Welcome to the USAGOLD Gold Discussion Archives. Looking to buy gold coins and bullion? 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. To join the debate request a discussion password here.
The opinions posted by all guests at this forum are expressly their own and do not necessarily represent the views of the management or staff of USAGOLD - Centennial Precious Metals. The hosting of this forum shall therefore not be construed as equivalent to endorsement by USAGOLD - Centennial Precious Metals of any of the opinions posted here.
ARCHIVED DISCUSSION FROM 12/22/2006 All times are U.S. Mountain Time (Yesterday's Discussion.) Goldilox (12/22/06; 20:03:07MT - usagold.com msg#: 150436) Consumer and Third-world resource nations @ frosty1,I have no doubt that your inflationary scenario is a valid option, but you didn't read my post carefully before responding. I said the consumer "owns" 5% of the wealth, but specifically mentioned that it amounted to more than 5% of consumption. However, I only believe the consumption game to be just one of the bubble troubles of the current system. It is designed with only ONE purpose in mind - to maintain the elite advantage for those who currently rule by it. Money is power, ultimately much more important than wealth, as it carries with it the privilege of "changing the rules" mid-game.When the consumer's "credit" is played out, there will probably be a new resource game instituted in its place, most likely an even more directly socialist "hot potato" betwixt goobermint and the high and mighty "ownership society" as Dubya so fondly refers to them. The serfs don't rule the elites. The closest they have ever come is the French Revolution, which merely paved the way for Napolean (whose rise to power was not so unlike Hitlers).Cheney tells the tale when he says, "deficits don't matter". All that matters is "who owes whom". His long-time assn with the IMF-IMS money machine has taught him that from drugs to arms, mortgages to new cars, "the first one's free, then I OWN your ass!" Cheep loans are no different than drug fronts to the junkie. When the loan effects its expected instability, the borrower will be back for more, with whatever they have of value for collateral. Thoreauly (12/22/06; 19:33:25MT - usagold.com msg#: 150435) @ frosty 1 http://www.financialsense.com/fsu/editorials/schiff/2006/1222.html Something to sip on. MK (12/22/06; 19:24:05MT - usagold.com msg#: 150434) Sierra Madre I share your fears about Iran. As do many Americans. frosty 1 (12/22/06; 17:58:15MT - usagold.com msg#: 150433) Goldie..pplease,your killing me! You will have me believe that the U.S. consumer only matters about ...hmm ..say 5% ,to the game??come away from the charts and smell the common sense!If the consumption game is not allowed to continue,the game is OVER.Did you here me? OVER!!For just that reason,the game will continue till the(tipping point).The T.P. is still years off.I ask you ,who will do the job the U.S. consumer has been doing for the world economy? As the rules exist today, there are no others willing to step up to the consumption plate.In the future...the rules will change, but now we still have the option of printing the hell out of our world reserve currency.This WILL come to pass.The question is how do you get the worlds best consumer to keep buying China?The only way that will happen is if you give him easy home equity money.A short term answer...yes..but the one you know they will make available.They do have the power to do this right now. Tell me where I am wrong....All doomer housing articles are not valid, as the dollar DUMP has not played out yet.Only after the revaluation can one see the true value of something REAL...As in Argentina 'so will the U.S. housing value go.Remember..3 peso before debacle,now worth 1 peso in the aftermath.This happened in a VERY short time span.Housing prices dipped but soon shot back to pre-debacle levels.frosty1 USAGOLD Daily Market Report (12/22/06; 15:13:59MT - usagold.com msg#: 150432) Page Update! http://www.usagold.com/DailyQuotes.htmlThe Daily Gold Market Report has been updated.If you are considering investments in gold we invite you to request our free introductory information packet detailing the products and services offered by USAGOLD ~ Centennial Precious Metals. We welcome your inquiry and look forward to working with you.FRIDAY Market ExcerptsDecember 22 (from MarketWatch, Reuters) -- Gold futures closed higher Friday and even after falling over the past two sessions, prices finished the week with a gain of more than $3-an-ounce as traders showed reluctance to sell the precious metal ahead of the Christmas holiday.Some participants added to positions after U.S. economic data bolstered the case for an interest rate cut, analysts said. "I think there's still a lot of speculative length in the market in both gold and silver ... and you do still have participants who want to add to positions," said Mike Guido, director of hedge fund marketing at Societe Generale."But we're right in the middle of the holiday season and the participation rates are very low. The volumes and liquidity are just not there," said one gold dealer.Precious metals participants left early for the three-day Christmas weekend. COMEX resumes metals trading on Tuesday. Most traders in the London bullion market also left early and London