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ARCHIVED DISCUSSION FROM 4/25/1999
All times are U.S. Mountain Time
View Yesterday's Discussion.
The Stranger
(4/25/99; 23:01:44MDT - Msg ID:5166)
canamami
Likewise, thank you, canamami. Since you don't understand my regard for your posts, I'll explain: I like intelligence, no matter where I find it.
I guess I am still amazed by the internet. I have been on-line only two years. I have only contributed to one forum, this one, and, at that, for only 3 months. It still freaks me out that I can sit in my office at home and consult with such bright people on my absolute favorite topic any time I want. I just wish you (canamami)would post more often. You obviously have some sort of background in geopolitics, which brings a valuable dimension to the debate.
There are a few other titans in here that I would like to mention as well, but I wouldn't list them for fear of leaving someone out. Anyway, God bless us everyone. Here is to a very memorable year for all.
canamami
(4/25/99; 22:10:30MDT - Msg ID:5165)
Currency War against the US? Why, and What to gain?
Stranger, thank you for your kind comments concerning my posts. The trouble is: I genuinely don't understand why you think so highly of them. In fact, I much prefer your posts to mine, and I find your posts to be among the clearest and most intelligible on the Forum.
I am pleased to see the return of Another and FOA.
I have some quick questions. As I understand the theory, the Europeans are planning to use the introduction of the Euro, particularly its gold quasi-backing, to supplant the $US as the global reserve currency. The purpose of gold quasi-backing is to induce the oil-producing countries and the Chinese to embrace the Euro.
To an extent (except for the importance placed on gold in the theory), this is generally accepted, at least to a degree. Most observers would agree that one objective of the Euro plan is to create an alternative reserve currency to the $US, so that the Euroland countries will derive the benefits of using a reserve currency. Some European politicians (let's call them pan-European neo-gaullists) also like the increased prestige to be accorded to Europe and the resulting diminution of US hegemony. One can also see the Chinese encouraging the Euro for political reasons, to diminish US influence. (For at least partly the same reason, this is why the Chinese are favourable to gold). In fact, any country or group which wishes to see some reduction in US influence will welcome the Euro.
My concern is this: It appears the theory posits an almost active economic aggression by Europe and oil-producing states in the Middle-East, with the acquiescence and support of China and using gold as a major weapon, to smash the $US.
However, and first, many of the Middle-Eastern countries are dependent on the US for military protection. No country or alliance in the world can match the US with respect to military technology. Only the US maintains a military of the size and mobility to assist those Middle-Eastern countries if they are threatened. The bottom line: only the US can protect these traditional regimes (The US being the successor to Britain and its Empire in this as in many other roles). Why then would these regimes undermine and alienate the US, if only the US can protect them and the all-important sealanes?
Second, given the deep economic, political, cultural and military ties between Europe and the US, why would Europe launch an economic war against the $US, which is tantamount to a war against the US economy? Sure, I can see the Europeans giving the US a figurative bloody nose as part of vigourous economic competition (see the introduction of the Euro), but to me this theory postulates something far more extreme, which would necessarily lead to the end of the Western Alliance, which clearly is not the intent of European leaders. I doubt that the US-led forces would be shutting down 25% of Europe's inland river traffic, with the attendant costs to the European economy, if European leaders were intent on "crushing" the $US in the near future. Moreover, the US is the world's most open major economy, providing a market for the rest of the world. Why would the Europeans undermine, and provoke a full-blown economic war with, the Golden Goose?
Third, the possible avenues of US retaliation are mind-boggling. This Forum is about gold. The US possesses massive (I believe over 50% of the world's) gold reserves. What country or group in its right mind would start an economic war against the US, using gold as a significant weapon, in the face of such awesome US reserves? Moreover, both Western Europe and the traditional Middle-Eastern oil-producers are still substantially dependent on US military protection. Why would they jeopardize the US' economic ability or general willingness to provide this protection? Remember, Russia could quickly turn hostile to Western Europe, and the West generally. The Western Europeans are on the front line if this happens, and they will not want to risk losing US support. The US' capacity to take economic retaliation is also formidable, so why risk the US' ire?
Perhaps I misunderstand the theory, but to me it implies the equivalent of an economic war against the US, which I don't believe the Europeans or the Middle-Eastern countries would wish to initiate.
The welcome return of Another and FOA prompted a break in my posting moratorium (massive quantities of work at the office). To my silence I must return.
