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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.

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ARCHIVED DISCUSSION FROM 12/23/1999
All times are U.S. Mountain Time

View Yesterday's Discussion.

DAYOOPER (12/23/99; 21:53:48MDT - Msg ID:21592)
Nothing like diversification
Poor old Solomon,

"Prospectors" are my choice of friends. Get you some.

Peter Asher (12/23/99; 21:52:58MDT - Msg ID:21591)
Caven Man
That is the BEST case for the abolition of network TV, that I have ever seen!!

Peter Asher (12/23/99; 21:49:49MDT - Msg ID:21590)
SPeed
The speed of movement in price is probably the simple result of news being obtained and acted upon by large numbers of players in an eye-blink, via the net. A quantity of buy orders that might have taken an hour or two to arrive a decade ago, probably occurs in 30 seconds. Simultaneously the potential sellers withdraw due to the same instant news access. Ergo huge price moves. Watch the trades scroll by some morning on the S&P Globex on live-charts, right after a major announcement.

Solomon Weaver (12/23/99; 21:48:46MDT - Msg ID:21589)
who calleth discussions on silver astray?
Silver is the beautiful sister to our golden king...and those who are brave, take her into their hands and hold her to their breast shall breath in the wind of the king.

Gold is mysterious and to own it in hand is to understand its mystique....to think that a little bit of talk of how these metals touch our souls might be off the subject of this forum is to underestimate the depth of the souls of those who haunt these pages.

Dayooper, yes, I am a bit of a junk silver bug, but I go me some nice shiney Silver Eagles and they make me happy looking at them!!!

I stand my ground and claim that silver is the poor man's gold and that she will rise and return just as does her king!!!

Poor old Solomon

Cavan Man (12/23/99; 21:37:28MDT - Msg ID:21588)
Hail USAGOLD; Hail MK; Hail Noble Knights of Table Round
Here we have distance learning at its finest; a virtual University at our fingertips. Forthwith a quote (from a fellow Greek MK) in honour of this most prestigious site and its proprieter:

You know that the beginning is the most important part of any work, especially in the case of a young and tender thing; for that is the time at which character is being formed and the desired impression is more readily taken....Shall we just carelessly allow children to hear any casual tales which may be devised by casual persons, and to receive into their minds ideas for the most part the very opposite of those which we should wish them to have when they are grown up?

We cannot...Anything received into the mind at that age is likely to become indelible and unalterable; and therefore it is most important that the tales which the young first hear should be models of virtuous thoughts....

Then will our youth dwell in a land of health, amid fair sights and sounds, and receive the good in everything; and beauty, the effluence of fair works, shall flow into the eye and ear, like a health-giving breeze from a purer region, and insensibly draw the soul from the earliest years, into likeness and sympathy with the beauty of reason.

There can be no nobler training than that.

Plato's Republic

(So, call me a Teddy Roosevelt; just couldn't stay away.)

Kind regards....CM

DAYOOPER (12/23/99; 21:30:23MDT - Msg ID:21587)
Solomon's silver moon
Poor old Solomon,
You sure are poetic! This is your "junk" silver bug buddy and have to make a comment. That silvery moon has had an ominous ring around it for the past 2 nights. Maybe it's trying to tell us something about things to come. That huge blast of air that went into that bubble today could be the tell tale sign ...which, if one used their imagination, could be shock rings.

Journeyman (12/23/99; 21:11:19MDT - Msg ID:21586)
Greenspan: What fast is. -- Wanna race?
The following may be a repost, but most apropos in light of
our TownCrier's comments (just below,)

TC: "Without shortchanging the intelligence and financial
Knowledge of Fed Chairman Alan Greenspan (who understands
how money is *supposed* to function--like gold!), we
respectfully submit that *IN THIS LIGHTNING FAST ELECTRONIC
WORLD*, such a gentle landing can't be done. When the trend
is apparent, no one will be willing to wait their turn and
absorb their share of the inevitable losses."

Greenspan on what fast is:

"As I testified before this committee in the midst of
the Mexican financial crisis in early 1995, major
advances in technology have engendered a highly
efficient and increasingly sophisticated international
financial system. ...But that same efficient financial
system, as I also pointed out in that earlier
testimony, has the capability to rapidly transmit the
consequences of errors of judgement in private
investments and public policies to all corners of the
world at historically unprecedented speeds." -Alan
Greenspan to House Banking Committee, 16 September,
1998

Here are a few examples of some of the "historically
unprecedented speeds" Mr. Greenspan may have had in mind:

The DOW transportation average jumped 75 points, about
7%, in about half an hour starting about 12:30, a
"startling move," apparently in response to news that
Northwest Airlines was increasing fares. -Bob Pisani,
CNBC, 29 Jan 1999

The South Korean Won has depreciated 40% in the last
four days, down 10% in the first three minutes of trade
last night... and it is predicted that the won will
likely drop another ten percent, the limit, again
tonight. -CNBC, December 11, 1997

But do such mega-byte speeds really have any relevance
to the U.S dollar?

- The dollar at its low was down 11 yen, at 120.3 yen
per dollar from 132 yen per dollar yesterday. This is
better than an 8% drop in the dollar, the bulk of this
happening in about three minutes in the middle of the
night. This is an "astounding drop" in the world's
largest currency. -MSNBC etc., 7 October, 1998 -"This
is the biggest one day dollar drop in 25 years." -Kathy
Jones, Prudential Securities, 7 October, 1998

Of course the perennial questions remain: "Are we really
sure the day of reckoning is at hand?" And if so, "How close
ARE we to the BIG ONE?" And for the brave (or fool hardy),
"Is there still time to cash in on the paper markets?"

Regards,
Journeyman


Peter Asher (12/23/99; 21:01:10MDT - Msg ID:21585)
Solomon, Netking, Town crier
Solomon and Netking; I am contemplating on your replies, I fear me may go far of subject on this. try peterasher@earthlink.net

Town Crier: I owe you a few belated thank-yous for compliments on posts

Solomon Weaver (12/23/99; 20:55:32MDT - Msg ID:21584)
the moon and Peter Asher
Peter Asher (12/23/99; 0:31:39MDT - Msg ID:21548)
Netking! Do we have a choice?
"Solomon Weaver #21538 "The ancient mystics believed that the moon's light shining on our souls allowed us to remember our past lives and our reasons for coming back in each life....like a COMEX of silver...holding precious memories." Netking #21546) Why would anybody want to keep coming back to this 'fallen earth' buddy(or contemplate it), I would prefer to go where the streets are paved in, you guessed it, Gold! "

-------

Ah yes, Peter, we would prefer many things....we also have many things to learn about this great universe...to me gold is like the sun...strong and intense...silver is like the moon...cool and subtle...the massive heat of the sun allows no tarnish...the moon and her memories are pitted with the dusts of time...both are our companions.

If the silver moon truely does have memories to offer us would we not grow wiser in listening how she speaks to our soul?

Poor old Solomon

THX-1138 (12/23/99; 20:50:53MDT - Msg ID:21583)
Yahoo sued over business partner's claim to user data
http://yahoo.cnet.com/news/0-1005-200-1505410.html?pt.yfin.cat_fin.txt.ne
DALLAS--Yahoo is being sued for as much as $4 billion by Universal Image, which claims the leading portal violated an agreement to provide information about users of its video and audio programming.


****
I don't think the company even has $4 Billion in revenue. YAHOO's days are numbered, and it just got added to the DJIA.
This is just too funny to believe.

THX-1138 (12/23/99; 20:28:10MDT - Msg ID:21582)
What's up with the crash index
http://www.wwfn.com/crashupdate.html
Sunday and Monday the Crash index was signaling a -10.

