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ARCHIVED DISCUSSION FROM 8/19/2000 All times are U.S. Mountain Time (Yesterday's Discussion.) beesting (08/19/00; 22:59:47MT - usagold.com msg#: 35208) Trail Guide FOA/ANOTHER and all, Please allow me to share some simple thoughts. For many many months now many reading this forum have been convinced by the overwhelming evidence presented that at some point in time the physical Gold market would separate from the "Paper" Gold market(LBMA COMEX etc.).We all may have been looking in the wrong direction! We have assumed the separation would take place somewhere in Europe or possibly the Mid-East, caused by a varity of reasons, including introduction of the EURO, and or not enough physical Gold to cover paper Gold in the event of a big upswing in the "Spot" price, and or devaluation of the U.S. dollar, all good reasons to this point in time.I submit the separation may be occurring as I write this. Where you ask?,,,,,,Answer CHINA!!!Thanks to the many up to the date postings here by many,especially Sirs Black Blade and TownCrier, we have learned that China is importing Gold directly from South Africa. First delivery was this week.(2 Tonnes)...No LBMA, no COMEX involved!We have also learned the average Chinese Citizen is allowed or soon to be allowed to purchase Gold in small increments of one gram or more. Given price on the day of announcement was U.S. $9.80 per gram(affordable even to the little guys).We have also learned the Bank for International Settlements recently opened a second office in Hong Kong, now part of mainland China,but why?Now we in the Western World lets think about this. I have never been to China, so I may be all "wet" here, my brother has been to mainland China about 12 years ago.If, as we have been told, China is a country where almost everyone works for "The Government", and in return the Government provides"Free",food,housing,medical'schooling,clothing and all essential needs for life.A $.25 cent per day wage would be considered, Extra Spending Money. So, with that in mind, and with well over 1 billion in population wouldn't it be possible for many to start saving their small amount of "money" to buy for themselves something no one in China has been allowed to do for many many years.....GOLD!The Worlds First "Free" Market for Gold may be already here and we Goldhearts didn't even realize it(of course importing exporting Gold from China may still be a long way off) Something to sleep on! Good Night All.....beesting. The Invisible Hand (08/19/00; 22:21:50MT - usagold.com msg#: 35207) Al's Big Stick msg#: 35180 "So all in all I agree with your ultimate goal, but not until we use our big stick to keep our enemies away and ..."Others used this Forum recently to discuss Nazism. Let me be clear, I DON'T AGREE WITH YOUR ULTIMATE GOAL. TownCrier (08/19/00; 21:29:33MT - usagold.com msg#: 35206) Looks like all my rowdy friends are here tonight http://www.dawn.com/2000/08/19/ebr6.htm Time to kick back with a cold one in good company, but first, here is a brief article gleened from our new live news feed over at the Daily Market Report Page. (Check it out, FOA, I've been busy while you were doing whatever it was that you were doing.)HEADLINE: Gold up on fall in rupee valueHaji Farooq, the Chairman of Bullion Markets Association in Karachi said, the "Rupee was becoming weaker each day and as a result we have to pay more for gold in international market, besides the market itself is tight....Gold rate may go further high over next few days until the Rupee gets stable."Not the best English, to be sure, but he made the point clear enough as the local bullion price was pushed higher in the face of rapid rupee depreciation against the dollar. Al Fulchino (08/19/00; 21:13:16MT - usagold.com msg#: 35205) Black Blade,CoBra(too),Peter A.,ET The wind is blowing and I see FOA is approaching so let me clear my desk here.Black Blade (08/18/00; 23:07:18MT - usagold.com msg#: 35175)Will the Real Alan Greenspan Please Stand Up?Me: First of all, you and I don't ever interact here, but I wish you to know that I find your comments and updates from the various fronts very interesting. . Thank you. For what time an individual has is precious.As far as your article goes, I have often wondered if Greenspan has just learned that being on the playing field is what he wants. Perhaps he has learned that if he is too ideological or just plain principled regarding gold, he is is finished. Perhaps he does believe in a gold standard, but feels he can "duplicate" it with the Fed's efforts and at the same time appease those in office that keep him in office. I don't know.CoBra(too) (08/19/00; 06:06:19MT - usagold.com msg#: 35177)Regards to you dear fellow. I hope your swim was enjoyable. I find that almost nothing about the outdoors is as wonderful as being in or around the water.In reference to your thoughts: I still think tariffs have a place. In simple terms (since I am no technocrat), we prefer to keep our children protected from outside influences until we know the outsiders’ heart and mind. Yes? In a similar vein we must keep our country free from people who do not trade fairly, until…..until we see and verify what is in their hearts. I am willing to be the country that makes the first move in almost every occasion, but I am not willing to wait without results.Short story. When I was very young, very young, my brother, a cousin or two and myself would sometimes find ourselves inside during a rainy day. Most of the time we were raising hell, but once in