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ARCHIVED DISCUSSION FROM 1/23/2006
All times are U.S. Mountain Time

(Yesterday's Discussion.)

Goldilox (1/23/06; 23:49:16MT - usagold.com msg#: 140819)
Consistently Inconsistent, or A Wolf in Sheep's Clothing?
http://www.financialsense.com/fsu/editorials/kirby/2006/0121.html
snip:

From a Fundamental Macroeconomic perspective of the world we live in today, if there could ever be two "big picture" developments one could imagine – IN THE WHOLE WORLD – that anyone with one ounce of economic understanding or intelligence would be hard pressed NOT TO AGREE are over the top gold bullish – it's the two news-items listed above.

But Wait…..

Let's take a look at what GFMS had to say on Friday, Jan. 20, 2006 – shall we:

Gold price losing shine:

From: Agence France-Presse
From correspondents in London
January 20, 2006

GOLD prices could slump below $US500 in the first half of 2006 after a recent strong run, owing to falling jewellery demand, metals consultancy GFMS forecast overnight.

The precious metal could fall as low as $US490 dollars an ounce during the next six months, and would average $US521 over the period, London-based GFMS said in an update of its annual gold survey.

GFMS said the prediction was based on "a pause in the recent investment boom and a dramatic slump in jewellery demand".

The price of gold raced to a fresh 25-year high here on Tuesday, striking $US564.30 - the best level since January 1981. Gold had gained some 18.0 per cent in value during 2005. High price levels would prompt a 25-percent slump in global demand from the jewellery sector during the first half, particularly from India, the study predicted.

In recent months, gold has benefited from its safe-haven status, with investors ploughing funds into the market to safeguard their money against inflation and rising geo-political tensions over issues such as Iran. Philip Klapwijk, president of the GFMS, said: "Many would see the market's ability to sustain prices comfortably above 500 dollars as something of an achievement.

GFMS added that a "fresh impetus was needed for a major hike in the inflow of funds" into the gold market, such as surging energy prices or higher investment demand".

-END-

Now, right from a link on the GFMS homepage, we learn this:

Background Information:

GFMS is the world's foremost precious metals consultancy, specializing in research into the global gold, silver, platinum and palladium markets.
GFMS is based in London, UK, but has representation in Australia, India, China, Germany, Spain and Russia, and a vast range of contacts and associates across the world.

Our research team of fifteen full-time analysts comprises qualified and experienced economists and geologists; while two consultants contribute insights on important regional markets.

Executive Chairman Philip Klapwijk and CEO Paul Walker appear regularly at international conferences and seminars, and their articles have been widely published. All analysts travel regularly and extensively to stay in touch with GFMS' unrivalled network of contacts and sources of information around the world. [RK emphasis]

Now I will admit that there's only one of me, but I'm scratching my head wondering how "fifteen full-time analysts comprised of experienced economists and geologists – along with two [making a total of 17, no?] contributing consultants could proffer a serious research paper – highlighting jewelry demand only - without nary a mention of the underlying fundamentals at hand?

In fact, the talk of the economic world – for the past several months – has had a large focus on the prospect of countries such as China diversifying their U.S. reserves. Heck, the Federal Reserve has gone so far as to speculate in published documents what the effects might be if countries such as South Korea do the same. Maybe GFMS doesn't believe information that the Fed Reserve publishes? Perhaps GFMS only conducts research in the jewelry industry? Who really knows?

Now, far be it from me to point out why the Fed docs referenced above make no mention of Gold as a possible recipient of such a diversification. But, as an advocate for the gold community – GFMS would be more than aware that every Central Bank in the World carries gold "on its books" as an official reserve asset – wouldn't they?

No, GFMS – self purported to be the [world's foremost] gold industry advocate - apparently they did not.

-Goldilox

Wolves and Coyotes - When you wake up with a CB, do you gnaw off the other arm to ensure it doesn't happen again?

Smeagol (1/23/06; 23:04:43MT - usagold.com msg#: 140818)
Another tipping point?
http://www.financialsense.com/fsu/editorials/2006/0119.html#silverlease
"GOLD LEASE MANIPULATION
by Rhody
January 19, 2006
SILVER LEASE RATE MANIPULATION
Addendum January 23, 2006"
Ssnip:
"Lease rates over the past ten years have, on balance, fallen to less than a tenth of the rates prevailing ten years ago from around 2% to less than .2% What does this mean??? The falling rates suggest there is less demand for leased gold in a rising gold market. That is a very rational thing to do considering a lease on gold is actually a short on gold. The other thing this could mean, however, is that the official sector (central banks) are arbitrarily lowering rates to inject more official gold surreptitiously into the gold market. The fact that the blue and the red lines have come together recently (the lease rate spread is approaching zero or going inverted) strongly suggests this possibility. To conclude, this final graph signals incredible stress in the financial sector in its efforts to control gold prices. The low overall rates imply that the official sector is hemorrhaging gold but that this situation cannot continue for too much longer. In short, this final graph signals the death of leasing just a surely as an EKG like this would signal the death of a critically ill patient."

Smeagol (1/23/06; 22:44:38MT - usagold.com msg#: 140817)
A Glimpse into the Middle Kingdom...
http://www.financialsense.com/transcriptions/2006/0114Gu.html
...and well worth it... sss... we always wondered how "American" companies could be doing sso well... while America falls apart...

"JIM PUPLAVA: My guest this week is George Gu. George obtained his education at Nanjing University in China and Vanderbilt University and the University of Michigan in the United States, he holds two MS degrees and a PhD from the University of Michigan. Since 1990 he's been an investment banker and a business consultant. He's also worked for the last 15 years in the investment world with a focus on China. His work focuses on helping international businesses to invest in China and Chinese companies expand overseas. He's got experience working with Prudential Securities, Lazard and State Street Bank. He's also written several books, one Made In China: Players and Challenges in the 21st Century, and his current book is called China's Global Reach: Markets, Multinationals and Globalization."

A power shift is definitely in progress. And we all know how much they like It, yess?

S.

Goldilox (1/23/06; 22:12:23MT - usagold.com msg#: 140816)
Partying at Davos
http://www.commondreams.org/views06/0123-24.htm
snip:

The world's rich and powerful are heading this week to their annual meeting in the plush mountain resort of Davos, Switzerland. Hosted by the great global corporations (Citigroup, Siemans, Microsoft, Nestles, etc.), some 2000 CEO's, prominent politicians, pundits and international bureaucrats will network over great food, fine wine, good skiing and cozy evenings by the fire contemplating the world's future.

This is not a secret cabal; journalists will issue daily reports to the rest of us on the wit and informal charm of our financial betters. Rather it is like the political convention of those who manage the global economy. Call it the Party of Davos.

All markets are systems of rules that determine what sort of people are winners and what sort are losers. Politics is largely conflict among the different sorts – or classes – over who gets what. In stable societies, a social contract provides for enough wealth to trickle down to keep the lower orders from rebelling. Thus, in the 1950s, when Dwight Eisenhower's secretary of defense said that what was good for General Motors was good for America, most Americans – including the United Auto Workers – agreed. Within the boundaries of the US economy, capital and labor needed each other.

But as corporations went global, the mutual dependence weakened. And in the absence of global democracy, their owners and top managers seized the opportunity to set the new rules without social constraints. The first head of the World Trade Organization called these new rules a "constitution for the global economy." It's a constitution that protects just one world citizen – the corporate investor. It prohibits effective protections for the workers, consumers and the environment.

