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ARCHIVED DISCUSSION FROM 4/21/2001 All times are U.S. Mountain Time (Yesterday's Discussion.) Mr Gresham (04/21/01; 23:30:09MT - usagold.com msg#: 52327) Trail Guide Yes, I got a little Hi-Yo myself awhile back, thinking on Ted Butler and Warren and Bill as good guides, but it sure got heavy. Someday I'll tell you a funny story about hauling it all out of a building under extreme "pressure".I was mostly thinking "can we let the topic rest?" because it can go round and round. It is much more interesting (to me) to learn about the tie-ins of gold to the international reserve currency shift, and the default of major financial institutions, little of which involves silver, I believe.It occurs to me that you and Another have been at this for some time -- more than the 4 years on our records? --, awaiting the sea change of dollar retreat, and perhaps your timeframes are different than many here, whose minds are conditioned by windows of earning and investment timed in "New York minutes" rather than dynastic changes among national groupings.For example, 1985 looked like a pretty good year for the USD to give up the ghost, and you might have had a few expectant moments then. But finally it settled on needing a replacement, and your thinking evolved over time, as ours must now do more quickly. Indeed, a year of reconditioning ourselves on "The Trail" is a short time by comparison, but benefits from the distillation of experience you bring to us.The word that has been in my mind today is "mentoring", and it is an honorable concept; something us "wizards" in our 50s don't get much from anyone these days, least from anyone really worth listening to. (Yes -- we need it.) So, again, thanks. Thinking on it, I intend to pass along some of that mentoring in the spirit in which it was freely handed to me, as a natural part of the wisdom that comes through our stages of life, and not something I have "over" someone else.And now I'll go read your longer post below -- just wanted to get this out... Trail Guide (04/21/01; 23:21:44MT - usagold.com msg#: 52326) Comment ET (04/20/01; 08:42:22MT - usagold.com msg#: 52251)ElwoodHello Elwood, You write:-------"But, sir, none of these things are gold. Is it not the *label* of money, but its *use* as money that makes a thing money? How can we officially deny the use of pencils for writing, yet still maintain the "free market value" of pencils?" Yes - despite the volume of words, this simple point is left unaddressed. Thanks for your keenobservations! ----------Sir,Can you use a "promise" as money? Sure you can and often do today, because that is how you paid for your last fillup. You use it, but that doesn't make it wealth money, just a fiat money. My talk to Elwood on the Trail covers this deep concept. (smile)I'm gone nowThanksTrailGuide Trail Guide (04/21/01; 23:06:29MT - usagold.com msg#: 52325) Comment Mr Gresham (04/21/01; 17:01:59MT - usagold.com msg#: 52314)Trail Guide: SilverMr. Gresham, hello,I own some silver and everyone here that has read my posts knows it. But, just like gold stocks, it's a minor position compared to gold bullion. More importantly, I have talked endlessly about the possibility of our paper gold market falling in price as these contract securities are sold into oblivion because of default fears and the piling on by shorts. Enforcing a situation where physical gold runs in the opposite direction. There is a whole world of people out there that are leveraged to the hilt in silver waiting for the big event. If our paper gold market tanks, the pressure on the silver price will be enormous! In many ways reenacting the very leverage these bulls are looking for, but all of it in the other direction. There are few people that will retain a position in an "investment" like silver if the paper pricing market is hit, bigtime. Forcing the selling of everything. Where as in gold the world community will grab all the free bullion available (jewelry included). Because gold is not perceived as an investment nor as an investment with an industrial use component.In the initial crisis, silver could hit the floor and stay there for some time. It all depends on how this plays out. For myself, with the explosive potential of physical gold to show it's real value, I don't need silver. (smile)ThanksTrailGuide ausome (04/21/01; 22:42:30MT - usagold.com msg#: 52324) silver Trail Guide I seem to remember you likening silver and gold to natural gas and oil prices in earlier oil crises. Natural gas went up but nowhere near the price increase of oil. When gas prices stabilized oil kept on going up. Is this still a valid analogy? Enjoying your comments. Thanks. Netking (04/21/01; 22:34:54MT - usagold.com msg#: 52323) Galearis Sir Galearis(52321)Good comment,I note that Mexico have been considering & investigating the ramifications (at Govt. level)of using Silver for their currency. Now that WOULD be interesting.(Like the shorts, I hope you chase that seasonal flu away!) Trail Guide (04/21/01; 22:32:50MT - usagold.com msg#: 52322) Comment da2g (04/21/01; 12:12:17MT - usagold.com msg#: 52302)Trail Guide- SilverHello da2g, You write:-----Is not a hyperinflation ultimately deflationary in that there is a dearth of credible means of purchase? Why would silver not benefit from this, at least temporarily? Could this be a means of transiently parking purchasing power, superior to paper that is quickly losing value? Could notsilver benefit from demand as money? Could silver be a means of barter that changes hands in commerce, whilst gold is held in the background as a wealth asset?------Well sir, The coming super inflation of our dollar could more accurately described as a super currency devaluation. Where the Euro becomes the dominate settlement currency and our dollar reaches a level to match it's long term history of over creation. In making this point before, I pointed out that the dollar is going to reflect it's "unsupported value", where it is no longer propped up on world markets. During this type of devaluation, the internal price inflation, within the US will have all the attributes of a real hyperinflation. With one compelling difference; another currency will be available for use. Foreign exchange controls will be in play, I'm sure, but will not reflect a total freeze on currency flow. The same will ultimately be true for gold. Mostly because we must import oil and other necessities and gold will be tradable as the one true measuring asset officially market to a free market. I also fully expect that our government will endorse the ownership of physical gold by it's citizens, if for no other reason than to blunt the rush for Euros. Still, as in my last reply, US reactions could be uncertain for a time. Therefore, the holding of rare / old coins is absolutely a must. So, in this montage of events, in time, there will be ample dollars, Euros and gold for ownership. All reflecting their own values, of course, but trading never the less. Considering this point, this blunts one of the main attributes of owning silver as a trading vehicle in place of a usable median. More than anything, silver will reflect it's industrial use demand of which the US is the current major user by a wide margin.Further, comparing the worth of an ounce of silver against an ounce of gold today is liken to balancing two entirely different structures. Such as asking which is heavier a ton of bricks or a ton of feathers? Obviously, they weigh the same but the weight comparison is worthless. Today, I could easily say that gold is much more a bargain than silver because an ounce only costs $260 where 100 ounces of silver cost $450. Any fool could see that gold is the cheapest and what a bargain for sharp investors! (smile) But, we don't do this because it isn't a valid value comparison. No matter the unit weight or size. Yet, the silver bulls try to sell this to anyone that will listen. Also:------ unless I am mistaken, I seem to recall ANOTHER stating years ago that silver may have some value in this situation.