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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...   (Discussion Forum Hall of Fame) (The Gold Trail) ("Thoughts!" by ANOTHER)   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.

FORUM ARCHIVES

Select date of the archive you wish to view Month 1 2 3 4 5 6 7 8 9 10 11 12 Day 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Year 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Archives date back to September 22, 1998

WELCOME TO THE ARCHIVES!

ARCHIVED DISCUSSION FROM 9/26/1998
All times are U.S. Mountain Time

Ph in LA (09/26/98; 22:18:43MDT - Msg ID:205)
To FOA RE: Currency controls
If I read your answer to my question correctly, you mean that holders of dollars outside of the US will be offered such low rates to convert them to other currencies that they will prefer not to do it? Will the converse be, then, that holders of Euros will be offered many dollars? Or will some sort of double standard be devised? Are you familiar with our expression "having their cake and eating it too"?

ANOTHER (09/26/98; 22:00:47MDT - Msg ID:204)
I will be gone for a time.
Thank You

ANOTHER (09/26/98; 21:57:35MDT - Msg ID:203)
Pete (9/25/98; 10:06:55MST - Msg ID:174)
YOUR POST:
------------------------------------------------------------
ANOTHER & FOA-THINGS TO COME?
My Dear FOA,
Thank you for your prompt reply. If only some(NOT ALL) posters at Kitco were as courteous and gentlemanly as yourself and ANOTHER, Kitco would be much better off. IMVHO. Their loss is USAGolds gain. My views are very simple minded. I have not the brainpower or ability to dissect every little nuance in the markets and therefore try to analyze as best I can. My thinking is that the current currency crises occuring throughout the world was and is unsustainable. The FRB is between a rock and a hardplace. The strength of the dollar has to be decreased to help most currencies before a world wide depression took hold. In other words something has to be done before the dollars strength destroyed the world economy. My 1st thought was that the FRB would be forced to devalue the dollar by a rate cut. My 2nd thought was that this would be a temporary solution. The derivative markets have been in a no lose, win situation for several years due to such things as the yen-gold carry trades which in time were carried to extremes. That these would eventually default because the dollar would have to reverse course soon. Once this reverse happens, many highly leveraged derivatives would be caught in a squeeze that would put the dollar in jeopardy forcing the FRB to again change course and defend dollar by rate increases which in turn will tank the equity and bond markets. As you stated in a recent post that you and ANOTHER expected a major default which will mean the beginning of the end for the dollar. The recent hedge fund bailout is as you say only a small tip of the iceberg. More will surely follow as sure as day turns to night. Your prognostications such as a Jan 1988 post?(Can't find it for now) that some on Kitco used to trash ANOTHER predicting that a rush to cover may be difficult to contain and predicting that the price of gold would be $320-$360 by year end was and is right on as of now. Also your post on Jan 10, 1988-21:03 predicted with no uncertain terms that the BIS would not allow the price to go below $280 has also held to date within acceptable parameters. I am still trying to determine in my mind why a concerted mean spirited effort was made by certain posters on Kitco to so desperately squash your input and what their true motives were? We will watch closely as events unfold, yes? Thank you for listening to one of a simple mind who has as much faith that gold will triumph in the end as I have in God. Pete
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Mr. Pete, This LTCM, it begins the beginning of your increase in wealth. As Mr. TYoung has spoken, I do add that; "these boys of summer have struck out"! This game will never be played beyond your shores again. As I write, all that hold the debts of America ask, "of what form does the collateral take"? The dollar is represented as the "gambler's tool" and of little use as a builder of wealth. This Euro, it does hold at least, "the pretense of respectability".

Sir, what you have written, it is done well. Follow this change of weather as it is at the door, perhaps it has entered your home as the new season for gold. Even I, myself will add flavor to this new gold market. Of the "mean spirited ones" you speak? They are seen in all the world as "boys that curse the wind, but a strong wind has no ears". Thank You

Goldfly (09/26/98; 20:46:42MDT - Msg ID:202)
December Gold
Mr. FOA: No I didn't think you meant $1000 by end of year, but you did say (love those archives!) "Well before the end of the year, many will look back and understand that we will never see these dollar prices for gold again, ever!" I was looking for a bit of clarification. Is $50 such a strong move? (Be gentle, I'm just asking. When I said "laying it on the line," I supposed we were talking $100-200 increase)........After the turn of the year, do you expect a continued gradual increase? Where *does* that $1000 figure come in? (Not to be confused with "Where will Georges make landfall?") GF

ANOTHER (09/26/98; 19:41:45MDT - Msg ID:201)
TYoung (9/24/98; 18:46:57MST - Msg ID:153)
YOUR POST:
"I mentioned to Another the other day that I thought derivatives would cause loss of confidence in the US$ and asked what he thought would be the cause. Well, looks like derivatives are at the forefront. I was really just pitching a high fast ball to a high fast ball hitter.... Another...but I'd still like a comment. Yes? Tom"
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Mr. Young, while in the US I have seen your new fast ball hitter! A good eye has he, and a fine person. His composure and stature as in play, is the image of a true American to many from afar. Sir, I will swing for your pitch as my view now becomes clear. This LTCM, they stand in the open for all to see. This "Noble House" holds no resources above or below the ground and many now ask "how this palace of paper could stand"? To this I add "how will they deliver the real items they owe"?

