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ARCHIVED DISCUSSION FROM 12/2/1999
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Black Blade (12/2/99; 23:36:44MDT - Msg ID:20115)
Y2K take on inflation/deflation?
BOICE COLUMN Plain English: Y2K will spark permanent change in global economy. Source: The Tucson Citizen

Many people may be taking the "Don't Worry, Be Happy" approach to the Y2K computer bug - but not Tres English. He doesn't believe the approaching 2000 will be an apocalyptic end of the world as we know it. However, English, founder of the Y2K Business Coalition, predicts the glitch will spark subtle changes in how national and world economies work. His predictions came out this month in a final report of the Y2K Business Coalition, which was disbanded in September. The Y2K bug may strike when computers become confused by a date that ends in 00. Computers could shut down or create reams of incorrect or garbled data.

nglish bases some of his Y2K predictions on the oil embargo in 1973. The embargo created a 10 to 15 percent reduction, for just a few weeks, in one vital resource of the modern world. That shortage - and regulators' reaction to it - caused a major recession and high inflation for four or five years. Y2K, he concluded, will probably create at least that level of problems in all fields of modern technology worldwide.
He sees the upcoming century as a confusing mix: "I think we will experience - retail customers and businesses - some items either unavailable or in an overabundance," he said. "We'll see rising prices on some items and falling prices on others. There could be high inflation or deflation." It is and it isn't as confusing as it sounds. People and companies have been stockpiling some supplies. When the expected shortages don't materialize, companies will begin dumping inventory -at reduced prices. Production will slow, prices continue down and hence deflation in certain sectors.

Some commodities will experience unexpected shortages, generating an increase in prices and, worse, inflationary expectations. Regulators, seeing rising prices, could clamp down too hard, sending the economy into a recession. Y2K will bring "an unprecedented range of disruptions," he said. "This is a different phenomena than we've ever seen before." Small businesses, which he considers among the least prepared for the computer bug, will be among those most affected. Many "small businesses are choosing to do nothing though they know the problem is coming," he said. Because thousands of small businesses have not attacked the Y2K bug, he expects the small-business failure rate to as much as double during the first six months of 2000.

Many of these businesses will fail, he said, even after they fix their hardware and software because large companies will refuse to do business with companies with Y2K problems. "Major corporations will say, 'We don't need you. You messed up. Come back when you can prove you don't have the problem,' "English said. Major companies that have dealt with the potential bug will become more dominant in the local economy. "Look for an acceleration of the established trend toward national chains and job shops and away from locally owned or controlled companies at all levels, "he said. His predictions, he admits, could be as wrong as any of the others that have been offered during the past year. However, he could be right. And that's worth thinking about.

THX-1138 (12/2/99; 23:33:58MDT - Msg ID:20114)
Reply to Twice Discipled about Alan Keyes
I am also in favor of Alan Keyes as the next president.
He is a great speaker, is the only Republican candidate talking about getting rid of the income tax.

I missed tonight's debate. Couldn't find what channel it was on. Wasn't listed in the TV guide.

How did Mr. Keyes do agains George Dubya?

tedw (12/2/99; 23:12:12MDT - Msg ID:20113)
June 2000 400 gold calls
http://www.usagold.com

In response to Marius post I would suggest the following.

Gold moved up approx. $80 in about 1 week in October and it could easily do it again. That doesnt make $400 look far out of the money.

Secondly, one factor Marius doesnt acknowlege: Y2k. In the event of civil disorder (at least possible) Gold should be a major beneficiary. BTW, I read in todays Oregonian that the Food Stamp program is still not Y2k compliant (the source was the government itself). Anybody want to venture
a guess as to what will happen if the people in the inner
city dont get their food stamps?

Thirdly, there is an out of control stock market waiting for a crash.

Fourthly. I did a little averaging for the price of Gold. I threw out the year gold went over $800 and this year. The average price of gold over the last 18 years has been $340.
That in itself is good reason to have calls.

Personally, Ive got Gold Calls Im holding onto. If they dont move by the second week of January, Ill just roll them over into some further out calls.

And yes, you shouldnt put any money in calls that your not prepared to lose. Nothing ventured nothing gained.

TownCrier (12/2/99; 22:51:03MDT - Msg ID:20112)
Reply to Sir Goldy Locks Guy
http://www.usagold.com/productspage.html
"Town Crier.....What does this mean????? I'm kind of new to the market, so could you explain the meaning of this "news flash"...Thanks"....Goldilocks guy

The "news flash" was simply an attempt to deliver early a tidbit of news that is normally conveyed later in the evening GOLDEN VIEW. The data is an attempt to show the small window of the gold derivatives markets as they come closest to overlapping with the real (metal) gold market.

Each COMEX futures contract generally represents a leveraged, theoretical control over the fate of 100 ounces of gold. In truth, it is only a zero sum betting arena in which the margin price you pay is your ante to participate by holding one side of a contract, and the price movement dictates how much cash you must pay or receive from the counterparty to the contract (anonymously paired through the Commodities Exchange.)

Any given day there is a real "threat" that demand for gold on the real (spot) market could exceed supply, raising the price to a new equilibrium price. But over on the COMEX trading floor, the supply and demand fundamentals are based on the game tokens...the contracts themselves as people trade into and out of these contracts as the price changes, settling with the counterparty at every turn.

The Open Interest position is an indication of how many outstanding contracts are currently in play between counterparties for the various futures months. The counterparties include one who is betting on prices moving higher (called a long position) and the other is betting on the contract price moving lower (called a short position.)

These futures contracts trade over time, from well in advance right up to their termination day in the month of the future's "expiration." For gold this last trading day is the third to last day of the contract month. Open interest can change over time as new contracts are written or old contracts are settled between the longs and shorts. For example, on the December contract, the open interest throughout Autumn was near 100,000 contracts, but as December (and First Notice day--see below) approached, the number of outstanding contracts had fallen to only 11,504. Of note, when the futures contract's termination month arrives, contract holders have the option of giving notice of their choice to settle their postion with gold instead of cash. A short position can be the one choosing to supply gold, or the long position could be the one who demands it. To this end, COMEX offers a depository for the gold at which it can be both stored for customers and verified that it meets the quality specification of purity and weight necessary to substitute for cash settlement. (Specifications are 100 ounces �5% of .995 fineness either delivered as one single bar or three kilogram bars.)

My reports try to track the number of futures contracts that are exchanged for physical postions. In some cases, the short who has to deliver gold may already have it stored in the COMEX depository, in which case the registration changes ownership...an untrackable operation to our outside view. In other cases, the short must procure the necessary gold from an outside source. This source could be a refinery, a personal stock, or the spot market...in which case it would help put pricing pressure on real gold.

If a long futures holder has designs to take delivery of 100 ounces, he would have to pay COMEX the full agreed upon contract price. Remember, originally he had only put up a small margin. If the price rose, the short counterparty would have to absorb the difference in price. The actual gold comes from whichever market participant that held a short position from the earliest time. COMEX would supply them with only the original contract price that they shorted.

Here's a thought. Instead of hastling with COMEX for these clunky bars, why not simply settle for the cash (as most of them do) and if it is gold you want, get it from your favorite source? Through USAGOLD/Centennial Precious Metals, you can get a wide variety of gold coins at superb prices. With all things being equal, our hope is that if or when you choose to build a personal position in gold, you will choose to order through us rather than some other source. Not only will you find it an easy process, you may very well find our prices to be the best around. And if in the rare chance you live accross the street from a gold dealer, perhaps you might still be pursuaded to choose us, rationalizing the extra effort as a cheap tuition for the education and service we strive to provide daily at no charge. It is your purchases through USAGOLD / Centennial Precious Metals (look in your yellow pages...we post an ad in many cities) that fund this site.

I hope this doesn't seem like a shameless pitch, but all things being equal, we would love for all of our valued visitors to choose us for their business. Your support helps us to keep the fire burning. Visit the link above to see a small sample of the gold coins we have available, and be sure to sign up for a free information packet on personal gold ownership...and to receive our free monthly newsletter.

I wandered off the path a bit, but I hope this answered your question.

Chris Powell (12/2/99; 22:23:34MDT - Msg ID:20111)
New "Midas" and Reg Howe commentaries
http://www.egroups.com/group/gata/301.html?
New at GATA:

GATA Chairman Bill Murphy's latest
"Midas" essay says the shorts are still
in trouble and asks for help with GATA's
new advertising campaign seeking
answers from the Fed and the Treasury:

http://www.egroups.com/group/gata/301.html?

Gold market watcher Reginald H. Howe
suggests that the Bank of England's gold
sales program was meant to rescue the
Fed from its sales of naked gold calls:

http://www.egroups.com/group/gata/302.html?

PH in LA (12/2/99; 22:21:07MDT - Msg ID:20110)
Reply to Stranger Regarding FOA
Dear Stranger,

Please forgive the personal nature of this reply to your "Welcome Back!" message (Msg ID:20095) to FOA this evening. I fear that I am, in the interest of fairness and yet almost against my will, too often forced into the role of official defender of FOA/Another, something that they hardly need. Nevertheless, your comments should not go unanswered as they betray a dangerous lack of understanding of FOA's message, and at the same time, demonstrate a definite lack of courtesy that is hard not to take offence at.

Your own remarks would benefit from a bit more clarification. Just what do you think you mean by "the exact bottom in the POG last summer"? Bottoms are a moving target, only seen clearly after the fact. Was last summer really the bottom? Can you issue a guarantee of that to accompany your supercilious tone? What happens if the POG continues to track downward now and passes the $250 mark to the downside? Issue an apology? Do you really think anyone but yourself would care if you did?

Your fixation on the $30,000 number lacks perspective, too. True, FOA has made a bit of a fettish out of it at times, with his "On the road to $30K" literary device (which is as likely meant to entertain us as to be taken literally). In any case, that number was introduced years ago by Another to shock us into thinking in a different way. Much later FOA further explained that Another had come to that figure as the conclusion of a working study group that felt that under certain conditions some stability could result from such a number, etc., etc... Unfortunately, FOA has not disclosed all the details of that study, and certainly, we would all like to know more about it. However, calling it a "phony idea" is offensive to those of us who have followed Another's THOUGHTS considerably longer than you, yourself, have.

I find your charactarization of FOA as "trying to pass (him)self off as some kind of financial swami" to be particularly idiotic. Only an extremely shallow thinker could conceivably invent offense in such a thing as that. Because who cares how FOA "tries to pass himself off"? Not I! Are you suggesting that your own contributions are made with some such ulterior motive as that? I can assure you that my own are not. I think... I read what others write... And I search untiringly for truth in every post I read. I don't care who is a "financial swami" and who is not. As a matter of fact, I find the utterances of the widely recognized swami, Alan Greenspan, to resemble the inchoherant ramblings of a madman (or invetterant lier). FOA and Another appear to purposely make an effort to let the content of their remarks speak for itself. Of course this is virtually impossible. As human beings, we unconciously supply what they make a point of leaving out. This is impossible to avoid on our part. But that hardly qualifies them as "trying to pass themselves off as swamis". You, yourself would do well to examine your own motives in even suggesting such a thought.

Even if FOA and Another have been buying gold since it sold at $400/oz, I doubt very much that it much affects the pot they may or may not piss in. After all, they still have the gold. They pay no interest on it. They risk it not by investing in stocks that may become worthless at any moment by a multitude of circumstances, not the least of which would be outright bankruptcy of the underlying company. Because, yes, that still does happen in this best of all possible financial environments. "Not to the financial giants listed on the DOW", you reply. Yet such things do happen. And you can be sure that such a company would be deleted from the DOW so fast you would hardly miss it. It can happen. And it does happen. Why do you think Microsoft replaced Sears Roebuck lately? Was it not simply to reinforce the idea that the DOW goes up? Of course the DOW does go up; because if any of its stocks don't, it is replaced periodically with one that does. Rest assured that Microsoft will be replaced as soon is it stops going up with something else, too. (I'm sure that you are aware that some critics suggest that the profitability of many of these corporations is based on irregular accounting practises more than on financial success.) What do you think would happen if that idea were suddenly embraced by a majority of investors? Wouldn't you prefer gold at that moment, no matter what the price?

I personally would very much like to have all the money I have ever lost over the years to this single circumstance reimbursed to me in gold, be it at $300/oz or $400/oz. After all, it would still be gold. Far preferable to a worthless stock certificate, any day. If this qualifies as a "phony idea about wealth" so be it. I still prefer such a "phony idea" to any other phony idea of embracing a stock certificate at a PE ratio never before contemplated in human history!

And certainly, any "honest people in here who have been victimized by baloney" deserve whatever happens to them for not reading Another's/FOA's words properly (as you, too, appear not to have done). Another and FOA have always advised buying real gold, not gold contracts, nor any other abstraction of wealth. Those of us who have done so have our gold. We will still have it whether or not the price goes up or down. And it will still be gold. Not gold contracts. Not an abstraction of any kind. FOA has often said that he is "sitting back to watch the show". His only failing has been in not sharing his view with us, lately. I hope your remarks do not lead him to absent himself unnecessarily.

In the end, we'll be happier with our gold than we would be without it. Maybe we would have been happier with a few "good" stocks or gold contracts. But who would have known which were the "good" ones? If I challenged you (or anyone) to foretell the future of any investment, how would I know (in time) if the response is correct or not?

No one can know the unknowable. Not you. Not me. Not FOA.

Do us all (including yourself) a favor and lighten up!

Many of your contributions have been well worth remembering. (Your view on inflation has been consistent and well worth taking note of.) Unfortunately, this latest message was not.

THC (12/2/99; 22:10:54MDT - Msg ID:20109)
@Oro re Internet as Tax-free Zone
LOL!

Pls put in a good word and ask Mr. Clinton to grant global income tax exemption to all who "work over the Internet!!!!!"

Yeehaa.....

THC

Canuck (12/2/99; 22:04:29MDT - Msg ID:20108)
$30,000
I have often sat and dreamed of $30,000 gold.

An onze of gold buys 300 loaves of bread today (to keep the math easy) so if the awesome rise of gold is dependant on the failure of the dollar how much bread can be bought with
$30,000 gold?

If (again for easy math) the dollar shrinks to a dime, or inversely stated, a loaf of bread is $10, then $30,000 gold will buy 3,000 loaves, an increase of 10 fold.

FOA's 30,000 number is the number in the future, based on a severely devalued dollar. He is not stating gold will rise from $300 to $30,000 (100 fold).

Gold rising from $300 to $30,000 with no change in the dollar results in 30,000 loaves of bread, this is mathematically absurb.

To further ramble on endlessly, and take numbers to a point hopefully outside of reason if the dollar depreciated to a lousy cent, $30,000 gold buys 300 loaves ($30,000@1%/$1),
exactly what $300 gold buys today ($300/$1).

