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Welcome to the USAGOLD Gold Discussion Archives. The archives of this gold discussion forum are a treasure trove of information to educate investors about protecting their wealth through portfolio diversification with private gold ownership. The discussion forum also covers the wider issues of the past, present, and future role of gold in international monetary policy and the dynamics of the modern gold markets...

The opinions posted by all guests are expressly their own and do not necessarily represent the views of the management or staff of USAGOLD - Centennial Precious Metals. The hosting of the public discussion shall therefore not be construed as an endorsement by USAGOLD - Centennial Precious Metals of any of the opinions posted here.

ARCHIVED DISCUSSION FROM 1/2/2003
All times are U.S. Mountain Time

(Yesterday's Discussion.)

Topaz (01/02/03; 23:52:47MT - usagold.com msg#: 93289)
Cavan Man re: Islamic Dinar/Dirham
The whole point of their approach CM is the establishment of a trading medium untethered.
You or I can produce Dinar/Dirham....and as our reputation for quality "as specified" grows, our coins will increase in circulation.
They don't envisage a convertability with Fiat...other than Au/Ag content.

How this will work in practice is beyond my feeble mind.

melda laure (01/02/03; 23:30:26MT - usagold.com msg#: 93288)
JPM no exposure to gold
depends on what the definition of NO is.
They have "no" exposure like they had no exposure to Enron... that is until one of their "counterparties" decided that they would um er "default".... as in "WE'RE the victims of insurance FRAUD".

Today they have no exposure.

But who are the counterparties?

Have their deals been fully marked to market? That is to say, have their sugar daddies seen the bill to come? That's the real hard question. Visions of mbia's CDO portfolio come to mind.

"Put all the rats in one trap, said Gandalf".. a little quarantine operation.

Topaz (01/02/03; 23:28:26MT - usagold.com msg#: 93287)
Renny, Goldrush.
Renny,
I'm in a similar situation to you...and learning every day. You know, we are blessed in that our Physical holdings are such that their "bulk" does not require "outside involvement" in the form of "vested interest" participation in management...depositories and the like. They qualify as possessions....good ain't it?
ski's point was a good one. "Don't mix your Piles"
Goldrush,
Full bowl of Cereal here Gr...someone else can worry about the Box!
Cheers.

Chris Powell (01/02/03; 23:16:42MT - usagold.com msg#: 93286)
Morgan wants to know where the gold 'rumor' is coming from
http://groups.yahoo.com/group/gata/message/1363
Morgan Chase denies "any real exposure" to gold.
Maybe they're telling the truth -- as in half-truth.

http://groups.yahoo.com/group/gata/message/1363

To subscribe to GATA's dispatches
by email and get them immediately so
you don't have to go look for them,
send an email to:

gata-subscribe@yahoogroups.com

Carl H (01/02/03; 23:11:38MT - usagold.com msg#: 93285)
R Powell: Silver
Your post deserves a better response than I am capabable of writing at this hour. I will try tomorrow.


DummyANI (01/02/03; 22:28:31MT - usagold.com msg#: 93284)
�—Privateer (01/02/03; 22:10:58MT - usagold.com msg#: 93283)
Your�@Mistake�I
One year Gold lease rates on the first trading day of 2003, January 2 is 0.950%.
Libor rate on the first trading day of 2003, January 2 is 1.458%.
Libor minus One year Gold lease rates equals 0.508%.
Lease rate is up 0.218%, very few physical Gold.

D-ANI

Privateer (01/02/03; 22:10:58MT - usagold.com msg#: 93283)
Libor Gold Lease Rates
http://www.lbma.org.uk/statistics_current.htm
I am somewhat surprised that no-one seems to have noticed the CRASH DIVE taken in Libor one year Gold lease rates on the first trading day of 2003, January 2

On Tuesday, December 31, the one year lease rate closed at 0.732%. On the next trading day, Thursday, January 2, it closed at 0.508%. This is a fall of 0.224% in one trading day. Much more to the point, the Libor one year Gold lease rate fell almost one-third (30.6%) of the way to ZERO on January 2.

Black Blade (01/02/03; 21:58:52MT - usagold.com msg#: 93282)
Suspects in missionaries' killings are members of cell planning more attacks
http://www.usatoday.com/news/world/2003-01-02-yemen-suspects_x.htm

Snippit:

SAN'A, Yemen (AP) — Two Islamic militants accused in the slaying of three American Christian missionaries and a leftist Yemeni politician had also planned attacks on journalists, other foreigners and prominent Yemeni politicians, security officials said Thursday. Investigators have compiled a list of eight targets after interrogating the two men, Ali al-Jarallah and Abed Abdul Razak Kamel, the officials said, speaking on condition of anonymity. Investigators believe the two are part of a larger cell planning attacks. The officials did not give the full list of alleged targets nor name anyone believed included in the hit list. But they said the targets included a guest house used by Ismaili Muslims in San'a. Some Sunni Muslim extremists consider Ismailism — a form of the Shiite branch of Islam — heretical.

Black Blade: There are likely to many more terrorist attacks around the world against western targets and those not part of the Wahabbi Islamic sect by Islamists as preparations for war picks up and more troops land on the Arabian Peninsula.



Black Blade (01/02/03; 21:47:53MT - usagold.com msg#: 93281)
Re: cyberbat, tevye, and davefinger

Cyberbat – I'm not exactly sure what you mean as far as the PPT throwing endless dollars against gold. If you mean does the "President's Working Group on Financial Markets" (also know as the Plunge Protection Team) "manage" the Gold market then I would say that I doubt they do. The PPT is a coordinated effort by members of the government economic specialists (and presumably includes members of the Federal Reserve and Treasury) and those tied to Wall Street investment banks to "manage" the financial markets. I take this to mean the equities and possibly the bond markets. We know this group exists as outlined by executive order and are allowed to do intervene in these markets as it is a matter of public record. The Gold market in my opinion is more likely "managed" (for lack of a better term) by individual Central Banks, Investment Banks and Funds (and possibly mega-hedged producers) as a matter of survival or promoting the illusion of "no inflation". I am not completely convinced that there is a coordinated "cabal" working to cap the price of Gold, but rather there are many institutions that have backed themselves into a corner with the "Gold Carry Trade" and are now desperate to stop or at least slow the advance of a rising gold price having leased out several thousand tons of Gold. With so many people involved it would stand to reason that if this were a coordinated "conspiracy" among literally dozens of institutions involving hundreds and possibly thousands of people, some one would have blown the whistle (or have written a book after having been laid off/fired). That said, there are many deep pockets on Wall and Broad streets (and around the world) and a Federal Reserve ready and willing to bail out any institution that finds itself with their "tit caught in the wringer". Remember Long Term Capital Management? Recent comments by Alan Greenspan and Ben Bernanke among others about having the power of the printing press to save the day should also provide fuel for such concerns in the Gold Market (and commodities in general). As it is these institutions are losing their grip on the Gold market as opposing interests (speculators, Funds, some other Banks, the public, etc.) are likely to overwhelm any institution(s) attempting to "manage" the market as economic conditions deteriorate. The more the Fed prints dollars the more likely the threat of inflation that will drive ever more interests toward Gold. So throwing endless dollar to keep Gold down is a self defeating game plan. Anyway that's my take on it.


Tevye and davefinger – If you are referring to the Fidelity Select Gold Fund (FSAGX), the answer may lie in the fact that the Fund manager (I don't recall his name off hand) sold off hedged miners and went nearly all out for non-hedgers. You won't find Barrick, Placer Dome, AngloGold, etc. in the portfolio anymore. The Select Funds routinely rotate young managers as a course of gaining experience (though they are supervised by a team of in house managers). On occasion former or experienced managers are brought in to give a helping hand. There were two funds with a focus on the precious metals and they were combined a couple of years ago into what is now the Select Gold Fund. I still have old IRA investments in this and the Pilgrim Gold Fund (formerly the Lexington Gold Fund combined with the Lexington Strategic Silver Fund).

- Black Blade


The CoinGuy (01/02/03; 21:16:36MT - usagold.com msg#: 93280)
Kuwaitis Withdraw Capital From US Markets
http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2003/01/01/wirq301.xml/

Snippit:

Kuwaitis, faced with the threat of war against Iraq, are withdrawing hundreds of millions of dollars from America to invest at home.

Comment: Another lifeboat sails into the night from the USS DOLLAR...

