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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 10/26/2000
All times are U.S. Mountain Time

(Yesterday's Discussion.)

Mr Gresham (10/26/00; 23:45:31MT - usagold.com msg#: 40056)
Trail Guide
Got it.


ET (10/26/00; 22:43:24MT - usagold.com msg#: 40055)
Strad Master
http://www.duesberg.com

Hey Strad - I want to thank you for recommending Dr. Peter Duesberg's book, "Inventing the AIDS Virus". After reading this book I now understand why I've never heard of it. It is a scathing rebuke of modern medicine and the money that flows through its coffers. The HIV/AIDS scam will no doubt go down in history as one of the greatest examples of the corruption that comes from fiat currencies. Without the lure of "government largesse", this episode would not have injured, maimed and killed so many. This book should be read by all.

From the last page;

"Ironically, HIV-positives actually have no reason to fear. As with
uninfected people, those who stay off recreational drugs and avoid AZT
will never die of "AIDS." Antibody-positive people can live absolutely
normal lives. Worldwide, seventeen million of the eighteen million
HIV-positives certainly do. Those at real risk of AIDS could help their
fate if they were only informed that recreational drugs cause AIDS. And
those with AIDS could recover if they were informed that AZT and its
analogs inevitably terminate DNA synthesis, and thus life.

"When the public finally catches on to these deceptive tactics [the
promotion of HIV as the cause of AIDS and the promotion of AZT and
cocktails as cures], the HIV hypothesis of AIDS and its proponents will
find harsh judgement...

"This time the public may hold biomedical researchers and public health
experts accountable, and misguided microbe hunting will meet its
long-overdue judgement."

Journeyman (10/26/00; 21:16:06MT - usagold.com msg#: 40054)
Why secede? -- a matter of "history." @ORO

Hi ORO!

Well, California secedes as a matter of "history." I was writing this for a series I started awhile back on free trade, inspired by the discussion over Buchanan's platform.

I am using the secession to demonstrate the problems caused by floating exchange rates, particularly to milk producers in California and Nevada as the currencies fluctuate. I think the "secession" perspective will make it easier to understand the fluctuation problems since they obviously didn't exist until the currencies separated.

The re-evolution of a defacto "gold standard" as a result of competition under "free banking" is another pet notion of mine --- yours too it seems -- and the free trade piece allowed me to kill several birds with one stone. Didn't have time to re-write it after seeing your post, so, well, California seceded. Thus the "history" in the message title is the history -- of the piece I'm working on! (sporadically.)

Your posts lately have been totally awsome. And I don't mean that lightly. Looking for holes as you asked -- but barely able to keep up with the reading, let alone give them the study they deserve. Maybe after the crush!

High regards,
Journeyman


ORO (10/26/00; 20:49:14MT - usagold.com msg#: 40053)
Journeyman - loved it
Why secede?

Why not in the US?

How do Californians come to secede?



Cavan Man (10/26/00; 19:53:42MT - usagold.com msg#: 40052)
and, Sir Gresham
I'm nobody! Who are you?
Are you nobody, too?
Then there's a pair of us--don't tell!
They'd banish us , you know.

How dreary to be somebody!
How public, like a frog
To tell your name the livelong day
To an admiring bog!

Emily Dickinson

Cavan Man (10/26/00; 19:50:40MT - usagold.com msg#: 40051)
Noble Trail Guide
The pedigree of honey
Does not concern the bee-
A clover, any time to him
Is aristocracy.

Forbidden fruit a flavor has
That lawful orchards mock;
How luscious lies the pea within
The pod that duty locks!

Borrowed for this occasion and compliments of:

Emily Dickinson

Journeyman (10/26/00; 18:54:05MT - usagold.com msg#: 40050)
Wet dream only??? @ORO, ALL
http://www.e-gold.com

ORO's msg: #40010 "Oilman - Gold in the computer age" reminded me
of one section of an as yet unposted installment of the "Free
Trade Series," the first parts of which I posted in the following
USAGOLD messages:

PREVIOUS INSTALLMENTS: Journeyman (09/05/00; msg#: 36076)
---------------------- Journeyman (09/06/00; msg#: 36133)
---------------------- Journeyman (09/07/00; msg#: 36204)
---------------------- Journeyman (09/08/00; msg#: 36268)
---------------------- Journeyman (09/09/00; msg#: 36317)

Rather than wait for muse and free time to finish said series,
(which may never happen) ORO's post seemed an enticing excuse to
post it now. So, here it is!

Live the following fantasy with me for a few minutes - - -

California has successfully and bloodlessly seceeded from the
united States, declaring it's own fiat currency. California
calls it's currency the "collar" (for *C*alifornia d*ollar*) and
pegs it originally one collar = one dollar. So far so good.

The new California government, naive, infiltrated by
libertarians, and making a big mistake from the viewpoint of
potential future bankers and successor government cliques,
declares free banking. Most Californians, being highly
sophisticated and not liking the yearly 2% to 5% (sometimes more)
tax (in the form of "inflation") they had been paying for
_anything_ they held denominated in Federal Reserve monetary
tokens, quickly opt for convertible gold backing for the portion
of their assets they decide to save for later use.

The "free-banking institutions" offering "collar" certificates
with this gold-backed option flourish. Of course, Californians'
addiction to the convenience of "plastic" payment, causes the
natural extension of the popular gold-backed option to electronic
accounting "book-entry-only" (megabyte) collars as well. On-line
E-GOLD.COM (link in header) becomes one of the favorite banking
institutions because they provide verifiable on-line
certification for their E-collar-to-gold ratio.

Since there can be no practicle "legal tender law" coercion under
free banking (too many different banks and certificate types
among other things), reverse Gresham's Law quickly drives out the
non-gold-backed "collars." In the "school of hard knocks," most
Californians quickly discover these non-gold-backed collars
"aren't worth the symbols printed on them" because no one wants
to accept them in trade at face value!

Good collars drive out the bad. The remaining "collar"
certificates, issued by banks offering the gold-backed option,
cause the collar to become, de-facto, a gold-standard instrument.
The traditional rate evolves to be 500 collars per gold oz. thus
one collar is worth .002 oz. of gold. As the collar becomes the
standard of "hard money" (a moniker previously applied very
loosely to the U.S. dollar as a hold-over from before 1913 when
it too was married to gold by free-banking competition) some
problems begin to develop as more and more world-wide trade is
conducted in collars. But that's a post for another time and
hopefully another poster.

Because of the convenience to the user (and efficiency to banking
organizations) of electronic banking, more than 97% of the
"circulating" collars quickly become megabyte rather than
physical in nature, leaving only 3% paper collars. Unlike
physical paper, the costs to issuers of megabyte collars is
negligible. Less efficient and more expensive paper collars
(they must be replaced when they wear out, etc.) become a loss-
leader for the various organizations engaged in free-banking and
it's projected by insiders that these paper collars will
eventually be phased out almost completely. Because of this
fact, banking over-head is greatly reduced and banking
organizations find ingenious ways to pay for the small gold
storage and shipment fees incurred in their normal operations.

For example, pioneered by legendary organizations such as
Tanaka's Bank And Grill on the corner of La Cienega and Smith,
businesses, unhampered by regulations like those in the U.S,
begin to offer investment services. Their more adventurous
customers not only maintain their buying power, but if they want
to take a chance on the "bank's" lending quants' gambling
expertise, they can put their gold-backed savings to work in
trying to make "interest." Gambling on people paying their
mortgages (loaning money to folks for houses) becomes the
specialty of many former bank mortgage "quants."

Because gold-backed collars are stable, such interest really is
an increase in buying power, not just a keeping-up-with-inflation
scam -- which those poor saps in the U.S. still get taxed on
anyway. Californians are not forced to let banking institutions
gamble with their savings just to stay even.

Some hard-money "purists" argue this investment gambling practice
is inflationary. Proponents claim bad effects are kept in check
because people don't think of this money as savings anymore --
it's expressly an investment gamble, they know they can't spend
it -- and that it _could_ be lost. It's like a time deposit that
really means it. And there's a limit on what can be lost (no
more than what is loaned.) Eliminating this practice is a moot
point since free-banking is the order of the day and there's
nothing anybody can do about it as long as the details of the
gambling, unlike the misdirective practices in the neighboring
U.S., are open and above board and stated in the bank-customer
agreement.

Gradually, since unlike the situation in the old U.S., there are
no laws or regulations preventing it, banking services, that is
money storage and transfer functions, become "courtesy" services
offered by many different businesses as part of their over-all
customer retention programs. The era of banks as distinct and
separate businesses fades into the murkey smog of "history."

Because there's no central bank in California, there can be no
"systemic risk." As in the pre Federal Reserve free banking era
in the U.S., banking is spread over a large number of independent
organizations. Only in very rare instances do any of these
institutions fail -- depositors keep an ear and internet eye out
for problems and this intense scrutiny from the many depositors
and their deopsitors' organizations proves much more effective
than the scrutiny by a small number of corruptible government
"bank examiners" -- and the expansionist Federal Reserve -- it
replaces in keeping those institutions which include banking
services in their product mix honest.

And in the rare instances when one _does_ fail, the effects are
mostly local. Such isolated and sporadic failures go almost
unnoticed except by those losing some of their savings with the
failing organization's gambling quants. Regular depositors who
haven't signed up for the gambling-interest option get all their
savings back except in cases of outright fraud or robbery.

Over time, it's discovered that this arrangement (in combination
with newly mined gold) accomodates just enough flexibility in the
money supply to foster what they call in the U.S. "optimum
sustainable growth." This is true because with a non-ballooning
money supply, such loans in the aggregate must increase
productivity in some form or at some point in order for the
"interest" to be paid.

This "optimum sustainable growth" rate proves to be in the
neighborhood of 7% per year for California. This surprises
everyone until Tanaka points out that Hong Kong's economy had
grown at a similar rate since 1948 --- for a period of more than
50 years.

-30- -30- -30-

What say you ORO, TG, Townie, ALL? Pure fantasy? Should I go
see a shrink?

Regards,
Journeyman

P.S. The forum is too big! And too good to miss. HELP!!! Yep -- need a shrink!!



Cavan Man (10/26/00; 18:28:53MT - usagold.com msg#: 40049)
SteveH
Any discussion of the conversion of funds ($US 1 Bn) or so from USD to Euro? Dollars will be sold for Euro under this scenario. I'll bet this doesn't happen.

Cavan Man (10/26/00; 18:27:02MT - usagold.com msg#: 40048)
Strad Master
Do you know the legend behind Haydn's "Miracle" symphony?

Cavan Man (10/26/00; 18:06:07MT - usagold.com msg#: 40047)
Strad Master
I'm only 42 but have been a fan of TB since I was 20. Also, I've been a classical music lover since the tender age of 18. I am looking at a picture of Tony Bennett on top of my rolltop desk taken 9-9-87. We are both featured prominently in the picture. At this concert he displayed his original artwork and, included a slide show. I might add that he was very gracious; spent a lot of time speaking with our group, taking pictures and signing autographs etc. I get a good chuckle when people talk about him being a favorite of the MTVers.