Now it's at -4. How is this thing calculated?

TownCrier (12/23/99; 20:25:54MDT - Msg ID:21581)
The GOLDEN VIEW from The Tower
WALKING THROUGH A HOUSE OF CARDS

Steering a confident course in the paper markets is surely as challenging (futile?) as navigating must have been for ancient mariners on a cloudy night. Or maybe more aptly put, when you've followed the white rabbit down the hole and have stepped through the looking-glass, there's no point in trying to make any reasonable sense of it all. The best you can do is simply describe what you see.

The one small element that appeared most natural (in light of the strong economic news that is now coming out of Europe, notably Germany) was what currency traders described as demand for the euro/dollar "surfacing out of the blue" in today's session. Traders were surprised by the euro's solid gain of 0.7¢ today against the dollar. According to Bridge News, one senior trader said, "I must say I'm amazed to see such a bounce on a day when the US stock markets performed so well," said a senior trader.

Indeed, to say the stock markets did well today would be an understatement. The Nasdaq Composite Index, the Dow Jones Industrial Average, and the S&P each hit record highs.....the Nasdaq breifly breaching 4000 in intraday trade and the DOW closing at 11,405.76. Arthur Hogan, chief market analyst at Jefferies, said it best when he told TheStreet.com, "I wish we were doing it on a billion instead of 500 million shares. This is a week unto itself. You have to X this out in terms of your long-term strategy. It's an aberration, and these days before a holiday tend to be aberrations. You don't have the full attention of investors today."

The 30-Yr Bond seems to be suffering from a severe lack of attention...from buyers, that is. The long bond fell 13/32 to its lowest price in 27 months, propelling the yield to 6.477 percent. Also offering some rational thoughts to TS.C was Gary Kaltbaum, chief technical analyst at GSG Securities, who said, "One day, the bond is going to cause a problem. But we're riding what the market tells us. There's no sign saying that this is going let up. You have stocks that have gone parabolic without taking a breath. Someday this will end, but we're not good enough to know when."

Gold never ends, but it does take an occasional holiday. In Japan the market closed Thursday for a public holiday, so trading was very thin overseas. Next up are the two holidays in a week's timespan for Christmas and New Year's celebrations. COMEX will be closed on Friday, with trading set to resume Monday. Spot gold drifted down 30¢ to $286.00 at the close, and February futures on COMEX eased by 20¢ to $288.50. In an FWN report Leonard Kaplan, chief bullion dealer at LFG Bullion Services noted, "We've seen more Y2K buying in the last week than we have in a long time," however, he said this buying has been done by individuals and has not been sufficient to move the gold price. We'd call that a distinct advantage for anyone who fits the description of "individual."

Open interest in yesterday's trade dropped by the same number of contracts as were tapped for delivery that day...the amount being 30, leaving 44 Dec. futures in open interest on COMEX trade. Delivery intentions today numbered16 contracts for a December total so far of 8,228....representing 822,800 ounces

There was a sizable reshuffling of inventory among the two COMEX gold depositories. There were 92,755 ounces withdrawn from the Registered stock held at Scotia Mocatta, with 91,744 ounces then being checked into the vaults of Republic National. Of this, 41,281 ounces were booked among the Registered inventory held there, and the remaining 50,463 ounces bolstered the small supply of Eligible inventory. In the process, there was a net drawdown of total COMEX inventory by 1,011 ounces. At present there are 1,107,889 ounces of Registered and 112,232 ounces of Eligible gold logged in the COMEX "warehouse."

OIL

After regaining as much as 50¢ of yesterday's losses, February crude settled up 37¢ at $25.87. Thin trading volume has been cited for the recent volatility absent any sufficient news to move the market as we've seen.

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

beesting (12/23/99; 19:55:03MDT - Msg ID:21580)
Sir, T.C. #21568----Thank You for checking the math on my #21566.
$280.00 Gold is a benchmark figure,and I would guess the Dutch Gold, sold for about that much,final figures may take a while to be released.If you notice BOE sales official figures are not released until long after the sale is completed.
Why? In a true sale of Gold buyer and seller meticulously weigh and test each seperate bar for accuracy,which is time consuming.

Why is $280 Gold a benchmark price?
Because 1 tonne of Gold at $280 equals a little over $9,000,000,an easy figure to remember when dealing in large amounts.

Here are a few more reasons why.
If anyone read the article about the late Edmund Safra(former founder of Republic Bank of New York, a Bullion Bank)the article stated "Mr.Safra didn't need a calculator to figure Gold prices.Well it's easy to get approx. figures in your head if a benchmark figure is reached.
Example: 1 tonne of Gold=$9 million dollars.
5 tonnes= $45 million
1/2 tonne=4.5 million
7 tonnes=$63 million and so on.
All ballpark figures only.Also our friend ANOTHER mentioned $280 Gold in some of his Thoughts.

The real purpose of msg # 21566 was to bring attention to the fact that a large publicized Gold transaction had taken place NOT PRICED IN DOLLARS,but in EURO's.I believe this was a first! It would not surprise me at all if most of the Europeons start to publically value all their Gold holdings in Euro's from now on,including the Swiss where both the BIS and World Gold Council are located.As FOA says,as the Euro becomes more and more used and excepted for Gold transactions worldwide, the paper Gold markets(LBMA&COMEX etc.)will seperate.

I'm going to repost my metric conversion charts because they got mangled when I transferred in my #21566 post.

UNIT------ABBREVIATION-------MASS & WEIGHT----APPROX U.S.EQ.
.........................number of grams..................
metric ton--MT or t---------1,000,000------------1.1 tons
quintal-----q----------------100,000----------220.46 Lbs.
kilogram----kg----------------1,000-----------2.2046 Lbs.
hectogram---hg-----------------100------------3.527 ounces
decagram----dkg----------------10-------------0.353 ounces
gram--------g or gm--------------1------------0.035 ounce
decigram----dg------------------0.10----------1.543 grains
centigram---cg------------------0.01----------0.154 grain
milligram---mg------------------0.001---------0.015 grain

The reason I'm posting these is, Gold is already being measured in some of these amounts'so now a person can convert to the measurement he/she is familiar with.
I lived in a country that used the metric system only for 5 years, and believe me it is easier once you get used to it....beesting.


elevator guy (12/23/99; 19:12:08MDT - Msg ID:21579)
@Village Idiot
Pokemon!!!!!!

Too Funny!

ROTFLMAO!

TownCrier (12/23/99; 17:37:13MDT - Msg ID:21578)
Peter and Village Idiot...this one is an instant CLASSIC
LBMA IS NOT COMPLIANT
Last night all computers for the London Bullion Market crashed. The head of the LBMA is quoted as saying "No problem, everything here is on paper." When asked since their security system is down will their gold be safe? The head of the LBMA said "I already told you, it is all paper!!"

Well done, V.I.!

TownCrier (12/23/99; 17:33:08MDT - Msg ID:21577)
Value of Global Stocks Passes Value of World Output
http://quote.bloomberg.com/pgcgi.cgi?T=markets_newsfeat99.ht=&ptitle=EMU%20Top%20Stories&touch=1&s=524acd32782b2b5884d0975853bc2e9d
For the first time ever the market capitalization value of the world's publicly traded companies (as determined by the International Federation of Stock Exchanges) exceeded the value of the world's output (as estimated by the International Monetary Fund.)

Aggregate stock value at November's end was $34.6 trillion, whereas the estimates of the value of world output was $30.1 trillion.