------------Well sir, Another does hold this view and he has a grasp for the human dynamic like nothing I have ever seen. But, I will at least take a middle position in that this transition, from a US standpoint, may not politically follow my outline. There is always the unknown when at the peak of financial crisis. Still, most major players, both historically and today, hold gold bullion for such a situation.Just as investors ran to bullion (and dollars) in the past, they will run today with their currency portfolio into the best managed currency. Right now the ECB has the best ship to sail during the storms preceding the coming transition. For the hard position of their wealth they will run for the most officially supported free market. In the near future, gold will hold that position, hands down. Further, when in a crisis, you don't want an investment and that is what all the statistics about silver are all about. In a major international currency war, you want a wealth holding that the world is running to. Not some idea about a return that will work this time yet, has failed more than a few billionairs in the past. ThanksTrailGuide Galearis (04/21/01; 21:48:46MT - usagold.com msg#: 52321) @ Old Yeller re lease rates.... I seem to have a flu right now and my sinuses are probablya metaphore for the squeeze that the shorts are in right now.If I recall correctly, the previous two rate hikes were prior(?) to the liquidity problem that spiked the lease rates to 7% or so, and now we have suspicious shiftings of metal in West Point. Could it be time for the piper to be paid - by someone (guess who) else? I don't know, I am not the expert (who is?) in all this purposeful murk. The experts are all on the other side doing these shameful things...However, the recent drop in lease rates would, on the surface, suggest a new liquidity in gold (and silver), yes?Or some other body is now being forced to cough up metal. On the other hand Rhody, myself and most important, Ted Butler all feel that the lease rates are rigged clear across the board and for the most part are nonsense. Unless, as in the last recent spike, they aren't.(smile) Both Rhody and I have said this before, the lease rates are for show more or less. They are public, too public and everyone watches, yes?A recent email from Rhody on this past week's curious rank of figures:...snip...Hi: Yup, Ted Butler was right. Lease rates are rigged. I also noticed the quarter point decline in rates today to more than the drop in Fed rates. They either arbitrarily drop the rates, or are using Treasury gold to supply the liquidity that the BOE? no longer has. ...unsnip...Which pretty much sums up our views on this. That's a FWIW, of course, sir.It would imply that somebody(s) not making much on the carry trade any more - and perhaps somebody(s) maybe in a bit of trouble. Solution: drop the rates. Lock step proceedure. But your guess is as good as mine...If only sinuses were so easy. (smile)Also... On the little silver discussion going here: can anyone here take a moment and reflect on the importance, monetary importance, that is, of silver to OPEC and other (eastern) cultures? It would seem to me, that during such times in history when their are serious currency questions, ALL precious metals and ALL other relatively portable assets take on a much better lustre in the eyes of man.I truly believe there will also be a role beyond the commodity for silver. One can see this in the lease rates too.Best regardsG ax (04/21/01; 21:39:30MT - usagold.com msg#: 52320) Bob NOVAK mentions GOLD on Capital Gang Today Bob Novak, on Capital Gang today (CNN), stated something to the effect that fixing the price of gold at a higher level would help cure world wide deflation and in general would be beneficial to the world economy. I think a transcript ofthe statement should be requested from CNN if anyone wantsto know his exact words. Gold Trail Update (04/21/01; 21:12:53MDT - Msg ID:52319) 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 (04/21/01; 20:29:02MT - usagold.com msg#: 52318) auspec We're all (here) in this togeether aren't we? Let us hope many more from around the world, especially here in the USA subscribe their time to this channle of enlightenment. Netking (04/21/01; 19:19:19MT - usagold.com msg#: 52317) Silver - Interview with Dave Morgan - Resource Consultants Inc. Many facts are being uncovered in the gold story. GATA has made some startling announcements the past two days. Silver is as much if not more of this financial tidal wave than gold. Here below is our most recent interview.(Apologies for the length Randy/MK but it's worth a read. - Regards Netking)---------------------------------------------------------Interview by Resource Consultants Inc with Dave Morgan; "Pat: David you seem to prefer silver over gold can you explain why? David: Yes, Pat. I prefer silver over gold for several reasons. First let me state that I do like gold and own some, but I feel silver will outperform gold during the next bull market.Silver is a monetary and an industrial metal. In fact silver has been used as money more often and in more places in the world than gold. Because silver is also an industrial metal it is used in applications that are vital to our way of life. We would not be able to own refrigerators, stereos, TV's, computers, or phones without silver. The silver used in most applications is very small but it is vital, it has to be there. One fact that many gold dealers make people aware of is; that gold was confiscated during Roosevelt's Administration. However, you seldom hear them say that silver has never been confiscated. This is just one more reason I favor silver over gold. Silver has been running a deficit for eleven straight years now. Every year now for over a decade the above ground supplies of silver have been eaten away until now the best estimates in the world of remaining silver stocks are between 300-500million ounces. Pat: I've sold silver for years, it seems like the market is not paying attention to this constant decreasing supply, would you comment? David: Certainly Pat, let's take the high number. 