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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...   (Discussion Forum Hall of Fame) (The Gold Trail) ("Thoughts!" by ANOTHER)   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.

FORUM ARCHIVES

Select date of the archive you wish to view Month 1 2 3 4 5 6 7 8 9 10 11 12 Day 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Year 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Archives date back to September 22, 1998

WELCOME TO THE ARCHIVES!

ARCHIVED DISCUSSION FROM 10/22/1998
All times are U.S. Mountain Time

jinx44 (10/22/98; 22:53:06MDT - Msg ID:730)
FOA and the amazing US$500 FRN
I have read in several disparate articles, including USTreas. articles, that the larger $500 and $1000 notes were taken out of circulation due to the USG's concern that it would facilitate the drug trade. If they are truly considering bringing these 'narco-notes' back into circulation they must be really frantic. The Drug War has been such a help to the abrogation of the constitution by the feds that I cannot see how they could go back on their vision of financial enslavement. Then again, with $15Trillion or so of debt, maybe they should consider $100,000 notes too. Hello Weimar Republic?? Besides, it's only paper and ink, guys. 2 1/2 cents worth.

Unomas (10/22/98; 22:32:48MDT - Msg ID:729)
"We are looking at a weaker dollar and stronger euro,"
Thursday October 22, 11:30 pm Eastern Time

FX IN EUROPE - Bundesbank stays true to form (RPT)

LONDON, Oct 22 (Reuters) - The mark rose against dollar and yen on Thursday as the Bundesbank acted true to expectations and left interest rates on hold, analysts said.

The interest rate differential going forward favoured the mark, they added.

"It looks unlikely that Germany will cut rates, while it looks like there are going to be further rate cuts in the U.S.," said David Brickman, international economist at PaineWebber.

The Bundesbank left its key Lombard and discount rates unchanged, and fixed its next two securities repurchase tenders at the current 3.30 percent.

The Bank of France also left interest rates steady.

The dollar climbed to three-week highs of 1.6592 marks overnight amid last-minute market jitters about a German rate cut ahead of the Bundesbank's council meeting.

It fell to the day's lows on the steady rate news, to trade at 1.6380/90 marks by 1445 GMT, from 1.6425/28 in late European trade on Wednesday.

Against the yen, the mark built up to a high of 72.05, and was at 71.84/87, from 71.12/17 yen in Europe on Wednesday.

"We are looking at a weaker dollar and stronger euro," said Brickman.

"I would not be surprised if the dollar got below 1.60," Brickman added.

"The collapsing U.S.-German interest rate differential will drive the dollar down against the mark until it reaches that point which provokes the ECB (European Central Bank) into a relaxation of monetary policy," said JP Morgan in a client note.

"We reckon that this point is below 1.50 marks," JP Morgan added.

Brickman said the ECB was likely to kick off in January with a starting repo rate of three percent. The focus now is for rate cuts from peripheral Europe.

The chances of an imminent rate cut in euro-zone member Italy increased, analysts said, after new Prime Minister Massimo D'Alema said on Thursday his top priority was to pass predecessor Romano Prodi's draft 1999 budget.

"Rates will come down by a full point," said Gerard Lyons, chief economist at DKB International. Italy's discount rate curently stands at five percent.

Mark/lira remained steady on Thursday, ahead of Friday's confidence vote on the new Italian government. The mark was trading at 989.25/40 lire at 1507 GMT, from 989.18/23 in late Europe on Wednesday.

Dollar/yen was kicked about in thin trading within a range of less than two yen, dealers said, and took its lead from the dollar/mark and mark/yen exchange rates.

Half-year losses for Japanese brokerage giant Nomura, followed by a Moody's downgrade, provided a negative backdrop for the yen.

The dollar was trading at 118.05/15 yen at 1514 GMT, from 116.78/88 in late European trade on Thursday.

The pound fell against the mark after the Bundesbank kept rates steady. Strong speculation about British interest rate cuts was likely to depress sterling further, analysts said.

A survey by Britain's Engineering Employers Federation forecast 1999 gross domestic product growing by 0.7 percent, below the government's revised forecast of 1.0 percent growth.

The Bank of England's Monetary Policy Committee (MPC) holds its next monthly meeting on November 4 and 5. All but two of 21 London-based economists polled by Reuters on Wednesday expected the MPC to cut rates in November.

