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ARCHIVED DISCUSSION FROM 4/23/1999 All times are U.S. Mountain Time View Yesterday's Discussion. The Stranger (4/23/99; 23:07:47MDT - Msg ID:5111) beesting (5104) Beesting- Bullion banks normally arrange CBs to lend the gold and for mining companies to sell it. The gold is actually delivered to the buyer for ultimate fabrication into jewelry, coins, what-have-you. The mining company gets payment in full at settlement.As far as hedging transactions, they can be done in, or away from, the futures markets. The purposes and nature of such transactions vary from party to party. NORTH OF 49 (4/23/99; 19:33:14MDT - Msg ID:5110) Aristotle and H. Lime Well Sir Aristotle, got gold, got a powerful mind, got the desire get out there and kick some dirt around!! Off hand, I would say you've got it all ole bean!Harry, I am sure you had trouble believing your eyes when that duce showed up--did you keep it or market it?Something about your name has been driving me nuts for the last 3 or 4 weeks, and last night I finally remembered where I had heard it before. Some time during the fifties, there was a black and white TV program (like there was any other kind at that time) called The Third Man. I can't remember a darn thing about it except:1. it had a real cool theme song, and2. the main character was named Harry LimeInteresting, no?No49 USAGOLD (4/23/99; 18:00:42MDT - Msg ID:5109) Switzerland at Europe's Center To Another:Sir, it is good to have you back. We have had many stimulating exchanges in the past, and my own workload has kept me from pursuing a deeper discussion of the issues with you sooner. I would like to renew our exchange by asking this:Your most recent post #4846 raises a question which broke new ground in my thinking: "Think they this Swiss gold be for pawns? Not this modern gold. It be bid for by kings and queens as the ECB will be for the first and last." As I recall, the chain of events leading to the first public discussions of these sales included the implementation of Maastricht and euro introduction.Do you believe that Switzerland is attempting to show the rest of Europe that it will not be a safe-haven threat to the euro by reducing its gold backing of the SwFr? After all, when you think about it, with the euro becoming Europe's sole currency, any breakdown there would cause a flood of deposits to Swiss banks -- the traditional European haven.You imply that this gold will go directly to BIS and ECB. This is an interesting prediction and underscores the question above. Switzerland has a long history of playing European politics to shrewd advantage.How do you see this move on Switzerland's part? Is it a shrewd attempt not to be pulled into the EMU swirl and remain independent, or is it as they say -- a much needed constitutional update that gives them some freedom to move monetarily?Also, perhaps if you are so inclined, I would ask if you think gold's role would take centerstage in Europe now if the euro continues to be weak in light of the situation in Switzerland. Please answer as you have the time and inclination. I do not mean for my questions to be an imposition.Thank youMichael Kosares Christine (4/23/99; 17:36:25MDT - Msg ID:5108) Doctrine of International Community--by Tony Blair http://38.201.154.103/articles/?a=1999/4/23/70143 Text of speech given by British Prime Minister Tony Blair in Chicago last evening. Most interesting. THX-1138 (4/23/99; 17:21:23MDT - Msg ID:5107) Palestinian State Anytime Supported By Russia Associated Press reported yesterday that Russia now says it will support an independent Palestinian state whenever the Palestinians choose to declare it. The position was made clear in a statement made by Russia's ambassador to Egypt who was quoted as saying, "There is no choice but to declare a Palestinian state. Russia will strongly support the declaration of a Palestinian state at any time the Palestinian Authority chooses." In the last few days, there is a growing support for the unilateral declaration of a Palestinian state sooner rather than later-a sharp turn-around. Of course, the Israeli elections are fast approaching on May 17 as well. THX-1138 (4/23/99; 17:19:34MDT - Msg ID:5106) Egypt Says a Palestinian State Must Be Declared Soon Arutz 7 radio from Israel reported that the Egyptian Foreign Minister now says that Palestinian Chairman Yasser Arafat must declare a Palestinian state as close to May 4th as possible. The report said yesterday: "The Egyptians have been pushing this move for some time,in an attempt to re-locate themselves at the center of the international stage. Egypt assumes that a unilateral declaration of the state will anger the U.S., leaving Yasser Arafat with only European support. Arafat's link to Europe is none other than Egyptian President Hosni Mubarak, who has strong ties to several European countries, most notably France. Other reports from Egypt indicate that Arafat will declare a state immediately after the Israeli elections only if Ehud Barak is victorious. The plan is apparently to seek EU aid in pressing the UN to consider, and immediately recognize the new state. Both Egypt and the Palestinians perceive a Labor government under Barak as too weak to resist the world pressure that will accompany such a declaration." THX-1138 (4/23/99; 17:16:06MDT - Msg ID:5105) Push for New NATO Role in New World Order The London Telegraph reported today that according to a NATO speech yesterday British Prime Minister Tony Blair, supported by President Clinton, said that NATO ground forces will enter Yugoslavia with or without Slobodan Milosevic's permission. He was quoted as saying, "Success is the only exit strategy I am prepared to consider. We will not have succeeded until an international force has entered Kosovo and allowed the refugees to return to their homes." In a talk entitled Doctrine of the International CommunityBlair was quoted further as saying, "We are all internationalists now whether we like it or not. We cannot refuse to participate in global markets if we want to prosper, we cannot ignore new political ideas in other countries if we want to innovate, and we cannot turn our backs on conflicts and the violation of human rights within other countries if we want still to be secure." The London Telegraph report said, "Mr Blair hinted at a new role for Nato, turning it into the military arm of a new world order rather than a purely defensive alliance. Prime Minister Blair said, "If we can establish and spread the values of liberty, the rule of law, human rights and an open society then that is in our national interest too. The spread of our values makes us safer. As John Kennedy put it: 'Freedom is indivisible and when one man is enslaved, who is free?'