Centennial Precious Metals, Inc: Serving Gold Coin & Bullion Investors Since 1973
(Home Page)	(How to Buy Gold)	(Gold Coin Images)	(Daily Market Report)	(Live Gold Price)
(First-time Buyers)	(News & Views)	(ABCs of Gold Book)	(Gold IRA)	(Buy Gold Coins Online)
(European Clientele)	Online Information Packet			(About Us)

Welcome to the USAGOLD Gold Discussion Archives. The archives of this gold discussion forum are a treasure trove of information to educate investors about protecting their wealth through portfolio diversification with private gold ownership. The discussion forum also covers the wider issues of the past, present, and future role of gold in international monetary policy and the dynamics of the modern gold markets...

The opinions posted by all guests are expressly their own and do not necessarily represent the views of the management or staff of USAGOLD - Centennial Precious Metals. The hosting of the public discussion shall therefore not be construed as an endorsement by USAGOLD - Centennial Precious Metals of any of the opinions posted here.

ARCHIVED DISCUSSION FROM 4/24/1999
All times are U.S. Mountain Time

View Yesterday's Discussion.

Aristotle (4/24/99; 21:06:19MDT - Msg ID:5127)
News & Views
I received this month's newsletter in today's mail. Thanks MK! I've got it tucked in my shirt pocket and am heading out the door to join friends for a meal and some drinks. Hey, Dr. Jones, maybe we'll start planning that next outing with a focus toward scratching up a little yellow sand (or gravel!)

Aragorn, thanks for the helpful post. As you have now offered corrections/alterations and additions to speeches by both Alan Greenspan and George Milling-Stanley, I can't help thinking that maybe you sit back and assume everyone knows the truth of complex things as though they were common knowledge. And only when an expert shows through statements that don't quite hang together tightly as The Truth, you must realize there is work to be done and valiantly step forward to help bridge this gap.

While this approach must certainly be the most efficient use of your precious time, would it be possible to have you drop everything, assume that I know nothing, and point-by-point explain why the world works as it does? It might prove most beneficial for me to see this in one uniterrupted commentary. Thanks in advance! :-) Got martyrdom?

Gold. Get you some. ---Aristotle



USAGOLD (4/24/99; 20:04:32MDT - Msg ID:5126)
Aragorn....
#5123...an important insight!

I am sure the most know that the word fiat is Latin for "Faith". Once faith in a currency is broken, as Alan Greenspan and Rober Rubin well know, there is no going back.

In Russia when interest payments reached 30% of the government's outlay, it called a moratorium on all debt and interest payments thus relieving themselves of that 30% obligation. If the United States (which now pays interest on its debt at the rate of 15% of outlays) were to experience a doubling of the current interest rate, we would be at the point where the Russians threw in the towel. And that essentially is the end of the line. There is a lot of track between here and there and none of it smooth. Who with any common sense would hold a ruble now? Who would hold a dollar once default by the United States government became a fact of life?

Balance sheets are funny things. As any businessman knows changes can occur rapidly that tarnish a once healthy picture.

Other reasons why the government balance sheet might come unravelled:

-- A sudden fall in revenue due to a weaker economy

-- A sudden increase in military spending, i.e. the Balkans War.

-- Higher subsistence payments brought on by a weaker economy

I'm sure others at this Table could list more potentialities.

We include gold on our personal balance sheets in full knowledge that the course the United States government has put us on is fraught with danger. There is no safety net save the faith instilled in the currency by Messrs. Greenspan and Rubin -- a fragile safety net indeed since either one could exit the scene for whatever reason at any moment. It was interesting to see the Reuter's article this weekend on what some anyalysts thought would happen to the market if either or both resigned. Of all the thoughts and articles posted here over the past two days, I considered that article to be the most revealing. In short the markets and the currency would tank if either one left the scene. No one is willing to say what would happen if both left for the beach.

So the fragile American empire rests in the hands of two men? Frightening. I'll take gold over that any time.

Christine (4/24/99; 19:46:49MDT - Msg ID:5125)
FOA, Another--Re: currency war and oil
I continue to be alarmed by what appears to be a real war waged in Yugoslavia to hold the value of the euro down. I cannot make sense of it. I know that the IMF/dollar forces had plenty of time to plan a counter strategy against the euro that would not have involved a high cost, risky war to no one's benefit. What are they now fighting about. I think back to several of FOA's sentences: < Because the real value (and dollar price) of oil is about to be shown, worldwide as the Euro is given a major percentage of oil contract settlement!> and <Currently, the money war exists because the US/IMF wants everyone (trading partners)
to lower trade margins (profits) to reflect the new economics of high speed free trade, while still maintaining payments on the old international dollar debts built up during protected trade.>

Is the currency war really about how many of the oil states are going to switch to the euro for oil settlements. The oil states understandably want higher profit margins. Perhaps the euro/BIS is willing to provide that. Of course the IMF/US dollar wants the oil settlements and the profits.