traders return on Wednesday."We can expect prices to be jumpy until the start of 2007, with a slight upward bias during next week's abbreviated trading," said Peter Spina, chief investment strategist at GoldSeek. "Dips in the metals are finding buyers and the price seems to come right back up after any minor selling," he said.And "as long as key technical supports are not violated, the market should continue to hold this floor," he said.February gold closed up 70 cents at $622.30. The contract had lost $3.80 over the past two sessions, but it still finished $3.20, or 0.5%, above last week's closing level of $619.10."As we close out this year, there are many unresolved issues still lingering in the global background picture," said Kitco's Jon Nadler, an investment-products analyst, noting concerns related to North Korea and the Middle East. And "on the economic front, schools of thought are equally divided on whether a serious slowdown is in the making or if inflation and overheating are the more imminent dangers," he said.Given all that, "we remain of the opinion that an unwelcome combination of both forces may dominate the better part of 2007, and that such conditions will be superimposed upon a still-deteriorating U.S. dollar," he said.---(see url for full news, 24-hr newswire)---- Boilermaker (12/22/06; 15:07:32MT - usagold.com msg#: 150431) MK 150425 Well put and Amen!The Hank and Ben troupe to China would be like my banker coming over to see me after learning I had invested in precious metals. Here's how it would go;Banker;Ah, dear Boilermaker, I have come to explain some things and show you how to emerge from the dark ages of gold idolatry into the bright sunlight of financial prosperity.Me; How nice of you. Thank you and come in.Banker;Now let me show you this little presentation I have loaded on my laptop to explain to you the magical world of compound interest and fractional reserve banking.................(finish) Would you believe that your little stash of gold, lying unused and unproductive in a dismal box buried in some God forsaken place could be brought to blossom into a large new piece of Americana? If you are a real patriot you will release this mouldering relic of the past and give new life to yourself, your family and countless others. Of course I would want you to keep a few coins as keepsakes of the long dead past. What say you!? Me;I don't think so.Banker;My dear man, what possible reason can you have for refusing to do what makes so much sense? Me;A knowledge of history and my father's advice on how to survive the next depression. Banker;Depression? You're planning for a depression? The economy is now managed by the Federal Reserve to regulate inflation, eliminate depressions and maximize growth. Have you not heard about the Fed? Me; Yes. It has allowed our country to become owned or sold by the bankers. Bankers rule is predatory. They feed on many small people to enrich their own and the politicians who facilitate the public plunder. Banker;Good Lord man, you must have been lurking on those crazy internet sites that talk about world collapse and financial calamity!Me; Yes.Banker;Well, I've done my best but here's my card and call me when you come to your senses.Me;Merry Christmas Banker!! mikal (12/22/06; 14:37:22MT - usagold.com msg#: 150430) Earthlings' economy rates notice http://www.atimes.com/atimes/Global_Economy/HL23Dj01.html RISKY BUSINESSGlobal economy faces a dangerous yearBy Jephraim P Gundzik - Asia Times - Dec 23 | Excerpts:"Rising inflation and falling home prices are likely to push the US economy into recession by the second half of 2007. Gathering economic weakness, combined with negative real yields on US Treasury securities and growing political pressure to weaken the dollar will lead to significant dollar depreciation against most currencies. Economic growth in Asia, Europe and Latin America will also weaken in 2007. Slowing global economic growth will be very bad news for equity markets around the world. Dollar depreciation and rising international energy and grain prices will be good news for precious metals. Impact of instability on commodity prices While global geopolitical instability has ratcheted higher every year since the terrorist attacks on the US in September 2001, global asset markets have hardly responded. In 2006, many of the world's stock markets, including America's, reached record highs. As geopolitical instability increases further in 2007 the probability of major disruptions in energy supplies will grow."Mikal-- 2007 on the planet earth. Sometimes the author comments less than predicts, such as geopolitical events, Aside from subjectivity, there is interesting oil analysis, good currency insight and more with the aim of summarizing global markets for 2007. And there's explicit mention of "precious metals", so all is not doom. ;)"With the notable exception of Turkey, economic growth in Europe should suffer the least from slowing US economic growth in 2007. Monetary policy in the EU will tighten further, underpinning currency appreciation. Economic interdependence between EU members will insulate the region somewhat from slowing economic growth in the rest of the world. Russia will benefit from rising commodity prices. Despite more promising economic prospects, equities across Europe will follow US equities in a sharp correction. Bond