The pound was trading at 2.7828/38 marks and $1.6954/60 at 1521 GMT, from 2.7933/35 marks and $1.7004/10 in late Europe on Wednesday.

http://biz.yahoo.com/rf/981022/cne.html

Unomas




Goldfly (10/22/98; 22:17:39MDT - Msg ID:728)
Aragorn III
Oops. Sorry. Aragorn, not Aragon.

I hate typos.

GF



Goldfly (10/22/98; 20:57:08MDT - Msg ID:727)
FOA and Aragon III
FOA:....In the desert -YES! At the edge of an oasis as the sun rises on a cool desert morning- The dawn of a new day!.........I like it.

FOA and A3: Yes indeed post #713 was excellent, as was yours Aragon. They were both very intelligent and instructive. But, I see I didn't phrase the question properly. Because both left me wondering still: Where did the idea that this shiny yellow metal with interesting properties is a suitable representation of the accumulation of wealth? Where? Where, where, where?

What 3000 year old convention of the BIS determined that gold was it? Did a bunch of people tired of trying to haul around sacks of grain get together and say, "Gold!" Did a clan sitting around a campfire say, "If we act like this mushy yellow stuff is Really Important, that clan in the next valley might trade us for something we can eat." Or, better yet, did GOD, while walking the paths of Eden with his creature one evening, turn and say: "Adam,.......got gold?"

I understand, it's like procreation. Incredible value and mystique. And it's been going on for a long time. But the history and meaning of the VALUE of gold is not as easily discerned. Not by me anyway.

If you think I'm getting too far out there, I understand. Perhaps there is no satisfactory answer. Sometimes an innate desire must simply be accepted and then dealt with rationally. But it seems to me Aragon, w/ your argument that money must be SOMETHING, that gold is reduced to the status of a fiat currency. ("It's money because we say it is!")

Sitting down now.....

GF

Friend of Another (10/22/98; 19:05:54MDT - Msg ID:726)
Item!
ALL: I read this somewhere: "The US is now considering printing the old $500 and
$1000 note of 1934 only using the new currency format." . ------------------ In another
interesting coincidence, the Euro will also be issued in ( I think) 600 Euro notes? It was
noted that these larger bills would make the Euro more useable. Is the US concerned
about this new currency? Just a thought?


Friend of Another (10/22/98; 18:57:17MDT - Msg ID:725)
Russia and Gold?
USAGOLD, ------------------- I also find that the Russian thinking on gold to be an
incredible coincidence. Just as you noted today (msg. #717) about the !970s US treasury
gold auctions creating an atmosphere of attention, so do we also have the Argentine gold
auction. I'm sure that the gold detractors are aware from past results that you don't
auction gold it you want it to go away quietly. If they do influence the Argentine treasury,
then why is this coin auction taking place? And doing so just as the Russians are about to
bring gold back as money! I wonder if the use of gold by the old USSR will bring them
closer to Bonn? Or is it Frankfurt or Berlin? No doubt Russia knows where the ECB and
it's Euros will be located? FOA


Friend of Another (10/22/98; 18:32:06MDT - Msg ID:724)
Reply to: Tyler Rose (10/20/98; 16:14:39MDT - Msg ID:683)
Tyler Rose, ---------------- I didn't forget about your post, it was a hard one. The URL
you gave me took us to a site that offered a book about: "Every statement made in this
185-page book references either a legal precedent, report or letter issued by a government
agency, trade publication or known entity in banking and finance. " ! I would not even
attempt to go into this area on a forum. -----------------Personally, I do not think anyone
has a true handle on the legal aspects of multinational interbank federal gold loans if they
default. If we place ourselves into context of the events that would accompany such a
period, it would be more likely that armies would be called up before all of the parties are
paid in gold. Some would be paid no matter what, while most would be left to twist in the
wind (I think that is a cowboy / western phrase). Let's wait and read about it in the
papers. Thanks FOA