Good night and good luck to all USAGOLDbugs.
jinx44
(4/25/99; 21:42:02MDT - Msg ID:5164)
Christine again
The most powerful exist in this moment. In the next, it will be someone else. Being the smartest is what gets the power. As my evil SgtMajor was fond of saying, you are only on top until the next ambush. We will see; my money is on gold.
Christine
(4/25/99; 21:28:40MDT - Msg ID:5163)
Jinx--My understanding from those knowledegeable
is that the financial powers behind the IMF are the most powerful in the world by a vast factor. The liklihood of them being suckered is not high.
Christine
(4/25/99; 21:23:59MDT - Msg ID:5162)
Dollarization
Sorry for going on and on. What I have been getting at is I believe there will be something else after the euro. Much of what FAO/Another suggests may transpire, but I have to think it is part of a bigger scheme to manipulate us into something we would not otherwise agree to. Others here have commented on all the dollarization talk of late. Many strange things are going on and being said. Based on the Simmons speech here, and Al Fulchino's (Mobile Oil dealer) comments here about refinery fires etc., I suspect a staged oil shortage crisis in the US is about to unfold within months. What is it all about.
jinx44
(4/25/99; 21:15:51MDT - Msg ID:5161)
Christine
I must agree with your cautious nature when dealing with people the likes of Clinton, Blair, et. al. I do believe there are many different big players in this game and surely they are not all of the same intelligence. I think the ME players and some of the W. European players are the top of the food chain. I think WJC/Rubin are in the middle of the pile. Indeed I think there is a good chance they have been suckered. The rest of the playing field have been at this game longer, in the social and institutional sense of things. Just like the herd gets clipped by the street, some CB's and power organizations clip the others of their kind. Love and War???
The wonderfully saving grace in this lies in the private citizen buying gold to offset the ignorance and treachery of its' leaders.
Christine
(4/25/99; 21:09:58MDT - Msg ID:5160)
What every central banker knows better than his mother
IMHO, every central banker's first year in central banking school is spent intensively studying how to manipulate the price of gold to adjust the economy in the desired manner. If central banker's and their supporting financial powers knew and cooperated with the scheme to lower the price of gold several years ago, they would have anticipated the possible impact of that on the introduction of the euro relative to the dollar. They would not have minimized or underestimated the risk, as their fortunes and power rest upon these kind of decisions. They would have anticipated the vastly increased rate of growth of the financial bubble, and the risks when the bubble collapses. I cannot believe they would ever have been so cavalier. It does not make any sense.
FOA
(4/25/99; 20:41:25MDT - Msg ID:5159)
reply
Christine,
I an sure you will agree that we must watch how this unfolds. As Another said, events will mark the trail. Also, I never said Clinton, only the US political factions! There is a big difference.
I will be leaving now. Will return tomorrow.
Thanks for the discussion FOA
Christine
(4/25/99; 20:29:42MDT - Msg ID:5158)
FOA--IMF/dollar is not Bill Clinton
As you may or may not know, I have become a conspiracy theory believer as I have tried to make sense of this. However, I do not take any of the other existing very broad conspiracy theories for mine. I base my theories on what could be a logical explanation for what does not make sense. I do not believe the Clinton administration represents the IMF or the powerful banking forces that support the IMF. In my view, the Clinton administration is virtually a puppet show. Perhaps the puppets were fooled, but not those whose fortunes and privilege rest above the puppets. Again, I do not believe that the powerful banking/financial forces behind the IMF would ever be fooled by the BIS/euro. So, I still can only conclude that there are missing pieces to the scenario that will unfold going forward. I do not disrespect what you are saying; I just cannot agree with it. Is it possible that there are more plans and deception going on than we all know.
FOA
(4/25/99; 20:28:19MDT - Msg ID:5157)
reply
Hello again beesting,
We have only just begun to read and hear about gold. The coming action in this arena is going to wear out many traders accustom to a dead market. Physical gold will be the only way to participate in the harsh moves of the future. I look for the US to attack this rising market with all the accumulated wealth their citizens own! thanks FOA
beesting
(4/25/99; 20:15:50MDT - Msg ID:5156)
Thank You ANOTHER
living in the U.S. we are constantly bombarded by negitive Gold sentiment,from our President,to our Bankers/Brokers, to our next door neighbors.Your posts constantly give long term hope in our personal choice of owning physical GOLD for the future.