500 million or half a billion ounces, now let's subtract what Warren Buffet owns 130 million, that leaves 370 million ounces of silver. From my work I have shown that the average rate of silver consumption is about ten million ounces per month. So if we divide 370 million available by 10 million ounces per month usage, we find that there is only three years worth of silver left. This of course is purely a hypothetical example because the situation is far more critical than I am saying. First you have to use some common sense. All the 370 Million ounces I refer to is now owned by people. Some are industrial users that have to have the silver to continue in business, like Fuji film for example. Others are investors that have bought in over the years and most are holding around the five dollar level, these people are holding for price appreciation and safety. So, the question really becomes how much more silver is available at any price? Pat: Ok, what form of silver investment is the best and why? David: Pat, I firmly believe that physical silver is the absolute best way to own it period. I think bullion or low premium coins are the best, and I am partial to silver dollars probably because of my name. I would advise anyone that does buy physical silver to take possession of it themselves or be very certain of the storage facility they use. Once a solid foundation of physical silver is owned outright. The next areas to look is silver mining companies. This offers the opportunity to get some leverage out of any increase in the price of silver. Because silver has been so cheap for so long many primary silver companies are out of business. This makes the selection process important. I go into certain criteria I use to choose a mining company, and this is information for my newsletter subscribers. Right now , it is a very small list. Lastly, I do teach a method to use options to really swing for the fences, but this is for sophisticated investors only, and does involve risk capital, so most people should simply avoid it altogether. So to summarize, the foundation needs to be established in physical silver and this should be the majority of one's precious metals allocation, next stocks in silver and gold producers that are viable companies and unhedged, and lastly some type of silver speculation. PAT: Do you have a price prediction for silver? David: I get asked that question often and of course if I answer it correctly I will look like a genius and if I am wrong I am a dog. But let me take you through my thinking and perhaps people can follow my logic. Pat, as you know I am a silver analyst, but I am also an economist. During the last great inflation in this country, most analysts looked at the Money Supply as the number one indicator of economic life. People were very aware that the classic definition of inflation is simply" an increase in the money supply". There is a classic and elegant way to predict the price of gold using two things. First the M1 money supply, and secondly the amount of gold available. Right now M1 which consists of cash and checking account type money, what I refer to as near cash, it is money that can be spent on a moments notice, is around 660 Billion dollars. The Treasury reports that there is approximately 265 million ounces of US gold. So simply divide 660B/256M and the dollar price of gold is about $2500. Now before you call me a kook, I would like to point out that Forbes Magazine published an article recently called Gold at $2500 per ounce. So you see, it is not a number that is so out of reach, as far as Forbes is concerned. Now getting to silver, keep in mind there is less available and from recent history we know silver because it is a smaller market tends to move faster, we could look at the average ratio of silver to gold and say with silver at a 50 one ratio would give us a $50 dollar silver price, its old high. However if silver accelerated and got back to its classic ratio of 16 to one , that would put silver at over $150 per ounce. Lastly if silver ever went to its natural ratio, that is the ratio at which it is found in the earth of ten to one, then $250 ounce silver is possible. I know this sounds absurd, but chance favors the prepared mind. If you are not willing to accept my basic premise then ignore the rest. PAT: I remember using M1 in the way you just gave in your example David. Where were we in say 1980.? David: Pat at that time the M1 divided by the gold supply gave a $400 per ounce gold price and yet we both know it is a fact that gold traded briefly over $800 per ounce. So what this indicates to me is that in a high inflationary mode the paper price of gold and silver can shoot past their classic paper backed price. Pat: I understand you have a web site can you give us some information about your site? David: Yes, the address is www.silver-investor.com, I divide the site in two sections really. The top half of the site treats silver as a commodity and the bottom half of the site treats silver as money. The top half also has links that will enable anyone pro or con to research for themselves what I have been saying and verify the facts for themselves. Pat: David you have a newsletter of the same name Silver -Investor.com, why would someone subscribe to it when you provide so much information for FREE. David: Well Pat, all the articles I write and interviews I have given to me are just the basics of the silver market. In my newsletter I go deeper into the numbers and give very specific advice and insights into what is taking place in the economy in general , politics, and the precious metals markets. I do emphasize silver, but I discuss economics from a historical point of view. I use classically based economics The Austrian School if you will. I subscribe to nearly one hundred sources of information, business newspapers, private newsletters, the Silver Institute's work, CPM's studies, GFMS, and a host of others. I digest the information and produce a product with a balanced approach. I truly think I am the only one outside of Ted Butler that is doing this amount of research privately on silver." auspec (04/21/01; 18:44:18MT - usagold.com msg#: 52316) Robert Chapman International Forecaster April 2001 snippet from LeMetropole Cafe "Over the past 20 years a wave of non-bank credit has inundated the American economy. It has been particularly virulent since 1994. It has allowed monetary aggregates to grow much more slowly than credit aggregates, which enabled lower inflation. This credit avalanche has caused massive investment in fixed assets that has promoted systemic global excess capacity in virtually all manufactured products and forced prices lower. This has set the stage for a liquidity collapse. This also explains why inflation has averaged 3% for 10 years. If credit expansion continues unabated we'll eventually have hyperinflation. If it is curtailed we'll have a deflationary collapse. Both excessive monetary expansion and excessive credit expansion lead to depreciation of all currencies. That is why there is a war against gold by the elitists, because that is where wealth has always gone in times of depreciating currencies, whether it was coin clipping, monetary debauchery