After the Bloomberg reporter recounts how the surge in stock values have come as investors "abandon traditional methods of evaluating companies and buy stocks just to keep pace with the market," he then goes on to quote a fund manager who proceeds to chant some of that reassuring "new era" mantra that has teased and taunted and ultimately bitten the asses of civilization since the dawn of economic activity. The fund manager said, and I quote: "This may be a new era and you have to accept it."

I can't speak for others, but my personal observation is that Salomon Smith Barney employs some of the sharper talent in the industry...talant that at least seems less overcome by the mania that has swept through the other houses clouding their judgement. By now you've probably had a chance to review the SSB report in our Gilded Opinion pages as one example. Here's another. The rational voice in this Bloomberg report comes from SSB's European equity economist Paul Horne, who said, "The U.S. monetary environment is likely to deteriorate over the next few quarters as the Fed starts to walk off with the punch bowl." Horne added that the Fed's "skill in slowing the economy from its current 4.5 percent to 5 percent rate to its new, sustainable speed limit of around 3 percent will be crucial in preventing the equity market, U.S. and international, from over-reacting."

Without shortchanging the intelligence and financial Knowledge of Fed Chairman Alan Greenspan (who understands how money is *supposed* to function--like gold!), we respectfully submit that in this lightning fast electronic world, such a gentle landing can't be done. When the trend is apparent, no one will be willing to wait their turn and absorb their share of the inevitable losses. Everyone will want to be the one who was smart enough to get out with it all when there is no more to be had. It's all about the market dynamics of Fear and Greed.

Gold ownership is all about security and living each day well. True gold-hearts are some of the most relaxed and pleasant people you will ever hope to encounter. Here at The Tower we hope that you may count yourself among them.

Peter Asher (12/23/99; 17:20:45MDT - Msg ID:21576)
Village Idiot, Town Crier, Michael
I hope there is an extra prize for one of these entertaining satires. The Pokeman curency item is hilarious. Hey, I'm trying to do some serious thinking for the contest but I can't stop laughing.

Great job V.I.

lamprey_65 (12/23/99; 17:02:20MDT - Msg ID:21575)
Kaplan's at it again!
http://www.goldminingoutlook.com/
Kaplan can be soooo frustrating...he got in a spat with Ted Butler today on Kitco over Barrick, then he writes this in his Gold Mining Outlook today:

KAPLAN'S CORNER: QUESTION: Why do you think that there wasn't more hedge covering when gold bottomed
in the summer of 1999? ANSWER: Several major producers did cover part or all of their hedged positions at that
time, most notably South African producers such as Anglogold (AU), which covered one third of its hedges, and
Goldfields Ltd. (GOLD), which had only been lightly hedged but which covered virtually all of its hedged positions,
thus becoming essentially an unhedged producer. Smaller Australian, Canadian, and other producers also covered
various percentages of their hedged positions when gold was below $280 per ounce. Barrick Gold (ABX), which had
done significant hedge covering in the first quarter of 1993 and in the last quarter of 1995, did not take similar
action in the summer of 1999, which they must now regret (if only because they could have put their hedges back on
in late September or early October at a substantial profit). Barrick is not likely to repeat this mistake a second
time, so the next time that gold appears to be bottoming, probably in the first quarter of the year 2000, I predict
that they will cover a substantial portion of their hedged position, and they will announce it loudly a month or so
later, just as they made their famous pronouncement of hedge covering in early January 1996 which led to a brief
but significant rally in the XAU. Other hedged producers may act roughly simultaneously or follow Barrick's lead,
so such an event could stimulate a major gold rally.

Sounds great right? Well, there's one major problem. The multi-stage bull gold bull market which began in March 1993 ended the first week of February 1996 - within a month after he says Barrick announced taking off their hedges! We entered a down trending market that February which lasted until this summer -- a 3 1/2 year BEAR MARKET! Thanks for the heads up Barrick!

Now, how many of you believe Barrick's January 1996 announcement was made in good faith?

Lamprey

TownCrier (12/23/99; 16:15:12MDT - Msg ID:21574)
A key phrase from ORO's State Depertment historical excerpts
"Larre repeated [the] oft-heard French thesis that France does not 'favor' increase in price of gold except in case that this only alternative to demonetization."

For many of us (who eagerly want higher gold prices today) to fully appreciate the meaning of that French sentiment, a certain adjustment in mentality is in order. You must understand the "rules of the day" as they existed in the 1960's. Back then, by definition of policy each and every dollar was (in theory) one-thirtyfifth (1/35th) of and ounce of pure gold, payable on demand. (But only for international entities. Franklin D. Roosevelt had made gold ownership illegal for U.S. citizens in 1933--imagine that!)

In these policy discussions, talk of a higher price for gold is a bit off the mark, as the gold itself was the money, and how could money cost more or less? Because many of us have likely already been brainwashed, think of this example...consider the strange notion of raising the price of a modern dollar. In truth, the delicate talk about raising the price of gold was in those days the equivalent of saying the U.S. dollar would be devalued, and therefore fall into default against a portion of its gold-delivery obligations.

France held many of these paper contracts for gold (called dollars,) so you can see why they didn't want the "price of gold" to rise. They didn't want all of their 1/35th ounce gold contracts to each be declared partially unpayable. They had sold wine and whatnot to America priced as if the dollar was good as gold, and they didn't want to be shortchanged because they held the dollars they recieved in payment well past ripeness.

To say that France "favored an increase in price of gold except in case that this only alternative to demonetization" is to say that France favored a partial default on their gold contracts (thru dollar devaluation) rather than the alternative of "demonitiztion" which is a polite way of saying total default and bankruptcy of the dollar as an institution. In a nutshell, France was saying we want all of the gold that was pledged to us, but we are willing to admit that some gold is better than no gold at all.

Learn from the mistake of a nation, and don't hold your own dollars past ripeness.

What's that smell?

TownCrier (12/23/99; 15:43:19MDT - Msg ID:21573)
ORO, unfortunately, no. The prevailing thought here is that it was Spring of 1999...a haystack too large!
http://www.state.gov/www/about_state/history/frusjohn.html
To all, the link above provides the index of the Johnson Administration Volumes. (Work on the Nixon Administration Volumes is not yet available, unfortunately!) The Tower suggests the more curious and intrepid among you will find many insights and golden nuggets among the two categories listed below. Enjoy, and don't be shy about participating in "Show and Tell" with any specific treasures (please make judicious use of excerpts to save space) you may unearth. And thanks again to ORO for bringing this one to the surface again. We certainly have many new visitors, and greater appreciation for these affairs all around.

These will prove to be of primary interest:
VIII--International Monetary and Trade Policy--Published 1998

XXXIV--Energy Diplomacy and Global Issues--Pub. 1999

megatron (12/23/99; 15:00:07MDT - Msg ID:21572)
bretton woods
If anyone out there would like a very clear, rational explanation of the Bretton Woods agreement and why/how it failed and the role of gold in US/dollar policy, get a copy of Jude Wanniski's 'The Way the World Works'. There is a big chapter on the whole mess and it's very enlightening.

ORO (12/23/99; 14:49:04MDT - Msg ID:21571)
Town Crier - when?
Do you remember at what period that was?

Thanks

TownCrier (12/23/99; 14:26:36MDT - Msg ID:21570)
ORO, it is good to see you revisiting this revealing Dept. of State info
One of regulars here at The Tower provided a collection of important excerpts from this valuable archive to the USAGOLD Forum during the early months of 1999. Fascinating stuff, and as more has been learned of modern events and delve deeper into the politics, a look back at these 1960's politics is perhaps more relevant today than it was in the spring of the year. Thanks for the interest in the subject and for the effort!

