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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 10/25/2000
All times are U.S. Mountain Time

(Yesterday's Discussion.)

ThaiGold (10/25/00; 23:23:19MT - usagold.com msg#: 39972)
Gold: You can't Always Eat It
Attn: justamereBear (10/25/00; 16:03:02MT - usagold.com msg#: 39899)
You wrote:
[quote/snip]
"Forget it. It is already too late. Better to spend your energy mitigating the effects on humanity of the coming crash by getting in a position to rebuild."
Not that I think that there won't be a plethora of draconian measures enacted, and REAL hoary theories, to attempt to turn back the clock
[unquote]

I write:
It may not be too late. If such draconian measures can be
enacted soon enough. I'd much rather have stable US coins,
& currency, forever referenced to intrinsic $50 gold than to try
to exist in a chaotic serfdom and crashed environment where
there is nothing to spend my $300 or $30,000 gold upon.

Think about it. Economic stability and a pleasant living
environment must be worth something to us. Or is it all just
better to think of ourselves sitting down each day/night to
selfishly eat alone, a hearty meal of hot porridge gold.

Regards

ThaiGold@OperaMAil.Com


ThaiGold (10/25/00; 23:08:11MT - usagold.com msg#: 39971)
You've Been Virtually Confiscated ... Already.!.
Attn: Christopher (10/25/00; 07:09:29MT - usagold.com msg#: 39861)
To: Christopher:
You wrote:
[quote/snip]
I have a problem (being a strict constitutionalist) with the government arbitrarily setting the price of anything, be it gravel or Gold.
Your plan, if it was enacted, would result in, rather than a "war on drugs," a war on Gold. Gold manipulation by any other means is still Manipulation.
However, you have given us a starting point from which to consider this question, maybe from a new angle.
[unquote]

I write:
It's hardly a "War on Gold", nor "Manipulation" of any kind.
In fact, it's a Victory for Gold, because it will conquer all the
previous manipulation wars against gold. And free it to it's
rightful status as a monetary unit in the hands of citizens
everywhere (worldwide) at it's historic real value.

Just the reverse is true today. Manipulators have mounted a
considerable war against gold, and they have essentially won.

As I've said before, today's gold has been virtually confiscated
already. Just that nobody realizes it. The powers have locked
it at $275 whether you like it or not.

Regards,

ThaiGold@OperaMail.Com



ThaiGold (10/25/00; 22:53:11MT - usagold.com msg#: 39970)
You Said... I Said...
Attn: jinx44 (10/25/00; 13:22:36MT - usagold.com msg#: 39885)
To: jinx44:
You said:
[quote]
If you suspend the free market mechanism by outlawing gold, what is the difference in what we have now?? I say, outlawing gold because with your suggestions of outlawing the holding of more than 100oz., outlawing selling bullion to anyone but the USG, and a tax on any physical held by people, you have outlawed gold and what it stands for.
[unquote]

Whereas, I said in my:
ThaiGold (10/25/2000; 1:10:23MT - usagold.com msg#: 39835)
[quote]
(3) Coins having bonafide documentable numisimatic collector value
may be kept by their current owners. Or may be sold to others of
similar hobby, with a simple permit certificate for each intended
coin, obtainable from a postoffice or Federal Reserve Branch bank.
(4) Such coins must be reported annually, regardless, upon those
individual's IRS tax return. A 1% excise fee will be imposed.
(5) Legal Tender Gold/Silver coins shall be exempt from such IRS
inventroy/reporting/taxation if the quantity does not exceed 100
coins of either style. Or 100 oz, whichever is greater. We want
these coins to be in free circulation, not hid under the mattress.
[unquote]

=== Methinks you misread my entire post. Nowhere in it,
is gold "outlawed" outright. In fact, there are specific points
to enable the people to retain and use their gold, freely, in
widespread circulation. Afterall, that's one of the key points.

=== So all I can say, is I didn't say what you say I said I said.


Regards,

ThaiGold@ OperaMail.Com



LeSin (10/25/00; 22:49:33MT - usagold.com msg#: 39969)
EURO & OIL

DUBAI, Oct 24 (Reuters) - Lifters of Iraqi crude risk becoming bogged down in a procedural wrangle as they try to honour Baghdad's request for payment in euros, leading some to predict hiccups in export sales from next month, industry sources said on Tuesday.

``The euro payment issue could trigger a disruption in Iraqi oil sales,'' said a major customer. ``We are in for fun and games.''

Iraqi oil marketer SOMO notified customers officially by telex late last week that from November 1 all letters of credit for crude oil payment must be opened in euros rather than dollars, lifters said.

But the U.N. is still studying sanctions-bound Iraq's recent request for a separate euro account.

``I get the impression this is not going to be resolved quickly,'' an industry source said.

Baghdad has been exporting some 2.3 million barrels per day (bpd) of oil under the current eighth phase of the U.N. oil-for-food exchange which ends on December 5.

Oil-for-food revenues are currently deposited in a dollar U.N. escrow account at Banque Nationale de Paris (BNP) in New York. That account, after nearly four years of the programme, now stands around $10 billion, said industry sources.

But BNP cannot issue a new, standard euro format for letters of credit until instructed to do so by the United Nations, customers said.

Those lifting Iraqi barrels in the early days of November must now get the necessary U.N. mandated paper work in place.

``We have been told informally by the U.N. to open a letter of credit in dollars for our early November lifting,'' said one major customer.

That is likely to get Baghdad's back up.

``SOMO will make some noise when this happens,'' said an oil executive. ``They will react because Iraq is in no mood to compromise.''

Iraqi oil officials could not be reached for immediate comment. But industry officials said last week that Baghdad planned no change to its policy of maintaining oil exports.

The Iraqi government decided last month to halt trading with the dollar and replace it with the euro or any other currency.

Baghdad has said the move was to confront the ``daily American-Zionist aggression,'' an apparent reference to U.S. support for sanctions.

Some industry sources said Washington, dead set against euro payment, was proving the main stumbling block at the U.N.

But Baghdad was also playing politics as well, they added.

``Even if the euro issue gets resolved, Saddam could come back with something else,'' said an oil executive.

From a practical perspective, lifters of Iraqi barrels saw no problem with the switch from dollar payment to euros.

``It's perfectly justifiable,'' said one big customer.

Iraq's oil exports at current prices fetch around $60 million a day.

The U.N. oil-for-food deal lets Iraq sell oil over a six month period on a renewal basis to buy food, medicine and other humanitarian goods for the Iraqi people reeling under stringent U.N. sanctions imposed for Baghdad's 1990 invasion of Kuwait.

justamereBear (10/25/00; 22:44:17MT - usagold.com msg#: 39968)
Goldfan 39664

The thing that tied all my research togeather as to where we might go was a book "Moscow Days, Life and Hard Times in the new Russia" by Galina Dutkina. She is a jounalist in Russia who wrote on the everyday happenings of recent life (about 1995) in Moscow. I bought the softcover that is considerably less expensive than the hardcover.

This fit well with my quest for information as to what happens in a modern arena when a major power goes bankrupt, such as I expect the US to do. I had thought that technology would play a different role.

justamereBear (10/25/00; 22:27:00MT - usagold.com msg#: 39967)
CoBra(too) 39913

I'm afraid I don't understand where you are going with this post. You will have to be a bit more simplistic for some of us poor farm boys.

Just guessing from your post, but I thought you might find the following interesting.

First we had a shooting war, then we had a cold war. When that was over we had a lot of spies out of work. They took their information gathering/analysis skills to the major corporations, who were receptive, insofar as they already had embyonic intelligence gathering units, at least in their marketing departments. (called market research)

Today we have an economic/intelligence war going on, even if the guy on the street does not realize it. And, it is every bit as intense as the other kind.

Some of this war is cross border. Particularly the French have devoted a goodly percentage of their former military intelligence machine to commercial intelligence for use by French national enterprises.

It has been estimated that the Japanese have as many as 55,000 "economic spies" in the US. Almost without exception they are just doing a job, but they do send back information, just like what sometimes happens with US firms. It is just that theirs is a bit more organized. What are the latest developments, who is doing what to whom? Back home it gets assembled with all the other data coming in and analysed. With lots of parts to the jigsaw, a picture can be seen.

The Koreans are particularly scrappy in this arena.

However a good deal of this war is borderless. Major corporations are heavily involved with competetive intelligence. Nothing illegal, just systematic gathering and analysis of public domain data. Firstly there is absolute mountains of data, and secondly, public domain extends much further than the average person realizes. For example, in one case, a very accurate estimate of a companies shipments was made by measuring the rust on the railway track siding leading to their plant.

The chairman of Nutrasweet has estimated that their very small intelligence unit adds $50 million to their bottom line. PER YEAR.

There are mountains of data out there. The problem is mining it to find the significant bits.


LeSin (10/25/00; 22:26:45MT - usagold.com msg#: 39966)
Russia Central Bank & UK Central Bank History
http://www.themoscowtimes.com/stories/2000/10/25/007.html

Wednesday, October 25, 2000

Central Bank: Just a Tool for Stealing

By Yulia Latynina This week State Duma deputies planned to start discussing President Vladimir Putinès changes to the law on the Central Bank.

Now, if you look in any economics textbook youèll read that the classic definition of a central bank is a financial institution whose main function is the issuance of a national currency. However, historically central banks have never been created for this noble purpose.

The Bank of England is a classic example. Created in 1694, it was granted the right to issue bank-notes. In exchange, the bank promised to use those notes to finance the state budget deficit. Over the next two years, the bank printed £760,000 sterling against its reserves of £36,000. Naturally, the currency rapidly lost its value and the government had to allow the bank to refuse to exchange the currency for gold. This measure was a boon to the Bank of England and its shareholders, which included about half of the Cabinet of ministers.

Since then, central banks have become much more civilized. Except in Russia.

Our Central Bank bears a strong resemblance to the early Bank of England. Although it is not a private bank, it does own a whole network of private banks -- the so-called Sovzagranbanks, created in Soviet times to launder Party money abroad. One of these banks had a subsidiary called Fimaco, through which the Bankès reserves were diverted into the state securities market.

In spring 1998, the Central Bank and the now-defunct Tokobank got into a dispute. The cause was a Sovzagranbank called Ost-West Handelsbank. Part of its shares belonged to Tokobank and the Central Bank didnèt like this. So, when Tokobank got into trouble and ran to the Central Bank for a stabilization loan, it was denied. Tokobank was told it would get the credit only if it put up the Ost-West Handelsbank shares as collateral.

Having no choice, Tokobank put up the shares. Toward the end of April, Tokobank received the loan. On May 4, Tokobank was put under temporary administration, but the bank did not collapse.

But Tokobank owed about $150 million to its foreign creditors. They were upset that the Central Bank, instead of putting the bank back on its feet, was simply holding it down. They sent a letter to major Western banks telling them not to extend any more credits to Russian banks. Since Russian banks at that time survived simply because of Western loans, as soon as the flow was stopped, the August 1998 ruble crisis occurred.

Of course, the August crisis had many objective causes, and Tokobank had many objective problems. But when deciding to use Tokobank in order to advance their own interests, the directors of the Central Bank should have at least paused to think about the larger consequences.

So, what about Putinès amendments? They represent a fundamental change in the status of the bank: It will be converted into a federal institution and all the banks controlled by the Central Bank will be brought under the jurisdiction of the Property Ministry.

That is, if the changes are adopted, the bank will no longer be able to be misused by its directors. Only the federal government will be able to do that.


Yulia Latynina is the creator and host of "The Ruble Zone" on NTV television




Al Fulchino (10/25/00; 21:45:34MT - usagold.com msg#: 39965)
Hon. Canuck
Canuck (10/25/00; 21:16:56MT - usagold.com msg#: 39960)
@ Al F.
You've been around for a while,; we've talked.

Here's your punch line and my question,

"TG may have his reasons for being cryptic".

I what to know why. I don't pay my broker to be such.

me: It should not matter what his reasons are to you or me. In time, he can show his reasons if he so chooses. I would assume he would claim to be hiding priviliged info and maybe identities of associates of some type. That would be the assumed good reasons. Now lets assume the possibility of not so good reasons could possibly exist too. I have no thoughts either way on this subject. I also have not invested because of his/her thoughts. Why should you? How can I verify his sincerity? I can't. Can you? And this is no character assassination of TG. I simply don't know and since much of the aura around him is based on the mysterious ANOTHER, I end up thinking I should visit a local psychic and see if she can conjure ANOTHER up. <just kidding of course> Now I do read his stuff and there is enough meat for me to know there is some animal there hiding in the bushes. But I am holding my shot since I cannot see what it is. I am turning and looking for game I can see.
Do you have a right to know why he is being cryptic? Nope you don't. Neither do I. Do you have a right to ask why he is? Yep. Remember, you said you pay your broker. You have rights there. Here it comes to you in the ether. What does your soul say? Does your heart talk with emotion or common sense? Hopefully the latter. But i suspect you are a worrier..we all are at some point btw. I would say also that I have seen many so called experts in the financial community say gold's day has arrived, just look over the nearest knoll. Others say 2-5 years. even here amongst sincere gold enthusiasts we see "Jump spot, jump! and the such. To what end do we wait? Why do you wait? You already have gold in your breath. Enjoy your day. We get 365 for about 80 cycles. I hid my pm's and haven't looked at them since <over a yr ago>. I would love to help you hide them <grin> Can I?


goldfan (10/25/00; 21:25:44MT - usagold.com msg#: 39964)
(No Subject)
justamereBear 39831
In light of today's TSE, you look like genius at forecasting( by Nov. 12 did you say?)!!!

Thanks for your long post. I'm working on some thoughts about inflation/deflation, which might help me understand what is likely coming our way. I'll likely not be able to post these soon. Going to be travelling 'til early next week.

Your notion of medicine that only prolongs, but doesn't cure, the illness is entertaining. I do agree. It's also a bit like a situation I'm aware of in northern Ontario. where the local one and only doctor is married to a woman who is the local one and only pharmacist. I have heard a lot of interesting stories from my friends who live there, about the length and varieties of illnesses, and the quantities of expensive medicines prescribed, etc.

I think after this whole economic thing implodes there are going to be many hundreds of former"financial analysts" whose resumes will say nothing at all about this last ten years in their lives, and won't even mention the words. I started my dabbling in investing a few years ago with some notion there was something resembling a science of it to be learned. By now, I understand there is no science, anymore than the science of trying to predict the journey of a single molecule across my room, hour by hour judging by where that molecule was yesterday, and trying to guess whether someone might suddenly open the door, and what will be the effect of the ensuing draft.

cheers

Goldfan


Al Fulchino (10/25/00; 21:22:38MT - usagold.com msg#: 39963)
The Traveler
What you just posted, was a good read. Thanks for sharing. Bells of truth were ringing for me. It was a very coherent effort on our part. The only part that I held back on was your:

"In 1991, did the Bush Administration encourage Iraq to invade Kuwait so that the demand for the US$ would increase from higher oil prices? Ask Ambassador Gladney. Was this also a market clearing scheme perpetuated in order to partially repatriate billions in US$ accumulated by Saudi Arabia. Remember, it compensated (paid) the USA and other mercenaries to fight the Gulf War. See the positive spike in 1991 on the chart of our trade deficit? In prior months, the deficit had been accelerating downward as trade deficits widened.

Are the current tensions in Palestine yet another tool in the USG's tool box used to create incrementally higher demand for the US$ and perhaps another market clearing scheme? I don't know, I'm just speculating based upon prior history and USG behavior. Of course publicly, the USG sells two days worth of imports from the SPR to show Americans that Uncle Sam cares about them. If only oil was not the blood of the modern way of life. It is at the heart of everything - trade, warfare, international intrigue and more."

But you DID say it was speculation. And I am glad. I perhaps naively would still hope Mr Bush would not have sent men to war to create demand for greenbacks.

Anyways. Nice thoughtful piece.


Canuck (10/25/00; 21:22:13MT - usagold.com msg#: 39962)
Mr. Gresham
Yes

Mr Gresham (10/25/00; 21:19:04MT - usagold.com msg#: 39961)
#40,000
Admit it! You're just gunning to be msg #40,000, before you go to bed tonight, right?


Canuck (10/25/00; 21:16:56MT - usagold.com msg#: 39960)
@ Al F.
You've been around for a while,; we've talked.

Here's your punch line and my question,

"TG may have his reasons for being cryptic".

I what to know why. I don't pay my broker to be such.

Mr Gresham (10/25/00; 21:14:06MT - usagold.com msg#: 39959)
Dagnabbit!
Youse guys are hoppin' today/tonight! But I gotta go catch a ferry boat home and read it later. There's some powahful juju goin' on 'round heah.


Canuck (10/25/00; 21:12:21MT - usagold.com msg#: 39958)
@ Trail Guide
Re-read your post, I now understand the 'phone call to Colorado' phrase.

The rest of the post remains as is.

R Powell (10/25/00; 21:09:38MT - usagold.com msg#: 39957)
Question of dollar's strength

Question please for Stranger, Cage Rattler, ORO, Town Crier or anyone/everyone with any insight into why the U.S. dollar is soaring so much against the world's other currencies?

Is this growing divergence caused by inflation, real or percieved? The Fed. has not changed interest rates for a while, is this $ strength a delayed reaction to previous rate increases? How much is related to GDP of the nation's involved? Have these things nothing to do with the Dollar index now above 118? Then what? And what happens if this continues. Do we export only those things that can be had absolutely no where else? So many questions, so little knowledge! TIA for any responses
Someone mentioned that the way the dollar is appreciating, it's a wonder POG hasn't sunk to $220. If the dollar index was still a 100 as it was not so long ago, would POG be $320 now? ??? Thanks Rich

Al Fulchino (10/25/00; 21:06:27MT - usagold.com msg#: 39956)
Canuck (10/25/00; 20:53:44MT - usagold.com msg#: 39954
Time to chill man. Why is Trail Guide the "man" to you?
your "You have the power to sway me, I am a servant of your word", I hope was a bit in jest, right? Right? TG may have his reasons for being cryptic. But I wouldn't be betting any part of the house on someone who I do not know and his or her cryptic writings. As totally honest as the man might be or wish to be, should you place any of your life in his hands? Ask yourself what YOU understand. Bet on that. And that only. If TG or anyone else is too cryptic for you, then use your gambling money on that instead. You will sleep much better.

The Traveler (10/25/00; 21:04:54MT - usagold.com msg#: 39955)
@ Rossl, Nickel62, Galearis and others

Greetings and warm regards to all.

Before I respond to the comments of our esteemed Trail Guide made @ 39784, I believe that our august Forum would best be serve by some preparatory remarks. This will require me to glide down from 30,000 feet to 10,000 feet and circle for a while. Hope I don't run out of fuel. Tonight, a lesson on the mechanics of trade flow or how the US$ moves around the world.

$$$$$$$$$$$$$$$$$$$$$$$$$$$$

I want to import casing and tubing for my 100 well drilling program in South Louisiana. I send out RFPs to a dozen steel mills located domestically and around the world giving each the footage, diameter, strength and other specs of the tubing and casing that I want as well as a request for the bid price to be quoted FOB New Orleans in US$ and in their local currency.

When my deadline is up, I open the bids and see that a steel mill in France can meet my specs and is the lowest bidder at a price of US$10 million or 12 million Euros. For a variety of reasons, I choose to pay in US$ once the pipe hits the docks in New Orleans (perhaps I think the US$ will slip against the Euro and I will profit. My bank is more than willing to arrange a FOREX transaction and buy E12 million for me now if I don't want the exchange risk.) Thus I contract with the mill and post my letter of credit for US$10 million. The pipe arrives a month later and after inspecting it and counting it to verify that the cargo conforms to the terms of our contract and the LOC, I accept the cargo. The Whitney Bank then wires US$10 million to the Paris bank of the mill. DIGITAL US$ arrive in Paris and the transaction is complete.

From a microeconomic perspective, this transaction has widened the trade deficit of the USA (dollars went overseas). The final net TRADE deficit or surplus will be settled from millions of other import and export transactions made with many countries (the macro perspective) and reported a month or so later by the financial press. This is the $30 billion monthly figure that we now read is the USA's net TRADE deficit.

A side note. The USA runs net surpluses with some countries – Mexico, while it runs net trade deficits with other countries - Saudi Arabia for its oil. It is the deficits that get the most press and political grandstanding – Japan in the 1980's (auto import restrictions, tariffs, etc.), China today (WTO membership, calls for market liberalization so that the USA can export more to them).

Roughly 30% of the USA's total import bill is for foreign oil. At $30 net, the daily import of 10 million barrels causes a $9 billion monthly charge to the TRADE account. Higher oil prices will increase the trade deficit while lower prices will shrink it. This point will have profound consequences on America when the US$ looses its reserve currency status. Call it the Achilles heel of a society that has been spoiled and enriched by cheap energy and loose credit.

Now the mill must decide what to do with its US$10 million. If the mill is flush with Euros, then it calls the trading desk of its Paris bank and instructs it to buy a US$10 million US Gov't note maturing in 5-01. The bank calls its branch in NYC (or its correspondent bank – say Chase) and orders the trade. When confirmed, the Paris bank wires US$10 million DIGITAL dollars to its NYC branch so that the NYC branch can pay the seller of the note and take delivery of that note. The owner of that UST note (paper claim) is the French steel mill. It invested a portion of its equity/ wealth (not just profit) in the USA.

The repatriation (return) of those DIGITAL US$ is captured in the CAPITAL account flows that are less reported or understood. At the end of the day, the net trade account and the net capital account MUST balance and the DIGITAL dollars MUST eventually return to the USA. (Some minor leakage does occur, however). As we shall see below, there are many ways to balance the trade and capital accounts.

