All times are U.S. Mountain Time
(Yesterday's Discussion.)
GratefulForGold (9/23/03; 23:53:37MT - usagold.com msg#: 109270)
otish mountain - I concur
Aragorn III, your words are poetry. Thank you.
otish mountain (9/23/03; 23:41:52MT - usagold.com msg#: 109269)
Aragorn III #109240
Your words paint the canvas of my mind.
GratefulForGold (9/23/03; 23:23:17MT - usagold.com msg#: 109268)
MK, Towncrier/Randy -- or whomever is responsible!
I won't go so far as to say you stole my heart ... but ...
Your homepage now has the "The World in Gold" (WGC) listed AFTER "The Gold Trail."
Demurely, she smiled an innermost smile and spoke from her heart when saying "Thank You."
(Yukon, it must have been your insider influence).
Thank you for your simple honesty, MK and Team.
Lady GFG
otish mountain (9/23/03; 23:21:02MT - usagold.com msg#: 109267)
Robert Pirsig
Druid
Thank You for the link. Zen and the Art of Motorcyle Maintenance. An important book given to me by dear friend many years ago. I have given away many copies since.
Highly recommended
Druid (9/23/03; 23:03:01MT - usagold.com msg#: 109266)
GratefulForGold (9/23/03; 21:55:21MT - usagold.com msg#: 109260)
"Could you expand on what you mean by the Chinese governor's statement being a "non-statement statement?" (If that is, indeed, what you were saying?)."
Druid: GFG, I posted a portion of Mr. Lewis "Morning Thoughts" of what his interpretation of a "non-statement statement" is. My own interpretation is reading between the lines or listen for what is not being said. This would suggest that you the listener hold a wealth of knowledge from which to compare too so as to not easily be mislead. When you think of a "non-statement statement" a red flag should immediately go up and the first thing that should come to mind is politician. I hope this helps.
I highly recommend "ZMM", enjoy the following post, also by Mr. Lewis.
"Sept. 19: and what that means is that the law of gravity exists nowhere except in people's heads! It's a ghost! We are all of us very arrogant and conceited about running down other people's ghosts but just as ignorant and barbaric and superstitious about our own ghosts. - Robert Pirsig
Reading Zen, for me, is, in a sense, like putting on a comfortable pair of old shoes which were worn in by someone else. We both climbed the mountain presented to us as truth only to find contradictions, the resolutions of which required entertainment of new ideas and the exorcism of others. Fortunately, for me, I wasn't nearly as driven or as gifted as Mr. Pirsig which allowed my personality more time to develop. Moreover, the mountain of faith I was climbing, economics, was not, at the time, nearly as high as that which he was ascending, physical science. However we both climbed the mountain assuming that the answer we sought could be found only to find that the search for truth sometimes takes you places you never expected.
A search for truth, in the abstract, should not, I believe, be conflated with the search for a truth. To seek to prove the truth of a statement or any collection thereof is, in my view, to stop searching for truth, per se. In similar fashion to the way in which the policy of linking money to gold created equilibrating forces in the general quantification of value, so too does faith in the truth of any statement create equilibrating mental forces which aim to order the world in relation to the "known" truths. Whether the foundational truth is true is not subject to debate for if it was, the equilibrating forces would no longer operate.
Sometimes, however, we discover that faith in one truth leads to unpleasant and consequently for some, unacceptable conclusions, setting up, in turn a need for resolution. Consider how you might react to two alternate results of a biopsy. In general, people who find that analysis of a biopsy leads doctors to conclude that they are dying seek another opinion, while those to whom doctors give a less dire prognosis rarely seek further. In the former instance, most people's thirst for life, or fear of death outweighs their faith either in that doctor's application of theory or in more radical individuals in the science of medicine itself. That is, the test subject's analysis of the medical opinion is more a function of the relation of the conclusion to his desire rather than a dispassionate critique of the accuracy by which the doctors applied theory to data.
Those of us raised in cultures which revere medical science, and who are directly, at least in their minds, unaffected by its conclusions will, upon hearing of the dissident's unacceptance of the dogma, think that the dissident has allowed their personal desires to cloud their ability to reason. Neither position, in my view, is correct, in the sense that that ultimate test of any view is experience. If the dissident in question does succumb to the diagnosed illness, a somewhat dubious proposition in itself, then and only then is the view validated.
"Where are you going with this, Dave?" you might be wondering. Economics, in a sense, is like medicine, only in the case of macro-economics, the body in question is the collective, society. Leaving aside the utility of this perspective, which evokes thoughts of the problems of "national health", macro-economics suffers from the same problems as medicine in that sometimes the patient doesn't want to believe the diagnosis.
For example, but a few short decades ago one central aspect of economic dogma was that unanchored monetary systems always collapsed in financial chaos. It was faith in this tenet which, as noted, created the equilibrating forces which kept the general prices level stable over the long term, albeit with credit cycle induced fluctuations around the mean. Whether due to over-selling of the benefits of such links, or simply the rejection, due to their undesirability, of forecasts based on that truth, faith in the benefits of such a link wavered, setting up an eventual test of the truth of the tenet, which I believe is coming soon.
Expanding on our medical metaphor, sometimes, particularly when a theory is mature but not old, it is seen as more closed and definitive than it eventually proves to be. Sometimes a doctor's application of theory leads to a definitive prognosis, "you have 6 months to live," not the less definitive but more accurate view that "in general, people we have studied who presented with your symptoms all died within six months, which leads me to believe that you too will fall within that category." The closed end prognosis sets up a possible problem in that, in the event that you haven't died in six months, you might disregard the view altogether. The symptoms which once seemed a harbinger of death now fade into the background of your awareness.
It seems to me that just such a mental error may have occurred in economics. Those who argued against any relaxation of hard money standards often conjured up visions of imminent collapse, only to discover that the forecasts were wrong, either in terms of scale or in terms of time. The late 60s strike me as the time when the hard money die hards, acting as the definitive doctor in our metaphor, gave the patient six months to live, only to find that, while the patient was ill, he didn't die. Moreover, after suffering through a near fatal episode in the late 70s, the patient seemed to recover its old vigor.
Then the walls of the honest money edifice started tumbling, slowly at first, but then faster and faster as the patient kept on breathing. Sure there were scary moments when some felt the tug of the ancient religion, but the mainstream preferred to think that eternal life, or in the jargon of the times, permanent prosperity, was now possible. This sense of infallibility eventually coalesced into the late 90s stock boom, which, according to the IMF, was the largest in modern history.