markets around the world are likely to be very volatile in 2007. Rapidly changing economic growth and inflation expectations will produce wide price swings. This volatility will be led by US bonds, which will see falling yields in early 2007 be replaced by rising yields in mid-2007 as inflation increases and foreign capital flight accelerates. Spreads on emerging market bonds will widen with falling equity markets around the world. Commodities, including energy, grains and precious metals, will probably perform much better than traditional investment assets as both investors and central banks speed diversification."Mikal-- You can take issue with the details but much of this is old news. A good compliation of insights nonetheless, with an obvious absence of criticism of bankers when blaming homeowners for overconsuming "easy credit".Some of the exacting predictions and timing, are highly speculative, and perhaps conservative or understatementsof a greatly tangled web. Gold looks better and better in the face of it. The author recommends gold at the very beginning of this essay. Sierra Madre (12/22/06; 14:02:51MT - usagold.com msg#: 150429) Thank you very much, MK! Thank you for your excellent article on the US/China relationship!I have been away for a week sans Internet but this piece of yours is all the reading I need have done in the interim.Sir, I thought earlier today that perhaps the Paulson/Bernanke visit might have also dealt with other matters, of a military nature: namely, sounding out China with regard to a pre-emptive strike (another one!) on Iran after the UN Sanctions to be voted on today fail - if they do fail - because of a veto by China or Russia.At this juncture, when the overtures of the P/B team failed to sway the Chinese leadership, I shudder to think that the US leadership, influenced by AIPAC, may decide that since all is lost, there is no option but a strike on Iran with all the consequences, however terrifying they may be. Nothing but fears on my part, but I think that desperation is a very poor counsellor for a cornered Emperor, and I refer to GWB, not a Chinese Emperor.Let us hope these fears DO NOT materialize! SIERRA TownCrier (12/22/06; 12:50:22MT - usagold.com msg#: 150428) MK on China http://www.usagold.com/analysis/kosares-20060929.html For some of our newer readers, "This concludes my series on China," may leave you feeling in the lurch... whatever that means.To bring you up to date, the hyperlinked URL given above will take you to MK's previous commentary on China, within which you'll find yet another hyperlink which will take you to the original NewsGroup commentary (wherein there will be a link to the FT article that kick-started it all.)Happy browsing!R. Chris Powell (12/22/06; 12:43:11MT - usagold.com msg#: 150427) Ecuador bonds tumble amid talk of default http://www.bloomberg.com/apps/news?pid=20601087&sid=ak87KbrTbFyk&refer=home By Lester Pimentel and Helen MurphyBloomberg News ServiceFriday, December 22, 2006Ecuador's bonds had their biggest-ever decline after the incoming finance minister said the government may restructure its $11 billion debt in a way similar to Argentina, which included a $95 billion default in 2001. Ecuador's benchmark 10 percent bonds due 2030 tumbled after Ricardo Patino said yesterday president-elect Rafael Correa's administration will meet with bondholders next month to discuss a plan that "may be more like what happened in Argentina."Correa, meeting yesterday in Caracas with Venezuelan President Hugo Chavez, said he "won't hesitate" to default on debt payments if he deems spending on social programs more important. Correa also has vowed to strengthen trade ties with countries such as Argentina and Brazil, governed by socialist politicians, rather than the U.S."Slowly the market is starting to realize that they mean what they say," said Alberto Ramos, a senior Latin America economist with Goldman Sachs Group Inc., of Ecuador's leadership. "This is an ideological view. This is about a willingness to pay."The yield on the bonds surged 184 basis points to 13.32 percent at 1 p.m. in New York, according to JPMorgan Chase & Co. A basis point is 0.01 percentage point. The bond's price, which moves inversely to the yield, fell 11.75 cents on the dollar to 76.25 cents, its largest decline since the government issued the security in 2000. The perceived risk of owning Ecuador's bonds surged today. Credit-default swaps based on $10 million of the nation's U.S. dollar-denominated bonds jumped 35 percent to $950,000 from $705,000 yesterday, according to data compiled by Credit Market Analysis in London. An increase in price indicates deterioration in the perception of credit quality; a decline suggests improvement. Correa won a Nov. 26 presidential runoff election after advocating that his government cut ties with international lenders such as the World Bank and consider forfeiting or delaying what he called "corrupt and unfair" debt payments. Correa takes office on Jan. 15. "If our moral duty to provide health, education and housing to our people impedes us from paying debt, we won't hesitate two seconds," Correa said at a news conference with Venezuela's Chavez. "We don't rule out a unilateral moratorium on our external debt."Argentina's default was the biggest in history by a sovereign government. Last year the country completed