I might add that he has grown older more gracefully than I. Thanks for the comment.

SteveH (10/26/00; 18:05:57MT - usagold.com msg#: 40046)
On the matter of reposts
www.gold-eagle.com
repost (and this isn't even about gold or its affect on the dollar):

Dr. Kurt Reichebacher opines on the dollar
(richard640) Oct 26, 18:29

CANNES, France - "Bear markets do not last unless coinciding with and independently induced by depression in general business."

- Joseph Schumpeter, Business Cycles

Earlier this month we were greeted with several 'shocks' that kicked off a wave of uncertainty in the markets: unexpectedly, the major central banks intervened to support the euro; The U.S. government rocked the oil market by announcing the release of some of its strategic oil reserves; And a profit warning from chipmaker Intel prompted a heavy global sell-off in technology stocks.

News since then has simply begun to reveal the truth underlying the real US economy.

If the central banks are fortunate, they may have put a floor under the euro. While America's participation is a great surprise, U.S. Treasury Secretary Lawrence Summer was quick to soften its bearing on the markets by repeating that the long-standing U.S. policy on the dollar had not changed: 'As I have said many times, a strong dollar is in the interest of the United States.'

In fact, U.S. policymakers are sternly opposed to any lasting reversal in the fortunes of the dollar. What may have caused them to join the intervention could have been the threat of the European Central Bank to raise its interest rates still further, risking weakening economic growth in the region.

Five Minutes To Twelve

Nonetheless, we continue to wait and to look for the dollar's impending collapse, like in 1985. Principally, what has been happening these days between the dollar and the euro is amazingly similar to what occurred in the first half of the 1980s. At the time, the world was bombarded with stories that the U.S. economy was enjoying miraculous, structural improvements owing to 'supply-side Reaganomics.' In line with it went the contemptuous story about Europe's economy, dubbed 'Euro-sclerosis.' Everybody agreed that the dollar's strength was well-grounded in the U.S. economy's lasting superior growth performance.

We have vehemently assailed these views, pointing out that in reality, the dollar derived its strength from unbridled government and consumer borrowing, while investment spending was going downhill. We warned that the first weakening of U.S. economic growth would initiate the dollar's collapse. In fact, stopping the dollar's surge in 1985 by joint intervention actually cost the central banks less than $10 billion of their reserves. But to prevent the dollar's freefall in 1987, they had to buy almost $100 billion in a single year and several hundred billions in the following years.

The Critical Difference Today

What is the difference between then and now concerning the U.S. economy and the dollar?

Today's talk of 'new paradigm' miracles is just as empty as the talk in the 1980s of supply-side miracles from Reaganomics. Yet there is one very important difference: The credit excesses of the late 1990s have been many times worse than those in the 1980s, and so are, accordingly, the imbalances in the economy and the financial system. Just think of the zero personal savings rate and the stupendous trade deficit. To speak of the U.S. economy's excellent fundamentals in the face of these disastrous facts requires a lot of stupidity.

The dollar's decline and eventual collapse will start once the economic news begins to disappoint. As we will continue to expose, there is already far more weakness in the U.S. economy than the headlines suggest. But right now, nobody cares to take notice.





JavaMan (10/26/00; 17:55:48MT - usagold.com msg#: 40045)
SteveH re: your msg id# 40041...
here's an alternative point of view from the same site... especially the last two sentences!


sharefin (Uptick) ID#284255:
Copyright © 2000 sharefin/Kitco Inc. All rights reserved
Gold as an investment has been going up all around the world ( EX US ) for over a year now.
http://www.sharelynx.net/Markets/Charts/GoldCurrency.htm

Why do you keep intoning that physical gold is a bad investment.

I bought some kilos last year as insurance and also as a long term investment ( five year hold )
And it has been going up strongly ever since.

Many countries all around the world are showing the same.
In these countries gold has fared a lot better than gold stocks.

You keep repeating that gold is a bad investment.
Tell that to those who sold their Euros for gold?????




Bonedaddy (10/26/00; 17:49:11MT - usagold.com msg#: 40044)
Why Paint the tape?
I enjoy humor. Irony is one of my favorite vehicles to do so. All this talk of "painting the tape" .... Painting is simply not acceptable. CHANGING THE TAPE, to put the best face on it, is the prescribed method to keep the marks pouring their retirement dollars into the game. I couldn't resist doing an "Askjeeves" search to find a history of the DJIA to post here for the lurkers who may not know the story .
HURRY, HURRY, HURRY, ...STEP RIGHT UP,.... SEE THE GREAT INVESTMENT MARKETPLACE.
A riddle from old Bonedaddy.
(If you have the curiosity for it.)
What is the dow worth based on the valuations of the stocks removed from the DOW lately because they weren't performing properly. (Hint: Home Depot will not raise the average.) Don't go too far back in history or it will be depressing, ever hear of Studebaker Motor Company?

Gold is Gold.

Unless I am planning to sell some soon, which incedentially, I'm not. I don't care how many paper U$ Dollars I can sell it for. I would however, like to continue to accumulate it in small amounts, as my budget permits. The trick, for me, is to avoid leverage of any kind. Just buy as I would beenie babies, baseball cards, guns, or whatever I like to collect. (I really appreciate the "no minimum purchase" offerings.)
If you're interested, please see the results of the askjeeves.com search below. Do a few internet searches of your own, but please don't worry about anybody "painting the tape".

Subject: Stocks - The Dow Jones Industrial Average
Last-Revised: 11 Apr 2000
Contributed-By: Norbert Schlenker, lott@invest-faq.com

The Dow Jones averages are computed by summing the prices of the stocks in the average and then
dividing by a constant called the "divisor". The divisor for the Dow Jones Industrial Average (DJIA) is adjusted periodically to reflect splits in the stocks making up the average. The divisor was originally 30 but has been reduced over the years to a value far less than one. The current value of the divisor is about 0.20; the precise value is published in the Wall Street Journal and Barron's (also see the links at the bottom of this article).
According to Dow Jones, the industrial average started out with 12 stocks in 1896. Those original stocks, for all of you trivia buffs out there, were American Cotton Oil, American Sugar, American Tobacco, Chicago Gas, Distilling and Cattle Feeding, General Electric (the only survivor), Laclede Gas, National Lead, North American, Tennesee Coal and Iron, U.S. Leather preferred, and U.S. Rubber.
The number of stocks was increased to 20 in 1916. The 30-stock average made its debut in 1928, and the number has remained constant ever since.
The most recent change was made effective 1 November 1999 when Home Depot, Intel, Microsoft,and SBC Communications were added, replacing Union Carbide, Goodyear Tire & Rubber, Sears, and Chevron. Also, on 1 December 1999, Honeywell merged with Allied-Signal and the merged company
kept the Honeywell name. In 1998, Travelers Group merged with CitiBank, and the new entity, CitiGroup, replaced the Travelers Group.
The most significant change before that was made on 17 March 1997 when Hewlett-Packard, Johnson & Johnson, Travelers Group, and Wal-Mart joined the average, replacing Bethlehem Steel, Texaco, Westinghouse Electric and Woolworth.

SteveH (10/26/00; 17:45:19MT - usagold.com msg#: 40043)
Comment
http://biz.yahoo.com/rf/001026/n26550694.html
snippet -- With two-year notes trading more than a half percentage point below the funds rate, many analysts have noted that the bond market had begun to expect the Fed's next move would be a rate cut and that it could come soon.



SteveH (10/26/00; 17:41:36MT - usagold.com msg#: 40042)
Comment
I watched Moneyline and and CNBC's version (can't remember name). Both featured the IRAQ for Euro issue. She is in the mainstream folks.

UN to decide fate of Euro for OIL deal of IRAQ 30 OCT 00.

Is this a catch 22 or what? No, you can't do it in Euro's, makes the UN look bad; You can do it in Euros makes the UN look bad. What to do?

SteveH (10/26/00; 17:35:15MT - usagold.com msg#: 40041)
Repost
www.kitco.com
Date: Thu Oct 26 2000 19:01
reinvestit (miner stocks versus physical) ID#409209:
Copyright © 2000 reinvestit/Kitco Inc. All rights reserved

Anyone notice the so called "expert analysts"
at usa gold keep harping on the fact physical
gold is the only way to go ? Not silver coin or bars
and certainly not gold miners stock or ANY gold paper
options, futures ect. ect.

Don't they know that in 73 74 stock crashes that the
gold mining sector was one of the best places to be positioned ?

Don't the better miners have large gold reserves?
Does this not matter?
In a market meltdown are the miners just going to fall
by the wayside while the POG skyrockets.
I don't think so.

Appreciate any comments on mining stocks versus physical.
reinvestit


SteveH (10/26/00; 17:30:02MT - usagold.com msg#: 40040)
I had heard mention that...
www.kitco.com
a commentator on CNBC talked of the markets' tapes being painted today, which is to say they were pushed hard to bring them to a positive close or a close on a high for the day. Then I read this respost:

Date: Thu Oct 26 2000 19:07
The Infidel (Well, here is the on story how the gate was defended.) ID#368286:
Copyright © 2000 The Infidel/Kitco Inc. All rights reserved
MORNING REPORT

Late Buying Saves Nasdaq

By Geoffrey Transom, 27 Oct 2000

Last night saw the 'pea and thimble' trick played yet again; the Nasdaq Composite was muscled up in the afternoon to prevent a failure of the retest of the year low on both the Nasdaq Composite and the Nasdaq100. To give you a flavour of how aggressive the buying was, the Nasdaq100 futures hit is contract low - at 2978 - bang on 1:15 pm Chicago time; that is, a fall of 180 points from the previous 'posted' close ( the number at the end of the previous New York day session ) .

In the next 18 minutes, the futures contract rose over 120 points. An hour and a half later, it had risen 240 points. That doesn't happen - not even on the Mother of All Short Squeezes.

I'm not complaining - Blind Freddie could have forecast that this was going to happen, and could even identify the Nasdaq100 stocks that would be used to drive the physical into synch with the futures. It was easy for intra-day traders to be on the right side of the trade; everybody I know was short prior to 1:20 pm, and long thereafter.

The dramatic move upwards was all about the Penguin community having something to squawk about at the end of the session. And so it happened - every TV Ramp show was replete with commentary about how last night the Nasdaq "re-tested its lows, and passed". Remember they tried that load of hovno ( as our Czech friends would say ) about a week ago? That was supposed to have been the bottom.

