Heating oil for February delivery declined 2.59 cents to 81.52 cents a gallon.

After markets closed, the American Petroleum Institute reported that U.S. inventories of crude grew by 2 million barrels in the past week, while reserves of distillate fuel, which includes heating oil and diesel fuel, contracted by more than 3 million barrels. OPEC Secretary-general Ali Rodriguez said the group could cut another 1 million barrels a day at its next meeting March 16 if the market remains weak. Although prices popped briefly on the news, since many anticipated the next cut at 500,000 barrel a day, prices fell steadily through the session. The specter of Iraq's exports returning to normal levels weighs heavily on the petroleum complex, analysts said. Analysts said the OPEC cut was effectively a wash as Iraq's exports resume. Iraq's ambassador to Vienna attended the OPEC meeting, and said his country will be producing fully by Feb. 1 - about 2 million barrels a day in exports and 800,000 a day for domestic use. OPEC President Chekib Khelil has said that output cuts would take into account Iraq's disruption of exports. The cartel would adjust production to reflect changes in Iraqi exports over time, Khelil said.

A slowing global economy are expected to continue pressuring crude and refined products futures. Warmer temperatures for most of January have kept heating oil under steady pressure. Stocks currently stand 8.5 million barrels below year ago levels. U.S. reserves of distillate fuel, which include both heating oil and diesel fuel, dropped to 115 million barrels from 118.2 a week earlier, API reported. A year ago, there were 123 million barrels of distillate fuel on hand. Crude oil inventories in the United States grew to 290.4 million barrels for the week ended Jan. 12, compared with 288.5 million barrels a week ago and 294.6 million barrels a year ago. Motor gasoline inventories, API said, declined by roughly 500,000 barrels to 197.9 million barrels, compared with year-ago levels of 196.6 million barrels. February unleaded gasoline prices declined 2 cents Wednesday to 85.79 cents a gallon. Natural gas futures were down $1.19 to $6.91 per 1,000 cubic feet. In London, Brent crude from the North Sea sank 73 cents to $24.79 per barrel.

Black Blade: Winter's not over yet, and NG storage drawdown continues. Meanwhile, energy crisis continues to worsen. The economy contionues to slide into recession. "Interesting Times" lie ahead.



Black Blade (1/18/2001; 0:39:38MT - usagold.com msg#: 45820)
Davis Declares State of Emergency Over Electricity
http://dailynews.yahoo.com/h/kpix/20010117/lo/davis_declares_state_of_emergency_over_electricity_1.html

By KPIX - BCN
Gov. Gray Davis tonight declared a state of emergency in the state over a growing electricity crisis that caused rolling blackouts in Northern California for part of the day today. "It's our obligation to step in," he said in a brief statement. Davis said he was calling a special legislative session tomorrow to ask that funds be set aside on an emergency basis to "keep the lights on" for the next week to 10 days. He said he had also conducted a long conference call tonight with four major power generators, who promised to cooperate with his plan if legislative action is taken by 12:01 p.m. tomorrow. Davis said officials would be working through the night to close a power gap currently estimated at 14,000 megawatts for tomorrow to avert another day of uncertainty in California's homes and businesses.

Black Blade: Now why would he do that? ;-)


Black Blade (1/18/2001; 0:37:24MT - usagold.com msg#: 45819)
Cost of Living in Bay Area on The Rise
http://dailynews.yahoo.com/h/kpix/20010117/lo/cost_of_living_in_bay_area_on_the_rise_1.html
By KPIX - BCN
The U.S. Department of Labor reports the overall cost of living in the Bay area increased more than 5 percent last year, according to the latest consumer price index statistics. Leading the way, according to the department's Bureau of Labor Statistics, was the cost of housing, which rose 7.5 percent in 2000. Rent increased nearly 9 percent over the last year, and increased more than 2 percent over the final three months. Also contributing to higher housing costs in the Bay area was the price of natural gas, which surged 13 percent in December and gained more than 60 percent on the year. Although gasoline prices dropped more than 5 percent since October, statistics show that gas prices gained more than 20 percent for the year. The price of groceries increased more than 4 percent during 2000, and alcoholic beverages showed a rise of more than 5 percent. The Bureau of Labor Statistics says goods and services that would have cost $100 in the early 1980s, cost consumers $184 in December 2000.