In America, as in most places, the party of Davos is bipartisan. It includes Bill Clinton and Dick Cheney, Robert Rubin and Don Rumsfeld, Madeleine Albright and Condoleezza Rice. (George Bush is also a member, but he doesn't like to travel). John Kerry is quoted as having called himself a "Davos" man.

Indeed, without reference to economic class it is impossible to explain why Democratic elites championed NAFTA, the WTO and the other instruments of corporate protectionism, which traded away the interests of its blue-collar industrial base in favor of the GOP constituencies in Wall Street and red-state agri-business. Nor is it possible to explain why Washington is indifferent to a relentlessly rising trade deficit, and the resulting foreign debt that has put the country's future in the hands of the central bank of China, while the Pentagon simulates war games with China as the enemy.

-Goldilox

The paradox of globalism, as it proclaims better lives for all, but hides the spectre of global slavery to implement it.

Goldilox (1/23/06; 22:07:00MT - usagold.com msg#: 140815)
- The Circle of Greed: The Only Bull in this Market is a Cash Cow
http://www.faulkingtruth.com/Articles/Investing101/1049.html
snip:

Hedge funds and brokerage firms. It's a match made in Wall Street Heaven. Brokerage firms make their money not by representing their clients, the average investor. They make their money by trading stock. It's that simple. And no one trades more stock that the hedge funds. Between the two of them, they have created some of the wealthiest individuals in America, lining their own pockets with outrageous salaries, unbelievable commissions, and massive bonuses that most Americans can only dream about. And they do it in a stock market where the average investor is still struggling to recoup even a fraction of the losses sustained in the market meltdown of 2000.

They do it by selling stock. It doesn't even matter whether that stock is real or imagined, just as long as the shares keep flowing. It doesn't matter whether the shares are delivered or not, just as long as the "customer" keeps paying the commissions for the shares that flow in a neverending stream from one hand to another. Counterfeit or real, as long as the brokerage firms collect their fees, they'll continue to buy and sell, sell and buy.

In a New York Times article last Thursday, they announced the yearly bonuses doled out by Wall Street by opening with the sentence, "Ferrari dealers, get ready. Wall Street bonuses are in and they are big." It wasn't an exaggeration. According the Times article, "Those bonuses were driven by record profits at many of Wall Street's major investment banks, including Goldman Sachs, Bear Stearns and Lehman Brothers."

Record profits on Wall Street. So what drove those profits? Did Wall Street deliver record returns to their clients to go along with those record profits? Isn't that the job of the brokerage firms, to make money for the millions upon millions of investors that they represent? So it stands to reason that investors across America shared in the banner year that lined the pockets of Wall Street, that gave literally thousands of Wall Street executives bonuses of well over a million dollars each.

Not so fast. According to the same article, "the bulk of Wall Street's profits continue to come from trading," and Alan Johnson, managing director of compensation consulting firm Johnson Associates, put it more bluntly, "The trading business, which drives Wall Street - it's not investment banking - continued to be extremely strong, even though interest rates went the wrong way."

So there you have it. The brokers get rich, not just rich but obscenely rich, by trading stock, and the hedge funds generate nearly half of all trades in the stock market, and an estimated 30% of total stock commissions. Real or counterfeit, every trade is money in the bank for both the brokers and the hedge funds. It's criminal, and it's a financial scandal so massive in scope that it's unimaginable that the major media still isn't reporting it, and in fact appear to have duct tape across their collective mouths when it comes to speaking out for the American investor.

-Goldilox

The article goes on to elucidate the complicity of the SEC in these dealings. When the Wall St investor gets his second 2001-style haircut, as he did in 1933, people will rush for the already-closed exit doors. Gold and silver may be the only investments not driven to zero, at which point, confiscation or servere limiting of PM business is the next concern.

Remember, the democratically elected Hitler's rise to complete tyranny was facilitated by the complete bankrupting of Weimar Germany. Desperate times bring desperate measures.

guns'n'butter (1/23/06; 21:30:09MT - usagold.com msg#: 140814)
this is the real thing folks......
http://za.today.reuters.com/news/newsArticle.aspx?type=businessNews&storyID=2006-01-23T113436Z_01_BAN341728_RTRIDST_0_OZABS-MARKETS-SAFRICA-RAND-MIDDAY-20060123.XML&archived=False
first the stregnthening of the rand......
and now oil for euro$ (as in Iran).......
hang on to your seats folks we are in for a ride......
anyone heard from ANOTHER lately....hmmm

TownCrier (1/23/06; 21:17:29MT - usagold.com msg#: 140813)
Intervention cuts yen's global role says Fed's Olson
http://yahoo.reuters.com/financeQuoteCompanyNewsArticle.jhtml?duid=mtfh78005_2006-01-24_01-42-32_n23188688_newsml
WASHINGTON, Jan 23 (Reuters) - U.S. Federal Reserve Board Governor Mark Olson said on Monday that currency intervention by Japan is one factor that has diminished the yen's global role in comparison with the U.S. dollar and the euro.

Tokyo spent a record 35 trillion yen in 2003 and the first three months of 2004 combined to stem the yen's rise. It has stayed out of the market since March 2004.

Asked about the inversion of the U.S. yield curve, Olson said the U.S. central bank was not in the business of trying to determine the shape of the U.S. yield curve, but that it was important to understand the factors behind market yields.

"Whatever is happening with respect to the (U.S.) yield curve. it is an international phenomenon," Olson said.

^---(from url)---^

On the topic of 'intervention' vis à vis 'utility' in the international arena, one would be wise to take serious mark of the dollar's own tightly-knit association with the derivatives network which effectively serves to accomplish a much more ponderous degree of 'intervention' wrought upon exchange rates and pricing mechanisms on international currencies and goods.

In a discussion of international splinters, does one dare to consider the plank in ones own eye?

Amen.

R.

Goldilox (1/23/06; 21:01:11MT - usagold.com msg#: 140812)
The Myth Of Peak Oil
http://www.prisonplanet.com/archives/peak_oil/index.htm
snip:

Peak oil is a scam designed to create artificial scarcity and jack up prices while giving the state an excuse to invade our lives and order us to sacrifice our hard-earned living standards.

Publicly available CFR and Club of Rome strategy manuals from 30 years ago say that a global government needs to control the world population through neo-feudalism by creating artificial scarcity. Now that the social architects have de-industrialized the United States, they are going to blame our economic disintegration on lack of energy supplies.

Globalization is all about consolidation. Now that the world economy has become so centralized through the Globalists operations, they are going to continue to consolidate and blame it on the West's "evil" overconsumption of fossil fuels, while at the same time blocking the development and integration of renewable clean technologies.

In other words, Peak oil is a scam to create artificial scarcity and drive prices up. Meanwhile, alternative fuel technologies which have been around for decades are intentionally suppressed.

-Goldilox

Not sure that I agree with the analysis, but it is worth reading for anyone who wants an alternate opinion. There are some good points brought up.

David Linkley (1/23/06; 19:53:39MT - usagold.com msg#: 140811)
@Belgian
Sir Belgian,
I so hope your last sentence is correct. Where I have trouble is seeing how gold will lead to better, freer global capitalism when I see bigger more intrusive governments everywhere. Will China or Russia stay the course to freer markets if extended difficult times come? I would gladly welcome your senario if I could only see it. Rights worldwide could be gone in an instant if governments feel their form of capitalism no longer suits their purposes. I am on the gold ride with you and your posts have made me think much deeper about my beliefs. I sincerely thank you!