Friend of Another (10/22/98; 18:28:40MDT - Msg ID:723)
Reply to: scp (10/20/98; 11:24:55MDT - Msg ID:679)
SCP, --------- Your question: "Also.... could you add any other thoughts as to why a
strategy that rekindled the boom in '87 will not work today? ---------------------- Plain and
simple, the dollar is very late in the time cycle of paper currencies. Don't confuse this with
some trading cycles you hear about. Throughout out the history of paper currencies (short
as it may be), the few that became world accepted major reserves (British pound?) all
headed downhill only after they reached the maximum in popularity and convertibility.
Once every nation began to issue debt, settle accounts, create reserves and in general, use
this major currency as a proxy for their own, it had reached it's limit of expansion. It is a
natural decline that occurs in fiat reserve currency monetary systems. As sure as the sun
rises in the East, the world moves on, into another money system. We have reached that
level today with the dollar. Everyone expects the dollar world to deflate this currency and
continue it's use in a depression racked world. No doubt, some of the bets placed today by
short sellers of gold involve a deflation read of the current situation. Indeed, we are seeing
the contraction effects of this in many countries. However, we now live in a much more
advanced economic world than in the past. The history of major currency destruction did
not have these factors to deal with. As Aragorn III wrote about platinum in his #612 post:
"The modern use redefined the value accordingly"! Another sent me a commit on it. "A
stunning statement that in this case can also be applied to the dollar of today." How true!
-------------------------- As the Federal Reserve lowers rates, it will, in time, crush the
dollar if an alternative currency is available. It will be and long bond dollar rates will rise
as the result. The world will move on because: " The modern use redefined the value
accordingly"! Thanks FOA


USAGOLD (10/22/98; 17:49:56MDT - Msg ID:722)
THE RUSSIAN ALTERNATIVE -- EXTRAORDINARY
The Russian talk of returning to a gold standard is extraordinary. The numbers need to be analyzed and I do not see how Tim Green can dismiss it out of hand on a dressed up version of the old barbarous relic argument. Why wouldn't it work? And what better way to break IMF hegemony. I for one do not take this lightly, nor do I have a knee jerk reaction. I would like more information, discussion. It is a grand experiment and I wish the Russians well. Why any hard money advocate would be opposed to it is beyond me. We should not only be cheering the Russians on; we should be offering them whatever support and intellectual assistance we can give them. The problem could be defending the ruble externally against attacks through a raid on the Russian gold reserve. Perhaps Russia will make the ruble exchangeable domestically and not internationally -- at least in the beginning. The Russian Alternative will be interesting to watch. Here we have a laboratory for what may become the new monetary order. It would be interesting to know what somebody like the pestigious Ludwig von Mises Institute views this. I will try to contact them tomorros on this and report back if I can get anything definitive.

I want to thank the posters here who have brought this extraordinary development to the FORUM's attention.

SteveH (10/22/98; 15:25:31MDT - Msg ID:721)
December gold opens higher in overnight trading...
currently at $294.00.



Aragorn III (10/22/98; 15:07:26MDT - Msg ID:720)
Further thoughts for Goldfly
You received an excellent reply from FOA (MsgID: 713) for your question--
"2. I have to admit I can see it, but I still have trouble understanding it. WHAT -other than supply and demand- MAKES GOLD VALUABLE? What is so great about gold?"

The response given by FOA should be more than adequate in addressing this question, but because I see this SAME question asked time and time again, I want to chime in with some additional thoughts from a different angle. Perhaps with enough beatings, this "dead horse" will run again!! I recently offered these thoughts to EJ (at Kitco) in an attempt to distinguish and show platinum, gold, silver, and money for what they are. Clearly, The 713 post by FOA is a vital and helpful element in this discussion. On Tuesday I wrote:
"All commodities ( read "hard assets and things of value" ) float relative to each other as needs and their use changes in importance--whether real or perceived. ("Real" tends to support longer lasting adjustments to the realative value versus all things than "perceived" does.) Supply and demand forces then give rise to additional fluctuations in relative value. Having said that, understand that the real importance of platinum and silver is found in their function as industrial commodities. That dictates their value in today's world beyond any other use for those metals. Platinum is indeed rare, but is no more rare than gold. Some sources indicate equal quantities of each on Earth, while others indicate that the element gold remains a fair bit rarer than platinum. Cause for the misperception: it is that thousands of years of global active mining for gold has resulted in an impressive post-mined stockpile, while platinum has not received this same attention. As utility for platinum was more recently recognized, its mining has increased, yet supply remains tight in relation to demand, so stockpiles remain small and the price is high ( as it should be for such a rare and useful industrial commodity ).