I hope I haven't bored the economically astute with this post, I just wanted to ramble with the notion that $30,000
today isn't $30,000 tomorrow.

FOA's 30,000 number can be any number, you pick.

ORO (12/2/99; 22:02:29MDT - Msg ID:20107)
Internet and Clinti at the WTO
In a play to protect the internet's "free from tax" advantage till it "matures", Clinti is getting on everyone's nerves, challanging their sovereignty and their internal laws, and finally - he is challanging their funding.

Imagine Europe without the VAT levied on everything domestic or imported simply because it was ordered via internet.

No way.

The "huzpah" of the guy is amaizing.

Labor laws and environ-mental laws that would put the burdens of a rich nation on those just emerging into the industrial revolution shows such a detachment from reality that brings one to ask why armageddon has not hapenned yet with him at the glowing red button. Would Al Gore press it if it were to save the whales (at least when they evolve again?).

Marius (12/2/99; 21:48:16MDT - Msg ID:20106)
tedw message 20085: Jun 00 400 calls
My advice, as someone who's been trading futures options for the last year and a half, is that it's NOT a good trade. There are technical & fundamental reasons why I belive this is so.

Jun 2000 400 calls are a LONG way out of the money, with not a comfortable amount of time to expiration--despite your perception that there's all kinds of time until June. Think about how long gold either declined in price, or traded within a narrow range of resistance & support. Also, think about how we are all being worn down by the seemingly endless ability of the "Hannibals" to hold the price down. Many of us thought they'd be done in when the October runup occurred. It's obvious they were not. I own Jun 290 calls, and I'm beginning to wonder if I shouldn't have liquidated in October. Also, it took COMEX two weeks to clear the trade which liquidated my Feb 2000 290's in that runup--during which time I felt like I was twisting on a meat hook.

That $170 premium may look attractive, but it's a trap unless something miraculous happens. Go ahead, but only if you know you'll be ok financially & emotionally if you lose it all. Odds are strongly against you!

Al Fulchino (12/2/99; 21:44:54MDT - Msg ID:20105)
Stranger
I deeply respect your independent character. I wish to make one point to you, if I may. In your post to FOA, you mentioned that people here had been victimized. I must say to you, that victimization is nourished by naivete on the victims part. I do strongly believe that being a believer in anyone other than yourself is a mistake. Just as we elect the politicians that we deserve, we elect others to follow and we deserve what we get. If anyone here accepts FOA, you or me as gurus we are silly to do so. It is incumbent on each of us to evaluate what is brought forth here. And along the way the truth will be sorted out. It may be that in the end one way of thinking or another is proven right or wrong, but we all cannot believe we are independent free thinkers if we blame others for our own decisions.

Thank you for standing up and being so independent minded. Your challenges help make this a place for sorting out truth.

canamami (12/2/99; 21:43:58MDT - Msg ID:20104)
Reply to The Stranger
The Stranger,

I don't know if we should call you Mr. Reality Check or Mr. Antidote - either way, your guts and intelligence have often served to single-handedly expand the range of beliefs and discussion on the Forum, and I'm sure have saved some from what could have be disastrous financial actions or decisions. Your presence on a certain penny-stock gold thread could have saved one neophyte investor a lot of money.

From the clash of competing positions, truth is distilled.

I note Oro has put a verifiable hypothesis on the table, which is something I like to see: The next bid for gold comes in mid-December; I stand to be corrected if I'm wrong.

P.S.: By the way, would you, your clients and former Wall Street associates be interested in launching a takeover bid for a couple of poorly managed exploration companies who own what is still a fairly promising property in the Carlin Trend in Nevada. :-) They could probably be had for $0.15 a share :-) and :-( simultaneously. Need a perverse sense of humour to deal with the losses.

Canuck (12/2/99; 21:29:14MDT - Msg ID:20103)
Twice Discipled
Re: BOE Auction

Amazing info.; we need to confirm/deny that post ASAP.

Can you believe the crooked S.O.B.'s (if true). Can you begin to imagine if a BOE insider/informer was to leak & confirm that statement.

All; see previous post by Twice Discipled.

Rhialto (12/2/99; 21:24:17MDT - Msg ID:20102)
Questions for FOA
Several weeks ago you posted that gold at $30,000 would not change hands but rather be held like a share of stock representing value. Today you post that gold will be the new "money wealth." Does this mean that no one will spend money? Does this mean that like the wealth of the old world Another, we will buy food with gold? How long do you think it will be until a gold based system of wealth exchange occurs and what will the billions of people who have no gold use to facilitate barter? Also, what is the current status of negotiations among world powers along these lines and who are the players? Many people think that the NWO is in charge of this type of thing, and others think the NWO is incapable of implementing it even if they are in charge.

Also, would you please reference me to published and accessable information verifying and explaining the existence, terms and implementation of the gold for oil deal. I would like to read something in that regard which has been published at any time since 1973. I am aware that ME oil producers had desired this arrangement as the Gold Pool collapsed but they were unsuccessful at that time, and I am unable to find a single subsequent reference to that concept including sources who described the demise of those efforts. You may recall that OPEC at that time simply accepted higher royalty payments.

Thanks

SteveH (12/2/99; 20:58:13MDT - Msg ID:20101)
Kapex
www.kitco.com
repost. Sage advice.

Date: Thu Dec 02 1999 20:52
kapex (Repost!) ID#275194:
Copyright � 1999 kapex/Kitco Inc. All rights reserved
Date: Sat Jan 30 1999 21:04
kapex ( Thoughts! ) ID#218248:
Copyright � 1999 kapex/Kitco Inc. All rights reserved
I just wanted to take a few minutes to share some of my thoughts with the group here at kitco. As we have
watched these markets together for the last 6 months or more, I have rang in with my thoughts and comments from
time to time.

One thing that is truly amazing to see is the level of capitulation that always happens at turning points. Bar none,
without fail, always happens. It is human nature, and it is plain to see. That is, if your not caught up in it yourself.

Fear and greed are the two emotions that are prevalent at these extremes, yet few recognize this phenomena as it
is taking place. The final step to capitulation is not one that comes quickly. Many recognize what is happening,
while it is happening but don't recognize that they themselves get emotional and throw in the towel precisely at the
point at which the complete opposite behavior is warranted. Capitulation or throwing in the towel has to take place
before the trend can reverse, otherwise it will continue.

So, you ask yourself, " how do I know when this is about to happen?" Good question! The answer is not so easy.
For one, you have to be willing to be wrong for a while. For another, if you want to take advantage of an
opportunity to profit from a change in the trend, it will go against you for a while. The KEY here is to look at that
for what it truly is, an opportunity to buy ( or sell ) at the lows or highs.
What's really amazing to me is the capitulation that
occurs at these junctures. Just at the time you should be recognizing the opportunity for what it is, the opposite
emotion exerts itself and you ask yourself, "what if I'm wrong, or too early," even though all the signs point to your
being correct. You then fail to act and the market does indeed reverse trend, Without you, I might add.
This is also a form of capitulation. The inability to act on that which you know is the correct course of action
because of fear of being wrong. It is also one of the things that I watch for in myself as a sort of a final piece of the
puzzle in place so to speak. I step back, review my reasoning and try to remind myself that it's ME that's kind of
capitulating, ( by the fear of being on the wrong side ) and then try again to buy or sell.

With all that said I would like to comment on the markets that we are so very interested in here at kitco. But
before I do, I would like to read you a few things from the book "Contrary Investing" by Richard E. Band.

Nine symptoms of a dying boom

� A breathtaking, parabolic rise in prices, accompanied by predictions that the advance will go on indefinitely

� A widespread rejection of old standards of value. According to the apologists for the boom, the dawning of a
"new era " makes today's prices reasonable, even cheap, no matter how outrageous they would have seemed only
yesterday.

� A proliferation of dubious investment schemes promising huge returns in an inordinately short time.

� Popular fascination with leveraged investments, such as futures, options, or margin accounts, which enable the
speculator to control a large block of assets with a small down payment.

� Heavy selling by corporate "insiders" and other conservative investors with a long- term orientation.

� Extremely high trading volume that enriches brokers and snarls paperwork has back offices try to keep track of
the many transactions.

"Although with today's computers paperwork is not the problem that it was just ten or fifteen years ago".

� Absurd or even violent behavior by people who are desperately trying to get their hands on the booming asset, (
Remember the "grown-ups" who punched and scratched each other to buy a cabbage patch doll ) .

He prefaced these nine with the words. "When more than two or three of these symptoms appear at once, it is
time to sell: The undertaker is at the door.
Personally I can't think of one that does NOT apply right now with respect to the stock market. Can you? Are the
"Internut" stocks the Cabbage Patch Dolls of today?

Is this not the same for the Precious metals and commodities right now only the opposite? 20 year bear market in
gold with dire predictions of 250, 200 and even 150 $ per ounce prices. Why, do these predictions come out
now, at the lows, after it has already been beaten down to the lows of many years? Because capitulation is what
has to happen to mark the reversal of the trend.

I also read someone's comments very recently and was taken as to how he pointed out that Gold's price is only a
reflection of the level of commodities ( CRB ) in general at this time. He is right! But he IMHO, failed to make the
next logical conclusion. ( From a contrarian standpoint ) That being, that he is only voicing what everyone else is
already aware of, and that this is a sort of resignation of why things are, rather than why it would be a good time to
buy. Just an observation. This has been factored into the prices of PM's and commodities already. A contrarian
will sit up and take notice when a well-respected individual reflects what is a valid point indeed, but then doesn't
take it to the next, logical conclusion.

Deflation may very well be just around the corner. But I would be a lot more fearful of an asset that is at unheard
of highs ( knowing the impact that deflation would have on that ) than one which is already at it's lows and is
begging you to buy it while it's low.

kapex

Twice Discipled (12/2/99; 20:40:35MDT - Msg ID:20100)
BOE auction slight of hand???
From one of those other forums ... can anyone verify this one?

BOE update
(uponroof) Dec 02, 21:52

Oh, by the way,
That auction last week which was ONLY 2x over subscribed
There was a minimum bid cut off...
which means some bidders whose bids were below the cut off WERE NOT RECORDED AS SUBSCRIBING.

The previous auction had no such clause, hence the 8x over subscription.
I am not sure how many bidders were involved, it's probably a closly guarded secret.
The headlines were important to BOE (only 2x) and the clause worked well.
Obviously BOE is learning "on the run" quite well.
Brace yourself for January's rules.

ORO (12/2/99; 20:24:01MDT - Msg ID:20099)
THC - US military, all roads lead away from Rome
Contrary to what you may think, these exchanges, especially the challanges to my thinking, are exactly why I post.

No feedback is better than a challange to an idea.

Printed out, will read and reply soon.

Thank you.

Rhialto (12/2/99; 20:20:41MDT - Msg ID:20098)
Beesting
I would like to have been the guy with the cash in the bank who didn't have to pay a 3% haircut (6% RT) every time he needed to draw down some cash and which was in your example obviously an equally safe investment over 40 years as having purchased gold with the same return.

However, what would you suggest to me today if I had done both and presently have $150K gold and $150K cash? This is a little tougher for me to figure out. Let me assume that the $150K gold is my worst case crash scenario protection and ignor all the confiscation and related threats to my gold-induced sense of security. Do I add to the gold holding or try to diversify my retirement portfolio including an investment in income producing assets? I am not asking for investment advice, just trying to get a handle on how to proceed wisely. My choice is T-bills and notes in an account at the Fed.

canamami (12/2/99; 20:19:28MDT - Msg ID:20097)
Reply to Peter Asher
Peter,

Thx for your kind comments, but I lack the discipline to read a novel, let alone write one. Anyway, I don't have the background in the cloak and dagger stuff to make anything believeable anyway.

My main regret is that I can't keep up with the recent posts on the Forum. What I do read reveals there is some very heavyweight stuff being put on this Forum's pages, which I wish I could read in sufficent detail and leisure, so that I could assimilate it. No to single anyone out, but I regret not being able to read a tenth of what Oro puts out, in that it seems to come from a unique perspective. There are other great heavyweights - The Stranger, Aristotle, SteveH, FOA, MK, you, Towncrier, too many to even mention - suffice it to say some awesome and innovative stuff has been produced recently, but unless one has hours in the day, it's not possible to keep up.

I fear my recent posts may have overstated some points, and stated some others in an excessively black and white manner, but there's only some much precision and detail that a time-management challenged, overworked, slow typist like me can achieve. When my current appointment expires, maybe I'll take your suggestion and try to write for a living.

Regards,
canamami.

ORO (12/2/99; 20:18:27MDT - Msg ID:20096)
FOA - Greetings
Will make time on weekend - as much as possible.

Printed out your post, will read later.

Thank you for your thoughts.

Peter Asher (12/2/99; 20:04:20MDT - Msg ID:20094)
canamami
Is that realy you, or your soon to win a Pulitzer clone. The "True Comics" slogan of the 40's comes to mind "Truth is stranger and a thousand times more thrilling then fiction. Move over Tom clancy and John Grisham ,The high points of your plots are being combined by the USA Gold Forum's resident Attorney/Global conflict Author.

Goldy Locks Guy (12/2/99; 19:54:14MDT - Msg ID:20093)
Town Crier.....What does this mean?????

I'm kind of new to the market, so could you explain the meaning of this "news flash"...Thanks.....Goldilocks guy

>>>>>>>>COMEX news flash
Today, another 2,371 December futures contracts were tapped with intentions for delivery, bringing the three day total to 6,029 contracts on this third day of notice. Folks, that translates to 602,900 ounces on the move...some of it likely passing through several hands as they each pass the buck on delivery.

64,236 ounces of new gold was added to COMEX Registered stocks today, bringing the Registered total to 1,178,117 ounces while Eligible gold stands at 80,974 ounces.

Of today's delivery intentions, Goldman Sachs was on the receiving end of 1,051 contracts. Deutsche Bank was second with 781 contracts. Delivery intentions so far for December are nearly half of the current total on the COMEX books.

As of the conclusion of yeaterday's trade, there were still 6,085 December contracts yet to be settled one way or the other (a net decline of 869 from the previous trading day.)

TownCrier (12/2/99; 19:48:47MDT - Msg ID:20092)
The GOLDEN VIEW from The Tower
Traders and analysts are still attributing gold's present weakness to a lasting sense of disappointment over the UK auction held Monday, which was over-subscribed by 2.1 times instead of the 8-times level from the September auction. Gold's $4.50 fall today occured while London was still in session in overlap with NY. Reuters' London market review quoted some dealers offering an explaination. "It was fund long liquidation which has taken us down. It came down through support at $286.00 and I think a few stops were hit. It is just some stale fund long liquidation." Another dealer said, "There has been selling and I think those people who bought it (before the auction) are getting stopped out," while an analyst added that this consolidation period in the wake of the third UK auction is "being characterised by professional disenchantment and consumer bargain-hunting."