Its collapse, in the main confined to the Tech/Telecom sectors, has restored a degree of faith in the old nostrums, but, having tasted, ever so briefly, the fruit of faith in permanent prosperity, some are loathe to either wake up from the dream, or more perniciously, wake others up from the dream. Faith in the new dogma of flexible exchange rates and subjective monetary policy has been embedded in our laws so now we await a test of their truthfullness. Like a man who outlived his six month "death sentence" only to come up with a that old horrible cough two years later, we dread to think that perhaps the old prognosis was correct after all. The conventional wisdom, in my view, is locked in denial.
Whether the current system survives the coming test remains to be seen. This is perhaps an unsatisfying view given my expressions of faith in the hard money dogma, but I share Pirsig's view above, experiments are where the rubber of ideas hits the road of reality. Just because you believe in a ghost, doesn't mean it exists, which seems true both individually and collectively. None of which is to argue that I haven't wagered on an outcome consistent with the old faith, I have. However, to the extent you find my musings more or less in alignment with your own, please don't think I am sure, I'm not. I await each day with as much child-like wonder as I can muster, happy to live in a creation not of my own making.
In the interests of full disclosure, my September DJX put options have expired worthless."
slingshot (9/23/03; 22:58:41MT - usagold.com msg#: 109265)
To the Winners
Congrats to the winners of the price guessing contest. Enjoyed all the entries.
Slingshot------------------<>
slingshot (9/23/03; 22:52:40MT - usagold.com msg#: 109264)
Coin Shop Report
Todays venture points to both gold and silver is on the buy.
Both dealers said that the majority of sales were in gold bullion. Silver had slowed with some selling,but had more purchases. One ounce eagles,Gone, just smaller denominations with varieties of Krugs,Pandas and Maples.
Silver 100 oz, Gone, with 10 0z in stock and 1 0z rounds (combined both stores) less than 200 pieces.
Silver Eagles were plentiful. One store has had a run on Gold $5 and $10 coins.
Question, I have a 10 0z bar that states it was minted from the U.S. Strategic Stockpile Silver. Formerly stored at th U.S. Assay office. San Francisco. 1981.
Would it be worth it to set aside from core being there is no more Silver Strategic Stockpile.
Slingshot---------------<>
GratefulForGold (9/23/03; 22:38:47MT - usagold.com msg#: 109263)
Black Blade @ msg. #10925-- WGC/ETF
Thank you, BB! You always come across as the voice of reason.
Question: I realize mainstream (non-PM Funds) Funds can't invest in physical gold. Can those same mainstream Funds invest in gold mining companies or do they need to change their charter (or whatever)? When I read about "Funds" buying the mining shares, are they all those mainstream Funds or just PM Funds? Logically, I would think that mainsream Funds would first move to buying gold mining shares, then maybe ETFs. If not, I would have to ask why the "market" has bypassed what would seem to be the next logical progressive step of Funds buying mining shares and then to maybe buying ETFs?
I know the PM market is very small and there's not a whole lot of room for "new" money to flow into it (without the POG going sky high). Hey, what am I saying...that's a BAD thing, right? We wouldn't want gold to reach its true value without the brokers being able to milk the cow.
Anyway, I'm glad you weighed in with your comments. You are always so rational, I'm amazed. I'm starting to think of you as my poster child for mental health. Thank you!
Lady GFG
Black Blade (9/23/03; 22:35:16MT - usagold.com msg#: 109262)
Will debt buildup sabotage the recovery?
http://www.iht.com/articles/110808.html
Snippit:
LONDON George W. Bush, the French prime minister and the average British home buyer may not agree on many things, but on one issue of crucial importance to the global economy they seem to see eye to eye. All are borrowing freely, as governments and private households around the world load up with ever greater debt. Bush and Prime Minister Jean-Pierre Raffarin see a fiscal stimulus as one way to lift their countries back to the prosperity of the 1990's, while consumers, especially in Britain and America but elsewhere too, often behave as if those good times never went away.
The nagging worry now is that the recovery is a mirage, that consumers, companies and governments are simply living on borrowed money - and time. In that case, as soon as the benefits of U.S. and European tax breaks run out, economies could slip back toward recession, or just sputter along for months or years. "If you can't get sustainable growth with all the money we've thrown at it, then we're in real trouble," said Brian Hilliard, an economist at SG Securities in London. The buildup of debt is impressive. Joachim Fels, an economist at Morgan Stanley, has calculated that total private-sector debt - that is, debt from companies and individuals - rose to 134 percent of gross domestic product last year in the euro area, from 106 percent in 1995. In the United States, that ratio has risen to 152 percent. In Britain, where consumers have cashed in on rising home prices and where companies have borrowed heavily, private-sector debt has surged by 54 percentage points since 1995, to 190 percent of gross domestic product last year. Mortgage equity withdrawals in the first quarter rose to 7.3 percent of after-tax income, according to the Bank of England. That was the highest rate since 1988 - only months before home prices started to plunge in Britain, sending the economy into a tailspin.
One way to square things would be to bring back inflation, which looked dead and buried when central bankers raised the specter of its opposite, deflation, earlier this year. Indeed, by keeping interest rates at the lowest levels in decades in most parts of the industrialized world, policymakers have actually signaled that they would welcome a bit more inflation as a defense against falling prices. If salaries rise along with prices, inflation can be a debtor's best friend. "With central banks turned deflation fighters and reluctant to prick asset bubbles, and with rising private-sector debt making inflation more desirable to the private sector, it may be only a matter of time before inflation rears its ugly head again," wrote Fels in a note to clients.
Black Blade: Looks like real inflation is already here to me. But the Fed is working hard to flood the world with dollars while some foreign nations are willing to buy all the US debt they can. How much longer can the Japanese for example keep selling Yen and buying dollars before the system breaks down. With over 9 trillion Yen spent so far it doesn't look good for the Japanese. However, some currency market players in Japan have figured out the game and have profited wildly at the expense of the Japanese government and people. Some are proposing a "tit for tat" retaliation against Japan and US Congressional members gave proposed a 27% tariff on Chinese goods for their refusal to let the Yuan float on the currency market. It could get interesting soon enough.
DummyANI (9/23/03; 22:16:43MT - usagold.com msg#: 109261)
Commercial-shorts want to lose more than 1307 million dollar –Part2
Magma Volume of Volcano Commercial-short-Gold at Mt.COMEX
This is my trial to calculate commercial-short losses according to their short-cover behaviors.
Recent CFTC reports are as follows.