If the mill decides to convert the US$ into Euros so that it can pay its local vendors, make payroll, and pay taxes and dividends, then it instructs the Paris bank to do a FOREX transaction. The bank does one for its own account and the mill's bank account is credited with E12 million less a fee. Now the bank is holding the US$. It checks its cash flow needs and decides that local needs are covered.

For the US$10 million, it now has three options. It can buy a US note in the same manner as described above for its own account, it can loan the US$ to a French or German client wanting to buy a private or public US company or asset, or if all external needs are satisfied, it can send the US$ to the Central Bank and have E12 million credited to its account at the CB.

The Paris bank decides to send the US$ to the Central Bank. Historically, all Central banks shied away from currency risk and so after forecasting its reserve currency needs for payment of imported oil and other imported commodities (copper, wheat, etc), it simply sent the unneeded US$ back to the FED/Treasury in exchange for an equivalent amount of its own currency.

Oh, you have no Euros to swap for your US$, Mr. Secretary? Then send us your gold bullion. Oh, you closed the window in 1971. Then how about settling with SDRs (special drawing rights). Hold it, we are full up on those too. Since you can't settle, we will go into the open market and sell your US$ at any price needed to clear the trade. Currency devaluation follows if after the net–net trading of all private and central bank transactions more US$ still need to be sold. Alternatively, currency appreciation occurs if more US$ are wanted than are available. This is basic supply and demand balancing and price discovery.

$$$$$$$$$$$$$$$$$$$$$$$$$$

In 1995, when the dollar dropped rapidly to 80 yen and to 1.2 Swiss francs because the supply of digital dollars exceeded the demand for digital dollars and thus a lower exchange rate (equilibrium price) was needed to clear the FOREX market, Rubin created additional demand for the US$. He offered the Central Banks, effectively the holders of last resort, a deal they couldn't refuse. Call it the Rubin put. Buy our 2-year notes instead of crushing the US$ in the FOREX markets and the USA will honor the following "make whole" promise……

The CBs reluctantly accepted the offer because an alternative reserve currency (the Euro) was not yet born much less crawling, much less walking, much less running. As ORO has commented, the ECB needed to create a big Euro float. The absence of a functioning reserve currency would have collapsed worldwide trade and caused global financial turmoil if the CBs had laughed and gone home. Besides the "make whole" promise though shaky beat acknowledging to their citizens that the world had transferred $5-$10 trillion dollars worth of its collective wealth (pipe, oil, wine, Toyotas, etc.) to the USA for near worthless paper and America's protection from the evil empire.

Yes,the USA is the "mercenary" defense force of the Free World. Top cop on the block! It has bases everywhere including many in their homelands. Stop paying the mercenaries and what happens?

This is the unprecedented event that I referred to in my post @ 39771 - the CBs didn't swap US$ for their own currencies or gold or SDRs anymore. They bought US Treasury notes!!!! UST notes held in custody at the NY FED for the account of foreign central banks tripled to almost $800 billion in just 5 years. Do CBs own any INTC or MSFT? No. They hold US$ denominated debt instruments (paper claims) backed by the full faith and credit of the US Government which is further backed by its broad and getting broader taxing powers. It is paramount to understand that the USA borrows from foreigners in its OWN CURRENCY. More on this huge settlement advantage soon.

The yen carry trade and the gold carry trade also implemented under Rubin created additional demand for the US$ so that further UST notes could be bought. This incremental demand shows itself in the capital account as a surplus. If it is bigger than the net trade deficit, the dollar rises. If smaller, the US$ clears in FOREX transactions at a lower price. The net trade and net capital accounts are once again balanced.

All this new demand for the US$ and UST notes created the Rubin/Clinton strong dollar AND lower yields on UST notes. All other private debt instruments are priced above the "risk free" UST note. Falling yields means cheaper borrowing costs and lower debt service requirements for all. Furthermore, the Capital Asset Pricing Model said earnings of traded companies are thus worth more due to a lower discount rate on their earning streams and BOOM the equity markets soared. This causes more CAPITAL account transactions into the US$ so that foreigners can get in on the action.

This virtuous cycle of prosperity was thus born because CBs took the currency risk that they had historically avoided. Why? The Rubin put or "make whole" provision was persuasive. Poor us when the virtuous cycle of prosperity reverses and turns into the vicious cycle of poverty. We will then start down the road to serfdom. Actually, Bubba deserves little blame – he was too busy behind close doors to supervise Rubin.

The rapid rise in energy prices this year is but another tool in the Treasury's tool box to create incremental demand for the US$ and avoid for now having to honor the put. Assume that the non-US, net importers of oil need 40 million barrels of oil each and every day to power their economies. Raise the price by $15 over a short period of time and an additional US$600 million DAILY must be kept at home by central banks in order to pay for their respective imports of oil. Yes, this is inflationary to all countries, but does the USA want the flu or pneumonia?

Want a shred of proof? Recall that someone posted here recently documents of the LBJ Administration that showed that the US conspired with the British to disguise the net US trade deficit with Britain back in the 1960's - when the gold standard was the disciplining force for international trade.

When France pays Kuwait for its latest tanker of oil, Kuwait must now decide what to do with the US$. It could deposit them in a NYC bank or buy a UST note or buy gold or buy fighters or pass it out to its citizens so that they don't rebell. It too could sell in the FOREX market.

In 1991, did the Bush Administration encourage Iraq to invade Kuwait so that the demand for the US$ would increase from higher oil prices? Ask Ambassador Gladney. Was this also a market clearing scheme perpetuated in order to partially repatriate billions in US$ accumulated by Saudi Arabia. Remember, it compensated (paid) the USA and other mercenaries to fight the Gulf War. See the positive spike in 1991 on the chart of our trade deficit? In prior months, the deficit had been accelerating downward as trade deficits widened.

Are the current tensions in Palestine yet another tool in the USG's tool box used to create incrementally higher demand for the US$ and perhaps another market clearing scheme? I don't know, I'm just speculating based upon prior history and USG behavior. Of course publicly, the USG sells two days worth of imports from the SPR to show Americans that Uncle Sam cares about them. If only oil was not the blood of the modern way of life. It is at the heart of everything - trade, warfare, international intrigue and more.

See why the Euro had to be created? No foreigner wants to be abused forever. In time, it will sprint as the US$ stumbles. The Free Gold Market is said to be the mechanism that will prevent the same abuse in the future by the Euro. The Euro will let gold find its own international clearing price and then mark-to-market its holdings of gold bullion. Too bad the Euro is only 15% backed by bullion.

In summary, I am confident that Trail Guide, ORO, Aristotle and other wise ones here would GENERALLY agree with the above to this point. A thousand minor technical differences wouldn't change the thrust of this distilled analysis. The proper point of current debate then is: What happens to the USA's economy (and thus to many of you) when the Rubin "put" is called? How will the USG make holders of its debt instruments whole? To inflate or to deflate, this is a choice that will create big winners and rabid losers. I'm on record @ 39771 with my viewpoint on who wins. Trail Guide has expressed his viewpoint.

I'm running very low on fuel. I will return tomorrow with other lessons all must struggle to grasp before my response to Trail Guide can be posted.

Black Gold, Yellow Gold, the only wealth worth physically possessing!



Canuck (10/25/00; 20:53:44MT - usagold.com msg#: 39954)
@ Trail Guide
From your 'fence post' story,

"You see, I think it knew something was wrong below him that we couldn't see,,,, because next morning he was at a
phone booth calling Colorado about something. This really happened!"
----------------------------------------------------------

Trail Guide,

Why do you talk in riddles from time to time? What is your motive? From an outsider I can't make heads or tails from this post. At the end you ask Stranger if he acknowledges/understands your statement. What are you saying in the above paragraph? You have inside informative that you tease the 'average Joe' with. What are you really saying? You talk of economy, fiat, commodities, the Euro, and an endless array of subjects that we debate endlessly and sprinkled in amongst is a 'story', an analogy, a 'play -on-words'. Never have you stated who you are. Never have you stated your credentials.

I've been here since Nov. 98. I watch for innuendoes and 'slips of the tongue'. I have seen a few and I don't know what they mean, it is inside information. There is a poster on this forum that made a brazen slip a few months ago.

You see FOA, I am John Q. Public and I am investing in gold.
I am loosing my shirt. Since Nov. 98 I have lost half of my lifelong savings in gold; it is my own fault, I have been flip-flopping from stocks and investing in physical and unfortunately was buying on the way up during the W.A. announcement and even my physical is 15-20% underwater.

I NEED more of a sign that 'a fence post called Colorado' to keep the faith. You are the man on this forum. I am going to put you in an unfair popsition FOA. Gold is at a do-or-die situation; it has broken support of $272. You need to step up to the plate and SHOW us the money. Show me the money man. Sink or swim. Is this an ultimatum, not at all, tell me and dozens, maybe hundreds of lurkers or thousands of lurkers why you, personally are a physical gold advocate. I don't know if you are my mother or Alan Greenspan.

FOA, I am not unhappy, I am not mad, I am not anything. I AM at the crossroads of gold. You have the power to sway me, I am a servant of your word. Tell us, who you are and what is your affilation with gold.

Canuck.



Cavan Man (10/25/00; 20:41:58MT - usagold.com msg#: 39953)
SteveH
I am glad to see your running discussion with Trail Guide. It is very good for the Forum. I believe Trail Guide has left me behind along the dusty trail; left me in fact for the buzzards! Well, I probably deserve it for asking so many dumb questions. He'll be surprised when I end up at the trail head with the rest of the group! You've a better mind than me. Please keep up the good work. Many thanks

Cavan Man (10/25/00; 20:36:39MT - usagold.com msg#: 39952)
Trail Guide
I understand why the "Giants" want to keep a good thing going but what I don't understand is why an independent minded investor with deep pockets who prefer USD (and I'm sure there are many) doesn't bust the gold market wide open with hugh buying. Why?

justamereBear (10/25/00; 20:32:39MT - usagold.com msg#: 39951)
Town crier 39829

Firstly, I am not quite sure what you mean by "monetization" in this context, which would go a long way toward making my response more intelligent, if in my case intelligence is possible. However taking my assumptions into account:

Firstly, I oversimplified to dramatize 1 aspect, the local effect in the US. When I made the post I thought about all those treasuries in the hands of CB's around the world, and decided it made my comment to complex without adding appreciably to the point.

When you say these foreign held treasuries are completely off my M3 radar screen, in the sense that they may have been purchased directly from the treasury, (and to be sure the following does not properly consider those CB's whose countries are in trade deficit to the US) you are right. However, the effect is there through the US trade imbalance, financed through the commercial banks. The transaction of purchasing treasury bonds is merely one step of many. The treasuries merely bring the paper known as dollars home, in exchange for another paper known as treasuries. Admittedly, my brief argument was far to brief, although I would argue that the net effect was largely there.

As to the question of who lives in M1 and M3:
The average citizen does not understand the banking/monetary system at all. Speak to them about fractional banking, and you get a blank look. The corpoation, or anyone who goes in for a loan, does their transaction in M3 dollars (s)He lives in an M3 world.

The central banks cannot directly influence M3. They control M1 almost completely. They can only rely on the system to use M1 to INFLUENCE M3, therefore they live in an M1 world.

This comment was related to my confusion over the inflation/deflation discussion.

In the 30's, the US CB, and more recently, Japan, "pushed on a string" by "printing money" and pumping up M1 to try to get more liquidity into the system. In the 30's there were times when there were NEGATIVE interest rates, ie when it was profitable for the banks to simply borrow from the CB, and do nothing else, rather than the usual way, where the commercial banks had to pay an interest to the CB in order to borrow. In Japan there have been effectively zero interest rates over a significant part of the decade.

Thus M1 could inflate, but because the banks were fearful of lending, that had no effect on M3. On the other side, (M3) two things were happening. The fearful of lending banks were not only desperately trying to collect whatever loans were outstanding, lest they to become uncollectable, they were making very few new loans. M3 was also shrinking as the banks wrote off those bad loans already on the books. It is a self reinforcing circle. Which leads to my definition of deflation, "a massive asset destruction".

It appears quite feasible to have inflation in M1 at the same time as deflation in M3. I expect that scenerio to play out this time as well.

There now, I saved myself a bit of typing by being cryptic, and spent a lot of 1 finger typing to explain myself. Could it be I am related to a banker?



ORO (10/25/00; 20:31:56MT - usagold.com msg#: 39950)
goldhunter - margins
I am assuming that margin requirements would rise and that you would take a 1 year position, but if they don't and you take a current month position, you are right at that 500% figure on a 1500 per contract margin for current month. However using 4 current month contracts per year, you raise the cost of participation relative to POG by raising the number of transactions to 8 per year and paying 8 bid/ask spreads. Though the possible outcome gives you a 500% possible profit, it raises your sure cost of participation to 12% of POG. Thus on a year's worth of exposure you have a 12% of POG cost on which you can gain at best some 500% over an occurrence - on a single contract you will have 500%, on the rest you will have a participation cost with no profit (I am assuming that you try once per active month and do not return to current month once you are stopped out) which brings your actual max return over the full year with one event to 125% if you manage to time it perfectly.

As to spelling, I don't run my posts through a spell checker and I don't read them. All in the effort to post prompt replies when I have the opportunity to post them. If the mis-spelling and the many occasions where gobledygook syntax appears are a problem to more people than yourself, then tell me and I'll make an effort to clean up the posts.



Cavan Man (10/25/00; 20:30:15MT - usagold.com msg#: 39949)
Prudent Bear
Good commentary over at Tice's site tonight (as usual). Thanks to Mr. Tice.

Trail Guide (10/25/00; 20:28:42MT - usagold.com msg#: 39948)
Last Comment

Hello Steve,

Well, it's never as bad as it all seems. Remember, people, nations and empires have been doing this from the beginning. We are, as a people much stronger and tougher than we think ourselves to be. Us Americans and all North and South Americans will survive and be better for it. So the
Europeans may come out on top for a while? Good for them. They are good people too!

As I said long ago; most everyone takes our thoughts as major gloom and doom. That is totally wrong. I expect the US to change, not die my friend. Great doses of reality force us into a better life, a stronger life.

Again, the secret to navigating through changing times is in not allowing others to control you. Indeed, 90% of that power comes by controlling your own financial assets. None of us has to lose to experience change, but we must change not to experience loss!

This chess game is a long one and we will have time to discuss this further. Until then, consider following a conservitive trail that puts you in control.

Trail Guide





Cavan Man (10/25/00; 20:27:45MT - usagold.com msg#: 39947)
A long term bullish message from the Euro....
......to the rest of the global economy:

Remember all the financial dislocation caused by the old monetary view of global finance? Look here; we've no overt political agenda behind our currency. In fact, we have so much confidence in it (the Euro), we even benchmark it to THE PRICE OF GOLD. We just want to do business.



Al Fulchino (10/25/00; 20:21:04MT - usagold.com msg#: 39946)
Hi-Hat (10/25/00; 19:05:42MT - usagold.com msg#: 39921)
That was beaautiful. It really was. I knows what you see. It put a bit of water in my eye. Thanks for real gold.

R Powell (10/25/00; 20:19:07MT - usagold.com msg#: 39945)
Count me out !

From Sierra Madre (39917), "We so-called gold-bugs have taken so much opprobium, so much in the way of condemnation, that we are utterly immune to any of your arguments."

Please don't include me in your "WE" group. The idea that only thoughts and views that concure and reinforce what "We so-called gold-bugs" believe and cherish should be posted stinks of censorship. What is to be gained or learned from repeatedly hearing only that which pleases you and makes you feel good. These will become repeatedly heard as this "utterly immune" or closed mind attitude will not tolerate or even consider anything it does not percieve as a old, friendly, wellknown and correct thought. Perhaps ignorance is indeed bliss but please don't include me in your group even though I am a goldbug. A mind is a terrible thing to waste and an "utterly immune" (closed) mind is (IMHO) brain dead.
Agree or disagree, or simply ignore what displeases you but please don't condemn from the point of view that you speak for "We so-called gold-bugs".
I happen to think both Aristotle and Goldhunter are partly correct and partly not so but I would never take sides with one and ask the other to stop posting because I didn't like his viewpoint. Freedom of expression for the Furtherment of enlightenment.

SteveH (10/25/00; 20:09:41MT - usagold.com msg#: 39944)
Leigh, for good reason...
Today was a 52-week low in gold.



Cavan Man (10/25/00; 20:08:33MT - usagold.com msg#: 39943)
Stranger
AAA reports today that cost of airline tickets are up 13% YTD. However, airline volume is up 6% YTD. My source today was WBBM Chicago.

Batra was/is right about one thing at least--this economy is (credit) supply driven. Too much debt is a real bad thing!

Leigh (10/25/00; 20:07:01MT - usagold.com msg#: 39942)
Blue-Light Special?
Does anyone else have the impression from reading the gold forums that everyone has been out shopping for gold today? (Silver, too, Canuck!)



SteveH (10/25/00; 20:06:57MT - usagold.com msg#: 39941)
Darn, I keep double hitting the submit button
http://biz.yahoo.com/rf/001025/n25658211_2.html
CM, Shaken, not stirred.



SteveH (10/25/00; 20:06:01MT - usagold.com msg#: 39940)
Darn, I keep double hitting the submit button
http://biz.yahoo.com/rf/001025/n25658211_2.html
CM, try that link.



SteveH (10/25/00; 20:05:22MT - usagold.com msg#: 39939)
GATA quote just in
www.gata.org
"Last May I interviewed Congressman Ron Paul, M.D.
and member of the House Banking Committee for my
newsletter, J Taylor's Gold & Technology Stocks. In
a letter to Congressman Paul, Bob Rubin said the
following. "We have long recognised that helping
prevent extreme market fluctuations from generating
self-fulfilling losses of confidence that could
unnecessarily destabilise the real economy is an
appropriate objective of government policy. We also
recognise that government action is often required
to create the conditions for markets to work at
their best."



Cavan Man (10/25/00; 19:59:49MT - usagold.com msg#: 39938)
SteveH 39925
URL not found. Anything there or mistake?????

dragonfly (10/25/00; 19:59:32MT - usagold.com msg#: 39937)
Advice to the Privileged Orders
"A nation is surely in a wretched condition, when the principal object of its government is the increase of its revenue. Such a state of things is in reality a perpetual warfare between the few individuals who govern, and the great body of the people who labour. Or, to call things by their proper names, and use the only language that the nature of the case will justify, the real occupation of the governors is either to plunder or to steal, as will best answer their purpose; while the business of the people is to secret their property by fraud, or to give it peaceably up, in proportion as the other party demands it; and then, as a consequence of being driven to this necessity, they slacken their industry, and become miserable through idleness, in order to avoid the mortification of labouring for those they hate."

"The art of constructing governments has usually been to organize the State in such a manner, as that this operation could be carried on to the best advantage for the administrators; and the art of administering those governments has been so to vary the means of seizing upon private property, as to bring the greatest possible quantity into the public coffers, without exciting insurrections. Those governments which are called despotic, deal more in open plunder; those that call themselves free, and act under the cloak of what they teach the people to reverence as a constitution, are driven to the arts of stealing. These have succeeded better by theft than the others have by plunder; and this is the principal difference by which they can be distinguished. Under these constitutional governments the people are more industrious, and create property faster; because they are not sensible in what manner, and in what quantities, it is taken from them. The administrators, in this case, act by a compound operation; one is to induce the people to work, and the other is to take from them their earnings."

"In this view of government, it is no wonder that it should be considered as a curious and complicated machine, too mysterious for vulgar contemplation, capable of being moved by none but experienced hands, and subject to fall in pieces by the slightest attempt of innovation or improvement. It is no wonder that a church and an army should be deemed necessary for its support; and that the double guilt of impiety and rebellion should follow the man who offers to enter its dark sanctuary with the profane light of reason. It is not surprising that kings and priests should be supposed to have derived their authority from God, since it is evidently not given them by men; and that they should trace to a supernatural source claims which nature never has recognized, and which are at war with every principle of society."


Joel Barlow
appx 1792
from
Advice to the Privileged Orders in the Several States of Europe - Resulting from the Necessity and Propriety of a General Revolution in the Principle of Government



I get the feeling that we may soon sense the proportion that is taken from us, which is probably in some magnified proportion to what we have been enabled to take from others over a long period. There is undoubtedly (smile) some thermodynamic equation that clearly and unambiguously spells out the functional relationships between energy throughput per capita, creative allocation of surplus "free energy", and the systemic turbulence when entropy comes home to roost.

Gold is for sure a consolidated and dense means of preserving the "free energy" generated by work. Its warm color is symbolic of energy and fire, and its weight is very existential. Happily, there is a way to easily "secret" ones' property. It's great fun to carry it around as well.

Will there ever be gram weight coins available or are there already? Seems useful in future.




SteveH (10/25/00; 19:58:01MT - usagold.com msg#: 39936)
GATA quote just in
www.gata.org
"Last May I interviewed Congressman Ron Paul, M.D.
and member of the House Banking Committee for my
newsletter, J Taylor's Gold & Technology Stocks. In
a letter to Congressman Paul, Bob Rubin said the
following. "We have long recognised that helping
prevent extreme market fluctuations from generating
self-fulfilling losses of confidence that could
unnecessarily destabilise the real economy is an
appropriate objective of government policy. We also
recognise that government action is often required
to create the conditions for markets to work at
their best."