Cavan Man (1/23/06; 17:54:59MT - usagold.com msg#: 140810)
Iran's denial
A Persian would never tell his own wife how much gold he owned never mind the mindless idiots reporting the alleged "story".

Rook (1/23/06; 17:23:17MT - usagold.com msg#: 140809)
.,.
http://www.prudentbear.com/archive_comm_article.asp?category=Guest+Commentary&content_idx=50794
Investors cant always bail when they want, as some hedge fund investors are finding out.

USAGOLD Daily Market Report (1/23/06; 16:53:17MT - usagold.com msg#: 140808)
Page Update!
http://www.usagold.com/DailyQuotes.html
The Daily Gold Market Report has been updated.

If you are considering investments in gold we invite you to request our free introductory information packet detailing the products and services offered by USAGOLD ~ Centennial Precious Metals. We welcome your inquiry and look forward to working with you.

MONDAY Market Excerpts

January 23 (from Reuters) -- U.S. gold futures climbed on investment fund buying on Monday as a weaker dollar, high oil prices and a host of economic and geopolitical worries attracted more cash to the rallying precious metal.

The market was expected to strive for fresh 25-year highs soon, after scaling its latest peak on Friday, analysts said, although some profit taking was capping gains for now.

COMEX February gold futures ended $4.70 higher at $558.70.

Traders said gold took off for higher ground after the dollar dropped broadly when New York Federal Reserve President Timothy Geithner underscored threats to the global economy from growing U.S. trade and financial deficits.

Some investors also turned to gold on fears over the stand-off between Iran and the West over Tehran's nuclear program, a surge in oil prices to above $69 a barrel and a sharp slide in Wall Street stocks on Friday.

"It's more of the same rally; every time we sell off, we seem to rally right back up," said George Gero, vice president at RBC Capital Markets Global Futures. "You are seeing fund buying coming in because the momentum hasn't been broken. I think they are gunning for this thing to go up to the next level, about $575," he said.

Investors have stashed more money in gold as they seek out "safe-haven" type assets like the metal while sectors like the stock market have not performed well, analysts said.

The U.S. stock market on Friday suffered its biggest loss in nearly three years.

---(see url for full news, 24-hr newswire)---

MK (1/23/06; 16:52:29MT - usagold.com msg#: 140807)
Chris, TC et al -- Japan, the Gulf and the potential for an international stock market crash
"Some, however, suggested that Iran could still be eying Swiss and Gulf accounts as refuges."

____________

I am a little up in the air as to what might happen if the Iranian oil bourse moves forward. In the end, the oil supplier will still get to choose how to denominate its payment and American military prowess will still play a role in that decision -- particularly for Saudi Arabia and other Gulf States which feel threatened militarily by Iran and the Islamic fundamentalist revolution. But I don't see the Iranian oil bourse as the real threat to world financial stability at the moment. The threat of an oil boycott and possible second stage Gulf War? Now there is something to be concerned about.

By going with Swiss and Gulf accounts for its own oil revenues, Iran would avoid putting money in the nation states which would be most affected by an oil boycott -- Japan and Europe. Iran, I am sure, understands the consequences of its actions and it would be foolish to leave its money in markets that could be devastated by an oil boycott. Iran is the fourth largest oil producer behind Saudi Arabia, Russia and the United States. One third of its oil goes to Europe. Japan gets about 15% of its oil from Iran with the hope of nailing down more. The United States does not import much, if any, Iranian oil.

Short of a war over Iran's nuclear ambitions, the danger arises that Iran would respond to a UN boycott with a boycott of its own. When this threat first materialized, the Japanese stock market took a dive. In the event of a major war in the Gulf and a possible shutdown of the Straits of Hormuz, Japan would be crippled. 90% of its oil imports come from the Persian Gulf. Europe would be right behind it.

What's the point of all this?

Beware of something quite literally going bump in the night if the Iranian situation doesn't settle amicably. Japan could roll over before you even get out of bed in the morning with mitigating circumstances in Europe and New York. Europe, which will have been already weakened by an Iranian boycott, could be the recipient of getting hit high and low at the same time should Japan be forced to move money from its banks and brokerages in order to shore up the damage at home. By the time Wall Street opens the world markets could be in chaos. Strange that it could all start in Japan, but as things have developed, that's precisely where I would lay my bet that it might begin. The last sudden drop, in this respect, serves as a warning.

The Bush administration and Europe are playing for high stakes, and Japan and Europe could be the most directly affected industrial power. Therefore, I can see why some would suggest Switzerland and the Gulf itself as repositories for Iranian funds, but even then, how safe would Iranian money be in the Gulf itself. My guess is that strategically they might gamble that boycotts answered with boycotts is the next step in the showdown.

Chris Powell (1/23/06; 15:53:48MT - usagold.com msg#: 140806)
Iran denies moving financial assets and buying gold
http://today.reuters.com/business/newsarticle.aspx?type=tnBusinessNews&storyID=nL23170008&imageid=&cap=
By Christian Oliver
Reuters
Monday, January 23, 2006

TEHRAN -- Iran's central bank has not implemented any measures in preparation for U.N. action over its atomic program because it does not believe sanctions will be imposed, the bank said Monday.

"We do have a contingency plan. We are prepared for any eventuality but at the moment we do not feel sanctions are going to take place," Deputy Governor Mohammad Jafar Mojarrad told Reuters in an interview.

"We are not repatriating our foreign exchange assets ... and there has been no movement of any assets from, for example, any European banks to any Asian banks," he added.

He said talk of such transfers had resulted from misquotes in the Iranian media and also denied suggestions from gold traders that Iran's central bank was buying up the precious metal.

"We have no intention of buying gold at the high price at the moment ... we are not in the market for the time being and are not going to be in the market," he said.

Less than 10 percent of Iran's assets are thought to be in gold.

Iran faces referral to the U.N. Security Council for possible sanctions after failing to convince the world its atomic program is peaceful. It has bitter memories of its U.S. assets being frozen after the 1979 Islamic revolution.

Central Bank Governor Ebrahim Sheibani said last week that Iran could repatriate funds if that proved necessary, sparking fears the Islamic Republic could be about to bring its cash home and buy in gold stocks.

Analysts said it was unclear what Iran would gain by transferring money to other foreign accounts, which would be equally subject to U.N. measures.

Some, however, suggested that Iran could still be eying Swiss and Gulf accounts as refuges.

Mojarrad also said in Monday's interview that Iran's economy could grow by between 6.5 and 7 percent in the year to March 2007, and reiterated the central bank's stance that the economy should grow by about 6 percent in the 12 months to March 2006.

Both these figures represent a sharp recovery on the 4.8 percent growth posted in the year to March 2005. Mojarrad said improvement in the construction and agricultural sectors would help lift the growth figures.

Liquidity growth would remain about 30 percent in the year to March 2007, making 13.5 percent inflation a realistic target.

He added that Iran's oil earnings could lift from about $42 billion in the year to March 2006 to about $45-50 billion in the year to March 2007 as long as Iranian crude continued to sell for about $50 a barrel.

He said the Oil Stabilisation Fund, Iran's rainy-day foreign currency reserve, should hold $18 billion by March 2006. This currency is held in the central bank's accounts abroad.