. . non-interference must be qualified." Sounds like a ground war is imminent. Maybe Heir Clinton should start up the draft, and because he is for equal rights for everyone, then women should be included. I would suggest he draft his daughter first. beesting (4/23/99; 17:04:25MDT - Msg ID:5104) Stranger #5080 and Peter Asher #5076 Thank you both for the input concerning forward selling by Gold mines.This is what I've been mulling over; From what I've read each contract to forward sell Gold by a mine is written differently.Gold delivery may be 3 years or up to 10 years into the future,but(and this is a big butt) doesn't the Gold mine get paper cash right away for the sale of the contract to meet payroll expenses,and other operating costs?They may get some cash and some deferred payment depending on how the contract is written up.The Gold mine may receive interest in advance,to bring up the overall profit per ounce. Is there a Gold-mining accountant in the room??If they get deferred payment I'd assume there would be a monthly or yearly interest amount added into the over all sale, of the Gold in the ground. This could explain why(as Stranger pointed out) a higher price per ounce can be shown on annual reports.I believe large Gold mine sales are in tons not 100 ounce increments.That brings up the paramount question; Who are the cash buyers of these large forward sales Gold contracts? Is it the Gold bullion banks who may be backed by The Federal Reserve or other Central Banks, who in turn take a contract for tons and break it down into 100 ounce increments to sell on paper Gold exchanges?(comex)The question has previously been answered(and I think correctly),on this forum, that the U.S. Mint buys Gold directly from U.S. mines,but wouldn't they still need an intermediary(most contracts require a third party) such as a Bullion Bank?Individual loans and transactions would not appear on banking annual reports to shareholders so no one,except,bank loan officers and higher banking officials would know the inner workings of Gold transactions.Is there a Bullion Banking loan officer in the room to explain this???One other question;Someone is paying refinery costs on Gold,is that cost added into mining costs at the mine?If so wouldn't that bring down profits at the mine.It's my understanding large mines(Australian)produce large ingots which are transported to refinery's for further refining.Cost may be incurred by buyer of Gold.(Bullion Bank?)...........beesting THX-1138 (4/23/99; 16:45:43MDT - Msg ID:5103) CNBC Was just watching CNBC and they were discussing what are some stocks to stay away from. Yup, you guessed it. Stay away from Gold stocks. The reason the guy gave was that inflation was not an issue. CNBC seems to really be talking Gold down recently. Aragorn III (4/23/99; 16:42:04MDT - Msg ID:5102) The weekend ahead of us...the week beyond... "FOA (4/19/99; 19:33:56MDT - Msg ID:4895) THE NEW BULL MARKET!"FOA, I see the work of ANOTHER firmly rooted in this. I hope that a plea for a "translator" by some does not act to hinder the free delivery of future messages. You are surely busy enough without this extra duty. But thank you for this message, and for yours that followed: "FOA (4/20/99; 10:40:49MDT - Msg ID:4928) Modern Gold Standard!"Next week will bring several important men together to discuss as "official business" that which is never far "out of mind" or "off the agenda"...the matter of holding together a weakening market structure with a semblance of confidence, purpose, and direction for the future. Some days do however reveal a sense of "winging it" as the unpredictable wind suddenly gusts against them.Do you see these meetings as efforts toward passing the baton in the direction you and ANOTHER have described, or does that element remain independent from next week's business agenda for the Group of Seven?got insight? TownCrier (4/23/99; 16:00:05MDT - Msg ID:5101) Yep When you can't count, it is definately time to call it a day! TownCrier (4/23/99; 15:58:39MDT - Msg ID:5100) Was calling it a day But the 6000th post enticed me into one more."All work and no play..." you know? TownCrier (4/23/99; 15:56:23MDT - Msg ID:5099) REMINDER: weekend reading list http://www.usagold.com/AllWorkandNoPay.html Become a master of your own destiny. Learn what money is and what it isn't. A productive diversion when the Knights are away from the Round Table. By Monday, the squires will all be wearing armor! CoBra(too) (4/23/99; 15:52:50MDT - Msg ID:5098) (No Subject) Just before I call it quits for the day I've checked with the forum and want to thank Stranger (very kind, I wish I would..) and Christine for their comments. At this stage I can only try to shape some half baked ideas.I do agree wit Christine's comments re. CB officials not being totally unaware of almost every angle of potential future developments, which is their most important task and objective in terms of keeping the monetary base and the equilibrum of the respective currency units on even keel and avoid the short term boom/bust cycles, experienced during the 70-ies. We can only speculate as to what got us into this mess. One may be overreaction, or better overkill of the 1970's oil shock kind of double digit in(-stag)flation. Then the extended, and I am convinced, almost nobody has foreseen theJapanese ongoing Japanese melee, accentuated by the Yen carry trade, now gold carry trade by the hedge funds. Again nobody would have betted on the sheer size of these funds, even as early warning signs in form of Orange County or Barings became apparent. Also nobody would have believed the massive leverage some of the worlds leading investment banks have been willing to extend - the profits have been to real and to good to pass up. The new breed of CB technocrats may have been driven by irresistible profit and performance orientation as tey succumbed to the gold carry trade, derived from originally and basically sound business practice to hedge for future price volatility, at the same time undermining their only true asset (CB's & GM's). (BTW I mean the Barricks of this world and not the PDG's, NEM's or HM's, which are doing it more prudently).Complacency leads to the believe, that every foreseable risk is accounted for and the old liner is smoothly sailing towards the land of milk and honey, an iceberg in form of LTCM ripped open the unsinkable Titanic. Well, were still floating,taking a lot of water,but can we patch it up enough, at least to reach some sort shore in time? A.G.s pumps are still working overtime and all other vessels are limping far off course. Mayday does not seem far off.Sorry for late nite post (it shows) TownCrier (4/23/99; 15:44:43MDT - Msg ID:5097) Millenium Bug threatens food supply systems http://www.fao.org/news/1999/990302-e.htm Experts pinpoint transportation as the weakest link in the food chain. TownCrier (4/23/99; 15:41:24MDT - Msg ID:5096) Senators