Cavan Man (10/25/00; 19:54:47MT - usagold.com msg#: 39935)
SteveH
Steve,

Over at ezboard.com there is an article that makes mention of a high level China/SA "tea" recently. The Saudi representative's name was a Prince Sultan.....(don't recall). Sounded like he was #3 in the official sector. Also sounded like relations were very warm between the two countries. FWIW

SteveH (10/25/00; 19:53:34MT - usagold.com msg#: 39934)
How do you spell "disbelief -- three?"
Depending on who translated the French person I just wonder if increase gold reserves meant increase the value of the gold reserves (by setting a higher price of gold)? Naw!, Must have translated correclty -- more ounces not more value. (that would come later)

TG,

I am not smiling. I grew up in a strong America where the dollar was king. If this is playing out like you have been saying and there is every and I mean every indication to believe that this is so (where do you get such advanced info [rhetorical]?) then we are indeed in for some big suprises. Funny, human nature is? You know, one day we were all putzing around minding our business and there was an Iron curtain, and the next thing you know it was being torn down. And now this.... I keep hopeing you had just a great storyline but damn if those events just don't keep confirming it all, again and again. Wake up all.

The Euro and the dollar are at war. And the dollar appears to be loosing (sadly, no smile)and in a way that makes it look to most like it is winning. And the CNN's of the world just keep parading bozos who have no clue what is going on. "Oh yeah, the next four quarter are looking very strong." The CEO conference in Boca Raton "are very concerned about the oil picture, but are generally confident that the economy is going strong..."

Then we have the comments like those Gold mines and their crazy hedge programs (with the unspoken "...and no, I have no clue that the reason for this is to keep oil cheap in terms of dollar/gold settlements...."). It is as much more about what is not said vs what is said. It is also no coincidence and a godsend that all of this is occurring with the full vision of the internet. Traditionalists who ignore these sites get there news from CNN, Bloomberg, and CNBC and the Wall Street Journal who would only print a 1/4 of this poppycock stuff if it hit them in the face, because the pair of dimes needed to shift their thinking hasn't struck them yet. GATA is just too radical for them and they have been hitting home runs on great gold market intel for over a year. Yeah, it is scary and sad both that neophytes to world politics discuss world politics only to find out that those who should be discussing it either have no clue or are in complete denial or couch things is such esoteric terms that if there were clues of lights being on they are lost in the dazzle of brilliance through obfuscation -- no greens-pun intended. Got info?

Cavan Man (10/25/00; 19:47:13MT - usagold.com msg#: 39933)
Trail Guide
You are so wise.

RossL (10/25/00; 19:44:55MT - usagold.com msg#: 39932)
WSJ

In case anybody missed it, or anyone still cares <grin>, the WSJ editorial page today recognized some other choices and published articles written by Harry Browne and Ralph Nader.


Cavan Man (10/25/00; 19:42:12MT - usagold.com msg#: 39931)
ORO
What of the unhedged mines?

goldhunter (10/25/00; 19:40:04MT - usagold.com msg#: 39930)
Re-Hash...Oro
Yours "If we are considering the cost of maintaining a long position during this 1 year period, we stand to lose about 6% of POG in time premium. This leaves 14-24% of POG as the maximum probbable upside in the futures market. If you are quick enough, you will see a 100% to 200% return on your speculation. If you make any errors in timing you will have lost most of your gain and perhaps lose part of your speculative funds."

Does not look like 90% of the speculators loosing to me?

Also, you are "light"...a 24% increase in the price of gold from say 270 would be about a $6700 increase. At a margin of approx 1500 per contract, my math shows 500% return...

Any more "enlightening" information you care to mis-spell?



Canuck (10/25/00; 19:40:03MT - usagold.com msg#: 39929)
@ The boys
No need to quibble about little things.

From Oro,

"Most of the winners in the gold options when the WA explosion ocurred did not get much of their money out. And subsequently they lost it.

If you are a trader, and a good one, you may make it. If you are an investor with a long time horizon and no judgement as to rapid market movements, then you should not play any gold derivatives, no matter how conservative your strategy."

End.

Hey, very simple game mon amis. If you can time it go for it. Doesn't matter if it is gold or grey poupon. If you are looking at the END result WITHOUT a time frame, well, then play it that way.

The paper argument versus the physical one is RELENTLESS, IRRELEVENT. The long shot, big pay-off, time dependent paper gold bet is one avenue and the physical, we win through attrition route is Another.

You guys bore me, play a new record.

Bet the money or buy the physical, time your 'bet' or don't.

I went to the physical store yesterday and scooped 130 oz. of silver. They gave it to me. Now if silver goes up tomorrow or 2001 or 2010, I win. If I have 'timed' this wrong then I give it to my son. He wins. But there is no expired clock. What about the paper silver bets, who cares.
The big basket of Y2K gold ounces I have, same deal.

So if the paper boys time it right and make a killing, good.
There are playing the odds, I am not.

I hope GoldHunter makes money because I know I will.


Trail Guide (10/25/00; 19:35:10MT - usagold.com msg#: 39928)
(No Subject)
SteveH,

Picture me with a big (SMILE) (EAR TO EAR)!

SHOWTIME!

Trail Guide (10/25/00; 19:32:37MT - usagold.com msg#: 39927)
Comment

Two replies, then a story.

ALL:
I'm fighting a cold bug,,,,, trying to write a small novel of a reply to Appolo's #39611,,,, preparing a summary to Traveler,,,,,, and then I smell the stench of paper gold burning! So, I hurry up and look under my chair cushion (need a ladder to climb up and get in it now because of the mound under it) to see if it my gold bullion had also burned up in the flames,,,,,, it didn't. Boy, that was close (smile).

Mr. Holtzman, thank you for that reply and excellent explanation. I'm glad to see that you have "orientated" yourself into a position of understanding. My position in the currencies is a bit more thin in the diversity department.
I am now down to just the Dollar and Euros. Having recently changed the ratio far into the Euro's favor (around .88/.86). My advantage, of course is that I can just spend them there for any number of fine, much better valued assets if the dollar never goes south again. You know, in poker they say "anything is possible, it's just not probable". So, I do give the Dollar a .00000001% chance of never going down to Euro par again (smile).

I heard Eddie George is also becoming "orientated"! He went out of his way in Paris not to rock the dollar boat too much. Calling the Euro "substantially undervalued in terms of the medium-term 'fundamentals'. Oh boy, it must be killing them as the Pound is clearly in the same pickle the dollar is in and that trend is in motion.

Suddenly everyone must talk out of both sides of their political mouth and the ECB has got to love it. England / USA need to sell to Euro Zone or their already tiny profit margins are going to completely disappear. Not only that, the Euro exchange rates sets the competitive margins everyone else must mark against. Soon, if the dollar doesn't drop, taking the pound with it, we are going to have a very hollow backing behind an already sky high economic
structure.

To back up that contention, the same Reuters article said " Tuesday showed Britain enjoyed a trade surplus with the rest of the EU in August for the first time in almost five years, despite the strength of the pound versus the euro."! But then confirmed that "there is evidence that British
exporters have been cutting their prices in sterling terms to maintain their competitiveness in European markets in spite of the strength of the pound. That has hit corporate profits."

So, Americans openly display their strong dollar saying the Euro is week,,,, while knowing full well that EuroZone is outperforming on a long term basis and their currency is really strong in that fact. The pound is being drug up with the dollar, yet both countries know their money's overvaluation is a bad sign. Killing their markets.

It won't be long now and everyone will be talking out of only one side of their mouth,,,, and it will be saying drop those interest rates Alan, you must get that dollar down. Big inflation, here we come!

I bet the UK is into the Euro before we know it. They missed their chance (worried about a little minor inflation) and now will come up with some ad-hock tracking system, you watch! Eddie is already throwing off hints; "For the time being our best bet, it seems to me, is for both the Eurozone and the UK to continue to pursue macro-economic -- both fiscal and monetary -- stability in parallel" Did you hear that one? Trail Guide

ORO,
you have placed so much fine information out here and I never go into as much of it as I would like. I saw your #39804 "Debt to equity, according to Noland, is at 83%". Not good, my friend!

I'm doing an abstract fiat money example and hope to use it as a base to construct some discussion with you. It' so hard to talk here with everyone using such closely related terms, we often don't get our point across. At least I don't.

Story:
Was traveling a while back. I stopped and tried to tell a fence post (there are a lot of those scattered across this great planet of ours) that there is a difference between "the price" and "the value" of things when fiat markets are involved.

I said that the efficient market theory is skewered
when there is an unending supply of new fiat credit for people to bid with. In such paper markets, the paper money price cannot represent the real value of things in the course of our lives. Take away the ever expanding paper pricing mechanisms and replace it with a fixed amount of bidding units and the real worth of things in our lives becomes known. Of course I'm not just talking about gold vs paper gold. It's most all things, except gold is the most extreme example today.

Know what? That post didn't say a word. Just stood there holding the fence up. Either I'm dumb as a "____ post" for talking at all or that sun-of-a-gun is smarter than it looked.

You see, I think it knew something was wrong below him that we couldn't see,,,, because next morning he was at a
phone booth calling Colorado about something. This really happened!

The moral of this story is:

"you can't turn a wood post into paper then gold,,,,when even "knot heads" know it's rotten two feet into the knoll"

(smile)
Stranger, yes?

Trail Guide

SteveH (10/25/00; 19:28:27MT - usagold.com msg#: 39926)
How do you spell "disbelief -- two?"
www.kitco.com
Date: Wed Oct 25 2000 19:25
scorp54 (WOW!!!) ID#233298:
European central banks might increase gold reserves
Tokyo--Oct. 25--European central banks might increase their future gold
reserves and reduce exposure to the "risk-free" assets available in the global
market, Herve Ferhani, head of the foreign exchange division of Banque de
France said on Wednesday at the Nikkei Gold Conference in Tokyo. He said he
sees United States bonds and gold as global risk-free assets and added that
gold is one of the few options available to replace the US bond, or even the
only option.


SteveH (10/25/00; 19:25:21MT - usagold.com msg#: 39925)
How do you spell "disbelief?"
www.kitco.com
http://biz.yahoo.com/rf/001025/n25658211_2.html

SteveH (10/25/00; 19:22:27MT - usagold.com msg#: 39924)
Maybe Another was Jordanian?
www.kitco.com
The domino theory as applied to the Euro.

Another one topples.

(Jordan to ditch dollar in trade with Iraq) ID#284255:
Copyright © 2000 sharefin/Kitco Inc. All rights reserved
http://www.arabia.com/article/1,1690,Business|31953,00.html

The move is in response to an earlier Iraqi decision to stop trading with the US currency

October 25, 2000, 02:25 PM
BAGHDAD ( Reuters )

- Jordan has decided to stop using the US dollar in trade dealings with Iraq and replace it with the euro or another European currency, the state news agency INA reported on Wednesday.
The move is in response to Iraq's decision, announced in September, to stop trading with the US currency, head of the Jordan's Trade Centre in Baghdad Ma'an Al-Azizi told INA.

Announcing that decision, the official Iraqi news agency said it had been taken to confront "daily American-Zionist aggression" against Iraq.

"Jordanian companies which have dealings with Iraq started to make offers to Iraq with the euro or European currencies," Al-Azizi said.

Al-Azizi said Jordan's Trade and Industry Minister Wasef Azzar would head a 150-strong delegation of businessmen to Baghdad on Monday to participate in Baghdad International Fair, which opens on November 1.

Iraq was Jordan's biggest trading partner before United Nations trade sanctions imposed on Saddam Hussein's regime after Iraq's 1990 invasion of Kuwait.

An oil-for-food programme has allowed Iraq since December 1996 to sell oil to buy food, medicines and other humanitarian needs for the Iraqi people.

However, Jordan's exports to Iraq under the programme are only a fraction of what they were before the sanctions were imposed.

"Iraq is Jordan's main trade partner... the volume of trade exchange with Iraq had exceeded one billion dollar since the beginning of Iraq`s oil programme," al-Azizi said.

Baghdad remains Jordan`s main energy supplier as it delivers annually over $600 million worth of crude and products to the kingdom under undisclosed concessionary terms that ease the burden on the kingdom`s deficit-ridden budget.

Iraq's oil supplies to Jordan are exempted from United Nations sanctions.

The newly appointed Jordanian government recently put out feelers to Baghdad, hinting that it sought better ties after a number of misunderstandings over the last few years.


SteveH (10/25/00; 19:09:46MT - usagold.com msg#: 39923)
repost
from the farside
repost:

Date: Wed Oct 25 2000 20:56
shell (sharefin, ski) ID#286383:
Copyright © 2000 shell/Kitco Inc. All rights reserved
I got this from sinclair in response to my asking for scenarios under his view of possible gold up/shares down-

"It is great to hear from you again. I hope all is well with you and yours. Things have changed Shelly. The use of gold for the cheapest finance in the world has as its sponsor the central banks. you know banks in major $ centers are using the gold loan technique to raise $ for consumer loans. Yes, amazing.

1/ I would imagine that if POG rises then gold share will rise with the lower or non hedgers in the lead after about 30 days of bullion price strength.

2/ A steady slow rise would not be damaging but is unlikely in the face of the enormous hedge positions covering requirement. If gold does rise it probably will be in fits and starts.

3/ Physical gold on margin is too dangerous. Gold calls not exceeding 10% of free capital staged over a one year period is a rational speculation. The key here is limiting loss potential in the speculative format.

4/ Gold might shake the troops by rising to major new highs and shares falling from say 1/2 the range of that rise. That is a more likely scenario. At the beginning they will rise together in my opinion.

Shelly, we all should do all we can to prevent this calamity. Gold is the only hope finance has of being sane again someday. A rise say to $1450 based on a short squeeze of this huge hedge position is not goo for anyone. Timing it will be so hard that even the pro of pros can be slaughtered. The gold companies are the culprits with this nonsense hedging. Who needs more production as the price day after day on balance for 21 years goes into the pooper. There is so much more here than just the price of an investment. It seems like the revenge of all the paper traders and socialist now defunct that their activities bring a death sentence to gold as a monetary item. Believe me Shelly a blast up ands flop down will kill it forever.

I am flattered that you remember me. I wish you the best of good fortune.

Yours,
Jim

*** ORO, 60,000 tons huh?

SteveH (10/25/00; 19:09:44MT - usagold.com msg#: 39922)
repost
from the farside
repost:

Date: Wed Oct 25 2000 20:56
shell (sharefin, ski) ID#286383:
Copyright © 2000 shell/Kitco Inc. All rights reserved
I got this from sinclair in response to my asking for scenarios under his view of possible gold up/shares down-

"It is great to hear from you again. I hope all is well with you and yours. Things have changed Shelly. The use of gold for the cheapest finance in the world has as its sponsor the central banks. you know banks in major $ centers are using the gold loan technique to raise $ for consumer loans. Yes, amazing.

1/ I would imagine that if POG rises then gold share will rise with the lower or non hedgers in the lead after about 30 days of bullion price strength.

2/ A steady slow rise would not be damaging but is unlikely in the face of the enormous hedge positions covering requirement. If gold does rise it probably will be in fits and starts.

3/ Physical gold on margin is too dangerous. Gold calls not exceeding 10% of free capital staged over a one year period is a rational speculation. The key here is limiting loss potential in the speculative format.

4/ Gold might shake the troops by rising to major new highs and shares falling from say 1/2 the range of that rise. That is a more likely scenario. At the beginning they will rise together in my opinion.

Shelly, we all should do all we can to prevent this calamity. Gold is the only hope finance has of being sane again someday. A rise say to $1450 based on a short squeeze of this huge hedge position is not goo for anyone. Timing it will be so hard that even the pro of pros can be slaughtered. The gold companies are the culprits with this nonsense hedging. Who needs more production as the price day after day on balance for 21 years goes into the pooper. There is so much more here than just the price of an investment. It seems like the revenge of all the paper traders and socialist now defunct that their activities bring a death sentence to gold as a monetary item. Believe me Shelly a blast up ands flop down will kill it forever.

I am flattered that you remember me. I wish you the best of good fortune.

Yours,
Jim

*** ORO, 60,000 tons huh?

Hi-Hat (10/25/00; 19:05:42MT - usagold.com msg#: 39921)
Al Fulchino
Tis true. Holding physical gold is to appease that silent
witness in us all, that wakes at times at 3 o'clock in the
morning, and in whose icey stare we stand as specks of awareness before infintety. Naked and vulnerable the gold
soothes a little our short stay.

An elementary attraction of justice.

CoBra(too) (10/25/00; 19:02:16MT - usagold.com msg#: 39920)
The omision - re last post ... almighty (deity..} 'US-$ '
- to insure the validity of the former, you've got to supress
all other -even market - forces, until - yes until natural cycles of human behavior overtake the ingeniously implanted manipulation.
Allan, as we start to read between your lines - leave it to Larry, a guy neither his students, nor anybody else ever wll figure out!? ... fortunately, I must admit.
Larry - the mystery man, the oracle - or Larry the "other" inventor of the new conomy - or the scavenger of same! He will be to blame as the insane valuations of my retirement game is obscuring the Baby Boomers - no risk,. no gain - long term virtual belief in their sun belt security.
Well, think again -all, including the new prosperity was virtual - though Al/Larry shrink the rest of US. - Best cb2

Al Fulchino (10/25/00; 18:41:49MT - usagold.com msg#: 39919)
I must be a dummy I guess.......applause expected
How can anyone in their right mind defend the price of gold by using things outside the dollar as a guage for how "good" it has done <the pog>? I could't believe my eyes when i read that here today.

First of all, 90 % of the people here have likely bought pm's with dollars. Second, who here that uses this guage has used things outside the dollar to buy PM's? Some, true...not many. And if that guage is to be used, what would u have gained by selling a dollar a year ago to buy an equivalent in a euro and then bought his fraction of gold at today's price? You could have stayed with your silly dollar.

This will not likely be answered here. Perhaps it will be viewed as a personal attack I don't know. I just ask that readers here think for themselves and remember worship and deep respect is reserved for another.

Gold will rise, when it is time. Gold may even be a risk to own at that point. You buy gold for one reason. You paper currency is tampered with. You seek protection. I am but a simpleton.

RossL (10/25/00; 18:32:41MT - usagold.com msg#: 39918)
Sharefin - charts
http://www.sharelynx.net/Markets/Charts/GlobalGoldSentiment.htm

Sorry, I originally interpreted your sentiment index as something like the measurements of consumer confidence. Those consumer confidence measures will remain high well into a recession, then finally drop down. They will stay down well after the economy recovers, providing an extremely lagging indicator. This is one of the factors usually attributed to the reason why Joe Sixpack usually makes the wrong investment decisions.

Your use of gold mining shares, mutuals, and indices may give an overweighting in your sentiment index towards gold mines versus the physical price. There was a discussion here a while back about whether physical will lead the shares up next time, or vice versa. In many rallies in the past, shares and lease rates have led the physical. Some of us here have argued that it will not be that way when T.S.H.T.F. I don't recall exactly when that discussion occured. Anybody?


Sierra Madre (10/25/00; 18:24:45MT - usagold.com msg#: 39917)
Goldhunter and his fixation on paper....
"Methinks he protesteth too much"
Goldhunter:
You are certainly entitled to your opinions, and to making or losing money based on your opinions. I hope you make a lot of "money" - I use quotation marks as IMO what passes for money is not really money, although AT PRESENT useful as such.
You may and doubtless will, continue to post messages on this forum, which are philosophically distasteful to the majority of those who post or lurk here. But not matter how hard you try, - and you try so hard it almost seems as if you are working for the parties inimical to gold - I am quite sure you will not change the ideas held by those who consider that gold is something that is tremendously undervalued, and that the world has gone mad in pursuing pure number in the form of fiat money.
We so-called gold-bugs have taken so much opprobium, so much in the way of condemnation, that we are utterly immune to any of your arguments. Please understand we are diehards and proud to be diehards.
Make our life a little easier, if you please, and allow us this forum to exchange ideas among individuals of congenial temperament.

ORO (10/25/00; 18:17:00MT - usagold.com msg#: 39916)
goldhunter - because it is not likely to happen that way
While your speculative idea of selling short with the trend a couple of posts ago would make sense if banks were speculating on a downturn, I will point out that their behavior is not that of a speculator playing momentum but of a market manipulator directing price to an intended value.

I should point out that gold accounts were not considered in the data before, and those are unreported gold obligations that are not known to anyone. Using currency trading practices (about which there is detailed data on outstanding accounts) as a guide to the behavior of the bankers, it is probable that there are about 60000 tonnes of total bank commitments denominated in gold.

Bank capital available officially to close this in terms of dollars allows for only a 25% rise in POG before banks start having regulators run them and at 50% POG rise their obligations get entangled in court.

The problem of banks is not just the price exposure, they themselves have delta-hedged among themselves and have also taken long positions against some hedge funds which are now suffering from the crissis of the corporate and foreign debt markets, where spreads have nearly doubled, which would put the average hedgie following the standard rules of carry trading deeply in the hole. They are not likely to be able to fulfill any of their obligations.

As a result, the banks have mostly their own capital at risk. Considering the default rates on their assets - a third of which is corporate and foreign debt, they have an additional risk. In the same kind of crissis period that would cause heavy purchases of gold, they would also see the market value of their assets fall substantially. Therefore, the banks in question, who seem to be able to withstand a 10 fold price rise before crying uncle, would actually find that they can't maintain capital adequacy ratios required by international treaties on banking if the dollar, stock market, and corporate bond market tank in either of the following extents within one or two months: 10%(?), 20%, 5%, respectively. These would be the same kind of conditions that would cause a spike in gold purchases - what would presumably bring about a rise in paper gold markets. The dollar and gold are particularly inversely correlated, while stocks are slightly lower in correlation and bonds are correlated inversely to gold as well.

Therefore, the likelyhood of their having any practical access to the capital needed to cover losses on a gold blowup is unlikely. Even in something as small as Palladium and Platinum, the markets have been destroyed. There is no way to make a leveraged bet in these markets. In these metals, that trade at about 2% of the dollar volumes of gold, prices rose 2 fold over 1 year to arrive at destruction of the markets. To arrive at the dollar loss tolerance on gold, we can take the 100% 1 year price change figure and multiply it by the dollar proportion of the markets, to obtain 2% as the 1 year price rise the banks and exchanges would tolerate without shutting down the leveraged trade. If we look at the whole period in which Pd rose 6 fold, some 3 years, then we have 10% over 3 years, or 3% per year. Even allowing for 10 times the risk capital, one would come to the conclusion that the market can't survive a rise beyond 20-30% in $POG over the space of one year.