Let me tell you - that is absolute baloney. You are not witnessing a successful retest of the recent low. What last night was about was a heap of money being spent to prevent the necessity for dramatic write-downs on house trading accounts and junk bond portfolios. The only people who stand to make money from the 'save' are people who were prepared to join the same side of futures market, and people who daytraded stocks and options in the Nasdaq big-caps. People who buy-and-hold stock based on this rally will get hurt, because the stocks are not going to stay where they finished last night.

As I mentioned above, the Nasdaq100 futures hit a contract low at 2,978, and the physical market fell as low as 2,956 - lower than the previous low set on October 18th ( the last day that was touted as 'the bottom' - recall that I didn't believe that event either ) . Lower lows, and lower highs, is a Dow-Theory recipe for further declines, regardless of how much the major houses are prepared to 'paint the tape'. The only saving grace was that the low last night in the physical market Nasdaq100 was about 60 points higher than the May 25th low ( at 2,897 ) .

The Nasdaq Composite printed a higher low, however that is to be expected since, within technology stocks, there is already a rotation away from the highly-priced Nasdaq100 toward other Nasdaq components. This rotation 'muddies the waters' as far as Dow Theory-based technical analysis of the Composite is concerned. However the '100' is going lower from here, which in turn means that the Comp is going lower.

Having said that, the next day or so ought to see some strength; the touts have something to squawk up, and will mercilessly and shamelessly try to talk clients into buying stuff that is dramatically overpriced.

The catalyst they will use is JDS Uniphase.

JDS Uniphase reported earnings which met its 'whisper number' and beat the consensus estimate by 2c. Revenue growth - at 23% sequential - was at the top of the range of expectations, and the conference call was quite positive. My take on it, is that like Nortel and Lucent before it, JDSU will experience slowing demand. It said as much during the conference call, stating that it expects revenue growth in the "high teens" for the next year. JDSU also raised its EPS forecasts for the next quarter to 19-20c a share ( from 17c ) and its full-year expectation for 2001 to 80c from 70c a share.

Well, that will not be good enough if the US economy is slowing. First, 'high teens' is a slowing of revenue growth. Second, 80c a share for next year still puts it at a PE of 100 ( higher actually - JDSU has risen $10 in the aftermarket ) .

A stock with a PE of 100 to forward earnings has to grow revenue at much more than 'high teens' in order to be considered fair value!

Last night saw the release of the Employment Cost Index, which showed that employment costs continue to grow in line with productivity, and thus the additional employment being generated is in no way inflationary. I have been saying that for two years; employment and wages growth don't cause inflation; printing money causes inflation. As Friedman said, "Inflation is always, and everywhere, a monetary phenomenon".

The number - an increase of 0.9% - was about in line with expectations, and didn't move the bond or equities market much.

And now, to the numbers.

The Dow Jones Industrial Average was moderately stronger after the open, but spent almost the entire session trading around the UNCH line, until buying went berserk in Intel late in the day - Intel's chart just screams "painting the Nasdaq tape". At its high, the Dow had gained 128 points, thanks largely to its technology compoentns - and then, only the tech components listed on the Nasdaq. However despite the fact that the Dow's high was set at 3:42 pm Eastern, it was unable to hold that level and gave back more than half of its maximum gain, finishing with a gain of 53.64 points ( 0.52% ) to close at 10380.12 points.

The S&P 500 only saw a gain at two points in the day; the first half hour of the session, and from 3:45 to 3:56 pm Eastern. Between those periods, it had been as low as 1,337.77 - 27 points lower than yesterday's close. However thanks to Intel, Microsoft and the other technology components listed on the Nasdaq, the index managed to claw back almost all of its losses b ythe close, winding up printing a loss of just 0.47 points ( 0.03% ) to close at 1364.43 points.

The NYSE Composite dropped 3.02 points ( 0.47% ) to close at 633.48 points.

NYSE Volume was strong at 1.3 billion shares, and breadth statistics on the NYSE were positive, with advancing issues in excess of decliners by a margin of 1455 gainers to 1394 decliners. Volume was moderately concentrated in decliners with 600 million shares in advancers compared with 640 million shares in stocks which were down for the day.

After being as much as 4% lower during the session, wanton buying ( motivated by things other than sound investment principles ) drove the Nasdaq back up through the UNCH line. The Nasdaq Composite printed its low - 148 points lower than its previous close - at 2:15 pm Eastern, however by 3:20 pm it was back to unchanged. The 'push' buying - in the big caps - continued to drive the Composite right through to the close, with the index finishing with a gain of 42.61 points ( 1.32% ) to close at 3,272.18 points.

Nasdaq Volume was very strong at 2.29 billion shares, and breadth statistics on the Nasdaq were only just negative, with advancing issues falling short of the number of declining issues by a margin of 1919 gainers to 1987 decliners. Volume was concentrated in the advancers with 1.19 billion shares in advancers compared with 1.03 billion shares in stocks which were down for the day.

The Wilshire Total Market Index rose last night, gaining 5.15 points ( 0.04% ) to close at 12,738.87 points.

http://www.investorweb.com.au

Excellent Aussie website.

The Infidel

Strad Master (10/26/00; 17:14:06MT - usagold.com msg#: 40039)
Cavan Man
Re: Tony Bennett
Several years ago I played a charity concert for a small group of invited guests among whom was Tony Bennett. Afterward, he gave me some drawings he made of me while playing, signed with his artist's moniker "Bennedetto". I kick myself because for the life of me I can't find them anywhere, although I'm sure that someday they will turn up. As you may know, he is quite a fine artist. We had a lenghty chat that evening and he seemed to be a genuinely nice person. I'll bet he even owns some gold...

Sierra Madre (10/26/00; 17:05:00MT - usagold.com msg#: 40038)
With regard to Tedw's post 7.38mt No.39990
This is not exactly in the usual vein, but is a continuation of Tedw's remarks on Europe and the New World Order.

If any of you want to read the most profound and illuminating exposé of what has happened to the CAtholic Church in this century - a book highly praised by Malachi Martin himself - you must read "The Undermining of the Catholic Church" by Mary Ball Mart'nez.

Send her a check for $20.00 US to Rio Po No. 37, Apt. 410, Mexico City, ZIP 06500, Mexico City, Mexico.

The book is worth every penny, absolutely enthralling.

After reading an arrogant editorial page article in the Financial Times on Pope John Paul II, which I sent her, she wrote me a letter, from which I excerpt. Some passages cannot be presented on this page, though truthful:

"The Financial Times piece opens dramatic possibilities - let me mention the only one that makes sense to me:

"The present(.......)"pope" is soon to be LIQUIDATED. The Conspiracy is impatient to get on with the next "pope", probably Martini of Milan. Wojtyla has served his purpose. By blackening him now, his successor will come as an angel of light, of democracy and ecumenism. JP II has outlived his usefulness, so one of these mornings he will fail to wake up."

We keep hearing for calls for JP II's resignation. Fits in with the above. "Resign or die in your sleep"?

Let us not forget that the demise of JP I was totally questionable...rather like Vince Foster's? These things do happen....




LeSin (10/26/00; 16:51:55MT - usagold.com msg#: 40037)
DAVE C - Link as requested
http://live.altavista.com/scripts/editorial.dll?ei=2287994&ern=y
DAVE C
Sorry I should have posted it with the story. Enjoy! "S"

SALMON (10/26/00; 16:29:21MT - usagold.com msg#: 40036)
JDS LOST $1 BILLION IN ONLY ONE QUARTER

Including merger and other one-time charges, JDS reported a loss of $1 billion,or $1.07 per share.

Source CNNfn


I don't subscribe to the new paradigm of simply showing revenue growth. Gold companies can buy and sell gold and show ever increasing revenues. I go for profit.Show me the money!

R Powell (10/26/00; 16:27:04MT - usagold.com msg#: 40035)
And the winner is .... Peter Asher

Congrats on the usagold. com msg# 40000 post! I'm not sure but I think I heard some rumors of a gold brick doorstopper as the prize but I don't think you get 40,000 of them. Maybe?

R Powell (10/26/00; 16:14:51MT - usagold.com msg#: 40034)
Dollar strength

Mr Aristotle, thanks for responding with, "...supply tightness when dollars are sought on the forex for those with obligations to repay outstanding dollar indebtedness from prior years." I appreciate this all the more as you took the trouble to repeat material already discussed.
I wonder why the rate of the exchange deficit between the U.S. dollar and most every other currency has just recently accelerated? U.S. dollars have been needed for years to pay debt and buy oil but the current devaluation of the world's currencies (especially the Euro) vs the greenback seems to be progressing more quickly. The disparity is widening at what appears to be an unsustainable rate. Dollars are being bought and so are costing more but dollars have been needed for years. Why the sudden and violent increase in demand? Fewer dollars to be had? Is something happening here that can be and should be understood or is this what a currency trader might describe as just one of many dollar strengthenings to be offset by a coming downtrend? I wonder if there's more to this and where it will lead and I wonder because I don't think the world economy can continue to function normally (whatever normally is) with this. And what happens if the currency disparity grows more?
My understanding is limited but I sense that something has to "break" if this continues. Trade between the U.S. and the rest of the world will become simply our buying their goods and we won't have buyers for any exports, even corn at $1.80/bushel. I'm not sure there are answers for these questions but I can't help wondering.
Can you envision our country as functioning prosperously for years with an ever increasing trade deficit? Will the dollar become the world currency? I know there are already days' worth of forum reading on this so I'll search there for answers. Why is it that three satisfactory questions reasonably resolved always lead to twenty- six new questions?
Thanks again Rich

TownCrier (10/26/00; 15:46:55MT - usagold.com msg#: 40033)
Asian nations urged to hold more gold reserves
http://business-times.asia1.com.sg/5/news/nfrnt05.html
In its latest publication the WGC points out that unlike nations such as France, Germany, Italy, U.S. and Switzerland that hold over 40% of reserves in gold, most Asian countries have less than 5 per cent of their reserves in gold.

"So it might be prudent for all advanced countries to hold at the very least 15 per cent of their reserves in gold," they said.

Golden Truth (10/26/00; 15:15:18MT - usagold.com msg#: 40032)
To Trail Guide
Thankyou for posting here as i learn so much from you.
Thankyou from a lowly person.
P.s I hope your "coldbug" is soon finished with you and moves on real soon!
God bless you!
G.T

TheStranger (10/26/2000; 15:09:41MT - usagold.com msg#: 40031)
Trust Me, Golden Truth....
...it wasn't tape painting. I was buying stocks all day long, and I am sure a lot of others were too. I don't know how strong this rally will be, obviously, and I doubt the final bear market bottom is in place yet. But, for the time being, the bloodletting has exhausted itself. Look for a generally higher Dow for the next three months or so.

Cavan Man (10/26/2000; 14:39:28MT - usagold.com msg#: 40030)
Trail Guide
If you knew Tony Bennett I really would like to meet you (smiling and laughing)!

