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ARCHIVED DISCUSSION FROM 4/26/2001
All times are U.S. Mountain Time
(Yesterday's Discussion.)
ROSEBUD99
(04/26/01; 23:28:53MT - usagold.com msg#: 52663)
Journeyman (04/26/01; 22:07:49MT - usagold.com msg#: 52660)
Journeyman: i your post, item #4....suppose the net wasn't available??? then what?? Seems to me that the gov could shut down most of it thru the control of just a few providers/backbones if the need arose. Also with some of the new spying software they have been developing, i'm not so sure how secret it is. great posting the last few days !! Many thanks for all your thoughts.
Elwood
(04/26/01; 22:57:18MT - usagold.com msg#: 52662)
Of Austrians and Arabs
Hello, C-Man, Omar, and J-man. Thanks for your kind words.
Hello, ET, I'm as much an Austrian today as I was last week. (smile) If not, what a void that would create in me, eh?
Mises, Rothbard and the rest were truly great men. What they did was to teach the world how to study and formalize economics. They couched their lessons in the economic issues of the day, but the real message was always, especially for Mises, the study of human action.
Ready for some a priori reasoning?
First, let's see if we can agree on some foundation. Do you agree with the following:
1. that under a world system in which gold is the money (fiat be dead) the world would achieve the "full value" of gold, including both exchange value and "denomination of debt" value and all the other "values" we could think of?
Under what kind of system could gold value ever be greater than under this one?
2. that the Arabs can destroy any fiat which prices their oil, by merely reducing or turning off the flow?
If we can agree to these two premises, then we might come to an understanding of Trail Guide's message.
If the Arabs can decide what prices their oil (gold or fiat), and they choose fiat, what does this tell us? It tells us that they value or prefer gold at less than "full value" vs gold at "full value." Remember, as long as oil flows, they will ever be buyers of gold.
When you buy roast beef do you search for the "full valued" beef, or do you prefer the beef at less than "full value" if there's no quality difference?
Another way of looking at this is: If the Arabs kill any fiat which tries to price their oil, and thus forces the world to use the gold medium, with what will they (the Arabs) buy their food and their Mercedes? With gold, of course! But they don't want to use gold to buy food, etc. they'd rather use oil which they possess in abundance, and for which the world is willing to pay in food, etc. (transacted through fiat).
An Arab oilman is a man upon whose scale of preferences gold ever lies above oil.
Regards,
Elwood
Journeyman
(04/26/01; 22:28:03MT - usagold.com msg#: 52661)
Safety of "gold on hand" @Mr. Gresham
Hi Mr.G!
In one of your posts yesterday, I think, you suggested that gold in the hand was better than gold in storage, say with an "electronic gold" establishment.
I had addressed this with Cavan Man in a post etitled "Holding Our Own," and at that time, I agreed with you.
But I got to thinking. How well do you protect your gold at home? If someone came and held a gun to your head (or your daughters) and demanded your stash, what would you do? Or suppose you were Jewish in Germany at the beginning of Krystal Nacht.
I hate to admit it, but there are clearly some circumstances when I'd rather have any stash I might have elsewhere.
A bank MIGHT be appropriate - - - that's a main reason people used to use them I think.
Durn, I hate to say that.
Regards,
Journeyman
Journeyman
(04/26/01; 22:07:49MT - usagold.com msg#: 52660)
Human Nature & gold @Trail Guide
Hi TG!
Thanks for responding! I agree with you - - - people, especially in the name of their small groups and families will attempt to take advantage of others.
Luckily for us, comparative advantage and division of labor make trade more profitable over-all than war. And people are not only corrupt, they are also ingenious at developing ways of preventing corruption.
Knurled edges on coins were cast there to reveal edge-shaving, for example. Gold itself is a tool for corruption prevention - - - and that's why gold ownership was made illegal here in the USA in 1933 despite common sense and the U.S. Constitution. Owning gold prevented its holders from being indirectly looted by the printing presses.
Taking gold out of circulation was the only thing the corruptors could do to prevent this self-protective use of gold. It's THAT strong!
So I respectfully have to disagree with you: You CAN control paper with gold, and that's why French Finance minister Cambon - - - and the 1933 FED-Government amalgam HAD to get it out of circulation.
Now the use of "electronic gold" derivatives is a separate issue. The use of all "out of hand" transactional media incurr some risk. Perhaps Uncle Harry gave you an iron-clad IOU, but as he's just about to walk in the door and pay you off, a tornado sucks him up and lands him on the yellow brick road.