Others have built their fortune holding the debt of these traders. And now Default will follow default and all will look to settle for real things that become short in supply. Sir, the confidence in this dollar was purchased with "the greed of men". Soon, this "backing of greed " will lose the support of oil. For the value of a world currency is not made from the "fools gold" found in a gambling den. Thank You

Friend of Another (09/26/98; 18:31:32MDT - Msg ID:200)
Ph in LA (9/25/98; 10:09:42MST - Msg ID:175)
YOUR PARTIAL QUESTION: "Would it become impossible and/or difficult for citizens to repatriate funds/assets held outside the country? It seems hard to imagine the chilling effect "currency controls" would have saying that holding gold outside the country under such circumstances might be unwise, too."?????

Ph, The possibility of FXC (Foreign Exchange Controls) is very real. This topic has been discussed in several well written books spanning 25 years. In a way, the closing of the gold window in the early 70s was a form of FXC. Anyone outside the country could no longer get their gold because too many dollars had been printed to cover the gold in the US treasury.

Today, to many derivatives have been printed (paper gold is one of them) than can be covered by the outstanding dollars! The US Federal Reserve either prints a load of dollars to cover this contingent or the system falls apart. If the Fed prints, the Americans get inflation. If the Fed doesn't print, the world financial system, based on a dollar reserve currency, starts to implode and foreign holders of dollar assets try to exchange these for their local currency. To do this they must take the dollar home to the USA for exchange! During this exchange, if the dollar loses to much value in the exchange rate, these foreign holders just SPEND THEM in America!

Again, the US experiences price inflation, only this time it's during a global deflation in dollar assets. To stop this chain of events, this time the US Treasury closes the dollar window. It's usually a last effort to hold the banking system together. The gold window was closed by holding gold at a low price valuation and not selling any of it. The dollar window will be closed by buying dollar currency at a rate so low as to stop most major holders from exchanging. This usually brings a two tier market , dollars inside the country worth more than outside the country. For some time, all dollars outside the US were called Eurodollars! Will we see these Eurodollars exchanged for Gold ???? In some countries, the CBs already have. Thanks

ET (09/26/98; 18:11:01MDT - Msg ID:199)
Friend of Another
Thank you for the reply. You've hit the nail on the head as far as I'm concerned. I can't see how most of these markets can survive this type of leverage. I think you are correct, the average investor will not make the connection until the markets are closed. I don't think we'll have long to wait. ET

ET (09/26/98; 18:02:39MDT - Msg ID:198)
bmacd - Greed to Fear
Thanks for the reply. In the whole scheme of things, AG's rate cut is meaningless, like you say. I guess my point with the first post is to try to gauge reader's views on the NY Times revelations. This seems to be a watershed event to me. This derivatives exposure has always been hanging out there but never brought to the forefront like this. ET

Friend of Another (09/26/98; 17:43:47MDT - Msg ID:197)
ET
ET, The swings in the markets (all markets) will get larger untill the average investor cannot stand it anymore. Remember, during the great German monetary inflation their stock market went wild, even by today's standards. Today, the people in the know, know the risk! They are playing the same game, with the same mindset of a currency holder. I can get out before anything goes wrong! The problem for them now is that they think the markets will stay open while they cash in, it won't!

bmacd (09/26/98; 17:32:19MDT - Msg ID:196)
ET-Greed to Fear
On Monday-well likely. Greed is great when one thinks there is something to gain, but at this point all that has kept the market going is falling apart and will further. So fear seems rational to me!! Honestly, I was saying this to my Dad the other day, I almost hate being so happy these days, because all that we've all felt would happen is now happening. I'll do well by it, so will fellow gold bugs, and commodities people. But being right means a lot of people will get hurt as the house of cards collapses. Well my Dad's response (he's a huge gold bug) was too bad. We've suffered over the last couple of years, but hung on. Anyways, I'm still trying to figure out what happened on Friday that made the market go north and gold south. I left for a clients (one where I have no access at all to information) with gold over $300, the Dow heading south etc. What exactly did happen? Anyways ET, Monday would likely see a more fear driven market after all this kicks in but we must remember that this week AG will announce that interest rates will come down 25 basis points, and regardless of the fact that Japan really can't lower theirs anymore, England's are on the way up, and Germany has said absolutely not to a rate cut, and France about the same, this 25points will save the world, and the party will go on and the world's problems all solved! Tongue in cheek, but nothing surprises me anymore!!!

Friend of Another (09/26/98; 17:32:18MDT - Msg ID:195)
Victoria (9/24/98; 17:34:06MST - Msg ID:150)
Victoria, Welcome to the discussion group! It has taken a while to reply with the bugs in the Forum and on my end.