Trail Guide (10/26/2000; 14:25:24MT - usagold.com msg#: 40029)
(No Subject)
Mr Gresham (10/26/00; 09:43:13MT - usagold.com msg#: 40002)
TrailGuide is our "insider"

Hello Mr. Grescham,

You're not helping me with what you are saying. In my world it lowers my credibility, not raise it.

Thanks
Trail Guide

Trail Guide (10/26/2000; 14:18:49MT - usagold.com msg#: 40028)
(No Subject)

ALL: I willnot in a nutshell just tell everyone; Hi, I'm Mr. Main Man and I know the King of England, Frank Sinatra, Ton Cruise and Jane Seymor (no I don't really know them!),,,,,, and I am buying gold bullion so don't you think you should too? Not much of a foundation building in that is there? That's right, it's just a bunch of unneeded buildup that hollows out ones credibility far more than building it.

So, on this forum, in this format we bounce from point to point along the way and try to explain our reasoning. This whole game has a thousand parts and everyone wants to see their least understood bit discussed. Now, there are a lot of talkers on this and other stages and everyone has their
position to explain. Good! But in the end, all this discussion will get more and more distilled down into just one,,,,,, the right one. The one Another said that time would eventually prove. Knowing my private life (or anyone else's) will add nothing to further this learning experience..

I (and much more so Another) said one should consider buying just gold bullion and only gold bullion for what is coming in our future. Not any of the white metals, not paper gold, not paper gold substitutes in the form of gold mines, not even leveraged gold contracts from dealers. But every time we (or anyone else) said gold would soar, most listeners just heard that one "bit", then used their own understanding from the past, to further invest for the future.

Another always said to buy bullion in proportion to your understanding of the changing market! And that learning became relative to unfolding events. For anyone not listening that was a "forward looking statement". We were supposed to watch and perceive and learn how our new gold market was evolving differently from how traditional hard money thinkers thought it should. People heard "thousands per ounce" and their brain stopped working right there. They immediately raced to buy the same outdated products used to track gold advances in the past. They didn't want to hear the rest of the story, preferring to invest first and ignoring the points we further made. Didn't want to hear about what could happen between "now" and that "thousands per ounce" later! Knowing my background now, is not going to change those mistakes.

Now many "Western Gold Bugs" are deep in the mud with no easy way to reconcile to the changes we said were coming? Who knows? Especially as things keep progressing right along these lines. In their position it's hard to reverse yourself. If one sells out all his paper for bullion now, then some spike guns the stocks and such you just sold,,,,,whether a meltdown later happens or not,,,,, it's a
killer for you mentally!

I don't know exactly where it will go from here, never said I did. This could be the lowest point, futures stay together and track an easy advance over a month or a year? Or, as we have been driving home for a long time,,,,,, the political situation may develop into a full blown currency war. Then we may find official institutions literally dumping margin money into paper gold so as to sell gold paper worldwide. What all the "fence posts" out there don't realize is that a few billion in short margin can have the effect on derivatives of hundreds of billions,,,,,, and they just need cash to do it,,,,, no gold at all. Are they at risk of being called? HA! HA! You be the judge? If you got caught buying 2,000 contracts for example at $250 an ounce strike price (and even had the money to take it) would you stand strong for delivery if the price got hammered to $100 in two weeks or so? I don't think so! You would be like all the rest of the trading crown,,,,,, dumping your position and reestablishing,,,, over and over!

Further, at that point, everybody and their brother would know that a cash only fixed settlement was coming, because enough gold wouldn't exist to make everyone whole! That very thought would drive a premium into the bullion price that every paper trader in the world would swear was a conspiracy by the coin dealers (and bullion only dealers). I can hear it now on CNBC:

" Once again on Cemex, Landon and other major gold centers bullion trading (they won't say paper trading) was tightly controlled to limit the effects of what is believed to be manipulation of gold in Europe and by coin dealers worldwide. In an effort to help the market makers cope with the constriction of gold flows, trading is allowed for 30 minutes a week. During that time only some 300 contracts could be settled each day for cash at a fixed spot price . As a result of this limited trading, the premium on physical gold has been driven up well above it's real price designated on official markets. In some areas it's over $2,000 an ounce. Virtually shutting off all official center
gold trading,,,,,, on to other news!!!!!!

The above sounds like a joke doesn't it?

Lastly,

I have said this before and will again for the last time. I want all paper gold to soar. Such an outcome would be the very best thing that could happen. None of us hard money or gold industry advocates would lose with this. However, as a private individual I am not planing for that outcome. I am not, because of all the reasoning I have laid out in the past and will continue to do in the future.

Thanks
Trail Guide




Cavan Man (10/26/2000; 14:16:09MT - usagold.com msg#: 40027)
Stranger speaks and....
markets rise (wow)!
I think the real gamblers are not those guys and gals that own mining shares. The real gamblers own everything else!

My pot runneth over....CM

Galearis (10/26/2000; 14:09:16MT - usagold.com msg#: 40026)
Just a passing muse...
Factor in a year of inflation for todays POG (paper)
@ 8% it comes to $245.
Silver cost spreads in paper silver over physical are also climbing separating.

G.

Golden Truth (10/26/2000; 14:06:31MT - usagold.com msg#: 40025)
CNBC comentator just acused Market of "PAINTING THE TAPE"
YES it's true the guy who said it.Said it, was because the last two days in the last hour of the market it would rally???

He was almost given the boot and was attacked by the main anchor person.

G.T.

Trail Guide (10/26/2000; 14:06:09MT - usagold.com msg#: 40024)
Reply

A few comments:

---------------Cavan Man (10/25/00; 20:41:58MT - usagold.com msg#: 39953)Trail Guide has left me behind along the dusty trail; left me in fact for the buzzards! ----------

Cavan Man, you know full well that neither I, you or anyone else can possibly talk with everyone here. I have a certain amount of time allocated for this. Some days more, some days less. There are other things to be taken care of and without limits, one could stay here all day. (smile) As this forum
has grown and events progressed, there is even less one on one dialog between all of us. In the end, we will all be reduced to mostly reading and watching facts as they unfold.

to continue further:

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

Canuck, if I could deliver this message in 50 dialects, write 20 books on the subject and use every possible literary devise, it still may not spread the word in it's fullest understanding. There would always be people that must conduct a disquisition after reading and even then still never grasp it.

This is not said to disparage you, it's a recognition of the vast diversity of how our minds work. To reach a diverse group one must present their thoughts in diverse ways. You must already know this? In addition, some people and cultures grasp a riddle faster than plain speech!

The fence post story had many meanings, none of which were conveying a secret message to someone and certainly not inside info. The fence post analogy came to me naturally. In the past I have sat around campfires, under the stars, late into the night where the whole conversation involves the passing of riddles.

The use of "fence post" as in; "hard headed as an old post" or "dumb as a post", etc. is an old American wild west expression. Maybe even Euro/Asian, I don't know! It's often used today. During yesterday's discussions, I got the distinct impression in several of the exchanges that one of
them was acting like said post. The usage was done with that double meaning and also portrayed how wood is used to make paper and paper gold is traded for physical. Somewhere below the surface (post below ground,,, knoll) that which becomes paper (gold) was rotten to the core and even the (paper players, BBs, etc.) knot heads (as in knot in a tree or post) knew it. Stranger's only part in this was that I tied it to his "new fence" making he and everyone here talked about the other day.

Further:

So, you need to know my status in order for any of this to gel? Well I can tell you that a lot of high powered people through out the entire currency and gold world have had it all figured out for a long time. And they didn't mind telling you about how to play it with leverage, I might add! Yep, serious credentials, had they,,,, of a kind that one could just follow their thoughts without even a doubt. Know what it got them (followers)? Smack dab in the middle of a currency war and a very diminished portfolio to show for it.

Think of me as the garbage collector that you talk to every wed. over the back fence. That way I am sure you will not take what I say as an absolute. Like SteveH or Sharefin put it; they kept thinking (hopping) I was just a good story teller. You see, it's not knowing me or my level of
involvement in this that will make you any difference or do you any good. It's the process of turing around your thoughts to see all sides in this game,,,,,,, and that will place one in the best position to make decisions,,,,,in the end.

Trail Guide



Cavan Man (10/26/2000; 14:04:49MT - usagold.com msg#: 40023)
Knallgold,Golden Truth
Knallgold-Yes I understood his comment!

Golden Truth- We have a hole in the dike. EU's Euros for oil soon.

Golden Truth (10/26/2000; 13:54:58MT - usagold.com msg#: 40022)
It's Official CNBC just announced IRAQ dumping U.S dollar!!!!!!!!!!!!!!!!!
What really amazed me was the absolute Arrogance and pompus pride openly displayed. When they mentioned that it would not "sink" the $$$, because IRAQ switching to the EURO :-) only amounts to $91,000,000 million out of 1,000,000,000,000{trillion}dollars, in OIL payments!!!

What it really TELLS ME is that the u.s $ is backed by OIL payments and nothing else. F.O.A brought that up along time ago some posters? had trouble with the CONCEPT!

Now the real BOMB if OIL can be purchased for cheaper in EURO,S than a stupid high exchange rate in u.s funds. LOOK OUT! I'll be converting Canadian "Loonies" into EURO's to pay for ALL my Energy Costs TODAY!

So goodbye u.s dollar as a World reserve currency and hello less expensive EURO,S. Just wait till this really catches on, with other OIL consuming countries,which now already includes JORDAN!

P.S IRAQ said Nov 1st is the deadline then they shut the VALVE!!!!!!!

G.T





Knallgold (10/26/2000; 13:22:59MT - usagold.com msg#: 40021)
New Gold market
"...Ferhani said the euro's recent weakness was unlikely to affect European central bank policy on gold reserves. Currency depreciation would neither be an incentive for banks to accelerate sales or to rethink their plans to reduce gold reserves, he said...."

Please read that carefully!In their (ECB) Gold policy,it doesen't matter what the euro currency exchange rate is (opposite to the dollarsystem).No manipulation of the goldprice to influence the euro's strenght/weakness.To proof that:
``..The (WA) agreement was not designed to affect the price of gold. It was designed to make things more transparent,...''

DID FERHANI SAY "FREEGOLD"???


ORO (10/26/2000; 13:22:53MT - usagold.com msg#: 40020)
Peter Asher - indeed
Direct use in trade with no bid/ask.



Peter Asher (10/26/2000; 13:22:00MT - usagold.com msg#: 40019)
Stranger, Thanks!

"The mice are roaring" might say it all.

ORO (10/26/2000; 13:21:10MT - usagold.com msg#: 40018)
Cavan Man - Unhedged mines
The mines that have a well functioning direct marketing plan, like Harmony, which has its branded Tolla (sp?) bars, can expect to survive well enough during the "twilight period" where the official markets and the "street" markets are well out of sync.