The CoinGuy

sector (01/02/03; 20:45:16MT - usagold.com msg#: 93279)
@Gold Standard You are Quite Correct Sir...
...regarding the Yuan/Dollar Link...
...my comments concern the not-so-behind-the-scenes efforts to get the Chinese to break this link and upwardly revalue the Yuan.

We need that to occur in order to raise the price of Chinese goods and the Chinese have so far told the Fed to "Pack Sand".

Thus, the non-cooperation between the Chinese and the US isn't helping matters much for the Fed.

It gets worse. IF the Chinese revalue upwards they can buy even more gold.

IF the Japanese devalue the yen back towards 133 the elders there can crush the gold cartel all by them selves with only 10% of their ready cash. The elders have $620 Billion in fungible deposits [Not real estate] and cash. They can suck every last ounce of gold away from the G-10 in a heart-beat.

So we sit and watch while the big pod of Killer Whale speculators tear out huge chunks of flesh from the giant Blue Whale that is the hapless G-10.





knotakare (01/02/03; 20:25:21MT - usagold.com msg#: 93278)
Bravo Sierra!
Your comments today and the "Dirt Poor" article on another favorite gold website are surely classics. The comments today that JPM has no position in the paper gold markets (derivatives), is proof positive that we are indeed dealing with a suspension of rational knowing. Of course they did not use these words, but that is what they directly implied.

We now see the entire western world's economic and political systems operating on the greator fool theory, as so we must watch the destroyers perform their craft.

happy new year to all!





Goldrush (01/02/03; 20:24:16MT - usagold.com msg#: 93277)
A CHART OF THE S&P 500 P/E RATIOS OVER 75 YEARS
http://www.gold-eagle.com/editorials_02/jmiller092402pv.html
Market still looks very overvalued by historical standards.

Goldrush (01/02/03; 20:10:05MT - usagold.com msg#: 93276)
JPM not out of the woods yet
http://www.marketwatch.com/news/yhoo/story.asp?guid=%7B23864C47-C988-40EC-9611-99A5B16F2B98%7D&siteid=myyahoo&dist=myyahoo
Probe sought on Enron-like deals
Senate panel questions structured finance pacts
By Matt Andrejczak, CBS.MarketWatch.com
Last Update: 6:09 PM ET Jan. 2, 2003

WASHINGTON (CBS.MW) -- A congressional panel on Thursday urged financial regulators to conduct a sweeping review of all U.S. banks and Wall Street firms for complex financial transactions similar to those allegedly used to help Enron pad profits.

The Senate Permanent Subcommittee on Investigations claims J.P. Morgan Chase (JPM: news, chart, profile), Citigroup (C: news, chart, profile) and Merrill Lynch (MER: news, chart, profile) designed and profited from structured finance transactions with Enron that used deceptive accounting and tax strategies.

"It is not acceptable for our banks or securities firms to help any public company mislead investors or analysts through deceptive transactions," said Sen. Carl Levin, D-Mich., outgoing chairman of the Senate Permanent Subcommittee on Investigations.

The subcommittee highlighted the multi-million dollar deals at separate congressional hearings last year. The firms denied the allegations that they knowingly aided Enron's deception.

On Thursday, the panel released its second report describing the role of U.S. financial institutions in Enron's collapse. Read report.

Meantime, J.P. Morgan settled with 11 insurers over an entity it created to do business with Enron. See full story.

The report called on the Securities and Exchange Commission, Federal Reserve and Office of the Comptroller of the Currency to launch a joint review of banks and securities firms using structured finance deals with U.S. public companies and tighten rules on what is legal.

Rich Spillenkothen, director of the Fed's division of Banking Supervision and Regulation, told the subcommittee in mid-December that the agency is expected to complete its own review of structured finance transactions in a few months.

According to the subcommittee, there is a gap in regulatory oversight because the SEC does not regulate banks and the Fed does not oversee accounting practices policed by the SEC.
__________
We might yet find out more about JPM dealings.
Silvercollector_great article

ax (01/02/03; 20:07:55MT - usagold.com msg#: 93275)
COOK UNABRIDGED: THE PART ON FED BUILDING GOLD RESERVES
http://www.gold-eagle.com/editorials_03/cook010303.html
COOK UNABRIDGED: THE PART ON FED BUILDING GOLD RESERVES

http://www.gold-eagle.com/editorials_03/cook010303.html


It is important to read the part omitted from Rodney Cook's

essay by msg#: 93264:
----------------
...The tiny minority of Austrian economists just sit back and smile. Those
who follow their advice are currently counting their coin.


WHAT IS THE FED TO DO? AT THIS POINT, THEY SHOULD BUILD

THEIR GOLD RESERVES. IF THEY ARE HYPOTHECATED WITH SOME

MYSTERIOUS INSTRUMENT OF STRUCTERED FINANCE, THE POSITIONS

SHOULD BE UNWOUND. IF THE GOLD IS GONE, LAY PLANS FOR

CONFISCATION.

ALL APPEAR TO BE IN THE WORKS.

PERSONAL CENTRAL BANKING


So what's a simple debt slave to do? ...............

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


Comment: Confiscation would not be necessary. The Fed
can buy gold from the following sources.

Also see the Julian Phillips Essay:

http://www.gold-eagle.com/editorials_03/cook010303.html

From ax msg# 93207 ( see excerpts below)

ax (1/2/03; 10:55:24MT - usagold.com msg#: 93207)

How the U.S. Treasury can Acquire Gold?

..I also refer you to the essay of Julian Phillips on the subject

of gold and the central banks which I read last night. It has a

very important analysis of how Alan Greenspan may now be viewing

gold in the financial system, and many other valid points as well

as crucial statistics on central bank reserves. I recommend this

reading very highly.

Yours is a legitimate question - how the U.S. Treasury can Acquire

Gold

First of all, 8k tons is the desired figure - as a start, the amount can

be substantially less. It can be acquired in increments as small as

one ton. There are many sources for such supplies:


1. the Domestic Mines - those mines which are physically located


within the United States, which employ labor within the United

States


2. The supplies of Central Banks that have indicated their willingness

to sell. Certainly this includes Switzerland which is selling now.

This might include Germany, depending how you interpret the

remarks of their officials. When I first started recommending

purchases of gold by the U.S. Treasury in early 1999, it would have

definitely included England.


3. The physical and future gold market - London, New York, Asia


4. Gold bullion dealers within the United States - large and small,

who now offer gold bullion to the general public. They can just

as easily, and gladly so I imagine, sell to the U.S. Treasury, just

as Lockheed -Martin sells fighter jets to the U.S. Dept of Defense

For the reasons discussed in the Jan 1 2003 posts and earlier posts

the U.S. Treasury needs more gold backing for its currency. This

can be done incrementally - in one ton segments. Naturally the price

might adjust upwards; however, it will be a bargain in that so much

more issued currency and debt can now have a much more solid

backing - the solid backing of physical gold. This will allow the USD

to maintain its role as the world's reference and reserve currency -

stable and secure.


silvercollector (01/02/03; 19:56:00MT - usagold.com msg#: 93274)
This one!!!!
http://prudentbear.com/archive_comm_article.asp?category=Guest+Commentary&content_idx=19039


silvercollector (01/02/03; 19:54:42MT - usagold.com msg#: 93273)
Last post is a ABSOLUTE MUST read...
...if the president has called it quits, well, make your own conclusions.

Gold. Get yourself lots.

Goldrush (01/02/03; 19:52:48MT - usagold.com msg#: 93272)
Dollar still under pressure
Hong Kong, Jan. 3 (Bloomberg) -- The dollar snapped a rally from yesterday and may fall on concern a U.S.-led war with Iraq would make international investors keep their money at home.

The U.S. currency started the day with a gain, after a report yesterday showing a surge in manufacturing sent it to its biggest rally versus the euro since August. It slid back as non-U.S. investors said a possible war is still reason to shun the dollar.

The dollar traded at 119.86 yen at 10:06 a.m. in Hong Kong from 120.08 late yesterday in New York. It hovered at $1.0378 against the euro from $1.0362. The U.S. currency had its biggest gain yesterday versus the euro since Aug. 22. Trading may be less than usual because Japanese financial markets are closed for a holiday.