Village Idiot (12/23/99; 14:19:10MDT - Msg ID:21569)
Invisible Hand has the right idea!!
***MY TOP FIVE EVENTS for GOLD MARKET 1999***

OIL FOR GOLD!!!
Yesterday December 31 only one oil frigate from the Middle East was able to make it to America. Its non-compliant navigational system crashed it upon the beaches of Eastern Florida. Oil trucks are backed up for miles trying to off load the oil but the Captain is demanding an ounce of gold per barrel. Truck drivers are diving into the sea hoping to find the rest of the 1715 Fleet so they can pay for the oil.

TERRORISTS ATTACKT FORT KNOX!!
A Middle Eastern Terrorist group decided to take advantage of the millenium rollover last night and take over Fort Knox. They have come up empty handed. The leader of the Terrorist group Mohammad abdul Rashid was quoted as saying roughly translated " Where is all of your Friggin gold?".

LBMA IS NOT COMPLIANT.

Last night all computers for the London Bullion Market crashed. The head of the LBMA is quoted as saying "No problem everything here is on paper. When asked since their security system is down will their gold be safe? The head of the LBMA said " I already told you, it is all paper!!"

FEDERAL RESERVE BACKS POKEMAN!

All of the Federal Reserve printing presses had stopped functioning due to the fact that they have embedded systems that were not y2k compliant. Alan Greenspan says not to panic we are issuing Pokeman cards to solve the problem. When asked if using Gold and Silver coins would be better. Mr. Greenspan said that they were heavy and bulky relic metals and that Pokeman cards were lite and cute. Mr. Greenspans favorite character is Pekachu and so he is worth $100.

PRESIDENT CLINTON TO SELL IMF GOLD!!

With the price of Gold skyrocketing due to world problems and the discovery of no gold in Fort Knox and the paper trail at LBMA, President Clinton has announced that he thinks it is a good idea to sell all of the IMF gold. 5 minutes after announcing this the price of gold went up another 2000 dollars due to it being 2000 times over sold. President Clinton has stated that he never said that he wanted to sell all the IMF gold, but now thinks it would be a good time to revalue the IMF gold and pay off the worlds debt!

TownCrier (12/23/99; 14:02:51MDT - Msg ID:21568)
Good thoughts, beesting
Your math is right on the mark, but before you get too fixed upon the price per ounce, first get comfortable with the extent of rounding precision and error that may be involved in 13.5 tonnes. Was this rounded to the nearest tenth of a tonne or nearest half tonne? Also, was €119 million rounded up or down to the nearest million?

And most importantly, as was noted in yesterday's GOLDEN VIEW, and reaffirmed by ORO, 119 million euros is not necessarily the price at which it was sold. The only thing we can say with a degree of certainty is that the value adjustment of €119 million on the ECB balance sheet reflects the quantity of gold assets remaining multiplied by the official valuation that was determined for the beginning of this latest quarter. This doesn't account for either the shifting LMBA/COMEX prices of gold since then, nor does it account for the shifting euro value (exchange rate) since then. That last item is an important concept.

ORO (12/23/99; 13:45:31MDT - Msg ID:21567)
More from there
199. Memorandum From Secretary of the Treasury Fowler to President Johnson/1/

Washington, June 6, 1968.

The present crisis in France offers both a threat and an opportunity.
--A threat to the international monetary system that could destroy it in its present form.
[I like to point out that the dollar reserve system was equivalent to a gold system for countries other than the US. On that issue, the negative Balance of Payments, BOP, of the UK and France's fear of going into debt were pressing the system to devalue or float the Franc or the Pound.]
--An opportunity to make a major structural improvement in U.S.-Europe balance of payments and thereby strengthen the monetary system.

-----------

Opportunity was lost,
The last major holdings of Sterling reserves were in danger of hitting the market. Sterling was stabilized using a large credit facility to guarantee sterling conversion to dollars. Backfired because some of the dollars were converted to gold.
France continued talking of devaluations after the riots of summer 68 started.

From 207:

B. In light of Brunet's alleged comment, call your attention to Paris 24001 (repeated to Rome)/4/ with this passage:

/4/Dated November 16. (Department of State, Central Files, FN 17 FR)

"Larre said he understands U.S. has agreed not to put pressure on Germans to revalue 'for the time being.' However, U.S. ' needs to decide' in event of general European rate changes whether it wishes to adjust its rate accordingly, i.e., agree to raise gold price, or demonetize gold; Larre repeated oft-heard French thesis that France does not 'favor' increase in price of gold except in case that this only alternative to demonetization."

--->Another interesting one.

222. Record of Meeting of the National Security Council/1/
Washington, November 25, 1968.

NATIONAL SECURITY COUNCIL MEETING IN CABINET ROOM, MONDAY, NOVEMBER 25, 1968 WITH THE PRESIDENT, SECRETARY RUSK, J. R. WIGGINS, AMBASSADOR TO THE U.N. JOSEPH SISCO, ASSISTANT SECRETARY OF STATE, SECRETARY CLIFFORD, PAUL NITZE, SECRETARY FOWLER, DIRECTOR HELMS, GENERAL WHEELER, GEORGE CHRISTIAN, WALT ROSTOW, BROMLEY SMITH AND ED FRIED--12:06 P.M.
[Here follows a brief introductory discussion of two U.S. reconnaissance planes that were shot down over Vietnam.]
Fowler: The first place we always look to for answers on these things are the Departments. And I think, therefore, I will give you a quick report on what the market situation was as of 11 o'clock this morning which covers most of the trading day in Europe.
The exchange rate, movements and the flow of funds are very faithful because the money is going out of Germany and into France. And the French franc rate is up and the British pound rate is up and apparently this is the result of the real money flow rather than in marketing prevention.
The other significant thing from our point of view is that the dollar is strong and the gold market has remained very calm. Low rise, and high minor rise, in the morning from 30# the first fixing and a decline back to $40.10 in the afternoon. So the first market reactions are good."

The discussion seems to relate to the notice of Deutche Mark revaluation upwards. Previous meetings discussed the US, UK, and French BOP problems being solved by a DM revaluation upwards.

From 220: Nov 22, 1968

"Through the mechanics of the IMF, and assuming they draw the full amount of $985 million with a good portion in U.S. dollars (as opposed to other currencies), this would mean that the full gold tranche position of the U.S. at the IMF will be re-established--which means that the United States will have virtually automatic credit of one billion two hundred ninety million dollars available to us from the Fund--a position we have not been in for about five years."

Much hapiness on French credits being transferred to the US as a result of the package to save the Franc from devaluation.





beesting (12/23/99; 13:06:30MDT - Msg ID:21566)
Another shot fired by the European Union---that nobody heard yet!
From Sir ORO's #21556 11/23/99 7:23 AM:

Quote;Dutch CB spokesman Bret Groothoff said,"I can confirm the amount of 13.5 tonnes of Gold 119 million Euros was what The Netherlands sold."

ORO said,"I think that this is an important distinction'since that keeps open the possibility of the sale being at a different inter-Central-Bank price from market prices."

beesting-I agree I think this is the very first step for the NEW MARKET in Gold, discussed by ANOTHER/FOA.
Lets examine what was made public.
13.5 tonnes of Gold was sold for 119 million EURO's!

Now we have to use some math, and I hope these figures come close to accuracy.

1 metric tonne= 1 million grams.
1 ounce=31.103 grams.
1 Euro dollar= $1.02 U.S. dollars.
Using all the above figures including the Dutch numbers I came up with:
1 gram of Gold= $8.814815 Euro dollars.
1 gram of Gold= $8.99 U.S. dollars.
Dutch Gold sold for $279.61597 or $279.62 U.S. per ounce.
Someone please check these numbers,if you have time.
The new Gold market is going to be priced in the Metric system(grams,kilo's, and tonnes) and Euro's!!!