There is also the issue of having "windfall taxes" on the mines. Hopefully, the SA government will realize that it has more to gain from allowing capital flows back into its mining sector at full blast rather than limit the profitability of the mines, and thus the incentive to invest in them. But I would not be holding my breath.

US mines are a more difficult issue. Though there would definitely be a tendency to take a "widfall tax" on them in leftish circles, I am not sure there would be such popular support for this. So my Jury is out, so to speak.

So there should be some period of profitability between the closure of the paper gold markets and the windfall taxes, but it depends on the marketing ability of the miners.



wolavka (10/26/2000; 13:20:14MT - usagold.com msg#: 40017)
Dollar
DXH march dollar index high 118.72 open and high, low and close 118.00

This sucker is gonna fall out of bed tomorrow.
It breaks 117.20 which is the extended resistance/ now support of the last 5 days 10-18 thru 10-24; thus the breakout up (yesterdays run and when gold got hit).

7:05 cst to 7:40cst will tell. gdp the pusher.

Peter Asher (10/26/2000; 13:18:40MT - usagold.com msg#: 40016)
JA, Mr. Gresham

I would also second JA's motion but since my #39975 is part of the discussion, I presume I cannot along with any other of the participents.

TheStranger (10/26/2000; 13:15:52MT - usagold.com msg#: 40015)
Peter
An energy expert just said on CNBC that, out of the trillion dollars that trade on Forex every day, only some $90 million are attributable to Iraqi oil. Maybe that's your answer.

Peter Asher (10/26/2000; 13:13:54MT - usagold.com msg#: 40014)
ORO

Re your >>>> Title to gold can trade at substantially less than 0,1% and possibly at 0,01%. A very small general fee can cover all the transactions, leaving only the vault, security and transport costs, which with today's computers can be minimized because of the availability of optimization algorithms and statistics which were unknown at the time of free gold.<<<<

Therefore my theme of msg #40,000 is much more limited, affecting only smaller holders of physical in hand. I gather from your above, that Gold CAN be used as a currency within the banking system, without being ‘taxed' by a bid/asked spread.

Is this a correct conclusion?

TheStranger (10/26/2000; 13:06:58MT - usagold.com msg#: 40013)
A Cliche Ridden Post For Peter Asher and JA / Fever appears to have broken on Wall Street
Peter - Danged if I know. The problem for you and me and everyone else in here, of course, is that we tend to think we can improve performance if we sit here and watch every moment of the action. We start missing the forest for the trees. We forget that a watched pot never boils. (Are you reading this, Cavan Man). But if we have confidence in our research, and I do, then patience is what's required.

JA - you are a sight for sore eyes, buddy!

*****

Wall Street is ready to roll on the upside for awhile, but you've got to own the right stocks. I think goldminers are going to do fine. Did you notice the strength in that sector today? No more tax selling for another 6 weeks or so.

Usul (10/26/2000; 12:58:18MT - usagold.com msg#: 40012)
Islamic Banking
http://www.cyberclass.net/turmel/dinar.htm
"The Sharia also prohibits the commercialisation or multiplication of a debt without the means to guarantee it, as in fractional reserve banking. Thus, the banking business as such cannot exist in Islam; the only function it could have would be to restrict itself to being an institution for transferring money, but without the capacity to expand the amount of credit, writes Vadillo"


MO VER MEG (10/26/2000; 12:26:29MT - usagold.com msg#: 40011)
Black Blade
Just a note to say hello and wish you well.

I have found your comments quite worthwhile - thanks.

ORO (10/26/2000; 12:20:05MT - usagold.com msg#: 40010)
Oilman - gold in the computer age
Digital gold - or rather the miniscule costs of transactions done by computer allow us to break a couple of old "truths".

I. Banking must involve fractional reserves in order to be profitable. The idea has always been that demand accounts can't make a bank work because clearing services are not profitable - as people tend to use cash when charged as little as 1% for transactions. Thus the only way to cover transaction costs of the time (manual bookeeping, clearing by mail) was to lend a portion of the bank's demand and semi-demand accounts (i.e. checking and savings respectively) to generate sufficient profit so that transaction prices (not costs) can be reduced and people would use the banks. In free banking systems during the gold era, one could use a 50% reserve and meet 1% of the account in annual transaction costs with the 2-3% interest earned on that 50% of "invented/created" money. It even allowed the provision of noticeable interest on deposits of size or on small deposits that are never used (small savings accounts often accumulated interest for decades without a single withdrawal.

That was never quite the case, however, as the better banks could make a 1 time profit of about 6% from the issue of banknotes instead of coin. The banknotes, entitling the holder to a particular amount of gold were traded at a premium to the actual physical because they were much more difficult to ocunterfit, and very easy to confirm as they were all numbered and the bank could check whether the number was real, and whether the note is inside the bank or outside it.

Today, transaction costs are miniscule by comparison. Title to gold can trade at substantially less than 0,1% and possibly at 0,01%. A very small general fee can cover all the transactions, leaving only the vault, security and transport costs, which with today's computers can be minimized because of the availability of optimization algorithms and statistics which were unknown at the time of free gold banking, and until the recent drop in computation costs (read 25 years) were too expensive to apply on a small scale. Overall, the costs are substantially less than 1% per year (say 0.2%) including vault and transactions for all but the most active accounts.

Thus, clearing and depository services are now viable business models. Services that cost much less than anyone could have imagined in the past (including Mises, who gave the initial historical argument presented above).

This means that banking operations can be separated from depository operations. This allows, for the first time in history, a clear and economically motivated separation between savings and investment. Putting bank accounts squarely where they belong, on the side of investment rather than savings.

II. Another outmoded thought is that of the need for an institution capable of guaranteeing a stable monetary or nominal value of accounts, which was only possible with fractional reserves and the fictions of bank bookeeping. Since this was, in itself, a function of the need to cover transaction costs with interest bearing accounts, it is no longer an issue.

Realizing the business opportunity at the dawn of the age of cheap computing in 1967-1970, money market accounts were invented. These accounts use clearing services from banks and hold their funds in carefully constructed portfolios of short term debt that purport to maintain a stable value despite (because?) there being no "reserve" requirement, no insurance fund (such as FDIC). Money market accounts have proven that stable monetary values can be maintained at interest bearing accounts without the fictional legerdemain of fractional reserve banking. Management of these accounts has now become extremely cheap as computer power has fallen in costs and models of financial flows have been refined.

III. Banks, as depository institutions are the outmoded service businesses. Their main usefulness is not in their clearing function, but in their judgement of credit risks at the "micro" level and in management of cash flows for clients. These same functions can be served by a "micro" money market fund and advisory services. Indeed, some banks have actually turned specialists in clearing, just as some have become specialists in debt origination - making loans and reselling them on the markets in "packages" or "securitizations" that are appropriate to "macro" level money and bond funds.

Furthermore, some banks are moving to investments in general, offering asset management services, not just savings and CDs. If it were regulatorilly possible, they would quickly outsource their clearing and demand deposit functions altogether.

IV. Currency is an outmoded concept.
This is at odds with TrailGuide's view that "digital currencies" will survive. The main raison d'etre of currencies is a dual purpose that is composed of (a)stabilization of the banking function, i.e. of fractional reserve banking systems; (b) allowing government to issue infinite debt and have the banking system monetize it. This has been the deal cut between banking and government:
1. Government provides banks with the monopoly on the issue of money, which allows banks to charge interest on the money supply.
2. Government provides banks with an enforcement mechanism for standard reserve levels and credit risk so that all banks can agree on expansionary and contractionary policy and all be forced to follow the agreement. (Of course, all banks found an expansionary policy to be much more profitable.)
3. Government provides banks with a risk free financial asset which is non-defaultable and provides a return without the excercise of judgement on the part of the banker.
4. Banks provide government with a permanent and captive market for its debts.
5. Banks provide marketing services for government debt.
6. Banks allow government infinite inflation of its debt while delaying the secondary monetary price effects - those that occur AFTER the initial dose of government deficit spending reaches the markets, and currency is under suspicion. This is done by leveraging government securities that are used instead of bank reserves. Such that each government security can have a private market debt issued against it at a higher interest rate. Thus public demand for money is greater than government's and government inflation is matched by a slower secondary wave of inflation by the private market, followed by a long term deflationary demand that allows government to pay its interest by the issue of more debt - because of the private market debt induced demand for the credit money.
7. Government gets a cut of seigniorage, and in the case of the US, uses the seigniorage and political leverage over trade partners to provide itself with the ability to run trade deficits "without tears" so that what it consumes is covered by discounted imports paid for by seigniorage over creation of the reserve currency and over beneficial interest spreads.

So, what have we here? What is it that is different?

(1) Banks do not need government anymore in order to provide a monopoly over the issue of money because the markets have made that impossible. The banks can no longer issue non-interest bearing money and receive interest on the loans that created the money. Today, they must offer a competitive interest rate on the money they issued, as well as on the loans.
(2) The costs of regulatory compliance for the traditional banking industry puts it at a disadvatage to its competitors in the credit markets - clearing specialists, investment specialists, debt origination specialists, debt securitizers, money market funds, bond and stock funds, etc.. All of which were made effective and cost efficient by the computer.
(3) The government securities money market and bond funds have taken the margin out of this business of playing the spread between savings and CD interest rates and government rates. Today they are all on a level field and government securities benchmark rates are close to bank CD and savings rates - though still lower, it is only by the margin that covers the management costs.
(4) The banks no longer control the "captives" who have fled to bond and money market funds, etc.. And therefore have little to offer government in this regard.
(5) Bond specialists outside the banks do so just as effectively, so that government has little use for the banks themselves.
(6) Political moods have swung away from government deficit spending. Fiscal conservatism has regained popularity as tax payers are much less willing to take upon themselves the burden of servicing debt. Therefore, the availability of the debt avenue is not as valuable to government as it once was. I.e. before interest payments became the main component of government expenditure.
(7) The US is just about ready to lose its seigniorage priveleges now that the costs of maintaining the US dollar reserve system are substantially beyond any service the US could possibly provide its trade partners.

V. Collecting interest during settlement. In the days of government ordained snail's pace settlement, money would sit unusable to its clients for 5-15 days. Today it is cleared within hours, if not instantly. The opportunity to collect interest over the length of transactions is gone.

Summary
The point has been reached where fractional reserve banking is not necessary. That, therefore, fiat credit currency is not needed by the debt markets. That government is no longer capable of retaining substantial benefit from inflating its currency.

Finally, there is no economic impediment to the use of fully funded specie accounts that trade title to the gold electronically at non-bank depositories that do nothing but provide a clearing and storage service. The credit and debit cards have a 1.5%-2.5% fee for credit allocation, funds confirmation, and multilevel clearing with temporary credit allocation involved at each stage of the clearing process. Small operations need to pay up to 5% and some nearly 10% for the service. E-gold has proven that the cost can be brought down to 0.5% even before any substantial economies of scale are obtained.