By my calculations, bank capital, at market value, is possibly as low as only 40% of its stated value, at a generous 60% allowance for actual relative to official bank capital, if the banks involved suffer no further losses during a gold spike, they are capable of supporting only a 28% spike before they hit regulatory problems at the end of the quarter. At a more realistic (less optimistic) set of criteria, they can not sustain any substantial move in gold prices that actually holds under the same conditions that would see a gold spike - when their risk capital is already consumed in covering dollar derivative losses, stock derivative losses, and interest rate spread losses. Allowing 1/4 to gold and each of the other arenas, one has an official capacity for the banks to survive a 35% POG price spike that does not fade quickly. At actual levels, they can only take a 17% rise that sticks.

During the spike, banks can see up to double the 17%, perhaps slightly more, so long as it does not last through a whole quarter.

If we are considering the cost of maintaining a long position during this 1 year period, we stand to lose about 6% of POG in time premium. This leaves 14-24% of POG as the maximum probbable upside in the futures market. If you are quick enough, you will see a 100% to 200% return on your speculation. If you make any errors in timing you will have lost most of your gain and perhaps lose part of your speculative funds.

Most of the winners in the gold options when the WA explosion ocurred did not get much of their money out. And subsequently they lost it.

If you are a trader, and a good one, you may make it. If you are an investor with a long time horizon and no judgement as to rapid market movements, then you should not play any gold derivatives, no matter how conservative your strategy.




aunuggets (10/25/00; 18:05:39MT - usagold.com msg#: 39915)
A simple answer to a complex subject ?
If one only had the assets to "prove his point".....

How much "paper gold" could be purchased in todays market vs. how much "physical" could be obtained ?

This assuming the "buyer" had unlimited funds to "go the distance".

Which would run out first ? Which could be sold beyond the point of "supply" (i.e. delivery) ?

CB "sales" simply a matter of shuffling chairs on the deck of the Titanic ?

Yawn.......



Golden Truth (10/25/00; 17:44:39MT - usagold.com msg#: 39914)
To goldhunter
I like it when you're MAD i learn way more, unfortunately
at your expense and blood pressure. :-)
Thanks for your perpective, every gold coin has two SIDES!
G.T

CoBra(too) (10/25/00; 17:44:20MT - usagold.com msg#: 39913)
@ justamereBear - re your 39897
It is real simple - no 3rd. world country ever repaid its debt - historically - ever - did the US of A ever repay their own citizens on the gold/$ confiscation/default in 1934? Or more to the point internationally in 1971, the year of Bretton Woods- funeral, or better default of the $/gold relation internationally!
In case I didn't misunderstand your post, I must conclude
there's either another 3rd. world country, or a new imperialsm, colonialism or worse "dirigis'm " emerging. Another country, not being able to repay the world for their excesses "in kind", ever!
Welcome to the globalized 3rd. World - Economy based on the basics of Fiat Money Flows - a concept, which the old Romans have proven to last until the empire succumbs to the "weight" of overextension.
The "barbarians" - eventually picked up the crumbs and evolved from chimps to chumps and (some) eventually to champs (see:Ari) ... before the latter elected to build their new constitution of personal liberty in a brand (german for fire) new land.
As all of man's achievements are subject to evolution and - thinking about the Reagan Era - global politics culminated in Ronnie's purging the world of the communist devil - now, whats left to purge?
... I probably don't have to spell it out - the new Imperialis'm of the old colony - reigning the globe by military
and, worse, by currency dominance!
... To insure this dominance - as a shortcut to a multi faceted issue - the predominance of the almighty (next to deity) is ab-used, until nothing, not even the sacred constitution is sacrosanct.
The Rise and Fall of great Empires is playing out now -ironically, right after winning the war against the perceived Anti-Christ (- the population being more Christian than
its protagonist populus) by usury of the predominant global currency. And all under the pretext of enhanced productivity, by technological advances, bringing a new "Messiah" to the rest of the world in the form of globalized free trade - utiilzed only by its inventor - in order to utilize newly created serfdom.
Call it globalized Feudalism - or George Orwell's nightmares coming true - Big Brother, don't ever bother, I'll be perfectly Able to figure out Cain.
See U - cb2



Buena Fe (10/25/00; 17:33:08MT - usagold.com msg#: 39912)
GATA
Bill and Reg........give her bullets, shooter!......I (we?) support you all the way.

"Reg Howe will be the final speaker at the Committee
For Monetary Research and Education Dinner at the
Union Club in New York City this Wednesday, October 25.

Cocktails start at 5 and the first session begins
at 5:45.

Reg may have a pleasant surprise for you!!!"



Aristotle (10/25/00; 17:27:25MT - usagold.com msg#: 39911)
gold hunter, you are seemingly beyond the reach of any effort at education
Your words to me--
------"You can say on a down day that the demand was "disinterested"...but what do you say on an up day? Is the demand "interested"? on an up day? You play word games to convince some, or try, and you miss the concept"-----

It is YOU who are playing word games and missing the concept. The concept was all about the fundamentals behind the TREND. One day up or one day down does not a trend make. We are talking about a course of action and the effects over months and years here.

You also tried a "brand new approach" (for you) by bringing up the London fix. Good! You must be out there trying to learn new things despite my skepticism. (By the way, I'm still waiting to hear you admit that Bretton Woods paper gold didn't hold up very well against real Gold. They didn't continue to trade "in tandem" as you would like us to believe is the eternal way of the world. In truth, the separation is what was inevitable then, and is inevitable now.)

Reviewing the exchange in yesterday's commentary, I can see that Townie's post to Golden Truth addressed the London Fix issue, though you were not inclined to see it or understand its meaning. Townie wrote--

-----"The price discovery mechanism is based on such items as gold derivatives (and notably the gold futures market) and [***here it comes, gold hunter****] the status of the balance sheets (and evolving sentiment) within the bullion banking sector. [****did you catch that, gold hunter??***] The performance and desirability of this paper gold requires both confidence and anticipation of *normal* market operations, not much unlike that required for paper currencies to function."-------

Let me spell this out for everyone else trying to follow along, because you have exhibited no desire or propensity to learn. (And it's not just my "opinion" against yours. What have you to say ORO's many elaborations on the matter?)

What Townie's post did was to go the extra step to provide this additional context and foster awareness regarding the affairs in London, lest the reader overly focus on just the New York paper influence. Here's the London situation that was being alluded to, whether you grasped it or not. The procedure of the London fix is to facitlitate the bullion banks settling their affairs only AT THE MARGIN of their TOTAL ACCOUNTS as necessitated by the latest sentiment and subsequential banking-related behaviour of their clientele. While were not talking COMEX futures here specifically, it is this other form of paper gold that takes its toll on the market price with respect to the London fix. It is this body of bullion banking paper gold in the total account that is only settled on the margins (depositor withdrawal) which results in the understatement of Gold's true scarcity and proper valuation relative to national currencies.

Gold. Get you some. ---Aristotle

Golden Truth (10/25/00; 17:23:48MT - usagold.com msg#: 39910)
GOOD NEWS GOLD IS UP 5cents!!!!!!!!!!!!!
You heard right,we are all going to be "stinking" Rich.
$30,000/oz here we come. Yup i,am totally convinced now!

Right F.O.A? Right? Please tell me you're right? :-((

MarkeTalk (10/25/00; 16:57:35MT - usagold.com msg#: 39909)
Nortel Networks--Time "to come together"?
In talking with my clients on the telephone today here at Centennial, some of them were just astonished at how the so-called invulnerable high-tech darlings (Nortel Networks, JDS Uniphase, Ciena, Sycamore, et al) were finally smashed 25%+ today. They were the lone holdouts in what has been a good thrashing of the NASDAQ since the top in March around 5000.

If you read any of the commentaries on the web or listen to the pundits on CNBC, they all point the accusing finger at Nortel Networks. If Nortel Networks (NT) hadn't come in below expectations for growth in sales revenue, then today would not have happened and "x" billion of market cap would not have been lost. I have a simplier explanation why investors dumped NT today. They have been saturated with those catchy TV commercials which use the theme song "Come Together" by the Beatles. One too many airings and they all woke up today and said, "That's it. I've had it. I am selling all of my holdings in Nortel Networks." And sell they did. Volume today was a gargantuan, monstrous 123,779,296 shares--about nine times normal volume of 15 million shares!

After today's debacle in the high tech stocks--all caused by Nortel Networks--perhaps the lyrics of the theme song should be revised as "Come Apart Over Me." Parting thought: Expect more darling stocks to be hammered as margin calls go out to investors today and tomorrow. Also the next lunar phase--the new moon--starts this Friday, which could result in a final spike selloff to much lower levels.

goldhunter (10/25/00; 16:46:36MT - usagold.com msg#: 39908)
Oro's post..ote
Your statement: "The paper gold calls itself an ounce but is backed only by 1/10 th of an ounce. 90% of paper gold buyers will see nothing come of their speculation."



This is fiction...In an uptrend, most longs will make money, just the same as coin longs will make money...To say otherwise is a distortion...Your statement absolutely false.

As far as being backed by 1/10 oz for each oz, again, not factual.
If you are long a futures contract into delivery, and you stay long into last trading day, you will be delivered 100 troy oz. .999 fine gold.

Your previous post is entirely mis-leading at best.

I might add, every gold holder (long) lost money today...100% cash AND futures holders.

I would like Oro or anyone to explain to me how all the longs that are in at 280 will be losing money at 325...

You're wrong.

wolavka (10/25/00; 16:35:05MT - usagold.com msg#: 39907)
It's that simple, I blew it!!!!!!
Dollar index opened new york 7:05 over resistance.

Comex gold opened 7:20 under 273 breakout point, and never looked back.

It's the dollar and nothing more. Watch break in dollar!!!!!!!!!!!!!!!!!!!!!

goldhunter (10/25/00; 16:31:13MT - usagold.com msg#: 39906)
Replies...
The difference in volumes of traded gold, physical vs derivatives may be explained by leverage and by ease of transfer...
Also, a bank holding gold (in a downtrend) would be expected to be short futures for adverse price protection...

These banks have an interest in being risk-averse, therefore as physical is sold off, appropriate shorts are covered...

Mr. Oro's statement about "counter-party" risk his paper cow idea is a good one...No counter party risk with a miss graded coin, or a stolen or lost cache of coins I presume.

Comex confidence remains intact today. Expect it will open tomorrow too.

ORO (10/25/00; 16:26:56MT - usagold.com msg#: 39905)
goldhunter - data and possibilities
Data is from Treasury and the BIS on OTC contracts in the US and internaitonally, aided by info from a couple of European banks.

The US OTC market is 10 times greater than the microscopic COMEX. Therefore, COMEX can be ignored but for the fact of its reflecting a little of what is occurring in the larger markets.

The history of gold as a political entity makes it highly unlikely that governments would not push banks into a net short position (not that banks would not do so on their own). Remember that there was a London gold pool operating for over a decade, with gold flowing from all of the US partners into the market in an attempt to keep the dollar at par of the delivery contract - $35 per oz.

On the way there, the US and G-7 governments sold out some 12000 oz. (some of it was bought back by Germany and France.)

The paper gold calls itself an ounce but is backed only by 1/10 th of an ounce. 90% of paper gold buyers will see nothing come of their speculation.



ORO (10/25/00; 16:16:57MT - usagold.com msg#: 39904)
goldhunter - supply and demand of what?
Supply and demand of paper - trading at 1000 tonnes per day would most definitely overwhelm a physical trade of 2500 tonnes of new supply per year and perhaps 10000 tonnes changing hands per year.

So long as bankers have a warehouse that delivers physical gold against a paper claim, then the futures market is setting 90% + of the price. The banks are already behaving as if their warehouse is emptying. The price is indicating a discount on gold obligations rather than a lack of demand for either gold or its paper subsittutes. Basic economics teaches us that a speculative player expecting prices to fall will directly or indirectly cause an emptying of inventory if he is incorrect. The clear process of emptying the banker's warehouse is the reason for the bankers looting all the central banks. The gold derivatives show a distinct tendency of banks in general to be short on gold, at least by a 2:1 ratio - the ratio of a gold short position that is delta hedged.

As for your insistence that a market like the gold market can at any time be an actual market dominated by supply and demand expectations, I wish you good luck in bankruptcy court as you try to get something paid out from the futures and options you bought thinking that this market was "real". I expect you will milk as much from this as you would from a paper cow.



turkey hunter (10/25/00; 16:16:22MT - usagold.com msg#: 39903)
United States history 1870-1900
@anyone. I would like to know what William Jennings Bryan back in 1896 thought about the gold standard. From what I understand he was against Gold (the Cross of Gold Speech)because the Money Powers of the time demonitzed silver. Silver was the money of the people. When silver was demonitzed the people (the southerners and westerners)had no money to trade or to pay their bills. So we had a land of plenty but the people starving. So William Jennings Bryan wasn't really against gold as money but using gold only he was against. Is this a right conclusion?

?-2 Were 20 silver dollars back then equal to a $20.00 goldpiece?

?-3 If the world was to go on a gold standard would not silver have to be included in some kind of ratio to make it work? Since there would not be enough gold for everyone to use? If they were to use gold only this indicates to me that they want to keep the masses as slaves. Comments please. Turkey Hunter

Hi-Hat (10/25/00; 16:10:39MT - usagold.com msg#: 39902)
TownCrier
Thanks a million.

justamereBear (10/25/00; 16:10:03MT - usagold.com msg#: 39901)
Goldfan and Holtzman

Goldfan
Right on. Hear!! Hear!!

Holtzman
And you have the audacity to pile bad puns on bad puns? Loved it
Thankfully your analysis has better moments, although I can't say I agree 100%, but the points are minor.




goldhunter (10/25/00; 16:09:20MT - usagold.com msg#: 39900)
Mr. Oro...Hi...
Could I ask a couple questions please...
Is you data Comex and therefore US dollar specific?
Also, may it be explained that as prices are falling (dollar gold), that more speculators as well as "coin" buyers step up the marketplace as bottompickers?

The shorts may be adding to a winner in a downtrend...the long may be guessing a bottom, one of each resulting in an additional open contract...Does it make any difference to your opinion if volume/open interest is increasing or decreasing?

justamereBear (10/25/00; 16:03:02MT - usagold.com msg#: 39899)
ThaiGold 39844

When you are on your deathbed, drowning in your own fluids with lung cancer, and with the death rattle in your throat, there is no plan that can save you. You should not have started smoking in the first place.

As I told a group of Ayn Rand fetishists, who were bound that they could "save humanity" if they could reverse some of the trends that were going on, and somehow communicate their valid concerns, which any thinking man would agree with, "Forget it. It is already to late. Better to spend your energy mitigating the effects on humanity of the coming crash by getting in a position to rebuild."

Not that I think that there won't be a plethora of draconian measures enacted, and REAL hoary theories, to attempt to turn back the clock.



ORO (10/25/00; 15:50:36MT - usagold.com msg#: 39898)
The matter of price - POG
The POG outside of the dollar is doing very well thank you. Though not doing as well as oil, it is still doing well.

Oil was 14 on the dollar index adjusted price, at its bottom in Jan 99 (as opposed to the bottom in $ prices which ocurred 2 months later in Mar). It then rose rapidly through June 99 to stabilize at about 20 "undollars". From there, it has doubled to reach near 40 in Aug. Since then, it has held in the range 35 to 40.

In gold, The steep downtrend from 1997 culminated with a bottom of 268 "undollars" in Jul 99, and continued rising to Jan 00, where it had stabilized at 320 and where it still holds today, thus reocuping half the loss from 380 in early 1997.

The process of gold price decline involved a printup of gold derivatives during this period that had doubled the amount outstanding from some 10,000 tonnes in 95 to 20,000 tonnes at the end of 1997. The $POG continued down as outstanding derivatives grew to 23000 tonnes (all notionals by the way, based on BIS data and OCC data), after the BOE statement, from there, the price followed expansion of derivatives AFTER each price spike, bringing the end of quarter prices to a steady progression of downward prices and upwards derivatives positions. from $307 at 23000 tonnes, we have a fall to $290 with the addition of another 3000 tonnes of derivatives at Q4 99, and the rise by over 3500 tonnes through end Q1 00, with the $POG dropping to $277, followed by a rise of $POG to $288 in Q2 00 BECAUSE of a BUYBACK or expiration (of unexercised paper) of 2000 tonnes of derivatives.

Over the whole period of available data, the derivatives price correlation gives that an issue of about 130 tonnes of derivative notional value drops the $POG by $1. Over the period of "distress" of the Asian Flu and its aftermath, the proportion was 200 tonnes per $1 price drop - meaning that the public was buying more gold - both paper and physical, therefore making the amount of paper gold needed to drive the price down that much larger. The peak in this ratio was in the secondary bottom of the Asian Crisis in Apr-Sep of 1998, where over 300 to 350 tonnes of paper gold were needed to achieve a drop in gold prices of $1. The period after the WA shows a steady proportion of about 150 tonnes of new paper supply per $1 drop in price, indicating a period of relative complacency on the part of the public.

Though there remains much uncertainty in the numbers, the trend is so very conspicuous that to deny it is not different from calling up down.

So we have the following behaviour:

Meet all gold demand with paper supply at a price sufficiently low for the buyers to take it instead of physical gold.

In order to avoid being caught too short, lower the delivery rate at which you commit to something closer to what you can expect to put your hands on. (see prior post)



justamereBear (10/25/00; 15:48:15MT - usagold.com msg#: 39897)
Jouneyman @ Question of the day

To me it is real simple, and confirms my thoughts re
-why Greenspan is begging for congress to move on derivitives.
-the corpoate bond market is flopping like a "dead fish"
-Financials are starting to get hit
_etc., as laid out in LAMPREY_65's 39747 Oct 23/00

Quite aside from the origional attitude that got the commercial bankers into this, (ie countries can't go broke, the greed of making loans without adequately considering risk, and the moral suasion by government to keep the good old USA great by helping exporters, through financing importers and/or their governments to buy US goods and services) the bankers are inherently pretty stupid. For instance they borrow short and lend long.

So what does the question of the day tell me?

Somebody (in the US) is panicing BIG TIME.

The commercial banks are at least semi aware that these 3rd world loans are never going to be repaid. (historically, no country that ever defaulted on its loans has EVER repaid.) What percentage of the capital on the books of the commercial banks do these third world loans represent? In most cases it represents well in excess of 100% of the "paid up" capital of the commercial banks. Is the commercial banking system in the US bankrupt? For some time I would think.

With the current account deficit, the huge quantity of hot US dollars floating around the world, the increasing price of hydrocarbons, a declining stock market to reverse investment flows, and many of the other things spoken of in this forum, and what do you get? Outflow of capital, and huge pressure on the US dollar, the seeds of a run on the US dollar.

This whole thing is unravelling.

I am beginning to think Clinton wants to lose this election, so his party is not saddled with the historical black eye that the collapse will bring to the party in power. (not to mention his own personal name)

If they can keep this charade going, Nov. 7 is not the date to watch for, it is in the new year when somebody elses name is president. "Oh look how their mismangement screwed up our world in only X days".

Say Febuary or March, 2001.


Aristotle (10/25/00; 15:31:14MT - usagold.com msg#: 39896)
Sir Holtzman, you are a joy to behold -- especially with your "off-hand" Halloween gore, slashing, and burning
Your metaphor was marvelous--
------------
In castle terms, the farms before the gate do have value, but the lord almost always allows the invading army to burn them without resisting overmuch. Why? Because their value is insignificant as compared with the value of maintaining the castle walls. And surprisingly, those few who watch their homes and crops burn at the beginning of the siege are seldom angry at the lord who generously held his gates open just long enough for them to seek his protection. Rather, they become his staunchest allies against the invader.

A nation's domestic paper gold market is, in to-day's terms, one of the many farms before the gate. It may be burned in some future siege, or it may not, but in any event its government will not neglect more vital pursuits to rescue it.

The walls of to-day's castles, and the siege engines rolled up to break them, are both made from fiat currencies.

[....] The UK has every reason to wish to maintain a reasonable balance of trade with Euroland. Lose LBMA (one farm before the gate) and yes there'll be inquests and grief in The City. But lose too many employers to lower cost Euroland and the newly swelled ranks of UK unemployed will make this summer's petrol protests look like a holiday outing.
-------------------------
The only thing I would offer at this time is in regard to your example of placing a basket of Gold and various currencies under the stairs for a period of time with the expectation that the net purchasing power will be maintained. Granted, the overall timeframe is vital as it may or may not include the day of reckoning in the bullion banking realm in which Gold will compensate for all other losses, but with respect to solely the national currencies over any given timeframe, it seems to me that you lightly discount the general trend that fiat currencies are apt to march arm in arm into a future of lower values against real goods. That is to say, over time, isn't it the general trend that prices tend to rise in all countries as denominated in their national currencies?

Again, thanks as always for sharing your comments.

---Aristotle

PS. To MK, I wanted to let you know that I found your market commentary today to be particularly excellent. Thanks for your daily efforts and insights.