``The bearish trend for the dollar hasn't changed,'' said Noriyoshi Tsunoda, assistant general manager of the treasury department at Mizuho Corporate Bank in Taipei. ``The geopolitical risk is still there, while the economic outlook hasn't changed much.'' The dollar may fall toward 118 in coming days, he said.


cyberbat (01/02/03; 19:47:50MT - usagold.com msg#: 93271)
@Black Blade
Do you think that the PPT can throw an endless supply of dollars to keep gold (a dwindeling commodity) down forever ?
If not , why not. The Euro and gold were down today which is a complete reversal. Treasuries were going crazy. I can't figure out what's going on anymore.
Cyberbat

silvercollector (01/02/03; 19:45:06MT - usagold.com msg#: 93270)
From the world of bizarre (Banker JPM) to the real world (Edward Scherrer is president of Peoples State Bank, Augusta, WI.)
http://prudentbear.com/archive_comm_article.asp?category=Guest+Commentary&content_idx=19039
-snip-


Edward Scherrer is president of Peoples State Bank, Augusta, WI.

I'm a small town banker and perhaps don't understand all the nuances of the national credit markets. But from where I sit, this economic recovery is extremely fragile, driven by excessive growth in consumer debt and likely to fail.


Gold Standard (01/02/03; 19:42:44MT - usagold.com msg#: 93269)
Sector - your #93265

In your recent post, you said:-

"There is a skillful devaluation vs. gold in the works that involves all the major currencies. Except maybe the Yuan. The Chinese don't seem to be playing by Marquis of Queensbury Rules."

As far as I know, the Yuan is pegged to the USD on an 8:1 ratio. This is competitive devaluation at its finest, because no matter how low the USD goes, the price of imports from the PRC doesn't change.

Regards, GS


silvercollector (01/02/03; 19:38:29MT - usagold.com msg#: 93268)
Just received this email
To my investment friends:

Check out this .PPT to understand why stock markets hit highs in 2000 and understand why markets have lost money for 3 years.

Follow the link:

http://prudentbear.com/

and click on "Why the bear market is not over"





sector (01/02/03; 19:35:37MT - usagold.com msg#: 93267)
@CavebMan JPM and their "Non-Exposure" to Gold
Nothing is confirmed until it is officially denied...
...AND they have contacted the Securities and Exchange Commission about all the [Damaging ] rumors.

My My! Imagine THAT. Chairman Harrison in a hissey fit over the WILD RUMORS of trouble in their $45 Billion gold derivatives short book now that gold is rising. Part of a $23 Trillion derivative book that was built by getting special pricing of 10X lower than their competitors...according to their Annual Report.

Mr H is going to the SEC and give Mr. Donaldson [Formerly Donaldson Lufkin, Jenrette] a piece of his mind! THAT will get RESULTS! "We have never lose a dime in gold".

If one never has to buy out of a short one never loses. Since the Treasury has backed the gold shorts that is probably true but they can't prove it without blowing the whole scam.

Kind of like The "Godfather's" Corleones not being able to "Go to the cops" when competitors horn in on their prostitution racket.

"Buy JPM...SOON to have less than $29 Billion in Enron litigation expenses".

mikal (01/02/03; 19:28:14MT - usagold.com msg#: 93266)
Correction to author name
DIRT POOR is by Rodney Cook, not James Cook.

sector (01/02/03; 19:21:05MT - usagold.com msg#: 93265)
@CavenMan The Euro is backed by a little gold but...
...how much of that gold has already been sold and/or swapped?
The central banks are light ...to the tune of 16,000 tonnes of gold so the Euro's gilded edge is also a tad light. The G-10 would like everybody to think there's a competition between the dollar and the Euro but there really isn't. There is a skillful devaluation vs. gold in the works that involves all the major currencies. Except maybe the Yuan. The Chinese don't seem to be playing by Marquis of Queensbury Rules. No surprise there...then there's their pals the "We ain't got no stinkin Nukes!" North Koreans. The Chinese will do only what is in their best interest. The G-10 will learn a hard 24 carat lesson from that.

All the talk of deflation wars, the new currencies and the Fed's mouthpieces themselves are the clue. It's like the buildup to December 7th 1941. Just about everybody behind the scenes knows it's coming.

Housing and its satellite boutique businesses are OK, but only for now. The day after the deval--housing dies because key interest rates will be automatically adjusted higher. Greenspan will try to mandate a result, like a tethered gas-powered model airplane, he will pull the Fed policy strings to make the little plane go up. What he fails to see is that the strings are slack and all the pulling in the world won't work. He will be forced to watch as a spectator while gold takes command.

Bill Murphy's has been rightly pounding the table that this gold bullish market remains a tightly coiled spring...one just can't predict the hour of it's release therefore one must be all in for the long haul.

Sinclair can trade nimbly because he's the best trader on Earth but the normal mortal would likely get crushed by volatility.
++++++++++++++++++

BTW Hogan's cupped wrist tip is right up there. It's hard to do because it feels so weird but the harder you swing the straighter it goes. Butch Harmon uses it. Love the back right foot too.


mikal (01/02/03; 19:16:23MT - usagold.com msg#: 93264)
Cavan Man, Solomon Weaver Re:Derivatives "mirage"
http://www.gold-eagle.com/editorials_03/cook010303.html
DIRT POOR by James Cook -Excerpts-
.....Barrick would take advantage of a bear market in gold to acquire other properties at distress prices. Nice friendly Banksters were able to offer considerable assistance. Through the alchemy of derivatives, hedging, and forward sales the Banksters were able to offer Barrick quite a deal: no downside risk in the event that gold were to rise.
What's this. No risk? No such beast. Someone was taking the risk. With Big Daddy Bush on the Board, the operations and policies of the Exchange Stabilization Fund could be telegraphed to Barrick. Essentially, Barrick and the Banksters could front run the Treasury. After all, bond traders do it all the time. An honored tradition. Over the years Barrick grew to be the world's premier gold miner, with a hedge fund bolted to the side. A hedge fund with an edge.
As the years went by, a second administration found a use for this edge. Any one remember Clinton's temper tantrums over not being able to control long rates? Well, Larry Summers to the rescue. His understanding of Gibson's paradox set the stage for a manipulation of biblical proportions: By suppressing the price of gold, you can suppress long term interest rates.....
Thus began a new period in economic history. A period where the Exchange Stabilization Fund facilitated the long peg on a bewildering array of gold swaps, gold leases, forward sales and unfathomable derivatives schemes. Spreading beyond Barrick, the entire industry has become caught up is a web of structured finance that could only be created during a financial mania, and can only be unwound during a deflation. The Treasury has recharacterized its gold reserves more than once. Only the naive believe that the type of fraud demonstrated by our corporate elites has not infiltrated the federal monetary system. The insanity began when the historic relationship between stock and bond prices was violated in 1996. Sobriety will return when historic reality returns to this primal relationship.
One by one, the party go-ers are sobering up. Austrian concepts are being considered. Mr. Market has been discounting hedged mining companies. Sir Alan has been emphatic about netting legislation before Congress. The Federal Reserve discussed buying gold mines after 9/11. The Russians have circulated the gold Ruble, the Chinese have liberalized the gold market, and the Islamic Dinar is about to launch. Lawsuits have been filed, first by altruists, now by commercial interests. Dollar devaluation was the consensus at Jackson Hole this year. Keynesian ideas are being dissed by Fed governors. Monetization of debt has become policy. Gold and its shares are breaking out.
And Greenspan, the closet gold bug, appears to be coming out.
Clearly, the Fed has been laying the groundwork to deal with a systemic monetary or currency crises for at least a year. While many do not give them credit, they clearly understand the problem at hand. After all, they have been party to the problem.
So, the Fed has panicked, and adopted essentially the monetarist economic philosophy of Milton Friedman by accepting blame for the last depression. The Keynesians are all a tether, having lost their perceived exclusivity over policy formulation.
The tiny minority of Austrian economists just sit back and smile. Those who follow their advice are currently counting their coin.
.....So what's a simple debt slave to do? My conclusion is that you must become your own central banker, and front run our monetary authorities. Sound complicated? Not really.
Unwind your structured finance position. Buy nothing on margin. Pay off your credit cards and debt.....
So build your gold reserves. Central banks are becoming net buyers of physical gold.....
A pull back in the gold price appears imminent and may offer immediate opportunity. The commercial short position is obscene. I thought that yesterdays spike down in gold price might be the beginning of an aggressive push to get the price down to levels where this position can be covered with less pain. But it is possible that the commercials are trapped. That the short position can't be covered, and that it will ultimately be "netted out" in a mysterious closed door process that leaves the major commercial producers owned by the central bankers, and the treasury's coffers of "deep storage gold" filled to the brim: The confiscation this time will most likely be of the hedged producers and naïve explorers.....End snippits
January 3, 2003


Cavan Man (01/02/03; 19:15:52MT - usagold.com msg#: 93263)
JPM
Pretty incredible or not?
"We don't have any real exposure to gold. I don't know where that rumor keeps coming from, but it's not true," CEO Harrison said.