Bottom line, oilman, is that currencies and traditional banking are outmoded by the computer age, not gold.




DaveC (10/26/00; 11:54:18MT - usagold.com msg#: 40009)
Mr Gresham (10/26/00; 08:28:00MT - usagold.com msg#: 39993)
Contrary Investor is a must read. It's on my Daily Sites list that I visit every morning.

USAGold forum is in the Freedom Info folder. Obviously, it is also a daily stop.



DaveC (10/26/00; 10:42:49MT - usagold.com msg#: 40008)
Peter Asher
http://www.arabia.com/article/1,1690,Business|31953,00.html
Jordan oil/euro story. Ciao



Al Fulchino (10/26/00; 10:30:39MT - usagold.com msg#: 40007)
Cavan Man FYI
Edward Everett has a city named after him. Everett, Mass. Shares a border with Boston. Approximately 3 square miles. Low tax rate. Lots of industry paying more than their share. Lots of good neighborhoods. In the sixties it was 1/3 Italian, 1/3 Irish and 1/3 Jewish. The mix has changed some with new arrivals, but it remains largely a working class community. Why my interest? Was born there and lived their for about 24 yrs. Mom still lives there. Ciao.

Buena Fe (10/26/00; 10:13:56MT - usagold.com msg#: 40006)
Peter Asher (10/26/00; 09:05:24MT - usagold.com msg#: 39999)
Peter do you have a link to the oil news about Jordon+euro?
Thanks

wolavka (10/26/00; 10:05:05MT - usagold.com msg#: 40005)
1936 commodities exchange act
Greenie spoke!

DaveC (10/26/00; 09:56:40MT - usagold.com msg#: 40004)
LeSin (10/26/00; 05:09:37MT - usagold.com msg#: 39983)
LeSin, Need a link to that story for confirmation.



Buena Fe (10/26/00; 09:53:54MT - usagold.com msg#: 40003)
oil
http://cbs.marketwatch.com/news/current/futures.htx?source=htx/http2_mw
NEW YORK (CBS.MW) -- Oil futures prices climbed Thursday morning on concerns that Iraq may withhold oil exports if the United Nations doesn't approve its request to handle transaction in euros instead of U.S. dollars.

This is old new to the Forum........I know......Letting Iraq blaze the trail.

Mr Gresham (10/26/00; 09:43:13MT - usagold.com msg#: 40002)
Second to JA's #39997
Traveler represents a very competent body of economic knowledge and analysis, and presents it in an excellent manner. TrailGuide is saying "Yes, but this time it's different."

If so, how different and why is up to us to research and grasp in order to decide, or synthesize, between them.

This is new stuff, that the world has not been through before. It's forgivable that we all don't get it immediately. There are pieces from past history, but not whole portraits we can draw from. We are all new here.

TrailGuide is our "insider", as Deep as a website for gold "nuts" is gonna get. (Anybody else got one?) He knows Mundell, and meets with people setting up the Euro's place in modern finance. He is connected to oil and banking, both in US and internationally. That doesn't mean he knows all the answers, or what's going to happen, when. The guys "above" him don't always get it right, and they don't always "win" their battles. But at least we get a seat at the table to overhear a bit of what they are hearing and saying.

He is like those "high White House sources" reporters cite in news reports. Later on, in the histories, you hear it was James Baker, or Robert Rubin, but for now it's: "You can have my name, or you can have my story, take your pick." I'll take the story today, while it's happening.



wolavka (10/26/00; 09:20:23MT - usagold.com msg#: 40001)
wheat for oil
okay, i'll buy.

Peter Asher (10/26/00; 09:05:36MT - usagold.com msg#: 40000)
Caven Man
Re "The US does not want gold to be "the
money" (Meaning to have any perceived monetary value;"

Consider that when the USG canceled the Gold standard, To use Gold as money necessitated 'selling" it to obtain currency.

That created a Bid and asked and the fact that that selling in large quantities lowered the price.

Relegating monetary Gold to the status of "Storage of value" to a great degree demonetized it

Peter Asher (10/26/00; 09:05:24MT - usagold.com msg#: 39999)
Stranger
The other day I brought up the Iraqi/Euro for Oil plan as "Saddam's Kiss of death." It went lower on the announcement.

Then yesterday Jordan joined in and now the Euro is lower still.

Why the contrary performance? Something is missing here!

Peter Asher (10/26/00; 09:05:08MT - usagold.com msg#: 39998)
Caven man
"A paid lover's dream", wouldn't have the same impact

JA (10/26/00; 09:03:18MT - usagold.com msg#: 39997)
Thanks and a nomination
I have not posted for some time but still try to find time to read those posters who I have found always provide educational value. This forum has been able to attract some very bright and knowledgeable people who obviously understand how the world financial system works. In the early days of the Forum one could read all the posts in a relatively short period of time, as the Forum has grown I find it difficult. However I would express thanks to all those who contribute their time, knowledge and thoughts for the benefit of persons such as myself.

I have found the recent discussion over the inflation/deflation issue between Traveler, Trail Guide, Oro and possibly several others to be particularly insightful. I would propose that once this series of exchange of ideas is complete, they be nominated for placement in the Hall of Fame,. I tend to think this series of posts is getting at the crux of major world, financial and economic events that are unfolding as we speak and will greatly impact all of our lives.


wolavka (10/26/00; 08:52:58MT - usagold.com msg#: 39996)
In pit
Look @ the neck veins

Cavan Man (10/26/00; 08:44:50MT - usagold.com msg#: 39995)
Apologies to forum
...for the crude language used inn last post to Canuck. I am mad at myself and taking it out on gold mining companies. My wife would say that is "displaced aggression". She is much smarter than I am.

wolavka (10/26/00; 08:35:08MT - usagold.com msg#: 39994)
Golds' Best Friend
FEAR, HERE HE COMES!!!!!!!!!!!!!!!!!!!!!!!!

Mr Gresham (10/26/00; 08:28:00MT - usagold.com msg#: 39993)
Contrary Investor
http://www.contraryinvestor.com/mo.htm
Good as ever. Don't miss the end.


TheStranger (10/26/00; 08:23:14MT - usagold.com msg#: 39992)
Iraq Threatens to Cut off Shipments if Euro Pricing not Permitted
http://biz.yahoo.com/rb/001026/l.html
See the above link to read about Saddam's latest ploy. If this helps break the dollar's rise, I am all for it.

**********

It looks like the winter rally is coming in right on schedule on Wall Street. Hopefully, the goldminers will catch some of the breeze.

Cavan Man (10/26/00; 07:49:56MT - usagold.com msg#: 39991)
Last word for Canuck...
Now I'm really worked up. I've missed my morning run and my gold stocks are getting hammered!

Gold stocks are too volatile for John Q. Public. Gold stocks are whore's dream. That is my main street opinion. Good day Sir.

tedw (10/26/00; 07:38:19MT - usagold.com msg#: 39990)
EURO AND THE NEW WORLD ORDER
http://www.usagold.com

Ive been reading a very interesting book: "Windswept House"
by the late Malachi Martin.Its very interesting reading and relates to the topics discussed here.For those of you who dont know,Malachi was an advisor to several Popes and a Jesuit and a Catholic Exoricist. Very interesting man.

At any rate, He gives some behind the scenes glimpes into Vatican Power Politics. The work is FICTION but before his death he said it was 95% true and he fictionalized to prevent being sued.

At any rate, he describes forces at work in Europe that are bent on establishing a New World Order and atttempting to use the Church towards those ends. They have even gone so far as to have Satanist rites within St Peters Basilica.

I am still reading the book and Im sure more will be revealed. However, what is clear to me is that powerful forces are at work in Europe seeking a Globalist government.

That being the case, there is a lot at stake with the Euro. In my opinion, they cannot afford to have it fail. Europe is tied by Geography but not by language or custom except for the Church.The Euro is an important binder in their plans. Look for the European powers to do everything they can to insure the Euros success.

One would assume if they are successful, the dollar will fall and gold will rise.



Cavan Man (10/26/00; 07:35:27MT - usagold.com msg#: 39989)
Canuck
The day Lincoln gave his, "Gettysburg Address", he was not the main speaker on the dais. A man named Edward Everett was the main event. Everett was a prolific orator. I believe he was a US Congressman or Senator from Mass. Anyway, Lincoln sat patiently and quietly for over two hours while Everett kept the crowds spellbound. Everett was a popular figure. The masses were enchanted with him.

Lincoln's speech lasted what, maybe fifteen minutes at most? Lincoln as you might know was not a very popular President. Did it matter then and does it matter now who spoke those famous words? Whose speech was remembered; Lincoln's or Everett's? Excellent ideas, thoughts and words do matter for today and tomorrow. I believe there is a small lesson there.

Thanks for giving me an opportunity to address you. I've stayed here at the keyboard although I am late for work. I, like you am in anguish but hey, it's only money.

Cavan Man (10/26/00; 07:24:46MT - usagold.com msg#: 39988)
Again, Canuck
Europe announcing they are thinking of adding to gold reserves? They are announcing what they are currently doing I bet. Think like a central banker. Think like a European. Think like an Asian. Think like a Russian. Force yourself. You can do it! This "announcement" is another move on the chessboard.

Guess what? Like you, I own both. But, I had to convince myself that mining stocks were a good idea. Got it? I had to convice myself about the stocks (and I picked some good ones) I am losing my shirt. What softens the blow for me is the fact that the stocks are in an IRA. Believe me, it still is a very hard blow. The ride is going to get rougher. Hang in there.

Forget about who Trail Guide is; doesn't matter. It's the ideas and thoughts that count. They are on the mark.IMHO



Cavan Man (10/26/00; 07:16:50MT - usagold.com msg#: 39987)
Canuck
Further, the US wants the dollar to be "the money". The US does not want gold to be "the money" (Meaning to have any perceived monetary value; I am of the opinion that fiat does have a use albeit not to store value). Gold is a proxy for the Euro because of the ECB commitment to gold as a monetary reserve. Therefore, gold is being attacked. POG will be attacked unmercifully until it breaks (current pricing market). That is my opinion.

I'm John Q Public also. I think FOA would say that he is and has been here for guys like me and you.

Why isn't the gold market responding as norms and convention and history should suggest it should? I submit that there is something much larger brewing--much larger. Look around; do you see any markets behaving rationally?

John Q. Public always ends up as a bug on the windshield. Have and hold gold and stay behind the wheel.