awhile we would play store. Remember I said we were very young <smile> Anyway, the idea was that we each would set up a store and offer things for sale that we owned. I had made my mind up that what I wanted out of this was money, not their goods. So I would insist that they all shop me first. Buy from me. Pay me. Then when it was my turn, I would buy little or nothing. Sometimes if I sensed that they were not happy, I would buy something to keep them in the game. Then they would shop me some more etc etc. In the end I would succeed in having the most money. That was my goal. Was it principled? No. Was I selfish? Yes. It took me time to understand fairness. And I paid many a price for being selfish. Nowadays when I play a game, like tennis with the kids, I do not try to win. I go for what challenges them. And in the end I get more challenging volleys myself. We are both winners. Anyway to the point. I was not a free trader when I was young. And if I hadn't been the strongest/oldest, someone who was a better person than I would have called my bluff. Thus I say, since, we the US, are the strongest and about the most fair on the globe, we should use what muscle we have, while we can and teach fairness.Peter Asher, that was a neat story on how you came upon your property and subsequent life as a timber owner.ET (08/19/00; 11:04:36MT - usagold.com msg#: 35183)It would seem that he believes religious beliefs have no place in the study of economics. I most certainly agree.It would seem his 'utopia' is freedom for all. I agree.Me: If I understand yourself and von Mises, you do not believe in religious association in economics, but you do believe in correct and incorrect economic ideas. Am I right? If so, then what motive does a person have to abide in your philosphy if they find it easier to be on welfare, or to steal wealth? Why should China, Japan, or any other nation trade by von Mises rule, if they are only concerned with keeping their own status quo or powere structure? They are not interested in correct ideas. Again I agree with yours and von Mises stated purpose, I just think you all discount the obvious. You can't make everyone believe you because you "reason" with them. Twisting an arm or two works too! And sometimes we have to see trading partners for what they are. Not very nice people. Show them what we have to offer, ask for trade between two nations, give them a chance. If it works, we are brothers, if they refuse to play fair, we put up barriers, like a parent takes his son's car keys away for the weekend.Best to you. Gold Trail Update (08/19/00; 20:40:50MDT - Msg ID:35204) The Gold Trail Discussion has been Updated The Gold Trail Discussion has been updated. Click on the link to read the latest updates. Cavan Man (08/19/00; 20:36:47MT - usagold.com msg#: 35203) Black Blade Apolofies to forum.... SHARED Cavan Man (08/19/00; 20:35:46MT - usagold.com msg#: 35202) Black Blade Aside: Sahred a cab ride with an Indian gent last week. We talked of GOLD! He told me that in India, 14K gold jewelry is referred to as "steel". Only 22-24K is the real thing. Aristotle (08/19/00; 20:19:38MT - usagold.com msg#: 35201) A lesson for our new Student To learn something new about something that is already very familiar, it often helps to look at it in a fresh new way that allows you to overcome your preconceived notions about the item under scrutiny. Let's give it a try.Because our modern dollar is basically just a unit of account (American style) for naming the prices of things and by which we are accustomed to evaluating the item's value, whereas other countries use their own units of account (euros, yen, pesos, etc.), to make this as broad as possible, I will use the term "currency unit" instead of "dollar" in this exercise. That will be the first trick to help you see familiar things in a different light.If you are told that an ounce of Gold is priced at 275 currency units, what do you know about the VALUE of Gold?If you are told that, due to unfolding economic events, an ounce of Gold has now reached a new price of 10,000 currency units, do you now know anything new about the value of Gold?My young friend, Gold is Gold, isn't it? Without anything else to consider, you will probably conclude that those prices reveal more about the value of the currency unit than they do about the value of Gold because the concept of a "currency unit" is not as familiar to us as is the concept of an ounce of Gold.Having thought about this a bit, which "concept" would you rather have occupying time and space in your piggy bank--a Gold coin, or a symbolically printed currency unit?Because our first exercise showed us that prices really only reveal to us the value of the currency unit and not the value of the item being priced, let's take a different look...huh? You want another example of this? OK. This one is simple. Let's say you are hungry so you swing through some really cool cafe--complete with a good jukebox and pretty waitresses--for a hamburger, fries, and a Coke. In satisfying your need for nourishment, this meal has a certain real value for you that might seem tough to quantify all by itself, but nonetheless, after eating it, that real value really doesn't change just because your bill arrives. When you look at the bill, you might discover that the price to you was either 5 currency units, or 700 currency units, or FREE because your buddy decided to pay for your meal. In a nutshell, higher or lower prices for a single item does not mean that thing has a higher or lower value, it only means that the currency