More Bargain Hunting in All the Wrong Places?

It seems that value shopping has become a lost art. Propelled by its fourth largest point gain in history (99.07) on the seventh heaviest volume, the Nasdaq Composite reached a new record by 5 points, last set the day after U.S. Thanksgiving. The Street.com suggested that it was "momentum players and daytraders piling into Nasdaq stocks" that were largely responsible for tech stock gains today. Are these values stable and justified on sound principles? Jay Suskind, head of institutional equity trading at Ryan Beck, said "It's momentum, momentum, momentum. People don't want to miss the boat." OK, so can another man on the scene offer more peace of mind about the stock markets? We don't gain much confidence from the words of Louis Todd, head of equities trading at J.C. Bradford. "The Nasdaq is just unbelievable. People are scratching their heads, 'How far can these things go?'" And finally, from Reuters we get a quote from James Melcher, president of Balestra Capital, "No one seems to be worried about anything. Inflation is moderate, production growth is excellent. The country is growing at a pretty good rate. The problem is, markets are supposed to look ahead. Happy days are here. It is late in the party, though. (Investors) have lost all hindsight. I just hope the party keeps going."
We're sure that will do it, James...Hope. <sarcasm>

Today's surge in home sales reported on earlier helped inspire deeper losses for the long bond...losing 9/32 in price to lift the yield to 6.316%. Treasury market participants are also apprehensive about tomorrow's November employment report. A consensus of economists forecasts an increase in November payrolls of 210,000 (down from October's 310,000 gain) and a steady jobless rate of 4.1%. Earnings are expected to maintain a trend at 0.3% gains. Traders are not optimistic. "Any relief rallies should be sold, still," a note trader told Bridge News. "I'm still
negative, I still think we're going to higher rates."

BACK to GOLD

Spot prices ended the day in NY at $284.70, down $4.50, while the COMEX February futures lost $4.80 to settle at $287.10. FWN attributed today's price decline to the dollar's strength against the other major currencies (yen excluded). As the dollar climbed versus these other currencies, gold becomes more expensive when priced in these other currencies, weighing on new purchases and encouraging sales in those affected nations. Heavy sales were noted by trades coming out of Australia in particular.

For today's COMEX totals for gold inventory, and delivery intentions, please scroll down to the information posted earlier at:
TownCrier (12/2/99; 14:51:07MDT - Msg ID:20073)
COMEX news flash

The significant but brief recap is that an additional 237,100 ounces were added to the previous two days of accumulated delivery intentions, bringing the total that will be changing hands to 602,900 ounces. Toward that end, 64,236 ounces of new gold was added to COMEX Registered stocks.

OIL

January crude continued its solid recovery from the early-week selloff, settling up 82� at $25.82. France has thus far failed in its efforts to push forward a 6-month rollover of of the Iraq oil-for-food deal, but the UN is adopting instead a one-week extension effective Sunday. Iraq's UN ambassador Said Hasan said "We will reject a week immediately." Iraq would also continue its halt on oil exports for at least another week, extending from the halt on November 25 during Baghdad's rejection of an earlier 2-week extension proposal. One broker was quoted by FWN "If we know Iraq is going to keep rejecting an extension, that's 2 million bpd that is going to be desperately missed by the market."

On another front, Venezuela Energy and Mines Minister Ali Rodriguez indicated that OPEC is 85-86% compliant with its agreements on output cuts. He said he wasn't worried about cheating, and boasted that Venezuela had the highest compliance level at 98.7%. Confirming OPEC's commitments to curb supply is an early report from Bloomberg that compliance in November has improved to 90%, up from their figure of 84% in October.

Higher oil is upon us.
The Y2K proving ground is one month away.
The Fed is daily replacing lost reserves from the banking system.
The stock market is as precarious as it ever has been.
US Bonds aren't getting any more popular with yields above 6%.
The dollar is seemingly at the mercy of continued Japanese intervention to weaken their own currency and prop the dollar.
The euro share of new-issue international bonds for the first half of 1999 was near equivalent to the levels enjoyed by the mighty dollar.
And speaking of that mighty dollar, when translated into history through the German Mark, the dollar is now at its highest level against this European benchmark currency in over TEN YEARS...since September 1989.
With 291 million people living in the 11-nation euro-zone, compared with 269 million people in the United States, euroland GDP in 1997 of 5.55 trillion euros compared with 6.85 trillion euros for the U.S., a second-quarter euroland annualized growth of 1.5 percent compared with 1.9 percent in the U.S., and a key refinancing rate at 3.00 percent in euroland compared to the Fed's key rate at 5.50 percent, you can be sure that our peer group across the Atlantic will continue to work for a level playing field as currencies are concerned.
How does the future shape up?
They have over 12,000 tonnes of gold while we have over 8,000 tonnes. They will be adding a host of countries to their currency union, while the U.S. has mildly entertained the dollarization notion with Argentina.

And that's the view from here...after the close.

Twice Discipled (12/2/99; 19:31:13MDT - Msg ID:20091)
Slight correct ...
I meant to say "GOLD and silver issued by the government, NOT worthless fiat paper issued by the Fed."

Twice Discipled (12/2/99; 19:29:32MDT - Msg ID:20090)
Republican Presidential debate
Did anyone listen and pick up on a few tidbits which I found interesting in the context of our common interest -- gold and money?

Alan Keyes mentioned that the taxation under the current code was unconstitutional and that to return to our constitution we should remove it and return to the constitution form of raising money for government operation.
Score one for Mr. KEYES!
I hope he would also be in favor of returning to the constitutional form of money -- GOLD and silver issued by the government NOT the Fed.

Interesting candidate, definitely well-studied and not your typical politician mold.

canamami (12/2/99; 19:17:41MDT - Msg ID:20089)
"Oil/Islam"prepares a counter-attack cum flanking maneuvre???
Stratfor today reports that Iran will build a $3 million dollar meat plant in rebel held (FARC) territory in Colombia, which I understand is also in the drug baron, drug producing region. (I did some work on Colombia in a previous life, but not much). Apparently, Iran already has sufficient meat-packing capacity to meet all its needs, while Colombia's ranching area is far from the plant, and the plant is in the jungle. One should read the Stratfor report for the full background, but apparently Hezbollah and FARC have major ties, and this is to provide Iran terrorist influence with FARC. Also, perhaps to provide a window on the drug trade.

In a previous life, I did come across some reports indicating that Iran (or Iranians) was becoming a big player in the drug trade, particularly heroin (poppies grow within Iran ,and in neighbouring Pakistan and Afghanistan) but also some other drugs. This was a recent development, and is partly rooted, apparently, in a belief among some Islamic thinkers that there is nothing wrong in contributing to the addiction of infidels, non-Muslims, etc. This would be especially true of the Great Satan, the US, perceived as the pre-eminent anti-Islamic force. Hence, one weakens the great enemy, while raising drug money for terrorist activities. If a showdown over culture, oil, whatever develops between the US and allies v. the oil-producing, Islamic Middle-East, the Colombian jungle is the place to be. The jungle diminishes the US advantage in military assets and technology. An Iranian presence in Colombia ties down US assets. It places terrorists in striking range of the Venezuelan oil fields, to cut off the main alternate supply of non-ME oil. Money for future adventures is raised from the drug trade. And maybe even some Christians rendered soft by liberation theology can be converted to Islam. Keep an eye out for this development. Note also the presence of a significant number of Chinese triad foot soldiers in both Latin America and North America, the triads allegedly sometimes serving the ends of the Chinese government. Note also the rise of Islam in North America, often fueled by recent immigration. There are now more adherents of Islam than Jews in North America, a little-cited statistic, said adherents of Islam often receiving financial support from the Middle-East.

Except for Pearl Harbour, no country has "taken it" right to the US since the War of 1812. How will the US react if, during a hypothetical move in the Mid-East (assume against a fairly united Arab and Islamic world and not just a renegade like Saddam), the power lines, refineries, aircraft, etc. start "crashing". The last few US opponents have just essentially sat there, with no real capacity to hit the US. In political and military battles against Iran and Saddam, the US has faced opponents who could not muster a strong coalition against it, due to national, cultural and religious reasons (see an old post I did juxtaposing Iran and Saudi), but if the FOA/Another/Oro thesis is true (a big if, but some corroboration seems to be there), will the US benefit from such dvisions? Will the US homeland be immune from terrorist counter-attacks and disruptions?

THC (12/2/99; 18:49:04MDT - Msg ID:20088)
To Oro Gold Scenarios
Good evening, Oro!

Thank you very much!

Let me first emphasize that:
*I truly appreciate your generosity with your time and ideas.
*I am very bullish on the metals, and I have long futures, options, physical and mining share positions.
*My purpose in this discussion is simply to achieve a realistic assessment of possible scenarios for the global gold market & monetary system.

1. US Military Hegemony
Once again, I am in complete agreement that the world is tiring of Caesar, but how does one get rid of Caesar? The Devil is in the details, and it is not easy to get to There from Here.

Caesar has troops in perhaps over 100 countries and territories. The key locations may be Europe, the ME, and Japan. How does one get rid of Caesar? Will he leave if one asks? Let�fs look at Japan. Japanese right-wing politician Ishihara Shintaro is now mayor of Tokyo, and a key campaign pledge was to get back the US airstrip in Tokyo for civilian use. He met with the US ambassador, and the ambassador refused to discuss it except with the central Japanese gov�ft. The Japanese gov�ft will not bring up the issue, so no progress. Okinawa has the same fate. I suspect it will be the same in most countries. Caesar will not pull out his troops unless he has a strong stimulus.

Most pertinent is perhaps, �ghow can the ME get rid of Caesar�h, and �ghow will they defend themselves after Caesar has gone?�h

2. Damage by the Trigger
A. Who holds the CB loan debt?
We have a total load position of roughly 10000 tons (or whatever), and this has been borrowed short by the BBs and loaned long to the miners, hedgies, etc.

Now, if we add up all of the BB positions, we must have a net 100% coverage of the above figure. By your numbers,
*UK holds 50%
*US holds 30% or so
*The only other possible bag holder would seem to be Europe, at perhaps 20%?

Now, it would seem that if the trigger is pulled:
*The BB will be unable to return the gold.
*The BB will be squeezed to the edge & then pushed over.
*The CB and ME gold loaners will not be able to get their gold back.
*Some of the key banks will go belly up.

This would appear to be an extremely mixed blessing. One immediate result is that the gold loans are destroyed by the bankruptcy of the borrower, thereby reducing European CB gold holdings by perhaps 50%.

Does Europe want this?

3. How does Europe benefit from this scenario?
It has been discussed here that the BIS and Europe have a deal, and that oil will be quoted in Euros.

If the European CB only holds gold as a �greserve�h and does not offer convertibility at a fixed rate, is not the Euro just another fiat currency like the dollar?

Why would the ME quote their oil in Euros instead of just gold?

Please help me here, I think I am missing something.

The link between the Euro and the ME seems to be missing, and this would appear to be the key to aligning the interests of Europe and the ME.

4. Triggers
You have improved the �gtriggers�h substantially by adding �greal assets�h to �gA�h and �gstock crash�h to �gC�h.

C seems to be the most imminent scenario, although one cannot be 100% sure that it will indeed lead to a gold bull market (although we will know when we get there!).

Thank you in advance!!!!

THC (12/2/99; 18:48:42MDT - Msg ID:20087)
(No Subject)
Good evening, Oro!

Thank you very much!

Let me first emphasize that:
*I truly appreciate your generosity with your time and ideas.
*I am very bullish on the metals, and I have long futures, options, physical and mining share positions.
*My purpose in this discussion is simply to achieve a realistic assessment of possible scenarios for the global gold market & monetary system.

1. US Military Hegemony
Once again, I am in complete agreement that the world is tiring of Caesar, but how does one get rid of Caesar? The Devil is in the details, and it is not easy to get to There from Here.

Caesar has troops in perhaps over 100 countries and territories. The key locations may be Europe, the ME, and Japan. How does one get rid of Caesar? Will he leave if one asks? Let�fs look at Japan. Japanese right-wing politician Ishihara Shintaro is now mayor of Tokyo, and a key campaign pledge was to get back the US airstrip in Tokyo for civilian use. He met with the US ambassador, and the ambassador refused to discuss it except with the central Japanese gov�ft. The Japanese gov�ft will not bring up the issue, so no progress. Okinawa has the same fate. I suspect it will be the same in most countries. Caesar will not pull out his troops unless he has a strong stimulus.

Most pertinent is perhaps, �ghow can the ME get rid of Caesar�h, and �ghow will they defend themselves after Caesar has gone?�h

2. Damage by the Trigger
A. Who holds the CB loan debt?
We have a total load position of roughly 10000 tons (or whatever), and this has been borrowed short by the BBs and loaned long to the miners, hedgies, etc.

Now, if we add up all of the BB positions, we must have a net 100% coverage of the above figure. By your numbers,
*UK holds 50%
*US holds 30% or so
*The only other possible bag holder would seem to be Europe, at perhaps 20%?

Now, it would seem that if the trigger is pulled:
*The BB will be unable to return the gold.
*The BB will be squeezed to the edge & then pushed over.
*The CB and ME gold loaners will not be able to get their gold back.
*Some of the key banks will go belly up.

This would appear to be an extremely mixed blessing. One immediate result is that the gold loans are destroyed by the bankruptcy of the borrower, thereby reducing European CB gold holdings by perhaps 50%.

Does Europe want this?

3. How does Europe benefit from this scenario?
It has been discussed here that the BIS and Europe have a deal, and that oil will be quoted in Euros.

If the European CB only holds gold as a �greserve�h and does not offer convertibility at a fixed rate, is not the Euro just another fiat currency like the dollar?

Why would the ME quote their oil in Euros instead of just gold?

Please help me here, I think I am missing something.

The link between the Euro and the ME seems to be missing, and this would appear to be the key to aligning the interests of Europe and the ME.

4. Triggers
You have improved the �gtriggers�h substantially by adding �greal assets�h to �gA�h and �gstock crash�h to �gC�h.

C seems to be the most imminent scenario, although one cannot be 100% sure that it will indeed lead to a gold bull market (although we will know when we get there!).

Thank you in advance!!!!

YGM (12/2/99; 18:38:20MDT - Msg ID:20086)
Thanks FOA.
A Phophetic Phrase or an Investors Credo...This Line shall Endure..
As I hold my gold for the money it is, traders will work all these markets as they must. With the speed of light they now circle the earth, only to find their future as but one step behind me!..............(end quote from FOA Post)

*****Much appreciated words along with your "return to have a say".......................YGM.

tedw (12/2/99; 18:31:12MDT - Msg ID:20085)
gold calls
http://www.usagold.com

June $400 Gold calls now selling for $170. That looks like a good buying opportunity to me considering they were as high as $1500 2 months ago and theres lots of time left on them.