-END-

mikal (1/23/06; 15:05:09MT - usagold.com msg#: 140805)
Promised escape from risk traps many
http://www.prudentbear.com/archive_comm_article.asp?category=Guest+Commentary&content_idx=50794
Liquidity Fire Trap - Michael Panzner - 1/23/06 Snippit: "Unfortunately, there are signs that some exits are becoming blocked. What that means is, those looking to cash out in the months ahead may soon discover that they are trapped -- with little or no way out.
Take last week's debacle in Japan. When word of an investigation at former high-flyer Livedoor unleashed a wave of selling by small investors, volume surged. That forced officials at the Tokyo Stock Exchange to halt trading early because of capacity constraints, despite the fact that the internet company's sub-$10 billion value paled in comparison to the $4 trillion capitalization of the overall market.
Then there are the problems in Germany. Since last month, two real estate mutual funds, with assets totaling $8 billion between them, have been forced to temporarily shut their doors to prevent runs by nervous investors. Under that country's rules, funds investing in property need only hold five percent of their assets in cash -- no doubt a problem if too many decide, as they have recently, to bail out all at once.
Doors are closing elsewhere, too..."


Goldilox (1/23/06; 14:52:06MT - usagold.com msg#: 140804)
Livedoor chief arrested in Japan
http://news.bbc.co.uk/2/hi/business/4638798.stm
snip:

The head of scandal-hit Japanese internet firm Livedoor has been arrested amid allegations that he broke stock market rules.
Three other executives were arrested alongside Livedoor boss Takafumi Horie, 33, who has denied the allegations.

Livedoor's problems have shaken Japan's business world and stock market amid fears that more problems may emerge.

The allegations were central to last week's share sell-off that forced the Tokyo stock market to close early.

The company is accused of giving misleading information to shareholders.

If found guilty, Livedoor could be delisted from the stock market.

Already, the firm's shares have tumbled by nearly 65%, knocking close to $4bn (£2.2bn) off its market value.

"Talk in the market about Livedoor going bankrupt or being broken up and sold is strong," the Daiwa Institute of Research said in a report.

One of Japan's best known internet companies, Livedoor had grown through a series of acquisitions and stock splits.

-Goldilox

As if the Nikkei doesn't have enought concerns.

specie-man (1/23/06; 14:48:42MT - usagold.com msg#: 140803)
RE: Fed warning on deficit
Doesn't it seem odd that these types of speeches given by Fed Governors are ALWAYS conducted outside USA borders ?


specie-man (1/23/06; 14:46:56MT - usagold.com msg#: 140802)
@ Goldilox - Liberty Dollars
I agree completely. This fellow doesn't sound like the type of person to plea-bargain here, however I think he will press for his legal right to barter like you said.

mikal (1/23/06; 14:26:26MT - usagold.com msg#: 140801)
Fed warning on deficit
http://news.ft.com/cms/s/12afef68-8c3c-11da-9efb-0000779e2340.html
US current account deficit ‘unsustainable’ – NY Fed chief
By Christopher Swann in Washington - January 23 2006
Timothy Geithner, president of the New York Federal Reserve, on Monday dismissed the view that the US current account deficit was sustainable, suggesting the risk of a sudden fall in the dollar would grow the longer the trade gap widened.
In a speech at the Royal Institute of International Affairs in London, Mr Geithner said the problem could not necessarily be expected to solve itself.
"Time does not necessarily help. The longer these gaps continue to build, the greater the ultimate adjustment required, and the greater the risks that accompany that process," he said.
"The plausible outcomes range from the gradual and benign to the more precipitous and damaging," he said. "The size and duration of these [global] imbalances, perhaps the most visible of which is the US current account deficit, present challenges – and risks – for the world economy."
His warning came as Raghuram Rajan, chief economist at the International Monetary Fund, repeated his concern over the risk of a run on the dollar.
"You cannot discount a run on the dollar. But you cannot fully quantify that risk at the moment," he said at the same meeting.
Mr Geithner has long focused in public speeches on the risks associated with the current account deficit. But he does not see a role for monetary policy in responding to the current account by raising interest rates to slow domestic demand growth and so the demand for imports. Rather, he believes the risks on the external side make it more important for the Fed to keep inflation under control, to avoid adding to the problems and to preserve the Fed's flexibility in a crisis.
Many economists have argued that the risks to the dollar from the bloated current account deficit are mitigated by support for the currency from Asian central banks, which wish to prevent an appreciation of China's yuan undermining export growth. However, Mr Geithner said this should provide little comfort over the long term.
"A prolonged continuation of the exchange rate ar-rangements that have given rise to the large increase in foreign official investments in US financial assets is unlikely to be consistent with the domestic requirements of those economies and for this reason many are already in the process of change," he said.
"Even if we could be confident that the world would be comfortable financing the US on these terms for some time, that fact alone does not mean that it is prudent for the US to continue borrowing on this scale."
Mr Geithner repeated his call for US politicians to reduce the budget deficit. The fact that the US is using much of the money borrowed from abroad to finance public spending, he said, increased the dangers. If it was being invested in the productive capacity of the US tradeable goods industries, this would at least help the US to pay back its foreign obligations.

Goldilox (1/23/06; 14:22:12MT - usagold.com msg#: 140800)
JPM
@ Druid,

I can't vouch for their interns' intelligence, but they certainly are "targeting" the Larry Kudlows of the world with their nonsense!

Goldilox (1/23/06; 14:18:42MT - usagold.com msg#: 140799)
Liberty dollars
@ specie-man,

How much you wanna bet that the shyster lawyers will all line up to get them to plea bargain to some lesser charge, when they ought to be arresting the security and local poilice for "false imprisonment".

Calling legitamate barter "illegal" is outright theft and harrassment.

Clink! (1/23/06; 14:17:58MT - usagold.com msg#: 140798)
@968
"Since the holding of reserves, which by definition is denominated in other countries� currencies....."

Excuse me ? By definition ?!

C!

specie-man (1/23/06; 13:59:29MT - usagold.com msg#: 140797)
Man arrested for attempted spending of $20 "Liberty" silver coin
http://www.buffalonews.com/editorial/20060122/1068456.asp
Apparently, a few silver coins are circulating around the Buffalo NY area. And at $20 per troy ounce.

Flatliner (1/23/06; 13:55:02MT - usagold.com msg#: 140796)
Buddy + buddy ? safety in numbers.
http://news.yahoo.com/s/afp/20060123/bs_afp/chinasaudidiplomacyenergy_060123135458;_ylt=AieLceVbf_V8AGE0lUHLiCymOrgF;_ylu=X3oDMTBiMW04NW9mBHNlYwMlJVRPUCUl
China and Saudi Arabia forge closer energy ties during king's visit

BEIJING (AFP) - China and Saudi Arabia signed an energy cooperation agreement during a landmark visit by Saudi King Abdullah that both sides said would usher in an era of closer economic ties.
King Abdullah, who arrived Sunday on his first trip outside the Middle East since taking the throne in August, met President
Hu Jintao on Monday at the Great Hall of the People.
King Abdullah and Hu oversaw the signing of five agreements, including one on "oil, natural gas and mineral cooperation," and another on "economic, trade and technical cooperation".
Agreements were also signed to "avoid dual taxation", allow for a Saudi loan to improve infrastructure in the city of Aksu in China's oil-rich Xinjiang region, and to facilitate "cooperating in vocational training".
…

This seems very public at a time when tensions are high.