R Powell (10/25/00; 15:25:17MT - usagold.com msg#: 39895)
Mr Holtzman and asset allocation

Thanks for an excellent presentation of different investments either gaining or lossing value but maintaining value in total. However I wonder if 100% of investment should be dedicated to only "safe and secure" with the goal of preservation and hopefully a reasonable gain. Can't we take 10%of it, okay 5% of it, to try for the big hit?
Of all the markets available that I have any knowledge about (that eliminates a whole pile of them), the potential upside move in the price of gold is unparalleled. The means for truely spectacular gains with limited initial investment is through futures' options. This is done through the leverage of options. When/if the jackpot is hit, the payoff will be in fiat currency (not gold) as was the initial option cost. Is the buying of time wasting gold options prudent? Not as long term (for retirement type) investments, no. Is it a safe bet? Yes, it is probably more bet than investment but it is safe. The option's value will skyrocket along with the price of gold.
Phycical in hand is always such regardless of the Comex price and is not a time wasting vehicle but when POG doubles, gold in hand doubles in currency value. An at the money option purchased for about $500-800 (depending on time till expiration) will be worth $27,500-27,800 when POG doubles (assuming a doubling from $270-540). Leverage, this is called or as I've read Richard 640 from the G-E forum call it-- the big casino!
Gambling? Of course it is. Blind luck? Not if your research tells you that POG should be higher. A matter of timing? Most assuredly!
I agree 100% with asset allocation but is there not room for say 5% of investable funds for "the paper gold" market?
It sure was fun when the Washington Agreement turned some $200 and $300 options into $4,000 and $5,000 options almost overnight. Maybe that's where this fish swallowed the hook? Maybe, it will happen again!! Soon I believe, but I wished I knew just when.
Regards Rich

goldhunter (10/25/00; 15:15:18MT - usagold.com msg#: 39894)
WET DREAMING...
When one says futures are acting as a "wet blanket" to hold the price down...just does'nt hold water...

As folks know, the futures contract can "make" 100 dollars for each dollar gain in the price of the underlying gold price...exactly the same as 100 oz of physical gold...

So, if you can see that the upside for gold is unlimited, versus the downside being limited to say $250 (cost of production for a few), you can clearly see that the short at this price, is pushing his/her luck...yes they're winning today, but for how much longer?

A down day is an adjustment to the day's world story...today could have been a stronger dollar/weaker euro, or another variable. I have yet to read the price of gold went down because of a wet blanket...you're dreaming.

goldhunter (10/25/00; 14:56:17MT - usagold.com msg#: 39893)
Hello Mr. Aristotle...
You said:"then doesn't it stand to reason that the downtrend in prices is purely a function of the abundance of paper gold supply coupled with disinterested demand for that same paper gold?"

No! You can say on a down day that thedemand was "disinterested"...but what do you say on an up day? Is the demand "interested"? on an up day? You play word games to convince some, or try, and you miss the concept...

Twice a day a group "gets together" and sets the price...after that moment, futures markets world-wide react to fundamentals/technicals such as suppl, demand, US Dollar,wars, inflation rates, etc. Coin dealers may or maynot adjust their prices accordingly...Aristotle, did your pounds and kilos go up today? Doubtful.

The price of both move together based on the above...believe it or not, it does not matter...there is NO magic futures genie taking your money away...there is a marketplace that trades/adjusts concurrent with fundamental events.

People can make up their own minds on what they believe...When both are at 340 or $640, you will see where the truth is...

Look at oil for an example...Crude was 12.50 or so about 18 months ago...Now crude oil is around $33.00 spot/cash or whatever you want to call it...guess where front month futures are? Tell them Aristotle.



wolavka (10/25/00; 14:20:19MT - usagold.com msg#: 39892)
Why gold got hammered
paper pigs in the dollar opened and drove it over the resistance from last 5 days. Until the dollar is dumped gold will suffer.

Aristotle (10/25/00; 14:16:46MT - usagold.com msg#: 39891)
gold hunter -- you are contradicting yourself
In your comments to my good friend, you said--

----"Ah, we're getting someplace...your quote above gives "credit" or is that "blame" to the futures actually setting the price for gold."----

Gold hunter, nobody here has any doubt whatsoever that paper gold sets the price for real Gold at this stage of the game. That was thoroughly discussed and understood long before you made your appearance at this forum. Moving on, clearly you too are demonstrating an acknowledgement of that fact with your comment above, but then you go on to say this in a later post--

----"I'll tell you with a straight face that downtrends in anything are because of either too much supply at a given demand, OR not enough demand at a given price... Almost every ounce of Physical gold ever mined is out there today and you know it...That's the supply Mr Crier and you know it...the fancy dance that this forum does about physical gold never addresses THE Large Physical Supply..."----

Ok, gold hunter, let's put two and two together. If the market of paper gold derivatives (futures) is what sets the price for Gold (as you acknowledge in the first point,) and if the price is a reaction to supply and demand (as you make in the second point,) then doesn't it stand to reason that the downtrend in prices is purely a function of the abundance of paper gold supply coupled with disinterested demand for that same paper gold?

Until the market making elements of this paper-based method of price discovery go bust, the existing quantity of physical Gold and the global demand value of that same Gold will not be truly reflected in the official market "price." Rising premiums on Gold for delivery will likely be the first sign that things are about to snap--if things move that slow, that is.

To be sure you are clear on the greater context here, allow me to offer a repeat of an important element I offered previously---

Long positions in paper gold are not used, as you might like to think, as a "fire insurance policy" among institutions that have a vested interest (due to their financial positions) in maintaining the status quo -- whereby in your expectations such a long derivative position would be acquired and used to compensate them for any adverse changes to the status quo (rising Gold prices and weaker dollars.)

No. It doesn't work that way. Instead, these institutions use the offering (and selling) of paper gold (and its influence on price discovery) as a WET BLANKET to keep Gold from catching fire in the first place.

As history has shown us, such imbalances do not last forever, and it is the ultimate discounting and default of the paper substitutes for Gold that sets the metal free from the paper illusion to seek its proper valuation.

Gold and consistency. Get you some. ---Aristotle

SteveH (10/25/00; 14:01:43MT - usagold.com msg#: 39890)
Repost
www.kitco.com
Date: Wed Oct 25 2000 11:51
permabear (dollar strength) ID#170184:
Copyright © 2000 permabear/Kitco Inc. All rights reserved
The explosive dollar strength we are seeing may be our first
sign of runaway deflation. Alot of nonsense is often
written by folks concerning how Treasury is printing money
hand over fist and how runaway inflation will soon develop
in the United States. Actually, the dollar is a managed debt
currency and must be borrowed into existence for it to
circulate. The natural tendancy for dollars to "disappear"
as debts are paid down is usually opposed by continuous
expansion of the money base through deficit spending and fresh
credit expansion via the private sector. The monetary structure
can figuratively be depicted as an inverted pyramid according
to Exner.

The top of the inverted pyramid has to be huge at this point in
the credit cycle. The surge in dollar strength at this point
in the credit cycle most likely means that not enough fresh
borrowings or monetary expansion is occurring to keep the
inverted pyramid from collapsing. It has the smell of
runaway deflation. If this develops it will be EXTREMELY DIFFICULT
to reverse. As absurd as this sounds--it may be simply paper
money that really takes on value from this point forward.


ORO (10/25/00; 13:51:59MT - usagold.com msg#: 39889)
goldhunter - TC and Nickel - pricing debate
The point of par.

The futures and optiuons market, particularly the OTC markets, have a price discovery function as more promises of title to gold are traded there than in the physical arena, where title to gold is traded.

The promise of gold is not gold, and as many promises can be printed up as one wants, so long as the portion asking for delivery on these promises is too small to make a difference.

In turn, the buyers of paper gold are assured of delivery so long as they receive their gold smoothly when delivery is requested. So long as this happens, gold is delivered against contracts at a 1:1 ratio to the nominal amount on the paper. This is a trade at par. The relative size of gold paper outstanding delivery to gold requests can expand so long as delivery at par can be maintained.

Breaking par.

When delivery demands against paper overwhelm the current stock and producer supply, then some will not obtain delivery on the contracted date, or will be asked to delay their delivery requests. When this happens, there is a loss of confidence and all jump to the delivery window to claim their gold for delivery. This is a future event.

Before breaking par.

Market participants will understand the potential predicament of delivery on an overwhelmingly large overhang of paper gold commitments. It would be expected that the delivery commitments be restructured to whatever extent possible so as to minimize the amount needed for delivery in each period in time.

In order to find out if the market is under duress and is trying to lower its annual gold debt payments, I ran a calculation that takes into consideration the overall outstanding commitments taken from all available sources Howe has found, and a couple he has not reported yet, and interpolated between the figures for dates where no information is available from some sources. I looked at this in terms of annualized commitment by dividing by the average maturity to obtain the average annualized gold volume that comes due. Since some of these obligations are within the banking system itself, I assumed that if netting is used (the practice of counterparties trading commitments so as to minimize the amounts that have to be transferred among them at maturity) it would be used to the same extent as in the rest of the derivatives arena.

Here are the results, please ignore the many digits and round the numbers to (barely) 2 significant digits:



Date......POG end......Annualized......Annualized netted
…………......of quarter…. .commitment …...commitment

6/30/00......288.15...... 3,704 ........ 1,288.94
3/31/00......276.75...... 4,594 ........ 1,809.90
12/31/99.....290.25...... 3,826 ........ 1,469.16
9/30/99......307.00...... 4,256 ........ 1,557.84
6/30/99......261.00...... 4,019 ........ 1,458.80
3/31/99......279.45...... 3,056 ........ 1,148.98
12/31/98.....287.45...... 3,106 ........ 1,155.37
9/30/98......293.85...... 3,443 ........ 1,363.24
6/30/98......296.30...... 3,107 ........ 1,373.44
3/31/98......301.00...... 3,514 ........ 1,697.28
12/31/97.....289.20...... 4,031 ........ 2,015.41
9/30/97......332.10...... 3,853 ........ 1,911.15
6/30/97......334.55...... 2,968 ........ 1,454.42
3/31/97......348.15...... 2,964 ........ 1,407.90
12/31/96.....369.55...... 3,238 ........ 1,589.88
9/30/96......379.00...... 3,915 ........ 2,090.40
6/30/96......382.00...... 2,929 ........ 1,631.22
3/31/96......396.35...... 2,901 ........ 1,534.80
12/31/95.....386.70...... 2,807 ........ 1,566.94
9/30/95......384.00...... 2,275 ........ 1,297.31
6/30/95......387.05...... 1,747 ........ 1,017.13
3/31/95......392.00...... 1,556 ........ 924.29

The raw commitment moves from about 1500 tonnes per year in 95 to a plateau of 3000 tonnes per year in 1996-mid 97, to a peak of 4000 tonnes per year during the Asian crissis, when leverage was at its highest among the hedge funds and the bank trading desks (investment and commercial). From there, we drop to the 3000 tonne level in early 99, from which point there is growth to record levels before the Washington agreement and after the Placer announcement, both of which brought about rallies in the POG.

When netting practices in other derivative markets are applied to the gold derivative markets, the possible netted commitments are provided in this data. From 95 there is steady growth till late 96, from 1000 tonnes to 2000 tonnes. From that point, there is a dip during the period prior to the Asian crissis breaking out to 1500 tonnes per year, and a return to the peak commitment levels of 2000 tonnes per year at the end of 97, when panic in the Asian markets was at its peak. From there, annual netted commitments fell to 1000 by the end of 98, as the realization must have set in that the gold market was over extended, from which the amount climbed up towards the second gold price peak in the first quarter of this year, which seemed to require a greater number of delivery obligations in order to get it under control. The commitments have fallen steeply since, to about 1200 tonnes per year in the second quarter.

I believe the most revealing figure is the netted estimate, as it shows that paper gold supply is approaching the point of all committed ammounts being put to delivery demands, as reported by the WGC supply demand deficit figures, now at some 600-700 tonnes including scrap (which is not new production). I believe WGC and George Millings Stanley are underestimating demand for physical by a substantial margin, because not all gold movements are recorded in their appropriate slots, and much of the gray market is completely ignored, though it is not very difficult to gain some idea of its scope of activity and direction, a similar problem is inherent in ignoring movements in bank-client-user gold positions.










Aristotle (10/25/00; 13:34:06MT - usagold.com msg#: 39888)
Same old song and dance -- An inferior product shows itself to all willing to see
On today's drop in Gold prices: I've said it before, and I'll say it again. One form of paper Gold, the COMEX Gold futures contracts, are being sold down the river as necessary.

This comes as no surprise whatsoever. It's been explained here at the forum in full, so those of you reading along who aren't blinded by the trader mentality can take comfort in your understanding of why events are unfolding this way. It simply stresses the underlying real market and ushers in the day when physical Gold will not be priced as a "derivative" of the paper gold markets.

If you don't have the metal, you can't participate in the all-important breakaway price/value adjustment. Somebody else will be cashing this fat reality check.

Gold. Get you some. ---Aristotle

goldfan (10/25/00; 13:29:23MT - usagold.com msg#: 39887)
goldhunter 39867 to Nickle62
goldhunter for give me for this, but I am pondering Au and other market forces these days.. oOu said

<<Some (minor amounts) of futures may indeed hit the spot markets, but probably not enough for folks at this forum to tell us that futures/paper gold is THE reason for the downtrend.>>

My understanding is that ALL futures are sold in the spot markets. So whatever they sell at, is the current price of gold, plus or minus whatever premium the gamblers are willing to pay, or not. Since futures contracts sell at the rate of maybe 1000 tonnes per day, while the pure physical only sells at some 10 tonnes per day, what is the POG pricing? Surely, whatever the physical is actully selling for, the POG is going to be the number the gamblers are interested in, the number reflecting the price that 1000 tonnes per day of paper gold is being denominated at. Only stands to reason, nobody is going to do any particular research to find out what physcial is selling at, when it is ony 1% of the market. So, physical sellers have only one way to check the validity of what it is they're being offered, to look at the paper POG, and that can be influenced downward by anyone who has a printing press, and no care whether he loses money or not.

FWIW

Goldfan

Journeyman (10/25/00; 13:24:03MT - usagold.com msg#: 39886)
Good!! @goldfan msg#: 39884


Good post goldfan!

Regards,
Journeyman


jinx44 (10/25/00; 13:22:36MT - usagold.com msg#: 39885)
Christopher and ThaiGold
TG--I read your letter with interest. You have spent a lot of time thinking about your points and it was a good read. Like Christopher, my problem with your letter is with the manipulation of PM's under the new currency standard. If you suspend the free market mechanism by outlawing gold, what is the difference in what we have now?? I say, outlawing gold because with your suggestions of outlawing the holding of more than 100oz., outlawing selling bullion to anyone but the USG, and a tax on any physical held by people, you have outlawed gold and what it stands for. I would rather stay with what we have now and let it implode the economy. I will have the protection of PM's to offset the rape of my wealth by the fascists of the govt/corporate cabal. More control of anything by anyone is anathema to people who seek liberty.

goldfan (10/25/00; 13:02:46MT - usagold.com msg#: 39884)
Goldhunter and Nickel62 re Spot POG and futures
I think that all futures contracts, are sold and bought in the spot market, which is the current (today's) market. So today, I have the choice of buying some physical gold, which is priced somehow off the POG published by LBMA or Comex or whoever, at something like 270 $ per oz. plus whatever premium I have to pay for whatever market and amount I am buying . Or I can buy a futures contact or an option on such at much less cost than this, but which is only a bet, sealed by a contract which is only as good as the counterpartie's word. My bet being that the contract will be worth more at the date it expires than what I paid for it. This worth is predicated on the notion that the contract really is for physical, if I want that, and not just a piece of paper like a gambling token with no money in the cashiers till to pay me off, if I want to leave the joint. It is also predicated on the notion that the market for this bet will still be there, will still have "liquidity" on the day I want to cash it in.

Consider some gold certs bought on margin. At the time of purchase, the premium paid was $10 over spot, because the market was thoght to be rising by the bank that sold them, and guarantees they can be redeemed for physical. Now there is a fast down market. POG is dropping, you are severly underwater and want to bail out. The broker doesn't take your calls, too busy, the whole market is crashing. You get a margin call after trading hours. You get sold out, at any lowball price the bank offers. Totally at their mercy.

If this were indeed a gambling casino, then it would be one where the gamblers very seldom ask to cash in their chips. Secondly, the chips outstanding vastly exceed the capacity of the cashier to redeem them, if more than say 1% or so wanted to cash them in.

How could such a casino be kept going? Only if the game had become such, that the chips were being used to trade for stuff needed for life outside the casino. So that few cared any more to actually cash them at the cashiers window in the casino. Chips are a lot easier to handle, quicker to put in play, easier to borrow and lend, and trade, than the real stuff.

However, maybe there will be a run on the casino bank, when the players become aware that chips are being manufactured and put into play in ever increasing quantities by the casino owners, who are doing this because they must supply "liquidity" to their dealers who are so inept at the game, they constantly lose.

In addition, the owners have a bias towards allowing the patrons to win, so as to keep them in the game, avoid a run on the bank, and keep their own chip salaries and rewards at high levels which they are using to buy up lots of hard assets, outside the casino. The owners of those hard assets are stupidly willing to sell their assets for chips, because they too are part of the game, and have long lost sight of the goods they ought to be demanding in return for their own real goods.

Analogy FWIW

Goldfan

CoBra(too) (10/25/00; 12:41:38MT - usagold.com msg#: 39883)
Nortel, Nokia and MA Bell - show the way -
- to investment hell - Canada's premier TSE index tanking 10% in an hour (Not even the Bre-X fraud - blamed to the western cowboy X-Changes, came close to this kind of meltdown affecting a nations premier capital market - blame it to index funds ... and it still needs the explanation, why BRX was included without standard scrutiny of the regulators), - the too big to ignore, or more to fail has arrived ... a prelude of what's to be expected, by the unsuspecting ... Go(l)d help America - there may be no gold left to shore up credibility tomorrow - when tomorrow comes
and Greenspin exchanges Summers for Winters - as meltdowns usually occur in warmer climates, this may be saving a day or two - feels cb2
.

Journeyman (10/25/00; 12:25:14MT - usagold.com msg#: 39882)
Details @ORO (&R Powell)

Hi ORO!

From my perspective, you and R Powell nailed THE QUESTION OF THE DAY. Of course.

But how exactly does this "debt relief" work. Does the U.S. government hold IOUs from all these governments? -- I ASS-U-ME that this is all govt. to gvt. debt?

Or does this also DIRECTLY involve debt to banks and other quasi NGOs, etc.? (We all know banks, etc. are the INDIRECT beneficiaries. Since money is thoroughly fungible, the money "forgiven" is now available for payments to other creditors.)

How do governments make sure the money gets to the "other creditors" they want to get it? How do they divide up the spoils amongst the banks, since this is a coordinated effort among several governments, including Britain, Germany, etc.?

High regards,
Journeyman


Canuck (10/25/00; 12:16:57MT - usagold.com msg#: 39881)
Wow!
Just checked for the first time today, Canadian bloodbath.

NT and JDU taking a beating and the PPT beating up gold just to make it look like gold is not a retreat.

FN and G.A up and my contrarian play ENB up.(6/7%)

To be contrarian requires thinking contrarian; what scam is next?

Hey, if you are outrunning me (from the bear) I will surely trip you!!

Holtzman (10/25/00; 12:07:49MT - usagold.com msg#: 39880)
I don't trust paper gold either, Trail Guide
Holtzman here,

--------------
Asset Allocation
--------------

To Trail Guide regarding (10/23/00; 19:26:57MT - usagold.com msg#: 39745), oh dear, I'm afraid my earlier (10/10/2000; 12:02:06MT - usagold.com msg#: 38687) post gave you nearly the reverse of the impression I was trying to convey.

You and I are in perfect agreement that paper gold vehicles (whether options, futures, derivatives, or even deposit chits) are best run away from. Those who reach into a lion's mouth to snatch at quick profit all too often discover that the potential reward was simply not worth the wrist (I know it's a bad pun, but I can't help making off-hand remarks).

Physical gold is several orders of magnitude safer than paper gold in my opinion. But then again, fiat currencies deposited in traditional bank accounts are also vastly safer than paper gold. What I'm less certain of is, of course, whether physical gold is any safer than a fiat currency. Certainly it will prove safer than most fiat currencies, but will it come out on top during our lifetimes?

Let me put this into simple numbers: go out to-day and acquire one gold Sovereign and £51 and e88 and $74. Now tuck them away under the stairs and come back in 2007. Which of the four will be the most valuable then? I have no earthly idea. I mean, it's a pretty strong bet that at least one of them will have tanked against everything else, but will it be the euro maintaining its decline into obscurity, or will it be the dollar crashing from on high, or will it be the pound remaining independent and therefore unwanted, or will it be gold succumbing to one of the various precious metal bogey-men such as central bank divestiture? From where I sit to-day, I read the odds at about even for any of those possibilities.

But, what I can say with a phenomenal amount of confidence is that the sum purchasing power of that unattended little basket of four assets will, come 2007, not have slipped tremendously from its value to-day. Indeed, if the fiat banknotes were instead kept in traditional bank accounts earning interest from now until 2007, I would sleep like a babe in perfect confidence the basket of four would maintain most of its purchasing value. Realise that I am confident of this even allowing for the total collapse of any one of the four, because the growth in purchasing power of the other three is highly likely to rise in at least partial compensation.

Now expand that little basket by adding £51 or maybe £102 of some stock fund which owns thousands of stocks around the world, including gold mining stocks as one of its many industry representations. The odds of this larger basket's combined purchasing power being less in 2007 than it is to-day is incredibly tiny because, in order for the sum to fall, it requires that the entire world convulse in all significant industries and in all significant economies all at once. And even if that sort of systemic shock does occur, there's always the Sovereign, which in such an eventuality would almost certainly rise in purchasing power.

That's asset allocation. It's not gambling. It's putting your hard-earned wealth in places where their combined total purchasing power will at least survive and hopefully thrive over long periods of time, pretty much regardless of what the future chooses to hurl at you.

--------------
Capital Siege
--------------

So why not include paper gold in that basket of allocated assets?