CoBra(too) (4/24/99; 18:02:36MDT - Msg ID:5124)
Aragorn's III apropos WGC's Milling-Stanley
arguments are "for real" and brilliantly highlight today's dilemma of valuation of real assets vs conceptual fiat values.
Would the gold mining industry follow the concept of todays OPEC (took 'em 25 y's to put their act back together), not in terms of cartels, but in terms of limiting supply in (paper) forwards, we would not even have to argue the problem.
I congratulate you on the insight and thank you for sharing.

Aragorn III (4/24/99; 17:14:16MDT - Msg ID:5123)
Apropos excerpt by TownCrier
I have read the thoughts of Mr. Milling-Stanley, and was pleased in particular by by this mention of trade consequences. It fits in well with our recent discussions at this Round Table. Many of Mr. M-S's fallout conclusions find their base on the single conclusion that these IMF sales WILL reduce the price of gold. I would suggest that while his fall of dominoes is in line with good reason, the first domino need not fall as this fall in price is not a foregone conclusion.

Let us return for a time to previous discussion. As the dollar supply experienced remarkable inflation through the 1970's, its value to contract for labor today was being lost as its future equivalent was but fractional production
tomorrow. In other words, "Why endeavor today, when tomorrow may require only half the product for the equal payment?" You must understand that U.S. Dollar hegemony made this sentiment ring true; otherwise competition from non-inflating money as an alternate payment would have maintained the producer's motivation and replaced the U.S. Dollar as terms for settlement. From outward appearance, that was not the path travelled.

As the framework for world economics was deteriorating by a failing currency, it was in the interest of those having the most to lose to circumvent the problem--that the real supply of dollars was outpacing real supply of goods. This fed upon itself as ever more dollars were created, borrowed into existance for purchase of goods today by those who saw that their future production would easily repay these loans. It was not to be, as we can see how many nations now struggle under a debt despite the hard work and good production of commodities valued by life the world-over.

The solution was found for the dollar's problem through the alteration of real supply and demand forces on pricing. The logic can be seen, "If prices are in terms of something not "real", then let us make supply and demand also in terms of something not "real"." Just as the dollar is a future promise to pay, the supply and demand pricing of key commodities was moved to the futures markets where the goods are but promises also. It is here that focused efforts have managed to shield from an unsuspecting world that the dollar has not changed course from the 1970's. In consequence, all those that borrowed easily have found that repayment has been hard, even as real demand for their products have grown! And further development takes a back seat to debt service.

This past vicious circle: borrowing many dollars with the prospect of easy repayment with future production, was now effectively replaced with an equally vicious circle: selling much future production (on paper) with the prospect of easy replacement (on paper) with future dollars in an "oversupplied" market!

Mr. Milling-Stanley concludes the first gold domino will fall in price with actual IMF sales (if, in fact, they ever occur), but this does not recognize that the price is now set by paper supply and demand. Actual sales would do nothing, as the TALK alone was enough to propel the selling of paper supply. However, independent of real gold supply, he remains correct throughout insofar as any additional sentiment projected toward additional sales will (via the futures markets) impact price and the world as he has outlined.

It is my hope for your safety that all here can see clearly the fundamentals reinforcing this vicious circle have broken down, and that only technical inertia keeps this "game" in motion. Losing the strength of the dollar will not be pleasant for citizens that have reaped its rewards in the past, even while others bore the expense. But as past efforts to save the dollar become instead efforts to save the world, gold will call the tune as it ever has, providing an avenue for independent minds to save their monetary wealth.

got foresight?



CoBra(too) (4/24/99; 16:41:30MDT - Msg ID:5122)
parallels to the 1920's
Dear M.K.,
I apologise beforehand and hope you don't object, but in view of last week's main discussions I would like to direct
all to the David Tice and Prof. v. Braun essays at Bill Murphy's www.lemetropolecafe.com, which in my mind adds a lot of credit to all posters in this regard on your great site.