Flatliner (1/23/06; 13:47:09MT - usagold.com msg#: 140795)
Getting locked out of your account?
http://news.yahoo.com/s/afp/20060123/bs_afp/germanybankbanking;_ylt=AvqEPWxZwh1ujSSZBEcd3ZimOrgF;_ylu=X3oDMTBiMW04NW9mBHNlYwMlJVRPUCUl
Panic-selling in German property fund sector claims further victim

"FRANKFURT (AFP) - The snowballing crisis in the German open-ended property fund sector appears to have claimed another victim, with SEB Immobilien-Investment saying that one of its funds had also seen heavy withdrawals last week.
In response, the Bundesbank, the Finance Ministry and the financial sector watchdog BaFin issued a joint statement pleading for calm in the market following the high-profile closure of three such funds in recent weeks.
The head of SEB Immobilien-Investment, Barbara Knoflach told the business daily Handelsblatt that one of the firm's funds, SEB-Immoinvest, had seen withdrawals of 100 million euros (122 million dollars) on Friday alone.
The withdrawals meant that the liquidity of the 5.5-billion-euro fund had been cut to just one billion euros, Knoflach said.
And Handelsblatt said that other fund managers such as Difa or CGI had also seen "increased" withdrawal of funds, even if those withdrawals were not yet dramatic…."

...

Looks like long positions are coming under strain.


968 (1/23/06; 13:20:37MT - usagold.com msg#: 140794)
Foreign exchange reserves - how much is enough ?
http://www.bis.org/review/r060123c.pdf
Text of the Twentieth Adlith Brown Memorial Lecture delivered by Dr Marion V Williams, Governor of the Central Bank of Barbados, at the Central Bank of the Bahamas, Nassau, 2 November 2005.

SNIPS :

"Since the holding of reserves, which by definition is denominated in other countries’ currencies, generally means that the home country is financing investment and development of other people's countries, then on the basis of pure arithmetic, countries should hold no more foreign exchange reserves than they think is necessary."

"While reserves add to financial security, there is the political security which can result from where foreign exchange reserves are placed. In the BIS, for example, access to foreign reserves is guaranteed. According to its post-war Charter, foreign reserves placed with the BIS cannot be impounded or frozen, as happened in the case of Panama, several years ago. So, depending on one's political vulnerability, it is not only important to have large reserves, but it is also important to be mindful of where they are held." (cfr. Belgian's post concerning the BIS !)

"The greatest risk to the holding country of holding excessive reserves is depreciation of the currency in which the reserves are held. Where large reserves are held then the impact of the risk of depreciation of the currency is greater. By buying other hard currencies one can hedge against depreciation, since the depreciation of one hard currency is often matched by appreciation of others. Without getting too deeply into currency diversification issues, this makes the point that countries can hold large stocks of reserves and yet reduce their exposures through currency diversification."

"However, there is increasing pressure on central banks to allow the free holding of foreign currency accounts – this involuntary dollarization is represented as part of the liberalization process. This too, and it is increasingly the case, pushes central banks into holding more foreign exchange reserves, and also undermines the effectiveness of monetary policy."

"As the stock of foreign exchange reserves rises across the globe, there is likely to be an increase in the purchase of equities by central banks, as they seek to take part in global investments while keeping access to reserves. Indeed, already, a number of central banks, particularly those which hold large surpluses, are modifying their portfolios in this way – and also improving income, I may add."

"The Caribbean has watched with interest the fortunes of the euro. We have observed that it has become a stronger currency. That is well known. What is less known, is that it has allowed the euro area countries to economize on the use of foreign exchange, simply because all transactions with countries within the euro area are now domestic transactions and this allows the euro region to pay less attention to the accumulation of foreign exchange holdings than its component parts did in the past. It now requires foreign exchange only to purchase goods and services or to make investments outside the euro region. At end 2004 France held 75% of the foreign exchange reserves held before entering the euro, Germany 62%, Greece 22%, Belgium 52%, Ireland 27%, Netherlands 45% and Spain 21.5%. Using a simple average, euro countries held on average, 40% of what they held in 1998.
With the admission of new members recently, this allows them to even further economize on the use of foreign exchange. There are lessons for the Caribbean here with respect to a single regional currency and the way in which it can economize on the use of foreign exchange."

"I cannot help wondering how political risks will be measured and how countries like China and Venezuela, not to mention certain Middle Eastern countries will be able to quantify the political risks of guarantees of foreign exchange holdings into a measure of foreign reserve adequacy."
----------------------------------------------------------------------------------------------------------------------
Does the forum has any thoughts on this speech ?

Belgian (1/23/06; 12:00:29MT - usagold.com msg#: 140793)
Saudi Arabia + China + India > oil
The dollar as good as gold...the dollar as good as oil...the dollar as good as ???

The dollar is now in competition with >>> gold - oilowners + consumers - euro -2 billion producers of cheap products !

The dollar cannot ""-function-"" as a reserve anymore. Read IMF/BIS studies.

Maybe that the Iranian gold found refuge in BIS and cannot be frozen under whatever circumstances.Idem dito for Saudi gold.

Druid (1/23/06; 10:50:55MT - usagold.com msg#: 140792)
Dollar a little tipsy...
http://www.fxstreet.com/nou/graph/liverealtimequotes.asp

Druid: The Dollar must have been out doing some heavy drinking last night. Check out the link.

Belgian (1/23/06; 10:47:09MT - usagold.com msg#: 140791)
Ford
Amazing how the financial industry can still transform intrinsic doom/gloom into a happy story (Ford stock + 7%).
Under such terrible structural circumstances, gold should move/evolve very orderly as to not blow away the house of cards.

Druid (1/23/06; 10:37:55MT - usagold.com msg#: 140790)
@Goldi

Druid: The JPM write-up you just posted suggests that JPM must have one hell of an Intern Program in place with a higher/lower learning institution representing the mentally challenged. It's just becoming more obvious when you read garbage like that which poses as legitimate financial intellect.

Belgian (1/23/06; 10:37:21MT - usagold.com msg#: 140789)
Swiss pebbles....
The part of Swiss gold that changed hands, without passing through BIS, already served their international banking industry's interests. Now, they are forced to officially abandon trade with the axis of evil. But,...the Swiss always succeeded in following the Big money (business), in one way or another ! They will be present (initially under cover) if and when the Teheran oilbourse opens !

That's good for the gold that Iran repatriated and for the remaining Swiss gold reserves. Full circle.

Taking into consideration that gold is not in a hurry to reach its complete revaluation and start its NEW function.

Goldilox (1/23/06; 10:17:30MT - usagold.com msg#: 140788)
J.P. Morgan sees gold near $600/oz by year-end
http://za.today.reuters.com/news/newsArticle.aspx?type=businessNews&storyID=2006-01-23T140247Z_01_BAN350614_RTRIDST_0_OZABS-MARKETS-GOLD-20060123.XML
snip:

LONDON (Reuters) - Gold prices may reach almost $600 an ounce by the end of the year on supply worries, firming jewellery demand, geo-political concerns and favourable currency environment, J.P. Morgan Securities said in a report on Monday.

Prices might even jump to $800 from $556 now, if Iran's nuclear issue heated up and oil hit $100 a barrel, it said. Oil prices are currently ruling at around $68.

"For gold, event risks are surfacing at a time when mining supply was already inadequate and jewellery demand firming. Fundamentals alone justify prices near $600 by year-end, while a meltdown in Iran/spike in crude could see $800 gold," it said.

Iran could face U.N. economic sanctions over its atomic programme. The United States and the European Union want the International Atomic Energy Agency to refer Iran to the U.N. Security Council at an emergency meeting on February 2.

"Iran situation remains fluid and unlikely to be resolved soon. This backdrop is supportive of precious metals and energy, but leaves base metals somewhat vulnerable," the report said.