Al Fulchino (10/26/00; 07:00:10MT - usagold.com msg#: 39986)
Canuck,, go ahead and ask...
Morning to you. Just saw your post today, after my morning newspaper walk. I was feeling that you were in a bit of frustrated period yesterday, and I can sympathize with that. I have even noticed an experienced investor such as our own very experienced The Stranger be a bit puzzled by gold's non-move.
As far as asking TG his personal history goes, you would be right to ask. I don't think he is going to give it though, so I hope your expectations aren't high. Would it be nice to hear? You bet we agree on that. The situation is like being stopped in a traffic jam and you are too far back to see what is causing it, so you ask the next guy in front who has asked those in front of him. And you learn that a woman gave birth while walking across an intersection. Later you see a police officer coming from the scene and he tells you there was a simple fenderbender and vehicles are now being towed. No woman giving birth. Who would you place faith in and why? Most would place money on the policeman. His position has given him credibility. Simple. And TG could do all that here if would so choose. In fact, I would ask that he would do so simply because if he was perceived credible, more people would likely be buying our precious metals. Now he does not owe us that, but it would be considerate < he like Oro tho will not touch certain subjects>. I, in his defense would have to remember however, that there may be a good reason for his tact. I don't agree with it, but who am I to tell him what to do? He is in his position, not me. Like us all here I will see eventually where his words lead.
One last point. In the bible there was a phrase concerning Jesus. It was said that he spoke as one having authority, yet he had none (earthly given) like the scribes and pharisees. Sometimes we treat TG as one who speaks with authority. Let your/our common sense watch over what he has to say. And the good in you will recognize his words for whatever they are.
Very good talking with you. I think I was able to use your concerns to also speak to others. Thanks for being who you are.


Aristotle (10/26/00; 06:50:31MT - usagold.com msg#: 39985)
Hey Trail Guide, I'll bet this post will make you smile. It almost looks like I might know what I'm talking about
(Or maybe I just have friends in high (rooftop?) places!)

First things first--I'll build up to my point by answering a recent question along the way.

R Powell, you asked about dollar strength yesterday in your usagold.com msg#: 39957 --
--------"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?"---------

Well, Rich P., as good fortune would have it, one week ago I answered a similar question from Rockgrabber. Let's take a look at the specific part from this old post that pertains to your question also.
------------
Aristotle (10/19/2000; 3:37:07MT - usagold.com msg#: 39377)
Rockgrabber--[...] As for your additional question, you asked--
"Now what about the dollar? ... Do they have a strong dollar system too? ... What are they doing in order to get this dollar like this??"

My thoughts-- to see this one (and the easy answer) one must be willing to look beyond U.S. borders to consider the global supply/demand dynamic for our currency unit. Being past its international usage prime and on the backside of its life, can you recognize how the international creation would wane, leading to supply tightness when dollars are sought on the forex for those with obligations to repay outstanding dollar indebtedness from prior years? It takes an obvious toll on external exchange rates lifting the dollar against all others, and would also express itself as an aggravation of the U.S. balance of trade--which is something we all see quite clearly. It also explains why loan repayment has become problemmatic and is being replaced with generous degrees of consideration for debt forgiveness for the Heavily Indebted Poor Countries. It also reveals some of the motivation behind the IMF's latest Gold scheme which did little more than to create new dollars for international use without going through the borrowing process that would put another on the hook for even more difficult loan repayment.
But don't fret over domestic deflation. The banking system will surely be saved at any cost--and that cost is hyperinflation, to be specific.
Gold. Get you some. ---Aristotle
--------------

Ok, Rich, did you follow all of that from a week ago, and particularly the final remarks? Great. Now let's have a look at something that I found today in the news, (Bridge News, to be exact) dated Tuesday, five days after my original comments were offered.----

**US lawmakers agree on bill granting $435 million of debt relief**
Washington--Oct. 24--U.S. House and Senate negotiators late Tuesday agreed on a $14.9-billion, fiscal 2001 foreign aid spending bill that provides the United States' full $435-million share of international debt forgiveness to the 30 poorest nations. The plan also allows the International Monetary Fund to continue using its gold reserves to fund its Heavily Indebted Poor Countries relief plan. ---END---

Wow. It's almost spooky to see confirmation that I **might** know what I'm talking about. I wonder if this credibility might carry through to my comments on paper gold, too? <big grin!>

ORO has done yeoman's work in explaining this deflationary phenomenom of dollar supply on a global basis in very clear terms in some of his most recent posts, particularly his usagold.com msg#: 39974 of today. I encourage you to have a look. And to conclude this thought regarding the green light for additional applications of the IMF Gold scheme, I hope everyone is prepared for the free infusion of new dollars that have no borrower standing behind them. Yes, the banking system will surely be saved at the cost I indicated.

On another note, as long as I'm in news mode, I hope everyone's seen this one by now, also from Bridge News--

**European central banks might increase gold reserves**
Tokyo--Oct. 25--European central banks might increase their future gold reserves because of reduced "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. ---END---

Now why would ol' Herve be saying such a thing? I believe that I haven't the foggiest idea. <wink wink, nudge nudge>

Canuck, unfolding events reveal that Trail Guide has been on top of this stuff from the beginning. In this forum I believe a track record speaks louder than any litany of professed personal credentials. If you are insisting that in any dialog where one individual assumes the role of "counsellor" that he must provide credentials to continue speaking, would it also be fair for said counsellor to ask the "student" for credentials to ensure that the time spent on him won't be wasted? I hope not. So sit back and enjoy the unfolding show. The horizon is rapidly clearing for Free Market Gold to be visible and enjoyed by all.

Gold. Get you some. ---Aristotle

Cavan Man (10/26/00; 06:48:16MT - usagold.com msg#: 39984)
Canuck
RE: Trail Guide
The dollar gold market is being sold down the river because in times of financial "troubles" and duress (like now; meaning obvious dislocations in various markets), the US desires for investors to run to US Treauries not gold. A run to gold is a signal that there is chaos afoot. That's the way the metal has been marketed here in the west; gold=trouble ahead. If investors run to gold, the dollar gets hit and from what I understand, there is a potential problem(s) with certain key players in banking industry. The dollar gold market will be sacrificed to save the dollar at any and all costs. I for one certainly support this being a US citizen. However, at the end of the day, the current mechanism for pricing gold will break and default as a result and then, the POG will be free. This is what TG is describing. Whether some extraneous event spikes the price higher in the meantime is unknown to all. That's what he is saying.

LeSin (10/26/00; 05:09:37MT - usagold.com msg#: 39983)
Gold @ Inflation Hedge & Herve Ferhani - Bank of France
INTERVIEW-Gold retains role as inflation hedge-BOF


Aya Takada
10/26/00


--------------------------------------------------------------------------------
TOKYO, Oct 26 (Reuters) - Gold prices may have fallen despite a surge in oil prices, but that does not mean the metal has lost its status as a hedge tool against inflation, an official at France's central bank said.
On Wednesday in London, gold slid to fix at $266.80 a troy ounce, the lowest since September 24, 1999 and not far above the 20-year low of $252.80 marked in July that year.

A bearish trend in bullion prices over the past two years -- during which crude oil prices have nearly tripled -- had prompted some gold market participants to believe the metal is no longer considered a hedging tool against inflationary risks.


But Herve Ferhani, foreign exchange director at the Bank of France, disagreed, saying lower gold prices were a sign that inflation was under control, in spite of the rise in oil costs.

``It does have a special role,'' Ferhani told Reuters in an interview this week. ``It must be an inflation hedge.

``Currently, inflation is by and large under control. And I would say that the market expects this to be the case going forward. That is what market prices reflect,'' he said.

However, Ferhani warned that a sudden change in the market's view on inflation could not be ruled out.

``We all know that the market can change dramatically from one day to the next,'' he said. ``We do not exclude, as a central bank, that such a thing might occur.''

Ferhani was in Tokyo to attend a gold conference.

Crude oil prices have recently risen to their highest level in 10 years. Light crude futures on the New York Mercantile Exchange (NYMEX) have so far averaged about $30 per barrel this year, against $13.40 during 1998's price crash.

CURRENCIES WON'T AFFECT GOLD

Analysts have said, however, that the recent surges in oil prices are not likely to have a major impact on the world economy as companies are depending more and more on natural gas and nuclear power as sources of energy.

Data from Japan's trade ministry shows oil accounted for 52.4 percent of the country's primary energy sources in fiscal 1998/99, down from 77.4 percent in 1973/74.

Ferhani said it was not surprising that gold prices had returned to levels recorded before 15 European central banks announced last September a watershed accord limiting gold sales and lending.

In reaction to the so-called Washington Agreement, gold prices had soared to a two-year high of $338 last October.

``The agreement was not designed to affect the price of gold. It was designed to make things more transparent,'' Ferhani said.

``The market up to then was not transparent enough. That was in no one's benefit because rumours would drive the price rather than the facts,'' he said. ``That was not effective any more. From this standpoint, the agreement has been successful.''

Ferhani said the euro's recent weakness was unlikely to affect European central bank policy on gold reserves. Currency depreciation would neither be an incentive for banks to accelerate sales or to rethink their plans to reduce gold reserves, he said.

``Gold sales are now covered by the (Washington) agreement. They are executed according to the plans. There are no excess sales,'' Ferhani said.

France is the world's third-biggest holder of gold after the United States and Germany, with 3,000 tonnes of reserves at the central bank


Canuck (10/26/00; 05:09:14MT - usagold.com msg#: 39982)
@ Al F.
You are a good man Al, a sensible man.

I did not buy gold and silver solely on the FOA 'platform'.
That would be outrageously overzealous. Yes, I beleive I have performed the due diligent research and yes I still believe some day and I hope soon gold and silver will get their day.

I found a site where I have one of those fictious portfolio's and I do well. The amount of money fictiously traded is far beyond my means but the point is I do think I am seeing the game currently being played.

I have set a timeframe for gold. At that juncture in time I will begin to dispose of these assets. I suppose I am loosing confidence, ie, "gold will have it's day by XX,YY,ZZZZ or I am out of here"

Perhaps asking FOA of his 'personal data' will add confidence to my slipping opinion of gold.

Is that fair? I may be asking alot but I don't think it's an unfair question.

wolavka (10/26/00; 04:50:49MT - usagold.com msg#: 39981)
1960s' where great.
Gem Proof 3.00 golds

get you some, IF YOU CAN FIND THEM!!!!!!!!!!!!!!!!!!!!

wolavka (10/26/00; 04:23:44MT - usagold.com msg#: 39980)
Thai Gold
Need vacation.

Shorting dollar index .

Buying more grains tonite/ today.

Be interesting to see who survives this.

The Invisible Hand (10/26/00; 04:08:04MT - usagold.com msg#: 39979)
currency war - the Philippine way
http://www.inquirer.net
Gov't sets 52 to dollar as peso rescue level

MANILA, Oct. 26 (AFP) -- The Philippine government has decreed 52 to the dollar as the level at which it will intervene to rescue the plunging peso, a senior finance minister said today.

As the besieged currency slipped past 50 to the dollar mark to a new all-time record low of 50.30 in early trading from yesterday's close of 49.65, Economic Planning Minister Felipe Medalla said: "We'll do everything to make sure the peso doesn't fall to that level (52 to the dollar)."

