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ARCHIVED DISCUSSION FROM 10/2/1999
All times are U.S. Mountain Time
View Yesterday's Discussion.
RossL
(10/02/99; 23:51:39MDT - Msg ID:15254)
Exercising options
Peter, I agree with you that fast moving markets will also have to be taken into consideration. Another general principle would should be added:
If your time horizion is timing the markets to the minute, then you should be trading futures instead of options.
koan
(10/02/99; 23:19:25MDT - Msg ID:15253)
stock options can be safer than stock!
As long as we are on this subject I will show you a cool trick regarding stock options: For a real example take Pan American Silver (10% just purchased by Bill Gates): All in Canadian: Stock is about $11. wts about 3.30-45 - 1 for1. with a strike price of 9 dollars (2 bucks in the money) - wts are good until feb 2001. Lets say you bought 1000 shares. It would cost you $11,000, but the wts would only cost you $3,450. If the stock goes up the wts should track the stock 1 for 1 with 3.5 leverage. But lets say the stock drops to $7. If you bought the stock you would now be $4,000 in the hole, BUT and this is a big but (pun intended) the wts would probably only drop to around 1.50 ot 1.75 because they would retain time value and leverage value. In essence a free lunch. Leverage on the upside and reduced loss on the downside. Pretty cool huh?
Tanglewild
(10/02/99; 22:51:40MDT - Msg ID:15252)
Options
My thanks to Ross and Peter for their time and suggestions as to the options. Considering the state of the comex right now and more than 3 months left on the option i will elect to wait it out a bit and not be at the mercy of the floor brokers. I too think this bull has young legs under it and more suprises may be in store in the near future.
Best of everything to you both and thanks again.
TW
Peter Asher
(10/02/99; 22:47:43MDT - Msg ID:15251)
RossL
The issue on the floor today was the current problem in the Comex option pit involving "Premium rape" There is no binding valuation constraint, and there have been some absurd sale prices far below the intrinsic value of the option contract.
Also, when the future spikes briefly on a blowoff the in the money option may not keep pace. When silver spiked to 5.95 the Nov. 5.50 only traded as high as .40, for one tick.
The exercise manuever is a way to sell into a more liquid market.
RossL
(10/02/99; 22:32:20MDT - Msg ID:15250)
Exercising gold call options
Just a quick refresher on the pros and cons of exercising your gold call options that are now in the money.
Basic principles
1. Managing time value is one of the keys to options trading.
2. Determining the proper strike is one of the keys to options trading.
3. Deep in the money options lose their time value.
4. Exercising options erases the time value.
For example, lets say that spot is 310 on Monday. A June 2000 call at the strike price of 280 is deep in the money. Lets say I predict a continuing bull market in gold and I think gold will hit 350 by January and 400 by May.
Determinations
1. I need to calculate my return, based on my predictions, of holding the option until May.
2. I need to calculate the current time value and intrinsic value of the option.
3. I need to calculate my return, based on my predictions, of exercising that call for one futures contract.
4. I need to calculate my return, based on my predictions, of selling that call and buying several out-of-the-money June 400 calls. The price of June 400 calls is pure time value and no intrinsic value.
5. I need to consider the lack of customer service that now exists at the COMEX.
Generally, options will be better off sold than exercised unless they are due to expire within the week.
My opinion is that I would be better off selling the call right now and buying as many June 350's or 400's that I can with the proceeds.
Check out some of these scenarios before you exercise that call! Leverage is able and waiting!
Feel free to critique this analysis or add to it.
SteveH
(10/02/99; 22:30:56MDT - Msg ID:15249)
protecting gold
http://www.ccrkba.org/1999Emersoncase2amend.html
The above link is the latest and most significant 2nd ammendment case as it was in 1999 and it breaks the oldest hold on the 2nd ammendment by the Federal Courts that used to say she was a state right and not an individual right; not anymore. This is a most interesting read. This may change things in a case-law system that has hitherto been against individual rights.
snippet:
By January of 1788, Delaware, Pennsylvania, New Jersey, Georgia and Connecticut ratified the Constitution without insisting upon amendments. Several specific amendments were proposed, but were not adopted at the time the Constitution was ratified. The Pennsylvania convention, for example, debated fifteen amendments, one of which concerned the right of the people to be armed, another with the militia. The amendment on the right to bear arms read:
That the people have a right to bear arms for the defence of themselves and their own State, or the United States, or for the purpose of killing game; and no law shall be passed for disarming the people or any of them, unless for crimes committed, or real danger of public injury from individuals; and as standing armies in time of peace are dangerous to liberty, they ought not to be kept up; and that the military shall be kept under strict subordination to and be governed by the civil power.
MALCOLM, supra at 158 (citing PENNSYLVANIA AND THE FEDERAL CONSTITUTION, 1787-1788, at 422).
The Massachusetts convention also ratified the Constitution with an attached list of proposed amendments. Id. In the end, the ratification convention was so evenly divided between those for and against the Constitution that the federalists agreed to amendments to assure ratification. Id. Samuel Adams proposed that the Constitution
[B]e never construed to authorize Congress to infringe the just liberty of the press, or the rights of conscience; or to prevent the people of the United States, who are peaceable citizens, from keeping their own arms; or to raise standing armies, unless when necessary for the defence of the United States, or of some one or more of them; or to prevent the people from petitioning, in a peaceable and orderly manner, the federal legislature, for a redress of their grievances: or to subject the people to unreasonable searches and seizures.
snippet 2:
Structural Analysis
The structure of the Second Amendment within the Bill of Rights proves that the right to bear arms is an individual right, rather than a collective one. The collective rights’ idea that the Second Amendment can only be viewed in terms of state or federal power "ignores the implication that might be drawn from the Second, Ninth, and Tenth Amendments: the citizenry itself can be viewed as an important third component of republican governance as far as it stands ready to defend republican liberty against the depredations of the other two structures, however futile that might appear as a practical matter." Sanford Levinson, The Embarrassing Second Amendment, 99 YALE L.J. 637, 651 (1989).
Third snippet:
This Court has not had recent occasion to consider the nature of the substantive right safeguarded by the Second Amendment. [see footnote 2] If, however, the Second Amendment is read to confer a personal right to "keep and bear arms," a colorable argument exists that the Federal Government's regulatory scheme, at least as it pertains to the purely intrastate sale or possession of firearms, runs afoul of that Amendment's protections. [see footnote 3]
Final snippet:
[comment: and here comes the best part. Don't you love it?]
Some scholars have argued that even if the original intent of the Second Amendment was to provide an individual right to bear arms, modern-day prudential concerns about social costs outweigh such original intent and should govern current review of the amendment. However, there is a problem with such reasoning. If one accepts the plausibility of any of the arguments on behalf of a strong reading of the Second Amendment, but, nevertheless, rejects them in the name of social prudence and the present-day consequences of an individual right to bear arms, why do we not apply such consequentialist criteria to each and every part of the Bill of Rights? Levinson, supra at 658.
As Professor Ronald Dworkin has argued, what it means to take rights seriously is that one will honor them even when there is significant social cost in doing so. Protecting freedom of speech, the rights of criminal defendants, or any other part of the Bill of Rights has significant costs—criminals going free, oppressed groups having to hear viciously racist speech and so on—consequences which we take for granted in defending the Bill of Rights. This mind-set changes, however, when the Second Amendment is concerned. "Cost-benefit" analysis, rightly or wrongly, has become viewed as a "conservative" weapon to attack liberal rights. Yet the tables are strikingly turned when the Second Amendment comes into play. Here "conservatives" argue in effect that social costs are irrelevant and "liberals" argue for a notion of the "living Constitution" and "changed circumstances" that would have the practical consequence of erasing the Second Amendment from the Constitution. Levinson, supra at 657-58.
Other commentators, including Justice Scalia, have argued that even if there would be "few tears shed if and when the Second Amendment is held to guarantee nothing more than the state National Guard, this would simply show that the Founders were right when they feared that some future generation might wish to abandon liberties that they considered essential, and so sought to protect those liberties in a Bill of Rights. We may tolerate the abridgement of property rights and the elimination of a right to bear arms; but we should not pretend that these are not reductions of rights."
Peter Asher
(10/02/99; 22:30:34MDT - Msg ID:15248)
Goldfly
Thankyou !
I never heard of "The Band" They came up on the lyric search.
I know the song as sung by my most revered singer on earth, Joan Baez. She has the ability to take a concept that you may not believe in, and put the emotion of the belief into her song so that you feel the feeling of believing it, and then therefore believe.
SteveH
(10/02/99; 22:15:06MDT - Msg ID:15247)
AEL
Agreed. I believe their logic is the pre-1933 confiscation for one, but new philharmonics over Eagles, I am not sure the logic. I know the reporting requirements for Eagles are less because they are US currency, whereas philharmonics would have reporting requirement if over a certain value. Obviously that could be a big deal to some.
Perhaps they will explain.
SteveH
(10/02/99; 22:11:51MDT - Msg ID:15246)
Dabchick
www.kitco.com
good work Dabchick:
Date: Sat Oct 02 1999 10:13
Dabchick (Valuing gold independent of fiat currencies) ID#258195:
Copyright © 1999 Dabchick/Kitco Inc. All rights reserved
Here are the Dabchick Gold Index figures for the past week ( calculated from the London Bullion Market figures published in the F.T. ) . All figures refer to the London close.
These figures are intended to show changes in the True Value of Gold relative to its value in January 1982. Because these values are independent of debased fiat paper currencies, they are also independent of the inflation caused to all other prices by governments that indulge in fiat currency debasement.
Date... | Close | . High. | .. Low .. |
27 Sep | 65.12 | 66.10 | 65.08 |
28 Sep | 69.91 | 70.90 | 65.83 |
29 Sep | 69.98 | 75.07 | 68.48 |
30 Sep | 69.46 | 70.84 | 68.76 |
01 Oct | 70.37 | 70.48 | 68.76 |
( Basis : Jan 1982 = 100 ) .
The dramatic up-move in the index this week is more pronounced ( by far ) than any I've seen in my records of the last 18 years. Its significance ( IMHO ) should not be under-estimated. Its rapidity and size probably signals the end of the long bear market, particularly as it was launched from the last 20-year low at 59.46 only one week previously ( on 17th Sept ) .
Furthermore, Friday's close at 70.37 took the index above the 22-month congestion area between 68-70. Although some resistance was evident at the 70 level on Tues, Weds, Thurs this week, there was only slight loss of momentum. The 70 level could now turn out to be another launch-pad. Let's hope so.
Regards.............Dabchick
Goldfly
(10/02/99; 22:10:11MDT - Msg ID:15245)
Mish-mash
THX- Mounties..... Unless your afraid of the POG crashing again, they're really not that big of a deal. About a year ago, when the POG was still up there (or that is, almost up here), I bought a number of them. I was able to laugh all through this year knowing I had time. But now it's only going to buy you a couple of months. Unless you're buying a good quantity, I wouldn't worry about it. Except of course if you just want something different....
Goldspoon- The Bone Report? Hmmmmm.... It's got potential. Should Townie start getting his resume out?
Peter- You extracted much more out of that song than I could have. (Never got into The Band.)