In High-Octane Mode Over Y2K, Gas & Oil http://asia.yahoo.com/headlines/230499/technology/924801300-129623.html Good info. TownCrier (4/23/99; 15:31:08MDT - Msg ID:5095) Dollar ends US mixed as Kosovo, G7 captures attention http://biz.yahoo.com/rf/990423/ble.html Trading money for money's sake. TownCrier (4/23/99; 15:19:22MDT - Msg ID:5094) Social Commentary from a man that appreciates the yellow metal http://www.polyconomics.com/searchbase/04-22-99.html Little Boys Playing With GunsMemo To: Sen. Bob Torricelli [D-NJ]From: Jude WanniskiRe: Kosovo and Colorado TownCrier (4/23/99; 15:11:21MDT - Msg ID:5093) Bridge NY Precious Metals Review Jun gold failed to stage a rally today as many had anticipated, settlingdown 30 cents at $284.9 per ounce. A few traders said they are predicting arunnup next week. "If we can break through $285, it should stay pretty strong,"said one trader. "Otherwise there's not much to go on." However, one trader held a bearish outlook for gold, noting that the market"is haunted by the possibility of IMF and Swiss National Bank sales andaggressive producer sales."Reprinted at USAGOLD with permission. For details please go to:http://www.crbindex.com/No further reproduction without written permission TownCrier (4/23/99; 15:09:10MDT - Msg ID:5092) $300-gold is cheap. It's a tough business out there. Assorted Bridge News Sydney--Apr 23--Australian gold producer Acacia Resources Ltd. today saidits gold production in the Jan-Mar quarter fell 8.5% from the previousquarter to 117,273 ounces due to heavy rain affecting mining at the PineCreek and Sunrise Dam operations in Western Australia state. As a result,cash costs rose 11.4% from the previous quarter to Aus $322 per ounce, itsaid. Bridge NewsJohannesburg--Apr 23--South African gold mining company Anglogold haswarned that the future of its Navachab gold mine in Namibia is threatened bylosses of 2.8 million rand following a 6-day strike over what workers allegedwere unhealthy working conditions, Business Day reports. An agreement was reached to end the strike last night following another dayof talks between Navachab management and representatives at the mine 200kilometers west of Windhoek. By I-Net BridgeSydney--Apr 23--Australia's Newcrest Mining said today its Jan-Mar goldproduction totaled 177,583 ounces, down 12.2% from the previous quarter,with output at its flagship mine, Telfer, in Western Australia stateaffected by lower ore grade in its underground development. The companyalso reported a net profit for the 3 months to Mar 31 of Aus $8.4 million,up 6.3% from the previous quarter. Bridge News,Sydney--Apr 23--Australian gold producer Sons of Gwalia Ltd. said today itsJan-Mar gold output was down 3.7% from the previous quarter at 108,431ounces, affected by heavy rain in Western Australia state and larger-than-forecast output falls at the Sons of Gwalia and Marvel Loch mines. As aresult, cash costs were boosted by 10.7% from the previous quarter to Aus$379 per ounce, it said. Bridge News, Story .10819Johannesburg--Apr 23--There will be no production at South African goldmining company Anglogold's Matjhabeng mine shafts in the Free State this weekendfollowing an earthquake early this morning. Anglogold spokesman Andries van Zyl told I-Net Bridge that there would beno production this weekend at Matjhabeng, but it was hoped that production at 3of the mine's 4 shafts would resume on Apr 26. By Jacqueline Mackenzie, I-NetBridgeSeoul--Apr 23--Trading of gold futures was limited on the first day of tradein the newly-launched Korea Futures Exchange of South Korea, with only 104contracts trading hands, traders at local futures said. By Dong-Won Suh, BridgeNewsReprinted at USAGOLD with permission. For details please go to:http://www.crbindex.com/No further reproduction without written permission TownCrier (4/23/99; 14:45:10MDT - Msg ID:5091) Debtor nations must honor debt - IMF's Fischer http://biz.yahoo.com/rf/990423/bd9.html First, lend them lots of money;Next, drive down the price of their exports;Then, hold them over a barrel.Cleverness abounds! TownCrier (4/23/99; 14:40:59MDT - Msg ID:5090) IMM currency futures end narrowly mixed http://biz.yahoo.com/rf/990423/bh9.html Pre-weekend tea leaves. TownCrier (4/23/99; 14:37:15MDT - Msg ID:5089) Time may be right if Rubin wants to go-fx analysts http://biz.yahoo.com/rf/990423/bhz.html Currency traders nervous over talk of retirement.If a market performance lives or dies by the decisions of one man, it is too far gone to save. TownCrier (4/23/99; 14:30:51MDT - Msg ID:5088) CEI Gold: Commitments of Traders [second try on format] 4/23/99 --FWN--As of Apr 20,1999 (CONTRACTS OF 100 TROY OUNCES). . . . . . . . . . . LONG . . . . (CHG) . . . . . SHORT . . . . . (CHG) . . . . . . %OINon Commercial . . 12,075 . . . . (+120) . . . . . 85,765 . . . . . (-7,281) . . . . 24.8%spreading . . . . . 18,901 . . . (+1,484) . . . . . 18,901 . . . . . (+1,484) . . . . 9.6%Commercial . . . . 137,066 . . . (+1,148) . . . . . 62,025 . . . . . (+8,719) . . . . 50.6%Tot lrg trader . . 168,042 . . . (+2,752) . . . . . 166,691 . . . . . (+2,922) . . . . 84.9%Small traders . . . 28,954 . . . (-1,847) . . . . . 30,305 . . . . . (-2,017) . . . . 15.1%Total OI 196,996 . . . . . . . . . . . . . . . . . . . . . . . (+905)(c) Copyright 1999 FWN Reprinted at USAGOLD with permission. For details please go to:http://www.futuresource.com/internet.shtmlNo further reproduction without written permission from FWN TownCrier (4/23/99; 14:12:03MDT - Msg ID:5087) CEI Gold: Commitments of Traders [hoping the format works] 4/23/99 --FWN--As of Apr 20,1999 (CONTRACTS OF 100 TROY OUNCES)-- --- --- LONG CHG SHORT CHG %OINon Commercial 12,075 +120 85,765 -7,281 24.8 spreading 18,901 +1,484 18,901 +1,484 9.6Commercial 137,066 +1,148 62,025 +8,719 50.6Tot lrg trader 168,042 +2,752 166,691 +2,922 84.9Small traders 28,954 -1,847 30,305 -2,017 15.1Total OI 196,996 +905(c) Copyright 1999 FWN Reprinted at USAGOLD with permission. For details please go to:http://www.futuresource.com/internet.shtmlNo further reproduction without written permission from FWN TownCrier (4/23/99; 14:06:55MDT - Msg ID:5086) FWN NY Precious Metals Review: Jun Palladium -$15.2 on Russia Talk By Tina Petersen, Bridge News Washington-April 23--NYMEX June palladium today dropped$15.20 to settle at $355.95 per ounce after hitting anear three-week low of $355 per ounce on growing perceptionsof Russian sales as well as profit-taking. Traders said the Russians have been selling smallquantities in Switzerland and believe material is headed tothe United States. The rest of the precious metals complextraded rangebound, settling marginally lower.