unit as a measuring device is smaller or larger, like an inch or a mile. Got it?OK, back to the next point, which was to look at how we can evaluate "value" now that our examples have shown us that "price" alone only tells us about the size of the currency unit. For that, we have to evaluate real things against other real things and consider their use in meeting our specific needs. With an entire population of productive people all competing and interacting throuch economic exchange for the various limited items available at any moment in time to satisfy their wants and needs, we have formed as a result a very impressive array of relative values for all things that are in constant adjustment as the elements of supply and demand undergo change in location and through time. As such, in America today, it is not unreasonable to say that one ounce of Gold and 300 loaves of bread could be evenly exchanged. As a contrast with the currency unit pricing example, would you say the value of Gold has changed if some day it could be exchanged for 6,000 loaves of bread?Right now, a great number of Gold owners are unwittingly sharing only the same small amount of Gold, thanks to the efficiencies of the bullion banking system. Gold that was originally put on deposit by public and private investors to earn an interest rate return (just like your own savings account) has been lent to others who pass it along according to their needs. Much of this Gold might find itself redeposited by the new owner into his own account, only to be lent out, again and again. Obviously, there is not enough Gold in the system at any given time to be returned to all of the depositors. If you have been a good student of history, you will recognize the inevitable outcome of this is not unlike what happened in America in 1933 and then to the world in 1971. But there is one huge difference.In 1933, as the U.S. Gold banking system was overextended and failed, the Gold was removed from the domestic dollar to save the remaining international Gold system "for the greater good of mankind"--or so it was thought. In 1971, as the international Gold system was overextended and failed, the Gold was removed from all currencies to preserve a resulting nongold-currency banking system in general, again, "for the greater good of mankind"--or so it was thought; after which time Gold banking was eventurally continued in a PURE sense using ounces, grams, kilograms, and tonnes. This is where we are today. When it fails, and the Gold can't be delivered against calls for the deposits on account, where can we possibly go from there? We can't possibly do something like "taking the Gold out of the ounce," nor, in turn, would there be any meaningful reason to preserve a Gold banking system of "Gold" loan contracts that no longer had any Gold behind the numbers--because at that point, you are simply using a non-national equivalent to what modern currencies have become.Jelle Zijlstra, who you'll remember from your HoF reading, was certainly premature in his ruminations when referring to Gold he said, "When we left the [British] pound, we could go to the dollar. But where could we go from the dollar? To the moon?" As you can see, Gold banking went back to honest weights and measures, BUT, that still DIDN'T solve the problem inherent in the general banking system--which is lending! Truly, when it (i.e., bullion banking as largely represented by the LBMA) breaks at this point, there will be no place for Gold to go but to a complete exodus from the banking system to be used as an unlent reserve asset and savings vehicle. At this point its value will reach the moon because, without the magic of banking, the existing small supply will no longer be able to satisfy the existing (and growing) large demand.I'm very glad to see that FOA has returned. I encourage you to hang on every word he says, because unlike me, he REALLY knows what he's talking about and what the score is. And to FOA: Welcome back, ol' friend.Gold. Get you some. ---Aristotle Black Blade (08/19/00; 19:41:58MT - usagold.com msg#: 35200) FOA Welcome back! I expect to be pondering your writings shortly. Probably through an alcohol induced fog, then later as I comb through your posts! Until then I'm off till Monday. Cheers! Black Blade (08/19/00; 19:37:40MT - usagold.com msg#: 35199) These Guys Should Look Closely at Indonesia, Thailand, Pakistan, etc. in a Crisis, Gold Rules! http://www.channelnewsasia.com/articles/2000/08/19/economic34674.htm Gold loses its shine for Singaporean consumers By Evelyn Thow Demand for gold has been on the rise in Southeast Asia except in two markets, Indonesia and Singapore.The World Gold Council says the weak rupiah is to blame for weak sales in Indonesia but no reason was given for why gold is not doing well in Singapore despite the strong economic recovery. Our news team found out why gold appears to have lost its shine among Singapore consumers. Since the 1997 economic crisis, the jewellery industry has been doing badly. Whether it was gold, silver, gems or diamonds, these luxury goods were the first to be affected by the crisis. This year, despite booming retail sales and growth in sales of luxury goods like cars, the jewellery industry has not done well especially gold. Imports were 31 percent lower compared to last year, reflecting the decline in demand in the region as a whole.President of Singapore Jewellers Association, Ho Nai Chuen says the industry has been affected by changing consumer behaviour. Fewer customers buy large pieces of gold jewellery and more