Thank You.......beesting
FOA
(4/25/99; 20:15:46MDT - Msg ID:5155)
Gandalf the White
Hello Gandalf the White,
Timing? Now! We should not see the gold price falling again (five or six dollars up or down is no more than fluctuation). Pressure is coming to bear that should see it climbing through the rest of the year and on. Another did not predicate this on a possible short covering rally caused by the loss of CB sales ( as stated a while back). This time the major governments will be behind the move. FOA
FOA
(4/25/99; 20:07:24MDT - Msg ID:5154)
Christine (4/25/99; 19:29:18MDT - Msg ID:5151)
Christine,
I believe this entire scenario was the work of very sharp people. As Another once put it, "it is the master plan"! They launched this fully, during the present administration in washington which has lasted almost two terms. Think about it, the present US political factions wanted the dollar to be strong at all cost in order to push through their economic plans. What better bait than to lay
down a dollar strengthening decline in gold? The US went for it with both feet and encouraged it from the beginning! Perhaps you are right, in that they even helped the process. Truly, they never thought the Euro would fly and even considered that this dollar building scheme, would help kill
the new currency before it launched. It must have been the biggest shock when it was realized what a trap was laid. Maybe you are also right that this brought on the war?
I think the US thought most of the European CBs would be on the hook for all the gold derivatives once the Euro failed. Now the whole thing is reversed. The US must figure out how to negate all of the gold paper without lowering the dollar in the world's eyes with a soaring gold price!
Oh yes, they knew about oil. But, so what? If the LBMA assignments were lost because of a failing Euro, who was going to suffer a loss of confidence? Europe of course, but the Euro succeeded! The game continues! FOA
beesting
(4/25/99; 19:49:28MDT - Msg ID:5153)
Floating Exchange Rates.
First,FOA I would like to thank you for clarifying the behind the scenes roll the Bullion Banks play in the world Gold markets, both paper and physical.
See my post 4/23/99 msg.5104.
Second,the question was asked many months ago how were currency exchange rates equated worldwide? No one seemed to have a good answer for that. This is what my broker sent to me.(although it's only a partial answer from a financial publication):
FLOATING EXCHANGE RATE movement of a foreign currency exchange rate in response to changes in the market forces of supply and demand; Also known as flexable exchange rate. Currencies strengthen or weaken based on a nation's reserves of hard currency and GOLD, its international trade balance, its rate of inflation and interest rates, and the general strength of its economy.
Now, I saw in a news release recently(from South Africa) that both the IMF and BIS were concerned about statistics being released, from certain Countries Central Banks, that the statistics were erroneous, thereby causing an untrue currency exchange rate for those countries. Each Central Bank has the authority to set the rate for its own country.
However the above statement still cannot explain why some very small countries have a higher exchange rate than some of the larger wealther countries.In My Humble Opinion it is because;population of a country is an added factor in the valuation of currency.
Wouldn't it be a lot easier for everyone if we were all on a worldwide Gold based system..........beesting
Gandalf the White
(4/25/99; 19:33:04MDT - Msg ID:5152)
FOA
Thank you FOA for your postings today on the forthcoming changes in the reserve currency of the Swiss and others. The Hobbits have been standing by to hear your promised thoughts on the most important item ---- TIMING ! Such statements as "soon" can be thought of as many different periods by the same number of persons. Can you please define the "when" a little better. Thank you.
<;-)
PS: I like your surfing style.
Christine
(4/25/99; 19:29:18MDT - Msg ID:5151)
FOA--IMF/dollar not likely passive participant nor passive responder
"A huge financial bubble distorts the world financial markets. This bubble has been developing for a long time but has gotten much larger in the last couple of years" (Ron Paul, US Congress) IMHO, CB's leasing gold and holding the POG down these past several years has been a major cause of the recent great increase in the financial bubble. My observation is that all the CB's were active participants in this manipulating the POG, not just the European CB's. Now, if the POG was being manipulated downward to facilitate the introduction of the euro (and I think this could be), surely the IMF/dollar was well aware of this and at anytime could have easily interferred with the process (ie"IMF announces it is about to buy gold"). I puzzle over this contradiction continually. The IMF/dollar has had many tools available to short circuit the euro before now. In fact, it actually appears that the IMF/dollar has collaborated with the introduction of the euro up until recently.