In 2003 Non-commerc-long chg Commerc-short change.from08.05 Close-gold
Aug. 05, 075,623 chg–17,688 c.shrt 145,598 chg-21,856 000000 cls0351.2
Aug. 12, 084,578 chg+08,955 c.shrt 151,016 chg+05,418 005,418 cls0360.0
Aug. 19, 104,223 chg+19,645 c.shrt 174,211 chg+23,195 028,613 cls0363.0
Aug. 26, 117,340 chg+13,117 c.shrt 184,612 chg+10,401 039,014 cls0366.8
Sept 02, 146,230 chg+28,890 c.shrt 209,840 chg+25,228 064,242 cls0373.2
Sept 09, 151,530 chg+05,300 c.shrt 204,805 chg-05,035 062,701 cls0382.8
Sept 16, 144,818 chg–06,712 c.shrt 200,273 chg-04,532 061,313 cls0374.6
If- Sept23, xxxx chgxxxxxxx c.shrt 195,489 chg-04,784 059,848 cls0380
If- Sept30, xxxx chgxxxxxxx c.shrt 185,489 chg-10,000 056,786 cls0410
If- Oct.07, xxxx chgxxxxxxx c.shrt 175,489 chg-10,000 053,724 cls0410
If- Oct.14, xxxx chgxxxxxxx c.shrt 155,489 chg-20,000 047,600 cls0440
If- Oct.21, xxxx chgxxxxxxx c.shrt 135,489 chg-20,000 041,476 cls0440
If- Oct.28, xxxx chgxxxxxxx c.shrt 095,489 chg-40,000 029,229 cls0470
These data indicate that if COMEX-gold went up 30 dollars, then they begins to cover their short positions at a rate of 5000(4784 average in the recent two weeks)-close.
At Aug.05, they had already 145,598 short-positions. Its mean cost is (260+350)/2=305$ which is a nearly average sell-cost of 145,598 short-positions. So I revise commercial-short-loss as follows.
3493 x (380-305)x100 = 26.2 M$
1541 x (380-365)x100 = 02.3 M$
rv1-Sept09: Gold+30$ 380$/ounce short-cover 05,035 short-side loss 28.5 M$
3144 x (380-305)x100 = 23.6 M$
1388 x (380-365)x100 = 02.1 M$
rv1-Sept16: Gold+30$ 380$/ounce short-cover 04,532 short-side loss 25.7 M$
These positions were already settled, and the commercial-short loss was 54.2 million dollars at Sep. 16 2003..
Following is my predictions.
rv1-Sept23: Gold+30$ 380$/ounce short-cover 04,784 short-loss 27.1 M$
rv1-Sept30: Gold+60$ 410$/ounce short-cover 10,000 short-loss 86.6 M$
rv1-Oct.07: Gold+60$ 410$/ounce short-cover 10,000 short-loss 86.6 M$
rv1-Oct.14: Gold+90$ 440$/ounce short-cover 20,000 short-loss 233.2M$
rv1-Oct.21: Gold+90$ 440$/ounce short-cover 20,000 short-loss 233.2M$
rv1-Oct.28: Gold+120$ 470$/ounce short-cover 40,000 short-loss 586.5M$
Commercial-shorts want to lose more than 1253.2 million dollars further from this week.
D-ANI: Buy a gold, sell a Yen
GratefulForGold (9/23/03; 21:55:21MT - usagold.com msg#: 109260)
Druid @ msg. #109252 (No Subject)
Perhaps it's the hour, but your post seemed "deep" to me (most of the few brain cells are retiring). I loved the Chinese bank governor's quote...it had me going right up to the point where I read WHO was saying it! Very veiled. But accurate?
I did wonder how a country is supposed to increase its savings while at the same time boosting its domestic demand. Hey -- an idea -- GOLD! You increase your savings while boosting the demand for...GOLD! I guess that means, for me, I can only buy Gold Eagles? Or only gold mined from American mines? Yea, I'm "patriotic" after all!!
As for the rest of your wonderful post -- although I'm from the Wolfe/Kesey era, "non-statement statement" (or for that matter, "solipism") never entered my awareness or vocabulary. Much to learn.
Could you expand on what you mean by the Chinese governor's statement being a "non-statement statement?" (If that is, indeed, what you were saying?).
I feel like I'm being too verbose here (on the Forum) so I'll say "goodnight!" Thanks!
Lady GFG
Black Blade (9/23/03; 21:55:16MT - usagold.com msg#: 109259)
World Gold Council sponsored ETF (Securitized gold shares?)
Good or bad? It depends on what you expect from it I guess. Personally I rather have physical gold in my possession because to me physical gold (and silver) is insurance. We have seen how the markets can just close up shop for several days at a pop. Remember what happened on September 11, 2001? No one had access to their investment portfolios as the markets closed for several days. Yet even though my stocks were locked up and inaccessible I could grab a fist full of my gold and silver. I think most here view physical precious metals as portfolio insurance and having it in their possession is better than not having it in an emergency. The "lock up" in the markets was a wake up call much like during the Great Depression people lost their savings when banks closed up or were inaccessible due to a "Bank Holiday".
Now the flip side of the coin so to speak. Many large Funds are restricted from owning anything but stocks and bonds. Therefore they are not allowed to hold precious metals as a form of insurance even if they wanted to. Besides, it is almost impossible to buy such large quantities of physical gold on a timely basis as demonstrated by Goldcorp's attempt to make a large (actually a moderate) size purchase of physical gold even after being assured that a quantity ten times the size that they bought could be readily acquired. Actually it took a couple of weeks if I remember correctly. The story is located in the "Gilded Opinion" here at USAGOLD I believe. The point I am making is if the ETF is actually shares based on actual physical gold located in a vault then this would be a way for large funds to put gold in the mix of their securities. I understand that the price will be based on the spot price of gold and shares will be issued only on the amount of physical gold in the vault and new shares can only be issued as more gold is acquired and placed in the vault. The gold supposedly can't be loaned nor can any derivative structures be made using the gold as collateral. So in this regard it may be good as it will create another source of demand. I am not sure if the Aussie fund will be combined with the UK fund and the proposed US fund either.
But for the individual investor looking for portfolio insurance and I mean true physical gold as insurance come what may that can't be isolated away from him/her then I would stick with the "real deal". If I want to speculate then I will buy gold mining shares of gold producers based on the qualities that I determine to fit my needs and what I look for in a speculative instrument like stocks. OK, for disclosure purposes, I do own shares in three debt free unhedged gold producers. But that is not "portfolio insurance", that is a speculative and hopefully profitable investment. The physical "real deal" is insurance in my possession where I can get to it no matter what world event takes place and no matter what may occur in the financial markets. So is the WGC securitized gold shares good or bad? It is a matter of perspective but they are two different things entirely and it's comparing apples and oranges from my point of view.