are buying lighter pieces for gifts for weddings and birthdays. Jewellers need to target the younger market and work on lighter more fashionable designs. But jewellers need to create an awareness among the youth that yellow gold has more intrinsic value as it can be traded in for cash during periods of crisis."Traditionally goldsmith practise trade in gold, that has been the practice for many years. For time to time, the younger generation will see the value is yellow gold because if you buy a piece of jewellery and it become outdated you want to trade in, yellow gold is the only possibility," said Mr Ho. Currently white gold jewellery is more popular although it has little value. He predicts its unlikely that yellow gold will regain its popularity in the next two years as it takes time to build awareness about the value of yellow gold. Black Blade (08/19/00; 19:31:12MT - usagold.com msg#: 35198) Asian Contagion Repeat, He Who Has The Gold Rules! http://www.dawn.com/2000/08/19/ebr6.htm Gold up on fall in rupee value KARACHI, Aug 18: Fast depreciation in Rupee value against the dollar and tight position in international bullion market pushed gold prices up in local market, traders said on Friday. Gold tezabi was sold at Rs5096 per 10 grams against Rs5070 on Thursday while Wednesday's rate was Rs5035. However, silver rate remained unchanged. "Rupee was becoming weaker each day and as a result we have to pay more for gold in international market, besides the market itself is tight," said the Chairman of Bullion Markets Association, Haji Farooq here. "Gold rate may go further high over next few days until the Rupee gets stable," he added.-APP Black Blade (08/19/00; 19:17:41MT - usagold.com msg#: 35197) @ Canuck I just had a thought that you may have confused "rolling futures" with a strategy I have of "rolling stocks" that I may have briefly touched on a while back. I tend to buy cheaply into beaten up equities with strong balance sheets and usually within the cyclicals. On a sustained rise, I sit back and wait for a slight pull-back of say 15% to 20% for example. Then I sell a potion of that position to cover the original total cost basis and what may be necessary to cover the capital gains taxes. Usually I end up with what I call my "free-ride" shares (even though I have taxes on any gains when I sell the free-ride shares). This is a strategy that I use, and I tend to call it rolling-over shares. I recently did this with some Stillwater Mining (SWC) shares. I now have only a nominal position in SWC with an "effective" cost basis less than $5.00/share (though the actual cost basis is much higher). However, I have also built up a rather nice position in Harmony Gold (HGMCY) using this strategy with an "effective" cost basis of zero (free-bees). I always try to recover my principal as my "play money" and sit on the free-bees forever if necessary. I do use some of the proceeds to purchase physical Gold, Silver, rarely Platinum, and occasionally numismatic gold coin. I am not making any recommendations here or giving market advice. I have had my share of losers as well. I was just thinking that you may have confused this stock trading scheme with an options trading scheme mentioned by someone else. BTW, I have shares in many companies, not just mining and petroleum. Good luck!Black Blade HI - HAT (08/19/00; 18:58:32MT - usagold.com msg#: 35196) FOA Have pent up thirst out here on the Trail.Good that some water is coming. Cavan Man (08/19/00; 18:56:43MT - usagold.com msg#: 35195) Yes FOA...... ......welcome home to this fine forum. While you were away I acquired a set of Hogan Apex woods (30 years old) and had them re-finished with new shafts. They look like they are "right out of the box." There is value in bringing back to life something that is thirty (or more) years old yes?As I settle into my accustomed role as poor Wamba "the fool" (please read some Walter Scott-Ivanhoe), I look forward to resuming the "strenuous life" along your trail.Very truly yours.....CM Black Blade (08/19/00; 18:55:24MT - usagold.com msg#: 35194) @Canuck msg. 35181 http://www.e-analytics.com/fued8.htm Canuck, the link above is a brief definition and fairly straight forward. Although I think you may have confused me with another poster, perhaps Richard640 who posts here and on GE. He seems to be into the options game. However, I am more into playing with equities and hard assets. If he is reading this, or one of the GE forum participants at GE can get his attention, he may be able to post here and give you a better feel for rolling futures, and other strategies. As far as backwardation is concerned, it is a relatively rare event as you surmised, where the short term demand is stronger than the longer term demand as seen the current price. The shortest term futures contract is priced higher than the longer term contracts. This has happened for several months with the PGM metals contracts as I have been reporting on here at USAGOLD. The PGM markets were in confused state as traders had really expected the Russians to begin shipping PGM metals to market. As supplies dwindled and the metals were nonexistent, the spot price exploded, even though futures prices were somewhat lower. The same was evident in the PGM lease rates. Recently, we saw the same thing happen in oil for much the same reason. There was a gas crunch in the middle of the so-called driving season and the people wanted to gas-n-go. They didn't want excuses, they wanted gas, and they wanted it now, at any price. Granted, there were a few other reasons for