or credit. The public has been misled by its leadership, which has attempted to turn gold into a commodity, and replace gold with credit and depreciating currency, whose value is lied about through ever changing indexes. They lie to the public telling them their purchasing power is increasing, when it is decreasing, masked by credit availability. This is also borne out in price stability, which is a figment of some central bankers fantasy. Excessive credit and money supply both cause over production of goods and services. Money supply increases are easily identified but credit excesses are stealth and you don't know how bad they are until you get hit with hyperinflation or depression. The fight is typical value versus non-value. The central banks, as they now are doing, will infuse monetary aggregates into the system to keep it afloat. They know they have two generations of uneducated, who couldn't identify a benchmark of value, such as gold, if it jumped up and bit them. This they think will render them safe, because they have deprived the knowledgeable investor the opportunity to hedge against a rotting financial system. The outcome is sealed. The elitists have tried the same thing over and over on their way to world government and have always been unsuccessful. The outcome this time will be no different, but the pain will be just as agonizing."Chapman also states in relationship to the spy plane now in Chinese territory: "The technology on the plane was 20 years ahead of anything any other nation has." Mr Gresham (04/21/01; 17:04:06MT - usagold.com msg#: 52315) Hi-Yo (Silver?) BTW, maybe it just comes from hanging around with these "masked men" who ride into town on a horse named You-know-what shooting silver bullets? Mr Gresham (04/21/01; 17:01:59MT - usagold.com msg#: 52314) Trail Guide: Silver We're all here to learn, and we're all here to materially improve our lives through wealth preservation.A word that you've used before about gold is "outperform". This is all the wise investor needs to consider, right? The relative performances of savings vehicles can be conjectured, and then we make our own diversification decisions.You are probably saying that silver is now totally hinged to the economy's performance, and in a depression it goes ka-blooey. If a coffee is $20 at Starbuck's (the regular house blend), then silver may or may not buy a cup of coffee. I would expect it probably would, but you can concede silver's fans a 300% gain in a hyperinflation, can't you? While still making your macro case for a gold 3000% gain.Now what would be interesting (for them especially) would be to delve into silver's historical role, on which I suspect you have some good insights, and why the 1-for-1 of medieval times, or the 16-to-1 ratio of a century or so ago ain't coming back."Outperform" is the word I'm keying in on, and trying to learn the reasons within your presentation for gold doing so. Give silver your best analysis (brief as you care to?) and then agree to disagree. I don't think it's an important point of departure among PGAs, do you? Black Blade (04/21/01; 16:46:42MT - usagold.com msg#: 52313) Dollar Drops on Concern U.S. Economy Is Weaker Than Thought http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=blk&bt=ad_position1_topfin&middle=ad_frame2_topfin&s=AOt.2BxSSRG9sbGFy Snippit:The dollar extended a decline sparked by the Fed's half-point interest-rate reduction, the fourth this year. Some analysts saw Wednesday's cut as an indication of the extent of the U.S. slowdown. Better growth prospects elsewhere may weaken the dollar by attracting investors to non-dollar assets. ``The underlying fear is that there is a structural problem in the U.S. that won't be fixed by rate cuts,'' said Shahab Jalinoos, currency strategist at UBS Warburg. He sees the euro rally extending towards 92 in the coming days.Black Blade: The sleepers have awakened! Trail Guide (04/21/01; 16:44:58MT - usagold.com msg#: 52312) Online I'm making some green tea, then back to further carry on our dissusion (smile). Be here a little later. da2g (04/21/01; 15:00:23MT - usagold.com msg#: 52311) Reply- Netking Hello NetkingThe following is taken from FOA's last post on the Gold Trail, and is what I am having difficulty understanding: Once the current dollar gold market fails and gives way to a free physical price, we will see that figure even as our economic function drives all other hard money metals into the toilet. I talking about .50 cent silver. while gold races past it's first grand. When we see it we will understand it.----------- lamprey_65 (04/21/01; 14:58:40MT - usagold.com msg#: 52310) Gold Weekly We have a tentative breakout confirmation this week. Any close above $258 is still positive...I would consider any an end of week close above $263 as a true breakout confirmation. A close above $264 next week is quite bullish. (Last week's close was $265.40.)All prices COMEX. Netking (04/21/01; 14:12:31MT - usagold.com msg#: 52309) Trail Guide/da2g - "relative worthlessness of Silver" Trail Guide & da2g - Hello Y'all,Please enlighten me Sirs with regards to the comment made:"One concept that I am having difficulty grasping is your contention of the relative worthlessness of silver" To be honest, I am having trouble grasping this theory or seeing upon what it is based. I have a scientific mind so please give me some facts & figures that will convince me!regards Netking Black Blade (04/21/01; 13:56:42MT - usagold.com msg#: 52308) Oil Prices Ease But Fuel Worries Persist http://dailynews.yahoo.com/h/nm/20010420/bs/markets_oil_dc_1.html Snippit:LONDON (Reuters) - Oil prices continued to drift slightly lower on Friday after a recent rally fuelled by fears of a gasoline shortage this summer in the United States.Black Blade: Higher transportation costs are also added to the costs of goods and services and guess who pays for that? Besides, the numerous reformulated grades of fuel for various regions in the US will tie up the refineries for some time. Quite a juggling act. Should be "interesting." Black Blade (04/21/01; 13:51:09MT - usagold.com msg#: 52307) Baker Hughes - U.S. rotary rigs up 15, Canada down 29 http://biz.yahoo.com/rf/010420/n20484843.html NEW YORK, April 20 (Reuters) - The number of rigs searching for oil and natural gas in the United States rose by 15 to 1,213 during the week ending April 20, according to oil services firm Baker Hughes (NYSE:BHI)Black Blade: More drill rigs overall and yet NG production is falling behind. They had better get more rigs and get to it. Looks as if an energy caused recession is in the cards. Better get some portfolio insurance like PMs while they are still cheap. BTW, mining costs are rising due to high energy costs. I heard from old contacts that executives of 2 of NA's largest miners had visited the mines recently because of higher energy costs. Looks as if there could be a lot of layoffs coming in Nevada and some mine closures over the next few months. Black Blade (04/21/01; 13:37:19MT - usagold.com msg#: 52306) Calif. Farmers Hit by Energy Costs http://dailynews.yahoo.com/h/nm/20010420/bs/utilities_california_agriculture_dc_1.html Snippit:SAN FRANCISCO (Reuters) - Soaring energy costs and local drought threaten to cut deep into the bounty of California's huge $27 billion agricultural industry, sending fruit and vegetable prices higher across the country.