restructuring $104 billion of bonds. Neighboring Uruguay exchanged $4.9 billion of its debt for longer-term, lower-interest securities in 2003, a move that Standard & Poor's also classified a default.Under Argentina's 2005 debt restructuring plan, the government offered to compensate bondholders with new debt worth about 27 percent of their initial holdings, about half the recovery rate typically offered in government restructurings. Patino said Ecuador will talk to all creditors, including bondholders and multilateral agencies, and may announce a restructuring in February. Chavez said Venezuela, which bought $25 million of Ecuadorean bonds last year, may buy more of the country's debt. Argentina has raised about $4.5 billion by selling bonds to Venezuela since early 2005, helping it avoid turning to U.S. and European markets after its 2005 debt restructuring prompted several lawsuits from bondholders in international courts. "We could support Ecuador just like we have supported Argentina," Chavez said during the news conference. The average spread on Ecuador's dollar bonds today rose 159 basis points to 834 basis points or 8.34 percentage points, the highest since June 9, 2005, according to data compiled by JPMorgan. Spread, or the amount of extra yield a bond offers over U.S. Treasuries, is a barometer of investors' confidence about being paid on time. Larger spreads mean investors are less confident and demand more extra yield to compensate them for the risk of default, relative to risk-free U.S. government debt.In 1999, Ecuador defaulted on $6.5 billion of debt. The 10 percent bond due 2030 is one of the two securities the government gave investors during a restructuring in 2000 of the defaulted securities. Survivor (12/22/06; 12:39:20MT - usagold.com msg#: 150426) China, Zimbabwe, and US Dollars And so the US dollar becomes the "hot potato" of world currencies. "Hot potato, hot potato. Who will take the hot potato?"If they can't sell it, they may as well give it away. These "loans" often end up being gifts. - Survivor MK (12/22/06; 12:09:37MT - usagold.com msg#: 150425) Chris Powell, Thoreauly. . . With the failure of the China mission, we have crossed a modern economic Rubicon. The die is cast. http://www.usagold.com/germannightmare.html Note: This modified post appears out of sequence and might be confusing to our visitors. Trying to deal with the snowstorm here in Colorado, a sick dog who had to go to the vet, and get that post out didn't work out too well for me. I didn't take the time to develop the second half of the post which dealt with an inferred sale of gold simultaneous to the end of talks in China. It needs work and I'll try to come back with something a little more solid than an opinion based on supposition. The rest of the piece stands as is. Many thanks for the kind comments which followed. Please excuse the inconvenience of seeing this post out of sequence. The original post number was #150410. Happy holidays to all. . . ._____________"If history teaches anything, it is that government cannot be trusted to manage money." The Nightmare German Inflation, Scientific Market Analysis____I read the Galbraith article you posted with a great deal of interest. As most of you already know, I consider the China/US relationship -- flawed as it is -- the Achilles heel of the world economy. Now, I believe, with the failure of the Paulson-Bernanke mission, the arrow has found its target. Gold ownership globally, as a result, is not just an important aspect of the private investment portfolio. For reasons outlined below, it has become essential.The China visit by a large and influential American entourage marks a watershed. Now, certain long proscribed outcomes are not simply assured in some obscure future; they are immediate -- launched and in progress. There will be no turning back. In fact, there has been no turning back for a very long time. The failure in China confirms what many of us have suspected for some time now. China and the United States have trapped themselves in their own policies. There is no way out.The visit will be a subject of discussion for historians probably for generations. Ultimately, in my view, that discussion will revolve around what role the mission played in the early 21st century international economic maelstrom which followed. It will question why no one in power on either side did anything substantive to alter the outcome. Those of you who are students of history will remember Barbara Tuchman's book on how World War I was actually launched (The Guns of August). You will recall that she concluded that the war began not so much because anyone or anything actually "started" it. The war began because no one tried to "stop" it. Now, almost 100 years since August, 1914, we have come to a similar place but this time in the less violent arena of modern economic history.Let me come to the point:If China is going to more or less allow its currency to decline in purchasing power in concert with the U.S. dollar (which seems to be the final outcome of the meeting), the other major trading nations will take their cue from this policy and force their currency to depreciate as well. Essentially, they have no choice. Only Europe, at this time, is attempting to increase demand for its currency (by raising interest rates) while all others head in the other