- Black Blade
Black Blade (9/23/03; 21:21:56MT - usagold.com msg#: 109258)
@Waverider
I can sympathize with what problems you may be having. A few months ago I downloaded a free program that stops popups dead in their tracks (webwasher.com). But I had a couple of unintended problems like posting for example because I failed to setup the program properly and it took me a few minutes to figure it out (a small easy to identify problem though). Now it works like a charm and haven't had any popups since giving me headaches.
Actually it's free software downloadable for individuals that I found out about in Readers Digest of all places. It also occasionally updates to stop the scammers from getting ways around the popup blocker. It also sped up my loading pages like USAGOLD as well. Now if only I could figure out how to stop getting all kinds of email spam offering me all manner of sexual enhancements, porn, get-rich-guick schemes, credit cards, mortgages, etc. Heck, I even almost missed an email from Gandy the Wizard once because his email got mis-directed to the "junk folder" at one time. Somehow his email was "determined" to be spam by the way I set up the spam blocker program. Hmmm...
Sorry O' Grand Wizard! Anyway, hope all is going well with your firewall installation waverider. BTW, congrats on the POG guess.
- Black Blade
GratefulForGold (9/23/03; 21:20:38MT - usagold.com msg#: 109257)
melda laure @ msg. #109254 -- ETF (what, again?)
Drats! Just when I was actively trying to convince myself to be open minded to their (ETFs') whole deal you have to go and sound smartly sceptical (to me)! Or should I say, you triggered my natural bias against ETFs.
Being such a simple person, my logic gets stuck there. I just don't comprehend how we can criticize the stock markets, derivative markets, central banks, ad nauseum and yet, as the gold community, embrace (without even knowing their paper-manipulation details (what few we'll ever be privvy to)) yet ANOTHER scheme that says it's 'AS GOOD AS GOLD.' Yes, color me stupid ... but a rose is a rose is a rose. Paper is paper is paper. Gold is gold is gold.
Hrrmph!
Lady GFG
Dollar Bill (9/23/03; 21:12:18MT - usagold.com msg#: 109256)
*>*............+
Sir Socrates 964, Your "2 cents" , I am looking for adjectives, excellent.
Goldfly (9/23/03; 21:09:52MT - usagold.com msg#: 109255)
Leigh - incrementalism
I think A3's post was about a nuke strike.
???
melda laure (9/23/03; 20:53:57MT - usagold.com msg#: 109254)
ETF "fund"
Paper Avalanche, Lady GFG
And just where are the "funds"? I seem to remember something about HSBC-Taiwan... I'm not trying to bad mouth the planned fund- anyone who's been watching this gestation process knows it's a real can of worms, the jurisdiction of the place of storage is merely the least. I'm more interested in the possiblity that you could short this baby like any other stock. I seem to recall that all the major participating banks are expected to act as market makers to make sure the price of the paper tracks the gold price (and I just wonder if buying and selling 400 oz bars will be the mirror image of that activity as it ought to be - though I rather suspect the trading of comex paper on the backside, at least in the short term- resulting in the fanny-equivalent of a duration gap, only this will be a physical/contract gap). Part of me wonders if this means a lot less trading transparency than comex, nymex and the like.
In the short term, look at the total issued volume of the aussie-flavored ETF. It's still quite small in ounces; by comparison the Mrs Watanabe Brigade (ie. Japanese) ate up several times that in a couple months.
As you ask regarding the fate of the american ETF, I suppose the day we see the thing plastered accross CNBC as the price goes to the moon you'll know that "containment herding mode" is in full gear.
GratefulForGold (9/23/03; 20:46:41MT - usagold.com msg#: 109253)
R Powell @ msg. #190249 -- Silver
Silver HAS to live up to its potential. Between us, we've encompassed both the "right brain" and "left brain" of the matter. How wholistic.
P.S. I'm glad you like silver, too.
Lady GFG
Druid (9/23/03; 20:38:43MT - usagold.com msg#: 109252)
(No Subject)
http://www.chaos-onomics.com/morn.htm
Sept. 22: In view of the above risks, I believe that the major industrial countries—the United States, the EU, and Japan, in particular—should assume major responsibility for the global recovery and restructuring by introducing structural reforms, raising savings rates, boosting domestic demand, reforming labor markets, adjusting trade policies, giving developing countries greater market access, and gradually addressing the problem of fiscal imbalances. - Mr. ZHOU Xiaochuan, Governor of the People's Bank of China
I first encountered the phrase, "non-statement statement" in Tom Wolfe's expose on Ken Kesey and his Merry Pranksters. If I wished to wax solipsistic, I might argue that Wolfe "invented" the phrase, but I try to avoid conflating my views and the world at large. Solipsism is a mistake many traders, including myself, make, or in my case made, more than once, when their awareness of causal economic relationships moves from the lips and into the heart. Once one accepts that, for example, overvaluations are indeed eventually rectified, continued overvaluation offends one's sensibilities. How can this happen?, the newly awakened wonder, when the answer to the question lies in their own experience. Looking backwards at a solution makes the transition seem so easy, when it rarely is.
Druid: Looking past the obvious.
GratefulForGold (9/23/03; 19:56:14MT - usagold.com msg#: 109251)
Paper Avalanche @109247 -- Mas ETFs
Off-the-cuff: Sorry, I can't really address your question! I don't necessarily view the ETFs as a ploy to "control" the price of gold. What I do view ETFs as is an attempt to subvert the deep human instinct of turning to gold in times of turmoil. Yes, "gold" will become a household name ... for good reason, IMO. My only (current?) real argument with ETFs is that too many people will be influenced by the media-magic and spin...and thus turn to ETFs rather than PHYSICAL in their possession and control.
Maybe ETFs will work when the "greed" factor is still powerful and in play. Physical ownership will come into focus when the "fear" factor sets in ... but according to our Friends, that will be too late for most to be able to find/buy PHYSICAL!
We pays our money and makes our choices!
Even though I couldn't address your question, I look forward to reading others' answers!
Lady GFG
Dollar Bill (9/23/03; 19:52:21MT - usagold.com msg#: 109250)
*>*.........+
Am I too conspritorial? I think Snow's message to china to devalue and the G-7 talk about Japan and China adjusting is
the USA doing a double dealing.
I think the US wants China and Japan to continue what they are doing, but I am guessing France and Germany are making it a condition before they support any Iraq measure in the UN. As was mentioned in a post today, Snow told them that the deficeit will be HALF what it is now in 2008.
Pretty bold talk.
Before this talk of China letting it's currency rise, The guy from Morgan Stanley had on his commentary his recent trip to China and what he told them about thier currency.
He went into detail telling all the reasons he told the Chinese on why they should continue the present situation of fixing thier currency to the dollar.