Some help from my book:

unit: abbreviation: mass: U.S. equivalent:
no.of grams
metric ton MT or t 1,000,000 1.1 tons
quintal q 100,000 220.46lbs
kilogram kg 1,000 2.2046lbs
hectogram hg 100 3.527 oz.
decagram dkg 10 0.353 oz.
gram g or gm 1 0.035 oz.
decigram dg .10 1.543 grains
centigram cg 0.01 0.154 grain
milligram mg 0.001 0.015 grain

Most of the countries in close proximity to the EU seem to be very anxious to join in,when and if this happens, it would gradually expand the use of the Euro and the metric system concerning Gold. A further strengthening of ANOTHER/FOA's prognosis.

Those in the know....buy Gold....beesting.


ORO (12/23/99; 12:38:11MDT - Msg ID:21565)
Gold in the Johnson Administration
http://www.state.gov/www/about_state/history/vol_viii/185_199.html
194. Memorandum From the President's Special Assistant (Rostow) to President Johnson/1/

Washington, April 2, 1968.
/1/Source; Johnson Library, National Security File, Fried Files, Chron, March 1-April 30, 1968. Confidential. Drafted by Fried.

SUBJECT
Stockholm Monetary Conference/2/
/2/Regarding this conference, see Document 193. Deputy to the Assistant Secretary of the Treasury for International Affairs George H. Willis was part of the U.S. Delegation to the Stockholm Ministerial, and his notes are another record of the meetings. (Washington National Records Center, RG 56, Assistant Secretary for International Affairs, Deputy to the Assistant Secretary and Secretary of the International Monetary Group: FRC 83 A 26, Willis' Notes 66-69, notebook entitled Ministers Mtg-Stockholm, March 20-30, 1968)

1. Stockholm completed another phase in the IMF Special Drawing Rights plan. It brings us closer to creation of "paper gold".
The central issue was whether France would be able either to stall the proposal or change its basic character. Either outcome would have caused an international monetary crisis and a major drive to raise the official price of gold. Faced with this choice, the other European countries joined with us to settle the remaining questions and put the plan in shape for the ratification process.
2. There were few differences between the U.S. and France's European partners. The main reason for compromises was to help Germany, Italy, Belgium and the Netherlands take the political heat at home of dividing with the French on this fundamental issue. They had to be able to show that they were not knuckling under to the U.S. but were acting to protect world prosperity on an issue where France was unreasonable. This required a demonstration that they and the U.S. would go the last mile to meet French demands without prejudicing the plan or the quality of the SDR as a reserve asset.
3. We therefore agreed:
--on changes that amount, in effect, to a strict rather than a loose interpretation of the principles adopted at Rio;
--on making it easier for a country to opt out of the agreement after the decision is made to activate it;
--to give the EEC a veto on decisions for any future increases in IMF quotas and some related questions.
We were prepared beforehand to make most of these concessions in one form or another, in some instances, the compromises were more disturbing to France's Common Market partners than they were to us. Others we regretted making, because they reduced flexibility in the future development of the SDR. The provision giving the EEC a veto on some additional IMF decisions will give us some trouble on the Hill, but it is not a substantive issue.
4. The willingness of the Four to stand up against the French is a major political development. It demonstrates again that there are limits on how far de Gaulle can push them.
5. The French claimed that the system could not work because our economy had gotten out of hand and we were dumping unwanted dollars on the world. In joining with us, the Four showed they had confidence that we would bring our financial house in order and, specifically, that we would pass the tax bill. The tax bill has now become as much of a world issue as the controversy over the price of gold.
---> [They were right weren't they?]
6. We are playing the Stockholm meeting not as a victory of the U.S. over France, but as a victory for the world monetary system and for reason in world financial affairs.
The French did not vote against the agreement, but abstained. They could decide to join when the final document is submitted. But this will be difficult for de Gaulle to do--particularly after France came out publicly for an increase in the price of gold.
--->[I believe the French position has never changed.]
The market reaction to Stockholm has been excellent. The price of gold in London is softening and the volume is small.
7. As a result of Stockholm, it should be possible to put the Special Drawing Rights proposal in final form within two weeks. It will then go to each of the Governors of the IMF for approval by a mail vote. This must be completed within thirty days. On this schedule, we should be able to put the proposal before the Congress for ratification by the end of May./3/
/3/In an April 17 memorandum, Assistant Secretary of State for Economic Affairs Solomon informed Under Secretary for Political Affairs Rostow that the Executive Directors of the IMF on April 16 had approved their report on the SDR facility and fund reform and that, along with its annexed resolution, the report would now be referred to the Governors of the Fund for their review and vote on the resolution. Solomon informed Rostow that Secretary Fowler, the U.S. Governor of the IMF, would need authorization from the National Advisory Council for his vote. A meeting of the NAC was scheduled for April 18, preceded by a meeting of the Dillon Committee (see footnote 4, Document 64) at which Fowler would review with the Advisory Committee the NAC Special Report and elicit the Committee's views on who might be non-governmental witnesses on the SDR/Fund Reform at Congressional hearings scheduled to begin May 1. Rostow concurred with Solomon's recommendation and recorded State's recommendation that the U.S. Governor vote affirmatively on the IMF Resolution. (National Archives and Records Administration, RG 59, Department of State Central Files: 1967-1969, Box 274, FN 10 IMF 4/1/69)
8. The Stockholm agreement and the Washington Gold Pool decisions are building blocks in the development of a stronger monetary system. They have brought order to the financial markets and give us time to move on our fiscal and balance of payments programs. They also mean we must show results on these programs.

W. W. Rostow/4/
/4/Printed from a copy that bears this typed signature.
---------
Obviously, the results did not show. Things just got worse.

The fear in some of the other memos is almost palpable.
e.g. Rostow describing a conversation with and memo from Joe Fried (?) #190
"He describes the attitude on the Hill as one of almost anarchistic willingness to pull down the temple around their ears on the grounds that our budgetary expenditures are out of control. He feels that the Europeans have the same kind of feeling and cannot understand that our Executive Branch and Congress are incapable of generating a tax-expenditure policy that would keep us in reasonable order.
He is almost in despair about being able to negotiate a package without some sign that a tax increase is at least over the horizon; and he is in despair about getting a tax increase unless there is some kind of commitment to expenditure limitation.
I know enough to know that I have no competence in figuring out how this nagging political problem can be solved. It obviously goes to the heart of our nation's capacity to carry its external commitments; maintain the world trade and monetary system; and avoid a serious domestic breakdown in our economy."


TownCrier (12/23/99; 11:52:28MDT - Msg ID:21564)
US dealers pass on exercising Fed Y2K repo options
http://biz.yahoo.com/rf/991223/sn.html
In this Reuters article, one government bond trader said of the options: "I would say that anybody that exercises them (today) should be fired, because ... rates are easier than they were earlier in the week."

Here is the key phrase by the reporter that should help you fairly assess if we are currently living in *normal* times:
"...the Fed has gone out of its way to try to ensure the funds rate will not fluctuate significantly above target during the days around year-end."

Gone out of its way...hmmmmmmm...kinda makes you wonder what is in store when the Fed "gets back *in* its way", so to speak.


TownCrier (12/23/99; 11:41:47MDT - Msg ID:21563)
The Fed continues to flex its muscles as "lender of last resort"
http://biz.yahoo.com/rf/991223/h9.html
Early today, Fed watching analysts expected the Federal Reserve to add reserves to the banking system with four-day fixed system repurchase agreements in order to span the holiday weekend. James Blumenthal, economist at MCM Moneywatch said, "It could be a fairly decent size with demand for currency rising."