Gold's value is set by its importance as a financial commodity, moreso than its value as an industrial commodity--which by itself would be on par with platinum. But today, as an industrial commodity alone, gold's price would surely fall because, unlike platinum, there is a ready supply of post-mined gold to meet any consuming industrial demand. But the operative word is "UNLIKE (platinum)". Gold's relative value remains high despite this "overhanging stockpile" because this same overhanging stockpile in the vaults of nations and individuals gives unrefutable evidence that gold is used first and foremost as a FINANCIAL commodity. Its widespread occurrance yet overall scarcity, together with its other properties, has made it uniquely suited to play the role as the world's ultimate money."
[Goldfly, this is where FOA's message adds well to my thoughts. And again, you asked the question "WHAT -other than supply and demand- MAKES GOLD VALUABLE? What is so great about gold?"--I continue with my original response to EJ...]
"It does no good to ask, "Why gold?" If there were some other element better suited, we would be having this discussion about IT instead. "It" is not platinum, "it" is not silver, "it" is not sand or tree bark or water. It is what it is, and it needs no introduction.
got gold?"

Does everyone not see that by asking "Why gold?" and "What is so good about gold?" they are essentially asking and not asking the questions "Why money?" and "What is inherently valuable in the paper/fiat dollar?" To understand money is to understand what function it serves and how it might best serve that function. Money must be SOMETHING! The history of man is a tale of utilization of resources and division of labor to enhance our individual and collective odds for survival with time to spare to contemplate our existence and the universe. Money facilitates individual survival as a store of wealth (for "wealth" read "excessive productivity") and also facilitates the division of labor. Thousands of years of human struggle has found that which is uniquely best suited to be the "something" that is money. It HAD to be something...turns out to be gold...for the reasons FOA explained. Modern times will show us how to best utilize gold (again!) to fill its monetary role for modern transactions. We are well beyond the days of gold coins for circulation. Look to the Euro for the answer, and subsequent evolution of the Euro or that of a competitor currency. Gold WILL be the foundation! In the near future I see holding money to be as nearly holding gold. But during this brief transition phase from our current fiat money systems, holding money will be as nearly holding paper, while holding gold will be a joyous education in the meaning of VALUE.

got value?


nugget101 (10/22/98; 13:22:04MDT - Msg ID:719)
More on Russian coins
Russia to Mint Gold Coins from Reserves
MOSCOW, Oct. 09, 1998 -- (Reuters) Russia plans to boost its budget and guarantee bank reserves by minting gold coins from central bank reserves, the leading business newspaper Kommersant Daily said on Friday.
The newspaper, which cited unnamed sources in the government and central bank, said that according to a draft government resolution, 20 tonnes of reserves would be used by the end of the year but up to 200 tonnes could be used in all.

The Russian government is scrambling for funds to finance a budget deficit of almost 100 billion rubles planned for the fourth quarter of the year.

The plans call for the issue of coins of six grams of 583 purity with a 10 ruble value as legal tender but a metallic value of 1,000 rubles, and coins of 15 grams of 999 purity with a face value of 100 rubles and a metallic value of 5,000 rubles.
The paper said the first stage of the project would bring the budget 5 billion rubles. Of this, 3 billion would be used to guarantee private bank deposits, 1 billion to pay wage arrears and 1 billion to pay off government GKO t-bill debts.
Kommersant said the decision had been taken as gold was the only item of value in the central bank's reserves.
But it could not be sold abroad for fear of flooding the market and could not be used as loan collateral abroad for fear the gold would be seized to pay debts. The paper added that the chance of the resolution being approved was "extremely high."
Russia in mid-August froze its once booming GKO t-bill and OFZ bond market pending a restructuring and is now more or less shut off from financing via the international capital
markets.
The head of the central bank's precious metals operations said in September that the bank had gold reserves of more than 500 tonnes.

Unomas (10/22/98; 12:15:48MDT - Msg ID:718)
Gold Is Trotted Out As Russia's Savior
Proposals Hint at Return to Old Standard


------------------------------------------------------------------------
Agence France-Presse
------------------------------------------------------------------------
MOSCOW - With the ruble discredited and vulnerable, Russian authorities have begun to float radical proposals to put gold back at the heart of the national economy, using reserves to underpin and even partly replace the flagging domestic currency.

Well aware that printing rubles to finance a growing budget deficit will further undermine the currency, officials have introduced several ideas, one of which involves minting a bullion coin that would literally be worth its weight in gold.

Some analysts have cautiously welcomed the mobilization of gold to defend the ruble. But others warned that the move would not provide a long-term solution for Russia's predicament.

The problem for the government revolves around the huge discrepancy between the amount it plans to spend and the funds it can realistically bring in. Prime Minister Yevgeni Primakov's government plans to spend 130 billion rubles ($7.67 billion) in the fourth quarter, having pledged to pay off back wages and keep up with foreign-debt repayments. Income, however, is penciled in at just 70 billion rubles.