FOA, you have made similar comments before: "What good is economic demand for oil if the payment settlement is worthless? Better to support a low gold price to create a new currency than risk a total loss of oil usage." From this I have interpreted that oil nations began demanding more gold for oil settlements due to mistrust of US dollar value some time back. I can accept this as a plausible scenario. I cannot reconcile the apparent complicity of the IMF/dollar in what has transpired to launch the euro, only to have the BIS/euro take over to destroy the IMF/dollar in the end. There must be missing pieces, because the picture as I understand it lacks logic and coherence.
FOA
(4/25/99; 19:20:21MDT - Msg ID:5150)
Swiss Franc?
http://www.grantspub.com/GIRO/index.html
THE COMING SHORTAGE OF HARD CURRENCIES
"'I just came back from Switzerland,' relates Yves Mojonnet, a San Francisco investor and paid-up subscriber, 'and I have witnessed a shift in public perception about the long-term benefits in joining the [European Union]. And I
would put some money on it that, sooner or later, the Swiss will be in favor of this.' The Swisss joining Europe? Without their precious franc? In exchange for the sinking euro? Whether or not you would take Mojonnet's bet (be advised that he's Swiss-French by birth), prudence in the monetary-policy context continues to be redefined. The keepers of the world's strongest currency are bending over backwards to protect their franc against excessive strength. In this deflationary time, the Swiss are becoming less and less like themselves and more and more like everybody else."
FOA
(4/25/99; 19:13:28MDT - Msg ID:5149)
OIL!
http://www.iht.com/IHT/TODAY/MON/FPAGE/embargo.2.html
Paris, Monday, April 26, 1999
Allies Order Military To Plan Oil Embargo Russia Refuses to Stop Shipments; France Backs Off Its Objections
By Joseph Fitchett International Herald Tribune
WASHINGTON - The NATO summit meeting, apparently united in its determination to cut oil supplies reaching Serbia, told the alliance's military commander to work out plans to interdict ships carrying oil to Serbia via the Adriatic sea, U.S. officials said Sunday.
The officials, who asked not to be identified, said that this new action to isolate Belgrade had enough backing in the alliance to ensure that effective steps would be taken, using the U.S. and European warships patrolling the region.
Objections to an embargo, spearheaded by France, reflected fears of a clash with Moscow if NATO sought to halt and search Russian ships at sea, but U.S. and British officials played down the risk of a major confrontation.
The British defense secretary, George Robertson, said: ''The idea of refueling the Serb machine is not really on the Russian agenda at the moment.'' Privately, British and U.S. officials at the summit meeting said that Moscow seemed to be tiring of public challenges to NATO exposing Russian weakness in the crisis.
President Boris Yeltsin spoke at length about the Kosovo conflict withPresident Bill Clinton in a telephone conversation Sunday, apparently without signaling any intention to defy NATO over the oil issue, said Samuel
(Sandy) Berger, the national security adviser.
Before that conversation, the Russian foreign minister, Igor Ivanov, said on Russian television: ''There are only 19 member countries in NATO, and NATO's decisions extend only to those countries that are a part of the alliance. According to international law, sanctions or embargoes can be imposed only by the UN Security Council.''
Speaking to reporters in Cairo, where he was visiting, Mr. Ivanov added: ''We will continue delivering oil in keeping with our international commitments.''
Although the French reportedly agreed to the plan to tighten the economic noose on Belgrade when it was discussed at the start of the summit meeting, President Jacques Chirac later warned publicly that a blockade would bean ''act of war'' - apparently a reference to Russia, where officials threatened publicly to continue supplying Serbia with oil. Russia has been the main supplier for Serbia, and U.S. officials said that they thought Moscow might try to continue getting some oil to Belgrade along the Danube River route.
Later, at a news conference at the French Embassy in Washington, Mr.Chirac said that there were ''no divergences among the allies'' about action to halt deliveries of oil products to Yugoslavia. His remarks appeared to indicate that he was satisfied that his concerns had been allayed in the closing hours of the summit meeting.
When asked about French and other reservations on the embargo, Mr. Clinton defended the plan energetically. ''How can we justify risking the lives of the pilots,'' he said, and ''then say, 'But it's O.K. with us if people want to continue to supply this nation and its outlaw actions in Kosovo in another way?'''
CoBra(too)
(4/25/99; 18:36:05MDT - Msg ID:5148)
Gold? FOA - GOLD!
Thank you for your kind response - It's getting too late for for me to think your remarks through, intelligently. I'll be happily sleeping over your answers and will try to respond tomorrow.
Please keep "The Money Changers" at bay for a nick on behalf of all of us. We would want to acquire some more of the physical reality.