Angel- It seems a number of postal employees are too nosy for their own good. Once when we got a PM delivery, they kept asking my wife "Is this somebody?" (OK, get this- they thought that it was someone's cremated remains) and "What's in there?" It seems the postman was really shook up that it might be an urn with ashes... (I don't know, I'm suspicious, but I wasn't there to gauge him...) I told her next time to just say that's what it is or that it's computer or car parts.
Roberta Flak? Ewwww.... that's not my speed either. Tell you what, I've got a half-baked project that I should finish to keep it timely anyway. Something worthy of Nashville. I'll try and crank it out.
Cavan Man- I think FOA is incommunicado. From past experience, something like "I'll get back when I can" could be awhile.
Aristotle, Aragorn III, Gandalf, Stranger- What are you guys doing? Did you make a foursome and go off to a 5000 hole golf course? Or are you spending the days in the backroom, counting out your chests of gold?
Regards all,
GF
AEL
(10/02/99; 21:39:17MDT - Msg ID:15244)
eagles vs philharmonics
Cavan Man (10/2/99; 14:00:24MDT - Msg ID:15208):
"I would not buy US Eagles or gold coins denominated by any other country with strong ties to the US dollar."
Why is this? Is not bullion bullion? When it comes time to sell/trade, would not bullion be bullion, regardless of the particular geopolitical issue?
Canuck
(10/02/99; 21:26:39MDT - Msg ID:15243)
POG: An addendum to ORO this am.
The POG has received numerous bonuses in the last 12 days.
The 15 member EU consortium placed a cap on gold sales, there is no 'sudden' supply to flood the market. Demand will and does exceed supply even moreso. I am buying physical Monday and if I am buying physical there must be a fierce demand for I have to be thoroughly convinced. I am not saying that I am correct, I am saying that I am ultra conservative and I see no data indicating gold's retreat.
Oil has doubled, this must lead to inflation. One can analyse until blue in the face, but oil and its refined byproducts affect the price of everything ie: shipping a bag of milk to the grocery store; taking a cab; a courier.
Oil's price has filtered to the individual.
The dollar drop vs the yen. Higher import costs will impact
cost of living. A 20% increase in yen increases everything purchased from Japan.
Gold has been at a bottom for many years, this does not guarantee upswing but it does provide confidence of one.
Supply and demand, ultimately, dictates cost/price. Forget, for a moment, the collusion debate, the BOE auction, the FED, the paper chase, etc. There IS unbelievable demand for gold, the world is nervous, the markets and the financial players are beyond anxious, the volatility is absurd and investors are perplexed. We are well inside 100 days to year 2000 and most of us KNOW turmoil is to set. No need to discuss Y2K, the company I work for will miss Y2K targets by 10%. Time, money and resources have and will dictate the outcome, not Y2K itself. I fear 10% of other companies will miss targets by 10% and this is the essence of why Y2K will be what it will be.
There have been several posts today indicating the decay of paper gold. This is the FOA/Another theory manifesting. Ask
yourself if there is going to be a turnaround. The answer is you can't UNSCRAMBLE A SCRAMBLED EGG.
Al Fulchino
(10/02/99; 21:11:51MDT - Msg ID:15242)
Confiscation
Is there anyone here that went thru confiscation, in the 30's? or anywhere? I would like to hear what can be said from first hand experience. It would be useful to us all.
An issue is at hand, if gold DOES get to anything like $30,000 then it is POSSIBLE that many who do not hold gold in gov't and in society as a whole is likely to be jealous and it would be politically correct to make an issue of ownership.
canamami
(10/2/99; 20:28:48MDT - Msg ID:15241)
Testing
Testing.
Cavan Man
(10/2/99; 18:22:25MDT - Msg ID:15240)
OOPS!
I forgot to mention Mike Kosares. His analysis is the best!
We're lucky he hangs around with us. He could be working for one of the networks you know.
Cavan Man
(10/2/99; 18:17:32MDT - Msg ID:15239)
watcher 15225
I'd can Kaplan. Wisdom and knowledge he has but, he trades his book same as the rest. I've thrown in my lot with Another/FOA/ORO et al. I have a real good feeling about those guys.
Cavan Man
(10/2/99; 18:13:32MDT - Msg ID:15238)
Angel
Genes don't lie. Believe it! CM
Where is our kindred spirit FOA tonight?
Angel
(10/2/99; 17:46:32MDT - Msg ID:15237)
Cavan Man
Shrewd? Yes I have been called that before. Guess it is in the genes. I am extremely proud of my heritage. Everyone tried to take a piece of the Armenians but they still kept coming back. There aren't too many of us left.
goldnbones
(10/2/99; 17:42:17MDT - Msg ID:15236)
oops
oops! Make that $0.98 on Sept 24
Cavan Man
(10/2/99; 17:39:26MDT - Msg ID:15235)
Peter Asher
Peter, can you imagine? Start a new business in the middle of WWII! When I remarked upon that feat, Sopia said; "When you have a family you do what you have to do."
Of genuine concern to all I think is the fact that many Americans have never had to, "do what they have to do". or, at least they forget.
goldnbones
(10/2/99; 17:36:56MDT - Msg ID:15234)
gold hedging
During the last week I watched the share price of Eldorado Gold go from $0.98 on Sept 20 to close at $1.30 on Oct 1. That is up about 33%, performing well because Eldo is said to be one of those producers whose share price is strongly tied to the spot price of gold.
However - this is what Eldo had to say in their 2Q financial rpt.
Hedging Programs
Eldorado unwound gold hedges to a value of $5 million in this quarter, and used the proceeds to pay down debt. The Company now has 510,000 ounces hedged, representing 100% of production for the next three years, at an average price of $297 per ounce. The hedged ounces are all in instruments that enable them to be rolled over, should spot prices exceed the strike price. The Company conducts an active currency hedging program for Brazilian currency (Real). At present, all real denominated operating costs are fully hedged for 6 months, and the Company has the capacity to extend this for a further 6 months if appropriate.
So...they have the next 3 yrs production hedged at $297/oz, but can roll those hedges over if spot gets too high.
My question is that if the hedges are rolled over, aren't they rolled over using the current higher lease rates? So that if you roll them over, it might not benefit that much, if at all. And therefore Eldo may not benefit from the higher gold prices, and following Another/FOA's postings, may even be hurt by them.
But here is an interesting point - Eldo is 39% owned by....Gold Fields Limited.
Cavan Man
(10/2/99; 17:35:57MDT - Msg ID:15233)
Angel 15230
Angel,
Ah, you must be a shrewd one; to your credit!
History remembers but "the West" does not; there was an Armenian holocaust of significant proportions during that period.
Peter Asher
(10/2/99; 17:35:39MDT - Msg ID:15232)
Tanglewild
It would be best to call it in when your equity exceeds the margin requirement. It's just a request to your broker to excercise you option. Your account is debited with the strike price and credited with the furture's value at the time of execution. The differential is your margin acct. value.
watcher
(10/2/99; 17:34:04MDT - Msg ID:15231)
peter asher
now you've done it . gonna have that tune in our heads.
good job
Maybe goldfly will will write one and we'll enjoy that one also.
Angel
(10/2/99; 17:30:54MDT - Msg ID:15230)
Peter Asher
Peter, that was Great ! I can't believe you wrote that so fast. Maybe Goldfly can work on something else.....Hmmmm lets see, something mellow. How about "The first Time Ever I Saw An Ounce" ala Roberta Flack.
Stopped in at my local coin dealer after grocery shopping to see if he had anything left. I pretty much cleaned him out on Wednesday. He had a few Philharmonics and some .10 oz Mapleleafs. I bought them all and told him to call me when he got more but he didn't think he would get anymore anytime soon. He said silver was his biggest mover but he wouldn't or couldn't elaborate.
Cavan Man...wonderful story. My father's family immigrated to the East coast from Turkey in 1910. They were Armenians escaping the persecution of the Turks. I remember hearing all the horror stories while growing up and thought everyone must have this kind of background. I also know that they brought GOLD with them and that enabled them to start a business.
Tanglewild
(10/2/99; 17:14:59MDT - Msg ID:15229)
Peter Asher
Thank you for the advice Peter, I think that's a great idea regarding calling in the futures contract on the gold. I was wondering if it would be better for me to call it in just before expiration or sooner? I don't even know how to call it in..lol. Any help would be appreciated :-)
Thanks,
TW
Cavan Man
(10/2/99; 16:56:56MDT - Msg ID:15228)
A Y2K Aside
Some months ago here someone made a comment concerning embedded chip architecture in plastics (resin) manufacturing plants. The concern was that the process would freeze up in some way and the tubes, pipes etc would become clogged with an intermediate substance that would permanently take those lines down....something like that. Chaos would follow.
I have a friend who is an attorney for Monsanto; they have basically the same concerns in many of their plants. Guess how they intend to respond? Monsanto will take their plants offline and fill the "lines" with water until they can sort things out. Yankee ingenuity!
Cavan Man
(10/2/99; 16:50:39MDT - Msg ID:15227)
@Peter Asher
Peter, Thank you.
Also, don't forget that Leo Burnett started his agency in the middle of the great depression; people who knew him told Leo he was crazy and would end up selling apples on street corners.
In their lobbies (LB's) today in the Chicago Loop, they feature bowls of apples for their visitors with a greeting card to relate the history of the agency
Peter Asher
(10/2/99; 16:28:50MDT - Msg ID:15226)
Leigh, Angel, Golfly
Leigh -- Thank you!!
Angel, Goldfly.
I hope it was OK to answer Angel's suggestion (and inspiration) for those lyrics.
The Forum was engaged in *extremely active posting*, so I assumed that Angel had placed a *market* order, rather then one *limited* to Goldfly.
watcher
(10/2/99; 16:26:12MDT - Msg ID:15225)
too much optimism/ Kaplan ???
Hi to all.
I really can't believe my ears these days . Too much optimism.. too much .... Like that had anything to do with the sudden rise in POG.
First of all the rally started over seas each time and was met with opposition only when it reached the shores of "the Land of the free" . Pardon my pessimism.
We have only, in our brighter outlook'seen others recognized that the patient is not dead afterall as we new all along. Kaplan even had the nerve to say we had a double top in the last few days and it was all over because of our optimisim. Irresponsible at best . Maybe suspect. He has ignored even what the main stream is beginning to recognize as a reality. I am starting to feel more like I did about him as I did when reading M. Armstrong. Just doesn't add up
This forum or any other is not responsible because of a little glee of emotion leaks out. These statements are meant to further someone elses gain. Not ours for sure.
Is the POG overvalued yet. I have not heard one statement that the price is to high. Just that it might go down anyway.We all have been thru a lot of that and short term ,in this market, anything can happen. What we are witnessing
is the Calvary HAS ARRIVED. This is what Another and FOA and ORO have alluded to . The titans have started at it and we at this point can participate carefully but we must recognize that until an agreement is worked out ( or may already have been started)this is war and anything goes.