As Moscow has shattered the trust of borrowers with its debt default in August, its options for financing the deficit are painfully limited. Although an International Monetary Fund mission was in Moscow on Wednesday for talks with government officials, analysts have said further loans are unlikely to emerge, at least this year.

Against this inauspicious background, the government has increasingly referred cryptically to "mobilizing internal reserves" to break its financial vicious circle.

A regional governor suggested early this month that Russia return to the gold standard and reintroduce the 1920s-vintage "golden ruble," under which the Russian currency would be tied to the central bank's gold reserves. Some analysts have scoffed at this option.

"The gold standard went out in the 1930s, and I don't think a single country can go back," said a London-based gold specialist, Tim Green. "It's not a good idea."

But the gold-standard idea has since given birth to another. Last weekend, a senior official from Gokhran, the state precious-metals repository, said plans were advancing to use gold and silver reserves to mint new coins.

The mint, the argument runs, would help authorities pay off the wage backlog without inflationary money-printing and would restore trust in a ruble-denominated store of value. The central bank has yet to declare its position on the coin issue, but many economists are skeptical.


------------------------------------------------------------------------
http://www.iht.com/IHT/TODAY/THU/FIN/gold.html

Unomas

USAGOLD (10/22/98; 09:49:22MDT - Msg ID:717)
To FOA and ALL: Quick Though on Gold Auctions
I remember those U.S. Treasury/IMF auctions of the 1970s. We entered those times very concerned and dreading what the auctions would do to the price, but at each auction the price was higher until by the end we had single bidders trying to buy the entire lot! It was a happy surprise to all of us in the market back then, and a lesson filed for future reference. When it comes to gold sales, the threat has more value than the actual deed, don't you think? It can be raised time and again with appropriate frothing in the press. An actual sale is a one time event that becomes anticipated, planned for and ultimately diluted in effect.

Friend of Another (10/22/98; 09:43:37MDT - Msg ID:716)
All:
SteveH & Nugget101, I will reply a little later. Have to take care of a few things. Also, have some E-mail replies.
thanks FOA

nugget101 (10/22/98; 09:34:18MDT - Msg ID:715)
FOA - Your insight please
In an earlier post you said:
<As I mentioned to someone else, I say to you: We will continue
with a paper money system, it's needed for efficiency and it's necessary in complicated
trade. So do the same as others, get past it and get over it. Many world leaders have come to the same pragmatic conclusion. That does not mean that gold can not be integrated into the financial landscape, it will. So, the next time you see gold going down in dollars, remember, it's just a old currency from the past that will devalue any present money that
fails to properly denominate things. >

Are you saying that a fiat currency will be used alongside an intrinsic value currency like gold or gold/silver backed money? Or will a fully gold back currency (ie: warehouse receipt) emerge that will be used as a pragmatic tool to facilitate trade?
Also, won't the people follow "good" money and therefore naturally push "bad" money out of the system. Therefore a fiat currency wouldn't be tolerated for long if there was a value-backed alternative. I don't care if it is backed by barrels of oil, salt or gold; if there is an alternative to a pure paper currency it will naturally push out fiat money. We saw Russia's immaturity when they thought that could just crank up the presses, until someone realized that a coin backed by physical assets represents greater stability.
On another tangent, doesn't fiat money represent the loss of the individual to own personal property? Is that why nation-states and socialist individuals like fiat money, because it gives them power over property and makes the individual beholden to government?
Again, on a more basic level. How does leasing gold raise dollar value thereby increasing liquidity?

Thanx

Friend of Another (10/22/98; 09:26:53MDT - Msg ID:714)
Reply to: Turtle
Sorry Turtle, my mistake. That web site takes you to another (also interesting)place. Go to http://www.euro-emu.co.uk/ then to "Soapbox archive" to find Mr.Ludlow. This site has a world of discussion about the Euro. USAGOLD: Michael, you may find this some very good reading, also.