Gold prices spiked to a 25-year peak of $567.60 an ounce on Friday. The metal gained 18 percent in 2005 and has risen another 8 percent this year.

The report said the market needed both mine supply and considerable amounts of other sources of supply such as sales by central banks and investors to achieve balance

By 2007, non-mine supply would be needed to be half of mine supply to balance the market, considering growth rates in jewellery demand, the report said.

"In our opinion, there is a zero percent possibility of mines achieving 50 percent production growth by 2008," it said.

"This long-term structural shift in the need for non-mine supply is strong enough driving force for gold's current bull market but the recent emergence of the Iran nuclear issue has simply added to the case for the metal."

The reports said gold was likely to gain from a favourable currency environment, with the dollar seen range-bound in the first half of the current year, while weakening later.

A weak U.S. currency makes dollar-priced gold cheaper for holders of other currencies and lifts gold demand.

"The recent pullback in gold from its record highs should not be interpreted as a peak, rather we see it as a stage in a longer rally," it said.

"Gold's bullish hues are based on a stagnant supply profile, rising investor interest in real assets and the influx of petro-dollars from the Middle East," the report said, adding the magnitude of petro-dollar flows was difficult to measure.

The report also noted that central banks had ceased to be net sellers of gold for the first time since 2003. It did not elaborate.

Gold reserves with central banks and the International Monetary Fund total around 31,000 tonnes. In some European countries, gold accounts for half of their reserves, while in the U.S., the world's biggest holder, it makers up 64 percent.


-Goldilox

Boy, are they "going out on a limb". With covert inflation in the low double diits, that just about guarantees their "prediction". More interesting is the suggestion that IRAN issues might find $800, and the acknowledgent of CB's leaving the sellers table with "no elaboration".


Goldilox (1/23/06; 10:05:52MT - usagold.com msg#: 140787)
Ford Cuts
25-30K jobs

26% cpapcity

7 plant closings

4 new Hybrid models


dem bones, dem bones, dem DRY bones!

TownCrier (1/23/06; 09:56:11MT - usagold.com msg#: 140786)
Gold rush set to continue
http://www.shanghaidaily.com/art/2006/01/24/237597/Gold_rush_set_to_continue.htm
Shanghai Daily; 2006-01-24 -- SOLD out. Sold out. Sold out once more. Whenever gold bullions hit the counter, they are sold out very quickly after being put on sale.

Bank of China is no exception. The lender almost sold out sets of the first and second series of gold bars to mark the 2008 Beijing Olympics on the first day the sets were unveiled last Wednesday.

"Chinese have a long historical practice of keeping gold at home as a hedge," said Sun Changyan, a trader with Shanghai Lao Miao Jewelry Co, the city's major jeweler. "Bullions are eyed as a safe haven, fortune symbol and investment vehicle in China."

The investment allure of the yellow metal will glimmer even more when China further opens its individual gold investment sector and introduces more products.

"Investors expect higher prices in the future and that's why they still buy the products at the current high prices," Sun said.

Chinese have a traditional frenzy for the yellow metal. ... The precious metal not only glimmers in the world's fastest growing major economy but also in the global market...

Global investment on the yellow metal more than doubled in 2005.... Its investment potential played a critical role in raising gold prices last year, according to a latest report made by GFMS Ltd.

China deregulated its gold market in late 2002 by opening the Shanghai Gold Exchange to allow producers, corporate users and banks to trade in the yellow metal.

The next step came in November 2003 when the Bank of China, the biggest foreign currency lender in the country, became the first of the country's big four banks to begin offering paper gold trading to individuals.

...But until the Shanghai branch of the Industrial and Commercial Bank of China pioneered its new option in late July, individuals could buy and sell only certificates that tracked the market price of gold. They could not take physical possession of the precious metal.

...The service will be expanded nationwide and the minimum trading threshold will be cut to 100 grams from 1,000 grams, reported China Gold News, citing Wang Zhe, the bourse's general manager.

^---(from url)---^

Bottomline: whenever and wherever physical gold is offered in China, signs of "Sold Out" are soon to follow.

The price implications should be fairly self-evident.

R.

TownCrier (1/23/06; 09:27:29MT - usagold.com msg#: 140785)
IMF's Rajan: Can't Rule Out A Run On The US Dollar
http://www.nasdaq.com/aspxcontent/NewsStory.aspx?cpath=20060123\ACQDJON200601231026DOWJONESDJONLINE000413.htm
LONDON -(Dow Jones)- A run on the U.S. dollar that would see investors rushing to dump the currency is a possibility, although it's difficult to judge how likely an outcome that is, the International Monetary Fund's chief economist said Monday.

With the U.S. current account deficit running at close to 7% of gross domestic product, economists have long expected the dollar to depreciate against other major currencies, and feared the dollar could go into free fall if that prompted international central banks and investors to flee the greenback.

"We are in a risky situation," said Rajan. "You cannot discount a run on the dollar. But you cannot fully quantify that risk at the moment."

Rajan added that he's more concerned about the possibility that a run on the currency will be triggered by foreign private investors abandoning the dollar than the risk that international central banks will diversify away from U.S. assets.

"The first action will come from foreign private investors, who have no motives other than returns," he said.

^---(from url)---^

Factoring on gold holding and carefully considered redistributions to make themselves "whole" as they sit on and "eat" their dollar losses in the name of stability, central banks can indeed appear to confidently be doing "nothing" like a large-scale dishoarding of dollar positions.

They do, however, have incentive to take small "non-controversial" moves as a sort of 'guidance' to win the hearts and minds of the private sector to get them herded in the general direction to reinforce the desired trend. Thus is the battle waged between the old gold-frozen dollar reserve faction on one side and the price-liberalized (freegold) floating MTM gold reserve faction on the other side.

The previous comments about the choices one makes "in extremis" tells you which side will prevail -- the side aligned with the choice to recognize the permanent vitality of solid gold savings/reserves.

R.

TownCrier (1/23/06; 08:59:37MT - usagold.com msg#: 140784)
Swiss pebbles to trigger an avalanche...?
RE: ------UBS will no longer deal with individuals, companies or state institutions such as Iran's central bank, said company spokesman Serge Steiner. "It is a carefully prepared measure that has been under consideration since last fall." Iran ... mindful of the freezing of its U.S. assets after the 1979 seizure of the American Embassy in Tehran - has already begun transferring its reserves from European banks to an undisclosed location.--------

A fiat currency is good for exactly NOTHING without a cooperative banking institution to provide accounting and clearing services on behalf of the customer. Without the supporting role of a bank, clearing of currency-denominated transactions becomes cumbersome to the point of impossibility, and if accounts can't be utilized via meaningful transactional purposes, then any and all 'inherent' value perceived upon such fiat currency holdings (along with related bonds) instantly and completely evaporates as though a mere mirage in the desert.

Federal Reserve chairman Alan Greenspan, speaking to the US Congress in 1999, said: "Gold still represents the ultimate form of payment in the world. Fiat money, in extremis, is accepted by nobody. Gold is always accepted."

Equally importantly, not only does gold come to the fore in the matter of payments as Greenspan says, but as alluded to by my comments, it ESPECIALLY comes to the forefront as a matter of ensuring that ones accumulated balance-of-trade surpluses (net savings) are always meaningful -- even "in extremis".