Thank you Friend oA -regards CoBra(too)
FOA
(4/25/99; 18:30:19MDT - Msg ID:5147)
Christine (4/24/99; 19:46:49MDT - Msg ID:5125)
Christine,
Your statement: " 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. "
No, it's not just "profit margins" that will drive the switch. It's total worldwide demand. If the IMF / dollar group continued with past currency policies, we would be looking at a financial depression that would destroy oil demand for years to come. In order to maintain dollar reserve credibility, every other country in the world would have to slowly convert into a dollar standard.
That was the only outcome from a policy of saving all debt denominated in dollars! As anyone should realize, the end of that trail would be dark, indeed!
In order to maintain some form of world economic function, the BIS and Europe embarked upon a plan to build not only an alternative currency, but an alternative "economy". Not much different than the US enjoys presently in the mist of financial turmoil. It was long ago known that
the only way a financial system could be build opposing the dollar would be to base it upon gold, as traded in an open market. Not a gold standard or a gold reserve system, but upon a reserve asset valued in a open world trading concept. This would allow any country to add reserves without draining the money supply from it's trading partners, as the "gold exchange standard" did.
True, the dollar does hold gold in national form, but, it's corresponding debt overhang will never allow that gold reserve to balance currency in circulation. As the dollar falls, hyperinflation will most definitely be required by the US treasury as a last gasp attempt at survival. More likely than not, the US will be selling it's gold to the ECB for Euros before this is over.
Back on the subject of oil demand, what good is economic demand for oil if the payment settlement is worthless? Better to support a low gold price to create a new currency than risk a total loss of oil usage. A complicated game involving many players. It always does when largest trading reserve currency in the world is about to be replaced.
FOA
FOA
(4/25/99; 17:50:44MDT - Msg ID:5146)
reply
The Stranger,
I used your elephant tail to make a point. I know it was a very small part of your overall thoughts. Many of which I agree with! thanks FOA
FOA
(4/25/99; 17:40:44MDT - Msg ID:5145)
GOLD?
CoBra(too) (4/25/99; 16:45:06MDT - Msg ID:5141)
Hello CoBra,
You are right about this: "The gold lease game is just another over leveraged or pyramid scheme or scam feeding the paper casino bubble"! That is exactly what some of it became. But not all of this trading is by gamblers / traders. A very good portion of it is government CB money
management used to balance reserves against paper currency. Just as the days are gone when governments print paper currency outright to manage monetary policy, gone also are the days of outright public sales of gold. Even with all the discussion of CB gold sales these past few years, one has only to check the World Gold Council site and see that not that much gold was taken out of CB procession. Most of the sales were just redistributed between governments. And who is to know how much of the actual sales were purchased by other major entities as a currency wash?
Now, gold is going to be forced up by the same players that needed it down. Yes, the shorts will most likely create a major market problem as they are liquidated with Euro loans to pay off gold loans, but that is not the major economic play here! Gold will rise as the dollar gets
imploded, setting the stage for a reserve currency transition. It is starting now, today, this hour, as we speak. As I mentioned in an earlier post a few days ago, the IMF / dollar engine is shutting down. Just look at M3 money supply GROWTH, straight down! The IMF must quickly find
liquidity through government gold sales to support dollar debt reserves held in other countries. If not, the dollar will be destroyed in a nuclear currency event. By selling gold receipts, they can leverage the those assets ten times plus, using derivatives. That money will be used as loan
collateral. Ever wonder why we never see the physical trail of the real gold assets? It's because they never move the gold, just free it up to write derivatives against it in the OTC market.
Who will gain from this? Anyone that has leveraged dollar reserves into gold derivatives reserves that will be bailed out using Euros! Not to mention that gold will soar into the thousands. I wonder what entities would have purchased so much gold?
FOA
SteveH
(4/25/99; 17:40:11MDT - Msg ID:5144)
Stranger...
Speaking of tales: June gold now $285.30. That represents a higher opening from Friday's NY close.
The Stranger
(4/25/99; 17:34:34MDT - Msg ID:5143)
FOA
Hello FOA and thank you. I was asked to describe the elephant. I admit, I only described his tail.
CoBra(too)
(4/25/99; 17:19:00MDT - Msg ID:5142)
Spring meeting G7/IMF
In addition to my latest post the above meeting, conveniently starting while everyone is there on behalf of Nato's anniversary today in Washington strive for enhanced transparency. All CB's shall be "subject?" to state their key reserve asset types on weekly basis:
1) total reserves
2) total US $ reserves ...!!!