Surely the bell has rung and we all here have a ring side seat . FOA AND Anothers is probably the safest(buy physical)
and for traders (much to gain and much to lose)many gyrations bring both profits and losses
We can all sit back and enjoy the show knowing that we are not alone . THE CALVARY HAS ARRIVED
ORO- enjoyed reading your re-cap of your posts .Great work.
koan
(10/2/99; 15:58:39MDT - Msg ID:15224)
Monastic Trio - inspired
I think there was an old John Coltrane album with Miles Davis, and Theloneous Monk or a woman, called the Monastic Trio -always liked the sound of it - three inspired muscians. Schippi, I hope you are right because I havn't taken much off the table, I am pretty much long - let your long positions run. Kaplan is just so persuasive.
koan
(10/2/99; 15:11:25MDT - Msg ID:15223)
Silver and gold
I have always wondered to what extent silver may be manipulted by the users? If silver gets above $6.00 or if the comex stocks drop below 70,000,000 oz, I think anyone who may be manipulatiing it will lose control as it should directly go to $7.00. Gold is harder to figure because we don't realy know what the short positions are, or, once again, the potential demand. The world does seem to be buying big time - which was real evident when gold was around $250. Even the gold carry, foreward selling and shorts couldn't push it below that figure - too much demand at those prices. I think one of the reasons gold took off better than silver was more short covering on gold, but silver will catch up - $10 before $500. Last, silver now has the big guns in its corner, Bill Gates, Soros and Buffet - they now all have an interest in a rising silver price. The monastic trio.
Peter Asher
(10/2/99; 15:10:13MDT - Msg ID:15222)
Caven Man
Thanks for the inspirational story.
The sub-heading from the cover of "True Comics" in the '40's
"Truth is stranger, and a thousand times more thrilling, then fiction."
CoBra(too)
(10/2/99; 15:05:44MDT - Msg ID:15221)
@Cavan Man - Reality Check-
Dear CM,
History is all about fall back positions - we're the greatest already and we've got every shelter to fall back to if worse comes to worse, that is exactly what the Romans felt, while war was raging outside the "LIMES".
A modern equivalent is Drexel, Burnham's Michael Milken, who smartly derived that only 16 corporate (AAA+) rated +triple A bonds were left in the late seventies. He therefor deduced Junk bonds should overall have a better performance on average- He's been pretty right for some time - So have the "hedge" funds - FOR THE LAST TIME!
OK-I've got to vote tomorrow - Austria's gen'l elections - would be real tough, if there was an alternate .... for me ...
CB2
Lafisrap
(10/2/99; 15:01:01MDT - Msg ID:15220)
It's still a good time to buy, isn't it?
I shopped around today and found that American Gold Eagles are still generally available. The price is a bit higher though, between $330 and $335 per ounce.
It appears that the preminum over spot has gone up by about $5. One of the larger coin dealers told me that as the spot price of gold recently increased, his sales of American Gold Eagles dropped off to almost nothing. That's what he said, and he still charged me the additional $5 premium. It does not make sense to me.
I sure do need gold to go to $30,000 per ounce. I hear Monday will be an exciting day for the gold markets. I will be only watching for a while.
Lafisrap
Leigh
(10/2/99; 14:58:06MDT - Msg ID:15219)
Peter
Peter, that's brilliant!!
Peter Asher
(10/2/99; 14:56:44MDT - Msg ID:15218)
Angle, Goldfly
thanks to the incredible Internet, Robin was able to get the lyrics in minutes. Here they are.
:THE NIGHT THEY DROVE OLD DIXIE DOWN}
{st:The Band}
[C] [Am] Virgil [C/G]Caine is the name, and I serve[F]d on th[F/E]e
Danvill[Dm]e train,
[Am] 'Til Stoneman'[C/G]s Calvery came an[F]d tore up th[F/E]e
tracks[Dm] again.
[Am/E] In the winter o[F]f '65, We wer[C]e hungry, jus[Dm]t barely
alive.
[Am/E] By May the tenth[F], Richmond had fell, it's a ti[C]me I
[Dm]remember, oh s[D]o well,
{c:Chorus}
The [C/G]Night They Dr[Fmaj7]ove Old Dixie [C/G]Down, and the
[Fmaj7]bells were ringing,
The [C/G]Night They [Fmaj7]Drove Old Dixie [C/G]Down, and the
[Fmaj7]people were singin'. They went
[C/G]La, La, La, [Am]La, La, La, [Gsus4]La, La, La, La, La, La,
[F] La, La,
[Am] Back with my wife i[C]n Tennessee, Whe[F]n one day sh[F/E]e
called t[Dm]o me,
[Am] "Virgil[C], quick, come see[F], there goe[F/E]s Robert E[Dm].
Lee!"
[Am/E] Now I don't min[F]d choppin' wood, and [C]I don't care if
th[Dm]e money's no good.
[Am/E] Ya take what ya need and y[F]a leave the rest,
But the[C]y never should hav[Dm]e taken the ver[D]y best.
(Chorus)
[Am] Like my father [C]before me[F], I wil[F/E]l work th[Dm]e land,
[Am] Like my brothe[C]r above me[F], who took [F/E]a rebe[Dm]l
stand.
[Am/E] He was just eighteen[F], proud and brave,[C] But a Yankee
laid hi[Dm]m in his grave,
[Am/E] I swear by the mud [F]below my feet,
Yo[C]u can't raise a Caine bac[Dm]k up when he's in [D]defeat.
(Chorus and fade)
Peter Asher
(10/2/99; 14:51:35MDT - Msg ID:15217)
Angel
Original lyrics to follow:
---
The Bank of England is my name, and I served my master's gain
Till Duisenberg's cavalry came and tore up the carry game
In September of '99, the shorts were hungry and on the line.
To the twenty first, the POG still fell, it's a ti-me I remember oh so well.
** Chorus
The Night They Drove the Gold Shorts Down, and all the phones were ringing,
The Night They Drove the Gold Shorts Down, and all the Forum was Cheering. They went La, La Yad-de-dah---- ETC.
**
Back with my wife in Tennessee, when one day she came to me.
Virgil, quick, come and see, There goes the P-O-G.
Now I don't have to be choppin' wood, and I don't care if the Fiat's no good.
Ya take what you need and you leave the rest, but they should ne-ver taken the ve-ry best.
**
Chorus
**
Like my father before me, I will work for Gold.
Like the Gold-hearts, who never sold.
Like Another, so proud and brave, will put the Yankee bankers in their grave.
I swear by the Mine beneath my feet, you can't ra-ise the dollar when it's in defeat!
**
Chorus
Marius
(10/2/99; 14:47:33MDT - Msg ID:15216)
It's a fill! (Unless...)
Elevator Guy: no offense taken! I'm in much the same position as you. For a variety of reasons, options trading has been "my thing" for the past year and a half. I do want to get some of the profits into less risky vehicles, so physical and/or stocks will get a fair hearing from me.
Koan, RossL, Peter Asher et al: The COMEX/broker tale keeps getting more interesting. The recent article posted here about NYMEX/COMEX being technologically backward helps explain a lot. But I get ahead of myself.
Got a call from my broker this PM, indicating a "preliminary
fill" on my market order to sell Feb 00 290 calls. ACCORDING TO COMEX I can't consider this a completed fill (ie, trade with the money) until it is confirmed. The broker said it is theoretically possible for the price to be adjusted, or the trade to be undone. They have not had it happen to their traders yet, but know of others who weren't so lucky. So, until I hear back (hopefully on Monday) it's in the bag...unless it isn't! These guys have done very well for me for the past year and a half, which is one reason I didn't consider on-line trading sooner. I find some of what they did in this interval suspect, but I'm not saying or doing anything about it until the profits from everything (still have June 00 290's) are really in hand!
FYI: I bought the calls in July at 2.8, & they were supposedly liquidated at 23. If I recall my math accurately, that's about 721%.
Best of luck to all, & hold on. This ride's just getting started!
schippi
(10/2/99; 14:43:20MDT - Msg ID:15215)
To ALL Gold Bears
Regression analysis of all 39 Fidelity Select sectors
which collectively act as a proxy for the market, show:
Precious Metals (FDPMX) and Select Gold ( FSAGX)
to be in First and Second place on the 30 day regression table.
Also FDPMX is First on the 60 day table and FSAGX is Third.
My suggestion to all Gold Bears including S.J. Kaplan is
to do the math!
koan
(10/2/99; 14:42:29MDT - Msg ID:15214)
Aldous Huxley - and gold
I don't know how you wondered onto that subject, but the Huxley family is/was? one of the great intellectual families over the last 150 years. Sir Julian Huxley is famous for his great defense of Charles Darwin. I am very curious about Mondays action on the PM's. The stage seems to be set for a rise with inflation up and hedging down. But I am worried about Kaplan's bearish comments and statistics. The variable which could make the difference on the upsdide would be new buyer's which is almost impossible to predict and would counter act Kaplans stats. Over the longer term I am more bullish. Kaiser is real bullish. He thinks this is the $800 move. Sure hope he is right as I can then do my trading fome Bora, Bora. Peter, Aldous Huxley is famous for Brave New World - you and I and a few others are probably the only one's who ever read Door's of Perception ( I thought a very good treatise). lol
Goldspoon
(10/2/99; 14:36:24MDT - Msg ID:15213)
Next weeks and next Months Headlines.....TODAY!!
Next week:
The horse with no name rises from the dead, after being shot last week and begins to check out! The other horses stand around for awhile from shock and amazement then begin to follow.
Next Month: From Goldspoon's bones.... Y2K fears are in the background as more imeadiate concerns grip the world.. the natural and manmade disasters increase in number and the time between each event grows ever shorter....Disease and illness also begin to play a role...The urge to Hoard becomes strong....
(Sell insurance company stocks as the come under increasing pressure).....as if the others wouldn't.....
CoBra(too)
(10/2/99; 14:29:13MDT - Msg ID:15212)
Humble retort to 2 days of great posts -
Hello - Leigh - you've made my day by looking over to the other Midas site - thanks for signing up and I'm not the only one giving Bill Murphy a lot of credit in expressing his views, without fear of repercussion to some of the big guns in your and anybody else's government. -
And that, on the other hand is part of my belief, that the dollarization, globalization, (blatant) manipulation et al of all and every market -the gold market in particular - will not just surrender peacefullly in a way, where a new regimen (sounder?) can take its place right away. No, I feel, like many others here (A,FOA, ORO et al) that the final battle in an ongoing war against the hegemony of the paperization of the world in terms of US currency is coming under attack- a world which is starting to become weary of debts being seviced by more debts, or IOU's and a world, which is and has been financing the bubble economy of the US for too long -fearing the collapse of the consumer of the last resort and, of course the paper debt it (Asia & EU) still hasn't reptriated.
EC and ECB's gold sale curb was a more than pleasant, though unexpectedly harsh (in wording) surprise at this, hinting on very grave disequilibriums - probably because of the lenient posture towards derivative trading in the US/UK banking community, spelling major upheavals akin to systemic risks in todays monetary (or better $-) system - finally identified as grandest scale scam casino.
This is not free trade, nor is it capitalism, no it isn't even casino capitalism - it is pure gambling - made possible by the worlds largest cash pools and banks leveraging the gamblers up to their hilts - and not caring a damn about their risk/reward ratio anymore, which their doomed shareholders will remind them in time. The licence to create (il-)legal tender IOU's, was never supposed to be the licence to use this swindle for their own benefit.