the higher price as well, such as a fairly new tax, new EPA and state mandated cleaner burning fuels with expensive additives, and a broken pipeline thrown in for good measure. Never-the-less, the short term oil and gas prices were higher than the longer term futures prices (backwardation). Contango is simply the reverse, where longer term contracts are priced higher.In short (no pun intended), The theory of backwardation is based on the idea that short hedging is more predominant than long hedging. The opposite situation, an upward bias in futures, is referred to as contango. Contango is in effect the risk premium assigned to a contract that is further out (longer term), since the future is uncertain.As far as the inverted yield curve is concerned, I suppose you could look at it as backwardation. The inverted yield curve signals that demand will soon slow down or that the available supply ill soon be higher. The only problem here is that the longer term 30 year bonds are being repurchased by the treasury. Therefore, the price of the 30 year Treasury is rising while the yield falls. The inversion began last January when 10 year Treasury yields surpassed the 30 year yields. Now, even the 2 year yields surpass the 30 year yields. Inverted yields have usually been a prelude to recession. Even though I believe that a recession is very likely in the not to distant future, I am unsure about the validity of the inverted yield curve under these current circumstances where the government's repurchasing of the longer term Treasuries are driving the price up and yield down. It seems that this could be a somewhat "artificial" inversion (IMO). However, the big-picture of higher petroleum costs and rising inflation (in spite of bogus PPI and CPI numbers) all point to a coming recession and the price increases must show up in goods and services, or profit margins will be squeezed (diminishing returns), all which likely will lead to recession. As you are probably aware, I am in the exploration, mining, and petroleum business. So my background and contacts throughout the industry from the board room and upper management to field hands provide some unique perspectives to how this end of the market operates. We have been through several cycles like this through the last few decades, and the lesson is never learned by the investment community. The world truly does run on oil. We have a saying, "If it isn't grown, it has to be mined". Just look at the world around you and all those things that make your life that much more comfortable and productive. Anyway, here is the post from the provided link, hope this helps. Normal Backwardation and Contango This is part of a larger Futures and Commodities site provided by Equity Analytics, Ltd. Under the theory of normal backwardation, futures prices will tend to rise over the life of a contract because hedgers tend to be short the futures market. Hedgers tend to be short the futures contract as insurance against their cash position. The hedgers will pay the speculators a return to hold long positions in order to offset their risk. This is known as normal backwardation. A market is considered to be in backwardation when the cash price exceeds the future price or a nearby futures price is greater than a more distant futures price. If the reverse is true and hedgers are long futures contracts, the futures contract price would decline over its life. This situation is known as contango. For there to be normal backwardation, speculators must be long futures contracts. Only in this manner will the futures price continue to rise as more speculators need to be compensated for their risk exposure. Conversely, for there to be contango, speculators must be net short futures contracts. Only in this manner will the futures price continue to decline over its life for the speculator to be rewarded for his exposed risk. Keep in mind that most hedgers are generally short futures contracts. They are long the cash or spot market. However, according to 'Net Hedging Hypothesis', the net position of the hedgers may change over the life of the contract. As the contract begins to trade hedgers are short positions. Hedgers expect that the futures price will rise. Presently, they believe that the price is too low. According to this theory, the price of the contract will rise and hedgers will become long the contract. If this happens, speculators will become short. Therefore, the price of the contract must decline in order for the speculators to be rewarded for their risk exposure. Net Hedging Hypothesis might not seem conceivable on the surface. However, consider the price of gold and jewelry manufacturers. Initially, the gold producers might be short gold futures. However, jewelry manufacturers might be long gold futures. Both parties are trying to protect their interests. The gold producers want to lock in their prices and the jewelry manufacturers want to lock in their costs. Assume the gold mining companies hedge first. This leaves the gold mining companies net short. Assume the jewelry manufacturers hedge second. They are now net long. Both positions, the gold mining companies and the jewelry manufacturers combined, bring both sides net positions close to equal. As both sides net position becomes equal, taken as a whole, both sides are neither long nor short. If the jewelry manufacturers continue to hedge long, the long hedgers will be greater than the short hedgers. Should this scenario unfold, the price of the futures contract must be greater than the expected future spot price. Otherwise