3) total other currency reserves
4) gold holdings - (got to love - not reserves?)
5) IMF reserve positon (SDR holdings)....
A committee of the global financial system (SGFS) and a special data dissemination standard (SDDS) will be sought to be introduced by IMF.
Well, all's well - we'll just make it (sorry) "w e l l e r"
CoBra(too)
(4/25/99; 16:45:06MDT - Msg ID:5141)
FOA-new Curreny? - no - only the "only" real currency
As I understand your post, it means exactly what so many have posted here. The gold lease game is just another overleveraged or pyramid scheme or scam feeding the paper casino bubble, which the mighty CB-technocrats use for short term gains as well.
Taking it one step further, it would mean, as soon as the bubble can be pricked safely - without risking the collapse of the financial and with it the underlying economic system - it will be done. All the players in derivative gold, which today has reached non redeemable proportions anyway, will be left out in the cold. This would include LBMA, HK and Bullion Banks,latter being still prone to systemic risk as they constitute the largest banks globally and carry the largest derivative risk.
My conclusion here would be - "as the CB's stand aloof, they (derivative markets) can't sh*t on the roof, which is the only place clean - in the CB's last latrine" - AG and world C-bankers are finally trying to curb derivative markets excesses, which meanwhile midgeted their own power. Worse, they've lost control of global gambling (incidentally, Vegas revenues are now 2nd to Nevada's gold revenues -?). Did they miss the boat???
I'm rambling - sorry its only because the prudence of real business and ethics seem to loose out to casino capital. Thank you FOA and if you find the time please revert to above.
Regards CoBra(too)
FOA
(4/25/99; 15:28:00MDT - Msg ID:5140)
NEW CURRENCY?
Hello Stranger,
I have read some of your thoughts (and many others here) and would like to commit on part of one.
"(4/23/99; 23:07:47MDT - Msg ID:5111)- Bullion banks normally arrange CBs to lend the gold and for mining companies to sell it. The gold is actually delivered to the buyer for ultimate fabrication into jewelry, coins,what-have-you. The mining company gets payment in full at settlement."
This is the basic concept most investors have about gold lending. It's not what is said but the perception that it creates that I must argue with!
During the last twenty or thirty years, the public has been conditioned to think of gold as a commodity only, not a currency or money. This conditioning was so well done that when people even consider gold as a financial refuge they view it as a "useful item" that can be traded for it's
commodity roll ( jewelry, coins,what-have-you) in tough times. The majority don't look at it as real exchangeable money, rather it's put into the same category as liquor or guns or soap. Something someone else needs for daily living. We never consider that gold may be wanted by the other person to use exclusively as money during hard times! Even the World Gold Council and the mining industry was taken to task for promoting this. See:
http://www.fame.org/fedwatch/fedwatch.htm
http://www.fame.org/famennews/ART-007.HTM
The Gold Mining Industry Shoots Itself in the Foot
"Because of an accident of fate, a large part of the gold mining industry has mistakenly spent almost a billion dollars over the past fifteen years promoting jewelry in an effort to stimulate gold demand."
" In the worst case, because it helped subvert the only use of gold that can possibly drive and
maintain its value —its monetary use"
The people at FAME saw the promotion for what it was, part of a broad based public disservice that helped create the misinformation printed today that is taken for fact! In the Stranger post above, we instantly see the gold leaving a CBs vault and heading for the Italian jewelry factories. If gold wasn't being traded as a currency / financial asset, we could accept this. However, one has only to understand that the commodity use for gold (jewelry and such) is easily
supplied by the yearly mine production! Yes, much of the mine gold is indeed sent to the fabrication yard. But, 99%++ of the financial gold never leaves the major vaults! Why should it? If a CB lends it's gold, it is indeed sold. A receipt is issued for it and a new owner holds that receipt. We have to understand that most of the financial gold is held in major depositories in NY, London, etc., even various nations reserves. If an investor buys 10 tonnes of gold from a CB lend / sale, why would he remove it? By far, most of the trading of gold today is done using deposit receipts. These receipts are indeed leveraged many times over by selling derivatives on the OTC markets. It's not a conspiracy, JA! By the way thanks for the definition. See:
((4/21/99; 18:23:47MDT - Msg ID:4988) Conspiracy theories).
What we are seeing is a new currency being managed as any other currency is. Listen to Greenspan:
http://www.bog.frb.fed.us/BOARDDOCS/TESTIMONY/19980730.htm
"Nor can private counterparties restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise."