Since I'm getting carried away, I would like to conclude - If they have gotten away with this scam sofar, it will be pretty tough to fight them on their own turf - and it may take some time!
Still, goldhearts, our time has just begun and wer'e looking ahead to a prolonged bull market for gold - and I would like to add, while A/FOA's message is clear and understood, don't expect the opposition to surrender that easy.
Thank you CB2
Cavan Man
(10/2/99; 14:25:24MDT - Msg ID:15211)
Reality Check
RE: Gloom and Doomy Forecasts
My wife has an Aunt I have known for about six years. Her Aunt recently spent a week with us. Sophia is a Greek immigrant who came to this country in 1953 with many other ethnic Greeks living in an area of Albania bordering Epiros (northern Greece).
During WWII, it was uncertain with the continental upheaval which way things would turn out for these people; would they be governed by Nazi's, Communist's or, the Royalist's? There were six villages in this particular area and for the most part, the people who lived there including Sophia and her family stayed put until they could be certain which side in the conflagration would win out above the others. In 1943, IN THE MIDDLE OF WWII, it became clear that a very bad man who they still discuss Hoxa (pronounced HOJA) was taking control of the country. He was a murderer and a communist. In 1943, Sophia's father, a Greek grocer in his Albanian village, moved alone to Greece and opened a restaurant; IN THE MIDDLE OF WWII! Later, Sophia and the rest of his family reunited (about three years or so) in Greece and they were lucky enough to share a two room bunkhouse with another family where they cooked on a camping stove for eight years. Sophia had a friend, Aristea who slept with her in the same bed for eight years. While Sophia's financial fortunes did not turn out as well as many others from Sopiki (one of the six villages), her brother for one came to this country in 1956 unable to speak a word of English, with no money, took a job as a waiter, and parlayed his hard work into a donut shop and now owns resort property in Florida; truly a self made man; not the Bill Gates variety. Aristea's husband has a similar story only his fortune was built upon real estate as well as hard work.
I am sure we can all tell a story like this. The point is, as Dean Acheson's father was fond of saying to his son, "buck up lad". Here in the US, win, lose or draw, we are the luckiest civilization in the history of the modern or ancient world. Even if worse comes to worse, we sure do have alot to fall back upon.
Cavan Man
(10/2/99; 14:07:13MDT - Msg ID:15210)
@ ORO
I really enjoyed your last two posts here! Thank you.
Since I didn't have to wade through so much quantitative analysis that is difficult for me to understand (my education deficit disorder problem), I now have a better understanding of your overall perspective. Also, I now know that you are also a regular midwestern guy ala Spock (his last enagagement with the dilithium crystals) when he said to Kirk; "I have been and always will be your friend". Know what I mean Vern?
Cavan Man
(10/2/99; 14:02:27MDT - Msg ID:15209)
Bonedaddy
Your many contributions are, right on!
Cavan Man
(10/2/99; 14:00:24MDT - Msg ID:15208)
granny
Hello. I would not buy from local coin shops unless the size of your purchase warrants. I would purchase pre-'33/34 European bullion coins and newly minted 1 OZ. Austrian Philharmonics. I would not buy US Eagles or gold coins denominated by any other country with strong ties to the US dollar. The European bullion coins will have some numismatic value because of dates/condition. Since the troy weight is approximately a 1/4 OZ. or less, they can also be used as the "money" they once were if necessary. The Austrian coins have the highest monetary value (2000 Schillings) about $US180 last time I looked and they are closely tied to the Euro block. Both products will be a store of wealth. The Philharmonics could be considered an "investment" if your diversification strategy permits. MK can sell you all you need.
Peter Asher
(10/2/99; 13:36:12MDT - Msg ID:15207)
Angel
Angel
If memory serves, you wouldn't have to change much else for a great Gold celebration song. If I can find my Baez Albums tonight, I'll take a crack at it.
Where were you in the summer of '66? I believe that was the year that Leary did the "Turn on, "Tune in, "Drop out" seminar at the Fillmore East with incense, candles and as background music, the Massa Luba.
About song publishing, I have music and lyrics to a future fiction folk-song about Miners of all ores. It's also a 'treatment' for a potential screenplay, so I haven't gone public with it as yet. Interested?
Peter@peterasher.com
Tomcat
(10/2/99; 13:04:57MDT - Msg ID:15206)
ORO: The half life of the dollar
Your last post to Skeptic was a great summary. Times are going to change very fast from here on out. Since we are entering a stage where inflation could be a very big issue I have a few questions about it.
In physics there is the concept of a half life for radioactive material. It is the time it takes for the radioactivite intensity of the material to decrease to one half of its original intensity.
In any inflationary environment the dollar would also have a half life for its value: the time it took for the dollar to be worth fifty cents.
Someone asked me if I could predict how fast the dollar would decay if the US did not devalue but monetized the debt? I thought about it and was clueless due to the fact that there are so many varibles like repatriazation.
Then I said to myself, there must be upper(faster) and lower(slower) bounds to the problem. Clearly on the slower side you could say its at about 7% inflation which would give a half life of about 10 years.
The difficultly for me is estimating the fastest half life. If the Fed kept pumping repos and buying treasuries and we had repatriaization at a super fast rate, what would be the fasted time it would take to get a 50% decrease in the dollar's buying power within the US? Could it happen in six months? It would seem that for us to experience rapid inflation in the US, those repatriated dollars would have to get into the US and actually be used purchase goods and competed with US dollars on mainstreet; and that take a bit of time. No?
Also, it the US dollar was devalued by fifty percent, how long would it take before the dollar dropped by 50% on main street?
Could you provide a bit of input here. I am not expecting a direct preciction. However, an orientation of how to look at the half life problem and the what the key variables are would be very helpful.
granny
(10/2/99; 12:54:57MDT - Msg ID:15205)
Just a little story.
Just a short sweet story.
Recently my 84 yr. old father had successful, mutiple bypass surgery (it didn't go all that smoothly for about a year but he's doing much better and we still have him around to love and enjoy.)
Just prior to taking him to hospital, for scheduled surgery, he insisted that we empty the contents of his safety deposit box to find his one and only 1800's gold coin. The BAGS of coins were quite shocking to us as we remembered, from childhood, his occasionally bringing out his books of coin collection so carefully arranged and protected. He sold off most of his silver in the 70's and made a nice profit but continued to collect silver, unbeknownst to us, by throwing coins, any silver coin, in a bag, then bags, and then more bags (they are heavy). It took two of us to take the box out of its drawer after taking seve ` ;ð¨:':--p GET /business/cpm/cpmforum/archives/3019999/default.html HTTP/1.0
Host: www.usagold.com
Accept: */*, q
Angel
(10/2/99; 12:52:26MDT - Msg ID:15204)
Gold by US Mail
I had to go to the Post office to pick up my coins that came via registered mail. While I was signing all the forms the Postmaster plunked down two boxes aprox. 6 inches long by 4 inches wide stating "these little suckers are heavy...what ya got in there gold bullion?".....if only he'd known.
Aldous Huxley was also a close friend of the infamous Timothy Leary. Opps, I guess that tells you how old I am.
Goldfly...how about a new song entitled "The Night They Drove The Gold Shorts Down". Just a suggestion
PH in LA
(10/2/99; 12:50:07MDT - Msg ID:15203)
Re: Option settlement (The more things change...)
Date: Sat Apr 18 1998 22:31
LIBERTY__A (Gold mining stocks and their golden path!) ID#263379:
Copyright © 1998 LIBERTY__A/Kitco Inc. All rights reserved
...As much as I would like to follow your specific recommendations of owning physical gold now, I cannot at this time for reasons stated below. Others that post here at KITCO are gold bugs of the western world belief ( as you labeled) that are staged, and ready for that big gold move as you have postulated. Unfortunately, most with gold mining stocks in possession that maintain a present day formidable loss that at some point will be regained.
Now, I'm sure a large majority here can relate to this position and question.
My plan is one that switches from my gold mining stocks ( before they burn ) to the physical, for a hold of a lifetime, as you have gracefully stated.
I acknowledge a possible LOCK in the physical gold market at, or about $1,000.
1 ) Sell 1/2 position of the mining stocks @ $650 and buy physical gold. ( coins or bars )
2 ) Sell the remaining 1/2 position @ $750 and complete the physical gold purchase.
This would assure a possible great % stock profit and more purchasing power to buy the physical. How do you envision gold availability at this level?
Mr. Another, can you be specific. Is this plan a viable one, and what caviats to you envison? Please advise this writer and your audience.
Best regards, and thank you.....
Date: Sun Apr 19 1998 00:08
ANOTHER (THOUGHTS!) ID#60253:
Copyright © 1998 ANOTHER/Kitco Inc. All rights reserved
Mr. Liberty_A,
Sir, the plan is good, the question is, "how good is your broker"? Noone can know how this world change will come about, in specifics. The gold market may lock at $400? Or $4,000! When the
public perception does come to understand, many entities I know of will not be buying "at the market" as your broker will. These ones, they will be "above the market", "well above the market"!
Will you bid $1,000 when your broker screen shows $475? I myself, as a country will be "there"! You sir, will stand well behind most in line.
I tell my children, as you may tell yours: "when a thousand hungry lions fight for one scrap of food, small dogs should hide with what's in their belly"
Thank You
Chicken man
(10/2/99; 12:45:38MDT - Msg ID:15202)
ORO - Trading of the Future or Future of Trading...?
First of all ,thanks for that post this A.M......thank you for your "time" you spent putting the "pieces of the puzzle" together...!
This is a post from marketforum.com (it is mainly a forum that chats soybeans, corn, hogs, cattle etc).... the main "buzz" now is gold calls and the bad/no fills they have been receiving from the COMEX...here is the post:
" Nymex/Comex Follies Herald End of Open Outcry???
Posted By: John J. Lothian
Saturday, 2 October 1999, at 11:53 a.m.
With the follies at the Nymex/Comex this week, the inking of the Eurex/CBOT deal and the
announcement by the MGE they will enter into an agreement with a company called ePit to develop an
electronic commodity exchange, could this week have been the turning point for the end of open outcry
trading in the U.S. as we know it.
The Nymex/Comex was ill-prepared for the huge explosion of order volume they saw this week. They
seemingly have had their heads in the sand as the Internet revolution and technological advancements
have brought new demands upon the efficiency of their markets.
They have seemingly ignored the success of the E-mini S&P contract at the CME, which not only
helped ease the flow of customer paper into and out of the big S&P 500 pit, but has attracted masses
of new traders into the futures markets. For example, why has the Nymex/Comex not started side by
side trading with their ACCESS electronic trading system during the day, or better offered a smaller
size contract on it running side by side with the big pit traded contracts. I believe this approach has
added liquidity to the S&Ps, not stolen volume from them. While a Nymex/Comex approach would be
somewhat more similar to the un-robust CBOT Project A offerings during the day, it would at least
give the exchange another avenue to handle explosions of volume. Open ACCESS up to the FIX API
the CME is introducing (if possible?) and suddenly the Nymex/Comex has opened their markets to
electronic futures traders around the world in a meaningful way.