the speculators will not be compensated for their risk exposure. Mr Gresham (08/19/00; 18:22:25MT - usagold.com msg#: 35193) FOA Time to re-read the FOA chronicles from before on the Trail. I find I understand more, and realize that I've changed from the last reading, each time I do.Welcome Home, Friend Of All. Gold Trail Update (08/19/00; 17:29:00MDT - Msg ID:35192) The Gold Trail Discussion has been Updated The Gold Trail Discussion has been updated. Click on the link to read the latest updates. FOA (08/19/00; 17:23:02MT - usagold.com msg#: 35191) POSTING LATER Hello Again Everyone! Yes, I'm still here. Sorry I haven't been able to write anything, but am just now getting back to normal. Thanks to everyone that welcomed me back after my post of a week ago. Michael, thanks for your private note then. Will be testing my code for Gold Trail in a minute and hope to send in something later (few hours?). Oh "Yes", we have a lot to offer over the next weeks and months. FOA/ Your Trail Guide Al Fulchino (08/19/00; 16:54:22MT - usagold.com msg#: 35190) ET You wrote a lot that I would like to respond to but I have to make this short, so I can sneak in a swim again before we go out to eat. So here goes: I wrote:"Remember history also shows that their are bad people in theworld and you must always be ready to protect yourself against them."You responded:I would say the world is full of bad ideas, not bad people. I'm much more concerned with bad ideas.Me: Hope I pasted that correctly. Anyways, bad people who choose to avoid what we all call conscience do exist. They utilize rationalizations and bad ideas to further their selfish goals. People of all kinds make choices daily. What can we call a person who knowingly chooses what is wrong? I call him a bad person. What do we call a weak person who follows bad advice or ideas? I call them weak or at best ignorant. But, after giving them time and the ability to utilize experience and judgement to view the resulting history of those choices, I now hold them accountable. Have they changed their ways? Or have they stayed the same. If one and one is two, to you and me, then shouldn't it be for them? Naturally the answer is yes. So why doesn't a Jesse Jackson or a Bill Clinton wake up?If you had a daughter of dating age, and her boyfriend has a notorious past, do you let her date him? If it is only his ideas that are bad, should he be easy to change? <smile> RossL (08/19/00; 13:08:30MT - usagold.com msg#: 35189) @ HBM OK, If you want to send me your spreadsheet files I'll see what I can do with them. Thanks.Ross Hill Billy Mitchell (08/19/00; 12:24:56MT - usagold.com msg#: 35188) @ RossL Can't call on Sunday. Will try to get you one evening next week.HBM RossL (08/19/00; 12:15:30MT - usagold.com msg#: 35187) @ HBM Check your mail box! Hill Billy Mitchell (08/19/00; 12:06:04MT - usagold.com msg#: 35186) @ RossL RossDid you get my e-mailAlso,IMO no cost of labor is a subsidy of government any more than cheap imports are a subsidy. Of course overpaid bureaucrats are receiving a subsidy for their labor if you can call it labor but the work is for the gov.and is being paid with protection money collected from the non-subsidized labor. No one agrees with me on this. I do not have the time available just now to prove it with the a logically argument. I think I am all alone on this one. Does not mean that I am right but it is a good indicator that I am at least on the right track. Journeyman, bang your head against the wall and help me with this one some day.HBM Cavan Man (08/19/00; 11:57:10MT - usagold.com msg#: 35185) Christopher The essay by hamilton is quite awesome. It is so well written that anyone, even me can understand it all. This piece is an excellent summation of the case for gold. RossL (08/19/00; 11:24:33MT - usagold.com msg#: 35184) Some notes for today http://home.columbus.rr.com/rossl/gold.htm Let's ponder about some hypothetical countries A, B, C, and D. Country A decides to "protect" it's economy with duties, tariffs, taxes, or government restrictions on certain goods and services, and they result in higher prices on local labor and imported goods.Question: who pays for the higher prices? Question: isn't the high price on labor a subsidy from government A? ... the same thing as a government handout to a special interest group?Question: A business man had prevoiusly had a good business exporting goods to countries B, C, and D. Can he still compete? What happens to his exports when the cost of labor rises?Question: What will happen to the trade balance/deficit situation of country A? Is it good in the long run? ET (08/19/00; 11:04:36MT - usagold.com msg#: 35183) Al Hey Al - thanks for a most stimulating discussion. You wrote in part;"Me: The American economy over the last two hundred years has outclassed all others."This is true and for a couple of reasons. First, on a relative basis the US has had the greatest economic and political freedom until recently. Secondly, since the Civil War, no major war has been fought on its soil. These features have allowed for excellent productivity growth with no devastation of the infrastructure through war. "Protecting it at all costs may be nationalistic, but what is wrong with having a good self esteem and keeping what is good? And importantly, it is our economy that is the engine that our national will and spirit uses to keep us strong and free."Unfortunately our great 'strength' has been sold down the river in the form of currency debasement. In the process we have lost much of our economic and political