Although physical gold is a good investment, there is much more leverage potential in Gold Calls and when they are so
down so much they look good to me.A risky investment ,yes, but with lots of potential upside.

YGM (12/2/99; 18:26:46MDT - Msg ID:20084)
Adrian Day, Ron Paul etc. Live Audio Gold Discussion
http:liveinvestorsforum.com/events.asp
Launch site for audio....@ 7 pm pacific and 10 pm eastern

Canuck (12/2/99; 18:25:24MDT - Msg ID:20083)
Aristotle
Thank you for 20048 and 20051 seems to make sense to me.
Net capitization of the indices (ie Nasdaq)is going up, not flat.

You posts carry a philosophical tone, I like that. Any thoughts on the definition of investing versus speculating.
I saw a phrase the other day, it went something like this,
" investing is a sure thing, guaranteed income, if the income (increase) is not guaranteed it is speculating"

There have been many posts declaring the merits of investing
in gold versus speculating in gold and I fail to see the difference. Surely the difference is not a time thing, that is, investing in gold is a long term venture whereby speculating is short term. How would one define the time frame? Surely the difference is not of financial gain; in either scenario profit is a common denominator. How do you feel about this bizarre question?

I was going to Babbylon but I thought I would pre-seek ideas
on this issue. Also YGM's recent message scared me off.

FOA (12/2/99; 18:06:06MDT - Msg ID:20082)
An eye for gold!
After all these days,,, did Another "time" the gold market correctly? No, not for traders he didn't! But, then again, his whole message and proposition was never for a traders mindset or time frame. Indeed, his direction was for simple savers, like you and me. As a conservative group, our
holdings represent the most long lasting, stable assets that presently exist. Such assets collected over a lifetime should not be lost to a world gone mad! Truly, Another's thoughts represent the values held in the old world. For many these are in competition for our hearts against the current facade of economic reality.

We now understand how short-lived the current misconception of money must be. Other fast paced modern investors have accepted that "money was never wealth" and paper currencies need not be real things to represent their savings. Lost on these "educated of the Western world" is the knowledge that "wealth in the form of real things" was the first thing humans traded. It was only later that someone labelled these things as money. As a people we once knew the special value of gold and held it beside our other tradable property. We held this gold more dearly because it made the best form of "tradable" wealth. In this context, it's demand will remain, as always, infinite. It mattered not if one had one ounce or one million ounces, as gold money was/is but a representation of the real tradable wealth you saved over a lifetime of work. How far must modern gold now climb as it is reintroduced to the world as a new "tradable money wealth"? As far as the unlimited
efforts of humanity!

Truly, as gold is once more used as "wealth money", this action will again impart an unlimited value for gold in use. The more we built and created, the greater the gold value must always be in the future. Neither time or new ideas have changed human nature as it seeks to run from the modern uses and valuations of "IOU" wealth. A wealth that was never as great as the dollar said it was. As a system it could never represent a lasting "wealth of nations" as held in the account of "common man". Gold will come pouring in to fill this void.

This coming new level of value for gold is the "proposition" Another presents. A concept that is now being embraced as "something new" for a failing economic system now based upon an over leveraged world reserve currency! Truly, the old ways will not fail those that see through our
modern money fog. Another once put it somewhat this way; Nothing has changed our need for real things as tradable items. And this earth is still round my friends. As I hold my gold for the money it is, traders will work all these markets as they must. With the speed of light they now circle the earth, only to find their future as but one step behind me!

Yes, Another once said that. Differently of course, but an incredible bit of insight it remains. I also accept that most "physical gold" savers will find themselves "many steps" ahead of the "Western trading community" as this plays out. This "long term gold accumulation" proposition was given some time ago, to induce conservative people to begin saving gold "now". At any dollar price, be it $600 or $10! Such direction was given in the face of unprecedented choices from where someone could make fortunes using our modern vehicles. Yet, through it all, the revaluation must
come as gold will return as money to represent all of this wealth many times over. For truly, all modern wealth will be directly or indirectly denominated in gold as our dollar reserve fails. To this end, the physical gold holder will stand "one step in wealth" ahead of every worldly paper trader. Weather they trade paper gold stocks or dow stocks, real estate deeds or CDs, in the end their paper winnings will compete with the spoils of all others of "Western thought". These "non physical owners" will seek to buy what gold they can at a price many will refuse to understand. If one made a million by paper investing, he will buy no more than a million in gold. Still, for every new buyer that wishes to escape the old paper world there will be the lowly physical buyer from the past who will already possess two million in gold.

You see, there is a world of difference between saving real money as a "wealth of ages" and trying to trade this world's "paper derivatives". The lasting wealth of physical gold does not have to be "converted" into real things prior to a currencies destruction. It already represents the new
holding everyone will want. The coming "Western" economic dislocation will devastate all forms of assets that are held in "contract ownership". Be they stocks (most gold stocks included), bonds, businesses or savings accounts, etc.; the loss of a major currency will consume most of the equity
these paper items represent. It has happened with every currency ever created and will happen again with our dollars.

So, the next time you read that someone lost their "bet on gold", remember, they lost because they made the wrong bet. Only a "bet" of "buying physical" over time represents the FOA/A true position.

Another recently said:

"The time? These years be right for ones who save gold. One good ear knows meaning of wind in trees. The leaves come down as seasons change. Fools see falling price of gold as "death of tree", they chase it's price as leaves on the ground. Know you all, it is the season that has died.
Time will prove all things. Ones of simple thought, such as I will save the wood, not the leaf as they buy the gold, not the price! Thank You Another

I will be posting and replying this weekend. Thanks FOA

ORO (12/2/99; 16:25:59MDT - Msg ID:20081)
SeveH - Stranger, on the contraction
Some comments on your post of the multiple Ms

SteveH (12/1/99; 3:34:47MDT - Msg ID:19978)
The Stranger (12/1/99; 12:14:39MDT - Msg ID:19997)
Thanks again for the kind words and the informed and thoughtful commentary.

--->....I see a significant finding in your numbers, but I am not sure exactly what it is. Let me explain. You have created an addendum to currently money supply theory. I presume this is your add-on (M5-9) and certainly worthy of deep consideration. In essence you have accounted for all liquid to semi-liquid financial assets and then tracked their growth over time. To aid in interpreting the significance of the various rates of growth in each asset class, I think we need to evaluate the level of risk to each M-class were the overall stock market to fall...
Before considering the Stock Market, think of what happened in 1998 after the stock market fell. The Fed pumped up liquidity, the mortgage companies were our in force putting liquidity to use in mortgage refinancings. All at once, upon the initiation of recovery in stocks, bonds fell along with the rise in stocks. On average, long term paper lost 12.5% or more (after interest accrued is put back in). This plays into the simple fact that over the past two years the only categories showing growth are those related to equities. The 25% growth in the cap weighted markets, has coincided with a steep rise in yields and a steeper rise in financial debt. The main point is that financial corporations are holding an enormous chunk of the stock market on margin. According to Tice, this is the result of delta hedging financials entered into when they used the 60% implied volatility in 1998's dip to sell highly valued options with hefty time premiums and once the market went up they were constantly pushed into buying ever more stock to hedge the calls, while the puts were becoming worthless. The manipulation of the market position of the arbitrageurs by the PPT participants is the major structural driver of trading in the markets (as opposed to apparent fundumentals played out by the options compensation scheme. A sudden drop in the market would cause these hedgers to get stuck with devalued stocks bought on margin that could not be sold quickly enough to unwind the hedge. That is very dangerous. It nearly destroyed the financial companies in summer 98 - particularly in the day after expiration in August 98 and again in Sep 98. The liquidity of the major poppular stocks simply dried up and their unwinding of old hedges simply exploded the markets.

--->... taking into account the various considerations of stagnant through a 50% correction to the "stock market," what would the affect be on each M-class as it fell through these various levels? I ask this because it seems that each M-class builds on a more fragile and less liquid asset base such that any redemptions from a higher M-class, of necessity, knocks value from the underlying class such that a cascading affect would work its way exponentially through to M-1, drying it up significantly. In other words, M-1 is now held hostage to a new financial era that can't afford a falling stock market, as the cascade or trickle through effect would devastate it. Any move to a cash position in any M-class above M-4 would devastate the system. The higher up the M-class you travel to liquidate the greater the cascade affect against M1-3. Finally, M-6 through M-9 are built on equities (for the most part). It is here first that the waterfall would begin. Any cash positions created from redemptions or sell-off here may go into bonds or checking but as redemptions ensue in equities, less cash would be redeemed and the corresponding build in bonds or checking would of necessity be reduced. If one were to plot the affect of M1-5 from a sell of in M6-9, I would guess one would see an expansion in M1-M5 but inherent in M1-M5 would be a loss of confidence in any form of paper asset. That could further starve M1-3. It is fascinating to think it through but your model shows an otherwise stable system out of equilibrium and any adjustments could be swift and unmerciful as it tries to find homeostassis (equilibrium?).

1. Cascading. There seems to be an error in your dealing with this issue. The selling of a cash account security moves M1 or M2 (money market - MZM) cash from the buyer's account to the seller's. A sale of a margined security settles the margin loan, which eliminates the buyer's cash that went to cover margin, both the margin loan and the cash it created are lost. The distinction is important.
2. If one takes financial market debt into account (by far the most rapidly advancing form), the financial markets are now structured with the elements of M5-M9 held against margin. If these securities are sold to cash buyers at a loss. Which is what happens in a credit crunch, then the cascade effect you speak of can really get going, as it did in summer 98. The process is this:
A. Sell security held on margin, (1) cash buyer - the cash comes out of M1-M3. Cash settles Margin loan. Loan gone, cash gone, M1-M3 fall. (2) margin buyer - cash created as margin loan made, cash disappears into old margin loan - no change in M1-M3.
B. Sell security held free of margin - in cash account, (1) cash buyer - cash comes out of M1-M3. Cash returns to M1-M3 and they remain unchanged. (2) margin buyer - cash created as margin loan made, cash created and margin loan is outstanding, M1-M3 rise.

In the event of a credit crunch, A1 is more likely, because of possible difficulty in obtaining credit for margin loans pressuring margined players to exit and preventing new margin from forming. As this proceeds, M1-M3 falls, thus exacerbting the problem by preventing more margin from being created. As this proceeds, losses are made, and some margin accounts fall into default. The default removes the loan, but not the cash. Currency drops in value as credit availability still decreases and the Ms fall.

If Tice's analysis is on spot as to the reason for the rise in financial debt, then the next contraction in the stock market can really cause a disaster if the Fed continues tightening terms of credit and is reluctunt to increase monetization. Note that higher interest rates will cause more closures of margin positions and a rise in cash holdings. This would continue to press M1-M3 just as the Fed churns out more cash.

The situation would be hysterically terrible were an interest rate shock knock the 7 trillion in financial corporation debt supposedly held as margin for some 7 trillion in securities. I has within it a theoretical potential to eliminate all the cash dollars ever printed. Watch this.

ORO (12/2/99; 16:11:35MDT - Msg ID:20080)
TC - Yen pattern trading
Perahps you remember the day the Yen turned. After a very mild intervention by the Japanese MOF, on that fateful day in Aug 98, the Yen was allowed to fall up to that point. Had no action been taken, the Yen would probably have fallen more steeply, and instead of stopping at 70 cents per 100, may have continued to the mid 60s before interest rates in Japan would have slowed down the carry trade dominating exchange rates at the time. Just a slight reversal of the trend, was enough to send the Yen skywards to 90 cents in one month. The odd gravity of leverage increases the force going counter relative to the originating force. Sort of like a yo yo on a rubber band.

The Euro is sitting in a simillar position to last year's summer spike down in the Yen. The spike earlier in the week in Yen and Euro Libor are indicating more resistance to new lending, we are on the edge of the liquidity boundary. In the Yen, we are approaching the hard edge of the unwinding of the carry trade, in the dollar, the transition to Euro debt is limiting liquidity available just as physical cash is withdrawn. In the Euro, new Euro creation is reaching the point where interest payments on the first loans are stretching the availability of cash Euros to cover interest payments.
That's the best guess right now as to Dabchick's observation of the Libor rates in all currencies.

What say you?

TownCrier (12/2/99; 16:04:24MDT - Msg ID:20079)
FOCUS-Summers, Argentine govt-elect talk dollarization
http://biz.yahoo.com/rf/991201/bd5.html
Argentina's upcoming economy minister, Jose Luis Machinea met with U.S. Secretary of the Treasury Lawrence Summers in regard to the possible dollarization of Argentina, a policy his party has opposed.
Mr. Machinea told reporters, "We talked about the subject of dollarization. It is a subject they (the United States) are prepared to discuss with us, but it is a sovereign (Argentine) decision, in which the United States wants to play no part."

SecTreas Summers said, "I think its better to let the Argentine authorities speak for their views. The subject of dollarization did come up in our discussions and I repeated ... that dollarization was an enormously consequential decision for any country, that currency decisions for any country were very much political decisions and decisions that a country had to take for itself."

The same rationale holds true for people, too. As alluded to in yesterday's GOLDEN VIEW, as a free preson you needn't blindly be "dollarized." You are free to make your own sovereign decision, and shouldn't take your obligation lightly. The SecTreas himself admits that the decision is "enormously consequential" that the deliberating party "had to take for itself."

Just as countries choose their personal currency and then use various other currencies as needed in trade, so can a person choose a globally sovereign currency such as gold, and use whatever national currency as required to facilitate your daily economic needs for trade. As the national boundaries become ever more blurred by international banking, it make ever more sense to be among the first to anticipate the future and get in on the ground floor with cheaply obtained gold...the REAL single currency. The banks hold onto a quarter of the world supply for a reason. They don't have a quarter of the world's wheat or corn, in marked contrast. Think about it.

Usul (12/2/99; 15:57:43MDT - Msg ID:20078)
Gold for Oil
http://www.msu.edu/~kreinin/
"Gold for Oil," New York Times letter, March 18, 1974,
included in Casebook of Economic Problems and Policies, R. Fels ed.
Mordechai E. Kreinin
University Distinguished Professor
Department of Economics
Michigan State University

TownCrier (12/2/99; 15:23:37MDT - Msg ID:20077)
Euro hits one-to-one with dollar first time ever
http://biz.yahoo.com/rf/991202/9e.html
The incredulous voice of frustration..."Whatever I say, whatever I do the euro continues its movement so perhaps I am best advised not to say anything." --ECB President Wim Duisenberg

Currency speculators smelled blood in the water when the ECB refrained from forex intervention as the euro zeroed in on parity with the dollar. Apparently they don't realize that this single currency is being managed under a new paradigm, and what is currently done for Japan's currency (for example) is a legacy of a failed era and is not to be readily embraced by the ECB. If a euro carry trade has developed, when it turns, the aforementioned blood in the water will be that of the speculators. Japan, on the other hand, has been most accommodative for the unwinding of the yen carry trade.