Goldrush (01/02/03; 18:59:04MT - usagold.com msg#: 93262)
UK Guardian
http://www.guardian.co.uk/worldlatest/story/0,1280,-2290035,00.html
During his breakfast with Silva, Chavez also brought up the idea of increasing cooperation among Latin American state-owned oil industries and set up a company called Petro-America.

``It would become a sort of Latin American OPEC,'' Chavez said. ``It would start with Venezuela's PDVSA and Brazil's Petrobras,'' and could come to include Ecopetrol from Colombia, PetroEcuador from Ecuador, and PetroTrinidad from Trinidad and Tobago.''
__________
JPM recommends buying gold on dips. Other than that its a
sleazy company. It guided Enron on making phoney accounts.

Cavan Man (01/02/03; 18:58:22MT - usagold.com msg#: 93261)
POS
THE CEO SAYS JPM HAS NO EXPOSURE TO GOLD???????????

Either there are some really significant problems in the pipeline or, some of our brethren are way off base.

However, I do think it is a documented fact that JPM/Chase is the single largest player in gold derivatives. Perhaps Mr. Harrison was referring to the (metal) gold and not the (paper) gold. Reminds me of the definition of sex in the 90's.

Solomon Weaver (01/02/03; 18:44:41MT - usagold.com msg#: 93260)
Note the gold related claims at the bottom of this article....brought for the purpose of educating the members of this forum at to the rumors aimed from the gold bug corner at JPM.
Morgan adds up Enron, other costs
Insurers to fork over $600 million in settlement

By Luisa Beltran & Greg Morcroft, CBS.MarketWatch.com
Last Update: 4:41 PM ET Jan. 2, 2003







NEW YORK (CBS.MW) -- J.P. Morgan made its financial New Year's resolution Thursday, setting aside more than $1 billion to cover its settlement with insurers in an Enron-related suit and beefing up its kitty for future litigation and regulatory expenses.



CBS MARKETWATCH TOP NEWS
Factory data sparks major rally in Dow, Nasdaq
Bush to detail economic plans next week
Rates fall again to lowest level since early '60s
J.P. Morgan Chase settles with insurers, to take charge




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The move will likely lead to a fourth-quarter loss at the nation's second-largest bank, but it is expected to help calm jittery investors and further strengthen the company's ability to maintain its oft-criticized dividend policy and attract more investors.

J.P. Morgan Chase looks likely to post a loss in the fourth quarter after taking a charge to settle Enron litigation and establishing a $900 million reserve to cover future litigation and regulatory expenses, the company said Thursday.

The current Thomson First Call estimate for the quarter is a profit of 36 cents per share, excluding special items.

Charges to eat Q4 earnings

"You shouldn't expect to have positive earnings for the quarter," Chief Financial Officer Dina Dublon told analysts on an afternoon conference call.

Analyst Richard Bove of Hoefer & Arnett said he now expects the bank to report a profit of 30 cents per share before charges for the fourth quarter but a loss of 13 cents after charges.

The powerhouse financial institution said it will take a pretax charge of about $400 million and also revealed plans for the $900 million pretax reserve. On an after-tax basis, these items equal $860 million.

"Excluding these items, fourth-quarter results are seen in the range of consensus," Dublon said.

Bove said operating earnings for the first quarter of 2003 are expected to jump back to 50 cents per share and to hit 65 cents by the fourth quarter of next year.

"People don't care what happened in [2002's] fourth quarter," Bove said. "They care where the company is going in coming months. The expectation is that EPS will be substantially higher."

"This means that J.P. Morgan's dividend is well-protected," he added. Based on Tuesday's closing price, the stock's dividend works out to a yield of 5.75 percent.

Shares of J.P. Morgan Chase, a Dow industrials component, surged 6 percent to close at $25.44 Thursday.

"Technically speaking, JPM has spent the past two years in a steady downtrend defined by lower highs and lower lows. The equity may potentially be on its way to achieving a lower high," options tracker Bernie Schaeffer said in his daily options commentary.

"Options players are quite optimistic on JPM shares despite its hazy technical picture," Schaeffer added.

Further boosting the firm's prospects, Moody's Investors Service reiterated its rating "A1" on J.P. Morgan's credit following the settlement news.

Moody's said the risks related to bonds were already incorporated in its ratings and added that J.P. Morgan continues to generate a "substantial and diversified stream of income" with which to absorb such costs.

Closing a chapter



News of the charge and the reserve came hours after the bank disclosed that it had reached a settlement with a group of 11 insurers in its bid to recover $1 billion from the companies regarding Enron surety bonds.

Terms of the agreement call for the insurers to pay about 60 percent of the amount of surety bonds the insurers wrote.

"The settlement represents us being on the right side of the deal, and represents the risk of going the whole way on the litigation," J.P. Morgan Chase Chief Executive William Harrison said on the conference call.

Travelers Property Casualty (TAPA: news, chart, profile) (TAPB: news, chart, profile) confirmed that it would pay about $139 million under the pact.

Liberty Mutual has signed on to the settlement. The insurer has agreed to pay less than $12 million to resolve litigation with J.P. Morgan, the insurer said in a statement.

In December, J.P. Morgan Chase (JPM: news, chart, profile) began battling 11 insurers, including Chubb (CB: news, chart, profile) and St. Paul Cos.' (SPC: news, chart, profile) St. Paul Fire & Marine Insurance Co., in court to recover about $1 billion. The insurers had issued surety bonds that guaranteed commodity deals between Enron and a J.P. Morgan-related entity, Mahonia Ltd. See story.

But once Enron went bankrupt in December 2001, the insurers refused to pay the bonds, claiming the deals were really loans between J.P. Morgan Chase and Enron, not commodity transactions.

Bank executives added that the $900 million reserve included likely costs for lawsuits involving non-Enron-related liabilities, like litigation involving WorldCom and other firms with which the company did business.

"These various cases will be resolved little by little over about four years," J.P. Morgan Chase general counsel William McDavid said on the conference call.

In November, Dublon told CBS.MarketWatch.com that she expected a resolution of the Enron case by late December or early January. If J.P. Morgan Chase lost the case, the bank would likely take a charge to income and not boost reserves, Dublon had said.

More outlook for the fourth quarter

Dublon and the others on Thursday's conference call said that despite the charge and reserve, the company's fourth-quarter performance showed some positive signs, particularly a strengthening in revenues as trading business picked up.

"Revenues are probably quite a bit higher than estimates, but expenses are higher than expected due to severance costs," Dublon told listeners.

She said overall charges will be higher than the $300 million that J.P. Morgan Chase predicted earlier for its investment-banking operations.

Vice Chairman Marc Shapiro told investors and analysts that the firm's credit quality had not changed much since the end of the third quarter.

"Telecom is playing out as anticipated," Shapiro said, referring to another area of troubled loans for the financial industry.

"Merchant energy is the sector most likely to be hurt by any drop in credit quality," he said.

Shapiro also said the company would maintain its 34-cent-per-share quarterly dividend payment -- a policy that's been criticized in the past even as it has been staunchly defended by the bank's management.

In a footnote, the executives said that, despite persistent rumors to the contrary, it has no exposure to the recent run-up in gold prices.

"We don't have any real exposure to gold. I don't know where that rumor keeps coming from, but it's not true," CEO Harrison said.

"We have seen this rumor pop up again and again," added chief counsel McDavid, "and we have asked the SEC to look into it."

Luisa Beltran is a reporter for CBS.MarketWatch.com in New York.
Greg Morcroft is New York news editor of CBS.MarketWatch.com.





makcumka (01/02/03; 18:23:31MT - usagold.com msg#: 93259)
@ Ari
Thanks again for providing your point of view on the "new" currency. It did not fall short of my mark.

Goldrush (01/02/03; 18:23:24MT - usagold.com msg#: 93258)
Home Depot falls 8% after hours
Home Depot Lowers Earnings Outlook
Thu January 02, 2003 07:49 PM ET
ATLANTA (Reuters) - Home Depot Inc. HD.N , the world's largest home-improvement retailer, on Thursday cut its earnings outlook for fiscal 2002, citing lower-than-expected holiday sales of power tools and hardware, and said it faced a "challenging environment" well into fiscal 2003.