The peso has fallen steadily from 40 to the dollar at the beginning of the year, and its decline has accelerated since September as investors sold down the currency over allegations that President Estrada took bribes from illegal gambling syndicates.

Without elaborating on any measures the government would take, Medalla said he was confident the administration had more market muscle than currency dealers.

"Speculators should be warned. The moment we resolve this crisis, the peso will recover and they'll lose out," the minister said.

But Bangko Sentral ng Pilipinas Governor Rafael Buenaventura ruled out the imposition of capital controls to stop the peso's decline.

"That's a non-starter really," he told businessmen at a meeting today.

The central bank has raised banks' reserve requirements, jacked up its overnight rates and sold dollars on the spot market but all have done little to arrest the currency's fall.

Last week, the central bank said it was considering raising its key overnight rates again but decided against such action this week.

Traders said the central bank's decision to hold off on any rate rises probably contributed to the peso's weakness.

Mr. Estrada said yesterday that "the central bank is independent" and "they know their job."

The president, who has dismissed the allegations against him, is facing impeachment charges in the House of Representatives.



Oilman (10/26/00; 03:41:03MT - usagold.com msg#: 39978)
ORO, The Traveler, Trail Guide
In the debate about gold and its future role, I have been wondering for some time whether I have been missing something. I find a key issue in the debate is the extent to which technology is a major driver, as alluded to by Allan Greenspan. One can probably safely assume that everyone is aware that computers have changed our world, but do we really the extent to which it has? For instance, if I go back in my own experience to 1989, only 11 years ago, I was involved in evaluating the financial return of a major hydrocarbon project. There was open scepticism when I proposed using a Lotus 1-2-3 spreadsheet for the evaluation. The concensus view was that it was not possible to use a spreadsheet to do the evaluation. Why?, you may ask. Well, in those distant days, the Lotus spreadsheet had a major problem with circular calcs. In doing the evaluation, in which I linked my income statement to my balance sheet and cash flows, I found the calculation to be unstable, whether I used "row-wise", "column-wise", "natural", etc methods of calculation. After two weeks of frantic work, I found a solution in cutting all links in the spreadshhet by developing a macro to iterate the calculation. This was possibly the first time such a methodolgy had been used. I coined the term "iteration" for the methodology. By mid-1990, when I started using the Excel spreadsheet, iteration was a built in option in excel, although very few people appeared aware of it. Today, iteration in financial analysis is passe. Just to put everything in total perspective, back in 1980 (ie 20 years ago), some beancounters were still using sliderules (anybody recall sliderules?). What will people be doing in 2010? (provided we are still around then!). Our ability to analyse information has expanded and continues to expand by quantum leaps in a very short space of time.

My point realy sums as follows: aren't we under-estimating the impact of computers on our world? If so, then maybe gold is destined to become a "barbaric" relic of the past. But, does human nature ever change? How does this impact on the price of gold (as well as other commodities, assets and the price of labour)?

Finally, it appears to me that with the ending of the cold war in 1990, a cutback in military spend globally enhanced the likelyhood of a global deflationary phase. With a relative shift in resources to the more productive private sector, one would expect the productivity of capital to improve.

ORO (10/26/00; 02:07:22MT - usagold.com msg#: 39977)
Peter Asher - all of it
The 60 K tonne is the overall estimate. 36% is US banks

Bulk of them is Morgan and Chase (2/3+)

Chase:
BALANCE SHEET ITEMS
(Millions of U.S. Dollars)

.................... YEAR ENDING........ QUARTER ENDING
.................. 12/31/98.. 12/31/99.. 09/30/99.. 09/30/00
Cash and Due..….....17,068....16,229....16,490....19,403
Interest Assets…....318,306.. 350,005.. 317,160.. 352,279
Fixed Assets............ 4,055.... 4,439.... 4,306...... 0
Other Assets............26,446....35,432....33,088....54,134
Total Assets..........365,875.. 406,105.. 371,044.. 425,816

Depos & Int
Bearing Liabs.….. 213,660.. 242,367.. 220,351.. 229,601
ST Debt & Curr........56,659....63,802....56,921....76,533
Other Liab............. 55,531....58,717....54,787....66,085
LT Debt & Cap Leases...... 16,187....17,602....16,644....24,157
Other LT Liabilities..........0...... 0...... 0...... 0
Total Liabilities...... 342,037.. 382,488.. 348,703.. 396,376
Preferred Stock.......... 1,028......928......928......828
Common & Paid In Capital....10,718....10,596....10,517....10,623
Retained Earnings........ 13,544....17,547....16,210....19,626
Other Equity............
-1,452....-5,454....-5,314....-1,637
Total Equity.......... 23,838....23,617....22,341....29,440

Chase has 29 bil of equity to put up against the same amount in gold derivative notional value - meaning that they are probably over $40 bil of total gold liabilities, balanced by an unknown amount of gold assets and lotsa dollars.

Morgan has $12 bil in equity and way more than that in gold obligations.

Needless to say, the whole thing is not viable upon a substantial gold move, particularly after the counterparties to the bank's longs are so distressed.


Lafisrap (10/26/00; 01:27:37MT - usagold.com msg#: 39976)
Trail Guide: Thanks for saying that
Trail Guide:
***
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!
***

I knew that! But it sure is nice to have my thoughts affirmed, and stated so well. It's like, spiritual. (smile)

Lafiscrap


Peter Asher (10/26/00; 01:03:19MT - usagold.com msg#: 39975)
ORO, Ari, Goldhunter


ORO, Ari

You are to be commended for taking the extensive time to debate the paper Gold reality with Goldhunter. It appears to be a case of "Don't confuse me with the facts, my minds made up!"

My observation Goldhunter, is that you are not looking at the *Quantification* of what is being described. It is true that Calls and Futures will turn 10, 20, 40X profits in a gold breakout: Until the bank is broken! Whether or not cash settlement is forced when demand for exercise cannot be fulfilled, would only alter the time and price of the collapse.
The 60,000 tons of Bank commitments at ORO's $67,000, (On a rally to only $335) comes to 25l billion dollars of obligation, and do I understand that to be just Bank paper BEFORE we count Comex, OTC and LBMA?

However much cash and credit and Hard Metal is available to the writers of paper Gold, determines the POG that breaks the Bank.







ORO (10/26/00; 00:43:12MT - usagold.com msg#: 39974)
Traveler - dollar leakage
The current accounts don't close. They contain a "discrepancy" figure that can reach the size of the whole deficit figure.

The dollars that are sent abroad in payment for trade do not have to equal the dollar assets purchased here through the capital account. The theorists who put this together in the 50s ignored interest rates because they were at the level of 2-3% for long term debt. The reality of today with 13-17% interest on the dollar debt of a Thailand and a rate of 7,5% on mortgages is not reflected in the theory behind the compilation of the accounts. They also ignored the possibility of third party loans or transfers in the Eurodollar or foreign interbank markets.

It should be understood also that dollars are liabilities of Fed member banks. Eurodollars are dollar denominated liabilities of non-US banks. Eurodollars are created when a foreign bank lends into existence new dollars in the amount its clients have on deposit from other banks (0 reserve fractional reserve lending).

In the case of the US, the accounts don't balance. Same goes for IMF statistics compiled from similar data from other nations' data. The IMF records a US import that is greater than the world's exports to it. Much of the outgoing volume of dollars that come through the current accounts are used to pay interest on some very high interest foreign dollar loans. Much of the dollar inflow through the current accounts is from dollars created abroad through Eurodollar lending.

The dollars can also just leave the country and circulate abroad, leaving some US bank with a liability to some foreign bank. The foreign bank may lend Eurodollars backed by the dollars owed it by your US bank to a third party whether or not the French exporter has decided to convert to Euro or not (your supplier may decide that it should keep the dollars on account in order to pay for the next couple of month's fuel bill). The records may show your bank still owing the French bank the $10 million dollars 20 years later, after they had compounded at the interbank rate for the whole of that period.

Your account at the US bank was a Fed system liability. When you sent the check abroad and your vendor deposited it in its French bank, the French bank would become liable to the French Mill to the tune of those same $10 mil. It will serve the transfer to your bank for collection (if it has a relationship with your bank) or to its central bank. The French central bank would serve the demand to the BIS, who would serve it to the Fed, who will serve it to your bank. The Fed would transfer $10 mil to the French CB account at the BIS.

If there is a relationship between the two banks involved, the French bank can keep the $10 mil at its account at your bank.

The French bank would also be able to lend into existence dollars which are lent to a third party. The only requirement on it is that the dollars clear through the BIS or an American international clearing bank when they are spent.
The French created dollars are recorded as a liability of the French bank (at this point only the French bank and the client knows that there is a loan), and the loan is spent by the third party, the borrower.
The banks serving the vendors where the borrower spent the funds will send the checks or transfers to their central bank for collection.
The third party central bank would then contact the BIS, who would clear them with the French CB who can clear the account with the French bank.
The $10 mil would move from the French CB account at the BIS to the third party bank's central bank's account at the BIS. The BIS would have $10 mil drawn on the Fed, and $10 bil owed to the French CB.

In the case of the French lending bank keeping funds at your bank, it would be able to clear the borrower's spending by writing a transfer from your US bank to its own central bank who would go to the BIS, who would clear the transfer through the Fed, who would credit the BIS $10 mil.

The Eurodollar system is extremely deflationary because there is no lender of last resort. The main method to obtain dollars to pay net interest on the Eurodollar debt is through export from the rest of the world to the US. The interest payments are at a higher rate than US interest rates, often by a spread of many %. Thus the Eurodollar debt market is often the more attractive one for dollars flowing out of the US. But today, and since 1995, there has been a movement from lending Eurodollars to directly putting them into the US, probably urged by the BIS and the ECB, who likely didn't want to accumulate more treasuries. The result is that the Eurodollar market is starved for dollars because lenders in that market prefer to lend/invest dollars in the US after the Eurodollar market and the foreign trade in US Treasury securities had grown to a combined total of over $6,7 tril - greater than M3 in the US.

Trail Guide claims that the ECB and the BIS want to see the Fed inflate like crazy. By inducing a dollar deflation abroad, they are pressuring the Fed to do just that. How? the deflationary pressure abroad destroys dollars as they are used to pay down debt. These dollars can't come back into the US capital markets, and therefore can't be used to pay down US debt, thereby forcing the Fed to increase its RP and permanent fund additions - to buy anything that moves through open market operations.

Because the Treasury has a big positive balance at the Fed with as yet no earmarks on it, the Treasury is being used to hide the monetary injection under the buyback plan's blanket. This is in an attempt not to appear to be inflating.




ThaiGold (10/26/00; 00:28:15MT - usagold.com msg#: 39973)
Attn: Wolavka
buy dec gold at 50. you'll be in the money. real money.
investment advice




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