Friend of Another (10/22/98; 09:08:07MDT - Msg ID:713)
REPLY To: Goldfly (10/21/98; 21:46:21MDT - Msg ID:708)
Goldfly, Your Msg. #708 was a great theatrical read! All the components of a good
drama are revealed as the act unfolds in an opulent tent somewhere in the lost desert.
We need no tickets for this play as this road-show is free and coming to every
neighborhood, soon!---------------------------------------------- Your words:
"WHAT -other than supply and demand- MAKES GOLD VALUABLE? What is so great
about gold?"----------- Well, that question goes deep into a human need for wealth that
represents ones life long efforts. We could ask the same question about houses, cars,
clothes, art work and the like. Hell, people work, they produce and in exchange they want
items and things. These possessions, in a surreal way are part of your life experience.
Humans all die, but before that, we want to see our Stuff??!! They lord over it, protect it
and try to keep others from stealing it.-------------------------- Look at what happened in
Paris when in WW2 the Germans came marching in. You didn't see those boys grabbing
any French currency did you? They took art work in the form of paintings, gold,
diamonds, RARE COINS, collectors items of every nature. What made those Things so
valuable? Besides supply and demand. ------------------Around the same time the American
government was moving much of it's art work out of the White House and storing it in the
Biltmore Estate (the Vanderbilt castle) in North Carolina. Why? Just because they thought
that Washington may be attacked and these National Treasures night be lost? Why were
these Treasures in need of saving but the dollar cash that was used to denominate them
was not? ----------------------------------This takes us right to the heart of the question.
What do you, as a real person see as value, the items or the dollar price that represents
their value? Is it the dollar itself that has the value or is it the "Ability Of The Dollar To
Act AS The Denominator Of The Value Of An Item" that creates the need for this
currency? After thinking a while, most people would answer that it is the Denominator
Action that makes this currency Money! ---------------Moving further along this line of
reasoning: I now ask in another context of your question "What makes dollars so special"?
-----------------------If money derives it's value solely by being an asset denominator for
use in commerce and trade, then why not gold? Indeed, in it's purest form money is any
real thing. When individuals are able to trade with each other using actual items they grow
or produce, nothing is lost in the transaction. Commerce is complete and the trade is final.
Goldfly, you already know the reason gold was used for so many centuries as money. It
being a real thing that could be divided into manageable bits for trade. People came to this
conclusion, perhaps a thousand years ago. It's only the last sixty or so years of paper use,
that modern analysts proclaim as the history of money! They delude the public by not
including the fact that our current new form of paper money has precious little historical
precedent. The facts are that gold works as money and it works very well. Unfortunately,
the modern, high speed world we live and trade in requires ink on paper and digital bits to
extract the efficiency of the system. This is truly to everyone's benefit, for as the earth
becomes more crowded, we need to be efficient in commerce. Gold can and will work
very efficiently in the coming financial framework. It is a money function for the 21st
century that will exploit and expose the wasteful ways of the current financial system.
------------------------------ As I mentioned to someone else, I say to you: We will continue
with a paper money system, it's needed for efficiency and it's necessary in complicated
trade. So do the same as others, get past it and get over it. Many world leaders have come
to the same pragmatic conclusion. That does not mean that gold can not be integrated into
the financial landscape, it will. So, the next time you see gold going down in dollars,
remember, it's just a old currency from the past that will devalue any present money that
fails to properly denominate things. --------------- To answer your question: It is the
history of gold being used as money that makes it special, not the current supply and
demand. In the same way that rare paintings have a history of being useful in the life
experience of humans, so too do we hold a life passion for gold. thanks FOA








SteveH (10/22/98; 08:50:09MDT - Msg ID:712)
Dec. gold $294.40
Gold opened lower today but is in the green since then, meaning a steady climb -- so far. Dow is down -79.81 so far. Gold contract volume at open was over 200; now much lower.

For Another and FOA. I have read your words. The premise or a priori is "Big money is buying physical gold AND a secret agreement (no longer secret) between one or more oil countries set in motion $$$ and gold (valued at $1K per ounce) in exchange for oil. Further the gold contracts, if they cashed out, have no gold to back them. Further, the Euro will be accepted instead of gold for oil thus boosting the POG and the Euro and the price of oil in dollars." Am I missing anything?

turtle (10/22/98; 07:34:40MDT - Msg ID:711)
P Ludlow
FOA: Is this reference an answer to someone's question? I looked at Amazon.com and there are a number of apparently rather scholarly books on European monetary organization and policy edited by Peter Ludlow but nothing called The Birth of the Euro-- more information please?

Friend of Another (10/22/98; 06:43:03MDT - Msg ID:710)
The Birth of the Euro: by Peter Ludlow











THE AUTHOR

Peter Ludlow is Director of the Centre for European Policy Studies, Brussels. http://www.euro-emu.co.uk/aboutus/thinktanks.shtml#ceps

In T.S. Eliot's poem, The Journey of the Magi, the wise
men asked about the journey that they had undertaken
together:

were we led all that way for Birth or Death?