Well, first off, because it's a form of gambling (or at best a form of insurance), not a form of savings nor even a growth investment. But second off, because paper gold will be among the first things to go in any sort of debacle. Indeed, events are already headed that way.

Market commentators love to rattle on about the distinction between Wall Street and High Street, and it's a distinction well taken. Paper gold is a creature of The City and of Wall Street. The average patron of a book shop or cafe is no more likely to pay for his purchase with paper gold than he is with a futures contract for coffee. Both sorts of instruments are highly esoteric and are never intended for high street shops or high street consumers. But domestic banknotes (fiat currencies) most assuredly are intended for everyday consumer transactions.

Governments exist to maintain order. To achieve that, governments are quite willing to allow the few to suffer so that the many will carry on contentedly. If ever a government is presented with the choice between preserving either domestic paper gold or domestic fiat currency but not both, there shall be no choice at all. Millions of registered voters must at all costs be kept content. Indeed, the comparatively few who suffer in the forsaken market will be portrayed by the government as having gotten their just desserts. They'll be described as get-rich-quick gluttons for whom the hard-working citizenry need devote no sympathy. This is classic Machiavelli, and it will work next time as it has worked countless times in the past.

The first step in avoiding a trap is knowing of its existence. The next step is simply Not to step in it. Rather, you'll fare best if you identify the vested interests of the powers above you, then take up positions in those areas which they are likely to defend at all costs in times of crisis. Back in the bad old days of feudalism, those peasants who settled themselves nearest the castle gates tended to fare better than those who had longer to run ahead of an approaching army. Those massive stone walls were put there to shelter the person and property of the lord, but they granted the same shelter to any peasant who had the foresight to position himself well.

To-day the walls are not so obvious, but the vested interests of the mighty are still able to be identified and turned to one's own advantage.

Paper gold is as risky as a casino wager under normal market conditions. During periods of severe market stress, however, its riskiness approaches the infinite because that's not where serious vested interests lie. One look at the Bank of England's gold sales will tell you that they regard gold (both paper and physical) as a minor (and expendable) part of the equation. Vastly more important to the BoE is maintaining a favourable pound/euro exchange rate.

In castle terms, the farms before the gate do have value, but the lord almost always allows the invading army to burn them without resisting overmuch. Why? Because their value is insignificant as compared with the value of maintaining the castle walls. And surprisingly, those few who watch their homes and crops burn at the beginning of the siege are seldom angry at the lord who generously held his gates open just long enough for them to seek his protection. Rather, they become his staunchest allies against the invader.

A nation's domestic paper gold market is, in to-day's terms, one of the many farms before the gate. It may be burned in some future siege, or it may not, but in any event its government will not neglect more vital pursuits to rescue it.

The walls of to-day's castles, and the siege engines rolled up to break them, are both made from fiat currencies.

From any one government's point of view vis-‡-vis another government, the walls are being held whilst there is trade balance, or at least favourable trade imbalance, from one side of the wall to the other. One of the most visible indicators of success or failure in this pursuit is the exchange rate between the two fiat currencies. Another indicator is the gross volume of trade. The true measure is, of course, the balance (or imbalance) in that trade.

For example, it is to Iraq's advantage to avoid direct exchanges between its fiat currency and the U.S. dollar because the U.S. wishes there to be an extreme imbalance in the U.S.'s favour. Iraq finds itself in the position of the computer in that 1970s U.S. film "War Games": the only way to win the game is not to play. Iraq may not be admired in Euroland, but it isn't quite so feverishly hated there either.

Realise, though, that this siege mentality affects allies as well as mortal enemies. The UK has every reason to wish to maintain a reasonable balance of trade with Euroland. Lose LBMA (one farm before the gate) and yes there'll be inquests and grief in The City. But lose too many employers to lower cost Euroland and the newly swelled ranks of UK unemployed will make this summer's petrol protests look like a holiday outing.

UK decisionmakers realised long ago that the pound/euro exchange rate was vastly more crucial to national health than was the pound/dollar exchange rate. They've spent the time since then doing anything they could think of to keep the pound from following the dollar rather than following the euro. You may rest assured that, when the BoE began its gold sales, it expended not the least bit of worry over what might befall the dollar/gold exchange rate.

Indeed, selling gold was one of the comparatively few "subtle" options the BoE had available to devalue the pound against the dollar. That's why one pound to-day buys only about $1.45 whilst a year ago the figure was closer to $1.65. I say "subtle" there because at all costs it should not be made blatant that the BoE was trying to devalue its own domestic currency versus the dollar. By making it appear in public that some stuffy bureaucrat was stupidly throwing away what he described as a barbaric relic, the true thrust of his gambit went largely unnoticed.

Notice, by the way, that whilst you in the U.S. have been agonising over a dollar POG languishing in a tight trading range for over a year now, the pound POG has actually been in a comfortable up-trend, from slightly below £160 to its present £186. Of course, I'd still have been better off if, last year, I'd purchased a double portion of dollars rather than dollars and physical gold. However, who's to say the coming twelve months won't more than reverse that trend? Again, we come back to asset allocation: spread it out wisely, rebalance it every year or so, but otherwise leave it where it is because a sure way to lose money is to thrash back and forth.

The key question in all of this is, "What will keep most of the population from rioting?" Find out how the powers above you are currently answering that question, and you'll have a much better notion of where to place yourself so you don't get burned.

Yours,
I.V. Holtzman

SteveH (10/25/00; 12:03:01MT - usagold.com msg#: 39879)
Observation
PPT
Today we may be witnessing what the PPT may not be able to do for the markets: the Canadian TSE is down over 800 points. This is significant as it gives a direct and public contrast between a market in which intervention by a PPT is prevalent (allegedly) and one that is next door that a PPT is either not working or is non existant. I can't help but think that this will have a "rub-off" effect and open a few eyes as to the seriousness of the "bubble" and the odd behavior of our markets.

beesting (10/25/00; 12:00:38MT - usagold.com msg#: 39878)
Sir Journeyman.....Debt Relief!
Funny you should ask that question, my wife and I were just involved in a long discussion concerning debt in third world countries.
Your post:
<<QUESTION OF THE DAY: What's the REAL motivation behind this "debt relief" agreement -->>

Discussion:
The poorest of the un-developed nations have "NO" way to generate any excess income, most live off the land in what is called subsistence farming, similar to what all of our ancestors did at one time.
If money is lent to them, generalizing,most don't understand the difference between a gift and a loan,I'm speaking about the subsistence farmers.
So, what has happened, IMHO is; better educated Government bureaucrats in third world countries negotiated international loans,from the IMF/World Bank to improve local infrastructure(roads, sewerage, etc.) and at the same time figured a way to tax these same subsistence farmers into paying off these loans in U.S. dollars..... As U.S. dollars become progressively more expensive in local currencies(because of fluctuating exchange rates) the local subsistence farmers cannot and will not pay any more taxes, which in turn are used to pay off existing loans.

This in turn leads to debt restructuring, so countries don't default on IMF/World bank loans, causing a snowball affect on the whole dollar system.

Who benifits the most from a strong U.S. dollar?
Answer: The IMF/World bank!!!
Who benifits the most from a weak POG.
Answer: Again the IMF/World bank.
FWIW......beesting.


ORO (10/25/00; 11:50:58MT - usagold.com msg#: 39877)
Dave C - vote Libertarian - bug your congressman
Vote Libertarian in all your elections where such a candidate is available.

Why not run for office on a Lib ticket yourself?

Where a non Lib is elected keep tabs on him and bug him like a swarm of gnats. Arrange as many "recruitment" and organizational neighbourhood meetings to find the like minded and to coordinate attempts to pressure politicos to take Lib positions.

We don't need to be a majority and we don't need money. We need a loud voice.





ORO (10/25/00; 11:45:27MT - usagold.com msg#: 39876)
Change of title of prior post
Journeyman:
Debt Relief = Maintenance of debt service burden



DaveC (10/25/00; 11:44:52MT - usagold.com msg#: 39875)
ORO (10/25/00; 11:21:58MT - usagold.com msg#: 39872)
ORO, spoken like a true libertarian.

Now, how do we make it happen?



ORO (10/25/00; 11:42:39MT - usagold.com msg#: 39874)
Journeyman - debt relief
The main point is that SOME debt remain to provide demand for dollars. Allocations of funds to the IMF and World Bank are no longer politically acceptable, so that any "debt relief" must be provided directly. The indebted poor nations would otherwise default, thus eliminating their debt loads forever. After repudiation of this dollar debt, terms of trade would go from provision of credit for purchase and sale to cash and carry. Exports to these nations would stop until they had enough dollars on hand to purchase imports (our exports, among others) and they would no longer be able to provide dollar credit to the clients of their exporters. Thus our imports would have to be purchased with cash rather than credit. As some of these nations export crude goods (including gold) the temporary elimination of their supply to market because of financial terms of trade would cause rather disproportionate price movements.

The considerations in this move are as follows:

1. Some debt would remain, with no dispute as to how much is owed to whom, vs. the alternative: no dollar debt remaining with prolonged dispute as to who may attempt recovery, how much, and how.

2. Avoid damage to some US exporters who would not only be suffering currency conversion problems, but would be completely shut out of the markets for anywhere from 3 mo. to a full year.

3. Prevent a price hiccup from which there is likely no future recovery as a result of disruption of supply during the move from trade credit to cash and carry, some 3 months in initial adjustment, and 6-12 months till supply is back to normal.


R Powell (10/25/00; 11:22:26MT - usagold.com msg#: 39873)
Currency exchanges

Dollar index is 118.44. The yen is also up but barely and the rest of the world, well...
Euro is 0.8282.
I think we're approaching maxim warp and the dilithium crystalls can't sustain this uptrend forever. The trade deficit has been about $30 billion per month but if the dollar keeps climbing, I don't see how any nation will be buying anything from us. All the grains, cotton and things like orange concentrate along with high tech manufactured goods are going to suffer unless the expensive American product can only be obtained here. Unfortunately, this isn't the case for American farmers.

ORO (10/25/00; 11:21:58MT - usagold.com msg#: 39872)
Inflate and make gold a legal tender
The general concept, with some detail was given before in a post some many months back.

The trimmed down version is:

Continue inflating as you are - as necessary to keep the banks from insolvency as their borrowers are keeling over. This is so as to keep the settlement systems essential to trade functionality.

As part of this inflation, make gold and the other precious metals legal tender for disposal of debt at market value. This would produce the necessary amount of cash needed to pay down dollar debt without needing to create dollars into existence through loans in order to pay down prior debt.

Once stability has been restored in the banking system and the credit markets, close the Fed. With a commodity money to supply the credit markets, there is no need to have a "lender of last resort". At this point, FDIC and the government authority to bail out banks should be eliminated so that no "Emergency Orders" are possible to save any banks at taxpayer expense.

Bank regulatory functions should be streamlined so as to avoid having all banks reading from the same playbook. Meaning that no minimum reserve requirements, capital adequacy ratios or credit quality regulations are needed. In fact, they are counterproductive since they do not allow banks to compete in these critical areas of importance to bank depositors. Because of the regulatory discipline, the banks can not effectively separate into conservative and aggressive strategies and compete on safety as well as rates of return and service/fees. One size never fits all. Regulations force this "one size" strategy on all banks. In today's strong information availability, the banks can be effectively regulated by the marketplace.

Taxation policy should stop attempting "targeting" since it is a market deforming process which assumes that government can successfully replace the markets in judgeing how to satisfy the various needs and wants of people. Governemnt should focus on its need for income rather than attempt to use its revenue raising function for the purpose of "rewarding" and "punishing" particular activities. First, end the double taxation of corporate income so that earnings are taxed only once and at the same rate as personal income. Eliminate the differential tax treatment of capital gains and dividend income as well as interest income.

The Federal government may assist state and local governments in their income as it does now, however, it must not attach any conditions as to how the funds are to be used, for what purpose, or under who's discretion. Any attempt to do otherwise would end up stealing control of the state governments from the state's people - whos main tool of control is their ability to vote out those who take tax policy in unpopular directions or those who target spending towards unwanted goals.

Finally, adjust the tax burden on income with the tax burden on property (both real and financial) and sales so that both are taxed at the same level of eonomic significance. This would require coordination of tax policy with school district and municipal level government.







R Powell (10/25/00; 11:05:14MT - usagold.com msg#: 39871)
Journeyman's question

Maybe debt relief is necessary in order for the game to continue. If one player holds all the money at the table, then that player must lend some to the other players or the game is over.
Or perhaps some debt relief lowers the outstanding balance and the monthly interest payments to a level that can be paid. Some payment (even if less than what is due) is better than no payment.
In my younger days, when the little woman a I were newly married, I sometimes paid part of many bills with a note that I would pay in full as soon as I was able rather than not pay at all. It worked, no one tried to foreclose and the power company never shut off the electricity. Those were the days, my friends. We were too poor to be unhappy!
Still not rich, but we manage to pay the bills.
Dow, Duck and S+P all down right now.

Journeyman (10/25/00; 10:50:22MT - usagold.com msg#: 39870)
A little help?? @ Town Crier

Hi T.C.!

A "good while ago" you did a post explaining how futures figured into the price of gold -- or something closely related. Possibly how the spot price of gold was calculated. At least I think that was you. (Else, "Duh!")

Could you direct me to that post -- I stupidly, apparently, didn't archive it -- or incompetently just can't find it.

Thanx for any help you care to give,
Journeyman


goldhunter (10/25/00; 10:05:09MT - usagold.com msg#: 39869)
Correction...
Should say "does'nt" in the phrase ...not " does "

wolavka (10/25/00; 10:04:52MT - usagold.com msg#: 39868)
here's your sign
got mine , will work for food. so now we can go up!!!!!!

goldhunter (10/25/00; 10:00:07MT - usagold.com msg#: 39867)
NICKEL62
Quote "You make a destinction that it is not futures that are doing it. Do you mean that the total supply that is being sold is not being effected by derivatives of gold being sold into the spot market?"

Some short futures contracts result in delivery, but it does seem to be or have to be a result of a futures transaction...Does this help?: A futures holder long, hopes to profit from an expected increase in the price of gold diring the term. At the end of the contract, the long can pay up at the contracted price and receive physical from the "short" or liquidate and repurchase another contract to benefit if the price rallies.

It has been the general practice that a minor number of the total open interest, or number of contracts actually result in delivery...certainly less than 25 tonnes every other month by the Bank of England, or a tonne-a-day from the Swiss...so in reply to your question above, Some (minor amounts) of futures may indeed hit the spot markets, but probably not enough for folks at this forum to tell us that futures/paper gold is THE reason for the downtrend.

Journeyman (10/25/00; 09:56:40MT - usagold.com msg#: 39866)
QUESTION OF THE DAY @ALL

Sandwiched in the middle of a politically motivated press conference on the dead-locked U.S. Budget situation, Bill Clinton announced an agreement to extend "debt relief" to poor countries.

Apparently both Democans and Replubicrats agreed. So --
QUESTION OF THE DAY: What's the REAL motivation behind this "debt relief" agreement -- which everyone signed on to -- right in the middle of otherwise dead-locked budget negotiations?

Regards,
Journeyman



nickel62 (10/25/00; 09:14:39MT - usagold.com msg#: 39865)
goldhunter thank you for your response.
If I understand you correctly? You think that the down trend in the spot gold price has been primarily due to the pressure of physical gold holders world wide, public and private voting with their feet and selling more physical gold than the demand in the market and thus forcing the price lower. You also say that the forward sales of the gold producers have added pressure to the downward price movement , but you expect that to stop at these levels. Is this correct? You make a destinction that it is not futures that are doing it. Do you mean that the total supply that is being sold is not being effected by derivatives of gold being sold into the spot market? Thanks for your responses.

CoBra(too) (10/25/00; 07:56:58MT - usagold.com msg#: 39864)
@ tg re- House OKs Bill To Reduce Bank Risk
Hello, tg, got an e-mail this morning from Bill Buckler, who predicted this rapid request from Greenspan/Summers to pass this Bill in favor of Banks and Brokers, which may become insolvent due to derivative problems of their counterparies.
There must be huge problems looming in derivative land to account for such action. What do AG/Summers know, the markets don't, at least not yet?
"We believe that this is an opportunity for government to take an important, tangible step to mitigate systemic risk and improve the integrity of our financial system", Summers
and Greenspan urged .... very opportune, if not opportunistic - says I -cb2

Golden Truth (10/25/00; 07:55:23MT - usagold.com msg#: 39863)
T.S.E DOWN OVER 900 POINTS Ha-Ha-Ha :-)))
The Idiots say there is no place to hide??? How Goddam stupid are people nowadays???
This proves it's a herd mentality, soon the herd will turn.
If they are not slaughtered first,welcome to the slaughterhouse people.

Canadian dollar also opened 4/10's of a cent lower now under 66cents. GOT GOLD SUCKERS?????

wolavka (10/25/00; 07:19:28MT - usagold.com msg#: 39862)
Sharefin
watch it after the sharemarkets trade, you had bottom fishers, the floor know it,

Christopher (10/25/00; 07:09:29MT - usagold.com msg#: 39861)
Thai_Gold
Mr Thai,

I read your proposal to the president-elect with interest in the first few paragraphs, but the bottom of my stomach fell out when I read the last bit. I have a problem (being a strict constitutionalist) with the government arbitrarily setting the price of anything, be it gravel or Gold.

Your plan, if it was enacted, would result in, rather than a "war on drugs," a war on Gold. Gold manipulation by any other means is still Manipulation.

However, you have given us a starting point from which to consider this question, maybe from a new angle.

HOw would I do it? I don't know. I think, though that there is no easy way, people would lose much. The game has gone on too long to prevent this.

Christopher

Sharefin (10/25/00; 07:05:28MT - usagold.com msg#: 39860)
wolavka
Methinks gold will spike much lower.
This should/could be the GSD.......




Sharefin (10/25/00; 07:02:20MT - usagold.com msg#: 39859)
Global Sharemarket Sentiment
http://www.sharelynx.net/Markets/Charts/GlobalSentiment.htm
RossL
Likewise the data inputs for the fiat side of the equation come from this set of charts and their inputs.

With these two sets of charts I've attempted to view the markets (gold & fiat) from a global perspective.

Though the Dow/Gold ratio has topped & stalled these last two years.
My Fiat/Gold Sentiment charts show the ratio as still rising.

One fault with my gold sentiment index is that most of the inputs are measured from stocks & their indexes (fiat)

In the chart set you first posted (fiat/gold sentiment ratio) it's interesting to note the two spikes in the ratio that occurred - one in 1998 & the next one in 1999.

Time for the next spike.
And it should prove to be the reversal for the fiat/gold ratio.
(Unless gold stocks plunge ever lower)



goldhunter (10/25/00; 06:57:01MT - usagold.com msg#: 39858)
NICKLE62...
My opinion is that the confidence in holding gold long, has been "tarnished". The evidence shows breakouts have been sold into, and banks, goldholders, and futures holders have not helped the bull advocates when they sell.

The perception will change at some point...commercials (smart money?) seem to be covering shorts/adding longs for the past few months, and Mr. Kosares is doing his job in promoting gold to us all (newsletter, website and more?).

I also feel that hedging by mines is foolish at these prices, and, actually, hedges should be bought back soon. They may be waiting for the uptrend to start.
Trends do change. And when the uptrend starts, the futures folks are going to add "gasoline to the fire". They did it in oil, and they will do it in gold.

The lower lows and highs of a downtrend are either supply or demand specific. The higher lows and highs of an uptrend are too. For the past years, supply and demand has been losing to the bears...
Pick your own causes, but it's not futures.

Sharefin (10/25/00; 06:55:13MT - usagold.com msg#: 39857)
Global Gold Sentiment
http://www.sharelynx.net/Markets/Charts/GoldSentiment.htm
The chart you mentioned has it's gold inputs derived from here.
You can see all the inputs and what they represent.


wolavka (10/25/00; 06:42:17MT - usagold.com msg#: 39856)
spike is over
now watch it go up

nickel62 (10/25/00; 06:15:29MT - usagold.com msg#: 39855)
goldhunter what exactly is your point?
Is it that there is more supply than demand because the central banks of the world have mobilized their supplies through either direct sales or "leasing" that results in sales into the market? IF so the point is well taken. Or are you saying that the store of wealth value of gold has been brought into question by the realization that if the central banks don't hold 31,000 tonnes of it then the value of it in the future will be so low that no one will have had his wealth protected by his investment but rather signigicantly diminished. The gold holding public having come to this conclusion have decided to sell and liquidate their holdings? Please be specific about what you think has allowed the demand to be swamped.

Canuck (10/25/00; 05:44:14MT - usagold.com msg#: 39854)
@ Stranger
Great post buddy! Remember Abby Cohen's earthshattering statement last year advising to lower equity holdings from 70% to 65%, now there's stellar advice.

My favorite north of the border is Sherry Cooper. Hard nosed bull all the way. Another that will go down with the ship.

Watch NT today, analysts were all bent out of shape over NT's 'mixed bag' earnings report. I am pretty sure I heard one guy say NT was down 21% in after hours activity. TSE might get murdered today and because NT is the 'gorilla' up here most funds to be beaten as well. But who knows, these guys may work it the other way; we shall see in a couple hours.

Have a nice day.

Canuck.

goldhunter (10/25/00; 05:43:56MT - usagold.com msg#: 39853)
Mr Crier again/again
"The World Gold Council has reported continuing demand for gold at record and near-record levels on a global basis, and further, that annual demand outpaces annual supply of new production and "scrap" by a significantly wide margin. It appears to me that many people are indeed seeing the light...the yellow light reflecting from the metal in their possession."

I'll tell you with a straight face that downtrends in anything are because of either too much supply at a given demand, OR not enough demand at a given price...

Almost every ounce of Physical gold ever mined is out there today and you know it...That's the supply Mr Crier and you know it...the fancy dance that this forum does about physical gold never addresses THE Large Physical Supply...