On the arrival of parity (Reuters data showed the euro as low as $0.9997) Tim Fox, currency strategist at Standard Chartered Bank said, "This reflects the malaise that currently persists across the European economy. But it cannot necessarily be called a vote of no-confidence in the concept of a single currency."

Do you hear that, Mr. D? The whole world hasn't yet tossed this baby out with the bathwater. Hold the course...because we know that a truly free market in gold depends on an unmanipulated free market in euros, too.

Rhialto (12/2/99; 15:07:03MDT - Msg ID:20076)
Chris Powell
The actual Financial Times article includes a great cartoon which shows a guy named Goldman Sachs with five heads.

I remember the $325 call option trade that was mentioned in the article, because it was big. I think the Oct 4 trade date mentioned in the article is wrong and that the trade occurred later in Oct and near the expiation date. It covered something like $4B of gold at $325 and the premium was millions of dollars. Altho GS pretends that the trade was on behalf of a client, it most likely was one of the GS heads selling to another GS head in some kind of stupid desparation effort to contain the potential damage.

"Chinese Wall" is the SEC's terminology for a process whereby it abrogates its responsibility to protect investors; it is pathetic to read the SEC's tortured rationalizations to justify this process, and nobody in their right mind believes in these things. The "control room" of compliance officers and corporate lawyers mentioned in the article are the middle men who more likely make sure that the information passing over, under and around the so-called wall is used in ways which benefit the company while at the same time appearing to have come from some other source.

ORO (12/2/99; 15:03:09MDT - Msg ID:20075)
Did some more diving at K some new pearls from glenn
Date: Thu Dec 02 1999 16:40
glenn (Excuse me.) ID#423288:
I hate to bother everyone with my petty posts but I wanted to bring to your attention the fact that the money supply JUST came out for this week and it appears that the Fed monitized all of the known debt on the planet earth this past week!

http://www.bog.frb.fed.us/releases/H6/Current/

over the past two weeks

m1..up..10.7 billion
m2..up..35.1 billion
m3..up..62.7 billion

thank you for your time.

WilloTheWarthog (12/2/99; 14:52:13MDT - Msg ID:20074)
ECB Trascript
http://www.ecb.int/key/st991202.htm
This is the transcript of the ECB press conference today. I detect little concern either over the exchange rate versus the dollar or the prospect of inflation for Europe.

TownCrier (12/2/99; 14:51:07MDT - Msg ID:20073)
COMEX news flash
Today, another 2,371 December futures contracts were tapped with intentions for delivery, bringing the three day total to 6,029 contracts on this third day of notice. Folks, that translates to 602,900 ounces on the move...some of it likely passing through several hands as they each pass the buck on delivery.

64,236 ounces of new gold was added to COMEX Registered stocks today, bringing the Registered total to 1,178,117 ounces while Eligible gold stands at 80,974 ounces.

Of today's delivery intentions, Goldman Sachs was on the receiving end of 1,051 contracts. Deutsche Bank was second with 781 contracts. Delivery intentions so far for December are nearly half of the current total on the COMEX books.

As of the conclusion of yeaterday's trade, there were still 6,085 December contracts yet to be settled one way or the other (a net decline of 869 from the previous trading day.)

Felix the Cat (12/2/99; 14:47:48MDT - Msg ID:20072)
Simply Me
I interested in your message(ID:20039)
well, as I know that the waterway through Panama will holding by HWL (a big company in HK) in Y2k, NOT the Chinese Gov..
And also the Chairperson of HWL said that is only use for commercial way.

What do you think?
<:-)

F. C

Galearis (12/2/99; 14:47:10MDT - Msg ID:20071)
@ORO
I am deeply greatful for your wonderful response, and I look forward to the ponder of your words. As so many others on this forum have stated and continue to state daily, we are blessed with one who is at once so wise in these fiscal ways and so generous in sharing this wisdom.

There is so much in this post to think about that I feel quite lost as to where to begin. So I will retire, digest what is obvious, and research what is (to me) not. This is the material that has drawn me to this wonderful forum and it makes each day an excitement of learning. Each day I learn how much I have yet to learn, a humbling experience but one with an open ended goal. Thank you!

CoBra(too) (12/2/99; 14:40:06MDT - Msg ID:20070)
Every positive economic number in the US -
seems to be up more than expected lately. Is it housing starts, manufacturing, consumer spending and what not- impacting the equity and credit bubble simultaneously by broadly commenting on this truly unparalleled goldilocks economy, which has come to roost so benevolently on te US.

So is the money supply (thanks TC - staggering! -and BTW yes my browser prob's seem to be under control)but nobody in the main stream press takes notice of this unprecedented boost of monetary aggregates, without which goldilocks and new paradigm and era apostles would suffer the same fate as the major and minor industrialized nations have recently undergone in their plight to concur with the greenback's hegemony by right (eignorage -ORO?) of printing the world reserve currency. (ORO - your latest posts have been phenomenal - thank you).

At a press conference ECB's Whim Deusenberg stated laconically today:"Whatever I may want to say will not have a lasting impact on the exchange value of the euro - so I won't say anything!". He stated, though that the ECB expects
accelerated economic growth in euroland for the next two years, which will highlight the appreciation potential of its currency quite dramatically. - Though I missed a statement - appreciation vis a vis what? ... and that seems to be the problem.

In this time and age of "instant" -sounds like "Ersatz" - information the historical only ever accepted parameter of value in human conduct - GOLD - is abjectedly, while purposefully obscured by powers of the casino-, crony- and
phony capitalists.

As the protestors in Seattle feel uncomfortable with the aims of WTO - ostensibly feeling their will be one global company - one government - one e-currency - and one system regulating every aspect of individual liberty -
after the ongoing mergermania - a return to small is beautiful may be tomorrows craze again.
I can feel the beauty of a small circular Philharmonic in my hand. Best CB2

WilloTheWarthog (12/2/99; 14:29:46MDT - Msg ID:20069)
Town Crier & Definitions
Inflation is when you blow a balloon up. Deflation is when you let the air out. Then, there's the scenario where someone takes a pin, and....

TownCrier (12/2/99; 14:24:01MDT - Msg ID:20068)
U.S. New Home Sales Rose 16.3% in October to Record 986,000 Annual Rate
http://quote.bloomberg.com/fgcgi.cgi?ptitle=U.S.%20Economy&s1=blk&tp=ad_topright_econ&T=markets_fgcgi_content99.ht&s2=blk&bt=blk&s=e94d3cd22052e9c7592fb851acf83d5a
30-year fixed-rate mortgages this year in October averaged 7.89 percent a week, a giant 17 percent increase over the 6.74 percent weekly average one year ago. Smell any inflation?...that is, whatever inflation may mean to you.
;-)

TownCrier (12/2/99; 14:12:34MDT - Msg ID:20067)
U.S. Bond Yields Rise to Near 5-Week High on Concern Fed to Raise Rates
http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=blk&bt=blk&s=282088a8918f6dcb67278c93028386d0
As you know, the yield moves in opposite direction to the price paid for the bond. The price itself is a supply/demand sensitive thing. Seems that the demand just isn't there. When you consider that bonds are the form in which many major international institutions hold their dollars, you get the impression that their confidence is too weak to hold dollars, even when yielding in excess of 6%. The reluctance could be a sign of a risk deterrent, or as a non-competitive return, or both. The more the bond falls, the greater the risk of developing a vicious downward spiral. Might our currency go the way of banana republic paper?

TownCrier (12/2/99; 13:46:29MDT - Msg ID:20066)
FOREX--Euro hovers above lows
http://biz.yahoo.com/rf/991202/y3.html
The ECB held interest rates and its M3 reference rate steady, yet currency traders remained unimpressed by ECB President Wim Duisenberg's comments that the euro had a strong potential to rise, and had expectations of slowing U.S. growth and an acceleration of European growth.

Currency traders said the dollar's own downside was protected by action from the Central Bank of Japan to curb the rising yen. What a giant bowl of soup! You're either floating on a saltine, or you're not.

ORO (12/2/99; 13:13:40MDT - Msg ID:20065)
Lease rate post from Kitco
http://www.kitcomm.com/cgi-bin/comments/gold/display_short.cgi#start
Date: Thu Dec 02 1999 06:47
Dabchick (Rhody.....Lease Rates) ID#258195:
Copyright � 1999 Dabchick/Kitco Inc. All rights reserved
I have been mulling over your posting on Monday ( 15:51 on 29th Nov ) about the sudden jump in 1-Month Lease Rates, and would appreciate your further comment on the following figures for the last 10 days which I have compiled from the data supplied daily in the FT.

Rates for 1-Month gold loans/leases
Rate... | $Libor | For'd | Lease |
22 Nov | 5.59 | 4.83 | 0.76 |
23 Nov | 5.59 | 4.85 | 0.74 |
24 Nov | 5.59 | 4.84 | 0.75 |
25 Nov | 5.59 | 4.80 | 0.79 |
26 Nov | 5.59 | 4.80 | 0.79 |

29 Nov | 6.47 | 4.36 | 2.11 | Note the jump in $Libor
30 Nov | 6.47 | 4.44 | 2.03 |
01 Dec | 6.47 | 4.50 | 1.97 |

Rates for 12-Month gold loans/leases
Rate... | $Libor | For'd | Lease |
22 Nov | 6.16 | 4.38 | 1.78 |
23 Nov | 6.16 | 4.48 | 1.68 |
24 Nov | 6.19 | 4.48 | 1.71 |
25 Nov | 6.22 | 4.45 | 1.77 |
26 Nov | 6.22 | 4.35 | 1.87 |

29 Nov | 6.25 | 4.37 | 1.88 |
30 Nov | 6.28 | 4.41 | 1.87 |
01 Dec | 6.28 | 4.39 | 1.89 |

As shown, all the 12-Month Rates ( ie $Libor, Forward and Lease ) have remained about the same throughout. The 1-Month rates show a different picture, about which you posted on Monday. In that post, you said that the rise in Lease rates on Monday was as a result of an immense lease-driven short attack on gold.

But it is clear that while 1-Month Forward Rates fell this Monday from 4.80 to 4.36 the major part of the 1.34% rise in 1-Month Lease Rates in London from 0.77% to 2.11% seems to have been a result of the 0.88% rise in $LIBOR from 5.59% to 6.47%. ( Incidentally, there have been identical rises in the 1-month money interest rates for the Yen and the Euro since Friday ) .

I have taken the liberty of copying the first part of your post of Monday this week ( 29th Nov at 15:51 ) when you wrote:
" LEASE RATES: There was an immense lease driven short
attack on gold today. For the past several weeks lease rates
have been quiet to slightly declining until today.
All last week one month gold leases were in the range of .8%
and stable to declining. Then today, they jumped 1.32% to
2.12%! ONE YEAR leases are 1.95%. So we went from a "normal"
looking spread of .8% to 1.7% across the board to instant
backwardation in one day! The drop today was an orchestrated
attack by fiscal interests to attack precious metals at a
critical time ( BOE auction and collapse of 30 year bond and
a weakening DOW ) The attack was across the board on all
PRECIOUS METALS, even platinum where one month leases are now
66.5% up .86%......................."

The rise in 1-Month $LIBOR also accounts for the rise in 1-Month lease rates for all the other precious metals. Don't you agree?

I would appreciate it if you could explain how the rise in 1-Month $LIBOR signifies a short attack on gold.

Regards....bbl.......Dabchick

TownCrier (12/2/99; 13:08:38MDT - Msg ID:20064)
Brazil cenbank to sell dollars to soothe Y2K fears
http://biz.yahoo.com/rf/991202/kw.html
According to this Reuters report, the markets expect demand for dollars to surge through December. Brazil's Central Bank director of monetary policy, Luiz Fernando Figueiredo, said of the intended dollar auction "It is one more measure to prevent the millennium bug, another liquidity measure."

beesting (12/2/99; 12:55:28MDT - Msg ID:20063)
@Aristotle-Which post did you find of passing value?
Sir Aristotle, I find passing value in all the posts,and I'll have to get back to you on the banking question.
The degree of value can only be measured in academic terms.
Such as; I've got my Bachelors degree in Golden economics,but I'm going for my Masters,and the forum contributors are the Instructors.Recent examples:
ORO #20055-"A great buying opportunity today"!
Towncriers GOLDEN VIEW #20020 "superb".
Special note from post; Deutsche Bank Futs and Goldman Sachs were BIG WORLDWIDE PLAYERS who took delivery at COMEX for the last 2 days.
Aristotle's quote;"How can you take the first important step to plan your life if you can't count on the enduring stabilty of your money's purchasing power.Without spending a dime you could find yourself wealthy one day and a pauper the next."End of quotes.
Very significant statement--How can I take past present and future earnings and retain past,present,and future purchasing power???
Put cash under the bed?-Thats never worked in the long term.
Put cash in savings bank?-With very low interest rates money loses purchasing power over time due to --flation.
Invest in Corporate securities?-Works sometimes can be disastrous other times.
Invest in Government bonds etc.-Rate of return may stay even with --flation.(talking about U.S.bonds)Penalties for early redemption.Can be a legal and family mess upon death.Can be discussed much more.
Invest in Real Estate?-Very expensive for the small investor,lose a lot of cash thru financing,open to unlimited taxation.Can be discussed much more.
Invest in a small business?-U.S. Government statistics show 90% of small business's fail withen the first 5 years.Can be discussed much more.
Invest part of a portfolio in Gold?--Lets do a comparison to the U.S. Social Security System which started in 1938,I believe.The explanation of S.S.(to non-U.S.)would take another whole post,and then some.

If a person retiring in the year 2000 had been able to purchase one ounce of Gold a month for his/her entire working life (42-45 years) they would have approx. 500 ounces of Gold,in todays topsey turvey world, worth about $150,000.00.
The first 20 working years assume the Gold could have been purchased for $35.00 per ounce,this would equal ownership of 240 ounces at total cost of $8,400.00. I'm going to use an average purchase price estimate of $300.00 Gold per month for the remaining 260 ounces of Gold=$78,000.00.Total out of pocket expense for 500 ounces $86,400.00. So if you want to figure in dollars profit- a paltry $63,000.00.Not much in todays mushrooming paper dollar amounts.

Now lets say another very conservative investor using the monthly installment method of saving,over the same period had saved $86,400.00 paper money in a very poor yeilding bank account, and now thru bank interest accumulation the the total amount was $150,000.00.

Now lets take a part of the above statement by Sir Aristotle,and apply it to today."If you can't count on the enduring stability of your money's purchasing power!!!"