To judge by much of the comment that has appeared on
EMU in the last few weeks and more particularly over the
last weekend, many of those best placed to know seem
similarly confused about what it is that is happening.

The pessimists come in various shapes and colours. They include City of London
pundits, German professors and, by no means least, ardent Europeans. Despite the
very different motives of those involved, their message is remarkably similar. Unless
the European Union does not rapidly cobble together a Political Union, EMU can
only end in disaster.

Who then is to be believed- those who rejoice at a birth, or those who prophesy
death?

It would be tempting simply to dismiss the sceptics with the observation that those
who have been so often wrong about EMU in the past have little claim to credence
when they pronounce on the future. Contrary to their expectations EMU is being
launched on time and with a broad membership. Although, however, a little more
humility would not be inappropriate on the part of those who have been proved so
spectacularly wrong, it would be mistaken for those of us who always argued that
success was likelier than failure to crow too soon or too loudly. The fact is that EMU
is itself a journey into the unknown.

That said, there are important clues which point to what it might mean- and, with still
more strength, to what it does not mean. To begin with the latter. One of the more
obvious explanations of the errors of those who have said that EMU would not
happen - and who now say that it cannot last-is that they have looked at Europe with
eyes conditioned by the experience of mature nation states, and more particularly
the United States of America. Hence the dreary incantation time after time of the
phrase 'history shows'. The past that we need to look at as a guide to the future is
not however the history of America or even Germany, but the history of the EU itself.
The future will doubtless hold many surprises as EMU takes root, but the political
and economic parameters in which the experiment will be worked out are relatively
well defined.

In economic terms, the basic point of reference is the Single Market, which though
by no means perfect, is a reality of growing- and irreversible- significance to
governments, business and private individuals alike. Monetary Union may not be a
necessary corollary of the Single Market, but it is certainly a logical one. Almost
every sensible list of what EMU is likely to entail in economic terms turns out on
closer inspection to be made up of developments which the Single Market already
implies. The Monti initiative on the need for greater coordination and cooperation in
tax matters is a case in point, increased transparency in pricing another.

EMU will undoubtedly have an important economic impact in area after area, and
there may well be - indeed there certainly will be- important policy initiatives to meet
unexpected situations. The policies in question will however work with rather than
against the grain already established in decades of experience with a Customs
Union and, more recently, a Single Market.

A similar line of argument is germane when we try to assess the likely impact of
EMU on the EU's system of government. The first point to emphasise is of course
that it is a system of government, even if it is very different in character from
government systems at national level.For the purposes of the present discussion its
most important features are three. Firstly, it is highly decentralised. Most policies
and laws are implemented through national administrations,who are also the key
decisionmakers at the 'supranational' level.

Secondly, its central institutions dispose of a budget which is minute compared with
those of other 'central' governments, and of no significance in macroeconomic terms,
except for some of the smaller, poorer countries who are amongst its principal
beneficiaries. Thirdly, to achieve its ends European government relies principally on
rules, whether in the form of laws, which have primacy over national law, or
discretionary codes of conduct, which because they are jointly adopted and
supervised, bind member states to certain standards of behaviour.

The making of EMU is a striking example of the adaptation of a major new project to
the underlying realities of this well-established system.

Monetary policy is single and central. The key decisions will however be taken by a
Council in which the governors of the national central banks far outnumber members
of the permanent executive.

Fiscal policy remains firmly in the hands of the member states with the result that
with the exception of a relatively minor sop to Spain in the form of the Maastrict
created Cohesion Fund, the size of the EU's central budget has not been altered with
the approach of Monetary Union. The buck stops therefore with the member states,
which is where, by common consent, the member states want it to stop.

Rules, and more specifically the Stability Pact, will do for EMU what big government
does in the nation states.

If therefore we ask what the impact of EMU will be on the EU's political and
governmental system, the most reasonable expectation must be that the institutions
that we currently have will adapt to the new reality in ways that are consistent with
their present ways of operating. They have indeed already begun to do so.

Politically therefore, as economically, EMU seems likely to mean more of the same
rather than a revolution. All of which is highly relevant to the question concerning its
durability. EMU fits well into the overall political design of the new Europe .This is not
the creation of one, two or even three men. Political leaders played their part. But the
dynamics- and therefore the inherent strengths- of the enterprise are not dependent
on the survival of a few outstanding figures. Every participating state, and even those
that are not yet members, has an immense stake in its survival. The chances are
therefore that it will survive, even if, like every political arrangement, it has to be
adapted to unexpected developments.