The point here being that the Swiss action doesn't merely suggest that Iran ought to move its fiat accounts to other institutions (each being merely part of the same big network), it actually instigates a strong argument that Iran ought rather consider promptly liquidating its paper holdings in favor of tangible gold stored on sovereign shores.

Are the Swiss hereby cleverly agitating for additonal physical pressure and its associated gold-price run-up, all done in the popular guise of anti-terrorism maneuvers?

R.

Goldilox (1/23/06; 07:45:34MT - usagold.com msg#: 140783)
Swiss Bank UBS Cancels Business With Iran, Syria
http://www.thebusinessonline.com/DJStory.aspx?DJStoryID=20060122DN002581
snip:

ZURICH (AP)--Swiss banking giant UBS AG said Sunday that it has stopped doing business with Iran because of the company's economic and risk analysis of the situation in the country.

UBS will no longer deal with individuals, companies or state institutions such as Iran's central bank, said company spokesman Serge Steiner. A similar policy is also being implemented in the case of Syria, he said.

All existing business with customers in Iran will be canceled, but Iranians in exile are not affected by the decision, Steiner said, confirming an article in Swiss weekly SonntagsZeitung.

"It is a carefully prepared measure that has been under consideration since last fall," Steiner said.

Iran, under increasing international pressure over its nuclear program - and mindful of the freezing of its U.S. assets after the 1979 seizure of the American Embassy in Tehran - has already begun transferring its reserves from European banks to an undisclosed location.

Steiner declined to specify the volume of business affected by the bank's decision.

Goldilox

K-R to Castle, your move!

Rook (1/23/06; 07:17:26MT - usagold.com msg#: 140782)
.,.
http://money.cnn.com/2006/01/17/news/economy/climate_fortune/index.htm
THe next growth industry? Nuclear power plants? 700 of them? All under the banner of environmental protection? Probably.

Belgian (1/23/06; 07:02:46MT - usagold.com msg#: 140781)
ETF's
What are the gold ETF's waiting for...to take profits on their (humhumho) gold !? Getting a bit cynical...

bskija (1/23/06; 07:01:54MT - usagold.com msg#: 140780)
Gold
This is a paragraph on the Web Site called Prison Planet:
Point #3 Bank Of America and Compass Bank managers (probably all other U.S. banks too) have been instructing their employees in the last few weeks on how to respond to customer demands in the event of a collapse of the U.S. economy - specifically telling the employees that only agents from the Department Of Homeland Security will have authority to decide what belongings customers may have from their safe deposit boxes - and that precious metals and other valuables will not be released to U.S. citizens. The bank employees have been strictly prohibited from revealing the banks’ new "guidelines" to anyone. (however, employees have been talking to friends and family)

Belgian (1/23/06; 07:00:47MT - usagold.com msg#: 140779)
Abdullah...
...Finds the oilprices too high for the developping nations (China-Inda). Maybe he is suggesting "privately" how these prices can be brought down !?

OvS (1/23/06; 06:54:07MT - usagold.com msg#: 140778)
Oh yes, and where is Traveler?
Wasn't it he who claimed to have
met FOA in Texas?

BTW, I have a failproof way to
tell when the real gold-take-off
is imminent: The X-broker Michael
will call us all and offer to buy
back our pre-1933's and any other
shiny REAL.

Belgian (1/23/06; 06:37:44MT - usagold.com msg#: 140777)
Gold as a brand !?
Philip Olden - WGC >>> Another intellectual dwarf (rather troll).

Belgian (1/23/06; 05:52:14MT - usagold.com msg#: 140776)
Gold - commodities - dollar (exch.rate)
Together with the goldprice rise, we also see many commodities rise in price. This must suggest (confirm) that gold (its price) still remains a dollar derivative.

The myth that gold and dollar do hedge each other can stay alive for as long as gold is not outrunning the commodities. Isn't that handy !?

Once the gold perception builders let gold outrun the commodities...you have 100% evidence that the gold=wealth process has shifted gears.

But as far as I know, nobody plans to lower taxes on commodities in sharp contrast with taxes on bullion.

bskija (1/23/06; 05:45:37MT - usagold.com msg#: 140775)
Greenspan
@Thoreauly
I would like to answer to your dissertation. Unfortunately, I misplaced my glasses and have a terrible time finding them if I'm not wearing them. This is just one of the myriad frustrations in life.



Belgian (1/23/06; 04:53:04MT - usagold.com msg#: 140774)
Vietnam
This state AND its CB is found ready to "half" its tax income on gold-imports ! Maybe because they see gold exclusively as "wealth" that comes within their borders.
It are those insignificant little states that FOLLOW THE GIANTS and translate into actions what is stealthly going on.

TownCrier (1/23/06; 03:41:41MT - usagold.com msg#: 140773)
Vietnam allows banks to trade gold abroad
http://english.people.com.cn/200601/23/eng20060123_237602.html
Xinhua; January 23, 2006 -- The State Bank of Vietnam has allowed commercial banks and gold trading businesses to trade the precious metal via accounts abroad... The move will help increase gold exchanges between the domestic market and foreign ones.

Vietnam may reduce the import tax on gold bullion to 0.5 percent from current 1 percent in the future, aiming to raise the competitiveness of local gold products, the country's Finance Ministry announced recently.

Vietnam imported some 40 tons of gold in the first 7 months of 2005 and 65 tons in 2004.

Now, the country houses around 8,000 gold trading businesses.

^---(from url)---^

Import duty to be cut in half, another gold-positive step in the right direction.

R.

Belgian (1/23/06; 03:31:56MT - usagold.com msg#: 140772)
Bizarro
Can you elaborate, please. TIA.

Belgian (1/23/06; 03:30:31MT - usagold.com msg#: 140771)
Gold perception building (management)
There are definitely limits as to how much goldmetal can and will be sold (and delivered) as to manage the goldprice's behavior.
And those factions that have been and still are "moving" goldmetal...ARE RUNNING OUT of the available metal.

THEY (one out of the two main factions) WANTED GOLD TO BECOME CORNERED !!!!!!!!!!

Less and less metal available to keep the gold contract management tool, up and running !

The NEW gold (wealth) doesn't need any CB (buy) gold-statements anymore.

Hoping (wishing) that a goldprice-spike will "normalize" the old gold-regime...is a very risky bet.

What will cause a goldprice spike if offer and demand continue to decline !?

Bizarro-Greenspan (1/23/06; 03:10:30MT - usagold.com msg#: 140770)
Belgian

If you read about the rollover conditions extended to Barrick through their "evergreen" hedges,you will find a lender who really does not seem to care when he gets his gold back.



Belgian (1/23/06; 03:03:58MT - usagold.com msg#: 140769)
Bloomberg
Goldprices may fall...because gold-demand in India and Middle East is drying up !?
Belgian says : The giant gold-holders and soon the shrimps too, might stop offering their gold at ridiculous prices !
Why offer gold (wealth) if the demand declines !? That's why the old gold-regime must organize another raid (down) on the goldprice as to provoke new offer and demand. Will they be succesfull in doing it once again ?

Bizarro-Greenspan (1/23/06; 03:03:53MT - usagold.com msg#: 140768)
So hold them green deeds betwixt your knees,ho,ho,ho

"Now open your eyes and think in currency terms. Why shouldn't we think our money is not holding it's value? The fact that prices are not rising only confirms that our part in the market economy is not being subdivided, yes? No, the fact is that your wealth has already been inflated away by past currency inflation. You see, currency inflationist want you to perceive that your savings balance against equivalent buying power in the future, not today. The fact is that your deeds are being inflated and the value is lost, today! Never to be regained by gaining additional account balances in the future. The very extra balances you count on to keep you ahead, only dilute the pie that much further.