Black Blade: I guess that they didn't get the news – inflation has been tamed! Look at the CPI and PPI numbers. Why heck – even Larry Kudlow says that inflation is over because gold is lower. Who are these guys kidding – inflation is "benign." ------- In a pigs eye!



Black Blade (1/18/2001; 0:32:12MT - usagold.com msg#: 45818)
Richardson again orders power suppliers into Calif
http://biz.yahoo.com/rf/010117/wbt022931.html

WASHINGTON, Jan 17 (Reuters) - U.S. Energy Secretary Bill Richardson extended on Wednesday afternoon an emergency order requiring firms to sell electricity to California's major utilities, but will wait until Thursday to decide whether a similar order should be issued for natural gas suppliers, an Energy Department spokesman told Reuters. Out-of-state suppliers have been reluctant to do business with California electric utilities teetering on the edge of bankruptcy, fearing the utilities will not be able to pay for their power. Richardson extended until midnight on Jan. 23 a prior order forcing firms to continue supply electricity to the utilities. He said the Energy Department was prepared to enforce terms of the order against firms that fail to supply surplus power to the California market.
During a meeting earlier in the day, Richardson and his designated successor, former Michigan Senator Spencer Abraham, agreed to extend the power order through the incoming Bush administration, which takes office this weekend. Separately, Richardson will decide on Thursday whether to issue a first-time order requiring natural gas companies to supply gas to the California market. California Governor Gray Davis made such a request over the weekend after Pacific Gas and Electric (NYSE:PCG) said more than a dozen of its natural gas suppliers refused to sell the utility gas on credit.

Black Blade: From what I hear, the out-of-state suppliers have given the lame-duck Sec. Of Energy the proverbial "finger." With 3 days of employment left, the industry gives him as much significance as the ME oil producers did this week. Bill Richardson will be nothing more than a fly-speck in history.




ThaiGold (1/18/2001; 0:28:05MT - usagold.com msg#: 45817)
Silver: Change for the Better
... A discussion for newbies... A review for Oldies...
All:

Many GoldBugs feel somewhat disinclined to accumulate Silver, prefering Gold
as the Better. Better preserver of wealth, in times of economic and social
distress. Y2K. Y2K1. HyperInflation. DisInfaltion. DeFlation. Things like that.
Did I mention StagFlation.?. Whatever.

Gold is prefered because (they always say) it's more compact. More dense. More
wealth-per-ounce. Easier to store. Hide Etc. Historically that's always been
true and will certainly continue to be true. Truth is Truth.

Platinum (and even now, Palladium) could be said to be even more-so. Compact.
And at such soaring prices, toss in CapGains as a plus. But there is no historical
precedent for Platinum/Palladium. Why.?. Because those two heavy-metals weren't
even discovered until the 1940's. Too late in history to have ever been used for
coinage and trade, by anyone, anywhere, anytime.

Today's saoring prices of Platinum-group metals (Platinum/Palladium/Rhodium) are
not likely to exceed Gold's price in the collapse of an economic/industrial system.
Because their primary use in is industry. As technical metals, and catalysts.
If the worldwide economies tank, there will be little demand for either. So be
cautious if you plan or think of using those as preservers of wealth. You may
get blindsided by their price collapse. A few years ago, Palladium was only worth
about 1/3rd the price of Gold. It could happen (quickly) again. It's now triple the
price of Gold. Do not be disappointed to see it fall during bad times.

But what of Silver.?. Bulky Clunky Silver. There's ample history of it being the
common coinage of preference by the little guys, in trade as well as wealth
preservation. It was convenient because of its "smaller denomination". Most goods
and services are nowhere near the price of an oz of Gold. But were often easily
priced in Silver, in the marketplaces of the world.

And as I see it, the future holds promise for similar useage. Worldwide. When the
people finally loose faith in all their fiat paper currencies. It will come to
pass and is inevitable. Be patient.

Gold *is* Better. But when you "spend" your Gold-coin, think about what you will
be pleased to accept "in change"... Silver ... "Change" for the "Better".