[That's the report?! Slow day, or calm before the storm... You decide.](c) Copyright 1999 FWN Reprinted at USAGOLD with permission. For details please go to:http://www.futuresource.com/internet.shtmlNo further reproduction without written permission from FWN TownCrier (4/23/99; 13:46:10MDT - Msg ID:5085) U.S. CREDIT OUTLOOK -- Treasuries feel unwanted http://biz.yahoo.com/rf/990423/bfm.html Solid prices are not based on sellers wishes. This doesn't look good for those in the non-gold world. Christine (4/23/99; 13:20:25MDT - Msg ID:5084) @Stranger Are you sure you are not my brother. No, you couldn't be-- because my brother will not even discuss gold with me, let alone own it. (-:>~ The Stranger (4/23/99; 13:13:24MDT - Msg ID:5083) Christine Now it is I who have nitpicked. I apologise. I think you express yourself very well, and I know I often do not. What I was trying to say is that "manipulating" gold is part of a central banker's job, as though you needed to be told. I get in trouble a lot for underestimating people. I believe underestimating others is a reflection of one's own shortcomings. If you ever catch me doing that again, please tell me to buzz off.I am REALLY glad you are here! Christine (4/23/99; 12:56:22MDT - Msg ID:5082) Stranger, you misunderstand me or I am not speaking well Greenspan and the central bankers are doing the right thing NOW, or we would be plunging into world-wide depression at present. I am just saying their past behavior has created this present mess which they are now correctly responding. They created the instability they are now trying to stabilize. JA (4/23/99; 12:28:55MDT - Msg ID:5081) Panning for Gold North of 49 brought up the subject then Aristotle and Hline commentedI have not done much of it, only once or twice with the children on a family outing. However, I think I mentioned before that I have some gold mining claims. They happen to be in a very picturesque part of the country, above the Salmon River with a beautiful view of the Sawtooth Mountains of Idaho. The whole area is full of gold mining history. A few years back, when the price of gold justified it, I spent many summer days and nights in those mountains and know a fair amount about the early gold mining history of the location. Many old mining cabins, tunnels, shafts and tales of lost fortunes, and mines. I gained a real appreciation for efforts of the old prospectors. I have heard it said "Gold is where they found it". So if a fellow knight at some point in time wanted to set out on a little adventure, see a beautiful part of the country and do a little gold panning, I would be pleased to provide an orientation and little tour of the area. There is a location on one of the claims, with a fallen down prospector's cabin on it. It will make you feel like you went back 100 years in time. I will show you his caved in mine shaft and where I think he panned his gold and you can have at it. I once sent in a sample of rock from the old dump for assay that came back about an ounce of gold per ton and 22 ounces of silver. However, I couldn't those assays consistently. While it's not too far off an old logging road, you are not likely to see another human, you are truly in nature. Backlash I don't know the answer to your question on Who and Why, I can only speculate. However as I said the other day if there is no fire why all the smoke? If I were to point fingers, which of course I am not, I would point them in the direction of the "Council on Foreign Relations". Several years ago when I read of comments or actions, that didn't smell right, taken by people in power, I would check if they were members of "The Council on Foreign Relations. I was initially surprised to find so many influential government, educational, business and media people as members of an organization that is promoting one world government. The Stranger (4/23/99; 12:27:39MDT - Msg ID:5080) CoBra(too),turbo, beesting, Peter and Christine (and anybody else) CoBra- apparently you and I share opinions on just about everything. That's pretty reassuring to me, given how smart you are.turbo- it is not just your intellect but your chivalry also which brings you to this forum. Clearly you are a dragonslayer! I hope to have a long and rewarding relationship with you, my friend.beesting and Peter- boy have I got a revelation for you two noble knights! When Barrick reports forward sales prices they include the calculation for net interest earned. Here, using a three year example, is how it works: Sell the gold for $285, buy treasuries at 5%. 5% of $285 is $14.25. $14.25 times 3 years is $42.75. Minus 300 basis points for 3 year lease expense, and you are left with $34.20. Now you add the $34.20 to the $285 and you get a reported sales "price" of $319.20. The fact that some sales are reported even higher than that is due to what Peter said about their having been made earlier when the whole market was higher, but it also happens because some of these companys have sold forward with lease arrangements that go out as much as ten years!Some CPA, reading this, can tell us if this is clean bookkeeping or not. I can only guess that it is, since so many are doing it. Barrick is a fine company. I own some stock in it myself, along with several others. They are caught in a trap here. Like turbohawg(sorry turb, here I go again) they were playing the disinflation game. Usually, at settlement, bonds could be bought back at lower prices and gold could be delivered at a lower opportunity cost from the mine. As disinflation began to blossom into the threat, at least, of full-blown deflation, these guys thought they had masterminded their way out of a gold bear market. Like Turbohawg, they underestimated the Fed and its magic-like ability to create money. Now they see inflation re-emerging, and there is not a damn thing they can do about it, because the first time they cease their forward sales activity, they will have to report negative sales comps and a severe earnings disappointment. The stockholders would be enraged. So, they keep selling and hope that gold goes up a little but not too much. It is a shame. What should have been the opportunity of their careers is here now, and most of them are stuck hoping prices don't rise too much. Wow!Christine- there you go again. Remember, it is the job of every central bank to achieve a STABLE currency. One of the most important measures of their success is the price of gold. Believe me, Alan, who is a dear friend of mine (I wish!), is doing everything he can to reinflate. It isn't just miners who have been hurt. It is farmers, steel fabricators and a whole host of others. Virtually ALL commodities are at dangerously low levels. That is why we are rapidly growing the money supply. Before this is over, you will credit AG and your understanding of his motives, for a very handsome gain indeed! Peter Asher (4/23/99; 12:22:36MDT - Msg ID:5079) Dress Rehersal http://www.wired.com/wired/archive/7.04/blackout.html?pg=1&topic=&topic_set= Superb article