Where then, finally, does this leave the British, the Danes and the Swedes who,
unlike the other outsiders, the Greeks, had not made any firm commitment on EMU
membership. The answer is more complex than is sometimes suggested. EMU is,
as this note has argued, so solidly grafted on to an economic and political system of
which the reluctant three are effective and valuable members, that the danger of a
major split in the EU in the short term should not be exaggerated. The outsiders will
not be part of the new EU-11 caucus. They will however be in ECOFIN. Still more to
the point, the insiders have absolutely no interest in pushing, or even allowing, them
to pursue policies that diverge from Euro-norms. In the short term, therefore, the
British and the others will probably suffer no more inconvenience than a small
interest rate premium and the uncomfortable awareness that if they do make
mistakes in macroeconomic management, they are now more directly exposed to
market discipline than any of their EU partners.

So far so good. More significant problems could emerge if entry was postponed
indefinitely. EMU is bound to change the way in which its members view each other
and the outside world. Once Euro coins circulate there will also be an important
psychological impact on the citizens of EMU states. Finally, and by no means least,
EMU is yet another stage in the transformation of power politics within Europe and
beyond. Over time, therefore, the dangers of remaining outsiders will grow rather than
diminish.

These dangers are particularly important for the British, who because of their size
and continuing importance in international relations, have always been more
vulnerable to the political revolution that started in Europe almost fifty years ago. The
events of this week-end demonstrated yet again how far even the pro-EU British
administration of Tony Blair is from understanding EU politics. President Chirac was,
needless to say, the chief culprit. The remark of the Austrian Chancellor that he had
just received a very useful lesson in how not to run a European Council is however an
indicator of how far Blair's own reputation suffered. His EU colleagues are still
fascinated by him. As the Prime Minister of the fourth poorest country in the Union
and an EMU outsider, however, he will have a hard task over the coming months and
years to transform admiration for his style into a willingness to regard him as any
more than an exotic and unreliable half-member of the club.

Friend of Another (10/22/98; 05:59:57MDT - Msg ID:709)
NEWS!
BRUSSELS, Belgium (October 21, 1998 10:03 a.m. EDT http://www.nandotimes.com) -- The
European Union economy remains an "island of stability" in a turbulent financial world
but will nevertheless expand more slowly than expected next year, the EU said
Wednesday.

The predicted slowdown is likely to increase calls for European nations to boost their
economies by increasing investment or cutting interest rates, already at record lows.
EU leaders are expected to discuss their response at a weekend summit in the
Austrian lakeside resort of Poertschach.

The 15-nation bloc is enjoying its greatest economic growth in a decade, 2.9 percent,
and will continue to do so until the end of the year, the EU said.

But then the financial instability in other parts of the world, especially Russia and Asia,
will kick in, narrowing the EU expansion to 2.4 percent next year. That's down from the 3
percent predicted in March, the EU's last forecast.

"In 1999, the international crisis will take a toll, albeit limited," the EU said in a
statement. "With the renewed pickup of growth and trade at the world level in 2000,
there is again scope for a reacceleration of economic expansion in the EU."

Assuming the world economy bounces back in 2000, the EU said its economic growth
should then recover to 2.8 percent.

"The overall picture is favorable. Economic growth in the EU is expected to remain
strong ... driven essentially by internal consumption and investment," said the report
from the EU's executive body, the European Commission.

The forecast showed Europe's stubbornly high unemployment falling slightly faster than
predicted in March. The jobless rate is seen at 9.5 percent next year, dipping below 10
percent for the first time in the 1990s.

The EU said tough budgetary policies imposed in recent years to prepare for the launch
of the euro as the common currency of 11 EU nations helped protect the bloc from the
turmoil abroad.

"The euro zone forms an island of stability." Interest rates are already at record low
levels and inflation, at 1.6 percent this year and 1.7 percent next year, is "historically
low."

Among the 11 nations that plan to switch to the euro on New Year's Day, growth is seen
at 3 percent this year slowing to 2.6 percent in 1999.

In Germany, the EU's largest economy, growth is expected seen peaking at 2.8 percent
this year then dipping to 2.2 percent in 1999 and 2.6 percent in 2000.

Ireland is set to continue as the EU's fastest-expanding economy with growth at 11.4
percent this year, almost four-times the EU average, before slowing to 8.2 percent next
year.

By PAUL AMES, The Associated Press

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