direction, that is, the direction of deliberate currency depreciation and inflation. All currencies, whether or not they make half-hearted attempts at letting the dollar go down, will depreciate markedly against goods and services nearly in concert. (I expect the European position to change next year as pressure builds from the left of the political spectrum and finance ministers step up their attacks on the European Central Banks, and by proxy, the union itself.) The net effect of these policies will be international inflation and in some places, most notably the United States, double digit inflation -- at least in the beginning. It could get much worse from there if the dollar becomes anathema in the portfolios of the world, and, as the saying goes, a crowd gathers at the exit. We got a dose of the future last week when out of the clear blue wholesale prices jumped 2% in the United States for no apparent reason. That was quickly swept under the carpet by Washington and Wall Street and the markets hardly reacted. I believe the reaction, though meager and, I am certain, heartening in certain sectors of the financial markets, has only been delayed. Last week's inflation numbers, however, are only a luke warm warning of what's to come. If allowed to go unchecked, the natural progression, pushed by the U.S. and China's deadly tango, would be to ignite an international hyperinflation as each nation attempts to cheapen its currency against all others in a mad game of one upsmanship -- a deadly game of economic Russian roulette which builds to critical mass and a final core meltdown. The United States, in this scenario, might lead the way on inflation but it will be far from alone. All the world's citizens should be gold owners, and I do not exaggerate by saying that.For those with a penchant for historical example, the Weimar experience will serve as a educational template and good study of how quickly and inexorably things can get out of control. What we are about to experience will be unprecedented historically. For the first time in the planet's history, the scale and implications are global. For those who wish to understand how these things tend to work out, an interesting link has been provided at top. (To give you an idea what people are thinking, this page is among the most widely linked USAGOLD pages on the web.) It could happen -- a internation hyperinflationary blow-off, that is. Furthermore, the politicians and economic bureaucrats responsible for currency policy are likely to continue denying the logical outcome of their policies both to themselves and the electorates they serve and/or represent. This is playing with fire. ______________When is the last time half the United States government, including its chief central banker, showed-up at anyone's doorstep to discuss anything. Just the appearance of so many high-ranking American politicians and bureaucrats alone should have been enough to send the opposition into a compliant mood. China, under the circumstances, should have been impressed. It should have been convinced to do the RIGHT thing by the speeches, the toasts, the pleas of the Secretary of the Treasury and the long academic presentation from Bernanke including footnotes.One problem. It wasn't. As Ms. Wu pointed out, the visitors did not truly understand China's history. They didn't know what its like to starve. They didn't know what it's like to impose one-child families on a population -- as a prerequisite to survival. They didn't understand what it is like to struggle out of utter poverty. Not by a long shot. Now that China had enjoyed basic economic security, why would it do anything to jeopardize it?And we cannot forget that after Paulson's last visit to China, the Financial Times published a lengthy article on its prestigious opinion page wherein Chinese academics and high government officials made a series of public warnings. (Visit the USAGOLD NewsGroup linked from the Daily Market Repot page) One of them was that China would not fold to American pressure like Japan did in the 1980s creating a depression from which that country still suffers. Officials also said that they stood ready to trade U.S. Treasuries for oil and gold as a way to balance its inordinately high stake in the dollar -- some $700 trillion in U.S. government paper.But, alas, the delegation failed. Momentum was lost -- probably forever. China will stand in contemporary history alongside that other notable failure -- Iraq. The big chill descends. It will be business as usual on the economic front and the Paulson-Bernanke China mission will serve as just another marker -- albeit an important one -- on a long road that started in 1971 with the first official devaluation of the dollar and its severance from gold. Perhaps the die was cast back then, but be assured we have now crossed an important economic Rubicon from which there can be no turning back. Under the circumstances, there will be no slowing down the international scramble for anything tangible -- most notably. . . gold. .