on the 1998 ice storm. Best example of a Y2K event to date! Christine (4/23/99; 12:17:26MDT - Msg ID:5078) Cental bankers If central bankers really are this stupid, they should be fired and replaced with computers. (Unfortunately, I fear stupidity is not the issue.) Christine (4/23/99; 11:42:31MDT - Msg ID:5077) @CoBra(too) IMHO, Alan Greenspan, and all the central bankers could have easily avoided the severity of this economic cycle if they had just stopped manipulating the price of gold downward years back. Via all the gold leasing, they have kept the price of gold artificially low, at least since 1996. Price of gold, if it is not manipulated, can best regulate asset allocation. Those central bankers certainly know this. Peter Asher (4/23/99; 11:36:33MDT - Msg ID:5076) beesting The mining company would have had to do those forward sales back when the POG (futures) were at that level.Buying a Call option gives the right to 'purchase' at that price, which only has value if the POG is higher than the call price before it expires. To have the right to sell gold, would be a Put, which would cost the price differential plus a time premium. For example the right to sell Gold next December at $400.00 would probably cost about $120.00/ oz. ($12000.00 per contract). USAGOLD (4/23/99; 11:34:57MDT - Msg ID:5075) Clarification: The comments in my previous post are relative to the interesting Reuters article linked by Townie and titled"Analysts query GFMS gold market data"Link provided below. USAGOLD (4/23/99; 11:28:31MDT - Msg ID:5074) A Couple Comments on the GFMS Controversy...A Fistful of Salt ---It would be interesting to know where they are getting their information on central bank gold sales, so far nobody has claimed sales and usually announcements follow within a reasonable time period of the gold reaching the market. Andy Smith is correct in thinking that rumors would have leaked somewhere if there had been a major sale.---If I recall correctly, Frank Veneroso, who nurtures close contact with Europe's central bankers, has also questioned GFMS statistics. Sorry, Frank, if I'm wrong on that.---Part of the problem for GFMS is the statistics published on a monthly basis by the London Bullion Market Association.LBMA shows a turnover of 850 tons per "day". GFMS, also located in foggy Londontown, shows a turnover of 4000 tons per "year". Supposedly, LBMA offers its figures as a way to make the gold market more transparent. All it has done is make the market more opaque when you try to reconile those numbers with GFMS numbers. How do each organization account for the differences? Obviously the LBMA volumes also reflect forwarding, options strategies, etc. in an unregulated market that does not require any sort of reporting. Ask one about the differences and they will tell you they don't know how the other arrives at its numbers even though their offices are a stone's throw from one another. You would think on something this important they would have arrived at some sort of understanding of each other's statistical model. Apparently they haven't and don't want to. The whole affair is as foggy as the town from which this information emanates.---Once again we get back to the leasing market. No study of gold flow can possibly be anywhere near complete without a thorough analysis of that piece of the puzzle because most, if not all of that gold, is sold into the market and adds to the supply. If these figures are in the GFMS study I don't know where they put them, but leasing by any measure is a significant portion of the gold coming on market.---All of us in the industry, use the GFMS figures in our analyses and pass them on to our clientele. It is incumbent on GFMS, a firm I respect, to respond clearly to those questioning the published statistics. It is not good enough in my view to say as Paul Walker has that: "The stuff these people put out is a joke...If they have a qualm with our figures they should produce a consistent supply and demand balance for us to debate." This is not a response to the question being asked. We are not in the business of gathering and tabling statistics. That's where GFMS butters its bread, not the bullion retailers. It is their responsibility to get it right. If you are going to go public with the information, it had better be correct. If you are uncertain about something, you had better note it. That, in my view, comes with the turf.---I have always had a favorable opinion of GFMS but they have increasingly come under fire over the past year or so.As alluded to in my report yesterday, I am also concerned with the consistently bearish scenario presented by the firm. As we all know, there are all kinds of ways to spin information -- not the least of which is take a neutral stance -- and the strong pitch made by GFMS supporting the British government's attempt to push IMF sales to the front burner raises concerns I never had before. They now that this is a sensitive issue to those of us who favor gold ownership and essentially represent those who already own the metal. Why do they basically come out bandying the party line so to speak and the line of the British and U.S. government's even though they know it is harmful to the market?---I also wonder if all of this should be taken with a fistful of salt -- especially in light of some of the reaction I have seen to criticism. turbohawg (4/23/99; 11:26:50MDT - Msg ID:5073) Peter Excellent post !!! And timely ... that puts it in a nutshell. A necessary step in accomplishing the feat of returning individual liberty to this country is the destruction of the mechanism by which the statists rule ... the elimination of the Fed and the return to the gold standard. We have one Congressman (and maybe a few others) on our side, Cong Ron Paul, who is introducing legislation to do just that. We need to send him some help. Christine (4/23/99; 11:11:28MDT - Msg ID:5072) SteveH--Great analysis--ie I think like you do I concur with everything you said, and you said it incredibly succinctly. What you describe is how I have started to become such a conspiracy nut. How could they have done this--they (meaning central banks, powerful international financeers, etc) can't be that stupid. If they had just stopped lending their central bank gold a few years back, gold would have started naturally rising, signalling money flows gradually back into commodities, and would have prevented this gross malinvestment that has occurred in manufacturing and production, causing worldwide currency collapses where the malinvestment has occurred. What a mess. Peter Asher (4/23/99; 11:02:43MDT - Msg ID:5071) Part of the problem I got this on E-mail, but the links dont't call it up so I'm posting it in full.From: Paul Adams <pauladams@earthlink.net>The Bill of No Rights>> We, the sensible of the United States, in an attempt to help> everyone get along, restore some> semblance of justice, avoid any more riots, keep our nation> safe, promote positive behavior and> secure the blessings of debt-free liberty to ourselves and our> great-great-great grandchildren,> hereby try one more time to ordain and establish some common> sense guidelines for the terminally> whiny, guilt-ridden delusional, and other liberal, commie,> pinko bedwetters.