Once back, Greenspan starts taking a public stance supporting the chinese currency to rise. Then the Morgan Stanley commentary vanished the next day. The political realities say they should squawk about it because of the job loss situation, but in reality, the jobs are going in many directions, China is just one destination.
The chinese support of the dollar is primary, so I think the rest is a public bluff to placate the euro guys that we
sypathize with thier pain, and support thier aims, but in fact the dollar comes first, so that is the real policy aim.
As was posted here, Greenspan dismissed the job and manufactureing loss, claiming it was not so important as
some say. (Includeing my unemployed neighbors!)
By the way, I could never have guessed how much lying would go on in my life to get me to think about politics and economics the way others want me to mispercieve it.
Also, I no longer consider myself in any way a democrat.
I know they both lie and spin, but really, the democrats are just disgusting. Any present democrats dont get upset with me, I see what I see.
R Powell (9/23/03; 19:49:19MT - usagold.com msg#: 109249)
Lady GFG
Thanks for expressing your fondness for the metal of the moon. I've been a silver fan myself for some time now after doing my best to disprove Bulter's ravings. I do not agree with his arguments against Comex but I can find no fault with his supply/demand fiqures and his analysis of those numbers.
It may all boil down to the market having to use or consume the combined accumulation of 5,000 years (which the last 50 years have almost done), to precipitate a physical shortage before the silver market awakens to the basic fundamental situation (supply and demand) that it has been disregarding for as long as most silver traders have been alive. Simple no? Ya, I know, this is grossly oversimplified.
I'm glad you like silver.
Rich
Leigh (9/23/03; 19:41:39MT - usagold.com msg#: 109248)
Aragorn III
It's great to see you posting again! Quick question: What happened to "thunder in the night?" Has it been replaced by "incrementalism?"
Paper Avalanche (9/23/03; 19:31:11MT - usagold.com msg#: 109247)
A challange for the gang
While I have recently mused about the hypothetical impact of the ETF on the dollar price of gold, I am not certain that my hypothesis is correct. To that end, I would be delighted to have any and all input / feeback on the following question so that I can ponder on aspects of my hypothesis that I am simply not able to recognize without the input of others on this fine forum:
If the dollar is no longer the reserve currency for international trade, how will ETF's serve as a paper control of the price of gold?
Take care all.
PA
GratefulForGold (9/23/03; 19:29:32MT - usagold.com msg#: 109246)
R Powell @ msg. #109238 -- Re Silver
I have always LOVED silver! In fact, my name on another forum was silver-based. I think I have loved silver for decades because I always, intuitively, loved REAL METALS! I have a lot of copper jewelry, too. But growing up, not poor but no excess discretionary funds -- I always chose sterling or 925 silver jewelry. For many years, I only wore silver because I refused to wear "fake" metal (and 10k gold is fake, in my book...14k is slightly better. Besides, for many years, I couldn't even afford 10k gold! The choice was easy -- buy real silver jewelry instead of gold-plated junk.). So, being a garage sale and thrift store devotee, I collected several pounds of this silver jewelry.
I, too, think silver is enormously undervalued. All of Ted Butler's statistics aside, my (simple) logic is that silver offers an incredible opportuntiy on TWO fronts: its industrial usages (I'm also a colloidal silver buff, as well as owning a British water filter that uses silver in its anti-bacterial action). Added to that usage, the history of silver coinage is imbedded in mankind's archives (memory) as a medium of exchange. A double hit! Silver, IMO, is not just "poor man's gold" but it is simply what it was pre-1964...effectively, smaller denominations of gold. So, my 1 oz. gold coins can stay intact and I don't have to buy bunches of 1/10 oz. gold, etc. I have SILVER for that purpose (smaller purchases).
It was thrilling to me when I was able to purchase REAL gold! There is nothing like it. My criteria for jewelry is now at least 18k. You have to look hard to find that in middle America! But no gold jewelry gives me the pleasure that a beautiful 1 oz. coin does! No, I can't wear my coins (and my favorite is the beautiful Credit Suisse "Pampa" or "Fortuna" .. I forget what it's called but it's the lady with the cornucopia. A work of art!!). So, I am absolutely thrilled to be so blessed so as to be able to actually own some physical gold! But, truly, my heart has belonged to silver for a very long time! I am just quite grateful they are mutually supportive!
Lady GFG
Tate (9/23/03; 19:28:45MT - usagold.com msg#: 109245)
When mixing Ag and Au with fiat, which one burns?
Thank You for responding.
WE also know what response from Indian national, or Argentinean, Chinese or many other people from "underdeveloped" parts of world would be.
American would say: who needs that copper.
According to Gresham's law silver does not displace gold and vise versa. Two metals are not competitors to each other in trade and in nature, rather live closely together. Gold in a free form always has some content of silver when mined and only about 80% pure before refining. So they are friends. If you attempt melting fiat paper with any of this metals which one burns? Smile.
Smeagol (9/23/03; 19:19:44MT - usagold.com msg#: 109244)
You didn't say
... we has to choose jusst one, so Smeagol would take It, silver, AND fiat, and then trade Fiat for more of It! Okay, okay, Smeagol can joke, yes? Alright, we sees we are digging a hole. How's about Smeagol tries some hai-ku (sss... sounds Orcish to us) to make amends?
bright Sun, Yellow Face
softer the Moon, the White Face
they shines in our hands
or,
Guard your Precious well
keep It safe, keep It secret
Evil Men wants It
All right, sstop groaning, we knows when to quits!
S.
GratefulForGold (9/23/03; 18:55:26MT - usagold.com msg#: 109243)
Tate @msg. #109237 - TEST!!!!
Which would the average person from some respective countries choose? Curious and curiouser....
I'd LOVE to come up with some clever possibilites but at the end of my day, the creative juices are coagulating! (Also, I'm not astute enough in all the different currencies and the attitudes that coexist therewith. Some of our very saavy knights could create some very interesting choices!)
I, simply, would choose the one that wouldn't blow away.
Americans might choose the one moved by hot air.
Japanese may choose the one that added heat to the American's hot air.
Europeans would ... ?
Since R Powell has already claimed silver, I guess I'm stuck (sigh) with gold. Ah, the inequities of life!
Interesting "TEST," Tate!
Lady GFG
Cavan Man (9/23/03; 18:52:10MT - usagold.com msg#: 109242)
Sounds like the delegation from Argentina.
demographics aside, you've got to be joking??
DUBAI, United Arab Emirates Sept. 23 —
U.S. Treasury Secretary John Snow told global bankers and economists worried about the tide of red ink in Washington that the massive U.S. budget deficit would be halved by the end of 2008.