``There is a farm crisis in California right now...and higher energy costs and water shortages will only make it much more difficult for farmers to operate,'' said Bob Krauter, a spokesman for the California Farm Bureau, the state's biggest farm group.Black Blade: No more vegetation for hungry locusts? A good article. The energy crisis is spreading to other more basic industries. Food costs are about to go much higher. But don't worry - food and energy aren't in the "Core Rate." Black Blade (04/21/01; 13:30:44MT - usagold.com msg#: 52305) State prepares for energy costs that could hit $100 million a day http://www.contracostatimes.com/partners/nf/bucks_20010421.htm Davis hasn't decided if California will pay any price to keep lights onSnippit: The state's power bill could rise to $100 million a day in the coming months, raising widespread concern about the state's financial health and setting the stage for a showdown: Should the treasury be committed to keep the lights on at all costs, or should the state at some point say enough is enough and allow rolling blackouts? Black Blade: I think that they have no choice. They have rate caps on utes. The Grasshopper will never pay for it's own needs unless forced to. "…and they danced, sang, and played all summer…" Black Blade (04/21/01; 13:21:55MT - usagold.com msg#: 52304) Power hit could plunge state into recession http://www0.mercurycenter.com/partners/docs/019595.htm Study warns of blow this summer to already slowing economySnippit:Rolling blackouts and rising energy costs this summer could deliver a $17 billion blow to California, while slowing Bay Area job growth by 5,000 jobs a year and possibly tipping a decelerating state economy into recession, a new study warns. The numbers in the report suggest the energy crisis could harm the state's economy worse than the so-called ``Asian flu'' of 1997-98, when tech exports to Pacific Rim nations slumped dramatically.Black Blade: They had better get prepared as power shortages are a given and higher prices are here to stay. There will be a lot of angry Grasshoppers. When asked to conserve, the Kalifornian Grasshopper will continue to devour the disappearing resource like the locusts they are.Thanks Old Yeller for that article. I'm trying to get the original article. Though we discussed much of that before, it really drives home the point. I have closed up my Nevada office dealing with the gold mining industry and now I'm focused entirely on natural gas. Old Yeller (04/21/01; 12:38:05MT - usagold.com msg#: 52303) Gold lease rates,just what happened last week? The standard rationale for falling gold lease rates last week was the surprise US rate cut.It's funny,but it seems to me that the three previous cuts didn't have that much of an effect on the rates.Could it be,taken from what we are learning from GATA's latest revelations;that the relief is coming from somewhere in Europe?Since the ECB is not playing the rate cut game,however,realizing that a quickly rising gold price may be a signal to bring down the whole debt structure,help may deemed to be required on this front.In short,we realize your predicament,no,we are not lowering our rates,but yes,we are not prepared at this time to explode our and especially your,totally unsustainable debt loads.The extension of this would be to call into question the true worth of the US currency as well as all the fiats based upon it.Gold holders be damned,once again,in the name of averting systemic risk. Not a good thing,no?Rhody or Galerius,do you have any thoughts on this? da2g (04/21/01; 12:12:17MT - usagold.com msg#: 52302) Trail Guide- Silver Trail Guide:Thank you for sharing your insight. I have no difficulty grasping your concept of the superiority of physical gold holdings. Indeed, I can recollect tales my relatives told me of the great German hyperinflation between the wars. I seem to remember being told the value of one physical automobile being equivalent to the stock of a substantial portion of the company that manufactured it.One concept that I am having difficulty grasping is your contention of the relative worthlessness of silver. In my mind, as a currency is rapidly decompensating, there should be a propensity to convert currency/credits to physical substances. Relatively speaking, certain items may fall in value to others. Is not a hyperinflation ultimately deflationary in that there is a dearth of credible means of purchase? Why would silver not benefit from this, at least temporarily? Could this be a means of transiently parking purchasing power, superior to paper that is quickly losing value? Could not silver benefit from demand as money? Could silver be a means of barter that changes hands in commerce, whilst gold is held in the background as a wealth asset?I would appreciate your thoughts on this, particularly if you could clarify where my understanding of this is in error. Also, unless I am mistaken, I seem to recall ANOTHER stating years ago that silver may have some value in this situation. Old Yeller (04/21/01; 11:50:57MT - usagold.com msg#: 52301) More Mozel When we are told that the bond debt instruments of the US are securitized,we should ask by what?What is the security for them?Or if they suretized, what are the sureties for the mountain of debt that is our national substitute for money?A surety is only one default of payment distant from being a bond servant,or even a slave.Is this the civil status to which you want to consent?Or to what you give your silent assent?Or are you simply acquiescing to what is going on?Legislation is impairing the obligation of contracts is commission of violence on conscience.People need peace, justice and security in which to work.From where there are not these,regular payments should not be expected.The bond holders of California utilities can tell you this is so. Old Yeller (04/21/01; 11:36:20MT - usagold.com msg#: 52300) Ode to the slaughtered bears of April 18,2001 The shallow thinkers among us conceive that the standard of value can be removed from a society without consequence.They ignore the evidence from own American history as well as the history of mankind to sustain that conception.Government is a teacher by example and what is taught is that it is OK to have no standard of value,it is OK to lie to those who have trusted you and to who you have given assurance.It has taught lawlessness.Where there is no standard of value,there are eventually no standards at all. Excerpts from a truly remarkable post by Mozel at Kitco,April 20;4:07 Mr Gresham (04/21/01; 11:24:58MT - usagold.com msg#: 52299) Turk: questions about Germany http://groups.yahoo.com/group/gata/message/735 The "Custodial" label is about as smoky as a gun can get, in bureaucratese. I printed those two months' reports out, in case the memory-hole is warming up for another deposit.I almost see the swap deal as explanation and "case closed", especially