>> We hold these truths to be self-evident, that a whole lot of> people were confused by the Bill of> Rights and are so dim that they require a Bill of No Rights.>> ARTICLE I>> You do not have the right to a new car, big-screen color TV or> any other form of wealth. More> power to you if you can legally acquire them, but no one is> guaranteeing anything.>> ARTICLE II>> You do not have the right to never be offended. This country> is based on freedom, and that means> freedom for everyone -- not just you! You may leave the room,> turn the channel, express a> different opinion, etc., but the world is full of idiots, and> probably always will be.>> ARTICLE III>> You do not have the right to be free from harm. If you stick a> screwdriver in your eye, learn to be> more careful, do not expect the tool manufacturer to make you> and all of your relatives> independently wealthy.>> ARTICLE IV>> You do not have the right to free food and housing. Americans> are the most charitable people to> be found, and will gladly help anyone in need, but we are> quickly growing weary of subsidizing> generation after generation of professional couch potatoes who> achieve nothing more than the> creation of another generation of professional couch potatoes.>> ARTICLE V>> You do not have the right to free health care. That would be> nice, but from the looks of public> housing, we're just not interested in public health care.>> ARTICLE VI>> You do not have the right to physically harm other people. If> you kidnap, rape, intentionally maim> or kill someone, don't be surprised if the rest of us get> together and kill you.>> ARTICLE VII>> You do not have the right to the possessions of others. If you> rob, cheat, or coerce away the> goods or services of other citizens, don't be surprised if the> rest of us get together and lock you> away in a place where you still won't have the right to a> big-screen color TV or a life of leisure.>> ARTICLE VIII>> You do not have the right to demand that our children risk> their lives in foreign wars to soothe your> aching conscience. We hate oppressive governments and won't> lift a finger to stop you from going> to fight if you'd like. However, we do not enjoy parenting the> entire world and do not want to> spend so much of our time battling each and every little> tyrant with a military uniform and a funny> hat.>> ARTICLE IX>> You do not have the right to a job. All of us sure want you to> have one, and will gladly help you> along in hard times, but we expect you to take advantage of> the opportunities in education and> vocational training laid before you to make yourself useful.>> ARTICLE X>> You do not have the right to happiness. Being an American> means that you have the right to> pursue happiness -- which, by the way, is a lot easier if you> are unencumbered by an> overabundance of idiotic laws created by those around you who> were confused by the Bill of> Rights.> Copyright © Lewis W. Napper. All> Rights Reserved. http://www.peterasher.com beesting (4/23/99; 11:02:18MDT - Msg ID:5070) Try this URL on Barrick! http://biz.yahoo.com/rf/990422/cf8.html Sorry! turbohawg (4/23/99; 10:59:17MDT - Msg ID:5069) and in the aftermath of yesterday's scrap ... Hey Stranger, while our posts have primarily focused on our disagreement on the inflation/deflation debate, just for the record, I often agree with what you say in your posts. I'm sure you've proven to be a savvy trader over the years. One thing's for certain, your personality really comes through your posts.Aristotle, I empathize with your plight on the matter of the grays. Mine seem to be propagating at a rapidly accelerating pace (perhaps my hair color is deflating !!!). But, I'd rather they turn gray than turn loose. It was interesting a couple of weeks ago when you posted about being "at piece". At the exact same time, I was having similar thoughts. That has happened several times on the Forum ... someone was thinking the same thing at the same time and expressed themselves with words similar to what I would've chosen. It's almost Twilight Zone-ish.Finally, I agree with your analysis that we could see the German '20's style of hyperinflation up front but only if the Fed is able to hold this thing together long enough, till they can get those wheelbarrows full printed up .... as of today, it's just not possible because the bills just don't exist ... the money supply is virtually all credit/debt. My deflation obstinacy is predicated on the bubble popping very soon ... but I've been wrong before. How's that for a caveat ??The questions posed by Backlash regarding the who and the why of the economic problems we face are really important if we hope to straighten this mess out in the future. They cut to the very core of our existence as (formerly) free individuals. I hope to post some thoughts on that later, but the truth is, it burns me so much inside that I'm not sure I want to focus my mind in that direction entering what promises to be a nice weekend.I will say this: Rejoice !!! We're witnessing the worldwide collapse of the welfare state.Thanks for the enjoyable discourse folks. beesting (4/23/99; 10:44:14MDT - Msg ID:5068) Why the spot price stays down and how to destroy the competition. http://biz.yahoo.com/rf990422/cf8.html Barrick Gold corp. North Americaa's second largest Gold producer, brushed aside weak bullion prices and posted its best quarterly results in its 16 year history.Barrick remained profitable due to higher production,lower cash costs, and a LUCRATIVE GOLD HEDGING PROGRAM.Barrick produced slightly more than 1 million ounces of Gold at cash cost of $116 per ounce.Barricks production through 2001 is already sold forward at an average MINIMUM price of $385 an ounce.Comment: all those people that are buying GOLD futures contracts or options on futures contracts at $390, $400 and more must be the ones responsible for the large Gold mining companies receiving $390, $400 and more on their still in the ground Gold reserves.What a tangled web the the paper monetary system produces..........beesting CoBra(too) (4/23/99; 10:32:24MDT - Msg ID:5067) Euro, Bubbles - de vs inflation While the horrors of both the tragedy of the Balkans as well as in Colorado's Littleton preoccupy our minds,it seems to me that the European official sector is taking a backseat view on economic developments. Particularily, in regard to the Sibling Euro, as the ECB's Wim Duisenberg was