Snow made the pledge Tuesday at the annual meetings of the International Monetary Fund and World Bank, both of which have cited the growing U.S. trade and budget deficits as dark clouds looming over the fragile global recovery.
GratefulForGold (9/23/03; 17:53:43MT - usagold.com msg#: 109241)
Thank you, kind sirs! -- ETFs
It would take this entire post to mention all your names, so I will simply say thank you ALL for your views and discussion! I have learned much and have, thanks to your discussions, considered many points of view. Only time (if that) will give us the answers we seek.
In the meantime, purchase of physical gold and silver is still possible at bargain prices! I just can't help myself, paper doesn't give me the same comfort and security, nor does it inspire confidence. So, I'll keep on keeping it simple. Obviously, of the two, it seems "fear" is motivating me more than "greed." The desire not to experience erosion, pillaging and covert theft of my assets has set my course. I simply try to take big GIANT steps to follow in the footsteps of our wise Friends.
Lady GFG
Aragorn III (9/23/03; 17:52:50MT - usagold.com msg#: 109240)
The way it must be
When central bankers gather for many reasons they may discuss far ranging topics. When protocol demands attendence at a function (IMF/G7/Dubai) and currencies alone provide a ready topic to meet the press, why then do they publically offer comments on gold, comments which are altogether hollow?
As preparation! For you, the market, to gradually acclimate to the sound of "gold" in association with these speakers.
After the shockwaves of 1999 the steady hands at the helm discovered that pronouncements of gold (yes, even those most positive) should not be dropped like a hedge-buster bombshell out of blue sky. Let there be hints. Let the plane be seen on approach. Let the sirens wail. Let it circle overhead. Let it be loosed in a graceful descent with a trailing plume of white smoke. Let the market below prepare; not be caught unaware, napping under hedges.
You have seen in your countries, wherever they be on earth, the central banks always endeavor to move slowly and speak carefully not to rock the boat when delivering changes in MONETARY policy.
Practically, you have NOT had similar first-hand experience seeing a delivery of (new) GOLD policy.
Until now.
As a few curious eyes look up, in the distance, there is seen a plane approaching...
got gold?
R Powell (9/23/03; 17:51:58MT - usagold.com msg#: 109239)
Hey Tate
How about a three way contest? Fiat, gold and silver. I'll choose, let me see here.... oh yes, make mine silver please!
R Powell (9/23/03; 17:48:27MT - usagold.com msg#: 109238)
Silver news
http://www.silverinstitute.org/news/pr12sep03.html
Government moves at a snail's pace but at least this idea is still alive and arsenic will, after year's end, no longer be used for a wood preservative.
As with the idea of improving our power transmittion lines with silver coated super conductive cable, this silver based wood preservative presupposes that silver is plentiful. The silver production industry would provide much more, I believe, if the market price were higher. Commercial use of silver in either or both of these programs would help. There is only a short term surplus of $5.00/ounce silver left. Double the price and there is still only a short term surplus in storage but if the price were to double then mining operations would once more be profitable. Black Blade has mentioned many times that some time is needed between planning a mining venture and bring the physical to market. Imho there will be enough delay here for silver prices to appreciate quite a bit.
Silver- still well under $100 per pound!
Tate (9/23/03; 17:31:34MT - usagold.com msg#: 109237)
TEST !!!!
How about little test.
Place 10 Oz shiny gold bar on a table with equivalent amount any fiat currency beside.
What would average person from various respective countries choose?
Any suggestions.
Waverider (9/23/03; 16:56:19MT - usagold.com msg#: 109236)
TownCrier
My apologies Randy - yes, my side - I have a new Firewall that is not allowing me some internet functions - posting here is okay though. Thank you. Again, my apologies.
Waverider
TownCrier (9/23/03; 16:51:46MT - usagold.com msg#: 109235)
Waverider problems
Your side, or ours?
R.
Waverider (9/23/03; 16:46:56MT - usagold.com msg#: 109234)
Test
Test - computer problems.
Gandalf the White (9/23/03; 15:51:49MT - usagold.com msg#: 109233)
AND here Sir GAB is a VERY UGLY chart !! <;-)
http://quotes.ino.com/chart/?s=NYBOT_DXY0&v=d1
It did not fill the DOWN GAP of yesterday either !
DIVE DIVE DIVE US$
<;-(
mikal (9/23/03; 15:34:24MT - usagold.com msg#: 109232)
Wrangling Over Exchange Rates
http://www.economist.com/agenda/displayStory.cfm?story_id=2083288
Excerpts:
"The G-7 says that markets should set exchange rates. But one of the seven- Japan- thinks they need a little help.....
The Bank[of Japan] hopes the yen will trade at 110 or more to the dollar in the future. That line might soon be swept away as well."
mikal (9/23/03; 15:15:27MT - usagold.com msg#: 109231)
Strong Talk for a Weaker Dollar
http://www.businessweek.com/bwdaily/dnflash/sep2003/nf20030923_1195.htm
"The G7 nations implicit criticism of China and Japan spells out the case for a devalued greenback. If history is any guide, it's certain to happen."
Gandalf the White (9/23/03; 15:14:26MT - usagold.com msg#: 109230)
YES, INDEED, Sir GAB --- A BEAUTIFUL P&F chart it is ! <;-)
http://stockcharts.com/def/servlet/SC.pnf?c=$GOLD,P
The next little green "X" will be the start of the "TO THE MOON" trip !
<;-)
USAGOLD Daily Market Report (9/23/03; 13:14:37MT - usagold.com msg#: 109229)
Page Update!
http://www.usagold.com/DailyQuotes.html
The Afternoon Gold Report by Jon H. Warner has been updated.
If you are considering investments in gold we invite you to request our free introductory information packet detailing the products and services offered by USAGOLD ~ Centennial Precious Metals. We welcome your inquiry and look forward to working with you.
Are the Gold Shorts backed into a corner and getting desperate? Could be but Funds just keep "buying on the dips".
White Rose (9/23/03; 13:14:24MT - usagold.com msg#: 109228)
Electronic Gold as the investment lightning rod
Perhaps I will make everybody's eyes roll because I will state something that has already been said many times. Bear with me.
It I was to create a fund whose value rose and fell with the value of gold, the temptations to "cheat" would be substantial.
Lets say I use the cash 20% for real gold, 20% for cash, 20% for gold stocks, and 40% for various derivatives designed to move up faster than the price of gold, but with varying degrees of liquidity (i.e. some positions I could sell quickly, some I would have to hold to maturity).
As the architect of this scheme, I would have to "crash test" it for a varity of circumstances. What if some event caused gold to drop as a popular instrument, and 3/4 of my customers wanted their money back. What if I had to redeem all that money after gold rose substantially?