But as you have said, well not quite, "The world needs modern fiats." But it's not the fiats it needs; it's efficient settlement mechanisms. These days, whether your "money" is fiat or gold, this means "electronic funds transfer."
Electronic gold, at that level is just another of these vehicles that we both agree the modern world needs to function these days.
The difference (like the devil) is in the details:
1. To the extent the inventories are honest (and they're independent and available on-line 24/7 for everyone to see), unlike fiat, the supply is strictly a fixed amount and can't be "inflated." There has never been this level of transparency available in the history of the world. None the less, cheating is always possible. There was an old gamblers scam. In the early days of televised races, a group taped a race and delayed the broadcast by about two minutes, enabling their cohorts to place large bets on the horses they already knew had won. Nothing's fool proof, but some things, such as the 24/7 inventory and transaction data would be pretty hard to beat for any length of time, which is what would be necessary to seriously loot the users. It's certainly at least as secure as equivalently transacted fiat.
2. These are private electronic gold organizations and there will be alot of them all over the world. As a customer, you can log on to the internet and then choose to use any or several of them and transfer your accounts quickly at the least hint of a problem. You wouldn't even have to drive to the nearest ATM. And with strong encryption, noone can tell.
3. Having these "electronic gold" establishments all over the world, usually in haven areas, and most being private, and independent, and in many different jurisdictions, it's not likely that any government even under stress and ingenuously using the excuses they regularly do could pull a repeat of the 1933 gold hiest by the Federal Reserve even in cahoots with the U.S. Government.
4. And as long as the internet is available, it will prove impossible for the banking-government cliques to remove gold as a transactional competitor to their fiats.
Regards,
Journeyman
P.S. FWIW, my read on the economic history of the world is still long periods of honest money interspersed with relatively short and disastrous bouts of fiat-induced inflation. While people still living remember the previous disaster, they tend to keep current folks honest.
ET
(04/26/01; 21:41:07MT - usagold.com msg#: 52659)
Randy
Hey Randy - you write;
"Please explain how in your view "an honest price of gold" would cause
the European governments(?) or monetary authorities(?) to "suffer"."
Randy, have you not noticed the size of governments these days? Do they seem rather large, or is it just me? The reason they've grown to such dimension is the fact they have the franchise to create money. Simple as that. Now, if you have an honest price of gold, or honest money, they will not be able to maintain this high standard of living because they will lose the franchise to create money. They will suffer.
"And if this can be demonstrated, could you also please compare it relatively to the degree of suffering currently incurred
against the situation of U.S. currency hegemony?"
I don't understand the question.
Randy (@ The Tower)
(04/26/01; 21:27:36MT - usagold.com msg#: 52658)
Help me on this one, ET
We *might* be on the verge of understanding. Please explain how in your view "an honest price of gold" would cause the European governments(?) or monetary authorities(?) to "suffer".
And if this can be demonstrated, could you also please compare it relatively to the degree of suffering currently incurred against the situation of U.S. currency hegemony?
abudahhab
(04/26/01; 21:12:04MT - usagold.com msg#: 52657)
More on the EU and the Near East Economic Union
As I've mentioned in a previous post, there is a major change taking place in the Middle East. The coming of a regional economic union with strong relationship to the EU is very much underway. You might enjoy the following links:
http://www.dailystar.com.lb/25_04_01/art24.htm
http://www.arabicnews.com/ansub/Daily/Day/010323/2001032314.html
http://www.arabicnews.com/ansub/Daily/Day/010426/2001042620.html
On another topic (no pun intended), gold isn't necessarily money, but it always a store of wealth.
ET
(04/26/01; 21:04:49MT - usagold.com msg#: 52656)
Randy
Hey Randy - thanks for your thoughts. You write in part;
"Your complete and consistent failure/refusal to grasp what has ACTUALLY been said (reapeatedly, and frequently
directed for your individual attention) puts you in a class by yourself. I stand in awe. Given ALL that has been said on
this matter, how can you possibly continue to gather that the European currency is to be fixed to a standard measure
(presumably you mean gold) that wouldn't be "actually trading in the marketplace"?"
Sorry, apparently I've been too subtle. It is not the standard that is the problem Randy. It is the issuers of the fiat in question that will be doing the marking to market. Do you not see the conflict of interest? These people are raving socialists. I cannot conceive of a more enviable position they could possibly put themselves in than this. Are you so naive as to believe they will suffer at the expense of an honest price of gold? Think long and hard on this one!