Never one to be outguessed, the Fed felt that four days wasn't adequate, choosing instead to utilize 7-day fixed system repos that totaled $4.265 billion. In a sign that they are scraping the bottom of the banking system's collateral barrel, 75% of the security was in mortgages ($3.15 billion) while the remainder was split between Treasuries and agencies.

Prior to that operation, the Fed made arrangements for yet another forward repo deal that would add $4.65 billion to the banking system...to settle on December 30th and mature on January 4th.

Netking (12/23/99; 11:34:40MDT - Msg ID:21562)
Reply
Sir Elevator Guy & others
Thanks for your questions/comments but I have to dash now...will reply later. PTL

tedw (12/23/99; 10:16:52MDT - Msg ID:21561)
Gold Calls
http://www.usagold.com
June 2000 390 Gold Calls up $60 since yesterday.

I would say somebody thinks Y2k will be a problem.

Gurn Blanston (12/23/99; 9:24:48MDT - Msg ID:21560)
Winner The Invisible Hand msg ID 21550
www.usagold.com
My vote for the winner of the "Top Five Gold Events of 1999" contest is The Invisible Hand. For fun all of you look at it and see if you agree with me.

Gurn Blanston

P.S. How does one pull up a msg ID # that one wants to look at? Is it in archives?

USAGOLD (12/23/99; 9:00:32MDT - Msg ID:21559)
Today's Gold Market Report: Couple Ineresting Year End Quotes from Londontown
MARKET REPORT(12/23/99): Gold was up slightly in early New York
trading. Volumes were light both here and overseas. Reuters (London)
reports the market firm due to "sizable" call option buying ahead of
year end to hedge "any Millennium bug-related disruptions." Flemings
Global Mining Group is quoted in that same dispatch as saying: "Major
Y2K problems, if they eventuate and depending on their nature, could
produce a spike but this is imponderable."

FWN quotes one London analyst as saying: "Improvements are likely to be
forthcoming in January as the physical market strengthens. Whether this
is met by additional hedging activity will depend on official lending
policies and the degree to which mining companies are looking over their
shoulders at a band of increasingly vociferous shareholders who have
taken on board all the events of the autumn." It appears that the
Ashanti Reverse Correlation is beginning to have its effect on
well-heeled gold stock investors. I would think it very difficult to
justify an investment in a gold mining company whose stock goes down in
value when the metal goes up. (Please see the December issue of News &
Views -- our hard copy newsletter for a couple revealing charts.)

That's it for today, fellow goldmeisters. See you here tomorrow.

Galearis (12/23/99; 8:48:40MDT - Msg ID:21558)
solomon weaver: moonlight
I had been waiting for the ultimate moonglow event since I first heard the news of this and last night saw my effort to compare and enjoy the show to those more normal of the past. Living in central Ontario under a clear, cold winter sky does wonders for the compression and clarity of the air and my walkabout was truly magical. On my property are a magnificent grove of old-growth white pines that have laid down a deep carpet of needles under them and area poplars had strewn their colourful leaves to texture this a little more. The shadows of the swaying boughs above were sharp abstracts of dark against this ground canvas and the light was so bright that even the ochre of fall ground cover was quite visible.

To remain on topic I should mention that the colour of the ground was quite golden. It was magical.



Basil (12/23/99; 8:20:38MDT - Msg ID:21557)
Y2k cash
In the FWIW catagory--yesterday, I overheard guy in front in line at neighborhood bank branch ask for 5k cash from his account.The clerk told him it wasn't available right then, but not to worry they could issue him cashiers check that could be taken to another branch which would have the cash.He was pretty upset and was escorted into mgrs office.I had to leave and dont know how it finally sorted out.

In same vein,I have been unable to connect to "Free Republic" website since Juanita Broderick/Clinton lawsuit story broke there yesterday AM.Still nothin about this development in local Denver papers.

ORO (12/23/99; 7:43:11MDT - Msg ID:21556)
Town Crier - Defaults.
TownCrier (12/22/99; 17:33:48MDT - Msg ID:21520)

To make my thinking clear on the matter (I hope), I would like to start with a distinction between two forms of default effects.

The secured portion of the defaulted loan, where cash is raised by sale of security to a third party causes a paydown of principal and is destructive of the "money" recovered. This portion does indeed go to "money heaven". This you covered well in your post. The unrecovered portion is what is left for discussion, and was what I was referring to. Obviously, I didn't specify this before, mia culpa. I'll call this "net default".

The net dfault has two different effects, one contracts only the bank's excess capital, without reducing the banking system's liabilities - which are the cash of the depositors in checking, NOW, CD, savings and such. The other occurrs only when the bank can't meet its required capital adequacy ratios after the defaulted loan asset is settled (as would be the case in a bankruptcy) and underlying security disposed of, which amount is the net default. In the latter case, both additional cash currency and assets are destroyed.

The bank's excess capital position (assets beyond liabilities) less required excess capital to meet capital adequacy regulations. Traditionally, the banks are required to have 2.75% to 5% of excess assets over depositary liabilities according to the regulatory classification of loans they make. The larger and more conservative banks maintain a 10% excess capital level (110% of aggregate deposits).
Reserves are particular portions of excess caoital deposited at the Fed without interest as "cash", and serve to provide the bank with liquidity in the face of withdrawals, and for balancing interbank discrepancies (when at settlement time one bank has more interbank claims on it than it has on other banks). The reserves are obtained by the temporary or permanent sale of loans and securities to the FED.
I would note here thatcapital adequacy requirements today are significantly higher than they were during the 60's, and that the levels of the late 60s were higher than those of the late 50's. This reflects a rising risk premium on the value of the underlying currency - from unquestionably gold backed to backed by way less gold than it used to be, to backed by nothing at all (officially, defacto backing is a different issue).

When net default is not damaging to the bank's capital adequacy, there is rarely any change in the banking system's cash liabilities.

When the affected bank does have significant damage, it would be pushed into mergers, propped up by the FED injecting reserves through the purchase of debt at face value, or another solution for a relatively mild problem. If the affected bank has a serious capital adequacy problem (say 95% or less), then liquidation occurs, bank deposit insurance pools are drawn on, and the bank taken over by the regulators. Liquidation does some damage to the money supply, though damage to bank assets is greater, since the FDIC and similar funds sit in government debt instruments and are not part of the money supply, but the FED can monetize them (and had done so at the time) .
If a non performing asset had a 70% recovery (typical for the US in the 1990 banking crissis), then that portion of money supply was destroyed, and must be replaced to maintain money supply. The funds used to purchase these assets are normally composed of new debt, for the most part. Since new borrowing creates new cash, the net money supply effect is not that great. The net-default, the unrecovered loss, is a net lowering of demand for money and the result is a future excess of money supply relative to its demand.

The important issue is that of the money supply ratio to debt, let's call it M/D, which increases as debt is liquidated at a greater ratio than cash in an environment of mild default rates, particularly when money supply is not reduced in full proportion because of FED monetization activity. In a bank panic, the money supply contracts far more rapidly than the debt, so that M/D falls rapidly. In this case, as had happened in the wake of the 1929 crash, the markets tend to consider all debt as non-performing, and the private paper money is thrown out the window.