______________This concludes my series on China. I look forward to the comments of my fellow posters and gold owners on these important matters. White Hills (12/22/06; 11:51:30MT - usagold.com msg#: 150424) Golden Christmas It wasn't Santa Claus coming through the pass to a little community called White Hills rather it was the Fedex man delivering the Gold French Angel necklace as promised by USA gold in time for Xmas. Needless to say ,after giving my Angel her Birthday-Xmas present I am really in for a wonderful Xmas. I also attended to business by taking delivery of 15 stampeding Golden Buffaloes at the Post Office(it is a 110 mile roundtrip) in Kingman, Arizona. In addition as I type this post it is snowing outside which fairly unusual in this part of the country. I would like to thank USA Gold for another profitable year as all my previous investments in gold have doubled and are now headed to double again, of which I have no doubt. Merry Xmas and Happy Holidays to all that visit here and to everybody at USA Gold. White Hills and his Angel Thoreauly (12/22/06; 11:45:57MT - usagold.com msg#: 150423) @ Chris Powell re a gold standard vs. freegold http://www.cipe.org/publications/ert/e32/e32_2.pdf My understanding is that while a gold standard would fix government currencies to the gold price, freegold would preclude the use of government currencies altogether and would in fact monetize any metal (silver, copper, zinc, etc.) that was sufficiently scarce to warrant its use as such. Thus, if gold were too expensive to own, less expensive metals could fill the void, just as they have throughout history.Furthermore, digital, gold-backed, 100%-reserve currencies could universalize and fully streamline this process (see link), freeing all markets as never before, even as the state retreated to the vanishing point.Hey, I can dream, can't I? Federal_Reserves (12/22/06; 11:42:12MT - usagold.com msg#: 150422) On China - our grandkids will http://www.shanghairickshaw.com/ be in poverty by 2030, the best job they can hope for will be hand pulling Chinese nationals in rickshaw's along the streets of LA and NYC. Of course by that time, the rich elites who haven't revoked their citizenship and still call themselves US citizens will be paying 80-90% income tax rates to help pay the interest on the debt. After all, the debt we are running up is backed by the ability to tax rich people. Until such time as sanity returns I'm hold gold as an offset to protect against inevitable rebalancing. Chris Powell (12/22/06; 10:54:12MT - usagold.com msg#: 150421) MK on China ... and life, the universe, and everything MK, your analysis of the world financial situationin light of the failure of Paulson's mission toChina is as good as anything I've read on the subject. I think the statement of the South Koreanfinance ministry official quoted in the AFP storyposted below is your confirmation. The illusion of infinite money and thus infinite power has spoiled the governments and elites that could have kept things on an even keel. Derivatives have extended that power by diverting muchinflationary/speculative/investment demand away from real things and into paper. But eventually even real things run out, as seems to be happening now in many respects. In theory fiat money can work and indeed it HAS worked for 35 or 70 years or so, depending on exactly how you want to do the chronology. But fiat money requires something of human nature -- the virtue of restraint.I'm no ideologue, nor an advocate of returning tothe gold standard. If I'd been around in 1896 Iwould have voted for Bryan and bimetallism. I don'tlike the idea that the growth in the world's realeconomy should necessarily be a function of theamount of metal that can be dug out of the ground.But it would be hard for me to deny that such asystem comes closer to reality than the currentsystem of controlling the money supply throughhuman judgment and the political influence ofspecial interests -- a system in which there now is really NO control and one imperial powerplunders the world.That the central banks have been so desperate to stamp out free markets in the precious metals and now, it seems, to stamp out free markets in all basic commodities as well suggests that free marketsmay be the antidote, the best guarantors of civilization and prosperity. (And the purpose of anti-trust law is to preserve free markets, markets in which no one gets big enough to control any market.)But will any free markets break out before thecommodities involved run out?Judging from the little restraint and virtue that seem to be available in government and financialcircles lately, I'd have to guess to the contrary-- and I hate to sound like an apocalypticreactionary.In addition to the brotherhood of man and fairdealing everywhere, I'd like some wonderfulcapital gains on my metal and my mining shares,and I'd like not to have to spend those gains onguns, ammunition, freeze-dried food, and ventilation equipment. Chris Powell (12/22/06; 10:20:09MT - usagold.com msg#: 150420) Diamond market is next target for derivatives http://www.miningmx.com/diamonds/522710.htm 12:15p ET Friday, December 22, 2006Dear Friend of GATA and Gold:MineWeb's David McKay reports that the Netherlands bank ABN Amro is planning a derivatives market for diamonds. Good grief -- is the real thing running out there as well, so much so that speculative and investment demand must be diverted from the real thing into paper?You can find the MineWeb report here: http://www.miningmx.com/diamonds/522710.htmCHRIS POWELL, Secretary/TreasurerGold Anti-Trust Action Committee Inc. Thoreauly (12/22/06; 10:14:31MT - usagold.com msg#: 150419) @ MK