Cavan Man
(04/26/01; 20:03:54MT - usagold.com msg#: 52655)
ET
Hi. The box business is mixed. Many plants are laying off and many are relatively whole. Mills that cannot burn coal or co-generate are in deep trouble. Energy bills at converting plants have doubled. Myself, I am giving it heck because I feel like I'll be in a new paradigm in the next couple of years or so. Like Ted Williams, I want to be sure I go out on top! All is well TBTG.
Cavan Man
(04/26/01; 19:54:46MT - usagold.com msg#: 52654)
(Elwood) USAGOLD 52598
Heartily agree and thank you for the distillation.
I'd like to add one more comment in the context of your comment about gold being the object due to the sheer immensity of settled trade (Aristotle did yeoman work in this area).
For two years I've been reading FOA, Another and the Trail etc. Having reached the conclusion that these gentlemen are genuine in addition to being gracious, I've been trying to understand how this whole scenario as it unfolds, (and it means severe economic dislocation at least in the short term) can be related with such reason, calmness and deliberate recitation and commentary. Why, for the US, it is a potential nightmare. I found myself asking: "How can our government let this happen? What is their defensive strategy? For gosh sakes do something would you!!!!!"
Elwood, I recently had an epiphany. These gentlemen and their cohorts are obviously motivated to reveal their thoughts not only to assuage what might be some remorse and guilt before the culmination but, also to influence other key and unknown (to us) parties. Their wealth and positions are so great and probably beyond understanding by most (certainly me) that they consider these thoughts and joust at this forum in much the same manner that a heart surgeon would conduct a bypass operation on your 98 year old grandmother; completely without emotion and coldly and cooly logical. This is a very skilled team. The end game in sight is matter of factly described and success is a given. That's how I know they're for real. They are playing for all the marbles and, in a way it is a game of sorts. What of our leaders here in dollar land? Well, in their positions of wealth, power and responsibility it is "strictly business" for them as well. Their personal needs are no doubt taken well care of and they will survive easily. Everyone understands (unless politics gets ugly) that the chess board and the rules of the game govern all and, that there will be another game.
I thought of the movie "Trading Places" where Ameche and Ackroyd place a $1 bet just for sport on the experiment with Eddie Murphy. Poor Eddie; his life is on the line and these two guys are playing their game. Whether Eddie come thru or not, whether or not they win or lose, they win. They always do. I hope I'm getting my point across. Thanks again for your fine commentary.
Mr Gresham
(04/26/01; 19:50:15MT - usagold.com msg#: 52653)
R Powell
Sorry for misleading you. I wish I was that good, but it is a joke; self-deprecating humor. I am such a good contrarian, that I end up being someone else's contrary indicator more often than not. Since I can't invest contrary to my own actions, the only way to profit (the joke is:) to tell others what I'm doing so they may do the opposite. (e.g.: I bought a house; real estate will go down; sell yours now.)
(Hey, the facts is: going on 3 years in gold now; down 10% on average. Do you see why "Spike" is a favorite word in my vocabulary? But it doesn't matter how you get there, as long as you get there by the time you need the retirement money, right? OK, now off to read what's below...)
Cavan Man
(04/26/01; 19:23:58MT - usagold.com msg#: 52652)
Trail Guide
Sir, you are a class act. Here we have wisdom (most importantly), wit, knowledge, experience, intellect and worldliness all for $0. Who ever said there's no such thing as a free lunch.
Randy (@ The Tower)
(04/26/01; 19:20:52MT - usagold.com msg#: 52651)
European reserve adjustments...continuing to reduce paper assets
I finally had a spare moment to look at The Tower's copy of the Eurosystem's consolidated financial statement for the week just ended, and it comes as no surpise that, once again, the net position in foreign currency reserves declined through portfolio transactions... this time by 0.5 billion euros (which seems to be par for the course.) Foreign currency assets for the eurosystem are now at 266.3 billion euros in value.
Gold assets, on the other hand, were held steady at 118.464 billion euros in value.
By way of contrast, gold assets on the balance sheet of the Federal Reserve total only $11 billion (due in large part to the legacy $42.22 per ounce valuation maintained by the U.S. Treasury for its gold stock.)
Randy (@ The Tower)
(04/26/01; 18:58:01MT - usagold.com msg#: 52650)
Fed bolsters bank reserves
On top of the Treasury Dept's buyback of $2 billion in U.S. debt securities today, the Fed did its own part to plunge funds into the market.
First was a $2 billion add via 28-day repurchase agreements, followed by a $5.505 billion add via 7-day repos, capped off by a $1.8 billion polishing touch to banking reserve levels using overnight repos.