Straigt Faces? Shame on you!



nickel62 (10/25/00; 05:43:42MT - usagold.com msg#: 39852)
I need some help. Please
I understand, I think that the money supply has been greatly increased since at least the mid ninties to allow a liquidity based boom in the international markets, but I would greatly appreciate a detailed description of how the US dollar was boosted roughly 30% above the other currencies. Is this because they were able to mark down the price of the spot gold market by this amount, or is that just something they had to do to keep from drawing too much attention to their scheme? Was the use of derivatives in the currency markets the way in which this was achieved? Did they just issue so much dollar denominated debt that the trading partners were forced to compete for dollars in the market place to pay down their dollar denominated debt? Was it implicit capitulation of the currencies that needed the exports, like Europe and Japan, that allowed the US dollar to rise by not converting their US dollar earnings from trade back into their own currency but instead bought US securities with them so as to not have the exchange value of their currencies rise and undercut their competitive position in international trade? OR Is it all of the above?

goldhunter (10/25/00; 05:17:21MT - usagold.com msg#: 39851)
Mr. Crier again...
"But I will agree with you on this in another regard. Simply not enough people are seeing the light that the ample and artificial supply of paper gold has facilitated over the course of many years an adverse effect on gold price discovery, and subsequently, the adverse popular perception of the metal's value."

Ah, we're getting someplace...your quote above gives "credit" or is that "blame" to the futures actually setting the price for gold...a "ours are joined at the hip" approach...an "us with them" united approach, not too different from what i have been trying to get through to you...It reads like you finally "Get It"...

On the reasons why we are in a downtrend...I wish you or FOA or anyone REALLY knows...certainly the "more sellers than buyers" notion is too simple.

What this market needs is a change in perception (and evidence) that GOLD futures AND Physical, will "cost" more next month/next year, and holders will have confidence to add to "winners" and not have their "heads" and wallets handed to them.

Adding long in a downtrend is not very productive unless/until that trend changes...



RossL (10/25/00; 05:10:05MT - usagold.com msg#: 39850)
SteveH - Chart
http://www.sharelynx.net/Markets/Charts/GlobalGoldSentiment.htm

That is an interesting chart, although it is a stretch to try to derive timing information from a sentiment chart. The gold sentiment is at multi-year lows, but it may keep going down for who knows how long? Until all the weak hands have sold all their gold.


Zenidea (10/25/00; 04:41:15MT - usagold.com msg#: 39849)
Hyperinflation/delation , etc
Just abit curious, whom has read Socrates re: "big and small" and or Alexander Pope " A essay on critisism "? and I ask why do these two enter the head spontainiously , before I actually try and nut this out ,or shoulkd I follow the gut through vague premise of understanding ? but at this stage round and round it goes ; any helpers ?. In the mean time I intend and act on as the hunches permeate .
Sir Peter Asher . I lean't back in the chair and bellowed a hearty laugh and my wife squealed out after showing her the email and mentioning a comment or two a heartier one , the morel of the story was the cause of some generated discussion at the dinner table and then the children joined in.
It was good to sit back and listen to their ears and minds working ...the right equipment. big :)s. night night all.

wolavka (10/25/00; 04:37:24MT - usagold.com msg#: 39848)
swiss franc
dec, all oversold under 5550 no advice.

wolavka (10/25/00; 04:11:56MT - usagold.com msg#: 39847)
grains
buy um , not investment advice, I like nem also.

ThaiGold (10/25/00; 04:10:15MT - usagold.com msg#: 39846)
Corn Soaring.!.
Attn: wolavka
wolavka:
Corn(CBOT)
Dec 203.00 204.50 202.50 204.00s +0.75 10/25/00 1:01

Corn soaring tonight.
Right here in the Forum.!.

Corn... Read you some.

Regards
ThaiGold


wolavka (10/25/00; 04:00:14MT - usagold.com msg#: 39845)
Cleaning out weak
Good bye , dip then up.

ThaiGold (10/25/2000; 3:36:28MT - usagold.com msg#: 39844)
What's Your Plan.?.
Attn: ORO (10/25/2000; 3:12:06MT - usagold.com msg#: 39840)
ORO:
Thanks. As usual, your insights are well thought out, and
undoubtedly quite true. (Even if leaving me somewhat baffled.)

Having said that, I'd really (really) enjoy it, if sometime in the
not too distant future you could use your skill, background,
and insights to write for us all, a "plan" or "scenario" that
would or could be effectively implemented upon a moments
notice, worldwide, that would rescue the world financial arena
from an impending multi-bubbled systemic meltdown.

That's all I'm trying to get people to think about, or vision, if
(as expected) worse comes to worse. Which seems to be
the case. Witness, tg's just-posted:
tg (10/25/2000; 3:15:19MT - usagold.com msg#: 39841)
regarding the apparently fast-track push of FRB and Treasury
to get a handle on the impending derivitive bubble burst. I'm
sure they are, as I write, trembling in their WingTips hoping
that legislation will pass both houses and be signed off by
Mr. Clinton before being engulfed in a major financial disaster.

Come on. I know you must have some thoughts along the line
of what could happen and what could be done to resolve it.

Those in the forum would, I'm sure be delighted to read your
own analysis and as-always well written plan or scenario.

Why does everyone in the forum leave all this dirty work up
to me alone to resolve. Gosh, I can't do everything around here
and besides, it's time for Rain_Dog's nightly run.

Regards
ThaiGold@OperaMail.Com


wolavka (10/25/2000; 3:28:15MT - usagold.com msg#: 39843)
No big bang just a whimper
Let the system fall apart. move on!!!!!
Tearing down and building up!!!!!

Now where is the SAFE HAVEN!!!!!!!!!!!!!!

This is too simple!!!!

ORO (10/25/2000; 3:23:29MT - usagold.com msg#: 39842)
Filling the hole in the credit supply
By my calculation, there has been a hole developing in the debt markets, as current US borrowing has been growing at too slow a pace and the deficit is around 300-350 bil. That hole is being plugged by funds coming from abroad. These funds are created abroad in other currencies then the funds are exchanged for dollars and thus supply the ravenous credit markets.



tg (10/25/2000; 3:15:19MT - usagold.com msg#: 39841)
the url regarding my previous post
http://dailynews.yahoo.com/h/ap/20001024/bs/derivatives_bill_2.html
sorry about the disjointedness

ORO (10/25/2000; 3:12:06MT - usagold.com msg#: 39840)
ThaiGold - da program
I will tell you what it is you are missing.

The one thing behind the bulk of economic problems of the past century is infinite credit. Without a "lender of last resort" no credit money can work. But with a lender of last resort the system is prone to problems of "moral hazard" as past errors are swept under the liquidity rug. The liquidity balm saves all but the worst offenders and lowers the value of the credit money in every cycle. The true choice in credit money is expand or perish, and there is scant middle ground.

Close down the credit money system and the Fed that makes it possible to survive and you have solved most of the problems.

Your approach is not going to solve any of the problems, but would probably destroy the functioning of the existing system.

Though I understand that you are trying to emulate the flailing hands of officialdom at its most useless in this, there is still the point that officialdom is pulled pushed and prodded by various interests. One must identify in a proposal like that which interests these are that the program targets for benefit, and who is going to pay for it.





tg (10/25/2000; 3:09:37MT - usagold.com msg#: 39839)
an elaboration on previous post
the bill to be passed specifically relates to finding ways to protect the nation's banking system in case a major financial institution should go bankrupt.


tg (10/25/2000; 2:59:31MT - usagold.com msg#: 39838)
Mr TRAIL GUIDE & Mr TRAVELLER - an important development

I have a question for both our learned friends which i think is important to the inflationary/deflationary debate.

Mr Greenspan and Mr Summers have writen a letter to Congress urging them to pass a "stand alone" bill regarding derivatives contracts in bankruptcy proceedings.
A bill accomplishing that has just passed the House of Representatives on a "voice vote".

How do you Mr Trail Guide & Mr Traveller, see that fitting in your economic scenarios.





ThaiGold (10/25/2000; 2:43:20MT - usagold.com msg#: 39837)
ReThinking
Attn: ORO (10/25/2000; 1:46:11MT - usagold.com msg#: 39836)
ORO:
Your ideas are great.!.
Consider it done.

Or, as was said at the River Kwai:
"I have already given za order"

Regards
ThaiGold@OperaMail.Com



ORO (10/25/2000; 1:46:11MT - usagold.com msg#: 39836)
Thai Gold - starting over
I suggest that you rethink your plan in the following direction:


Eliminate the possibility of the president and congress ever having authority to decide when how and where any market operates, any bank operates, what money is, what its value is, and disallow the government to hold any property not in use, excepting property donated into government trusteeship.

This would include

Ban on government guarantees of private contracts including banking.

Ban the CFTC

Ban the SEC

Ban the Fed

Close the department of commerce

Close HUD

Privatise social security and medicare

Close the department of labor

Close the department of energy

Close the bank regulatory agencies of the Treasury

Close the department of education

Eliminate "progressive" taxation.

Eliminate the "war on drugs"

Reform the EPA into an advisory role to the Justice department and state attorney generals.

Close the DEA, BATF, and eliminate all government powers associated with their functions.

Eliminate all FBI authority and turn it into a consultative and assistive body for state and local level police.

ThaiGold (10/25/2000; 1:10:23MT - usagold.com msg#: 39835)
Cutoff/try again: Virtual Confiscation: Draft Memo to the President-Elect
The Full Text: Economic Rescue and Reform Essay for 2001
====================================================================
Virtual Confiscation: Draft Memo to the President-Elect
The Full Text: Economic Rescue and Reform Essay for 2001
====================================================================
Draft Memo
==========
Dear Mr. President-Elect:

First of all let me congratulate you on your overwhelming victory.

Next, I thank you for this opportunity to present to you the full
details and context of my Economic Rescue and Reform Essay for 2001.

Here it is:
====================================================================
[Background]
During the past administration, major imbalances have built up in
the US economic structure. Some of these even predate the current
era by many years. And the imbalances extend as well to the entire
worldwide economic structure. Both are in grave jeopardy of instant
collapse, if not addressed quickly and with precision.

This plan may be implemented at any time, either before or during
such a period. It is a multipronged soloution which will be both
painless, transparent, honest and fair to the American people as
well as citizens, governments, and other institutions worldwide.

It will result in continued economic growth worldwide, under much
more stable financial conditions. The USA will remain the source
of worldwide stability. And the US Dollar as it currently exists
will remain the predominant Reserve Currency of preference. Indeed,
it will become an even stronger base by a sixfold factor. Citizens
of the USA will continue to use our present coin and currency. The
purchasing power of the US Dollar will remain unchanged both here
and abroad. Foreign currencies, likewise will stabilize in their
respective regions. With commensurate economic stability/growth for
them as well. Nobody will be left behind. All will move forward.

And most importantly, implementation of this plan will be simple,
inexpensive, and workable. With few exceptions, the average USA
or worldwide consumer; investor; businessman; or corporation will
see little change in their accustomed financial activities and
operations. Yet there will be a new stability and confidence which
they have not seen since much earlier eras. Most will welcome this.

[Implementation]
The plan will commence upon the regular Friday (USA) closing of NY
markets. You choose the date. The following presumes a date nearby
your post inauguration.

As President, you will have previously requested from the major TV
Networks an opportunity to address the Nation from the Oval Office
to announce some "essential reform and stability actions" intended
for the benefit of "continued" USA and world financial health. It
will not be an alarmest, spur of the minute/unexpected address:

[The Script]
Good evening my fellow Americans. I am speaking to you tonight from
here in the Oval Office to announce to you, as well as to those of
our worldwide economic partners and citizens of all nations, some
minor reforms and new regulations required to maintain and improve
the integrity of worldwide financial markets and institutions. This
telecast, being carried by satellite worldwide, and in all of the
G-11 nations, will be followed immediately by a local address from
their respective leaders and/or financial ministers. For we are all
in coordinated agreement for these measures to be quickly brought
into place worldwide. So as to maintain a smooth transition with no
adverse affect upon the majority of worldwide markets and business.

As many of you know, there have, over the past many years built up
various imbalances and instabilities within worldwide commerce,
financial markets, and institutions that could if allowed to remain
unchecked, possibly result in further complications that would not
be in the best interests of any of our nations. And so we are now
taking these pre-emptive steps to maintain and strengthen those
functions that are so essential to worldwide stability and growth.

The IMF; World Bank; BIS; and G-11 nations will all implement at
the same time, a coordinated, similar and interlocking plan. There
will be no surprises to any of them nor to Central Banks worldwide.

I will now itemize for you these measures and enactment schedule.
Please be aware that similar measures (by agreement) will be taken
at the same time by other worldwide governments and counterparts:

[Banking Pause]
(1) A 3-day Banking pause is declared, during this implementation.
(2) This is simply to restrain any who would try to profit from
temporary realignments being implemented. And prevent confusion.

[Price Freeze]
(1) I am also declaring a temporary 60-day safeguard period of
price controls during this transistionary period. Same reason.
(2) The IRS will monitor to insure that prices of all goods
and services remain at their current figures, as of Friday.
(3) Hopefully these controls will be lifted much sooner.
(4) These controls are to insure that the playing field remains
level, calm and clear of any unwarranted price manipulations.

[Stock and Bond Markets]
(1) Here and abroad, a 3-day moratorium (closure) is declared.
This, is to allow brokers/traders to adjust books and settlements
to be calculated and adjusted as of today's closing positions.
(2) The SEC will ban purchases of Stocks/Bonds on margin or credit.
(3) Existing law bans borrowed money from purchasing stocks/bonds.
These laws will be strictly enforced by the SEC/FRB/IRS.
(4) The SEC will ban all "short" sales of any security. This will
prevent rampant speculation and price manipulations in the future.

These measures alone, will result in immediate market stability.
Wild swings/price variations will be a thing of the past. Upward
growth is favored. Where the fundamentals will be determinant. No
longer will the markets be at the mercy of a few speculators who
have the power to profit by driving prices downward on a whim.

[Commodity Futures Markets]
(1) A 3-day market moratorium is also hereby declared. For similar
reasons as just mentioned.
(2) The CFTC will ban all futures-trading on margin or credit.
(3) Borrowed funds of any sort, likewise are banned for purchases.
(4) The CFTC will ban all "short" sales of commodities. With the
exception of bonafide producers. These will be strictly controlled
and existing laws enforced. Only a single year's (documented) net
estimated production may be sold forward by any commodity producer.
(5) The CFTC will immediately halted permanently, the trading of
Gold and Silver. Existing long/short positions will be frozen and
unwound in an orderly process by the CFTC. Settlements will be
adjudicated in US Dollars. Existing warehouse Gold/Silver will be
deposited into the National Treasury. (More on this later)

These measures will immediately stabilize commodity markets to more
truly reflect producer/consumer requirements. Speculation for the
sake of speculation and/or price manipulation will become a thing
of the past. These markets will return to their intended functions.
They are no longer to play a role as sanctioned pseudo-casinos.

[Options and Derivitives]
(1) The CFTC will ban forever, Options/Puts/Calls of any sort.
(2) The CFTC will ban forever, so-called "Index-Futures".
(3) The SEC and CFTC will ban forever, "Derivitives" of any sort.
(4) Existing positions in any of the above will be frozen and be
unwound in an orderly manner under uspicies of the CFTC and FRB.

Perhaps, more than any other entity, such Options and Derivitives
have contributed-to if not singlehandedly caused the majority of
the world's financial problems. Those institutions and speculators
who have overindulged in such risky and reckless initiatives will
not be favored nor bailed out as "Too-big-to-Fail". These measures
I put forth to America and the world tonight, are intended to help
our overall stability and growth. If some have been contributory
to the opposite in the past, they will certainly be so recognized.
Whatever they've gotten themselves into will have been their own
fault and have been frequently warned by regulatory authorities.
If they have continued such market abuses and recklessness, then
they alone must bear responsibility and their ultimate burdens.

[Market Interventions]
(1) I pledge that the US Government nor any entity associated or
disassociated with it shall in any way whatsoever henceforth enter
into any tactic or trade that could in any way manipulate markets.
(2) Foreign leaders of the G-11 have agreed to similar principles.

This may or may not have occured in the past. But some people have
speculated that to be the case. All I can assure you at this time
is that we intend to investigate such claims and possible abuses,
and if found true, will be made fully public. And I can assure you
that such will never occur again. If necessary, stringent measures,
penalties and oversight methods will be enacted into place. Those
found to have violated the law of our land or the implied ethics of
responsible government or business will be punished accordingly.

[Usery and Interest Rates]
(1) A National Usery-Point is declared. It shall be 10% per annum.
(2) All credit-card issuers are required to immediately adjust
their consumer credit fees to the 10% Usery Limit or less.
(3) Likewise, all Banking and commercial lending is Usery limited.
(4) All government and private Bond rates are similarly limited.
(5) A Savings Interest rate minimum is mandated at 4% per annum.
(6) Private lending/Mortgages/real estate contracts Usery limited.
(7) Existing debt instruments, if they exceed Usery limits may
remain due and payable. But cannot be re-sold nor exchanged unless
the interst rate is revised to the Usery limit or less.

These measures are meant for the stability and orderly growth
of credit. And to prevent intended or unintended abuses. Credit
is one foundation of a healthy expanding economy. It shall be
the policy of this government to foster its orderly and fair
expansion and/or contraction as necessary to maintain stability
yet prevent excesses and/or lending just for the sake of lending.
Make no mistake about it. Credit is a good thing, when targeted
for bonafide economic projects and expansion. The FRB will not
tolerate lending in any arena that is simply credit speculative.

[Coins/Currency/Legal-Tender]
(1) Existing coins and currency remain our standard Legal Tender.
(2) Their face valuations and purchase power remain unchanged.
(3) No devaluations nor revaluations of currency is intended.
(4) Public use of Gold Eagle and Silver Eagle coins as minted by
the US Mint is encouraged, and Legal Tender at minted face value.
(5) The US Treasury shall issue a new $50 Gold Certificate.
(6) The US Treasury shall issue a new $1 Silver Certificate.
(7) The US Mint will continue to issue Gold and Silver Eagle coins.
(8) These may be obtained by (only) any US citizen at PostOffice
or Federal Reserve Branchs at face value, plus a 1% excise fee.
Initially, quantities will be in short supply. A national wait
list will be maintained. One-per customer. Then you go to the
end of the wait list. Or you may accept Gold/Silver certificates.
(9) Export of US Gold/Silver coins/certificates will be prohibited.
(10) Import of foreign Gold/Silver coins/certificates probibited.
(11) The US Mint will again issue small denominationSilver coins.
(12) The US Mint will reformulate the $1 coin with a Gold content.

Please understand: Similar Gold and Silver coins wll be authorized
and minted by all cooperating G-11 countries for similar local
circulations and have Legal Tender status in their respective area
including the ECU. Those coins will be denominated in their local
units of currency, and with a local face value equivilant exactly
to our Gold/Silver ($50/$1) as a world standardized exchange rate.

It is the intent of this, and those, governmnets, to mint-at-will
using their national Gold and Silver reserves. This process is to
have the effect of disgorging the currently "useless" national
and central bank hoards of large bullion bars into coinage of/for
their citizens. Returning their national wealth and the sovernity
it represents, to those citizens, who indeed are/were the ultimate
owners. Since each country will prohibit exports of their national
coinage, their national treasure will remain a foundation of their
respective ecomomies. We're just going to move it all out of those
dusty CB vaults, back into a more viable/visible money for citizens
of all the world's countries to use daily.

[Gold/Silver/Bullion Markets]
(1) As mentioned earlier, COMEX/CBOT/FOREX/etc futures markets will
no longer be allowed to trade Gold nor Silver. Nor "spot" markets.
(2) All current gold/silver bullion not in the form of national
Legal Tender coins will be required to be sold to the national
treasuries of each respective country. At a standardized price that
is equivilent to US$ 50/oz, plus or minus, depending upon purity.
That's for Gold. For Silver, the standardized price shall be $1/oz
(3) Coins having bonafide documentable numisimatic collector value
may be kept by their current owners. Or may be sold to others of
similar hobby, with a simple permit certificate for each intended
coin, obtainable from a postoffice or Federal Reserve Branch bank.
(4) Such coins must be reported annually, regardless, upon those
individual's IRS tax return. A 1% excise fee will be imposed.
(5) Legal Tender Gold/Silver coins shall be exempt from such IRS
inventroy/reporting/taxation if the quantity does not exceed 100
coins of either style. Or 100 oz, whichever is greater. We want
these coins to be in free circulation, not hid under the mattress.
(6) It shall be unlawful to buy/sell/trade Gold coins or Bullion
in any other manner without an explicit government authorization
permit. Penalties will be severe: $1000 fine per ounce and 1 month
in federal prison per each ounce so-marketed.
(7) National treasuries may from time to time export Gold/Silver
to their respective counterparts in other countries. All such
exports will be duly reported publicly, timely, and precisely.
(8) Gold/Silver producers (mines) are required to sell their output
to only the national treasury of respective countries. They will
receive a standardized US$ 50/oz price in their local equivilent
in the case of Gold, or US$ 1/oz for Silver. Depending upon purity.
All such metal will be immediately utilized by local mints to
fabricate into the coins of their realms. None shall be exportable.
(9) Industrial gold fabricators (Jewelers etc) will be permitted to
purchase their bullion needs directly from the Treasury. These will
be rigorously scrutinized and licensed transactions. Their cost is
to be $50/oz for gold, or $1/oz for Silver plus a 1% excise fee.
(10) It shall be unlawfull to melt any US coin. Severe penalties.
Coins will be metalurically DNA imprinted. Melters will be caught.
(11) No national government of any nation will be obligated to
redeem it's accumulated offshore currencies for Gold nor Silver
payable to a foreign government nor entity. That right is reserved
only to individual citizens, and only within their own countries.
In other words, there are no international "Gold Windows".
(12) Such trade surpluses must be redeemed only as re-investment
securities, bonds, products, or services in the obligated country.