Now say this is you, some reading this may may want to hypothetically take the above mentioned $150,000.00 cash, reinvest in high yeilding securities'spend it,or live off the interest.
This would be the pleasent decision to make leading up to retirement.
Now the question is; Knowing the current world situation,and the potential for tremendous appreciation in physical Gold,which person would you rather be right now?
The holder of $150.000.00 cash or the holder of 500 ounces of Gold? The most accepted way to get to this point,according to most economists, is gradual accumulation as Sir Aristotle has suggested many times. Decision making equals--- free thought--- If you don't want Governments to do your thinking for you.....right or wrong, practice with hypothetical decisions right now!!....Thank You for reading.....beesting.

Chris Powell (12/2/99; 12:53:42MDT - Msg ID:20062)
How Goldman wrecked Ashanti Gold
http://www.egroups.com/group/gata/299.html?
From the Financial Times. Excellent.

TownCrier (12/2/99; 12:41:30MDT - Msg ID:20061)
Fed adds a total of $11.015 billion to the banking system through repo operations
http://biz.yahoo.com/rf/991202/pj.html
$6.015 billion was added by the Fed through 70-day fixed system repurchase agreements for tri-party settlement, and an additional $5.0 billion through overnight repos on this first day of the new two-week reserve mantenance period for banks.
Dana Saporta, economist at Stone & McCarthy Research Associates, said "In the new two-week maintenance period we put the average daily add need for the period at $13 billion."

To anyone new to the forum, these repurchace agreements are loans from the Fed to the various banks of the nation to replace depleted cash reserves as deposits reduce their accounts through outright spending and cash withdrawals. Definately a Y2K inspired phenomenon.

Trader_vic (12/2/99; 12:22:10MDT - Msg ID:20060)
USAGOLD (12/2/99; 10:07:18MDT - Msg ID:20057)- Mainstream Press Anti-Gold Bias
I saw in the NY Times this week a BIG article on gold and the BOE last auction... I couldn't believe that what was written was unbiased journalism...there were soooo many wrong quotes and interpretations of what happened in the auction and how that this was negative for gold! When they covered the topic of who bought the gold, they said that because the minimg companie were buying the gold that that meant that they would be selling it into the market forcing the price lower....What a bunch of hog wash that is... BUT, when there is an up day in gold or when gold traded over $300 again this last week, there was not a word... I take offense to the press writing articles which effect public opinion when they have no idea what IS GOING ON IN THE GOLD MARKET! AND, they never balance their negative comments with opinions from the positive side...like from the Anglogold who bought the gold...you know, you would think that they would want to know why a gold mining company would buy 200,000+ ounces of gold when all they would have to do is go dig it up... I guess we never said that journalists were intelligent people....

ORO (12/2/99; 11:39:22MDT - Msg ID:20059)
THC - Glearis - more on triggers and the battle scene
THC (12/2/99; 7:52:04MDT - Msg ID:20053)

1. US hegemony is chalangeable, as discussed before, the US can't put together the necessary resources to conduct its military operations alone. Currently, the US can continue on this road of malignant intervention on behalf of perceived human rights violations that no one else cares to join into (excepting the UK). The problem is that in typical slay the princess - bed the dragon fashion, the US is dumping national sovereignty in the pursuit of human rights in a way it would find intolerable were it applied to itself. Fo everyone outside the powerful US and the UK and Australia who are bounded by seas, All other countries have borders where significant ethnic poppulations of one side reside across its borders. In this messy situation, no one but the US would take the sovereignty of nations lightly. It stands in the eyes of the governments of the world as much higher in priority than any other matter of international law, politics, and military dynamics.
If the US is seen to methodically disrespect the sovereignty of nations, then there is nothing to be lost in pulling the rug from underneath it. The military for seignionrage deals were terminated, in part, because of this too. There is no advantage to anyone whatsoever in supporting the current system as it is.

2. Oil Royals accumulation - good. 'nough is E-nough.

3. Pulling the trigger.
The trigger was not pulled yet, in Q2 99, but as gold shorts were dumping, EMU member countries were having their banks dispose of their net short positions, and working out more reliable counterparties. The BT/Deutsche disposal of their position onto Morgan's books was a great example of this. That UBS and others were still stuck with bad positions is a problem that has probably contributed to the delay. The LBMA is mainly the province of UK institutions with the US majors participating. I would put the UK position as 1/2, the US (post BT dumping) at 1/3, going down, and continental EU as low and nearing 0 as much as is possible.

The Washington agreement and developments leading to it indicate that the UK position has shifted, and the UK is joining the gold side though with much trepidation. Much of their elite depends on London remaining the main financial hub of Europe. If they lose the position to Frankfurt and Paris, they are lost. Their joining in with the gold side should stand as a sign of a shift. It may even be possible to save the LBMA and keep some or most of the gold trading from leaving the UK. This, however, requires that much be cleaned up and changes the size of the gold contingent and the possible dynamics. ANOTHER's disappearance may have to do with the move by Europe to accomodate the UK, and therefore, the LBMA. The rush should now be on to unwind the system so as to save the members instead of bombing them to oblivion. If gold options have to be eradicated by letting gold slide till expiration and hedging of those remaining, so be it.

The Washington agreement was the difinite turning point and can be viewed as Europe pulling the trigger on one of the guns. Many other guns are there. These include bidding gold up below the market, cutting the gold loans short, Oil publicly bidding for gold. All has to be done to maximum effect. Friendly forces must be protected, taken out from the line of fire, where they insisted on standing despite many warnings. Now that British forces are at least acquiescing, if not joining in with the EU, one of the weapons loses much of its effect and direct action must be taken. Could the Brits be putting on an act as a delay tactic and have no intention of joining in? Perhaps in Maggie's day. Today's Brits will be stunned into inaction by the realization of predicament. "Trembling upper lip" is closer to a description of character in their current leadership.

As things turned out, the buckshot in the gun hit some on the friendly side, particularly the interests of Oil based gold accumulators stuck with possible losses of hard earned gold contracts. There is now a rescue operation for some of those wounded by friendly fire.

The gun used, now needs to be reloaded and the advantage of surprise is lost, though much confusion on the US/IMF side prevents some actors from coming to terms with reality. Many interpret the collection of the wounded from the battlefield as a sign of weakness on the part of the gold faction. Perhaps strength is shown by those who leave their wounded to die? I don't think that is the case.

Now we can talk of triggers from your post:
A. Major dollar holders (Europe, Japan, China or ME) (1) make a bid for physical (2) buy real assets
B. Major gold creditors (ME or EU CB) call in loans
C. Bull run in gold shuts down shorts [due to natural occurence of stock tumble in US]
D. Oil producers announce will buy and sell oil for gold, not paper money

The disruptions to the global economy brought on by any of these options being excercized, is a given. None are attractive to the EU and Japanese sides, However, the oil countries are a different matter. They may recognize the damage to the markets a precipitous decline in the $ would bring about, however, they could not care less and have zero sympathy. The Islamic and Arab worlds are very much united in their view of the US, a negative view. They would like to see the $ plunge overnight. They would dance in the streets. Their partners, however, will not want this, so D is saved for last.
Europe does not care for Japan much and is ready to write off the dollars on its books. It would not be the first time. If there is an opportunity to actually get something from the US by sending out $ to buy real US assets and goods, they will make the most of it. Since Q4 98 this is precisely what is being done. However, this can last only as long as the liquidity squeeze on US bank and credit systems does not need Fed assistance in the form of debt monetization. We already know that monetization is occurring right now and on a grand scale. The interest rates needed to support the dollar under these circumstances, grow substantially. There is a tendency to forget that cashing in dollars for "real stuff" tends to cause price rises/"inflation", and the amount of "real stuff" received in the next batch of purchases is smaller. Because of the conversion of $ debt into Euro debt, there is a paydown of Eurodollar loans and a drop in the global dollar liquidity pool (Euros convert to $, $ was in bank account, $ returned to lender, lender writes down asset and $ that payed it, $ is gone along with future demand for $ left). This brings the TED spread higher, and pulls $ deposits from US banks to replace lost $ liquidity in the global banking system. The liquidity hole sucks reserves from the Fed. Though the reserves are "temporary" and much of the demand is being met with liquidity options, instead of liquidity, there is no doubt in my mind that eventually, the currency will be added into the monetary base despite all attempts to avoid it. The result will be an inflation of M1 and will cause price rises.
Glearis, perhaps this covers some of your thinking regarding the move to default - that it would be default on value rather than default on the obligations. The Brits are being allowed to organize so as to reduce losses, but once the time allocated for this expires, remaining positions will be squeezed, whether default will result or not. I am all full of hope that somehow the $ would not crash. Unfortunately, I can't find any good reason for the world to do so, since the benefits are so limited. They may try to get as much as they can for as long as they can, but this process in itself will raise prices and will diminish their $ holding's value anyway. I still hope to see things happen your way, as I have written many times before, but allowing things to continue as they are, seems to just let Wall Street climb ever higher up in the sky just as the fuel tank indicators are blinking "low". The higher they fly, the greater the damage when they fall.
Back to the business at hand. Europe awaits C with baited breath. If it does not come along on its own, they will do more of A2 than has already been done. They are already doing B to a minor extent and will probably do more of it once the smoke clears from the first shot.

In short, the EU marvels at Wall Street's masterful performance on the financial stage, as they sucker Americans and even foreigners who know better into the stock market. They marvel at how the "psycopaths" of Merril, Goldman, and others built this bubble pumping machine that automatically commits money to the worst investments in human history, that have the stock price built into earnings to such an extent that earnings no longer relate to business as it is, but to the PR hype of the business as it could one day be.
Just yesterday I spoke to a fiduciary investor and his financial advisor. I told them of Bill Parish' work, just to find that the first still insists that Microsoft is a good investment, and that the second was shocked, but still thought that as long as there is significant momentum to the stock price, the stock would make a great investment even though the company is being operated into the ground.

The Microsoft situation goes straight back to Mises and company noting that monopolies are only sustainable by government action, namely the IRS kickback of employee tax payments to the company, and the SEC and FASB allowing them not to deduct the options costs from their income statements while allowing them to book the tax credit. The monopoly of Microsoft is provided by this subsidy, since it allows the company to sell its products below cost while expanding its reach into new cash flow generators that may some day make it profitable as a running business, rather than a brokerage operation.

WilloTheWarthog (12/2/99; 10:16:37MDT - Msg ID:20058)
TedW ~ Wage and Price Controls
Wage and price controls were implemented during the Nixon regime. Their effects were thoroughly documented, even by the US Government. I believe that with the new inflationary age that has already started, and the further increases in the size of US Government, they are an inevitable move within the next few years. Whether they are proposed because of war or because of economic problems, the net result will be the same.

During the wage/price control era of the '70's, WPC's contributed to increased government size and severe warpages and shortages in the market. For example, the price of fabricated copper products was held down while the world price of copper was going up. The net result was that many fabricated copper products (such as wire) were not sold in the US as finished product, but was rather exported and sold as copper scrap in the international market. This was legal because there was no control exercised over the export of scrap, so the producers, wishing to minimize their losses, sold to the highest bidder. Thus the US government was effectively responsible for the shortage of copper wire in the US.

All this was thoroughly documented after the fact by the wizards in the US government. I don't know if the two-volume, several thousand page book set is still available from the US Government printing office.

No matter how hard the government tries, it will not be able to change the result of its current inflationary policy. While it surely should bear the blame for the results, it will act in ways to shift the burden to the taxpayers and corporations--as usual, with their consent.

USAGOLD (12/2/99; 10:07:18MDT - Msg ID:20057)
Today's Gold Report: Mainstream Press Anti-Gold Bias
MARKET REPORT(12/2/99): Gold took a hit this morning shedding $5.40
from the price in what the London press is attributing to the lingering
effects of the Bank of England auction. Lease rates continued to rise
back toward the 2% level and another significant First Notice day
related delivery of 57,482 ounces was made to the Comex warehouse.
Standard Bank reports strong physical demand in Asia. Someone is playing
Santa Claus in Chicago again this year. Six gold coins were dropped into
Salvation Army kettles already this Christmas season proving that gold
advocates also have golden hearts.

On to another, less appealing, subject:

In what is obviously blatant anti-gold propaganda that I cannot let go
unchallenged, Reuters reports this morning in a piece by Alden Bentley
that "Almost none of gold's advance from near 20-year lows in September
and October was attributed to safe-haven hoarding of coins and bars
before January 1, analysts said." This is a lie and I would like to know
who these analysts are that Reuters is quoting and whether or not they
have the credentials and exposure to make such a comment. Quite to the
contrary, ask just about any gold firm in the United States and they
will tell you that the past year's rush to gold has been the heaviest
since the 1970s gold rush -- and that a good deal of the impetus has
come from Y2K concerns. The coinage demand figures bear this out.

Quoted in the article were a number of so-called gold analysts who are
nothing more than hired guns paid by the big brokerage firms to (for the
most part) debunk the metal. Not one gold analyst from any major gold
firm was quoted on Y2K volumes over the past year or even in recent
months. They weren't interviewed because this article was written and
the slant determined before one of Mr. Bentley's fingers hit the
keyboard.

My guess is that the real story is that another demand bubble is forming
for the yellow metal related to Y2K and Reuters is trying to kill it
with another totally unfounded anti-gold propaganda piece. We have seen
a strong pick-up in Y2K buying over the past week, and that, my fellow
goldmeisters, is a report from the front lines, not the back room of
Merrill Lynch or Smith Barney -- or some other hand selected anti-gold
spinmeister. Why don't we just get it over with and roll out James
Carville to get the job done once and for all?

Now, in the interest of reporting all the news, though much of the gold
buying in recent months has been Y2K oriented, I must say that not all
of it has been. Investors are also concerned about the overvalued stock
market, rising oil prices, inflation and whole host of other potential
problems. They also mention quite often that gold is low and the time
just seems right to make a purchase.

If the patterns of the past hold true in the present, you can expect a
string of attacks on gold starting now in the national press and
spreading to your local newspapers before the next two weeks are out.
Obviously, there is more fear on Wall Street than we realized about the
public exiting equities, and when you look at the most recent figures on
mutual fund reductions and growth in money market accounts, you get some
inkling as to the reasons why. Gold is an obvious beneficiary of flight
capital, thus the attack.

You know what's funny about all this?.... These orchestrated attacks on
gold never work. Even though reports are form written and perfected (you
could read a similar rendering a decade ago, two decades ago, etc.),
they haven't been able to change the public perception of gold. In fact,
they tend to have the opposite effect. Intelligent investors naturally
wonder why the press is so vehement in its hatred of gold and why the
spin group on Wall Street finds it necessary to orchestrate these
regular attacks. Could it be that they fear gold? Believe, it is a
lifeless metal, not the neighborhood attack dog -- so why the fear?
Those who believe in gold won't be swayed by propaganda of this nature,
and those who hate gold will revel in the delight of knowing that the
mainstream press is on their side. So it goes.......onward into the 21st
century where Robert Mundell tells us again today (this time through a
Canadian newspaper) that gold will play a significant role in the
international economic system.