Electronic traders do already have access to the Nymex/Comex, but the efficiency ends at the point
where the human brokers can not handle the volume of order flow. The Nymex/Comex, to my
knowledge, has done nothing to technologically enhance the open outcry efficiency. At the CBOT
there are about 100 Electronic Clerk (EC) terminals which aid brokers and clerks in managing the
customer orders, easing execution, and speeding reporting of fills. In fact, my CBOT floor manager this
week told me he has an EC pilot program in the Corn options, where this terminal is receiving only
straight buy and sell corn option market orders. That is a first, to my knowledge. At the CME, they
are behind in their unofficial goal to put 200 CUBS2 terminals in by the end of 1999. However, I can
now route orders to 5 different CUBS2 terminals on the CME floor and the list is growing every
month.
In the old days the flow of orders was limited to the number of phone clerks on the trading floor and
the speed they could take orders. It was also limited by the number of floor runners and their ability to
get orders into the brokers quickly and return to the desk for more orders. Sometimes runners would
stack up getting into a particular busy broker, thus the flow of orders was regulated by this physical
limitation.
With Internet order routing systems routing orders to New York, the flow of orders to the trading floor
is a function of the number and speed of order printers on the trading floors. Those printers and
computer systems can quickly send hundreds of orders to the trading floor within minutes. From there
though the Nymex/Comex did not and does not have a technological tool to help manage this order
flow. They could throw more human beings at the pits, pull clerks and runners off of other pits and
desks. I am sure there was plenty of this people shuffling going on at the Nymex/Comex this week, but
during the largest volumes it could not meet the challenge.
Clearly to me, the Nymex/Comex needs to technologically advance the efficiency of their open outcry
trading, or their black eye this week will speed the demise of open outcry trading at all U.S. exchanges.
The Nymex/Comex failure to efficiently perform this week for the retail traders presents an opening
for a would be predatory exchange or e-alliance. Once an existing or new exchange shows it can steal
the business of an open outcry market here in the U.S., momentum will be increasing for more markets
to switch to electronic trading or have volume stolen from existing markets.
Here is my suggestions for the Nymex/Comex:
1) Enhance open outcry trading by opening the exchange to the entrance of Electronic Clerk or CUBS2
terminals from the CBOT and CME to connect them to existing TOPS networking in place. 2) Create a
* sized gold and silver contract and trade them on ACCESS 23 * hours during the trading week. 3) Give
away free quotes for your ACCESS contracts. 4) Develop an open API for ACCESS to open the
system up to Internet order routing systems. 5) Promote the heck out of these contracts on the
Internet. 6) If you can't do these things by yourself in a timely manner, think about merging with
another exchange that has the technological ability already. It is not enough today just to transform
yourself into a for-profit corporation, you must have the strategic partners, capital and mass to
effectively compete. 7) At least forge an alliance with another exchange to get access to better
technology if you can't bring the necessary products to market in a timely fashion. It is better to make
some new alliances than have competitors develop competing products you can't match.
The Nymex/Comex must understand they don't exist in a vacuum. The gold and silver markets are
nearly as old as human civilization. Every country uses petroleum products. Today more of the
world's population has inexpensive access to futures prices than ever before in history, via free and
fee-based Internet sites and services. The traders who have flocked to the stock index trading in then
last 18 + years and are now trading via the Internet or through technologically equipped brokers are
clearly familiar with the traditional gold and silver markets. All it took to attract some attention to the
gold and silver market was the first substantial bull move in 13 years on Monday.
I will admit that the almost continuous bear market in gold for the last 13 years left a lot of people
with low expectations for this market. On Tuesday driving to the train I heard some analyst/trader
being quoted on the radio as saying the market action on Monday suggested that by the end of the year
Gold could be trading at $300 per ounce. It actually took only 26 minutes of trading on Tuesday until
the December contract traded there. Yowza!
The world has clearly changed because of the technological advancements and accompanying cost
barrier reductions. Millions of people can and have visited futures exchanges cyber visitor galleries via
the Internet. The huge spikes in the E-mini S&P on Fed announcements and government reports should
be a sign of the power of the global public's interest in our markets and a warning about the
inefficiency of the physical limitations of open outcry trading. If this kind of interest in the e-mini S&P
continually has this type of effect during key moments, how can un-enhanced open outcry trading
compete during similar surges in trading interest? I don't think it can.
Lets hope the Nymex/Comex can put aside traditional territorial political concerns and enhances their
open outcry trading before their follies turn into a trend and speed the end of open outcry trading in
the U.S. as we know it. I acknowledge the inevitability of the dominance of electronic trading, but am
hoping for a smooth transition rather than a disruptive one.
Regards,
John J. Lothian
Disclosure: Futures trading involves financial risk, lots of it!
Disclosure: John J. Lothian is the President of the Electronic Trading Division of The Price Futures
Group, Inc., an Introducing Broker. "
The poster has some very good points....and a vision where the future of trading is headed.....it is going into the cyber world because it HAS to...! way too much volume to handle by the "open outcry" method....
One thing I have been wondering about is how this lease scam will end....all the paper just can't be covered unless it is "settled" in paper.....if "24hr world trading" via the WWW (World Wide WAIT) there could not be a "settlement point" to demand delivery.... would you be so kind to share what you "see"....?
thx
SteveH
(10/2/99; 12:24:18MDT - Msg ID:15201)
Peter and Leign
It was late/early. Thanks.
Leigh
(10/2/99; 12:19:42MDT - Msg ID:15200)
Hooray!!
Thank you, God, and thank you, Ron Paul! Mr. Paul is a diligent advocate for our freedom, and we owe him A LOT!!!
granny
(10/2/99; 12:16:27MDT - Msg ID:15199)
Leigh..local purchase
Thanks Leigh. I just recently made two "online" purchases of recently minted bullion. I have received one shipment but the other is "delayed". Reason told has something to do with minting backlog or such. I'm unsure if I should be uneasy about this or if this is "normal". In both cases the "dealers" are either well known, recommended or highly visible and in both cases I have spoken with the proprietor, personally. I am happy with the arrived purchase and when second arrives I'm certain(hope) I'll say the same. AND they are really pretty and pristine. Had to get the dissecting microscope out, though, to really appreciate the 1/10 oz. Hubby was shocked that so much "worth" could be contained in such a small package! Easy to hide/bury though. He's more used to "vintage" silver.
I thought I'd venture down to the local shops to see if I could find any bargains. Last time I was in the shops I wasn't as prepared as I am now (although a little bit of knowledge CAN be dangerous, I realize). Appreciate your assistance. Be well.
turbohawg
(10/2/99; 12:11:50MDT - Msg ID:15198)
National ID killed by House
http://www.house.gov/paul/press/press99/pr100199.htm
>WASHINGTON, DC -- In approving the House-Senate compromise on the Transportation Appropriations legislation Friday, the House of Representatives killed an ill-conceived plan that would have prevented Americans from getting new jobs, boarding airplanes or exercising their Second Amendment rights without holding a National ID card. The National ID was slated to go into effect Oct. 1, 2000.<
Which means the totalitarians will now try Plan B.
turbohawg
(10/2/99; 12:05:21MDT - Msg ID:15197)
Tough Talk From The European Central Bank
http://www.prudentbear.com/markcomm/markcomm.htm
The latest commentary from the Prudent Bear, David Tice ...
>Our sense is that developments in Europe could now prove most significant. It certainly appears to us that the European Central Bank (ECB) is preparing the markets for a rate increase at its meeting next Thursday, and they may decide to act aggressively. A strong tone of independence now emanates from European officials. With tough talk focused on rising inflationary pressures, ECB President Wim Duisenberg and Chief Economist Otmar Issing provide quite a contrast to dovish pronouncements from our central bankers. While European central bankers are becoming noticeably nervous, our Federal Reserve apparently could not be happier.
...
All the same, with the continuation of such banter, we would be very surprised if the Federal Reserve increases interest rates next Tuesday and we sense the stock market anticipating no action by the Fed. We certainly now assume that the Fed is going to let this bubble run its course, instead of acting responsibly. However, if the Europeans do raise rates next week, this could prove a significant event for the US bubble. With the dollar acutely vulnerable right now, higher European interest rates could quickly translate into a weaker dollar that would likely put additional pressure on US interest rates and stock prices. In this regard, we will repeat a point we made within Wednesday's rambling commentary: "the Fed is losing control." <
got toilet paper ??
Leigh
(10/2/99; 11:57:14MDT - Msg ID:15196)
granny
Granny, don't feel that you have to buy your coins locally, unless there's a merchant that you like and trust. There are lots of dealers on the Internet, or you can go to your nearest big city. Don't be afraid to have the coins shipped. I was at first (sending gold by U.S. MAIL? Are you crazy????), but it's actually very safe. There's a long paper trail the Postal employees have to follow, and if anyone is caught stealing they are fired. The prices are very competitive. I like to buy bullion coins, which are new, very pretty, and often 0.999 pure. They're also a better bet than purchasing coins you aren't familiar with, especially if you aren't quite sure of the dealer.
Peter Asher
(10/2/99; 11:15:17MDT - Msg ID:15195)
PH
It was the "Other one" , "Brave New World"
Leigh
(10/2/99; 11:08:20MDT - Msg ID:15194)
MK and Town Crier
How was "Three Kings?" Is it worth going to see? Did you see a lot of gold?
Leigh
(10/2/99; 11:02:53MDT - Msg ID:15193)
PH in La
George Orwell. Aldous Huxley (1894-1963) wrote "Brave New World." He was the grandson of the famous sociologist Thomas Henry Huxley and the brother of the noted biologist Sir Julian Huxley. (We have a World Book Encyclopedia next to the computer desk!)
PH in LA
(10/2/99; 10:55:20MDT - Msg ID:15192)
Aldous Huxley
Peter Asher:
Didn't he also write the wildly futuristic novel "1984"?
Peter Asher
(10/2/99; 10:48:41MDT - Msg ID:15191)
Tanglewild
Excercise the Gold option by calling in the underlying future, You are close to having enough equity to meet the margin requirement and you will have a month longer on the future.
The Silver call has plenty of time to let more events unfold.
Peter Asher
(10/2/99; 10:39:55MDT - Msg ID:15190)
Uh,Steve
That's Alex Haley, not Aldous Huxley. The latter was well known for a book called "The doors to perception" along with many novels, one of which was "Island."
granny
(10/2/99; 10:35:21MDT - Msg ID:15189)
(No Subject)
Thanks all. I really appreciate you guys(includes gals) and all that I'm learning from ya.
Suppose one runs out today, to a few local pawn shops, to check on coins and maybe buy. Any coins in particular one should focus on? Any ideas about how much over spot one should stay under for newly minted coins and/or junk, silver/gold (excuse my PM grammer but I'm still in first grade :D )? BTW (by the way) one doesn't feel real comfortable purchasing too much "local" especially with potential hardships approaching in about 90 days.