Now for the fun part, some figures:
Mild debt repudiation in a fiat money regime -
Capital adequacy ratios for the bulk of banking are assumed to be sufficient:
Loans of amount DD default.
Banks sell security for a recovery of 70% of DD, case (A), and 40%, case (B).
Buyer borrows 80% of 70% of DD in case (a), 50% in case (b)
Banking system liabilities are at DD before default.
Upon default, and settlement of security sale and its financing, we have for banking system liability:
DD
case (A) and (a) less 70%DD add 80% of 70%DD
Total 86%DD
Debt outstanding:
case (A) and (a): From DD, less DD, add 80% of 70%DD, Total: 56% of DD
this is original asset erased, replaced by the buyer's new debt.
M/D changed from 1 before default to 86/56 = 1.54

DD
case (B) and (b) less 40%DD add50% of 40%DD
Total 80%DD
Debt outstanding:
case (B) and (b): From DD, less DD, add 50% of 40%DD, Total: 20% of DD
this is original asset erased, replaced by the buyer's new debt.
M/D changed from 1 before default to 80/20 = 4

Severe debt repudiation in a fiat money regime -
Capital adequacy ratios for the bulk of banking are assumed to inssufficient, i.e. defaults in aggregate move capital adequacy from, sayC = 105% to 90% of liability, M (median values):
Loans of amount DD default. DD is 15% of capital - very severe.
D is reduced by DD.
Banks sell security for a recovery of near nothing, 0% of DD.
Buyer borrows 0% of 0% of DD.
Banking system liabilities are at DD before default.
Upon default, and settlement of security sale and its financing, we have the same banking system liability but for the portion of bank liability defaulted because of bank closures. Assuming a uniform distribution of losses, 10% of bank liability is lost. Assuming the 80 20 rule, 20% of banks have 80% of the problem. Thus 20% of M less 80%DD = .2 - .8 * .15 * 1.05 = 7.4% for the troubled banks. These would be closed.
For the rest of the banks, capital was 80%M * 1.05 and is now less 20%DD = 0.8 * 1.05 - 0.2 * 0.15 * 1.05 = 80.15% of M. Since here capital adequacy was maintained, 80% M is intact. The 20% should be written off.
Thus M/D moved from 1/1.05 to 0.8/0.9, or from .95 to .89.
Distributing the figures at 30% default, and a wider 70/30 distribution, M/D would fall to 0.81 (some additional assumptions were made).
The reality of the situation, though, is that it did not happen this way in the Great Depression. At the worst point, M fell 1/3, but D fell 2/3, M/D rose to nearly 2 from below 1. Why? because of FED monetization activity, and because it would not allow banks to relend, and because the debt burden fell as interest rates banks paid fell.

In the case of the Great Depression, 2/3 of banks closed, and money supply fell by 1/3. Bank lending was so restricted, that nearly no net new lending was allowed as the FED continuously raised reserve requirements and capital ratios. From a bottom of 2.75% reserves in 1929, reserves rose to over 12% in 1932. Even after the great cheating, where everyone within the US lost 100% of their money, the FED maintained extremely high reserve requirements, particularly when considering that is could just print however much was needed to balance money supply to debt once its gold backing obligation was removed. By loosening the reserve requirements, the FED could have caused the creation of new money by resumption of lending at artificially low rates (see Japan today). The FED remained standing within the fiat world in reality, while keeping its head within the gold clouds of the past. This is not repeatable today.

For a pure fiat system, one could not expect the CB to stand there just looking at the carnage among the banks. The revolving door between the banks and the CBs does not allow for anyone in the FED to ever consider not "saving the system". Money would be printed with great abandon to keep bank liabilities live. The drop in money supply would simply never happen, as the FED would continuously buy bad debt like the BOJ is doing today. It will maintain the debt to money supply ratio - allowing a decrease in debt, while preventing an equal dollar destruction of money supply. As it does so, the M/D ratio will grow, as in the first set of examples.

For a general reference, M/D for the US credit markets overall is roughly 1/4. The relationship in the last top in M/D was 1/1.4 in 1980 or so. The previous bottom was about 1/2.7 in 1959. It could have been higher during the WWII or earlier in the 50s, but data from that period are not complete. M3 is used as proxy, using the M9 liquidity calculation, the ratio is not that bad, standing at about 1/1 excluding interbank debt.

By the way, as a little excercise, I added up US and Japanese GDP, Balance of Payments, Debt and Money supply figures. I came up with a way healthier economy than either of these countries alone. The only major problem is that of debt overhang, which remains very high, unless cross country holdings are netted - in which case we have more normal debt ratios.

---------

Solomon and TownCrier, I too think there has been a breach of the old limits and expect this to turn up repeatedly as a solution to non-US indebtedness problems. The main point, however, is that there appears to be an attempt to kill off the mechanism that keeps the dollar stable. The IMF and the rest of the banking world have tried to maintain these countries in perpetual debt for better than 30 years. Why is true debt relief an issue now?
Could it be that the reason is that the purpose of the debt is no longer in place? Could it be that a new deal is being struck and the US and EU are competing in terms offered to peripheral participants? Is the fact of the action indicative of US or EU gaining these participants on their respective sides? (if the IMF and UK have indeed been converted to the BIS side, which it seems to me that they have, then this would be a show of action in fulfillment of the new agreement)

--------

--->Dutch CB spokesman Bert Groothoff said "I can confirm the amount of 13.5 tonnes of gold, 119 million euros was what the Netherlands sold."

The selling price is not mentioned in this sentence, what is implied is a connection of euros and gold, an equivalency. I would tend to think this is a result of either less than perfect translation, or expression. However, it does stand to reason that such an equivalence exists.
Regarding the sale price, I would be surprised to find any indication of what it was. Only the BOE sales have ever indicated a price. I think that this is an important distinction, since that keeps open the possibility of the sale being at a different inter-central-bank price from market prices. What it is, I don't know, but possibly the underlying price implied from correlations I ran, which is nearly four times the market price. What units it is in? I don't know. Somehoew, gold francs of 0.00189 OZ come to mind as the BIS uses this for its books.

--->Does this mean the Dutch government has had to use the proceeds for operational or other expenses? Clearly, this is not simply a swap of gold resrves for paper reserves. Who in their right mind would do such a thing?

Does the possibility of the sale not being in dollars make a difference? If I remember right, only dollars and gold are reported as reserve assets for ECB purposes, since the 20% repo structure of the ECB only uses these two components (I did not check this, I may be wrong).

elevator guy (12/23/99; 7:37:43MDT - Msg ID:21555)
@Netking
Hello Sir Netking!

Did you short crude?

Signifigant drops lately!

Gold is showing signs of life.

Y2K aproaches. What will it yield?

Canuck Gold (12/23/99; 7:24:46MDT - Msg ID:21554)
***MY TOP FIVE EVENTS for GOLD MARKET 1999***
1. Canuck Gold stung by Bank of England gold sale announcement

Following the announcement that the Bank of England would sell 415 metric tons of gold over the next few years, starting with 25 tons in July 1999, the price of gold reversed its upward trend and fell by over US$30 per ounce.

2. First BOE gold sale has Canuck Gold crying the blues

The price of gold declined further following the less-than-positive subscription price of the first 25 metric tons sold by the Bank of England.

3. Canuck Gold celebrates the 8-times over subscription of the second BOE gold sale

The September sale of a further 25 metric tons of gold by the Bank of England was oversubscribed by a factor of 8. The downward trend in the price of gold was sharply reversed, giving gold bugs a reason to smile for a change.

4. Washington Agreement has Canuck Gold dancing in the streets

The agreement, announced in Washington on Sunday, commits the 11 countries of the ECB and others to limit the total amount of gold to be sold over the next five years to 2000 metric tons, with no more than 400 metric tons to be sold in any year. The commitment covers about 85% of the world's central bank gold. More significantly, the leasing of gold by the Central Banks is to be capped at current levels.

5. Ashanti Gold's hedge problems cause the hospitalization of Canuck Gold

Upon hearing of the margin calls against Ashanti Gold by a group of Bullion Banks, Canuck Gold was kept overnight for observation at the local hospital following a collapse. Rather than reacting positively to the surge in the price of gold to US$328 per ounce, the share price of Ashanti Gold collapsed due to the devastation to their hedge book.