The rare earnings warning from Home Depot, the world's second-largest retailer behind Wal-Mart Stores Inc. WMT.N , represented another black mark for the retail sector, which is coming off one of its bleakest holiday sales seasons.

Shares of Home Depot fell almost 8 percent in after-hours trade.



Goldrush (01/02/03; 18:22:11MT - usagold.com msg#: 93257)
JPM will post a loss not gain 4th qtr
JP Morgan to Take $1.3 Billion in Charges
Thu January 02, 2003 03:10 PM ET
NEW YORK (Reuters) - J.P. Morgan Chase & Co. JPM.N said on Thursday it would take about $1.3 billion pretax in charges for litigation related to Enron Corp. ENRNQ.PK and the global research settlement announced late last month.

The No. 2 U.S. bank said it would establish a $900 million reserve for costs of various private litigation and regulatory inquiries involving Enron, including $80 million for the research settlement with state and federal authorities.

It said it would also take a pretax charge of $400 million in the fourth quarter as part of its settlement on Thursday of an Enron-related surety bond dispute with insurers.

The charges equate to 43 cents a share and mean the bank will post a loss in the fourth quarter, the bank's chief financial officer, Dina Dublon, told a conference call. J.P. Morgan had been expected to earn about 36 cents in the fourth quarter, according to market data firm Thomson First Call.

Cavan Man (01/02/03; 18:19:28MT - usagold.com msg#: 93256)
My friends,
let us be attentive.....
December should witness a rise in manufacturing. EVERYBODY SELLING ANYTHING RETAIL OR ENGAGED IN THE SUPPLY CHAIN THEREOF IS BUSY DURING THIS MONTH.

makcumka (01/02/03; 18:01:05MT - usagold.com msg#: 93255)
@ sector
Your words about an "expiring" currency reminded me of an old Russian joke:

To prevent anyone from getting rich, the government will issue new currency with a undisclosed percentage of uranium contained in the currency. As soon as one gathers enough money to reach the critical mass, he seizes to exist.



Cavan Man (01/02/03; 18:00:44MT - usagold.com msg#: 93254)
@CB(too)
Right church but wrong pew....you mean, "pennies, pennies from heaven."

Sierra Madre (01/02/03; 17:57:28MT - usagold.com msg#: 93253)
Hmmmm.....hmmm, again......and more hmmmmm....

So the Japanese want to devalue the Yen. That's amusing. How do you devalue something that has no value? This is not just an idle question. It refers to a very real situation.

The present day world currencies are the bastard heirs of banknotes that in a more orderly and honest age, were promises to deliver a certain amount of gold (or silver, in the silver currency countries)

At that time, a currency could be devalued by changing the amount of gold or silver to be delivered upon the notes' redemption.

There was a common standard, a NUMERAIRE, in existence. All paper was representative of a certain amount of gold or silver.

No more. Only the form remains, the substance is absent.

"What a country" says Sector. I say, "What a world!" It is taking on the character of a real-life nightmare. Those smart bankers - greedy, avaricious moral cripples - thought that "Gold is dead. Gold is finished. The Central Banks actually don't WANT any gold." Their economist statists and planners, all intellectual prostitutes, gave them all the reasons. All the reaons were fallacious!

The Japanese are desperately trying to devalue their Yen, so that their industries can churn out more goods, which they will sell to the US consumers, in exchange for more papers, which are instrinsically worthless, and thus pile up more dollar balances of "I owe you nothings" as John Exter used to say. Madness, the world has gone mad.

The disconnect between paper money and gold, which finally came about in August 1971, has taken us into a world where there are no more limits, which is another way of saying, a world disconnected from reality. I think it would be correct to go further and say, "Since we are disconnected from reality, our world is essentially DEAD."

The "economists" and their media and journalist friends are groping in an irrational blackness, for answers, for solutions. There are none!

What we are going to witness in the next ten years, is something that Greek philosophers would appreciate in its awesome splendor: the collapse of a civilization.

Let's all look at this period objectively, rather like astronomers observing the collision of a monster asteroid into Mars. Of course, the problem is, the asteroid is coming our way, not towards Mars.

"See all, nor be afraid!
The best is yet to be,
The last of life, for which
The first was made."

We are able to observe the spectacle of Human Folly on a scale never before seen. Surely a privilege! Enjoy!

Sierra



Goldrush (01/02/03; 17:46:16MT - usagold.com msg#: 93252)
At a loss to explain numbers
Thursday January 2 6:53 PM EST

The latest forecastU.S. Factory Report Upbeat, Analysts Not Sure
By Victoria Thieberger


NEW YORK (Reuters) - U.S. manufacturing stepped out of the doldrums in December, expanding by a lot more than expected, but the improvement was at odds with other soft economic news recently, and didn't change expectations for a gradual recovery in 2003.


The group conducting the influential factory survey, the Institute for Supply Management, was at a loss to describe why the December report was so strong, noting that elements required to produce strong growth did not seem to be in place.


That said, the ISM index came in at 54.7 -- well above the 50.3 analysts expected and above last month's 49.2 -- and showed expansion for the first time in four months. In the survey, 50 marks the threshold between growth and contraction.


Other data were less upbeat. In keeping with the sluggish labor market, unemployment claims rose in the latest week, suggesting any improvement is still months away.


Economists, like ISM officials, were viewing the factory report with a healthy dose of skepticism.


"The striking thing is that strength in the (manufacturing) survey is against the background of an overall pretty disappointing economic environment," said Anthony Karydakis, senior financial economist at Banc One in Chicago.


"So is it really that manufacturing is leading the way in this recovery while we saw consumer spending and just about everything else falter in December? I'm not so sure," he said.


Though the report contributed in part to dramatic gains in stock prices and a sharp sell-off in U.S. Treasuries, Thursday was the first trading day of the year and dealers attributed the moves mainly to New Year portfolio shifts.


Economists say it's too soon to be sure the economy has emerged from the weak patch it's been mired in since late summer.


Consumer confidence remains relatively weak, and concerns surrounding a probable U.S. war with Iraq hardly point to a robust recovery. Confidence has fallen for six months out of seven, holiday retail sales were weak, and orders for long-lasting durable goods have yet to improve.


Figures on Thursday showed unemployment insurance claims rose by a surprisingly sharp 13,000 in the week ended Dec. 28 to 403,000, the latest figures to point to a stagnant job market. The jobless rate for December, due out next week, is expected to remain at an eight-year high of 6.0 percent.


In a concession to the struggling economy, President George W. Bush will unveil a stimulus package on Tuesday, which is expected to total up to $300 billion in tax breaks for businesses and individuals.


STILL STRUGGLING


Manufacturing activity accounts for about a fifth of the economy, but it has outsized importance because a large part of business investment in capital goods is related to factories. Economists have said a recovery in business spending is needed to put the economic expansion on firmer ground.


While manufacturing is expected to recover in the first half of 2003 from a slump late last year, economists believe it will be slow and won't be a big driver of the economy.


"Inventories are extraordinarily lean, so there is the potential for manufacturing to snap back a little bit," said James O'Sullivan, economist at UBS Warburg.


Markets reacted strongly to the upbeat data. After two weeks of gains, U.S. Treasuries prices were savaged and the 10-year bond yield suffered its biggest one-day increase in four years, while stocks rallied. The broad S&P 500 average jumped 3.3 percent to 909.03, helped by optimism about the new year.


And Eurodollar futures, a measure of interest rate expectations, fell sharply, implying the Federal Reserve may start raising interest rates in the second half of this year.


The ISM new orders index, a measure of future production, surged to 63.3 from 49.9 in November -- the largest one-month increase since August 1980.


"I think it's pretty clear the threat of a double-dip (recession) has faded considerably," O'Sullivan said.


Still the ISM cautioned that the fundamentals did not change dramatically in December.


"I don't think it's time to pronounce that manufacturing is ready to make a strong recovery. I don't think the drivers are there to be able to do that," Norbert Ore, director of the ISM survey, told reporters in a conference call.


The improvement in U.S. manufacturing stood in contrast to another disappointing report from factories in the euro zone, released earlier on Thursday. For the past year, the U.S. recovery has outpaced that of Europe, which is being weighed down by weakness in Germany, the region's biggest economy.


Manufacturing in the euro zone shrank for the fourth straight month in December, according to the Reuters Eurozone Purchasing Managers' Index, which fell to 48.4 from 49.5.