quoted to describe the bank's exchange rate policy as one of begnin neglect.With a full fledged war going on on the continent and nobody seems to have a solution as to containment (yet?), I have to admit becoming increasingly worried.One could have argued, that the new currency unit will find its true value during infancy, which was probably desired - today one wonders where that equilibrium might be in the end? (thanks Stranger of pointing me in the direction) As this forum was concentrating on the deflation vs inflation issue, the paper bubble takes on ballooning proportions,not ever experienced before. The excess monetary expansion of late has mostly gone into gambling on the paper markets, circumventing sound investment in the real economy.Meanwhile the trade gap in the US is exploding along with unprecedented credit expansion, further feeding the bubble and enhancing the wealth effect. Money supply excesses of this magnitude will be haunting us in the rapidly building inflationary environs we'll be eventually finding us with the usual time gap. Even A.G. hasn't found a valid way to avoid the occurences of economic cycles dynamics, which have always been part of society, though LTCM was at least a (good?) try. The inevitable awakening will be painful for most and will propel the only real 'money' to levels unheard of. Regards to everybodyCoBra(too) TownCrier (4/23/99; 10:06:52MDT - Msg ID:5066) Brazilian shrs may fall on forex scandal concerns http://biz.yahoo.com/rf/990423/08.html News like this reminds you why gold is the best there is. USAGOLD (4/23/99; 9:09:40MDT - Msg ID:5065) Today's Gold Market Report: Sideways -- The Path of Least Resistance MARKET UPDATE (4/23/99): Gold following the path of least resistance stayed sideways this morning. I say this because those with bullish prospects for gold cannot seem to muster enough for pushing the price through the $285 barrier while those with bearish prospects fear short-covering on any drop. So we are stuck until something happens to break the impasse. It doesn't look like anything is likely to happen today. The dollar is weaker but not decidedly so. Stocks are in a narrow range. And the oppressed bond market managed to show a tentative gain. Though investors continue to accumulate the yellow as a protective amulet against various financial maladies, including Y2K and an highly inflationary rising oil price, they have not accumulated enough to send the bear scurrying. Perhaps that comes later when supplies already stretched thin feel the pressure from the thundering momentum herd that has made its manic presence felt on Wall Street. The herd that runs in this direction, can easily run in that -- it should be remembered. So the best solution for those who seek the yellow continues to be getting it while you still can at bargain basemement prices. To give you a benchmark, oil is up 80% in recent weeks, a similar move in the gold market would put the trading price at well over $500 -- a price often quoted in gold analysis as an equilibrium price that would reflect, if nothing else, the inflation rate over the past 18 years. By any analysis, gold remains the bargain of the century and it wouldn't hurt to consider parking some of the profits gained from the mania into the one major asset that has remained untouched by the craziness. As for today's gold market news, reports from Asia were scant and London traded in a tight range overnight. The Commodity Futures Trading Commission will make public its Commitment of Traders report later in the day. The market will be watching to see what has gone on with the enormous short position revealed two weeks ago. Other than that it's been quiet this morning. Have a good weekend, my fellow goldmeisters. There will be no In Brief until possibly later today time allowing. I would ask you to revisit later in the day. Thank you. ORDER FORM for a Free Copy of News & Views -- our widely read monthly newsletter -- and introductory packet on gold ownership. Buena Fe (4/23/99; 9:04:08MDT - Msg ID:5064) Inevitable? TownCrier (4/23/99; 7:43:55MDT - Msg ID:5058)LTCM may prove turning point for marketshttp://biz.yahoo.com/rf/990423/q3.html"...modern finance was pushed as far as it could by its creators and came up short."Great find TC!At the end of that article there was this gem (or should I say gold nugget!!)Mehrling also justified the role the Federal Reserve played in the LTCM rescue, saying a default by the hedge fund would have taken down a clearinghouse handling U.S. Treasury bills futures which would have prompted ``defaults on Treasury bill futures... a threat to the very foundation of the (financial) system.''Defaulting on Treasuries? Tisk Tisk, I smell something burning.Keep Well All! WAC (Wide Awake Club) (4/23/99; 8:46:30MDT - Msg ID:5063) CB ownership I have read on this site that most CBs (including the BIS) are privately owned. Is anybody able there to shed light on the ownership of the Bank of England. I thought this CB was nationalised in 1946.Thank you. TownCrier (4/23/99; 8:24:56MDT - Msg ID:5062) South African Miners Missing After Quake http://dailynews.yahoo.com/headlines/wl/story.html?s=v/nm/19990423/wl/safrica_quake_3.html Not a walk in the park, this business... TownCrier (4/23/99; 8:20:32MDT - Msg ID:5061) Analysts query GFMS gold market data http://biz.yahoo.com/rf/990422/cdb.html Frustration with numbers. TownCrier (4/23/99; 8:17:12MDT - Msg ID:5060) Mobil earnings drop by one-third http://biz.yahoo.com/rf/990423/w1.html ...and still beat analysts' (low) expectations. TownCrier (4/23/99; 7:49:20MDT - Msg ID:5059) Rubin credits Clinton for U.S. economic prosperity http://biz.yahoo.com/rf/990423/e6.html Right...with a 3 point "Clinton Factor," a1,000 point "Rubin Factor," and a7,000 point "Greenspan Factor." TownCrier (4/23/99; 7:43:55MDT - Msg ID:5058) LTCM may prove turning point for markets http://biz.yahoo.com/rf/990423/q3.html "...modern finance was pushed as far as it could by its creators and came up short." Silver Tongue (4/23/99; 5:56:40MDT - Msg ID:5057) Paper Bloat I watch with increased amazement as the DOW, Nazdaq and the other paper market continue to move on to higher highs. Meanwhile the US balance of payments continues off kilter, money is printed as fast as the presses will print to move out of country and commodities continue to languish in the quagmire in which they are presently lying. As they said about Boy George, "Something is kind of weird here." I continue to remain partially liquid with the rest in gold and gold mutual funds. I can't see throwing money into the paper market, although everyday, as a result I lose paper money I could have earned. I supposed I should not cry over spilted ink. The Stranger (4/23/99; 5:09:50MDT - Msg ID:5056) Yet Another Comment on the Euro The Wall Street Journal ran an article