[Mining Industry Assistance]
It is generally believed that Gold and Silver cannot be brought
to market at such standardized prices. In some cases that is true.
In others, it isn't. The government plans to assist bonafide USA
precious metals producers with several initiatives. These will
include corporate tax exemptions, minor subsidies, and exemption
or relief from certain environmental costs, where applicable and
where safe. We may find in many cases, mines will be relieved of
considerable burden if it can be shown they have been manipulated
unfairly by other institutions and to have sold forward their
future outputs at predatory prices and schemes. Such mines will
be made whole by fines, refunds, and adjudicaments as the CFTC
unravels the various derivitive excesses. But I can assure most
of our well intentioned miners, you shall be treated fairly and
you shall be allowed to operate at a legitimate profit.

[New Tax Exempt Infrastructure Bond]
(1) Each country will issue a new Tax Exempt Infrastructure Bond
with a coupon rate of 6%. Proceeds from such bonds will be used
only for infrastructure improvements to benefit all citizens of
their regions. And, in some cases may be used to fund similar or
new infrastructure/industrial development in 3rd world countries.
(2) Interest and principle payments will be paid via a new import
and export duty of 1% levied equally upon all international trade.
(3) These bonds may be purchased by foreign entities or citizens
using only verifiable accumulated trade surpluses.
(4) These bonds may be freely traded or swapped amongst nations
to assist in stabilizing or reducing trade imbalances.

[Conclusion]
So there you have it, my fellow Americans. A swift, workable and
fair soloution to some nagging problems. This isn't a return to
an old outdated "Gold Standard". It's a new standard. A Standard
of Integrity. With the US Dollar as strong or stronger than ever
before. Will your dollar be as good as before? Yes. Will it buy
as much as before? Yes. Is it inflationary? No. Is your gold or
silver worth any less? No. Not in reality. Consider this: Prior to
these conventions, it took nearly 300 of your hard earned dollars
to buy a single ounce of gold. Beginning on Wednesday of next week
you can purchase that same coin of Gold for only 50 of your dollars
and what's more, you can use it in the marketplace or keep it in
a place of honor. For the US Dollar is once again As Good As Gold.

We are not devaluing the US Dollar. But we are ReValuing Gold and
Silver to their historic norms. No more will these precious metals
be inflated to outrageous unwarranted values by speculators and
manipulators. These can, indeed must, always remain as a firm store
of one's wealth. To that end, we now include the US Dollar itself.

Under these historic improvements, we attain a stronger dollar;
good as gold itself; and we retain unlimited banking flexibility;
international agreement and standardization. Local currencies are
wholly unaffected. Worldwide prices and trade remain unaffected,
indeed, ready to flourish in this new era of monetary stability.

Thank you for your understanding, cooperation and patience while
we implement these changes, to benefit all citizens, everywhere.

Good night, and may God Bless America.
==================================================================
Thank you for expressing an interest in my essay Mr. President.
I wish you well in your new administration, one for All the People.

Cordially,

(signature)
==================================================================
ThaiGold@OperaMail.Com
==================================================================


SteveH (10/25/2000; 1:02:29MT - usagold.com msg#: 39834)
RossL and HBM
http://www.sharelynx.net/Markets/Charts/GlobalGoldSentiment.htm
Check this chart out. Something afoot, eh?

SteveH (10/25/2000; 0:59:21MT - usagold.com msg#: 39833)
Protecting gold
http://www.jpfo.org/ragingagainstselfdefense.htm
snippet --

Educating others about firearms is hard work. It's not glamorous, and it generally needs to be done one person at a time. But it's a very necessary and important task. The average American supports freedom of speech and freedom of religion, whether or not he chooses to exercise them. He supports fair trials, whether or not he's ever been in a courtroom. He likewise needs to understand that self- defense is an essential right, whether or not he chooses to own or carry a gun.



ThaiGold (10/25/2000; 0:49:06MT - usagold.com msg#: 39832)
Virtual Confiscation: Draft Memo to the President-Elect
The Full Text: Economic Rescue and Reform Essay for 2001
====================================================================
Virtual Confiscation: Draft Memo to the President-Elect
=======================================================
The Full Text: Economic Rescue and Reform Essay for 2001
====================================================================
Draft Memo
==========
Dear Mr. President-Elect:

First of all let me congratulate you on your overwhelming victory.

Next, I thank you for this opportunity to present to you the full
details and context of my Economic Rescue and Reform Essay for 2001.

Here it is:
====================================================================
[Background]
During the past administration, major imbalances have built up in
the US economic structure. Some of these even predate the current
era by many years. And the imbalances extend as well to the entire
worldwide economic structure. Both are in grave jeopardy of instant
collapse, if not addressed quickly and with precision.

This plan may be implemented at any time, either before or during
such a period. It is a multipronged soloution which will be both
painless, transparent, honest and fair to the American people as
well as citizens, governments, and other institutions worldwide.

It will result in continued economic growth worldwide, under much
more stable financial conditions. The USA will remain the source
of worldwide stability. And the US Dollar as it currently exists
will remain the predominant Reserve Currency of preference. Indeed,
it will become an even stronger base by a sixfold factor. Citizens
of the USA will continue to use our present coin and currency. The
purchasing power of the US Dollar will remain unchanged both here
and abroad. Foreign currencies, likewise will stabilize in their
respective regions. With commensurate economic stability/growth for
them as well. Nobody will be left behind. All will move forward.

And most importantly, implementation of this plan will be simple,
inexpensive, and workable. With few exceptions, the average USA
or worldwide consumer; investor; businessman; or corporation will
see little change in their accustomed financial activities and
operations. Yet there will be a new stability and confidence which
they have not seen since much earlier eras. Most will welcome this.

[Implementation]
The plan will commence upon the regular Friday (USA) closing of NY
markets. You choose the date. The following presumes a date nearby
your post inauguration.

As President, you will have previously requested from the major TV
Networks an opportunity to address the Nation from the Oval Office
to announce some "essential reform and stability actions" intended
for the benefit of "continued" USA and world financial health. It
will not be an alarmest, spur of the minute/unexpected address:

[The Script]
Good evening my fellow Americans. I am speaking to you tonight from
here in the Oval Office to announce to you, as well as to those of
our worldwide economic partners and citizens of all nations, some
minor reforms and new regulations required to maintain and improve
the integrity of worldwide financial markets and institutions. This
telecast, being carried by satellite worldwide, and in all of the
G-11 nations, will be followed immediately by a local address from
their respective leaders and/or financial ministers. For we are all
in coordinated agreement for these measures to be quickly brought
into place worldwide. So as to maintain a smooth transition with no
adverse affect upon the majority of worldwide markets and business.

As many of you know, there have, over the past many years built up
various imbalances and instabilities within worldwide commerce,
financial markets, and institutions that could if allowed to remain
unchecked, possibly result in further complications that would not
be in the best interests of any of our nations. And so we are now
taking these pre-emptive steps to maintain and strengthen those
functions that are so essential to worldwide stability and growth.

The IMF; World Bank; BIS; and G-11 nations will all implement at
the same time, a coordinated, similar and interlocking plan. There
will be no surprises to any of them nor to Central Banks worldwide.

I will now itemize for you these measures and enactment schedule.
Please be aware that similar measures (by agreement) will be taken
at the same time by other worldwide governments and counterparts:

[Banking Pause]
(1) A 3-day Banking pause is declared, during this implementation.
(2) This is simply to restrain any who would try to profit from
temporary realignments being implemented. And prevent confusion.

[Price Freeze]
(1) I am also declaring a temporary 60-day safeguard period of
price controls during this transistionary period. Same reason.
(2) The IRS will monitor to insure that prices of all goods
and services remain at their current figures, as of Friday.
(3) Hopefully these controls will be lifted much sooner.
(4) These controls are to insure that the playing field remains
level, calm and clear of any unwarranted price manipulations.

[Stock and Bond Markets]
(1) Here and abroad, a 3-day moratorium (closure) is declared.
This, is to allow brokers/traders to adjust books and settlements
to be calculated and adjusted as of today's closing positions.
(2) The SEC will ban purchases of Stocks/Bonds on margin or credit.
(3) Existing law bans borrowed money from purchasing stocks/bonds.
These laws will be strictly enforced by the SEC/FRB/IRS.
(4) The SEC will ban all "short" sales of any security. This will
prevent rampant speculation and price manipulations in the future.

These measures alone, will result in immediate market stability.
Wild swings/price variations will be a thing of the past. Upward
growth is favored. Where the fundamentals will be determinant. No
longer will the markets be at the mercy of a few speculators who
have the power to profit by driving prices downward on a whim.

[Commodity Futures Markets]
(1) A 3-day market moratorium is also hereby declared. For similar
reasons as just mentioned.
(2) The CFTC will ban all futures-trading on margin or credit.
(3) Borrowed funds of any sort, likewise are banned for purchases.
(4) The CFTC will ban all "short" sales of commodities. With the
exception of bonafide producers. These will be strictly controlled
and existing laws enforced. Only a single year's (documented) net
estimated production may be sold forward by any commodity producer.
(5) The CFTC will immediately halted permanently, the trading of
Gold and Silver. Existing long/short positions will be frozen and
unwound in an orderly process by the CFTC. Settlements will be
adjudicated in US Dollars. Existing warehouse Gold/Silver will be
deposited into the National Treasury. (More on this later)

These measures will immediately stabilize commodity markets to more
truly reflect producer/consumer requirements. Speculation for the
sake of speculation and/or price manipulation will become a thing
of the past. These markets will return to their intended functions.
They are no longer to play a role as sanctioned pseudo-casinos.

[Options and Derivitives]
(1) The CFTC will ban forever, Options/Puts/Calls of any sort.
(2) The CFTC will ban forever, so-called "Index-Futures".
(3) The SEC and CFTC will ban forever, "Derivitives" of any sort.
(4) Existing positions in any of the above will be frozen and be
unwound in an orderly manner under uspicies of the CFTC and FRB.

Perhaps, more than any other entity, such Options and Derivitives
have contributed-to if not singlehandedly caused the majority of
the world's financial problems. Those institutions and speculators
who have overindulged in such risky and reckless initiatives will
not be favored nor bailed out as "Too-big-to-Fail". These measures
I put forth to America and the world tonight, are intended to help
our overall stability and growth. If some have been contributory
to the opposite in the past, they will certainly be so recognized.
Whatever they've gotten themselves into will have been their own
fault and have been frequently warned by regulatory authorities.
If they have continued such market abuses and recklessness, then
they alone must bear responsibility and their ultimate burdens.

[Market Interventions]
(1) I pledge that the US Government nor any entity associated or
disassociated with it shall in any way whatsoever henceforth enter
into any tactic or trade that could in any way manipulate markets.
(2) Foreign leaders of the G-11 have agreed to similar principles.

This may or may not have occured in the past. But some people have
speculated that to be the case. All I can assure you at this time
is that we intend to investigate such claims and possible abuses,
and if found true, will be made fully public. And I can assure you
that such will never occur again. If necessary, stringent measures,
penalties and oversight methods will be enacted into place. Those
found to have violated the law of our land or the implied ethics of
responsible government or business will be punished accordingly.

[Usery and Interest Rates]
(1) A National Usery-Point is declared. It shall be 10% per annum.
(2) All credit-card issuers are required to immediately adjust
their consumer credit fees to the 10% Usery Limit or less.
(3) Likewise, all Banking and commercial lending is Usery limited.
(4) All government and private Bond rates are similarly limited.
(5) A Savings Interest rate minimum is mandated at 4% per annum.
(6) Private lending/Mortgages/real estate contracts Usery limited.
(7) Existing debt instruments, if they exceed Usery limits may
remain due and payable. But cannot be re-sold nor exchanged unless
the interst rate is revised to the Usery limit or less.

These measures are meant for the stability and orderly growth
of credit. And to prevent intended or unintended abuses. Credit
is one foundation of a healthy expanding economy. It shall be
the policy of this government to foster its orderly and fair
expansion and/or contraction as necessary to maintain stability
yet prevent excesses and/or lending just for the sake of lending.
Make no mistake about it. Credit is a good thing, when targeted
for bonafide economic projects and expansion. The FRB will not
tolerate lending in any arena that is simply credit speculative.

[Coins/Currency/Legal-Tender]
(1) Existing coins and currency remain our standard Legal Tender.
(2) Their face valuations and purchase power remain unchanged.
(3) No devaluations nor revaluations of currency is intended.
(4) Public use of Gold Eagle and Silver Eagle coins as minted by
the US Mint is encouraged, and Legal Tender at minted face value.
(5) The US Treasury shall issue a new $50 Gold Certificate.
(6) The US Treasury shall issue a new $1 Silver Certificate.
(7) The US Mint will continue to issue Gold and Silver Eagle coins.
(8) These may be obtained by (only) any US citizen at PostOffice
or Federal Reserve Branchs at face value, plus a 1% excise fee.
Initially, quantities will be in short supply. A national wait
list will be maintained. One-per customer. Then you go to the
end of the wait list. Or you may accept Gold/Silver certificates.
(9) Export of US Gold/Silver coins/certificates will be prohibited.
(10) Import of foreign Gold/Silver coins/certificates probibited.
(11) The US Mint will again issue small denominationSilver coins.
(12) The US Mint will reformulate the $1 coin with a Gold content.

Please understand: Similar Gold and Silver coins wll be authorized
and minted by all cooperating G-11 countries for similar local
circulations and have Legal Tender status in their respective area
including the ECU. Those coins will be denominated in their local
units of currency, and with a local face value equivilant exactly
to our Gold/Silver ($50/$1) as a world standardized exchange rate.

It is the intent of this, and those, governmnets, to mint-at-will
using their national Gold and Silver reserves. This process is to
have the effect of disgorging the currently "useless" national
and central bank hoards of large bullion bars into coinage of/for
their citizens. Returning their national wealth and the sovernity
it represents, to those citizens, who indeed are/were the ultimate
owners. Since each country will prohibit exports of their national
coinage, their national treasure will remain a foundation of their
respective ecomomies. We're just going to move it all out of those
dusty CB vaults, back into a more viable/visible money for citizens
of all the world's countries to use daily.

[Gold/Silver/Bullion Markets]
(1) As mentioned earlier, COMEX/CBOT/FOREX/etc futures markets will
no longer be allowed to trade Gold nor Silver. Nor "spot" markets.
(2) All current gold/silver bullion not in the form of national
Legal Tender coins will be required to be sold to the national
treasuries of each respective country. At a standardized price that
is equivilent to US$ 50/oz, plus or minus, depending upon purity.
That's for Gold. For Silver, the standardized price shall be $1/oz
(3) Coins having bonafide documentable numisimatic collector value
may be kept by their current owners. Or may be sold to others of
similar hobby, with a simple permit certificate for each intended
coin, obtainable from a postoffice or Federal Reserve Branch bank.
(4) Such coins must be reported annually, regardless, upon those
individual's IRS tax return. A 1% excise fee will be imposed.
(5) Legal Tender Gold/Silver coins shall be exempt from such IRS
inventroy/reporting/taxation if the quantity does not exceed 100
coins of either style. Or 100 oz, whichever is greater. We want
these coins to be in free circulation, not hid under the mattress.
(6) It shall be unlawful to buy/sell/trade Gold coins or Bullion
in any other manner without an explicit government authorization
permit. Penalties will be severe: $1000 fine per ounce and 1 month
in federal prison per each ounce so-marketed.
(7) National treasuries may from time to time export Gold/Silver
to their respective counterparts in other countries. All such
exports will be duly reported publicly, timely, and precisely.
(8) Gold/Silver producers (mines) are required to sell their output
to only the national treasury of respective countries. They will
receive a standardized US$ 50/oz price in their local equivilent
in the case of Gold, or US$ 1/oz for Silver. Depending upon purity.
All such metal will be immediately utilized by local mints to
fabricate into the coins of their realms. None shall be exportable.
(9) Industrial gold fabricators (Jewelers etc) will be permitted to
purchase their bullion needs directly from the Treasury. These will
be rigorously scrutinized and licensed transactions. Their cost is
to be $50/oz for gold, or $1/oz for Silver plus a 1% excise fee.
(10) It shall be unlawfull to melt any US coin. Severe penalties.
Coins will be metalurically DNA imprinted. Melters will be caught.
(11) No national government of any nation will be obligated to
redeem it's accumulated offshore currencies for Gold nor Silver
payable to a foreign government nor entity. That right is reserved
only to individual citizens, and only within their own countries.
In other words, there are no international "Gold Windows".
(12) Such trade surpluses must be redeemed only as re-investment
securities, bonds, products, or services in the obligated country.

[Mining Industry Assistance]
It is generally believed that Gold and Silver cannot be brought
to market at such standardized prices. In some cases that is true.
In others, it isn't. The government plans to assist bonafide USA
precious metals producers with several initiatives. These will
include corporate tax exemptions, minor subsidies, and exemption
or relief from certain environmental costs, where applicable and
where safe. We may find in many cases, mines will be relieved of
considerable burden if it can be shown they have been manipulated
unfairly by other institutions and to have sold forward their
future outputs at predatory prices and schemes. Such mines will
be made whole by fines, refunds, and adjudicaments as the CFTC
unravels the various derivitive excesses. But I can assure most
of our well intentioned miners, you shall be treated fairly and
you shall be allowed to operate at a legitimate profit.

[New Tax Exempt Infrastructure Bond]
(1) Each country will issue a new Tax Exempt Infrastructure Bond
with a coupon rate of 6%. Proceeds from such bonds will be used
only for infrastructure improvements to benefit all citizens of
their regions. And, in some cases may be used to fund similar or
new infrastructure/industrial development in 3rd world countries.
(2) Interest and principle payments will be paid via a new import
and export duty of 1% levied equally upon all international trade.
(3) These bonds may be purchased by foreign

justamereBear (10/25/2000; 0:23:20MT - usagold.com msg#: 39831)
Goldfan 39779

Well, I would say that now we are at least reading from the same book, if not the same page.

Jumping to your paragraph "I see the TransCanada pipeline as a government sponsored....". That certainly was the view that was put out at the time, and there might be some truth that that was a major reason. You will note that I made caveats in my posts regarding "security of supply" issues.
It may also be true that the multinationals saw, and seized upon an opportunity to make a bit more profit, while placing the blame elsewhere. It may also be true that a bunch of rednecks, who had just won the lottery, had a mistaken view of their importance in the scheme of things, and reacted to slights that were minimal. (I am rich, ipso facto, I am smart, and/or I should get respect). Why else would I have been shoved around? On the face of it, I personally was not responsible for Ottawas decision.

It may also be true that there was exploitation, because that is the way the world works. In my opinion, when and how much may be debatable.

As to the Globes publishing policies, I certainly was not trying to imply you were responsible for their policies, but was pointing out that what we usually regard as an unbiased source, often is manipulated to be completely the opposite, as witness my Korean war example.

I also have no problem with the idea that the corpoate elite is "clubable". My 20 years experience with the banking elite tends to come down on the side of them being all cut from the same sheet, using the same cookie cutter. But then accountants also tend to view life, and make decisions heavily weighted by the tax act, rightly or wrongly, pertinent or not. That defining line is there because that is how they are trained (brainwashed), that is what they are experienced at, and know best.

You indicated the point of your post, (and what this forum seems largely about) is the when and how and why this economic edifice will come tumbling down. I see most of these political and other factors as noise. My view can best be shown as an anology.

In my mind, life consists of the daily putting off of the inevitable. We are all mortal, or at least I think that everyone I have met is. We do our best to stay out of the way of fast moving objects such as trains and trucks. Hopefully, I will go at about 80, by stepping in the way of a fast moving bullet launched by a jealous husband. Even better would be a 20 year old jealous husband. But I digress.

The mortality is a given. The struggle to put off the event takes various forms, one of which is medicine. The medicine is noise. It may vary the time of the event, but it will not effect the eventual outcome.

You may go to the doctor with an exotic disease, and because (s)he is human, (s)he may or may not interperate the symptoms correctly, and (s)he may or may not perscribe the appropriate medicine. Even if the medicine is right, the medicine may or may not react in the normal, or hoped for way with your system.

However, on balance, most doctors diagnose correctly, and perscribe the currently best known medicine, which on average produces the expected results. This does not imply that the current best known medicine is the best medicine.

I don't think the time, and how of your death is predictable, just as I don't think the end of the economy as we know it is predictable.

All we can do is to look at the patient and say: Heart problems, Liver problems, Cancer, And the heartbreak of psoriasis; I don't think there is big odds that he will last long. But sometimes they do. I don't know how many times I was called, you had better come, your father has only hours to live. He lived under a maximum of 6 months to live for 24 years, 364 days.

As to the oil question, it is but one disease, one dominoe in a whole row, that has the potential of failure of the system. If one goes, IMO they all go. However the Fed is certainly administering as much medicine as it can.

Off the record, and with no logical reasons, I am very worried that the stock market will crash prior to Nov. 12. However things do not seem to be quite in place for that. Confidence is currently to high IMO. This is evidenced by high retail sales. If there is a drain of investment dollars from the US, IMO the seeds are in place for a failure of the US dollar. On the other hand, a) the volume seems to be dropping, and that is usually what causes a crash, THE BIDS DRY UP. Lots of offers, no bids. b) The nasdaq is down what, 38 or 39 % from its peak? Is this not a crash?

The next time frame I am concerned about is the Feb./Mar. area, when I think there could be a lot of pressure on the dollar. Not that any of these scenerios would happen in one day, but I think the potential is there. Failing those two, I would be concerned starting the middle of Sept. next year.





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