I will quote that same item in another way. I say: Central banks stand ready to lease gold, using paper derivatives, issued by bullion banks, should the price rise. This action will stop private counterparties from managing gold.
Creates a different perception doesn't it? Truly, the fact that gold is traded worldwide, in such huge quantities, completely negates the current dogma that it is just a commodity. As the Privateer web site has said often, gold is barely even moving in price. I ask you, why would any investor be buying or trading gold in these huge amounts if it wasn't part of a currency financial asset? They
certainly are not buying it to sell to the jewelry shops, are are they? Let's review how much is traded daily:
http://www.usagold.com/wgc.html
"The latest net clearing statistics released by the London Bullion Market Association showed a 6% recovery in activity in March from the depressed levels of the previous month, with an average 28.5 million ounces (886 tonnes) of gold being transferred each day."
Notice they said "transferred". Now, any rational person will conclude that they are not placing 886 tonnes on ships and planes. Obviously they are talking about warehouse receipts for physical. Again, the world is not producing this much gold chain to justify 28 million ounces, a day in sales!
So why are they trading it in these amounts? Can we consider / commit on this for a while? I'll be back a little later. Thanks for reading, FOA
ANOTHER
(4/25/99; 13:59:43MDT - Msg ID:5139)
REPLY!
Mr. Kosares,
Good evening. I see by this post (USAGOLD (4/23/99; 18:00:42MDT - Msg ID:5109) that you agree the Swiss still play all sides to their "shrewd advantage". Good minds have they. Nothing changes for them. A Swiss currency, heavily backed with gold would bankrupt their trade when that metal imparts strength to the Euro. They could not exist in a "new Euro dominated world" with their local currency much stronger than the Euro. They wished, from the beginning, to be part of the EMU when it takes hold of world commerce. Yet, they were locked from selling by the BIS as it stopped gold sales last year. Wait they must until the Euro was born, now sales proceed to ECB, in the open I suspect. If they do sell small portion into public market for political agenda, these sales will be neutralized with purchases by BIS at same time. You see, my friend, these sales are truly transfers of assets and will occur during a much rising gold price in dollar terms.
I do not think the Swiss think of the EMU as a swirl, much as do the Americans. Even Michael Kosares, perhaps? The new economic future of Switzerland will be tied directly with all of Europe. Please remember the Bank For International Settlements is very influenced by local
concerns, even the ground beneath their building is Swiss, no? Many traders in the West see the Euro as the failure after it's long life of four months. The BIS see it as a tremendous success that was to be created as only one to one against the dollar. The fact of initial opening months brought higher rate came about from other countries, as you say, "jumping the gun" with bids! Please consider what I have said long before, "the new gold market will begin after the dollar has increased against other currencies". This has now happened and process is complete and the gold price will fall no more. You will soon see gold begin to strengthen the Euro as the dollar continues into a mighty fall.
Many local citizens in Europe, including the Swiss, do not fully understand the Euro or the future benefits it will impart upon them. They do, as westerners also do, "vote pocketbook" with respect to current financial affairs. Only in times of change do ordinary persons take the time for
observing conditions. In that time, real changes they do make, these usually bring the disruption of currency markets. We must understand and consider that the EMU was done for Europe as a community, not for the World. The order of events will show that the dollar will now fail, first,
then all will race for Euro. During this race, that now begins, gold will rise in dollars and Euros for a short time. Then continue rise in dollars and fall in Euros. This action will influence Swiss voters in the positive way and allow for smooth sale of gold to ECB. It be their trade advantage to sell gold reserve for Euro reserves, all done in rising dollar gold market.
In many ways we did wish to see gold fall below $280us. It would have forced the BIS to openly buy to support price so as not to destroy the Euro package and drive producers into physical gold. Today, gold will actively rise as events expose it as the "new currency of reserve". This thought is much opposed to actions of private bullion traders and western public money creators. In the end, all is good, for this world does balance life and wealth. Every item of worth
lost from paper gold traders will add ten times to the assets of private citizens. Persons of real wealth, persons of gold!
thank you, Mr. Kosares
Another
TownCrier
(4/25/99; 11:51:50MDT - Msg ID:5138)
Strong U.S. economy weakens Euro- ECB's Hamalainen
http://biz.yahoo.com/rf/990424/b7.html
In view of this morning's topic; read this, and 'insight' shall be yours.