Granny does carry a big stick, literally. (A branch fell off a tree this week, firmly lodging in the wipers across the hood of Big Red, granny's F250 diesel.)Granny has gotten many a good chuckle especially when someone "gets it".
nickel62
(10/2/99; 9:29:43MDT - Msg ID:15188)
Smaller gold mining companies that are currently uneconomic
It seems to me that now might be the time to resurect some of the investment ideas of 1995 and 1996 when the small gold stocks were flying high and every investment banker was fighting over raising financing for every moose pasture that they could find in most of the western and eastern world. As the apparent commodity appreciation continues the dollar decline and the relative weakness in the stock and bond markets will unleash a healthy amount of investment capital looking for a home. To say nothing of an army of investment bankers willing to finance anything that moves. Many of the scams of that last market are gone and thank god. But there were some actual viable deposits that faded into obscurity when the economics changed so radically and can now be bought for a song. This forum is repleat with individuals who have experience in this area and now is the time to be sharing the information. Too often after the move has gone too far along all you hear are already invested owners talking their personal book,in a rather hopefull wish that it will somehow make their own stocks go higher. Many of these deposits where highly valued in the marketplace and some of them still have vialbel gold mining and gold production comapanies that trade on exchanges. These woill be the first to raise new capital and thereby the stock price when the investment banking cycle starts again in this sector.CARPE DEIM
RossL
(10/2/99; 8:40:20MDT - Msg ID:15187)
Hipplebeck
It is my understanding that principle + interest on gold leases are to be paid back in gold.
elevator guy
(10/2/99; 8:30:22MDT - Msg ID:15186)
My post of 10-1, id# 15166
Sorry if my first sentence seemed aimed at you, Marius. I was talking to that little man of wisdom and reason, who I've been ignoring, as he taps me on the shoulder and says:"Why don't you buy some REAL gold?"
The second part of that post was kind of a continuation of your discussion about market orders, and limit orders.
From reading a few of the other posts, it appears that we are subject to the whim of the floor traders now!
Bonedaddy
(10/2/99; 8:28:37MDT - Msg ID:15185)
To: Elevator, Cavan, Granny, Leigh, and all..
About gold ownership. Why try to get rich? (For heavens sake, we're already rich!) Just try not to suffer as much loss when the Paper Palace comes down. The greatest obstacle for all of us to overcome will be the LUST TO BOAST about being right after all this time. I couldn't care less what my stock buying aquaintences think. What ever we do, we must do in the UTMOST PRIVACY. When it all comes unwound, the "victims" will look for scapegoats. If we have money and most people don't, it must have been our fault. The media establishment will blame gold, just as they blame firearms now. Because both are necessities for personal freedom. If you ever give up either, you may still be breathing, but you're just not living anymore. By refusing to hold paper instead of gold, we are throwing the British tea in the harbor. In their own time, they will come for us. Do not be deluded about that fact. If you don't have the mind set to stand your ground, it would be better to get out of street right now. You see, in a world filled with both good and evil, there ain't no neutral ground. You've got to serve one or the other. Sittin' the fence will get you shot from either side.
Bonedaddy
(10/2/99; 8:28:17MDT - Msg ID:15184)
To: Elevator, Cavan, Granny, Leigh, and all..
About gold ownership. Why try to get rich? (For heavens sake, we're already rich!) Just try not to suffer as much loss when the Paper Palace comes down. The greatest obstacle for all of us to overcome will be the LUST TO BOAST about being right after all this time. I couldn't care less what my stock buying aquaintences think. What ever we do, we must do in the UTMOST PRIVACY. When it all comes unwound, the "victims" will look for scapegoats. If we have money and most people don't, it must have been our fault. The media establishment will blame gold, just as they blame firearms now. Because both are necessities for personal freedom. If you ever give up either, you may still be breathing, but you're just not living anymore. By refusing to hold paper instead of gold, we are throwing the British tea in the harbor. In their own time, they will come for us. Do not be deluded about that fact. If you don't have the mind set to stand your ground, it would be better to get out of street right now. You see, in a world filled with both good and evil, there ain't no neutral ground. You've got to serve one or the other. Sittin' the fence will get you shot from either side.
Bonedaddy
(10/2/99; 8:28:04MDT - Msg ID:15183)
To: Elevator, Cavan, Granny, Leigh, and all..
About gold ownership. Why try to get rich? (For heavens sake, we're already rich!) Just try not to suffer as much loss when the Paper Palace comes down. The greatest obstacle for all of us to overcome will be the LUST TO BOAST about being right after all this time. I couldn't care less what my stock buying aquaintences think. What ever we do, we must do in the UTMOST PRIVACY. When it all comes unwound, the "victims" will look for scapegoats. If we have money and most people don't, it must have been our fault. The media establishment will blame gold, just as they blame firearms now. Because both are necessities for personal freedom. If you ever give up either, you may still be breathing, but you're just not living anymore. By refusing to hold paper instead of gold, we are throwing the British tea in the harbor. In their own time, they will come for us. Do not be deluded about that fact. If you don't have the mind set to stand your ground, it would be better to get out of street right now. You see, in a world filled with both good and evil, there ain't no neutral ground. You've got to serve one or the other. Sittin' the fence will get you shot from either side.
RossL
(10/2/99; 8:09:05MDT - Msg ID:15182)
Is time running out? Or has it already run out?
PH in LA
I've been wrong before, and I'm sure I'll be proven wrong again! There are local coin dealers open Saturday with gold for sale... I think I will buy some. Preserving wealth is more important than making trading gains measured in dollars.
If the "price of gold" now goes down in terms of dollars it will signal deflation. Deflation would bring defaults in the capital markets.
We absolutely have covered this many times before, but I now have the "gut feeling" that the time is here. Another short-covering rally could start ant any time.
Hipplebeck
I think your summary of gold leasing is pretty close, but you need to add the risk of default into the picture. The central banks wont be accumulating gold if the borrowers default.
Paying back the principle + interest is not a problem if the borrower is a gold miner who wants to finance production. If the borrower is a speculator, then he could be squeezed.
Bonedaddy
(10/02/99; 07:44:23MDT - Msg ID:15181)
Granny, what big teeth you have! :)
Arsenal of weapons? Buried gold? As Yosemite Sam would say, "thats my kinda gal". Leigh is right, call CPM and talk to one of the dealers. (I'll put in a plug for George now. I have been ordering my stash from him since 1996.) They can advise on availability and advantages of the different type of PHYSICAL gold. Of course a lady of your caliber (pun intnded) would only buy the physical and take delivery. You don't have to be concerned about the long delivery times when ordering from CPM. They're honest. By the way I've got three "quarter horses with chrome" standing in the corral and another on order for March Delivery. Tobianos one and all.
nugget101
(10/02/99; 07:39:02MDT - Msg ID:15180)
Intaglio vs Offset and Gary North msg 15123
Cut this guy some slack. He's not a printer nor would say he is an expert in that field. I would expect he means that the quality of the printing will be noticably poorer and therefore apparent to even the dimmest sheeple. I would expect that there wouldn't be enough paper stock available and they would have to use something entirely different. Maybe something like military script or food stamps. That alone would kill confidence. Forgery is easier and this money would most likely only be able to be used domestically.
nugget101
(10/02/99; 07:18:38MDT - Msg ID:15179)
Granny re: Confiscation by Gov
If desperate enough or if it is important enough, gov will take whatever measures necessary to get what some beaurecrat wants without thought to legalities.
Because your gold isn't registered in a database, I wouldn't be too worried about them knocking on your door. They might, and ASK... but they would probably be bluffing. I won't be surprised if we see a patriotic appeal for gold redemption (ala Korea) with a veiled threat at the end but the logistics are too great in my opinion.
Now guns are a different matter..... as is any extra food that you have "hoarded" (quantity decided arbitrarily by thugs).
ORO
(10/02/99; 06:56:06MDT - Msg ID:15178)
A note to the Skeptic
The following is a condensed version of all the major issues that I have discussed so far regarding gold.
Gold short position.
Have no doubt, the gold short position is still intact, virtually unchanged from before the rally. The physical gold obligations are 8000 to 10000 tons, the pure paper gold (short) derivatives account for at least that amount once over (call options etc).
Sources:
Quoting gold bear Andy Smith, 6000 tons of CB gold were lent, 1500 from EU members. Actually, I believe he is referring to the combination of CB and semi-official institutions, including the Vatican, Saudi and Kuwaiti royals, etc..
An additional 2000-4000 tons were taken from private unallocated gold accounts.
The physical borrowing mechanism has two parts, the producer hedge/forward and the speculative borrower using the gold for financing or as a pure short. The gold producer hedge is only 3500 tons. The balance is speculative ammounting to 4500 to 6500 tons.
The pure paper positions are predominantly intended for directional speculation and the issue of naked calls hoping that they expire worthless and from spread trades.
Each borrowing operation generates two short positions as the bullion is lent to the bullion bank (BB) and re-lent to the final borrower, be it the producer or the speculator. The bullion hits the market as certificates or as straight physical gold, sold by the BB for the borrower. The BB may then sell the miner's contract for a third short. Both the BB and the borrower are short where the BB also has a long position, but if the miner's hedge is sold, the BB has a naked position.
In this way, at least two buyers are satisfied and perhaps three with the same one ounce.
Supply demand deficits:
The 500 ton annual supply deficit of the past 5 or more years, has been met by this mechanism, according to Veneroso's estimates. In addition to this, there is the Arab oil position. Over the last decade about 1500 tons were purchased per year in long term supply contracts. These are generated by the trade of short term oil futures for long term gold forwards of the mines (or speculators), while the gold was lent by the Arab oil party, and then repurchased by them. This gold never hit the market. Purely a closed door operation. When added up over the last 10 years, minus the supply delivered from these contracts to the Arab oil countries and the scrap recovery from Asian sales last year (say 1000 tons), we have just under 9500 tons of physical gold supplied to the buyers, 2/3 to the Arab oil buyers, the balance to the markets. Using the mechanism described above, at least just under 19000 tons were shorted.
Price short covering interaction.
Gold demand, though price sensitive in the East, is inversely related to the price in the West. Thus demand increases on the way down in price. On the way up, demand declines more slowly because of the jumping on of Western momentum player. Therefore, there is an assymetry favorable towards the long side. Furthermore, there is a tendency to return to sustainable production levels, rather than operation at 140% of design capacity through highgrading. Producers will also be wary of increasing investment in new production beyond the current depressed levels that are only sufficient to replace 60% of current production going into 2005. The retrenchment in production from last years' peak will ammount to a 5% to 10% drop if prices are stable and rising, or a quick 20 to 40% drop if prices rise well above $400 and stabilize there. It is the combination of these basics with the aggressiveness of short covering under duress that will shoot prices higher.
By my estimate of the price reaction to the short covering during the initial stages of the process, there would be a $2.4 (+/- $0.70) rise in price during short covering for every $1 lost during the shorting process. Since the shorting process dropped prices from over $400 in late 96 to the previous low level of $250, the gold price recovery as a result of this element alone should give rise to a $500 price. Longer term, the gold short position formed in the 95-96 period prior to the fall in price, will be added to this to raise the price further, perhaps contributing to an extra $100 gain. On top of this is the growth in demand and the assured loss of future supply from lack of investment and from cessation of fresh leasing. The result is unpredictable, but is surely to be quite robust. So a stable price level should be very significantly above $600 that would be caused by short covering alone. Doubling this figure would not be difficult in such a thinned market.
Dollar weakness.