Many disagree with a physical gold only investment. Another has spent an enormous amount of time, writing how the times will be different in this era.

I think most of the diversion comes in where investors can not envision gold going up in price all that much. Most don't feel they can create a meaningful return through holding bullion only. The slant is always towards the leverage of mining companies. Most think they will be able to exit these securities and move to physical after some of the future rise in price is complete. That's good if we continue to progress into another economic cycle typical of the past. However, the American economic system is about to change in a way few can follow. The small person will come out far ahead of the large investors by holding onto gold through thick and thin.

As for the large Gold resource countries becoming more powerful? That's a good question that I would like to see others, including Another commit on. It gets right into the politics of money! Will oil rise with gold? I have to agree with Another, oil in dollar terms is going to go up out of sight. But then again, the dollar is also going to go down out of sight. I think these very items will get a good amount of coverage right here as time goes by. Thanks

ET (09/26/98; 17:04:23MDT - Msg ID:194)
Derivatives
Hi all. Thank you for the forum. After learning today from the NY Times that LTCM's actual exposure is $1.25 trillion rather than the original $100 billion, it's made me wonder what the total exposure to banks is out there. A recent 'News and Views' pegged it at around $60 trillion or so. As I understand it, investors had approximately $2.2 billion in the fund and through financial magic had exposed themselves to $1.25 trillion. I further understand about $400 billion is invested in several thousand other hedge funds. If other funds exposure is similar, that would place total exposure at around $200 trillion. At even half this amount, it is impossible to cover without a huge hyperinflation in paper credits. As this NY Times story was released after the markets closed Friday, I'm curious as to what others think concerning Monday's open. I can't believe those in the know concerning the risk are about to waste any time leaving the paper markets and heading to gold. All this time the real level of risk with derivative contracts has been a well-kept secret, but the 'cat is out of the bag', so to speak, for all to see. Will we see the greed turn to fear Monday? ET

Friend of Another (09/26/98; 17:00:37MDT - Msg ID:193)
Goldfly (9/24/98; 21:05:32MST - Msg ID:159)
Goldfly, "By the end of this year" is laying it on the line"? I hope you didn't think I meant that gold would go to $1,000 by the end of the year! It could, under the right conditions. We will most likely see it begin a climb past the $330 / $340 area. Remember, if it gets past $360 before the Euro comes out, it would create a panic that could destroy many of the shorts. As you can see, a large portion of them are Hedge Funds! These same funds are big into currency trading. The disruption in the financial arena would , as Another has shown, be catastrophic! You wouldn't have an official gold market to buy from! Another has not sent me a reply yet, but later on we may get some discussion from him. FOA

Friend of Another (09/26/98; 16:42:37MDT - Msg ID:192)
System working.
My link is up so I will be able to post. I'll start with a reply.

Jeff (09/26/98; 15:56:13MDT - Msg ID:191)
Just a simple test.
Just a test post to correct a message ID bug. -Jeff

Friend of Another (09/26/98; 14:43:15MDT - Msg ID:189)
Forum Open?
I see the Forum is open. I'll check my system and hope to be back here in an hour or less. I think there is more to discuss now than ever before.

USAGOLD (09/26/98; 14:21:01MDT - Msg ID:188)
****To Gold Bugs from Near and Far****
Welcome to USAGOLD FORUM! If you would like to participate in the discussion, please click on the Sign-Up button to register. It's fast and painless. We will get your password to you as soon as possible. So far we have had a much stronger response than I originally anticipated. We have had a large number of registrations and there has been a strong, consistent flow of visitors as well. The next goal is get the number of posters and the flow of information up and that I leave to all of you. This site was established to be used by those hoping to learn something from it and have some fun in the process. We encourage the participation of all. I want to thank Jeff Marett at E-Street Communications for doing an outstanding job on the technical aspects of this site. I look forward to re-starting the discussion. There is much in the wind surrounding this gold market. Now that we have archives, there's no stopping us. Let the discussion begin!

USAGOLD (09/26/98; 14:04:38MDT - Msg ID:187)
Just a short note to say......
We are now up and running. The Archives are fully funcitonal. Now all your golden thoughts and words of wisdom will be stored for posterity. Though we think we got it the way we want it, there may still be a small problem or two. If you come across a problem, please let us know. As it we have to apologize. The archiving bug ate up the posts from September 19,1998 through September 21, 1998. For this we apologize. If anybody by some stroke of luck saved those posts, please e-mail them to me and we will add them to the archives. I know there was some good stuff there and I hate to see it lost. I want to thank all of you for your patience. All copies of THE ABCs of GOLD INVESTING will go out as promised. -- The Management

USAGOLD (9/26/98; 08:59:56MST - Msg ID:180)
*****The Forum will be down today****
for about two hours starting around noon mountain time. We will be hopefully putting the final touches on the Forum Archives. Thank you for your patience.

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