relating to Deutschebank's ballooning gold derivatives book, but for some small niggles:Would Germany entrust 1700 tonnes of its gold now newly placed in USA, when "currency war" is soon to be underway at Euro introduction? Wouldn't we think it would be trying to gradually get it OUT of New York, if any leftover 40's, 50's, 60's gold stashes were held there? Are they THAT confident about making it all back on the Euro participation? (Maybe back then they weren't?)"The Treasury cannot directly do a deal with the Bundesbank because, unlike the ESF, the Treasury is subject to congressional oversight. " So how did ESF take title to the Treasury's West Point gold? Although ESF is a branch of UST, there must be some bookkeeping entry to reflect that transfer, some other "swap"? (Using ESF's $25 billion?) (Hey, 1700 tonnes comes to about, what? $17billion?) I don't think he's shown the link between ESF and UST here, or am I just missing something in the reading?Now, ESF could "pay" Bundesbank some other way, in some other market, with part of its $25 billion, but that would show up on ESF's books, right?And the Bundesbank's "empty vaults" tidbit. Does that mean physically? But more importantly, does that mean they've leased (sold) the entire 3400 tonnes? (1700 on behalf of the US, and 1700 on their own volition). That sounds extreme, and again, did they hope to make it up on their Euro participation? Or were they in some big trouble on their own fiat? (East Germany absorption?) Sounds like a new story to me, and not one that sounds like FOA's "Europe strong in gold" thesis.Like Britain, was Germany "eating up all their candy on the way to school, so they wouldn't have to share it" with the EMU? Cutting all their last-minute private deals, and sliding in under the Euro requirements? That sounds like a lot of confidence in the Euro's success, something I'd not heard ascribed to the Germans.Or were these "public-private" deals, where the physical went off to favored wealth-holders? Something that I would think would not go unnoticed in Europe. Carl H (04/21/01; 10:20:25MT - usagold.com msg#: 52298) Write to your congressmen! The new information regarding the "Custodial Gold" at West Point quite remarkable. As a US citizen, it makes me quite angry and inclined to use the word treason. I have written an e-mail to my representative and senators bringing the evidence to their attention and asking them to review it. I am including part of my letter below to encourage others to do the same.Does anyone know how to start one of those grassfire messages on the net?The letter follows:I am writing to you because evidence has come to my attention which suggests that the Exchange Stabilization Fund (the arm of the Treasury that has no Congressional oversight) has encumbered, without Congressional approval, in excess of 20% of the United States gold reserves. Yes, this is an extraordinary claim, but I believe that you will find there is some fairly extraordinary evidence to back it up. The evidence is based on recently released minutes of Federal Open Market Committee meetings from 1995 as well as other sources. The evidence be viewed at:http://groups.yahoo.com/group/gata/message/734http://groups.yahoo.com/group/gata/message/735I realize that you are extremely busy, but I implore you to take the time to review the evidence for yourself. If you find very convincing, please start or at least support a Congressional investigation into this matter. If you are not convinced by it, or do not have the time to review it, I request that you at least send an inquiry to the Treasury Department asking them the following question:Please explain why the gold stored at West Point has been reclassified as "Custodial Gold" and what does this change in designation mean with respect to the ownership status of the gold at West Point?I would greatly appreciate a copy of any response you receive. Mr Gresham (04/21/01; 09:34:10MT - usagold.com msg#: 52297) Doug Noland -- Credit Bubble Bulletin http://www.prudentbear.com/credit.htm Just starting in on it... TheStranger (04/21/01; 08:45:00MT - usagold.com msg#: 52296) From Barron's Making New MoneyThe world's businesses are starting to evolve a new currencyBy Jack White and Doug Ramsey(abridged)"Next January, Europeans will begin using euros, the world's first major new currency in more than a century. From that day, the German mark -- arguably the best-managed currency of the modern era -- will no longer be legal tender anywhere. The same fate awaits the French franc, Italian lira and other currencies."But the Europeans are deploying a currency built for the 20th century, not the 21st. Its value will still be dictated by the monetary policy of a central bank. With the global explosion of the Internet and e-commerce, the world needs a new type of currency. It needs an asset-backed, high-tech monetary standard, without the political machinations that hobble the euro, the dollar, the yen and all other traditional currencies.""The volume of physical money was long ago overwhelmed by the volume of other forms of liquidity. All coins and banknotes may soon become a quaint remnant of our pre-digital past. Consumers will pay for incidentals with e-cash "smart cards," with value downloaded over the Internet. Financial innovators will create new stores of value and new legal tender for e-commerce. Ultimately, those digital currencies that offer the best combination of technology, utility, liquidity, transparency and long-term value will outshine the euro, the dollar and the yen."The surprising thing is that it's taking so long. The decline of the gold standard, competitive devaluations and tariff hikes dried up international trade in the 1930s and should have destroyed the world's faith in fiat money. Instead, after World War II, the major economic powers devised an international monetary system at Bretton Woods that left central banks with the discretion to print money -- a discretion most countries abused frequently, even after the collapse of that system in the 1970s. Since the 1940s, the dollar has lost 90% of its value.""There are dozens of current experiments in online currency: DigiCash, e-money, iDollars, cybermoney, e-cash, eBucks, virtual cash, cyberbucks, CyberCoin, cybercash and more. Their sponsors, however, have put more thought into the brand names than the products. They have attempted to create e-commerce payment systems that are easy and secure but based on the dollar. They have created proxies for a traditional currency, rather than a new currency in its own right."But it may be only a short distance from virtual money to a full-fledged electronic currency, which we might call Electronic Trading Units, or ETUs for short."Good as gold"ETUs would have to be immune to political pressure, and either fully or largely backed by tangible assets. E-currencies of the future will be only as strong as the groups issuing them. The ideal e-currency might even be backed by gold. Encrypted digital units of the precious metal, even in tiny quantities, could in principle be used to pay for anything from a soft drink to a jet plane.""One