What if the price of gold rose considerably because of a very public default in the gold market (i.e. someone failed to deliver physical)? What if there were rumours that my fund was not solvent? What if a good pile of the gold stocks or derivatives went belly up? What if I owned enough gold that the government insisted that I hand over my gold to prevent the meltdown of the financial system?
Notice that so far I am not assuming that there is anything deceptive about this enterprise.
I am not as familiar as other here on the various instruments I could use to hedge one or all of these risks. What I am suggesting is that it would be very difficult to pay people off once there were a lot of redemptions and gold had gone up (as we all hope) even when one has the best of intentions.
I personally would hope that the publicity about this enterprise would cause many to consider gold, and then consider the risks of not holding onto the physical. The logical conclusion is to place an order at this and similar establishments.
Great Albino Bat (9/23/03; 13:01:35MT - usagold.com msg#: 109227)
Paper Avalanche and ge posts....
ge: I tend to concur with you, in your skepticism regarding ETF. When the door is open to abuses, there will be abuses.
Paper Avalanche: Well, I do hope you are right and I am wrong.
In any case, it appears to me that the US economy is beyond repair; or if there is a repair, it will be many years in the making - beyond my time horizon.
The days of dollar supremacy and hegemony are over. A new world order is forming and will establish itself; let us hope that a horrendous world war is not a consequence of US decline.
On another note: the P&F chart for gold looks very promising.
Get some shiny while you can!
The GAB
ge (9/23/03; 12:24:57MT - usagold.com msg#: 109226)
@ Paper Avalanche msg#: 109225 ETF
Does the ETF have to buy physical gold with 100 % of the deposits I wonder? The clients obviously do not like to own physical… Therefore, demands for physical delivery would be low. Let us make some magic, ETF could say, initiating a fractional reserve gold banking. Logical?
Paper Avalanche (9/23/03; 12:07:12MT - usagold.com msg#: 109225)
@ GFG and GAB
Good afternoon! I believe that I understand your position regarding the ETF. I was rambling a bit last night. To summarize my position in a more succinct way, I believe that:
1. The ETF will not be a means by which the price of gold can be controlled. Only a means by which paper dollar holders can participate in the rise in the dollar price of physical gold.
2. The price of gold can be controlled by paper only in a closed system. The US dollar was this closed system for the past five decades in that it both performed as the medium by which gold could be purchased (gold denominated in dollars for international trade) AND the dollar faction effectively had the only price discovery mechanism in the western financial markets, the Comex. The events of the last 36 months have provided market alternatives to this closed system.
3. To further illustrate the ETF's use as a vehicle of participation and not control, I sumbit the fact that after the LSE and NYSE begin trading the ETF next month, the CAC (Paris) is scheduled to begin trading the ETF in early November. I believe that it is inconcievable for the French, who have been instrumental in the creation of the Euro, will knowingly embrace yet another means by which the US dollar will be able to indefinitely set the price of gold.
I would respectfully put this question to anyone who can expand my hypothesis concerning the ETF - just how would the ETF control the price of gold?
IMO, the ETF is not a hammer but a mirror.
Take care all.
PA
USAGOLD / Centennial Precious Metals, Inc. (9/23/03; 10:55:12MT - usagold.com msg#: 109224)
Build your financial base
http://www.usagold.com/gold-coins.html
Knallgold (9/23/03; 09:44:24MT - usagold.com msg#: 109223)
ETF
Is the ETF the "shadow of the new european Gold paradigm" as FOA predicted?
Socrates964 (9/23/03; 08:41:23MT - usagold.com msg#: 109222)
Boilermaker
Seems naively pessimistic to me to assume that the fund will immediately be stuffed with paper derivatives and allowed to sink - its backers know that they have to work within the constraints of the global economy, and until the US sets its house in order, the demand for gold won't go away.
It seems to me, therefore, that the purpose of the fund is much more to accentuate and control trading swings in a market that would otherwise be too narrow to handle the weight of money that is likely to be thrown at it. The key point here being that large players can exchange their holdings for bullion. We can hence imagine the following:
1. They take out a leveraged short bet on the shares.
2. They withdraw their bullion and dump it on the market.
3. POG goes down, they buy back the shares and their cash goes back into the fund, which then buys back the bullion. 4. At the same time, they take a leveraged long bet on the shares.
This, at least, is how I understand it operating, the key point being that when a market becomes hot, the trading volume expands. The problem with gold is that the physical supply of the metal constrains the volume, so you have to invent an instrument that can 'take the strain'. The other important point is that there are far more investors/funds that feel comfortable holding a share certificate than a gold bar - indeed, many funds will only be able to own gold through this kind of equity vehicle. The ETF thus puts a weight of money behind the manipulators that probably doesn't want to take delivery of the physical - the next best thing to a blank check.
My hunch here is that the longer-term accumulators in Asia will work out what the game is and will have the good sense to trade in the same direction as the fund.
Wall Street will also have invented another pyramid scheme that will be every bit as glittery as the Yahoos and Junipers that would oscillate by 10-20% in a trading day and then close unchanged on the day.
DummyANI (9/23/03; 08:17:26MT - usagold.com msg#: 109221)
Commercial-shorts want to lose more than 883 million dollar
Magma Volume of Volcano Commercial-short-Gold at Mt.COMEX
This is my trial to calculate commercial-short losses according to their short-cover behaviors.
Recent CFTC reports are as follows.
In 2003 Non-commerc-long chg Commerc-short change.from08.05 Close-gold
Aug. 05, 075,623 chg–17,688 c.shrt 145,598 chg-21,856 000000 cls0351.2
Aug. 12, 084,578 chg+08,955 c.shrt 151,016 chg+05,418 005,418 cls0360.0
Aug. 19, 104,223 chg+19,645 c.shrt 174,211 chg+23,195 028,613 cls0363.0
Aug. 26, 117,340 chg+13,117 c.shrt 184,612 chg+10,401 039,014 cls0366.8
Sept 02, 146,230 chg+28,890 c.shrt 209,840 chg+25,228 064,242 cls0373.2
Sept 09, 151,530 chg+05,300 c.shrt 204,805 chg-05,035 062,701 cls0382.8
Sept 16, 144,818 chg–06,712 c.shrt 200,273 chg-04,532 061,313 cls0374.6
If- Sept23, xxxx chgxxxxxxx c.shrt 195,489 chg-04,784 059,848 cls0380
If- Sept30, xxxx chgxxxxxxx c.shrt 185,489 chg-10,000 056,786 cls0410
If- Oct.07, xxxx chgxxxxxxx c.shrt 175,489 chg-10,000 053,724 cls0410
If- Oct.14, xxxx chgxxxxxxx c.shrt 155,489 chg-20,000 047,600 cls0440
If- Oct.21, xxxx chgxxxxxxx c.shrt 135,489 chg-20,000 041,476 cls0440
If- Oct.28, xxxx chgxxxxxxx c.shrt 095,489 chg-40,000 029,229 cls0470
These data indicate that if COMEX-gold went up 30 dollars, then they begins to cover their short positions at a rate of 4784 average-close.
fix-Sept09: Gold+30$ 380$/ounce short-cover 05,035 short-side loss 15.1 M$
fix-Sept16: Gold+30$ 380$/ounce short-cover 04,532 short-side loss 13.6 M$
These positions were already settled.