That's it for today, fellow goldmeisters. More later if anything
interesting develops.

Please call 800-869-5115 (Ask for Mary Conway) if you have an
interest in receiving a trial subscription to our widely read
newsletter, News & Views: Forecasts, Commentary and Analysis on
the Economy and Precious Metals. Or you can go to our ORDER FORM
and submit your request by E-Mail. You will also receive our
introductory packet on investing in gold.

Galearis (12/2/99; 9:58:40MDT - Msg ID:20056)
@THC, Canuck
3. The �gTrigger�h
Perhaps we should look at possible triggers to destroy the paper gold/US$ pyramid.

"A. Major dollar holders (Europe, Japan, China or ME) make a bid for physical
B. Major gold creditors (ME or EU CB) call in loans
C. Bull run in gold shuts down shorts
D. Oil producers announce will buy and sell oil for gold, not paper money"

It was late last night when I finished typing to this forum and did not respond with my 2 cents of fiat to your oil/gold question. It seems to me the problem with responding to all these questions about things gold/fiscal/oil/fiat is the extraordinarily complicated nature of the interelationships that most consider the house of cards to end all house of cards. All your points above would likely accomplish the task, but do we really want the above to happen. All at once? Some? And in what order of battle?

Thank goodness we have a superior minds such as Sir Oro and FOA to dissect this beast for us all. The rest of us need simple answers in order for some sort of epiphany to occur. Here is my take FWIW - in "simple" words. FWIW The whole domino/house-of-cards fiscal problem may be summed up with one word: DEFAULT.

Many CBs hold way too much paper, be it gold or US treasury bills. They cannot send this back from whence it came and exchange it for real money because of the lack of supply of the real money (gold). To do so would ultimately cause those other things that would be equally destructive to their fiscal system and local economies. The US dollar decline would royally upset their own economies. There is not enough gold to cover the paper (and indeed there never was). To call in the loans, in what ever form, would lead to DEFAULTS.

Simply put, the mess they are in is somewhat(?) or wholly (?) unretrievable because to address their oversupply of the worthless, to exchange it for real money (wealth), or a percentage thereof (the Euro) would lead to a domino affect of DEFAULTS. A vicious circle. None of these people want to be left out in the cold on this particular musical chair game.

But this gamemanship between the fiscal managers of the respective world economies, as so aptly pointed out, is not to find a solution; it is a delaying tactic where the only goal is to minimize the damage of the ultimate collapse. Letting the POG 'go' according to free market fundamentals would only serve to trigger the fiscal calamity and......well at this point pick your favourite disaster movie.

Bottom line: the cure is worst than the disease. NOBODY WINS IF THE US DOLLAR COLLAPSES PRECIPITOUSLY! The goal here as I see it is to allow that paper ship to scuttle gracefully and without a ripple. Hopefully, for we who buy gold, this process will go on with class dignity and poise, with no temper tantrums and no violence.

Canuck: The Red Lake saga continued late last night. Please give it a read - I am sure noone has ever discussed a cow as sexual object on this forum before. And every word is the truth!

ORO (12/2/99; 8:59:50MDT - Msg ID:20055)
Gold prices
The current dip looks like a great buying op.

It looks like a capitulation. Time to start buying again.

Enjoy this while it lasts.

tedw (12/2/99; 8:22:20MDT - Msg ID:20054)
Wage and Price controls
http://www.usagold.com

Wage and price controls is not a subject I have heard discussed here or anywhere else in regards to Y2k.

I am of the opinion that in the event of severe disruptions in the enconomy, the government may result to wage and price controls.It happened in the Nixon era and it could happen again.

In the event that it does, what effect would that have on the stock and commodity markets? It seems to me that the price of Gold would want to skyrocket, but would price controls effect this?

Perhaps this is a dumb question, but if anyone has insight into this area, pleae share it.

THC (12/2/99; 7:52:04MDT - Msg ID:20053)
To Oro, Con't Discussion of ME Oil & Gold
Good morning all, and thank you Oro for your generous sharing of ideas!!!!

1. End of US Hegemony?
I agree with you completely that many nations are tired of US political, monetary and military hegemony. But �gdisliking Caesar�h and �gtaking effective action to disable Caesar�h are quite different. He who challenges Caesar and fails will face certain death, and death is not an attractive prospect to the politicians who manage the major non-US global players (Japan & Europe).

I don�ft think we can be sure that decisive action is imminent on this front.

2. ME Gold Accumulation
The gold market lacks transparency, and I think that it is not an effective use of our time to strive for precision in calculations. Cocktail napkin figures are fine. For the purposes of our discussion, as per your suggestion, let us assume the ME oil nations have accumulated:

10,000 tons of physical gold
8000 tons of paper gold

This puts them roughly on par with Europe, right?

3. The �gTrigger�h
Perhaps we should look at possible triggers to destroy the paper gold/US$ pyramid.

A. Major dollar holders (Europe, Japan, China or ME) make a bid for physical
B. Major gold creditors (ME or EU CB) call in loans
C. Bull run in gold shuts down shorts
D. Oil producers announce will buy and sell oil for gold, not paper money

What is the likelihood of these events? Please let me know what you think. I see:

A. Europe and Japan have not shown any interest in accumulating gold so far, it is hard to imagine that they have this concept. I find it hard to imagine this happening.
B. The EU BB probably hold at least half of the gold loan positions, calling the loans would push many of these to the edge. Would Europe destroy its own banking system? I find that hard to imagine as well. On the other hand, this seems like a natural move for the ME to demand payment. The problem is can they actually receive payment.
C. The common man is programmed to think in paper money, and will probably not buy physical until the move is already well underway. For this reason, C is not a likely �gtrigger�h.
D. If they can defend themselves from the US, Russia and other hostile nations, why not?

Based on my limited understanding, D actually seems like the most reasonable. Why would the ME choose the Euro? The ME cannot receive delivery of its current paper gold positions, switching from US$ to Euro will not make any more physical gold available to them, unless the Euro to gold parity is fixed and the European CB is willing to exchange gold for Euros at a fixed rate (kiss yer gold goodbye!).

Assuming the ME producers can defend themselves, would it not be most rational for them to:
*Convert all paper gold to physical
*Buy as much physical as is possible now with US$
*Announce policy change to begin using gold as currency for foreign trade (quote oil in gold)

I don�ft understand the attraction of the Euro, as the Euro is a fiat currency like the dollar. If the Euro gold reserve are just reserves and are not available on demand at a fixed rate, what is the difference from the US$?

However, I don�ft see how SA or Kuwait could free themselves of the US/Britain�c�c.SA is now �goccupied�h by the US military�c�c�c.just like Japan.

Looking forward to discussion of the problems with the above reasoning.

Many thanks,

THC

Aristotle (12/2/99; 6:57:37MDT - Msg ID:20052)
beesting, I've succeeded in temporarily typing myself into oblivion
I'll have to get back to your question after a break. Which post did you find of passing value?

One quick question, to make my job easier: where you stated "If an enterprising person legally hand carried $8000.00 in Gold and $2000.00 in cash to an established off-shore locality..." I'd like to know what is the weight of the Gold (container?) in which you are carrying the 8,000 bucks? Heh, heh, heh. Who was it that recently posted a (British?) rhyme about a couple of characters going out to sea with plenty of this and plenty of that and plenty of money wrapped in a five pound note?

Aristotle (12/2/99; 6:44:00MDT - Msg ID:20051)
I've seen several posters echo the notion that the equities market is a zero sum game.
That's not right. At least, it's not true if you use the exchange itself to define the closed system under the standard definition of zero sum. Within this system, each dollar of profit by one party does not have a one-to-one correlation with each dollar of another party's loss. No way, no how. For a simple demonstration, picture one stock that you bought for $10 and sold for $11. The next guy sells it for $12, the guy after that for $13, and so on. Nothing but profits for everyone all the way to the stars.

The futures markets, on the other hand, are zero sum markets. The difference is in the nature of the "investment." Stocks are free assets that come with no obligations. Depending on your choice between buying, holding, and selling, you and everyone else might conceivably never experience a net loss, or conversely a net gain. Futures are distinctly different beasts. They are CONTRACTS between two parties who enter into opposite sides at a specific price. As the contract price changes, one party gains exactly what the other party loses. A zero sum market.

Gold futures are a zero sum enterprise. Gold coins and bars, however, are free assets like stocks. And just like the simple stock example given, under a steadily rising market there need never be a loss suffered by anyone who had Gold pass through his possession. The opposite holds for the string of sellers in a falling market. The IMF, the ECB, the BIS, etc., all know this well enough. As a Gold "owner," the IMF can count on rising Gold prices as a relatively harmless source of funds with which to bail out Heavily Indebted Poor Countries. There is no "zero sum counterparty" to cry foul. If the U.S. followed this lead, assuming our Gold reserves are unencumbered of obligations, they could function as a painless source of future value with which the goverment could provide Social(ist) Security to our coming wave of retiring baby boomers.

I recall a coach in my track days who was fond of the phrase, "No pain, no gain." True enough when you're logging the endless laps around the track, and true enough on the futures markets. But Gold in hand has the potential to be all gain, no pain--a politically attractive opportunity that won't forever go un-utilized.

Gold. Gain you some. ---Aristotle

Black Blade (12/2/99; 6:32:02MDT - Msg ID:20050)
Got any old "Treasure Maps?"
Now for something different. You just never know where or how the next exploration idea will materialize. This has to present an amusing prospectus to potential investors.

Pharaoh Gold Mines (a subsidiary of Australian-based Centamin Exploration Company) have a copy of a treasure map. Not just any treasure map, but a copy of an ancient cutaway drawing of mine tunnels used during the reign of King Seti I in 1350-1205 BC. The original, on papyrus, is in an Italian museum. The map shows an area near the Red Sea coast about 500 miles SE of Cairo now known as the Sukkari Concession. The area is littered with ancient mining tools, mortars and crushers. Exploration drilling has been progressing for the last three years. The Australian executive director, Mike Kriewaldt, estimates extraction costs of about $120/oz using open-pit mining. Under the terms of a 1994 concession agreement with the Egyptian government, Pharaoh Gold will be able to produce and sell gold free of taxes for 15 years after production commences. In exchange the Egyptian government gets up to half the profit. The Australian Financial Review calls the Egyptian concession a "potential world-class gold project". Outside assessments suggest that one section of Sukkari Hill could hold over 2 million ounces of gold. Centamin shares trade in the 10-cent range.

JCS (12/2/99; 5:47:05MDT - Msg ID:20049)
Simply Me (12/2/99; 0:46:04MDT - Msg ID:20039)
IMO, WHAT'S NEW?
They sold or gave technology secrets to the Chinese over the past 7 years and now we have a military foe that is, possibly, superior to us in its military technology.
Now we give them the Canal, which Americans died building, and then they will control the gateway from the Atlantic to the Pacific with superior military weapons to protect it.
Sounds like something Clinton's crew would do. No wonder Hillary is fed up with the socialist pig.

Aristotle (12/2/99; 5:33:39MDT - Msg ID:20048)
A possible answer for Canuck
You asked, "Can I ask why the auction was so horribly 'undersubscribed'?
Since physical is still so short, conversely, demand should be high, why were there so few bids? I am completely perplexed and confused by the outcome."

"Undersubscribed" would imply that there weren't enough bids to claim all the metal offered. The auction was in fact oversubscribed by just over a factor of two. But I see what you're saying. More to your point, I think Townie's Golden View last night may have hit the nail on the head. Essentially, the auction scheme came about in response to tightening physical supply that likely threatened certain London Bullion Market Association operations. And although the price has now returned to the range at which the auctions were announced, the recent whipsawing down to $250 then up to $330 followed by a "collapse" back to $290 has shaken enough metal out of weak hands to temporarily alleviate the pressure. The fact that anyone at all is participating in the auction when an efficient spot market is supposedly right there in their back yard still speaks to an apparent difficulty in getting clear Gold of any size for ownership.

But for a small fry like me, the auctions are little more than a curiosity. I'm on the monthly program, and am content to help keep the fire burning here with the added benefits of no sales tax and delivery right to my door. The BOE's auctioned Gold comes inconveniently only every-other month, the London Good Delivery bars are way outta my league, and I'd have to arrange for the collection and transportation, not to mention the collection fee and Value Added Tax payable as this Gold would be transferred out of the LBMA system. When it comes to acquiring Gold, smallness has distinct advantages of flexability. But truth be told, I'd like nothing more than to rock our favorite Gold broker's world with a one tonne purchase!

Gold. Get you some. ---Aristotle

PS. WilloTheWarthog, I enjoyed your #20003 post. But where you said, "If every person owned a couple of ounces of gold..." the sad truth is that EVERY person could only have three small sovereigns should such an even distribution be theoretically attempted. Try this simple evaluation: put three Gold sovereigns (or four French or Swiss 20franc Gold coins) in your left hand, and consider yourself a man of average monetary wealth. In your right hand, heft the remainder of your Gold savings. Without the sinister implications, how many equivalent lives of men have you got at your command? That's a lot of potential manpower, my friend! Maybe we could convince ORO to do a calculation of the sum of ALL national currencies (M3 aggregate would be fine) expressed as a dollar equivalent and evenly divided among the world's 6 billion residents. I'm willing to go out on a limb and guess that the equivalent cash value per person would be staggeringly high. And beyond that, when you evaluate your preferred form of monetary savings, consider the future stability of its global supply and subsequent value.

Socrates said an unexamined life is not worth living. More significantly, my namesake went one step further, saying an unplanned life is not even worth examining. How can you take that first important step to plan your life if you can't count on the enduring stabilty of your money's purchasing power? Without spending a dime you could find yourself to be wealthy one day and a pauper the next.

Hipplebeck (12/2/99; 5:01:27MDT - Msg ID:20047)
to foa another oro etc.
I believe many things that you all have posted, but this mysterious veil thing is ridiculous. If you really have inside information on something, why not just state it? Why not reveal who you are? I saw the Wizard of Oz.

Hipplebeck (12/2/99; 4:52:23MDT - Msg ID:20046)
oil for gold
After reading on this forum for months, I have heard the phrase oil for gold, and that the arab countries sell oil for gold. I now believe this is bunk. Billions of dollars have been spent on oil. If they were really purchasing gold with this money, it does not reflect in reality. I defy anyone to show me proof of this myth.