A more resilient American consumer sustained last year's tentative recovery, with low interest rates fuelling purchases of cars and houses, the bright spots of the economy.


Homeowners, encouraged by historic low rates, made a year-end push to refinance their home loans and gain some financial relief. The Mortgage Bankers Association said refinancings rose by 10.9 percent in the week to Dec. 27.



CoBra(too) (01/02/03; 17:45:32MT - usagold.com msg#: 93251)
@ CM - Business is Lousy - and always was - someway!
Not only that ...But Shrub has promised to stimulate the economy and also plans to create new jobs.

Sounds like Mannah from heaven - though after being consumers of the last global resort and spending twice as much as all their NATO Allies in "Defense", roughly 400 Billion Dollars - where does it all come from?

... Well, of course, it must be Mannah from heaven.

Otherwise, I'm probably not wise enough to figure that one out. OK, you can loan some dough from medicare and even retirement funds - after all you haven't put in a dime anyway - oh don't tell me in funds, mutual or in another way ... and there may be no-one destitute enough to cry out loud and state foul - for now ... ?

... Well, the answer seems to be - as Bernanke and his co-conspirators see the future - print or the modern equivalent - create new Dollars at an ever accelerating rate. Pauperizing or socializing the fraud seems the way to go. A way all so called Western (ex-) industrialized have a way to go.

Is it fraud, or a way of life, we've been streamlined to accept? Fraud to the folks, who have bled for their meager retirement security and fraud to the generation paying for it - as the administration has already digested it. No, it's only delusion - and if you wanna accept it - it's your own fault! Or is it ... think again...

A real and true cure for the malaise the US Dollar has maneuvred itself into for the last century - or 300 million people vs. the rest of us 6 Billion peasants accepting forfeited paper forever ...

Do I know? - personally yes, as I go Gold! cb2



mikal (01/02/03; 17:44:28MT - usagold.com msg#: 93250)
Re: J. Sinclair
@R Powell- His information is provided as a public service, not to paid subscribers. The financialsense.com site also has other authors essays and of course Jim Puplava's excellent work, some of which IS subscription only.
Re: $4.85 -About a week ago he posted an essay where he changed that Ag resistance to $4.89. Dig around and you'll find it. I'm not posting everything he's ever written.

Christian (01/02/03; 17:41:47MT - usagold.com msg#: 93249)
New Currency Goal
The goal is to bring the underground economy into the above ground economy. Much of our economy from farm laborers, household help, factories, farmers, drug dealers, prostitution are forced into a barter transactions that exchanges goods for goods and off the books. Corn grower exchanging his corn for live beef, mexican farm laborers being paid with food, beer, housing, and a little cash, household help getting paid with room and board, factories paying labor with goods. Drug dealers will take just about anything that has value and a lot of prostitution is done for a roof over the head. Barter Exchanges are listed in every major city if you know where to look. The whole idea of a currency exchange is to get rid of the sitting cash that is not doing nothing and to bring the cash only deals out of the underground woodworks. A lot of households on food stamps, or medical aid of some kind are always looking for none reportable income. Many farmers milking 40 cows have no way of obtaining health insurance and no way to feed their families. They qualify for food stamps and medical aid as long as they can proof that the milk check does not cover the cost of producing that milk. Many dairy farmers will trade 2 or 3 cull cows for a springing heifer off the books, or trade a few cull cows for field work because the farmer can't afford to fix his tractor. The problem with real estate inflation is that the operator who has it paid has a windfall and the operator who has to borrow the money does so knowing he will be a slave for the rest of his life. If gold was a currency, real estate inflation can not happen like it can with fiat credit money. Over 40% of WalMart workers qualify for food stamps or medical aid. To increase your chance to stay employed at WalMart is not to accept any of their medical plans, be a part time worker, and never, never clock in over time.

silvercollector (01/02/03; 17:41:45MT - usagold.com msg#: 93248)
Jobless claims
Saw a post today where jobless claims were up after 2 weeks of turning down.

I anticipate jobless claims to turn up, how many managers who didn't have the heart to lay someone off just before Christmas now face the fact that they have to now.

R Powell (01/02/03; 17:33:45MT - usagold.com msg#: 93247)
Math
Regarding Sinclair's offer and 1,000 bets of $1,000 totaling $100,000, I obviously have something wrong here. How about 100 bets of $1,000. Anyway, if you care to bet he says to contact him and he will forward to you the contract for the wager.

R Powell (01/02/03; 17:29:18MT - usagold.com msg#: 93246)
Sinclair VS Elliot Wavers
Jim Sinclair has challenged the prediction of the Elliot Wave followers. He has stated that he is confident the POG will rise above $400 before it sinks to the $200 level that the wave believers (typlified by Prechter) are still predicting. How confident?

He has invited anyone who wants to bet ($1,000) on which price is reached first. He says he's willing to take up to 1,000 bets or up to $100,000 total.
Perhaps this posturing or gambling isn't important news but I found it both amusing and entertaining.

So, if someone says... "Hey, Jim, put your money where your mouth is.." he can reply, "I already did!"

He also stated that he believes silver needs to rise above $4.85 and he has positioned buy orders there. Does anyone know how large an audience he commands? I wonder how much a man of his position buys when he decides to do so and how many of his subscription readers will follow? It's unusual for an analyst to get this specific in the general press. Usually, only paid subscribers get this information. This may be interesting.
Rich

Cavan Man (01/02/03; 17:28:22MT - usagold.com msg#: 93245)
The Islamic Dinar
Malaysia was a trial balloon.....along comes the WAT to the Tigris and Euphrates neighborhood. Next up we have an Islamic Dinar movement gathering steam. IMHO, the ID will be the monetary no man's land where the currency war for POO will be fought. How many Dinars can the Euro buy? We shall soon see. (God Bless America)

silvercollector (01/02/03; 17:23:54MT - usagold.com msg#: 93244)
Cavan Man
Your post is bang on.

There was one of those monster mall complexes built down the road from me 3 years ago. I tell the kids it would be a 'great place to test a very small warhead'. Given today's enviroment that's not funny but I hope you catch my drift.

I watch it carefully for traffic and call it "the proxy for 'consumer spending'...". During the Christmas rush the traffic was luke warm, no where near the '98/'99/'00 freak show. Traffic has been linearly down since mid-2001. Anyways, the swarm tonight and since Boxing day has been unbelievable. Obvious to me that Christmas was postponed and this spells trouble for profits for the retailers.

Watch for Q402 revenues to be "okay" and Q103 profits to be "ugly".

Hope that re-inforces your post.

May your 2003 be golden.

silvercollector (01/02/03; 17:12:56MT - usagold.com msg#: 93243)
Nice, nice finish
Goldcorp, Agnico and Meridian (proxies for physical) finished ultra-strong in the last 15/20 minutes.

A couple juniors finished well, some not so well.

We approach the time where we "separate the men from the rabbitts"!!



davefinger (01/02/03; 17:03:27MT - usagold.com msg#: 93242)
Teyve Re: Fidelity
I'm fairly sure I read somewhere that Fidelity isn't taking new business in their gold fund. This was about three months ago IIRC. My company just switched to Fidelity for our 401k, and the rep mentioned that they have some really obscene amount of 401k money that they manage, on the order of hundreds of billions. Of course the gold fund isn't on our 'list'. Makes sense though. Even a small percentage of the mass of money under their control moving into gold would seriously jeopardize the game.



Cavan Man (01/02/03; 17:01:21MT - usagold.com msg#: 93241)
They are saying....
"stocks jump on manufacturing surge"
I am here to tell all of you as I am in the most BASIC of mfg. industries.....BUSINESS IS LOUSY. WE MAY BE A LITTLE BUSY BUT WE ARE MAKING VERY LITTLE MONEY. Profits are terrible! "Fixed cost review" is the order of the day. BTW, the company I work for was the most profitable in its' industry peer group.

Cavan Man (01/02/03; 16:54:47MT - usagold.com msg#: 93240)
sector and all......
There's a red herring in your catch; it's called the EURO. As gold rises the EURO balance sheet (BALANCE SHEET--comprendez-vous) gets STRONGER. Conversely, the dollar weakens (absent the "dark arts"). How do you account for the EURO monetary "pair of dimes"? Boning up on Ben Hogan in the "stovepipe league".....CM

Aristotle (01/02/03; 16:25:29MT - usagold.com msg#: 93239)
makc-man
I sorta see where you're coming from, bu let me stress again that the volume of the cyber sea greatly ouweighs the foam. Domestically AND internationally. The amount of overseas forex dealings is HUGE, and its nearly all digital. This is what washes away coastlines, not the foam. Aaaahhhh.... but the butterfly's wings upon the foam may germinate the storm, yes?