freedom. This is one of the lessons the Austrians teach. I don't agree with you concerning national will and spirit. These are political ideas of little use to the citizenry but of great use to those which wish to enslave. "We can speak about no tariffs all we want. But until all evil economies <yes evil> share our love of liberty, I see no reason why we should let down our guard or our borders, etc to those who want to use what we have built as a big mall for themselves."I don't believe an economy can be good or evil. It is simply the act of trading. I have no problem with anyone attempting to trade for their own benefit. I have great problems with governments interfering in the trade process. "Further, should we allow others into our economy if they do not allow us fairly into theirs?"If I can benefit from it, sure. "Lets say you wish to sell computers to China. And China says no we are furthering our own companies at this time, yet we allow them to sell here in the US. What would you say?"I would say that at some point they will realize the error of their ways. They are the ones not benefiting from the use of the computer they could have purchased. They could have invested in better technology but have chosen not to. They are the losers. "You see, in this case economic nationalism is a must. When the majority of the countries act in good faith as far as trading freely, then we are can drop our guard as far as economic nationalism goes."And which will be the first to act in good faith? I would suggest to you the free will be the first. "Remember history also shows that their are bad people in the world and you must always be ready to protect yourself against them."I would say the world is full of bad ideas, not bad people. I'm much more concerned with bad ideas. "You see all the wonderful platitudes in the world have never held. All the utopian societies have never held up....why should ecomomic utopias hold up. They won't, they won't, they won't <smile>"I don't consider free markets as utopian. I consider them the norm. If I want to buy something for my benefit I should be able to do so without paying tribute to the state. If this is what you are trying to protect then we will always find ourselves on different sides of the fence.From another post you wrote;"I had a chance to read several chapters from your link, earlier today."Great!"So far so good, but tell me how you read this passage: We liberals do not assert that God or Nature meant all men to be free, because we are not instructed in the designs of God and of Nature, and we avoid, on principle, drawing God and Nature into a dispute over mundane questions. What we maintain is only that a system based on freedom for all workers warrants the greatest productivity of human labor and is therefore in the interest of all the inhabitants of the earth."It would seem that he believes religious beliefs have no place in the study of economics. I most certainly agree.It would seem his 'utopia' is freedom for all. I agree. Christopher (08/19/00; 08:29:17MT - usagold.com msg#: 35182) Gold Shorts Doomed Begging our hosts pardon but there is an excellent two part post over on GE by Zelotes with the name above. Great weekend reading. Really gets the blood stirred up.MUST...BUY...MORE...GOLD.... Canuck (08/19/00; 08:28:35MT - usagold.com msg#: 35181) @ Black Blade & All B.B.,Have followed your 'Morning Wake-up Call' for a long time now; thank you for your thoughts and time.A few months ago you commented on the oil futures backwardization. You mentioned something along the line of "... they want it now...". I am having trouble understanding the contango/backwardization concept. Can you 'link' me to info. regarding this? Does backwardization imply that the markets expect prices to be lower in the future and/or the demand/supply ratio is so out of whack that 'spot' prices are higher than future? You also mentioned something about backwardization is a great way to profit ie: rolling an oil future call.Further, is an inverted yield curve 'backwardization' of borrowing? Borrowing money further out in the future inherently should be more expensive, yes? Does an inverted curve imply people "..want it now.."?T.I.A.,Canuck. Al Fulchino (08/19/00; 07:25:14MT - usagold.com msg#: 35180) Invisible Hand and others re:The Invisible Hand (08/18/00; 21:38:55MT - usagold.com msg#: 35172)Free trade and Private Property @ Al Fulchino msg#: 35167 Do individuals have a right to private property? Then they should have the liberty to trade with whomever they desire. Do we want America to be economically prosperous? Then Americans must have the freedom to sell and buy on any terms they find advantageous with whomever they desire anywhere in the world.Me: I respect your ideal, however consider that not all countries wish to share your ideal. Additionally, some items are sensitive to our security. Not all trade can ever be totally free. Again I go back to this simple idea. When the world is a safe place for our ideals of freedom then you can have true free trade. Guess what! We will not be reaching this ideal without divine intervention. Strange? No. Just a fact of life that many in this world not only do not share our belief systems, they loathe it and us by default. This idea goes back to my thoughts re Oro. I noted that another thought related in the last day was that tariffs lead to the Boston Tea Party. I always thought we had tariffs for many years after the US was founded, secondly, it was not really a tariff that caused the tea party but taxation without