The abysmal US economic performance of the last few years has brought the world a sea of dollars, currently the major export the US has ever produced (including the current value of all of WWII munitions "exports" to Dresden and the like). US manufacturing has withered, and we have turned into a nation of traders of the goods and money of others, plunderers of the weak, debtors to the strong. The borrowed bubble lent by Japan and Europe is being eliminated through repatriation. The foreign debt of poor and quickly re-emerging countries is being rapidly eliminated with each purchase at the neighborhood mall, and vulture capitalists exchanging debt for equity. Even quicker has been the elimination of $ denominated debt of the Asian countries by its the refinancing to Euros, SF and Yen. They will soon not need $ for debt settlement.
If oil countries start selling their oil in all currencies, or join the EU in using the Euro, there will be no reason left for anyone to keep $. They will not be percieved as a store of value any longer. The sea of debt of the US will look for anything American to buy, from alfalfa to zeolites. BMW, Mercedes, Toyota, Honda, Toshiba, Sony and others built plants here in the expectation of a decline in $ that would make a Ford Taurus come closer in price to a Hyundai Elantra. Import -export parity probably stands at 40 - 60 Yen to the dollar and a 60%-70% devaluation relative even to the Yuan.
The promise of the Fed to monetize all debt in order to keep the banking system liquid will end up with the most massive money printing operation since Weimar and Brazil. If only this were to occur, the $ would fall into an abyss as did the Ruble. If not, the banking system will implode as Japanese, Swiss and EU creditors leave the markets and flight capital returns to its home. The latter case would result in a rapid drop in the $ accompanied by massive collapse. Just that the bottom would not be as low.
Military roles
The Anglo world's moralistic and humanistic intervention is broadly viewed as destabilizing and dangerous. It forces all nations to ask under what circumstances would their borders be under assault and whether they, or indeed the US and its Anglo allies would come short upon this "humanistic" examination. Malaysia's Mahatir Muhamed, though I abhor him and his political system, has stated the issue outright. It is a parsimonious missionary force to bring moral and political colonialism back into independent countries if they just don't happen to have atomic weapons.
China, Russia, Pakistan, and India will quickly assist anybody with a flag and money in putting together their own little MAD for self protection from the US. The world will be a much less stable place and the US high tech forces will be useless in these conditions. The US would face the fact that in its zeal to protect the weak, it has become a pariah nation and a destructive force serving its own agendas in the guise of phillanthropy and peace.
The current system is on its last legs. No matter how terrible the retribution for dismantling the $ reserve system and its mirror of the US/Anglo military "police" actions, the alternatives are worse for both the US and the rest of the world.
elevator guy
(10/02/99; 06:54:47MDT - Msg ID:15177)
Psychology of the game
For years the shorts have had the market by the tail, and very few cryed "foul". (Except for this forum, and GATA, and maybe a couple of others)
Our lives continued, because there was nothing we could do about it.
Now that the market, due to a shift in the worlds currency paradigm, by the European Central Banks cutting the dollar loose to float like a dead fish, there has been a sea change of events, and the market has turned for us, we immediately have thoughts like:
It won't last.
Our side is still doomed.
There will be fresh gold somewhere to bail out the shorts, so they can maintain their strangle hold.
A few of us anxiously scour the net and the news wires, looking for signs of default and seizure. And what you look for, you will find.
I feel there is kind of a psychology of defeat in some of us, that won't let us ride the wave of success.
Its almost like someone saying, after they have been set free: "I don't deserve this, maybe I better let them beat me again, just to keep order in the universe- Gosh, look, they have whips and chains!" And while focusing on what "they" can do, we look not in the direction of freedom, just at the door.
Don't crumble.
Be brave.
A new day is dawning.
Gold is for free men.
Hipplebeck
(10/02/99; 06:53:33MDT - Msg ID:15176)
gold leasing
Good Morning
About a month ago I posted a question concerning gold lease agreements, namely, Do these entities who lease out gold require it to be paid back as gold when the lease is up, or do they accept payment in currency? No one knew exactly how these agreements work. I guess none of us has seen one of the lease agreements. It is a very important question. If indeed the gold has to be paid back as gold and even perhaps the percentage rate is required to be paid in gold, then as I postulated, the central banks are going to acquire gold out of these lease agreements.
Everyone on the forum keeps saying that the speculators borrow the gold, then sell it on the market, then buy treasuries etc. with it. Well what happens at the end of the lease? Let's say I borrowed gold on a one month lease, sold it, and bought something else with it. At the end of the month, do I settle up with the gold bank in cash? Do I rollover the lease, or do I buy that gold back on the open market to return it to the gold bank? It seems the only way to make money doing this is to pay back in currency unless the gold price continually goes down, in which case I could buy back the gold on the open market at the end of the month and return it to the gold bank.
In any case, the important question is: Do these entities who lease out gold require the pay back to be in gold or do they accept pay back in currency?
This one question is the determining factor in whether the central banks have been, in reality, selling gold in their leasing agreements or actually acquiring gold. If the payment is required to be paid back in gold, then all these leasing agreements are hanging over these traders and speculators until they return all that leased gold, plus interest. The central banks squeeze a bunch of gold out of the markets to put in their vaults and at the same time it becomes much more valuable. Could they have done this on purpose?
Leigh
(10/02/99; 06:12:52MDT - Msg ID:15175)
SteveH
I think you mean Alex Haley. What an interesting letter! Leroy is a lucky person to have a friend like you.
Tanglewild
(10/02/99; 04:37:52MDT - Msg ID:15174)
Gold options
Hi,
First post with a question or two...
Deciding to gamble a little on the y2k situation(much uncertainty there.....) I purchased a feb 280 gold call($180.00) and a couple of march 700 silver calls($250.00) about 3 or 4 weeks ago. If my math is right the gold call is up 1600%($2950) and the silver up 160%($400).
The online trading firm i purchased them through now says:
UNTIL FURTHER NOTICE, ALL NEW METAL OPTION ORDERS MUST BE
MARKET ORDERS. WORKING
LIMIT OR STOP ORDERS PRIOR TO 9/30 WILL CONTINUTE TO WORK BUT CAN
ONLY BE
CANCELLED OR CXL/REPLACED TO THE MARKET. ANY ATTEMPTS TO
CXL/REPLACE AN ORDER
MAY BE REJECTED BY THE FLOOR WITHOUT NOTICE. ALL COMEX ORDERS
CONTINUE TO BE
NOT HELD.
Needless to say the orders to sell that I placed two days ago were rejected because of the above.(market orders only being accepted..)
I don't really know what goes on in the options pits but i have my suspicions that it's not quite on the up and up. If I enter a market order to sell I am at their mercy as to what price I will receive. It seems to me that they play games like selling at the lows of the day and buying at the highs of the day. The quote yesterday (which was the first full day of the new policy stated above) was about $3300 for the high and $200 for the low which was way out of line of the past few days. The price of gold did not fluctuate enough to warrant $200 for the low yet somehow the floor brokers found it.....
I'm not willing to let these contracts go for a song and it seems the trading conditions have calmed to a level where this policy is not really needed but they want to have the luxury of selling me out for next to nothing.
Any insight from the many knowledgeable people here would be appreciated as to what I should do and also how the game on the floor really is.
BTW, I do collect coins and have physical also. (just in case...)
Thanks for your time. I really enjoy reading all of your posts here ! A wealth of information :-)
Tanglewild
duki
(10/02/99; 00:58:57MDT - Msg ID:15173)
THX 1138 MOUNTIES
As I understand these coins are sold at 320 ( I saw 325 ) with a put option to sell them back at 310, good till 12/31/99. In the last POG spike I saw the price of mounties rise above their "normal" price right along with the rest of the coins. I don't know about the purity of the Mounties but assuming that they are equivalent to Maples, once the other coins rise, the Mounties at the same price would have a free asset ( 310 put ) attached.
SteveH
(10/02/99; 00:40:50MDT - Msg ID:15172)
CM -thanks and Note to a friend
Leroy,
Gold's story actually seems to have made it to a major newspaper. I remember when Aldous Huxley (forgive me if I spelled the name wrong) spoke at my University. He spoke of a people from Africa and his tale of writing about them. His manner, diction, and story captivated and enthralled me. For the next four years I searched for his book. I told many people of the man and his tale but the book never came out. I had all but given up on telling the story but one day I heard that a book called ROOTS had just made it to the New York Best Sellers List. It was huge. Never before had I seen such fanfare and hoorah. I actually felt disappointed that a story whose banner I had raised for years after the speach, was no so large and telling that my part in it was over. I am beginning to feel that way about the gold baton, but not yet. But the parallel is quite similar. For over a year I have been telling gold's story without trying to be offensive or overbearing or out of place but as in Roots, it has been an obscure story that seemed to be a forgotten niche that seems to be exploding as Roots did to be one of the major stories of the decade.
SteveH
PS. This is from GATA:
11:30p EDT Friday, October 1, 1999
Dear Friend of GATA and Gold:
The gold carry trade and the short squeeze are finally
news for the mainstream press. Here's a fine article
from the Sydney Morning Herald for Saturday, October 2.
Those of us on the other side of the planet get to read
it a day before publication!
CHRIS POWELL, Secretary
Gold Anti-Trust Action Committee Inc.
* * *
A SQUEEZE TO PLEASE
By Steve Burrell
Sydney Morning Herald
Saturday, October 2, 1999
Paul Lee, the head of gold trading at Dresdner
Kleinwort Benson in Sydney, could be forgiven for
forgetting where he lived this week.
He didn't go to bed for three nights straight as he and
his fellow traders stayed at their screens around the
clock, riding the biggest and fastest rise in the gold
price in almost 20 years.
Lee's sleepless-in-the-saddle week began last Sunday
with unexpected news from the other side of the world.
With his unruly shock of hair and unfashionable black-
framed glasses, European Central Bank president Wim
Duisenberg looks more like a slightly owlish university
don than a white knight.
But when he and 15 of his fellow European central
bankers announced at the IMF-World Bank meeting in
Washington that they were capping sales and lending of
gold out of their official reserves, they became a
battalion of white knights and the Seventh Cavalry
rolled into one for the beleaguered gold sector.
The unprecedented announcement took the market
completely by surprise and sparked one of the most
dramatic surges in the gold price in a generation.
The gold price soared almost 25 percent in a few days
to as high as $US329 an ounce 30 percent above its
late August low of $US252.90 before consolidating
around $US300 by the end of the week.
On Tuesday alone, the London price rose $US20.40 an
ounce, the largest increase in dollar or percentage
terms in more than 17 years.
The agreement, master-minded by the central banks of
the world's 10 biggest economies, was a co-ordinated
attempt to reverse the long slump in the gold price
which had recently seen it crash to 20-year lows of
around $US250 an ounce, putting gold producers around
the word under extreme pressure.
Secret discussions on the deal began in earnest in
August, after an announcement on May 7 by the UK that
it was planning to sell gold reserves sparked a $US30
per ounce crash in the gold price and left the market
vulnerable to further falls.
Last weekend's announcement lifted a black cloud which
had hung over the gold market for more than three
years.
"The enormity of the announcement by European central
banks cannot be underestimated," says Colonial State
Bank chief economist Craig James. "The threat of
central bank sales was the prime factor driving the
gold price lower.
"The expectation of lower prices led to short selling
by speculators, inducing further downside.