I would also like to stress more mundane matters in gold mining industries, as most major gold mining co's started as juniors at one stage and have been lucky enough to find a "company making" orebody. One of the most spectacular recent success stories in N-Am. was Barrick by hitting glory holes at the Goldstrike deposit on Nevada's Carlin Trend in the 80's, which was predominatly Newmont's home turf at the time.
More recent examples were juniors being noted for their successes in delineating major reserves and being taken over at mostly fair prices as witnessed for instance by Arequipa (ABX) or Argentina Gold (HM).
There are a lot of smart juniors out there in the right spots, which are (barely) surviving, but still working to enhance their resource. As Carlin is maturing the Battle Mountain Trend -perceived as parallel to Carlin- is shaping up. PDG's lowest cost Pipeline deposit(Cortez JV) may be in the lead but there is a lot of potential on this huge trend.

Back in the late 70's the US was producing 30 tons of gold annually. Today, in mere 20 years the US sports being producer # 2 with a total of 351 tpa. - and almost 2/3 are from Nevada. Have a closer look at your neighborhood - it may be good for your h(w)ealth, as Dr. Ralph Roberts, the USGS geologist, dubbed as geological father of NC Nevada was quoted. He also said at early Carlin stages, that this area will equal S-Africa in a generation or two. Wer'e close, but anyway my reasoning is hedge your physical also by well researched cheap future ounces in the ground at todays 20 yr low on most mining stocks.
May your weekend be rewarding!


SteveH (4/24/99; 15:56:19MDT - Msg ID:5121)
What does this chart mean?
http://www.kitcomm.com/pub/discussion/Chartz.jpg
by Donald

TownCrier (4/24/99; 14:03:29MDT - Msg ID:5120)
Hear ye! Hear ye! A new addition to The Gilded Opinion is at hand!
http://www.usagold.com/THEGILDEDOPINION.html
Read Congressional Testimony by World Gold Council's George Milling-Stanley on the proposal for IMF gold sales. In addition to learning that 70% of the IMF's credit has been extended to only five nations (Russia alone holds 25% of IMF loans), you will see pertinent thoughts on international trade:
"The economic performance of most of the HIPCs is heavily dependent on the production of commodities, and often on just a very small number of commodities. This fact limits potential earnings, and renders the countries extremely vulnerable to adverse price movements. In addition, almost all the HIPCs run a persistent current account deficit, aggravating an already serious debt problem. In many of the countries, the value of goods exports is exceeded by that of goods imports, even before services and other "invisibles" are taken into account. Thus they have a compelling need to develop other sustainable export products. With limited manufacturing capability, these often have to be additional commodities or commodity-based items."

Visit USAGOLD's Gilded Opinion Index at the link above, and click on this item to learn more about it. We'll see you back at the Table!


Peter Asher (4/24/99; 13:30:31MDT - Msg ID:5119)
More on Y2K Bank threat
Subject:
[Fwd: [Y2kWatch-News] Y2k: Medical Prep and Banking Concerns]
Interesting banking insight:

Weatherman wrote:

> **********************************************************
> Y2kWatch-News: Information for Education and Preparation
> ----------------------------------------------------------
> Visit http://Y2kWatch.com/ April 23, 1999
> **********************************************************
>
> // Deal of the Week //
>
>
>
> ---
>
> // Banking and Derivatives //
>
> Dear Weatherman:
>
> My career has been in the financial sector, both banking and brokerage.
> During the 1987-96 period I was CAO for the second largest (at that time)
> securities firm in the world which was the U.S. subsidiary of a Japanese
> firm. Among other things my areas of responsibility included technology
> and credit.
>
> I do not see nearly enough awareness of the financial implications of Y2k
> such as bank asset quality and international financial transactions.
Banks
> will have to try to eliminate their "non-compliant" customers or risk
loss
> of loan principal if the customer fails. But there's nowhere else for
> that customer to go. Banks aren't going to be accepting new customers
who
> are being forced out by another bank. Therefore credit/asset quality
will
> be a major problem for banks if they have non-compliant customers who
will
> have serious operating problems.
>
> Banks and brokerages participate huge international transactions
including
> derivatives. The dollar volume of interest rate swaps is almost beyond
> comprehension and all of it must come under close scrutiny as the
> principals attempt to sort out who they're willing to continue doing
> business with throughout Y2k. The dollar value of foreign exchange
> transactions, which underpin world trade and commerce by facilitating
> hedging and currency exchanges, is greater than the combined value of
> world debt and equity trading. This is another area where the
principals
> will have to manage their counterparty risk very closely.
>
> Under almost any assumption there will have to be significant
interruption
> and disruption in these markets as the players take defensive actions
> during coming months. There's no 'quick fix' here because many of these
> transactions are quite complex and not easily dissolved -- especially if
> one of the parties doesn't want to dissolve it.
>
> Although these are very important issues, I don't see many people talking
> about them. Of course, if I were (still) Chairman of a commercial bank,
> you wouldn't hear me talk about them either. And anyone within my
> organization who talked publicly about it would be severely dealt with.
> Who else might talk about it? Perhaps an enterprising "investigative
> journalist" but I doubt that person could come from mainstream media.
>
> I agree "no one knows" what the outcome of Y2k will be. However, IF the
> software problem is as substantial as it appears, the strong
probabilities
> favor a serious outcome. I don't see how it can be avoided.
>
> Signed,
>
> "Banking Insider"
>
> ---
>
> // Y2k Weatherman Comments //
>
> I've been doing my best to get the word on Y2k out to the masses for
> nearly 2 years, but with Clinton's fiasco in eastern Europe and other
> distractions, the public has lost interest in Y2k. Y2k isn't "news" any
> longer. I've been contacted by both the Catherine Crier Show (Fox News)
> and PAX TV, but neither reporter followed through (yet) on an interview.
> I guess they are busy covering the war.
>
> However, I'm not an easy interview. I can be pretty caustic to the
> mainstream press. I've been burned by the press so many times I can
> hardly keep track. The London Financial Times grossly misquoted my
> website. How a "reputable" publication can misquote something that is in
> black and white is hard for me to understand. The Chicago Tribune used
> ridiculous alarmist language and took my comments out of context in the
> interview I gave them. A local Dallas TV reporter did a pathetic job on
a
> Y2k "investigative report" and slammed my website as part of his "public
> service." The Dallas Observer called my local preparedness group a
"bunch
> of kooks." I'm just thankful that TIME magazine was kind enough to *not*
> mention their interview with me and Randy Flink in their silly Y2k cover
> story back in January. I've quit paying attention to the nonsense from
the
> lackeys in the mainstream media. I don't have time for it.
>
> If you want the truth, you have to read between the lines and do your own
> research. The press has always been a tool of governments and the rich
> and powerful. There is no such thing as "unbiased reporting." Heck, I
> tell you up front on my website (see the "Iron Triangle" article) that
*I*
> am biased. (At least I admit it.)
>
> What is my point? Y2k is still a problem. We are making progress, but
> there will still be problems. Is the new Y2k complacency a calm before
> the storm? Only time will tell, and we don't have much longer to wait.
>
> ---
>
> The Y2k Weatherman
> Copyright 1999 by
> Millennium Insights LLC
> All Rights Reserved.
>
> ===
> +++++++++++++++++++++++++++++++++++++++++++++++++++++
> + Are you ready for Y2k? Visit http://Y2kWatch.com +
> + Prepare to serve, not just to survive! 1 Tim 5:8 +
> +++++++++++++++++++++++++++++++++++++++++++++++++++++
> ------------------------------------------------------------------------
> Jobs & Adverts USA. The right job for you might be just around the corner
> or perhaps in another time zone. With our growing selection of
IT/Managerial
> positions use Jobs & Adverts for your next career move.

--









TownCrier (4/24/99; 12:15:10MDT - Msg ID:5118)
FOCUS-Kuwait moving on foreign oil role despite critics
http://biz.yahoo.com/rf/990424/bb.html
Kuwait preparing to allow foreign participation in its upstream oil sector.

TownCrier (4/24/99; 12:13:54MDT - Msg ID:5117)
German tells U.S. "we won't pay more for war"
http://biz.yahoo.com/rf/990424/7.html
The cost of war: each country bears the costs of its own involvement; for example, the war is costing London one billion pounds ($1.7 billion) a month.

Peter Asher (4/24/99; 8:41:24MDT - Msg ID:5116)
Only cloud ???









From an Exite news article on a budding Asian stock boom.

The only cloud on the horizon is the threat of monetary tightening in the United States. Clough, chief investment strategist at Merill Lynch, said this is already starting to happen through a rise in bank reserve requirements, rather than an interest rate increase.

Others are concerned a rate rise is possible, with the U.S. Federal Reserve anxious to reverse the mass infusion of liquidity it supplied last fall when markets seized up on fears about the state of the global economy and over-leveraged hedge funds.

"The reason that prompted the Fed cuts no longer exists," Stephen Roach, chief global economist at Morgan Stanley Dean Witter, told a client lunch Friday.