Jade
(4/25/99; 11:44:37MDT - Msg ID:5137)
One World Currency
Cage Rattler. I've had the same thought regarding Euro/Dollar at One. And the Yen is very close to 100 which also could be a One. All you need is one of the three to go Gold Backed.....I would also like to add that the Fed is missing the boat here ["or maybe not"]. If they really wanted to cool of the stock markets, all they need to do is "let the price of Gold rise".
Ray Patten
(4/25/99; 11:31:20MDT - Msg ID:5136)
Possible scenario for the un-doing of the Gold-carry:
On October 7, 1998, the yen surged over 8% after a strong rally the previous day. The next 2 days saw the bond futures close almost limit down. In less than a week, most of the hedge funds had liquidated their yen-carry trades.
It looks to me that the Gold-carry will be un-done with the bonds and other US paper being sold first. Over the last 1.25 years, bond prices have traced a gigantic head and shoulders top. A close in the June futures under 119 would be a breakout. The hedge fund managers are not dearmers. When the market says sell, they do it. With their bonds gone, the reason to lease Gold would also be gone. They are currently short about 70,000 Gold futrues contracts. The combination of trying to buy cash Gold to get out of their leases and covering all their shorts could make for an interesting market. We can count on our government's "crash prevention team" to let them out of their shorts at reasonable prices, but this team has never been known to sell more than 100,000 contracts short. The demand for futures could be well over that.
Got Gold?
NORTH OF 49
(4/25/99; 11:29:10MDT - Msg ID:5135)
Harry Lime
http://www.filmsite.org/thir.html
Harry-slightly off topic, but the closing of your last post purplexed me so much (Harry [I will sell no penicillin before it's time] Lime), that I was driven to research the phrase, or at least it's origin.
Given your passion for Wells, and obviously, The Third Man work, you may find the following URL of interest.
(first time I've tried to post a URL--hope it works for me)
No49
Cage Rattler
(4/25/99; 10:12:05MDT - Msg ID:5134)
One world currency
What if the euro was being managed down to parity with the dollar? That is, 1 dollar = 1 euro. There has also been talk lately of the dollarisation of the Latin American countries. This would go a long way to creating a 'one world currency'.
Gandalf the White
(4/25/99; 9:22:41MDT - Msg ID:5133)
Calling all Goldhearts
The Hobbits have ALL gathered around to hear the forthcoming information from FOA. Please Cage Rattler and Christine --- ask your question of FOA and ANOTHER -- This should be something that they can advise us all upon.
<;-)
Cage Rattler
(4/25/99; 8:06:04MDT - Msg ID:5132)
Oil Settlement in Euros
I'm not too sure right now about the effect of oil settlement in euros on the euro rate but will try to get some views from colleagues.
However, I do know that talk of oil settlement in d-marks (now euros) has being doing the rounds for years and many traders take it as wishful thinking - but then nothing is permanent and nothing should ever be ruled out.
FOA
(4/25/99; 7:53:08MDT - Msg ID:5131)
Gold Talk, later today!
Michael and ALL:
Have been wanting to write here sooner, but knew today would be open so I waited.
MK, I have a reply post from Another making comments to your Swiss question. That along with an extremely bullish (time frame also included??) post on gold! This could be the call? I will return later to send them in and make some commits of my own. I also have some questions for the fine writers now briefing this site! thanks all FOA
Christine
(4/25/99; 7:33:51MDT - Msg ID:5130)
Oil settlesments
In spite of current weakness, how much of a boost or strategic advantage would the euro obtain if it aquired even some of the oil nations' oil settlements. How advantageous to a currency are oil settlements.
Christine
(4/25/99; 6:57:17MDT - Msg ID:5129)
@Cage Rattler--interesting insider view
Do you know how much is at stake with oil settlements. Is it enough for any oil state to play the euro vs. US dollar to bargain to obtain most favorable term. Is it enough at stake for US dollar/IMF to be worried about it, even though the euro is viewed as weak for the reasons you state.
Cage Rattler
(4/25/99; 4:22:35MDT - Msg ID:5128)
The Euro
My view as a currency trader: Kosovo is not seen as the primary cause for keeping the euro down. Rather the existing interest rate differentials are seen as the more important factor.
The euro will not be a strong currency unless (1) the political systems within EU draw MUCH closer; (2) the abolition of much outdated labour law; and (3) the abolition of ALL government transfers.
Click Here to view yesterday's discussion.
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