company, E-gold, already allows online users to settle payments using its currency, which is 100% backed by gold. Ownership of the gold changes, but the physical bullion stays put with the company, which is based on the Caribbean island of Nevis. The system also is transparent: Holders have real-time access to the total amount of e-gold in circulation, and the company's total bullion reserves.""How fast the world moves to ETUs depends partly on what happens to traditional currencies. Japan's long financial crisis already has made the yen less likely to be a world-class entry. The euro inherits the luster of the deutschemark, but it's tarnished because the European Central Bank can easily succumb to pressure from less enlightened member states. The dollar is strong only by comparison. The U.S. cannot run a trade deficit of $30 billion a month forever."It may take a global financial crisis -- or nations' reflating their way out of a crisis by printing money -- to spell an end to governments' monopoly of currency as we know it. But the growth of e-commerce is already providing plenty of incentive for issuers and users to experiment with digital currency, and it will be ready when the crisis demands it." TheStranger (04/21/01; 08:13:47MT - usagold.com msg#: 52295) Gene Epstein on Inflation This week brings a piece on emergent inflation by Barron's Gene Epstein.Quote..."Greenspan must know better than anyone that inflation is starting to rear its head; it's just one headache he hopes he can cope with later on. But ironically, when the Fed was in the middle of hiking rates early last year, the FOMC releases made constant reference to "heightened inflation pressures in the foreseeable future." Now that this future seems to be actually happening,...the news gets swept down the memory hole."So let's dredge it up. To begin with, the March employment report issued early this month, while widely interpreted as a sign of economic weakness, did include some striking news about the growth of average hourly earnings. The six-month growth rate of earnings ran 5% on an annualized basis, the highest rate since the economic expansion began, a phenomenon that is often referred to by that ugly phrase, wage inflation." Chris Powell (04/21/01; 07:46:37MT - usagold.com msg#: 52294) Fixing second link http://groups.yahoo.com/group/gata/message/735 The riddle of the low gold price solved, Part 2 Chris Powell (04/21/01; 07:45:42MT - usagold.com msg#: 52293) The riddle of the low gold price solved, Part 2 http://groups.yahoo.com/group/gata/message/734 Thanks to Reg Howe, James Turk, andGATA.To subscribe to GATA's dispatches by email and get them immediately so you don't have to go look for them, send an email to:gata-subscribe@yahoogroups.com Chris Powell (04/21/01; 07:44:45MT - usagold.com msg#: 52292) The riddle of the low gold price solved, Part 1 http://groups.yahoo.com/group/gata/message/734 Here's exactly how the Exchange StabilizationFund does it, with the help of the Bundesbank.Part 1.To subscribe to GATA's dispatches by email and get them immediately so you don't have to go look for them, send an email to:gata-subscribe@yahoogroups.com LeSin (04/21/01; 06:27:29MT - usagold.com msg#: 52291) ECB Holds Firm - Wim Duisenberg Calm - USA's Paul O'Neil - Sweats http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&refer=topsum&T=markets_bfgcgi_content99.ht&s2=blk&bt=ad_position1_topfin&middle=ad_frame2_topfin&s=AOuF4OxP2RUNCJ3Mg 04/21 08:08ECB's Duisenberg Defends Refusal to Reduce Rates (Update1)By James G. Neuger and Alina Trabattoni Malmoe, Sweden, April 21 (Bloomberg) -- European Central Bank President Wim Duisenberg defended his refusal to cut interest rates, saying the European economy may grow 2.7 percent in 2001 and will suffer only ``limited'' damage from the U.S. slowdown. ``We are confident that we are weathering this storm,'' Duisenberg said after a meeting of European Union finance officials. The impact of the falloff in demand from the world's largest economy is ``not negligible but very limited indeed.'' Duisenberg's comments suggest the central bank will hold its main rate steady at 4.75 percent next Thursday, setting up a confrontation with U.S. policy makers when Group of Seven finance officials gather in Washington two days later. Alone among the world's major central banks, the ECB has refused to cut rates as inflation has exceeded its target for 10 straight months. The U.S. Federal Reserve on Wednesday reduced its rates for the fourth time this year, taking its overnight rate to 4.5 percent, below the main ECB rate for the first time. Duisenberg's bullish outlook rules out a reduction ``in the medium term,'' said Javier Perez de Azpillaga, an economist at Goldman Sachs in London. ``Certainly not this week.'' Following growth of 3.4 percent in 2000 -- the fastest in a decade -- expansion in the 12 nations sharing the euro will ease in 2001. Asked by Bloomberg News if 2.7 percent growth is realistic, Duisenberg said: ``I would not take issue with that.'' He said growth of at least 2.5 percent is likely in 2002 as well. American `Misconceptions' EU Monetary Commissioner Pedro Solbes called the European Commission's prior estimates of 3.2 percent ``excessive.'' He declined to comment on an unsourced report in Il Sole/24 Ore that new forecasts next Wednesday will revise the prediction to 2.7 percent. Foreshadowing a G-7 clash, Duisenberg said U.S. Treasury Secretary Paul O'Neill fell prey to ``misconceptions'' when he suggested Thursday that Europe isn't playing its part in stoking the global economy. ``There may be some misconceptions on the American side if I at least listen to the comments made by the U.S. secretary of the Treasury,'' Duisenberg said. O'Neill said he was ``mystified'' by Europe's economic optimism. Exports to the U.S. account for 3 percent of euro-zone gross domestic product, the commission said. Duisenberg's wait-and-see policy is supported by figures released yesterday that show euro zone factories upped production by 0.4 percent in February. The unexpected increase buttressed a claim by Italian Treasury Minister Vincenzo Visco that Europe is ``relatively immune'' to the U.S. investment slump. Following the Money Central bankers also cite the expansion of the money supply, a barometer of future inflation, as a reason to hold off. Money growth stayed at 4.7 percent in February, surpassing the ECB's 4.5 percent target. Inflation risks that ``have lessened but not disappeared'' are the ``overwhelming reason why we decided not to change interest rates at the current juncture,'' Duisenberg said. Government efforts to talk up the economy come as business confidence in Germany, France and Italy -- the euro region's top three economies -- hovers close to the lowest level in a year and a half and companies such as Royal Philips Electronics NV of the Netherlands and Siemens AG of Germany cut jobs. Philips, Europe's largest consumer-electronics maker, said Tuesday it will probably lose money this quarter and will cut as many as 7,000 jobs, or about 3 percent of its workforce, as demand slows for mobile phones and computers. Siemens, Europe's