Peter Asher (4/24/99; 8:20:00MDT - Msg ID:5115)
.com mania, the real numbers
http://nt.excite.com/news/r/990424/10/business-stocks-week
Laugh or cry, as fits your mood

The Stranger (4/24/99; 8:03:59MDT - Msg ID:5114)
Love It or Lease It
I don't suppose anybody can know how much CB gold is still susceptible to lease, but here is a recent quote from George Milling-Stanley:
"We've had five significant sellers of gold from central banks in the past ten years. By that, I mean people who would sell more than 100 tonnes at a clip. I'm assuming from that and from conversations I've had with most of them, that the other 140-150 official-sector holders of gold are perfectly happy with what they have. And that certainly is what they are telling anyone who is listening."

I, Stranger, would modify one remark made in Steve's Kitco/africanminer piece and that is the comment about this practice being "unspeakably dumb". All commodities would command a higher price if the producers would co-operate with one another. Free markets are designed to prevent this, however. One of the characteristics that make gold unique among all commodities is that the world has got a 40 year inventory of the stuff. And gold has no one particular player who can exert a significantly disproportionate influence over its supply, the way the Saudi's can with oil, for example. Therefore, no one CB sees its own actions as decisive with respect to prices. As I have already said in a previous post, each of the practitioners of gold leasing has been rewarded for mobilizing supplies in this manner. That goes for CBs and mining companies alike. But, collectively, the practice has been a disaster. As inflation begins to impact upon the dollar again, I suspect we shall all get a lesson in just how big that disaster can be.

SteveH (4/24/99; 3:51:54MDT - Msg ID:5113)
A very clear gold leasing explanation with ...
a most interesting conclusion:

Date: Fri Apr 23 1999 19:43
africanminer (Rody gold over hang?) ID#219342:
Copyright © 1999 africanminer/Kitco Inc. All rights reserved
"The gold does leave the CB, and is on loan to the bullion banks who then lease it to the spec funds, banks and mines. The bullion bank
takes back T-bills from the sale of the gold as collateral for
the leased gold. The T-Bill is held until the gold plus lease
metal interest is returned. There is no paper metal issued in
any of this. A lease is a sale of physical metal period.
In most cases leases are rolled over including the metal
interest which can be leased as well. In this way funds must
be borrowing from Peter to pay Paul while the metal interest may
be borrowed from Fred, and so it goes into the lease overhang ever
inflating. We can only conclude that the the overhang grows
ever larger as the price of gold has fallen over time. This can
only mean that nobody has covered their leases in any meaningful
way. The only possible way POG can decline in the face of
deficit new production plus scrap supplies is if the shortfall
is made up from leased supplies and that these are dumped to
create an artificial surplus. This is unspeakably dumb, or
is intended to destroy gold as money by selling it into the
sewer. Anybody care to estimate whether there is enough
gold left in CB vaults to do this? I think they have
between 75% and 60% of their original 35000 tonnes left."

HLime (4/24/99; 2:48:22MDT - Msg ID:5112)
No49
Congrats No49 you guessed that I use a cover name. The only other person to
guess it was a secretary at a head hunting place when I worked for Phibro in NYC.

The Third Man came out in 48 and starred Joseph Cotton and Orson Wells.
I have always been an Orson fan and use that character name for my net id. The
music is called Zither, kind of a Greek guitar.

You bet I still have that nugget along with several 1 and 1.5 dwt brothers, but
the big one got away. Where I dig is a AK state recreational mining area. I
was working the previous summer on a tailings pile that was never washed
because the flat bedrock would plug up the wash plant. I had to leave to
work at my day job at the U and my pardners used a metal detector in last
seasons high banker tailings pile. THEY GOT A 14.35 DWT NUGGET.
It was either further down in the pile than what I had worked or it went over
the tines of the high banker. Either way I was standing on that beauty all season.

Harry ( I will sell no penicillin before its time) Lime



Click Here to view yesterday's discussion.

Permission to reprint is hereby granted where the USAGOLD name is cited along with our web address, mailing address and phone number. For electronic reproductions, citing the post heading and the http://www.usagold.com/cpmforum/ website address as the source is sufficient.

Centennial Precious Metals Gold coins & bullion since 1973 P.O. Box 460009 Denver, Colorado 80246-0009 We educate first-time investors!

We invite you to contact our trading desk for quotes and purchase information. 1-800-869-5115 00-800-8720-8720 6:00am to 6:00pm MtnTime; Mon-Fri admin@usagold.com

USAGOLD Rated A+