I can't say yea or nay to that bit, but let me toss out this other for perspective to stand behind my earlier comment to you regarding the focus on the paper aspect being perhaps too little, too late during crunch time. One year ago in Argentina many well-to-do citizens held some foam, yes, but they had a great deal more of the cyber sea of U.S. dollars held in Argentine bank accounts -- as a supplement to their peso accounts. With no change, none at all, to our U.S. notes to "complicate" matters, these Argentine citizens none the less found themselves on the outside looking in. The Argentine govt effectively seized all the Dollar brand portions of the cyber sea that fell within its jurisdiction.

Granted, this was not a result of our U.S. Government pulling a fast on on everbody else through implementation of foreign exchange controls, but it does show you perhaps from where the force is likely always to be most compelling, erosive, and damaging -- the sea, not the foam or (the color of) the butterflies' wings upon it.

That's about all I can say. Sorry if it falls short of your mark.

Gold. Get you some. --- Ari

sector (01/02/03; 16:23:48MT - usagold.com msg#: 93238)
@ makcumka Here is a prelude to the "New" Currencies --Weaker yen may be cure to lead nation to fiscal health
http://www.yomiuri.co.jp/newse/20030103wo12.htm
Yomiuri Shinbum
Hiroshi Ota

Economists and politicians have been calling for measures to weaken the yen against the U.S. dollar to enhance the competitiveness of exports. Finance Minister Masajuro Shiokawa has repeatedly indicated that, in light of the purchasing power disparity between Japan and the United States, he would like to see the dollar, now about 120 yen, rising to about 150 yen.

With the administration of Prime Minister Junichiro Koizumi having been unable to stem the ever-worsening deflation, which may lead to a full-fledged financial crisis, the economy is enveloped in a sense of stalemate.

It is against this background that arguments have emerged in favor of weakening the yen by such means as the purchase of large quantities of foreign bonds by the Bank of Japan.

There are a number of examples in which countries have successfully bailed themselves out of dire economic straits by devaluating their currencies. A good example is the 1985 Plaza Accord, under which Japan, Germany and other countries cooperated to have the dollar quoted sharply lower to help the United States extricate itself from an economic crisis.
++++++++++++++++++++++++

Ahhhh! It's the Japanese devaluating thingy! And all this time we thought they were waging a "War on Deflation". Get ready for the "New" , "Improved" Japanese currency bills. Guaranteed to buy less than ever.

The goal of the "New" currencies [Already announced by Japan and the US] is to require redemptions that the authorities know won't get done for Billions because the old-to-new redemption requires cross-border actions, presentation of illicit booty [Without to requisite income forms and just plain forgetfulness. It is an opportunity to reduce the money stock and make a little headway when the new currency is devalued against gold.

The Fed once offered a new currency that had a timer in each bill. If one didn't "Move their money" after a set interval it "Expired".

The first Quarter of 2003 will see the implementation of the new currencies and the long-suspected devaluation. All under the cover of a shooting war in Iraq.

It is reasonable to imagine that the New currencies will be simultaneously implemented along side the New Fed gold policy...a policy that will guarantee the price of gold will rise AND the Fed will get to benefit from that gold price rise. The Maestro will wave his wand once again...seeming to make currency Lemonade out of fiat paper Lemons.

What a country.


Tevye (01/02/03; 16:16:44MT - usagold.com msg#: 93237)
Fidelity and Vanguard Gold Funds
Last I looked, (a couple months back), Fidelity's Gold fund showed a large increase in cash on hand and cash was a significant percentage of the fund (~33% but I don't remember the actual numbers). So recent purchasers may have thought they bought gold stocks with Fidelity, but they really 'diluted' the fund. I expect Fidelity didn't buy stock because there was not enough available at an 'acceptable' price. If they do buy, it should push the market.
Vanguard, on the other hand closed their fund.

Anyone have more recent info?

Gold. It's (undiluted) Tradition
Tevye

Hipplebeck (01/02/03; 15:57:41MT - usagold.com msg#: 93236)
Ari
I did say theoretically.
Anyway, my point is that at this early stage, everytime a bill passes through any bank, there will be a record of it. In time, there might be a scan that takes place at the cash register of a store that records what that dollar bought.
There will always be cash traded back and forth between people, but there will be a better electronic trail that could be followed.
If things keep up the way they are going we are probably all going to end up barcoded.

makcumka (01/02/03; 15:48:53MT - usagold.com msg#: 93235)
@ Ari
The best justification behind colored currency -- ease of use
From the days of old USSR:

Not only the paper notes varied in color, they also varied in size, the bigger the bill, the bigger the piece of paper. Anyone can distinguish that, thus providing the "user-friendly" version of paper money. FWIW.

Aristotle (01/02/03; 15:48:27MT - usagold.com msg#: 93234)
Hipplebeck, call me skeptical
You suggested, "Theoretically, in electronic land, the database can record the movement of every dollar."

Think about this for a minute, please. You're talking about tracking every unit in an environment where some of our finest economic minds, Greenspan included, readily admit that it is no easy thing to define our money and money supply!! How you gonna track each unit item (comprising the cyber sea and its foam) of something as nebulous as that???

Easy out.

Gold. Get you some. --- Aristotle

makcumka (01/02/03; 15:37:07MT - usagold.com msg#: 93233)
@ Ari
Thank you for the explanation.

The paper money in my wallet is indeed only a trace of the total electronic amount of dollars that is out there in existence. But my concern was of a different nature. A lot of those paper dollars are held by foreign citizens, mostly in underdeveloped countries, in paper form, as a savings instrument (primarily). As more and more greenbacks are printed and released into circulation, the visual effect alone (not taking into consideration the published figure of the paper money in circulation, which has been increasing at a pretty steady rate recently) may alarm these people who are relying on USD for stability. The paper assets can be manupulated, written off, hidden, etc. The cash that is printed out and stashed away can be brought out in a relatively short period of time, if a panic starts and everywhere around the globe the people rush the banks to exchange the dollars. The psycological event will be catastrophic and, I venture to guess, will destroy the US economy way fasted than JPM, Enron and WorldCom combined. So, if the outstanding US cash is manipulated to disappear under strict exchange policies (I mean, we all know that anyone holding more than $5000 USD in cash is a drug dealer or a counterfeiter anyway, right?), the paper dollar exposure could very well be taken care of. So the USD emerges in a new, colorful way, the small people of other countries have lost their savings, but since the savings were illegal in the first place, it is ok, everything in paper assets can be controlled without too much attention, and the US consumer has a stronger USD (since they don't have a cash stash, they don't get hurt) and can get some more credit because the dollar is again strong. Everything is peachy again.

Do you think this is possible, Ari?


Hipplebeck (01/02/03; 15:35:04MT - usagold.com msg#: 93232)
That new currency
I suspect we could be watching the blending of paper and electronics.
There is probably a strip that has an individual identity number on it imbedded in every new bill.
This combined with high speed reading machines at the banks and there can be a record of where every bill has been.
Theoretically, in electronic land, the database can record the movement of every dollar.
People trade in old dollars by a certain time to get new ones, and presto, chango, all dollars are electronic just like a debit or credit card.


Aristotle (01/02/03; 15:30:34MT - usagold.com msg#: 93231)
TC: "Deflation will be fought to the last tree"
Precious reality!

G. G y s. --- Ari

Aristotle (01/02/03; 15:28:16MT - usagold.com msg#: 93230)
The best justification behind colored currency -- ease of use
When hyperinflation takes over (and it will) and the government is, in phases, adding and then subtracting zeros to the growing flow of notes, it's easier to deal with the various classes of currency and their relative value by a color scheme. (The shifting numbers on otherwise all similarly greenish notes would boggle most brains.)

For example...

Series One:
1's; 5's; 20's and 100's would be Green, Blue, Orange and Red, respectively.

Series One -- additional functional issue:
1,000's; 5,000's; 20,000's; 100,000's would be Green, Blue, Orange and Red, respectively.

Series Two -- "New Dollar" issue:
1's; 5's; 20's and 100's would be Green, Blue, Orange and Red, respectively.

Bye bye to the traditionally "Western" thoughts on meaningful monetary savings. Say hello to the rising standard of global common sense -- a personal standard of physical Gold savings! Get a head start.