Are you with me?

The secret behind the over creation of fiat currency is in the fact that most of the holders have no way of knowing how much their wealth or buying power is being diluted. Except at auction! The auction that is the marketplace for all goods produced and sold.

Again, as long as the MAJORITY of owners hold the deeds without taking them to auction, the loss of value never shows up in the real market auction place we call "spending"! This is how a huge credit expansion in a fiat system hides the dilution. It entices owners to hold the deeds as near money in the form of interest bearing credit instruments. In this process everyone can lose a bit of a finger every so often and never know it. With all this background in mind I continue our discussion:

=====================

Once our regular fiat system expands debt well beyond a point where gold reserves would have forced it to deflate, our economy demands that we enter a constant slow debt expansion that stops deflation from taking hold. In this sense, deflation is always "in the air" the moment we stop adding reserves. The system slows down whenever new credit flow stops. At this point Travelers statement takes on more meaning and has an expanded context. "Deflation is everywhere and always a monetary phenomenon because; we create the monetary ourselves and do it with no controls over our desires not to lose as a group". The dilution of all our money holdings is constant and real, yet none of us wants the system to tally up as long as we can slowly share the pain. Suddenly, monetary phenomenon is really a social phenomenon when Fiat is used."

FOA #46

***********************************************************

Well,these numbers are getting outlandishly large and rather comical,no?

That must be the reason for the present gold price to finally manage to spike above...

the 80's gold price.


TownCrier (1/23/06; 02:49:55MT - usagold.com msg#: 140767)
Central Bank Gold Agreement Sales in 2006
http://www.forexrate.co.uk/news/index.php?itemid=1038
23 January -- With general talk now speculating that Central Banks are turning back to gold comes the news of GFMS having talked to many of them and found them to be turning around in favor of gold.

This is important to gold, because Central Bankers views of gold do lay the foundation of Investor attitudes and actions.

Secondly, if Central Banks turn from sellers to holders the impact on the gold price is heavy. For them to turn to buyers would change the entire future for gold.

...As they are the writers of money, such a move would take the price of gold to a point where it can act as global money in one form or another. The path to that point may well still be a long one, but every step on that journey takes the gold price higher.

...in the week ending the 13th January ...only one of the signatories of the C.B.G.A. sold a ½ tonne of gold. And this when the gold price was moving to new recent highs!

Why did they not sell more? There could be many reasons, but the most practical reason is a market one, don't fight a price ‘spike’, IF you are hoping to bring stability to the market.

No such reason will be given by them as that appears to be too close to price management [manipulation?].

^---(from url)----^

Definitely has all the earmarks of yet another gold commentator finally discovering 'The Gold Trail' as the framework of understanding that shapes his public thoughts.

The more, the merrier!

R.

Belgian (1/23/06; 02:46:10MT - usagold.com msg#: 140766)
Barrick-Placer merger :
What is the "real" reason for the merger...in an environment where the price evolution of their product, gold, is so insuring !?
Weren't these mega hedgers supposed to break up with a relative fast rising goldprice !? Strange, that none of all these gloomy predictions never materialized.

Orrrrrr, could it possibly be that deeply stored American gold is been looted to ship it against...dollar-time ?

Bizarro-Greenspan (1/23/06; 02:41:15MT - usagold.com msg#: 140765)
Spreadsheet of doom,that's right,doom
http://www.capitalstool.com/forums/index.php?showtopic=3779&pid=384355&mode=threaded&show=&st=&#entry384355

Compiled a few years ago,but still breathtakingly relevant...


"In Ike Iossif's interview with Doc and several Stoolies on Marketviews TV, I mentioned a speadsheet which modeled a hyperinflationary runaway. Here are the basic assumptions and the results.

The money supply is backed mostly by U.S. government debt. So to answer the question of what the Federal Reserve and GSEs are doing to the money supply, you have to look at what's happening with debt.

The story is rather amazing. The quarterly Flow of Funds report, which is posted on the Federal Reserve's website, indicates that there's $33 trillion (with a T) of debt outstanding in the U.S. economy.

To that $33 trillion of existing contractual debt, we should add the $44 trillion net present value of the federal government's future fiscal imbalance. That figure comes from the paper by Gokhale and Smetters, published by the American Enterprise Institute. Most of the imbalance comes from Medicare and Social Security. These are not contractual debts, but they are promises that our whole society is relying on, and there will be consequences if they aren't paid. In cash flow terms, they become burdensome when the Baby Boomers start to retire toward the end of this decade.

So adding up $33 trillion existing debt and $44 trillion future fiscal imbalance, you don't need a PhD in economics to realize that the total of $77 trillion (which is seven times annual GDP) is a hole that we can never get out of. Just the annual interest on that sum at 5%, to stop it from compounding and getting bigger, would be almost $4 trillion annually or 40% of GDP.

Well, obviously we aren't paying 40% of GDP to hold this obligation from getting bigger. We couldn't, because it would collapse the economy. So the $77 trillion obligation will continue compounding and getting bigger, until one day a cash flow crisis makes clear that it can't and won't be paid.

Going back to the $33 billion of contractual debt, about ¼ of that is government sector, ¼ is private households, and the other half is business (both financial and nonfinancial). But since government issues the money supply, government is the key sector to watch.

Due to the government's own debt problems, the potential exists for a hyperinflationary runaway. It starts with the fact that during the past 5 years, federal revenues have been growing only 1.5% annually, while expenditures grew 6.5% annually. That pushed a cash flow surplus into a $400 billion deficit this year. Obviously if you extend those trends linearly, the gap between them (= the deficit) grows ever wider.

But that's not the only factor to consider. The average interest rate on the nearly $7 trillion of federal debt has fallen to less than 5%, which resulted in an annual interest tab of about $300 billion in the fiscal year 2003.

As the outstanding debt inexorably compounds from the rising deficits, and as the Fed eventually raises T-bill rates above their current 1% yield, the interest cost will rise and become a larger percentage of the federal budget ... which engenders yet higher interest rates, higher interest cost, and an expenditure trend which accelerates beyond the 6.5% trend mentioned above.

************************************************************

Good thing it's just a social experiment,eh?

Ho,ho,ho.



Belgian (1/23/06; 01:00:12MT - usagold.com msg#: 140764)
@David
Whilst we continue to disagree, we keep watching how gold evolves. The forumer pioneers have an idea about the time when the unwise, unlogic, pipe dreaming Belgian shrimp, for the first time said that, 100% of his (modest) savings are in goldmetal in possession. Repeat : 100% !
I will continue to communicate the new "arguments" (pipe dreams) for sticking to my choice. Am not complaining about the "return" (hum) on my savings...the full 100%.

In the mean time, Saudi King Abdhullah goes to China AND India. Not to tell them that his country is running out of oil, of course. Their (Saudi-China-India) "real savings" are also in gold wealth...whilst you remain fixated with your (old) linear views on the AA western world.

First we had the regime of fixed goldprices ($21-$34-$32) whilst fiat inflated (exploded). Then we had the semi fixed goldprice since 1971 whilst more fiat continued to inflate explosive, again. And now you have problems (rather angst) with seeing the next logical step...free goldpricing !? During the past 9 decades of gold evolution, a lot of blood has been spilled. Did it stop gold's evolution ?

Transnational financial capitalism is evolving back into the regime of physical economy !!! Think deep about this one.



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