representation. Anyway getting back to my original thought, why was it necessary for Pres Reagan to do some trade bashing with Japan? Remember that not only was our auto industry in trouble for their own arrogance but also we could not trade easily in Japan our own vehicles as well as other products due to the many obstacles they presented to American business. After some serious talks as well as a few not so gentle threats, they began to open their markets. So all in all I agree with your ultimate goal, but not until we use our big stick to keep our enemies away and mindful that we not only want them to enjoy what we know and understand, but that we are NOT letting anyone do harm to us.Finally, until people accept that their is good and evil in the world they can go on and on till eternity about von Mises and all the ideals of freedom they want. It is a cubicle that idealists devoid of the belief of good and evil will continue to live in until they face this fact. Not all countries nor people are good.Cobra (too) talk to you later, my time to swim <smile> Black Blade (08/19/00; 07:01:14MT - usagold.com msg#: 35179) Socialists in the Peoples Repulik of Kalifornia have much to learn about the Free-Market California Electricity Plan Would Leave Someone on Hook for $1.4 Billion Aug. 18--A state plan to cut electricity bills in South Orange County would leave taxpayers, ratepayers, or San Diego Gas & Electric Co. on the hook for $1.4 billion, the utility said Thursday. In documents filed with the Public Utilities Commission, SDG&E said the plan commissioners are expected to approve Monday is illegal and won't work. The criticisms underscore a key question lost in the uproar over this summer's soaring electricity rates: If consumers are spared from paying the higher bills, who will compensate utility companies that must purchase high-priced electricity on the wholesale market? "Who is going to pay? The answer is, I don't know," said Charles Langley, spokesman with the Utility Consumers' Action Network in San Diego. The PUC plan, drafted in one day after Gov. Gray Davis ordered regulators to cut bills, says the utility company will eventually receive all the money it is owed. But the plan does not say how that would occur. The PUC will decide Monday between two slightly different proposals for cutting SDG&E bills currently about $120 for an average residential customer. One plan would cut that to about $59; the other, to about $68. Both proposals would create a level payment plan, so customers would pay the same amount in both summer and winter. Electric rates normally would drop in winter. But SDG&E said wholesale rates will never drop low enough to allow the company to recapture the revenue it would lose in summer months. In fact, it said the $59-per-month plan would keep its bills below its costs year-round. The $59-per-month version of the proposal, the one consumer groups say is most likely to be approved, was being revised Thursday, partially in response to SDG&E's comments. "It's given us more things to think about," said Linda Serizawa, an advisor to the plan's author, Commissioner Carl Wood.Black Blade: Someone will definitely pay allright. But don't fret as it won't show up in the CPI core rate. No inflation! Yeah, right. In true Kalifornian Socialist-Style, the pain will be equally distributed through some form of tax. Cavan Man (08/19/00; 06:29:28MT - usagold.com msg#: 35178) Dear FOA USAGOLD 35171 I would be very interested in reading your analysis of this dated article by Dr. Judy Shelton. For myself, while I truly believe it is difficult if not impossible for a leopard to shed his spots, if Mr. Greenspan is taking the US along a circuitous route to sound money, he has me completely lost on his trail. A lot has changed since 1997. Thank you and welcome back home......CM CoBra(too) (08/19/00; 06:06:19MT - usagold.com msg#: 35177) Belatedly, Al F. re your 35167 -economic nationalism Hello Sir Al, While I've always been a fan of your's I can't quite agree with above statements and remember tariffs led to the Boston Tea Party. Seriously, as the US has become the leading world power after WWI, economically, politically and in terms of defense(i.e. agression? hope not)it also had to endure the depression of the 30's and was delivered the New Deal, whichin reality constituted the first real blow to your constitution. After WWII you've had some real eco-political giants likeMarshall - offering the chance of rebuilding the economies of the conquered after the selfinflicted devastation and in doing so the US and the world benefitted immensely from these endeavors in the end. This was the time when the $'s seignorage has started, albeit still convertible to real money internationally. The so called free and the communist world - and many may have believed in the ultimate wisdom of a social paradise - werecompeting for the 3rd. world which was left up for grabs by the two then world power contenders. Now the "free" world, or should I say the US seems to have won the day back in 1989 and at the same time missed their greatest opportunity to install something like a new Marshall Plan for ex-communist Russia, because of nationalistic, materialistic and possibly "imperialistic" concerns. There may be another chance with China, though I doubt it. As I'm aware, this post is oversimplistic, though i'd raher go for a swim right now - I'll end with regards -cb2 LeSin (08/19/00; 05:19:11MT - usagold.com msg#: 35176) Test Test ViewYesterday's Discussion.
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