yesterday(pg.A18) about French Finance Minister Strauss-Kahn and his idea to strengthen the Euro. He is suggesting that the member nations create a "European economic government" that would "complement" the ECB by co-ordinating economic policies throughout Europe. This made me think of something AragornIII said about how the Euro might ultimately be sounder than the dollar in part because there is no possibility of collusion between a central bank and a treasury. (This is my paraphrase, but I hope I capture his meaning.) As I find Aragorn's suggestion instructive, I do not wish to challenge him on this. But the very fact that a major European finance minister is already discussing a rearrangement reminds me that the whole thing is still an experiment. Nobody, as far as I know, has yet to even hand someone else a Euro in payment for anything.As long as everything remains in balance for the 11 member nations, this experiment may well work out, at least for tourists, anyway. But what about when inbalances inevitably occur. When unemployment in Italy gets so bad that the Italian premier deliberately allows his deficits to grow beyond the agreed upon 3% of GDP, for example. Will others simply coax him back into compliance, or will this chain only be as strong as its weakest link?The point is, governments in Europe may come to resent the restrictive effects of economic confederacy. They may, indeed, come to feel like men in a three-legged-race where the rest of the world's economies get to run untethered.Personally, I hope the whole thing succeeds (it would certainly have its advantages over the current system). But I am not yet prepared to bet on it. SteveH (4/23/99; 4:50:09MDT - Msg ID:5055) Gandalf Seems the gold gods heard us talking and have corrected the situation for now anyway. June gold now $284.80. SteveH (4/23/99; 4:48:33MDT - Msg ID:5054) Jon To answer your questions is not easy in a few sentences.Here are bullets that might point you in the right direction for answers:-- Gold has been lent out by Central Banks to Bullion banks, who in turn sold it into the market thus depressing the price of gold. Now they are short gold and must replace it in order to settle up, as it were.-- Gold is short from one to four years of gold mining production thus the only source of physical gold is in the banks or IMF or Swiss vaults.-- Central Banks have stopped or are about to stop lending gold and may want some or all of it back.-- Silver is in a similar situation, eventhough there is more silver than gold, its industrial use is much higher than gold.-- 1971 was a year that net redemptions of gold by other countries concerned Mr. Nixon enough to end the gold standard. This stopped the large giveaway of US gold at that time.-- What we are experience is inflation in the stock market, growth of money supply to historical highs, and a recent low in commodity prices world wide. When the tide reverses, the near zero-sum stock market will leave many leveraged market players bankrupt, property values lower, commodity prices through the roof, and the price of oil higher than ever before. This is called stagflation and differs from inflation or deflation in that it has characteristics of both. -- Stagflation results from increasing liquidity in the face of a depression. In 1929, the Fed dried up liquidity and thus the great depression.-- End result of stagflation may just be hyperinflation, thus making gold and silver a potentially very good hedge at this time, especially since the prices are still low.-- Derivatives (hedging of financial instruments to protect financial institutions should markets go up or down unexpectedly) threaten major investment bank failures should another LTCM occur.-- Gold could rise above $400-3,000 per ounce on short position alone. If governments world-wide were to embrace gold into their currencies (in some fashion) or to illegalize gold for common folk, gold could go even higher ($30,000?).-- Bah-hum-bug you say? Gold went up 20 times from 1971 to 1981. Why couldn't it go up 20 more times from 1999 to 2001? Quite possible.Hope that helps. Jon (4/23/99; 4:13:21MDT - Msg ID:5053) Conspiracy and price of gold I am new to this and enjoy reading the contributions to this forum. I am indeed impressed with the knowledge of the many participants. Question: what would motivate our Govt. to surpress the price of gold? Doen't the Govt. store a large quantity in Fort Knox? Or is this a myth, or is it that we just don't know? Is it the avoidance of inflation or the appearance of same? Inflation is surely more preferable to the Govt. than deflation - easier to keep the goodies flowing to the voters. I would sincerely appreciate your comments. SteveH (4/23/99; 3:51:38MDT - Msg ID:5052) TA gold June gold is tracking up the upper bollinger on the 60-minute chart. Where it stops nobody knows but it appears to be finding a new, higher level.Weekly view shows gold in direct drive towards upper bollinger which seems to want to meet it part ways, say maybe, around $297. Bollinger theory says, object measured tends to cycle between bollinger. So be it then.XAU seems to be leading gold higher. Watch XAU for gold direction. (XAU is index of producing gold mining companies) SteveH (4/23/99; 3:22:15MDT - Msg ID:5051) Gandalf Dag gun it! You beat me to it. June gold (gc9m) now $285.50.Must a bin dey wuz waitin ta ful uss inta buleaven guld wuz goin down. Den whammy! HLime (4/23/99; 2:04:21MDT - Msg ID:5050) No49, Please don't talk about panning It will be another 6 weeks before that damn pass thaws out enough toget to my favorite creek. I am spending the summer in the utter blissof digging my own money. Tomorrow I will receive the second packagefrom Miners Supply containing a 12' by 2" drill kit. No excuses. I am findingthat bench or pocket this summer. To those of you who have never pannedfor gold there is no greater joy than to hit pay dirt. Last season when I got that 2 dwt nugget was a day I will never forget. When I hit a small pocketthere was colour in every spade full I put in the high banker. I got over 7 dwtin six hours of digging and the best part of it is that Hillary will get none of it.Harry (North of 64) Gandalf the White (4/23/99; 1:23:19MDT - Msg ID:5049) Wakeup Steve! GC9M has hit 285.5 and the bid side is heavy size. Looks like an UP day tomorrow. Spot the dog did well just before reaching London --- we shall see.<;-) Oregon Geezer (4/23/99; 0:10:07MDT - Msg ID:5048) Thanks to Mike at CPM It's still Thursday here and I wanted to let you know that the package of that lovely yellow metal arrived today in very good shape. Time to run my fingers through the dandy little coins and then put them in a safe place.Many thanks for the advice, support and service. Click Here to view yesterday's discussion.
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