Gold. Get you some. --- Aristotle

R Powell (01/02/03; 15:26:46MT - usagold.com msg#: 93229)
Carl H // Devil's Advocate
There can certainly be nothing learned without questioning both new information and reassessing that which we believe. As time passes, events occur which can verify or prove previous assumptions. The game is ever afoot! I welcome your devil's advocate stance and have often ended my posts with the words "Any thoughts?" I've played the same against the likes of Butler and Morgan.

Concerning the powers-that-be, my own opinion is that they do exist to the extent that broad economic policy goals are set and actions are taken to achieve these. The strong dollar policy was probably one such goal with the detrimental side effect of surpressing the POG. Once the connection was asserted, POG was probably closely monitored. I don't think actions or policies were ever drawn up to specifically contain the POS. It may have happened as a side effect in so much as there is some monetary connection between gold and silver. As for the PTB being better informed than we are, I'll say again that either there is something wrong with our fundamental analysis or we constitute a small number- too small to influence a purely technically trading market that is disregarding the ongoing deficit. I'm uncertain about excess (extraordinary) manipulation in silver. Ahab was only interested in the great white whale, not small fish.

You mentioned the monetary connection between gold and silver as a possible reason to surpress the POS so as to avoid setting off the gold derivatives bomb. Unfortunately, I do not fully subscribe to this theory. I've questioned both the idea that derivatives will cause default or even any great disturbance in the market. I believe $354 was the magic number given for the total derivatives meltdown. Poppycock! I also find the idea of notational value (and the huge dollar numbers involved) given in this arguement very questionable as no one can explain how they are derived.
As an example, I recently BOUGHT the December 2003 silver contract but was afraid a modest downturn in price would trigger a margin call so I also SOLD the March silver to cover any losses. I hold a March 450 silver call (right to buy at 450). The dangerous futures are offsetting (very little risk) and the call can be used to offset the short position if/when POS goes higher. With the short position covered by the call, I hope to fully profit on the Dec. long. The long is covered until I offset (buy back) the March short. Now, my question is, involving two futures and one option here, what is the notational value of this position? How much have I contributed to the potential meltdown? For every long position there is a short, how are these notational value (that supposedly will cause the derivative meltdown) derived?
Given, as you say, "that The Powers That Be are very, very clever, and very ruthless" do you really think they (or any major financial institution) would hold massive derivative positions in gold or anywhere that are not somehow hedged? Hey, if they believe the gold/silver monetary connection still exists, then short gold positions could even be hedged with long silver. There are no limits to the hedging strategies. Also in this regard, I do not agree with Ted Butler's complaint against the Comex for allowing more future positions to exist than there is silver to cover them. I admire Butler's extensive research on silver but he should know that about 98% of all metals positions are settled in cash (account statements). However, the Comex has covered itself with a callable, monthly limit on physical delivery, if needed. In this event, it will be fiat settlement for the rest.
However, his (Butler's) warnings of increased margin requirements should always be keep in mind. As any market becomes more active or otherwise more risky, margins are subject to increases! The casino has the option to change the stakes required to play. As always, this is a 98% fiat paper game only loosely connected to the world of real hold-in-your-hand metal.

Indeed, as you mentioned, silver use is inelastic. If/when silver becomes too pricy for jewelry/tableware, it will be substituted with something else. This is a very tiny portion of silver use and imho, would be much more than compensated by any one of the new developing uses for silver such as the wood presservative use you mentioned. I believe Home Depot has stopped selling (arsenic) treated lumber (as of 1/1/03) and the proposed government ban (if enacted) is scheduled for 2004.

The threat of less silver use from digital photography has not been verified over the years. Photographic silver use was down only 4% from 2000 to 2001, not unusual considering the economy and the travel industry. How many of the worlds' people can afford a small film camera? How many a digital camera and the computer to go with it?

Your words...
"PHYSICAL investment demand could blow this whole thing up in no time."

Yes indeedy, and if it does not, PHYSICAL use will, simply because the world uses more than is produced and recovered. It's been one heck of an ongoing deficit and thus I believe there was one heck of a reserve to work through but the fact remains, the deficit continues and the supply grows precariously low.
Any thoughts?
Rich

Aristotle (01/02/03; 15:04:28MT - usagold.com msg#: 93228)
makcumka -- new currency
The plans are already well underway to roll out pretty and newly colorful currency notes.

Before you get too worked up or concerned over the (potentially sinister?) details of currency exchange, pause long enough to first consider the nature of the vast majority of our nation's money -- by and large a digital entry on an account. That is, there's nothing to it. Nothing to exchange. Compared to this cyber ocean of money, the stuff in your wallet is just a frothy foam upon the waves.

In other words, to worry about the mechanics of the representational paper switchover is perhaps a little too narrow -- and too late -- if push comes to shove and fell monetary deeds are afoot.

Does this change your view?

Gold. Get you some. --- Aristotle

CoBra(too) (01/02/03; 14:59:47MT - usagold.com msg#: 93227)
Stimulation - The Name of the Game!
Why didn't I think about that before? I could have ended up as a runner up to the Nobel Prize. Demand - or Supply Side doesn't really make much of a difference. What-ever side - stimulate the economy and you'll be the hero...

Wow. the econ news sound just great. Manu up - signs of strenght; JPM recoups a major part of Enron losses - shareholders don't. Dow, Duck and SnP took off like the fire works of New Year's Eve.

Only Tsy's took a beating. Bush to cut taxes and plans to stimulate economy by creating jobs. Sounds great, though every other citizen is asked to participate in Homeland Security anyway - need a job - turn to your friendly government and become a master spy - on your neighbor.

All these new measures to kickstart the economy, which stubbornly remained in the doldrums for the 3rd. year will need new financing. The new colored $-Bills, expected to be introduced sometime this year may just do the trick.
The old Greenback seems to have done its dues. What-ever else could you expect. After all it shed some 95% of its vigor over the past century. Time to replace it by something more hip - and maybe we could simultaneously scrap and forgive all accounts past - only some 34 Trillion Dollars of debt, not counting any derivatives, of course as they have been bets only. Bets on notional value...and who the hell knows what that means, anyway!

Colored pieces of paper - probably all shades of red, since it'd be fitting for new IOU's - will bring about some kind of new deal. And everybody will be happy again. The real producers of this world will go on exporting the products of their labor for a re-created monopoly game. May the playing field, or is it game board, still be the old one the chips are different; Colored!

The difference will be enormous. The deficits will be colored from here on. Add some color to any lady and she may improve her looks - will a rose colored trade deficit approaching half a Trillion, even in colored Dollars improve its effects?

Well, who knows? ... And probably I won't really care, as I won't wait for the advent of colored Dollars, as I already exchanged most into shining sun-colored ounces of gold and intend to keep doing just that as more come available at the still Whole-SALE prices for GOLD! - Do You? cb2

PS: My old Austrian conscience had me confronted with an annoying thought ... or was it in a dream? Anyway, Dr. Kurt Richebächer just materialized in my daydream, spoiling it with the reality that my economic intelligence is really as unfounded as most of todays Keynesian dreamers ... pop goes the weasel!


Aristotle (01/02/03; 14:47:45MT - usagold.com msg#: 93226)
ax, OK, so you're unphased by the "Gold availability" side of the equation.
I'll leave that part alone, since we'd just be going in circles. Let's move to the other equally important part of my question, which you've yet to address.

How will the Treasury get its money to facilitate the Gold purchase while not backfiring?

There's a little phrase that still haunts the world that I think you may have forgotten about.

"Deficits without tears."

There is no way the international community will tolerate Gold purchases by the U.S. government -- not at least through additional deficit spending. If indeed the government seeks to add more to its Gold reserves, the only way it will get it is through a violation of every freedom-loving principle that originally made this nation great. But then, it's been done before. Is this what you advocate?

What else would you have the Government do in your stead?

Gold. Get **YOU** some. Leave the Govt out of it. --- Ari

makcumka (01/02/03; 14:26:40MT - usagold.com msg#: 93225)
@ sector
You and some other posters mentioned "New" currency bills. What are they and how real is the possibility of yet another exchange of the US paper money? And wouldn't it be a prime opportunity to deflate the outstanding mass of paper dollars in the world? The exchange could be set up to take place only during a certain time frame an by "certified" banks, who just may not have enough on-hand cash to perform such an excange? Any thoughts or info on the subject will be appreciated



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