"The removal of the spectre of substantial central bank
sales means mine supply and demand will again be the
main determinants of the gold price."
But while the sudden, spectacular surge in the gold
price has produced some happy miners and gold company
shareholders, for others the revival of the precious
metal has come as an expensive surprise.
For a lot of speculators, including some of the world's
biggest hedge funds, it was a case of the free lunch
biting back.
They were up to their eyeballs in the financial
markets' latest version of a licence to print money,
the "gold carry trade."
The near-vertical trajectory of the once-languishing
gold price in the wake of the central bank announcement
has all the hallmarks of a rush of speculators to the
exits.
The hedge funds and other financial market heavyweights
including, market rumour has it , big investment banks
such as Goldman Sachs were forced to unwind plays which
could involve around $US25 billion ($38.4 billion) in
borrowed gold, frantically buying to cover their
"short" positions and driving the price up even
further.
On Tuesday, as gold prices spiked higher to $US326 from
$US304 in matter of minutes, rumours swirled about
massive buying by a New York dealer on behalf of a
client unwinding a $4 billion bet on the gold price
falling, according to the Wall Street Journal.
Gold's amazing resurgence may also have dramatically
changed the rules of the game for many producers, who,
like the funds, had borrowed central bank gold and sold
forward to hedge their production.
The higher interest cost of carrying these positions
means it is no longer profitable for them to sell
forward and may even prompt a major buyback by
producers to cover these short positions, according to
some analysts.
As Paul Lee notes: "Structurally, the entire industry
has changed."
The "gold carry" is a close cousin of the "yen carry
trade," which got the hedge funds into so much trouble
last year.
Speculators borrowed yen at ultra-low interest rates
and reinvested the proceeds in higher yielding
securities a guaranteed money-making proposition until
the yen started to rise against the US dollar and made
paying back the borrowings more expensive. With the
gold carry, hedge funds and other speculators borrow
gold from a central bank, leveraging up their position
by using bank credit to increase the size of the
exposure.
They then sell this borrowed gold and invest the
proceeds in other securities, such as US Treasury
bonds.
The trick in this case was that, until recently, the
cost of borrowing gold was only around 1.5 percent to
2 percent because central banks, keen to earn some
interest on their large gold holdings, were prepared
lend it out at a low rate.
With rates on US Treasuries at more than 5.5 percent,
it was money for jam.
What's more, with gold prices falling, they could also
expect to make money when they eventually returned the
gold to the central bank because they could buy it at a
lower price than when they borrowed it a standard
speculative play called shorting the market .
With leverage, these speculative positions could
deliver the hedge funds and their investors returns of
40 percent or more.
Unlike the yen carry trade, there is no currency risk
involved, though, as they were to discover, they were
exposed to interest rate risk and, of course, the
chance that the gold price might actually rise.
With central banks selling their gold reserves, so-
called "fabrication" demand for gold in the previously
strong Asian market still recovering from the economic
crisis and inflation low, there seemed little risk of
that.
If anything, with the spectre of central bank sales
hanging over the market, further falls were expected.
It was little wonder that the hedge funds arrived in
droves to take advantage of this free lunch during the
past year or two.
Just as no-one really knows how exposed the hedge funds
were to the yen last year, it is hard to be sure how
big their short position in gold was going into last
week and at what price those positions started going
under water.
Some analysts have put their collective short positions
as high as 8,000 tonnes. More reliable estimates of
central bank lending of around 5,000 to 6,000 tonnes to
both forward selling gold producers and speculators
suggests it would be closer to 2,000 to 2,500 tonnes.
Still, that's up to $US25 billion worth of gold at
current prices.
One of the first signs that the magic pudding of the
gold carry was about to turn sour came the previous
week when gold rallied almost $US6 an ounce in the wake
of the Bank of England's second auction of its gold
reserves.
The 25-tonne auction, part of a gradual unloading of
half of Britain's total reserves, was eight times
oversubscribed, with some of the world's biggest
producers among those buying up big to cover short
hedging positions.
The subsequent price rise to more than $US260 an ounce
was only the beginning.
The rally was supercharged over the weekend with the
surprise announcement by the European central banks
that they were capping annual gold sales from their
official reserves at 400 tonnes for the next five
years. With sales of around 1,715 tonnes by the UK and
Switzerland already decided, this was close to a
moratorium on selling until late 2004.
It also dramatically reduced the amount of central bank
gold likely to be sold worldwide in the next few years.
Together the European central banks, the US and the
International Monetary Fund hold 80 percent of
official sector gold. With the IMF changing its mind
about on-market sales to fund its recent debt relief
initiative and the US not having sold gold since the
late 1970s, the European decision was pivotal.
The announcement largely removed the threat of massive
central bank sales which had hung over the market since
the Belgian central bank announced it was unloading
gold reserves in March 1996 a fear which was
intensified greatly when Australia's own Reserve Bank
revealed in early July 1997 it had already begun
selling gold.
The European banks' weekend announcement fuelled an
immediate $US16-an-ounce jump in the gold price, taking
it above $US280 an ounce for the first time since early
May.
Although the average price at which the funds were
carrying their gold positions is unclear, this would
have started to take them close to the danger zone
where it would cost them more to repay the gold they
had borrowed from the central banks than when they
borrowed it.
They were already facing a squeeze from another
direction the interest rates charged by the central
banks for borrowing their gold. In recent months this
so-called lease rate had jumped from 1.5 percent to
around 4 percent, amid rumours the central banks were
withdrawing gold from the market. This sharply reduced
gains on the gold carry.
At one stage during the turmoil of the past week the
lease rate climbed above 10 percent.
For those borrowing on a "floating lease" basis akin to
a floating rate mortgage this means the gold carry was
costing them a lot of money.
Significantly, the European banks said last weekend
that, in addition to limiting their gold sales, they
would also curb their gold lending, agreeing "not to
expand their gold leasings and their use of gold
futures and options over this period".
With the European central banks holding around a third
of the estimated 5,000 to 6,000 tonne pool of bullion
reserves available to be lent out, this could have a
significant impact on the level of gold borrowings and
will help keep lease rates high.
Combined with the rising gold price, the rise in the
lease rates appears to have been the signal for the
speculators to get out by buying gold to cover their
short positions.
This bail-out made the climb in the gold price even
more spectacular, driving it as high as $US329 an ounce
in London trading on Wednedsay and leaving it at $US302
an ounce, a rise of 14 percent over the week,
yesterday.
The short squeeze was tightened even further by the
fact there were few sellers in the market. This was
partly because producers and other holders of gold were
waiting to see if the price rose further and partly
because producers were themselves short because of
previous forward selling at prices much lower than
prevailing now.
In effect their position was not much better than the
hedge fund themselves.
To put this week's rise in perspective, however, the
gold price is still well below the $US340 to $US350 an
ounce range that prevailed before the RBA's sale
announcement in mid-1997.
And it's still miles away from the $US400-an-ounce
levels of early 1996, before the Belgian sales
announcement not to mention its all-time high of $835
an ounce in 1980.
Although there is a big question mark over whether gold
will approach the levels of two years ago, the price
outlook is definitely brighter and current levels could
well be maintained or bettered, according to analysts.
While the recent spikes were driven by the bail-out of
the speculators, the rise in the gold price is also
reflecting shifting fundamentals in the industry and
the world economy.
The unexpectedly rapid recovery from financial crisis
of many of the East Asian economies among the biggest
buyers of gold for jewellery and other manufacturing
uses means fabrication demand is stronger and likely to
improve, as will the generally stronger outlook for the
world economy as whole.
The World Gold Council put gold demand at record levels
in the June quarter, with supply down by 5 percent on
six months earlier.
The annual gap between fabrication demand and mine
production has been around 500 tonnes for the past few
years and, according to a respected analyst of the
market, NM Rothschild & Sons chief economist Ric Simes,
it will rise to 1,000 tonnes a year for each of the
next few years as mine production growth slows.
The prospect of higher global inflation and signs that
the recent era of US dollar strength is coming to an
end also makes gold a more attractive proposition,
though the inflation hedge factor is far less important
than it has been in the past.
And on the supply side of the market, the European
central banks' decision to limit sales and lending,
along with the rethink on sales by the IMF, will also
lend price support.
After the present bout of volatility and short-covering
passes, Dresdner's Paul Lee sees the gold price
establishing a new firm foundation around $US275 to
$US280, although he doesn't rule out the price spiking
even higher than $US329 in the short term if hedging
positions continue to be unwound.
With demand firm, Colonial State Bank's Craig James
sees the price returning to around the $US325 to $US350
level which prevailed before the threat of central bank
sales slammed the market.
Rothschild's Ric Simes sees the price settling above
$US300 an ounce. "The reasons why gold might trend
higher were already accumulating (before the recent
price jump)," he said.
"They included US dollar weakness, strong physical
demand, the current short-term liquidity issues,
strength in other commodity prices, especially oil,
strong coin demand in the US and marked slowdown in
mine production growth.
"Y2K and weaknesses, or a sharp fall, in US equities
were other candidates that could lend strength to any
rally."
Simes says the likelihood of producers selling forward
could cap further price rallies in coming months,
though they may be deterred from this if the market
stays in a state of "backwardation", where spot prices
are higher than prices for future sales.
"Longer term, the market deficits will absorb sizable
amounts of above-ground stocks," he said. "Given where
costs of production are, a price settling above $US300
an ounce and noticeably above this level if the US
dollar is weak would appear warranted."
-END-
------------------------------------------------------------------------
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Chris Powell
(10/02/99; 00:36:08MDT - Msg ID:15171)
BOOM! Gold shorts start to default
http://www.egroups.com/group/gata/223.html?
Latest "Midas" commentary
by GATA Chairman Bill Murphy.
Spread the word.
THX-1138
(10/02/99; 00:21:30MDT - Msg ID:15170)
Mountie coins
Since the street price of gold has gone up to around the price of $320 I was thinking about purchasing a couple Canadian Mountie coins. My reasoning is with the increasing supply issues of US Eagles, and Maple leafs, and Krugerands, I figure nobody has thought about purchasing the Mounties as the price remained $320/oz while spot gold was at $255. I will have to ask my coin dealer what coins are actually the cheapest, but if the current prices are within $2 of a Mountie, I am going for them this week. They are actually much prettier than a Maple Leaf. Does anyone have any thoughts about this?
canamami
(10/02/99; 00:15:42MDT - Msg ID:15169)
Don Coxe's Conference Call - Lengthy and Interesting Gold Discussions
http://www.jonesheward.com/commentary.cfm
This week's conference call is well worth the time for a follower of this Forum. Gold was the main topic of the call. Most relevant portions are minutes 0:00 - 15:45 and 29:30 to 33:30. A very wide-ranging discussion, and too lengthy to summarize.
duki
(10/02/99; 00:06:01MDT - Msg ID:15168)
Another Lurker Outed
Hello, I've only been lurking here for a couple of months. It would seem that you good people have covered just about everything I might have to say on the subjects of gold, fiat currency, gun control, etc. I broke my financial back fighting against fiat currency in 87. Now that my back is better, I just accumulate physical, and equity gold and silver. once again just sayin HELLO.
Click Here to view yesterday's discussion.
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