No. 2 mobile-phone producer, will eliminate 2,000 jobs, or a quarter of those making handsets. After two weeks of hinting that they are getting impatient with the politically independent central bank, finance ministers such as Belgium's Didier Reynders and Germany's Hans Eichel eased the public pressure on Duisenberg. Let's Talk Reynders, who chairs the committee of euro-area ministers, spoke only of the need for ``dialogue'' with the ECB and didn't repeat an April 10 request for the ECB ``to draw its own conclusions'' from the economic slowdown. ``Why should Duisenberg resist non-existent pressure?'' the commission's president, Romano Prodi, said. ``We have not asked Duisenberg to come here to justify or explain.'' The only minister to break with the doctrine was Austria's Karl-Heinz Grasser of the Freedom Party, who called for ``an easing of monetary policy.'' Grasser later told Austrian television that a majority of the ministers pushed Duisenberg to cut, Austria's APA news agency reported. Spanish Finance Minister Rodrigo Rato said there is no such majority, and Duisenberg said that ``I can confirm Rato's statement.'' Ministers sought to quell the speculation swirling over how long Duisenberg will stay on as ECB chief by pledging to stop discussing his retirement in public, Luxembourg Prime and Finance Minister Jean-Claude Juncker said. The term of the ECB president runs for eight years. When appointed in May 1998, Duisenberg bowed to French pressure to retire early. He said he would stay on at least for the introduction of euro notes and coins at the start of 2002. Reynders, who had called on Duisenberg to set a firm departure date, said yesterday that ``the question didn't come up and doesn't come up Belgian (4/21/01; 04:57:53MT - usagold.com msg#: 52290) The final question in each drama is * WHY * ? *WHY* is the POG declining and *WHY* are they doing it ? I/ Bankers Speculation : it started around '95/'96, when the SM and the Derivatives went ballistic. An extra-ordinarry period wherin it is very plausable that banks were lured into some ventures, they wouldn't risk in more normal times. Even for prudent and conservative Deutsche Bank. They lost the money-spinning EMU currency trade and tried to compensate for this lost businnes. Individual investors, were in the ban of the derivative jack pots and everybody wanted to perform at all cost. Short : the Nick Leeson stunt all over. II/ The development of the dollar-cult as paper calf :it is already 6 years now, that the dollar retraced some of its 10 year decline. And the Clintonistas succeeded in the SM-magic. III/ Destruction of Gold. Impossible and totally ecxluded ! Do we have to make a choice between the above "reasons-why"or "motives" in order to acquire some peace of mind to avoid sleepless gold-nights ? NO ! Because the gold-drama (op-por-tu-ni-ty !) is most probably a mix of larger amounts of "ZEITGEIST" elements.The two Giants Anglogold (AU) and Gold Fields (GF), haven't confirmed their participation on the comming GATA-activism in Durban.Intriging, isn't it ? The two loud-speakers and arch ennemies with a complete different historical background and mining culture...remain un-engaged ! They both speculate on the gold-drama (opportunity) in a complete different way. AU, suspected to know much more about the world's gold-management speculates with heavy hedging and GF, does exactly the opposite. The third player, Harmony is to be situated in the GF camp. AU, continues to deny radically all GATA's allegations and GF abstinents from any comments ! This strong contrasting picture is significant.Our interpretation of this might be helpfull in making better choices in the "WHY" possibilities. Returning to my intuition, on wich I had to rely, before the past revelations : GOLD FELL VICTIM OF RECKLESS SPECULATION.Individual - Corporate - Official : UNBRIDLED SPECULATION !With the 100/120 Trillion $ of ultra-mega speculation volume, it is naive to suppose that gold was left out of this hystery of the speculative masses !This perspective is helpfull for Gold-projections and unfolding of the drama (opportunity). It is our common reasoning behind the "got gold " exclamation.The Bush administration is not going to do anything that will change the natural unwinding of this past idiotic expression of pseudo-liberty. No interference in the excessive results of liberalism. "Time" will do its work.That's why I consider GATA's work as a profound expression of honest indignation against unjustifiable abuses.Will there still be a need for investigation about what /how and who, when POG explodes and finds it Value ? I'm afraid, that, even to avoid the heat of accusations and culpability...they rather prefer to let POG go and shift the resulting losses on the backs of all taxpayers...AGAIN !Nevertheless, the past excesses, will have prepared, the start of the fundamental changes on fiat/gold/debt that we advocate. For having scrambled eggs...one need to crush the shells. working-kirk (4/21/01; 02:35:58MT - usagold.com msg#: 52289) Public Apology Hey forget about it. I made the same mistake. I thought Friday the 13th would be a disaster due to the many supersious people. I was wrong too!. Our problem is our analysis is right but we have no clue what the Fed will do. Did you know there was going to be a rate cut?Well at least our being wrong allows us to get more gold and silver at bargain basement prices. And if that is the price we have to pay, I'll be more than happy to pay it.Another thing, at least you're man enough to admit you're wrong. I wonder if Greenspan will either admit he was wrong when all his tricks failsNah. He is part of the government. He is part of the problem. When was the last time you ever seen a public offical admit he was wrong,... And most importantantly resign and be willing to go to jail for their misdeeds. Sure Clinton admitted he was wrong but only he in the most bald-faced lie tell everybody "I did not have sex with that woman!" "That depends on what 'IS' is? And even after he was caught you didn't hear him say: "I will resign and since I obstructed justice will accept any punishment including prison. No he only said he was sorry but to me he seems awful proud he took advantage of his position, and broke all ten commandments including murder and treason>>>>Midas Mulligan (04/20/01; 14:15:34MT - usagold.com msg#: 52268)Public ApologySorry for being wrong about rise in price of gold which I said would happen after March 21 equinox due to the fact that the sun would be shining over half, or 12hours, the time and would overpower the moon which would shine less than half, or 12 hours, time. Old Yeller (4/21/01; 02:22:22MT - usagold.com msg#: 52288) Running faster,getting nowhere http://www.siliconinvestor.com/stocktalk/msg.gsp?msgid=15695537 As Black Blade keeps us so well updated,items such as this are hardly surprising.The decline in productivity in all areas seems chronic.This race looks totally unwinnable,maybe it's time for a fireside chat from Dubya.Thanks to Winston at Kitco for the link. ViewYesterday's Discussion.
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