http://www.safehaven.com/article-5205.htm "All the world's citizens should be gold owners, and I do not exaggerate by saying that."No, you do not, as precious metals have become a "Nash equlilbrium" (see link), such that it is "an ideal financial strategy for everyone on Earth is to buy as much gold and silver as they can, as soon as possible." Chris Powell (12/22/06; 10:13:41MT - usagold.com msg#: 150418) Here's one thing China can do with all those dollars: Buy Zimbabwe http://news.yahoo.com/s/afp/20061222/bs_afp/zimbabwechinaeconomyaid_061222083735 Zimbabwe, China Negotiate $2 Billion LoanFrom Agence France-PresseFriday, December 22, 2006Zimbabwe and China are expected to begin negotiations for a two-billion US dollar loan agreement to help stabilise the economy, a state-run daily reported."China's government is ready to negotiate with the government (of Zimbabwe) for a two-billion US dollars loan facility to help it fight inflation and other aspects of the economy," Zimbabwe's Ambassador to China, Chris Mutsvangwa, told the Herald newspaper.The daily said the Chinese government had appointed a project officer to handle the negotiations who would soon open talks with Zimbabwe's Finance Minister Herbert Murerwa and central bank governor Gideon Gono.Mutsvangwa made the remarks in Harare at a ceremony at which the Chinese government handed over more than 22,000 metric tonnes of compound D fertilizer that will be used to help revive Zimbabwe's ailing agricultural sector.China's assistance to Zimbabwe would help dispel the myth perpetuated by the United States and Europe that Zimbabwe's economy had collapsed beyond redemption, Mutsvangwsa said.Speaking at the same event, Vice President Joyce Mujuru commended the Chinese government for its concerted efforts and support aimed at stabilising Zimbabwe."The support being extended to us by the People's Republic of China is critical as it comes at a time when we have embarked on an agricultural revival programme," she said."The timely delivery of agricultural inputs and good rains we are receiving will ensure the achievement of the projected growth rate of 9.4 percent in the agricultural sector in 2007."Isolated by Western governments over the political crisis in Zimbabwe, President Robert Mugabe's government has looked to foster new relations with Asian countries such as China and Malaysia as part of a so-called "Look East" policy.But despite a stream of high-profile agreements with its new allies, Zimbabwe has so far been unable to revive its ailing economy.Inflation is currently running at 1,098 percent and unemployment is believed to have passed the 70 percent mark. Food staples such as bread and cooking oil are now in short supply in a country that was regarded as southern Africa's bread basket little more than a decade ago.In August last year, reports claimed that South Africa had agreed to lend up to 500 million dollars to Zimbabwe on condition that its troubled neighbour agree to reforms to bolster stability. The money however never materialised. Chris Powell (12/22/06; 10:12:16MT - usagold.com msg#: 150417) Government's one unlimited power: to debase the currency http://news.yahoo.com/s/afp/20061222/bs_afp/skoreaforexeconomy_061222030415 11:49p ET Friday, December 22, 2006Dear Friend of GATA and Gold:Here's a case of a government financial official telling the truth -- that government has unlimited power in one respect, the power to debase its own currency, and that currency debasement has become virtually international policy.CHRIS POWELL, Secretary/TreasurerGold Anti-Trust Action Committee Inc.* * *S. Korea Has 'Unlimited Resources'to Prevent Rise in its CurrencyFrom Agence France-PresseThursday, December 21, 2006South Korea has "unlimited resources" if it decides to curb the local currency's rise against the dollar which is hurting exporters, a senior government official has announced.The won has risen nearly 10 percent against the dollar this year, raising concern among exporters who fear their goods will be priced out of overseas markets. It hit a nine-year high against the Japanese yen this month."To stabilize the economy, it is essential to maintain the currency at a certain level and the government will make its best efforts to achieve that," Kim Sung-Jin, a deputy finance minister, was quoted by Yonhap news agency as telling a radio programme. "If the government consults with the central bank and intervenes in the currency market, our resources are unlimited."The nation's foreign reserves totalled $234.3 billion as of the end of November.Kim also said investors may make a mistake if they assume the won will continue to rise lopsidely next year."In 2007 the US twin (fiscal and trade) deficits and the ascent of the yen and the yuan will put upward pressure on the won, while the shrinking current account surplus may be a downward factor," Kim said. "Investors may make a mistake if they expect a lopsided ascent by the Korean currency next year, as seen in recent months."On Thursday, Lim Young-Rok, another deputy finance minister, said business leaders had urged the government to stabilise the local unit."As the won rose sharply since 2004, South Korea's small- and medium-sized businesses have been struggling to maintain their bottom lines," he said.South Korea's comments echo others elsewhere in Asia where governments are increasingly concerned that