Review

The events noted above provide ample evidence of the current manipulation of the gold market. The timing of the sales announced by the Bank of England could have been construed to be coincidental with the recent upturn in the price of gold. However, the method by which the sale price for all the gold was fixed (forgive the pun) at the lowest in-the-money bid price, rather than the average or actual bid price, confirms the assertion that the purpose of the sales was to drive the price of gold down. By September, the price had fallen so low that by the time the second BOE auction came around, market forces had come into play and there was universal recognition that the price was about as low as it was going to get, hence the 8 times over- subscription and upturn in the price. A few days later, the members of the ECB announced the cap on gold sales and leasing. They had obviously had enough of the price
manipulation and disinformation depressing the value of their reserves and resolved to do something about it. As expected, the price rebounded significantly though the opposing forces have been battling it out ever since. The expected defaults of Ashanti and Cambior would have cause another price spike but the Bullion Banks came to an agreement not to make margin calls in order to save their own necks. The short overhang would probably have bankrupted many of them if they had been forced to cover. It would appear that they're trying to buy time to get through the century date change period and they're probably hoping that the price of gold will drop as supplies increase, if there are no major problems, as people unload the gold they accumulated as a hedge. There is speculation that the comparatively small over-subscription of the November BOE gold sale was due to an agreement among the Bullion Bamks not to bid. Stay tuned.



Hipplebeck (12/23/99; 6:02:12MDT - Msg ID:21553)
IMF gold sale
I think the secret to the value to this scheme is the special account that the proceeds go into. Somehow, the money that is put into this special account will be used for the debt relief.
It seems to be getting more and more difficult to pretend that IMF loans are going to be paid back.
Considering the fact that the IMF loans are just a means of securing control over these weaker nations without military means, the IMF folks don't even want the loans paid back.
They can keep stringing out this scam until the people of these countries rebel against the government that sold them out. The Russians are onto the scheme big time, and have already figured out how to play the game and get free money.
When the IMF is loaning them money on paper to pay interest on past loans they must be laughing all the way to the bank.

Netking (12/23/99; 2:06:10MDT - Msg ID:21552)
Shifty / Peter
SHIFTY 21549 - The fall of the market will be shown to be great in the days ahead due to the asset base upon which the foundation of this 'Grand Super Cycle' is based. One thing for sure there has been plenty of warnings. Do those who continue to throw money have ears to hear or eyes to see. Wisdom is justified by her children.

Peter Asher. Yes a choice Sir, the 'Manufacturers Handbook' guarantee gives an unlimited lifespan, the consumer gets to choose where to spend it (aka the Christmas message).


TownCrier (12/23/99; 1:55:33MDT - Msg ID:21551)
REMINDER ***CONTEST****CONTEST****CONTEST*** EARN precious metal directly with your effort!
From MK's Monday announcement of an opportunity for you to earn precious metal:

"I think a lot of the meisters are going to be hanging out at the FORUM during this Christmas week despite wild dashes to the Mall, food and beverage outlets, and other holiday activity, so I thought it would be a good time to have an important year-end type of contest. I hope posters find the time.......

For a French 20 francs gold coin (the famous gold Rooster coin--containing .1867 pure gold ounces), please carefully read and follow these simple instructions:

List the TOP FIVE EVENTS for the GOLD market in 1999 in a newspaper-type headline format (example: "Gandalf the White Purchases Entirety of BOE Fifth Gold Auction") with a short explanation as to why each was significant--whether positive or negative. This must be followed by a review of the events and their impact AS A GROUP on the psychology of gold investors. That review should be at least 30 words.

Length of review is not as important as content!! Your contest entry must be headed with ***MY TOP FIVE EVENTS for GOLD MARKET 1999*** (surrounded by stars as shown here)

The contest will run between now and the end of the day (Midnight Forum Time) Sunday 12-26-99. Time of submission will not play a role in the selection of winners. Content and quality of the post are the keys.....

There will be two runner-up silver Eagles prizes.

One entry per poster, please.

To encourage additional participation from our silent forum vistors, first-time posters will receive a Silver Eagle for posting during the contest period, but you must do two things:
1. Participate in the contest or else post at least 30 words on any gold investment related subject, and
2. You must e-mail us that this is your first post so that we'll know to verify if you qualify for the Silver (cpm@usagold.com)

I [Michael Kosares] will post my TOP FIVE on Monday after the CONTEST is officially closed. (The winning entry will not be contingent on agreement with me but the strength of the commentary. The winners' announcement might extend into the New Year depending upon year-end schedules of our panel of judges.)

I just thought it might be fun to recapitulate the past year.......

Onward, my fellow meisters.......into the fray. Let knowledge and courtesy be your hallmarks; wisdom your guide.

I want to take this opportunity to wish all our posters and lurkers Happy Holidays! I would like to especially thank our regular posters for making this one of the most interesting and informative stops on the internet. We've come a long ways from where we began, and built something here of which we can all be proud. May God bless and keep each of you and your families during these happy year end celebrations and into the New Year...... MK"

The Tower sends its warmest regards, too!

The Invisible Hand (12/23/99; 1:48:26MDT - Msg ID:21550)
*******MY TOP FIVE EVENTS FOR THE GOLD MARKET OF '99*******
DECEMBER 06 HOLLAND CONFIRMS THE WASHINGTON AGREEMENT

The Dutch CB confirms that it will only sell gold through the BIS. Market participants don't understand the relevance of the demise of the LBMA. The yellow stays in the 280 - 290 range.


DECEMBER 28 GOLD ASTONISHES WITH A $ 2,000 RISE

Goldman Sachs admits its programs are not Y2k compliant. Panic hits the market. Dow hits 3,200, halfway to irrational exuberance. Flight to safety helps the yellow. Oops, this is the gold market of 1999 not of '99.


DECEMBER 29, GOLD SKYROCKETS TO $ 15,000 after yesterday's $ 2,000 rise

Deutsche Bank fails. Ed Yardeni still trying to hide their short losses in the gold market.


DECEMBER 30, MARKET PARTICIPANTS COLLAPSE - GOLD UP $ 45,000

It becomes clear that not only is Y2k coming and that many institutions did short the gold market, but also that the London Market is a paper market.


DECEMBER 31, GOLD ENDS YEAR WITH A "SMALL" $ 25,000 RISE

LBMA collapses while most traders are absent. Armstrong (that's Neil Armstrong, the man who went in 1969 -without gold- to the ... moon) rules the waves.

SHIFTY (12/23/99; 1:02:22MDT - Msg ID:21549)
(No Subject)
On the news tonight they said that this stock market is responsible for a large number of " millionaires" . Now with all the cash in stocks and big mortgages and credit card debt, fancy cars, and all: I wonder, when the bubble bursts and they find themselves negative one million dollars will they be NILLIONAIRES or multi-nillionaires?

Peter Asher (12/23/99; 0:31:39MDT - Msg ID:21548)
Netking! Do we have a choice?
"Solomon Weaver #21538 "The ancient mystics believed that the moon's light shining on our souls allowed us to remember our past lives and our reasons for coming back in each life....like a COMEX of silver...holding precious memories." Netking #21546) Why would anybody want to keep coming back to this 'fallen earth' buddy(or contemplate it), I would prefer to go where the streets are paved in, you guessed it, Gold! "


SHIFTY (12/23/99; 0:18:40MDT - Msg ID:21547)
solomon weaver
You made the moon sound so beautiful I went out to get a look. The temp. here is +60 and so cloudy I could see nothing. It must be a beautiful site on a clear crisp night.



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