Aristotle (12/2/99; 4:09:19MDT - Msg ID:20045)
The great 'flation debate--this thing just won't die, will it?
Here's one last futile attempt at pitching a case for one particular definition before giving it up as a lost cause and proposing a solution. Although I've seen some subtle variations, it seems that the two most popular camps in the debate are aligned with either money supply, or else prices. The terms are built upon Latin "flare" (to blow), and not surprisingly, our own most common use for the term inflate is probably associated with balloons (or maybe tires.) When we blow into a balloon to inflate it, it swells in all directions, doesn't it? It generally gets bigger. To belabor the point, inflating an empty baloon or innertube makes the thing increase is size, volume, etc. A deflation is a reversal of the process.

Is it most appropriate to think of changes in prices as a swelling? Do prices increase in volume? Prices move more like our description of an elevator, don't they? When they change they either move up or they move down, they don't swell or collapse in size. Money supply on the other hand, if viewed as actual currency in circulation (or on deposit) rather than as a representative integer behind a statement such as M1, M2, or M3 =?, is more aptly described as a change in size, such as an increase in volume similar to air molecule in a ballon. To belabor the point again, currency in circulation doesn't change up or down like an elevator, it swells or it collapses. It inflates or it deflates. The confusion has probably crept in over time as the monetary authorities realized that telling the public that the money supply has been inflated would be certainly viewed as an unsavory turn of events. Such tomfoolery would surely result in some form of reprisal against the obvious cause--the institutions. Just like the changing phrases in the George Orwell's "Animal Farm," vocabulary had to be manipulated and managed such that money supply was kept out of the limelight. Or like my earlier point about advertising or propaganda slogans, repetition does not make something true, but rather creates merely the perception of truth. As such, the term inflation was deliberately forced to fit the symptom--not the cause--of rising prices. The public wouldn't hang the institutions for something that could conveniently be blamed on a smattering of causes--trade tariffs, labor unions, product shortages, monopolistic control of the market, excessive consumer demand, etc.

The problem, apparently, is that instead of relying on common experiences and common sense, many people have likely come to rely on the specific teachings encountered through their various formal educations. There's no shame in that, but the wisest choice is to know enough to pick your battles, and to realize this one will never be won by either side. What's more, it really doesn't matter. It's more important to realize that effective communication should be the bottom line.

Therein lies the solution. Simply avoid using the 'flation terms altogether. Who needs 'em? How much more difficult is it to clearly convey your thoughts by saying the money supply is expanding or contracting, increasing or decreasing? And prices--how much more difficult is it to say prices are increasing or decreasing, moving higher or lower? Here's my point. If you don't know my personal preference in terms, this statement is worthless to you--"The ECB is not so much concerned about euro exchange rates as they are about maintaining an inflation rate at two percent." The energy required to be crystal clear is the same as the energy spent being equivocal, so just do it. Be clear, that is.

Here is a prime lesson in effective communication, courtesy of Alan Greenspan as posted earlier by Journeyman-- "Whenever you have a currency fall as sharply as the rupiah has fallen, which is approximately 80%, and you import any significant amount of materials or foodstuffs, which they do, then clearly the domestic price of many of the things which they import obviously skyrockets ...and as consequence there are increasing concerns of food shortages and food prices which are too high for those average Indonesian citizens to afford." -Alan Greenspan, Semi-annual Humphrey-Hawkins Testimony to US House, July 22, 1998

And here's a final example of of effective communication from the same source--
Representative: "As the stock market reaches dizzying heights, does that not represent, in a sense -- in a sense -- an increase in the money supply, and is the FED concerned specifically about that?"
Greenspan: "That, that's an interesting question, because what we're dealing with is distinctions between money and credit in certain respects, or claimings. And the issue of asset value changes, which clearly are not the same thing as an increase in the money supply, are none the less interrelated and I think what we try to do, with hopefully some success, is to be able to understand the inter-relationships between money on the one hand, asset value changes on the other, and how both impact on the real economy. I wish we knew more about a lot of these things. They continuously change and we continuously get proxies for what we think real money is, and find out that it's not a useful proxy." -Federal Reserve Chairman Alan Greenspan, semi-annual Humphrey-Hawkins testimony (Day 2) to House Banking Committee, 24 Feb 1998

On a side note, it goes without saying what the underlying meaning is to the phrase "...we continuously get proxies for what we think real money is, and find out that it's not a useful proxy." Let me summarize with my closing statement--

Gold. Get you some. (And the flavor of the month is...Swiss Helvetias and Confederatios! Yes!! I got me some!) ---Aristotle

SteveH (12/2/99; 3:02:34MDT - Msg ID:20044)
Letter to my friend Leroy
Leroy,
The following posts are the most significant yet unsubstantiated yet highly intriguing posts I have run across on the net in recent days. ORO from the www.usagold.com forum is in true form. He sounds much like FOA did. Yet, I see evidence of identity pointing going on, whereby folks are trying to say FOA is a female and a well-known gold-bug. In addition, the Stranger's post highlights a sentiment of this prolonged gold-agony caused by gold really being at the center stage of world finance and intrigue but nobody and I mean NOBODY wants to make it known...yet.
Back to ORO. If what he says is true (I am the messenger and do NOT necessarily agree or disagree with any of what I have passed along here) then this post about oil and gold clearly brings to light what FOA and Another have been saying as true. What scares me about ORO's words here are that they seem to explain much of the circumstantial evidence that comes to the light of press regarding the gold market and the Euro and the conflicts in South East Europe. Again, these are the most significant posts I have seen on the oil for gold story yet.
The conclusion I draw from these posts follow below:
-- The timeline of the below events are out of any one parties hands as each delay in the rise of the price of gold is because so many players have turns at play.
-- Gold and it price on world Gold markets are in a state of flux and are out of balance -- a significant disconnect between paper price and physical price that is only be held in check by periodic physical gold deliveries from some Middle East oil countries (Jordon and Kuwait) and the Bank of England gold auction.
-- Most large holders of physical gold have stopped letting loose of their gold and will no longer play the gold-lease game.
-- At this moment in time, gold is being fed in small quantity via the above sources in order to buy time for large bullion banks and players to get their books in order for the next move up in gold. Ashanti and Cambior were the catalyst for this.
-- The Middle East oil countries are heavily into oil for gold contracts that to maintain price stability requires repayment in gold that doesn't exist in sufficient quantity to repay loans.
-- Recent oil hikes are a result of the above playing out.
-- Longer term, oil will go much higher.
-- Gold will go much higher and faster than some may be prepared for. Question still remains as to when, however. There will be some real fallout from this in terms of some larger players. Bankruptcies and suits.
-- The Euro is being held in check for the moment while this plays out.
-- The Euro has a good chance of becoming a world reserve currency in a world that can likely only support one world reserve currency.
-- The dollar is in true disfavor with the above world players. So all the acts that play out above will continue to move towards the Euro and gold. The Euro may become the proxy for gold, which will buy time for physical gold to be delivered to the ME.
-- Much of the European military and Middle East recent police actions would appear to be a result of payment for, reactions to, positioning for, the Euro becoming stronger and the dollar growing weaker and the large gold short position that scares the gold contract holders into believing they may not get their gold. In other words, its all about money, oil, and gold and waiting for the music to stop as the players move around the few remaining chairs to see who is left without a chair at the table.
SteveH

SteveH (12/2/99; 3:00:42MDT - Msg ID:20043)
ORO
ORO's posts from yesterday were simply brilliant. In fact, GT's and Stranger's posts were brilliant as well. An incredibly stunning performance. Bravo!

(I think FOA is ORO...nah...)

SteveH (12/2/99; 1:31:44MDT - Msg ID:20042)
Rhody
www.kitco.com
repost --

Date: Wed Dec 01 1999 14:30
rhody (LEASE RATES: Where have I seen this before? One month gold) ID#410367:
Copyright � 1999 rhody/Kitco Inc. All rights reserved
lease rates jumped .21% today, from 1.77% and gold tanked $1.40
The other lease terms moved up by marginal amounts, so gold is being
shorted again using supplies from where???? Minions of monetary
agencies continue to add to that lease overhang, and cheapen the
spot price, which adds to demand which adds to the supply deficit,
which adds to the demand which requires even more leased gold which
adds to the lease overhang and all of that is supported by a shakey
DOW and USD.
For those of you who don't believe in a lease ( short ) overhang,
even Gold Fields Mineral Services admits it may be 4500 tonnes.
Since annual gold consumption is 3500 tonnes and production is 2400
tonnes, there is no way even the 4500 tonnes can be covered. GFMS
is likely an instrument of US monetary interests, so they offer
a best case scenario for gold supplies. Even their estimates lead
to a dead market in gold. So why does the leasing go on? Every
lease from now on will likely end in a default, or perpetual roll overs
at ever increasing lease rates, culminating in defaults, lawsuits and
cash settlements. Anyone involved in leasing is selling down his gold,
and running a near 100% probability of losing the gold. Go figure.

Usul (12/2/99; 1:25:18MDT - Msg ID:20041)
How Not to Empty a Vault
http://www.pathfinder.com/time/magazine/articles/intl/0,3266,28724,00.html
Time magazine, July 19
"Said Haruko Fukuda, chief executive of the World Gold Council: "This is the economics of the madhouse." "

SteveH (12/2/99; 1:21:57MDT - Msg ID:20040)
New rare-earth element
www.kitco.com
repost --

Date: Wed Dec 01 1999 18:30
AzusaGold (Scientists Announce The Discovery Of A New Element) ID#255250:
Copyright � 1999 AzusaGold/Kitco Inc. All rights reserved

Investigators at a major research institution recently discovered the heaviest element known to science and have tentatively named it Administratium.

Administratium has no protons or electrons; thus it has an atomic number of 0. It has, however, 1 neutron, 125 deputy neutrons, 75 assistant neutrons and 111 deputy assistant neutrons, giving it an atomic mass of 312. These 312 particles are held together by a force that involves the continuous exchange of meson-0like particles called morons. It is also surrounded by vast quantities of lepton-like particles called peons. Since it has no electrons, Administratio is inert. However, it can be detected chemically, as it impedes every reaction with which it comes into contact.

According to the discoverers, a minute amount of Administratium causes one reaction to take more than four days to complete, when it would normally have occurred in less than a second. Adminstratium has a normal half-life of three years. It does not decay, but instead undergoes a reorganization in which the proportion of the deputy neutrons, assistant neutrons exchange places. In fact, an Administratium's simple mass will actually INCREASE with time since with each reorganization some of the morons inevitably become neutrons, and from new isotopes. This characteristic of moron promotion leads some scientists to speculate that Administratium is spontaneously formed whenever morons reach a certain quantity in concentration. This hypothetical quantity is referred to as the "critical morass." Any scientist will recognize it when it occurs.

Simply Me (12/2/99; 0:46:04MDT - Msg ID:20039)
Who's Setting Us Up?
http://www.worldnetdaily.com/bluesky_exnews/19991201_xex_in_2000_its_.shtml
Sorry, this is off topic....unless you're interested in protecting your gold (along with everything else you hold precious).

Following is a portion of the article:

In 2000, it's China Canal
Clinton admits Beijing to control
crucial waterway through Panama

By David Kupelian
� 1999 WorldNetDaily.com

President Clinton admitted yesterday that the
Communist Chinese will, in fact, run the
Panama Canal when the United States pulls all
of its troops out and relinquishes control of the
vital waterway Jan. 1, 2000.
Speaking to reporters in the Oval Office before
leaving on a trip to the west coast, Clinton
addressed the issue of the imminent U.S.
surrender of the American-built
multi-billion-dollar canal.
"I supported it at the time and I still support
it," Clinton said, referring to the controversial
1978 treaties signed by then-President Jimmy
Carter and Panamanian dictator Omar Torrijos,
requiring U.S. surrender of the Panama Canal
to the Central American nation at the century's
end.
"I think it's the right thing to do," the President said.

Clinton noted that the United States would be
represented in Panama for the year-end
change-over by former President Carter, whose
administration negotiated the treaties, and
Secretary of State Madeleine Albright. Carter
"deserves enormous credit" for winning Senate
passage of the treaties, which, Clinton added,
were "very controversial, immensely
unpopular. A lot of the members of the Senate
... had their seats put in peril over it," the
Associated Press reported.
As the year end approaches, increasing
congressional and military warnings about
America's imminent loss of control of the canal
have been dismissed and scoffed at
consistently by the Clinton administration.
During yesterday's announcement, Clinton,
once again, at first brushed off concerns --
voiced most recently by former Joint Chiefs of
Staff Chairman Adm. Thomas Moorer -- that
China is preparing to take over the canal once
the United States leaves. Moorer has asserted
publicly that China plans to seize control of the
canal through a Hong Kong company,
Hutchison Whampoa Ltd. -- a firm widely
believed to have close links to the Chinese
military -- which has won rights to operate
ports on both ends of the canal.
But then, in disarmingly unambiguous words,
the president openly admitted that China will,
indeed, control the Panama Canal after Dec. 31.
"I think the Chinese will in fact be bending over
backwards to make sure that they run it in a
competent and able and fair manner," Clinton
said.
"They'll want to demonstrate to a distant part
of the world that they can be a responsible
partner," the president said. "And I would be
very surprised if any adverse consequences
flowed from the Chinese running the canal."
But the former chairman of the joint chiefs of
staff is very concerned about "adverse
consequences." "I am appalled," Moorer told
WorldNetDaily in an exclusive interview, "that
the president would make such a statement,
and that his advisers would mislead him to
this degree. If what he says takes place, and the
Chinese are allowed to remain and increase
their presence, the results will be catastrophic
for the U.S."

"If we have to go back in to restore the canal to
its previous position," he said, "there will be
many casualties, and they won't be confined to
the canal area itself. Our inability to move our
forces back and forth (through the canal) will
result in casualties of our forces in other parts
of the world." If the U.S. is prevented from
navigating through the Panama Canal, it must
travel an extra 9,000 miles around South
America.

Moorer added an ominous warning regarding
China's strategic use of the canal.
"No one seems to grasp the threat to the U.S.
that can be posed by Chinese container ships.
When the Russians brought missiles into Cuba,
American citizens went into a panic," said
Moorer. "But now, following the lead of the
president, Americans are practically ignoring"
China's ability to do the same.
A Chinese dissident who spoke to
WorldNetDaily on condition of anonymity,
echoed Moorer's concern.
"The chinese Communists don't have a
sufficient number of long-range ICBMs, and
those they do have don't have sufficient
accuracy," he said, "even though they are
drastically improving them, thanks to U.S.
technology. But the shortage of ICBMs can be
compensated by, one, submarines, and two, an
enclave close to the U.S."

If anyone can find out if this story is fraudelent, I sure would like to hear it. The thought of the Chinese controlling the Canal scares the s*** out of me!

Click Here to view yesterday's discussion.

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