Following is my predictions.
if--Sept23: Gold+30$ 380$/ounce short-cover 04,784 short-side loss 14.3 M$
if--Sept30: Gold+60$ 410$/ounce short-cover 10,000 short-side loss 60.0 M$
if-Oct.07: Gold+60$ 410$/ounce short-cover 10,000 short-side loss 60.0 M$
i-Oct.14: Gold+90$ 440$/ounce short-cover 20,000 short-side loss 180.0 M$
if-Oct.21: Gold+90$ 440$/ounce short-cover 20,000 short-side loss 180.0 M$
if-Oct.28: Gold+120$ 470$/ounce short-cover 40,000 short-side loss 360.0 M$
Commercial-shorts want to lose more than 883 million dollar
D-ANI: Buy a gold, sell a Yen
Boilermaker (9/23/03; 07:52:26MT - usagold.com msg#: 109220)
WGC ETF Debate
My comments after reading excellent posts on this subject.
The devil is in the details. Has anyone seen the financial structure of this ETF beast being designed by the WGC? What about the type of assets that will be held. Physical only or paper gold? Here's a snip from Tim Wood from a month ago;
Posted: 2003/08/18 Mon 16:00 EDT | © Mineweb 1997-2003
NEW YORK -- Speculation about the World Gold Council's proposed globally tradable gold security, Equity Gold, is increasing proportionate to the time it is taking to clear regulatory hurdles.
WGC officials cannot comment because the fund remains under starter's orders from the US Securities & Exchange Commission. The proposed fund's registration statement was filed in mid May this year and has been under intensive development for the better part of a year.
Apparently the intellectual property dispute with Bank of New York over an earlier iteration of the fund remains unresolved, but that is a relatively minor hitch against market talk that insufficient custodial guarantees may be the only nail needed to seal Equity Gold's coffin.
end snip
Tim seems to think that "insufficient custodial guarantees" may derail this product. No one has seen the asset structure so it's premature to make definite conclusions. I totally agree that the fund will probably be designed to hold less than 100% physical gold. If it is, then our fears are justified and this ETF will be just another scheme to deflect investor's money away from real gold.
I also wonder how the SEC views this thing. It's been a long time in incubation. Clearly it's gotten someone's attention at the SEC. Perhaps the SEC sees it as a hedge fund which is what it would be if it held derivatives. I know very little about these distinctions and how they affect the approval process. Any comments here would be apprciated
I can envision that a lot of hucksters will jump on the gold bandwagon to get a piece of the action as gold gets the attention of the great uninformed. I'm curious if our gracious host Sir MK has considered launching a product that would satisfy the most conservative goldbug while appealing to the broader market to come?
Boilermaker
Socrates964 (9/23/03; 06:02:16MT - usagold.com msg#: 109219)
GAB/PA - ETF
If, gentlemen, you will allow me to add my 2 cents - my thoughts are as follows:
Think of an analogy with Russia:
Were Russian securities rammed down the throat of US/European investors in the mid-90s? -Yes (most notably Soviet-era debt - I remember a senior banker friend telling me that Yeltsin just had to service the previous regime's debt and that he had put a large proportion of his net worth into this one-way bet - the rest is history).
Was Russia systematically asset stripped by the same banks? - Yes.
Don't we have a contradiction here? - surely the Wall Street crowd can't pump up an investment bubble based on the huge untapped potential of Russia and at the same time pillage exactly the asset base that will make this new dawn possible?
Evidently not! When you are going to do a very big trade, you can't just go to the market and place your order - you have to build a new market place that seduces investors like a Disneyland that seduces 5-year old kids. You have to promote your message, and then you need a stock of assets to sell them at an inflated price (which you evidently bought for a song). Rather like selling bowler hats to the Bolivian Indians - first you persuade them that they need a bowler hat even though they managed to live through the previous 15,000 years without them> You then have your supply of bowler hats which you bought wholesale and sell retail, and that's the game - selling bowler hats. There may well be a 5-year plan with bowler hat density targets. There may even be some kind of spiritual message that gets pushed with the bowler hats, but the real game is very simple - shift those hats.
We can thus get bogged down in discussions about the overall direction of monetary policy, where the IMF stands, what the hidden agenda of the BIS is, etc., etc., but this is to introduce an element into our conceptual model that confuses the issue - the confusion being that somehow there is a 'national interest or grand design' that the financial élite has to balance with its desire to make money.
All that is really happening is that the élite is setting up its stalls and preparing the next scam - i.e. business as usual. It doesn't have to be a scam that leaves them as masters of the universe (in this case, the gold market). The aim is merely to make lots of money by selling dear what they bought cheap and doing it again and again and again.
Now, what is the time horizon for a boom in a single asset class. Having lived through the booms in Japanese warrants, Southern European infrastructure, cold fusion stocks, Korean convertible bonds, luxury franchise stretching, junk bonds, Perestroika plays, LatAm markets, Chinese stocks, Russian stocks, tech, utility restructuring (this must be most of the hot markets since the mid-80s), the back of the envelope answer is 3-5 years.
Now, does say, the Chinese communist party or the House of Saud have a 3-5 year strategy for maintaining economic power or a 30-50 year strategy? Probably the latter (maybe even a 300-500 year strategy, who knows?) So pumping gold to $600 and dropping it to $400 over the course of a year is neither here nor there for such parties since they have different time frames.
In this way, the shenanigans with ETFs will come and go without affecting the long-term picture for gold. All you really have to think about is one number - the real interest rate in the US - when this spikes positive then the gold game is over for the time being for anyone who has to do their sums in a fiat currency.
In the meantime, the ETF a very clear signal that gold will be allowed to rise in the short term - merely as part of the strategy for getting the public interested in commodities. In order to sell a get rich scheme, a few people have to be seen to get rich first. Gold is perfect because it is a 'fear' investment that can offer the returns associated with a 'greed' investment.
ViewYesterday's Discussion.