ThaiGold@OperaMail.Com


Black Blade (1/18/2001; 0:26:24MT - usagold.com msg#: 45816)
PG&E Becomes Second Calif. Utility to Default
http://biz.yahoo.com/rb/010117/es.html

By Jonathan Stempel
NEW YORK (Reuters) - PG&E Corp. (NYSE: PCG) said on Wednesday that it and its Pacific Gas and Electric Co. unit defaulted on $76 million of commercial paper, and that the state's largest utility will be unable to trade with California's major power distributor as of Friday. PG&E and Pacific Gas and Electric Co. also said they are in default under some of their credit lines, and that their lenders refused to allow them on Tuesday from drawing on two of those lines. The California Power Exchange arranges the distribution of power in that state. The announcement, in mirror filings with the Securities and Exchange Commission, came on a day the California Independent System Operator, which runs most of the state's transmission grid, enacted rolling blackouts throughout the state in a desperate bid to avoid overloading the grid. It also came one day after Southern California Edison, the state's No. 2 utility, said it defaulted on $596 million of payments to bondholders and other creditors. The default by San Francisco-based PG&E and Pacific G&E marks just the third time in the last six years that a U.S. company has defaulted on commercial paper, or short-term debt. Pacific G&E and SoCal Edison, a unit of Rosemead, Calif.-based Edison International (NYSE:EIX), have run up about $12 billion of debt because a rate freeze keeps them from passing on their skyrocketing wholesale power costs to consumers. Pacific G&E serves about 13 million customers in northern and central California, while SoCal Edison, which is based near Los Angeles, serves about 11 million Californians.

PG&E shares closed Wednesday on the New York Stock Exchange at $9-5/8, down 1-5/16, or 12 percent. Shares of Edison International closed on the Big Board at $8-7/8, down 11/16, or 7.2 percent. Lenders rarely default on commercial paper because of its short-term nature, and because they often can't issue it in the first place if their credit quality is not high. A unit of builder Armstrong Holdings Inc. (NYSE:ACK) defaulted on commercial paper in November, while Mercury Finance Co. defaulted on some paper in January 1997.

CREDIT LINE DEFAULTS, TRADING PRIVILEGES SUSPENDED

In its filing, PG&E also said it is in default of a $436 million short-term credit line and $500 million long-term credit line. PG&E said its lenders are entitled to accelerate its repayment of about $434 million of outstanding debt under the $500 million credit line. Pacific G&E, meanwhile, said it is in default of an $850 million credit line. Many of the defaults were triggered by cuts in the last two days of PG&E's and Pacific G&E's bond ratings to low junk status by credit rating agencies Moody's Investors Service and Standard & Poor's. Separately, Pacific G&E said the California Power Exchange plans to suspend its trading privileges as of Friday. It said the rating downgrades required it to post collateral, and it cannot. Pacific G&E said it owes $583 million to this entity on February 1. PG&E said it was not immediately available for comment.

DOWNGRADES

PG&E said it defaulted on $43 million of commercial paper as of Wednesday, while Pacific G&E defaulted on $33 million. The defaults came after their lenders on Tuesday blocked them from drawing on their credit lines. The parent said it has cash reserves of $347 million, while Pacific G&E has reserves of $700 million. The parent said Pacific G&E has no borrowings under the defaulted $850 million credit line, which is now being fully used as backup for the unit's commercial paper. It said Pacific G&E has $873 million of commercial paper outstanding, of which $437 million will mature by January 31. Pacific G&E also has a $1 billion credit line, but as of January 16 has drawn down $938 million under that line to pay commercial paper, PG&E said. PG&E said its $436 million credit line backs up its own commercial. PG&E said it has $501 million of commercial paper outstanding, of which $263 million will mature by January 31. Separately, PG&E said Pacific G&E said it owes $420 million to various power generators in early February, and $410 million in early March. The utility is seeking to avoid having to pay for power delivered in January until April 1. Moody's on Tuesday its bond ratings for Pacific G&E and PG&E on Wednesday to a respective ``Caa2'' and ``Caa3'' on Wednesday, and its ratings for their commercial paper to ``Not Prime.'' S&P on Tuesday cut its equivalent ratings to ``CC'' and ``C.''

Black Blade: So the "Cascade Effect" begins. Two defaults in two days. The Grasshoppers get a tiny taste of what is to come. It will take years to overcome this crisis, and still the Grasshoppers refuse to build in their backyards. Shove the burden on others in other states. They are about to undergo a bit of Hydro-Carbon withdrawal as out of state producers refuse to subsidize their lifestyles. The world's seventh largest economy is about to have the wonderful "liberal" experience of 3rd world living.


TEX (1/18/2001; 0:16:24MT - usagold.com msg#: 45815)
Gold Price - 80's Retro
The POG on this day (January 18) was $1,000/oz. How did I know that? Of all places, check out www.80s.com !!!



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