their export-driven economies could be hit if their currencies continue to rise against the dollar.Earlier this week Thailand introduced stringent capital controls in an effort to halt a sharp rise in the baht but the government was then forced to backtrack when the measures sparked a stockmarket collapse.Despite the chaos, the Thai government insisted it was right in acting to limit the baht's gains and said many other countries face the same problem. Goldilox (12/22/06; 10:11:30MT - usagold.com msg#: 150416) China Remarks @MK,I heartily concur with your observations and analysis on the China visit. It seems China's answer to the P & B team was, "Maintain the status quo, and we win".While the US absorbs about 20% of China's exports, China's imports are a lot more important to the US, who is no longer energy, food, nor manufacturing independent. China stands a much better chance of replacing its markets internally than the US does of replacing its suppliers, thanks to the gutting of US manufacturing for cheep global wages. Skillsand infrastructures just aren't all replaced "overnight".The Chinese have been between a rock and hard place before, and learned how to make a pillow from said rock. Americans can only ask their dying great-grandparents "what it was like" to be hungry. Chris Powell (12/22/06; 10:09:19MT - usagold.com msg#: 150415) Even little Slovenia gets roped into the gold price-fixing scheme http://www.nasdaq.com/aspxcontent/NewsStory.aspx?cpath=20061222%5cACQDJON200612220439DOWJONESDJONLINE000455.htm& Slovenia Joins Central Bank Gold AgreementBy Christian VitsDow Jones NewswiresFriday, December 22, 2006FRANKFURT -- The Slovenian central bank will become a party to the European gold agreement, the European Central Bank said Friday."In the interest of clarifying its intentions with respect to its gold holdings, Banka Slovenije agrees with and becomes a party to the joint statement dated March 8, 2004," the ECB said.The maximum annual sales of the Slovenian central bank, as well as the total sales, both as specified in this agreement by its signatories, will remain unchanged over the period of the agreement.The central bank also agreed not to expand its gold leasing and its use of gold futures and options during the period of the agreement, the ECB said. Lackluster (12/22/06; 10:04:05MT - usagold.com msg#: 150414) Paulson's China trip It does strike me as odd that there seemed to be little official explanation for such a high powered entourage. Much of what I have read regarding the trip is speculation, there seems to be little public information in regards to the purpose of the trip, or its results.I think the drop in gold price was no coincedence. USAGOLD / Centennial Precious Metals, Inc. (12/22/06; 09:59:07MT - usagold.com msg#: 150413) Step inside and shop at your convenience. Open 24/seven, regardless of winter storms! http://www.usagold.com/buy-gold-coins.html Goldilox (12/22/06; 09:56:35MT - usagold.com msg#: 150412) Trend makers @ frosty1,"Lets face it average joe is the trend maker,all others are just the fleas on the dog going for the free ride."Actually, 95% of US wealth rests in 5% of the hands, so "Ave Joe's" 5% really only matters in retail, where it makes up a larger proportion of the total.While it may be enough to help move some trends, by itself it is not necessarily enough to sustain them. That may be one of the reasons that the SM is still "performing" while Ave Joe is floundering in UE lines. frosty 1 (12/22/06; 09:39:48MT - usagold.com msg#: 150411) If everyone knows the state of the dollar.... Not to beat a dead pony, but...When indeed the dollar swoons downward,will not most available investment funds search for something real and solid? Such as REAL ESTATE,or Gold ,or silver, copper, oil,or any other item that they are not making any more of?Seems to me most predictions on housing, ect,do not factor in what a run from the dollar will do to the mindset of average joe.Lets face it average joe is the trend maker,all others are just the fleas on the dog going for the free ride.I am going on record as the only voice out there that is touting housing,yes housing, as not the (falling Knife) some think it is,but the savior of the middle class.Poke at me if you will,but in 2009,when the min. wage is $23.and the average home price is not $160,000.,but close to $500,000.I do believe some might think back to this post.Argentina here we come!! Merry holiday all! frosty1 not investment advice...just MHO mikal (12/22/06; 08:40:28MT - usagold.com msg#: 150409) Another case made for gold http://drmss.com/wordpress/?cat=1 The United States is Insolvent - Dr. Chris Martenson - The End of Money - Dec 17The author presents the case, the United States is insolvent, then recommends precious metals. mikal (12/22/06; 07:18:31MT - usagold.com msg#: 150408) Is internet becoming too big? http://www.freemarketnews.com/WorldNews.asp?nid=29641 Is It Illegal To Link To Other Websites? | FMNN | Dec 22Winter solstice, first day of winter. The days get brighter and brighter, though longer. ViewYesterday's Discussion.
Permission to reprint is hereby granted where the USAGOLD name is cited along with our web address, mailing address and phone number. For electronic reproductions, citing the post heading and the http://www.usagold.com/cpmforum/ website address as the source is sufficient.