Black Blade
(04/26/01; 18:33:53MT - usagold.com msg#: 52649)
Power crisis forces Kern County refinery into bankruptcy
http://www.contracostatimes.com/cgi-bin/emailfriend/emailfriend.cgi?mode=print&doc=http://www.contracostatimes.com/news/california/stories_statebrk/kerncounty_20010425.htm
Snippit:
OILDALE, Calif. -- The latest victim of the state's energy crisis is Golden Bear Oil Specialties Inc., which filed for bankruptcy protection Monday because its Oildale refinery could not pay its bills. By filing for Chapter 11 protection, the company can continue to operate under a judge's supervision while it reorganizes its debts. Golden Bear manufactures asphalt and other crude oil-based products in Kern County.
Black Blade: Now even the oil refineries can't stay open. Even with high oil prices, the going is tough. Due to high NG prices the refinery is unable to pay up for power. California used to have 42 oil refineries 25 years ago. Today there are 23 - oops! Make that 22.
Hey, R. Powell - Those silver Eagles are beauts aren't they?
R Powell
(04/26/01; 18:30:04MT - usagold.com msg#: 52648)
(No Subject)
Mr Gresham- you mentioned that you author "The Corrigan Report". Can you tell us more? Is it a financial advisory newsletter? How about one free copy for your old buddies in the castle?
US_Army (Ret)- you wrote that "I doubt everyone here is a greedy gold hoarder,..." I can speak for myself only, of course, and I'd like to say that, well, err, that is I mean that, just because I... Shucks, how did you figure it out so fast??
USAgold- received a piece of cardboard in the mail recently and, after further inspection, found a silver eagle craftily hidden inside. It's a beauty. Thanks!!!
Rich
Trail Guide
(4/26/01; 17:57:30MT - usagold.com msg#: 52647)
Reply
Journeyman (04/25/01; 17:32:04MT - usagold.com msg#: 52546)
Keep'n 'em honest @Trail Guide msg#: 52540
Hello again Journeyman,
Your comment on my question to Econoclast was an excellent example of the mind set I have been pointing out. It seems that with each step up the ladder of economic sophistication, we also perceive a need for a more sophisticated way of using our money. It is here, at this nondescript moment in the minds of men that we always attempt to combine receipt forms with wealth forms.
Throughout history, each one of these new ideas were embraced as a way that was sure to undo the prior problems. Each time the wealth of common man, his life long savings, is risked and then squandered once more as the world tries to make gold something it isn't.
It always starts off as a fine idea, a reasonable method, a way to better define our security of wealth and surety of payment. With each invention and improvement to our economic lot comes a better way to use gold without giving up any of it's historic principles. Principles of wealth form that
serve us by not cheating us. All done as we proclaim that "us humans" would conform to not cheat these principles in exercising this new process. Such a proclamation is repeated relentlessly until the ears of countless generations become numb from poorness without real wealth.
Truly, as mentioned on the GoldTrail, the money of our ancient fathers was not money unless it was wealth and it was not wealth unless it was possessed. Yes,,,,,,,, that one law of money that so convolutes our souls today as we struggle to contrive a way around such an unsophisticated rule of common sense. As surely as breath and air complete the circle of life, gold in hand, underrepresented by a claim, is the money we children have never known.
---------------------
Sir, you write (condensed for space):
------I think I know how the baser human tendencies ---------------------------------- with the
added advantages modern technology makes possible. We may perhaps best begin this particular trail with the French paper money experiment -----------------"To reach the climax of ferocity, the Convention decreed, in May 1794, that the death penalty should be inflicted on any person convicted of 'having asked, before a bargain was concluded, in what money [assignats or specie (gold and silver)] payment was to be made.' The great finance minister, Cambon, soon saw that the
worst enemies of his policy were gold and silver. Therefore it was that, under his lead, the Convention closed the Exchange and finally, on November 13, 1793, under terrifying penalties, suppressed all commerce in the precious metals." -Andrew Dickson White, Fiat Money Inflation In France ----
--------Simple self-interest caused the French people to discount the paper assignats vs. the precious metals, so much that the "authorities" had to attempt to drive gold and silver out of the market places in a vain attempt to save this their latest paper scheme. It took the French about 10
years, door-to-door to clear things up and get back on honest gold. In fact, Napoleon was the follow-up to that paper experiment, and he fought most of his major battles financed directly by gold. You see, history is _not_ the paper context punctuated by sporadic honest hard money we all assume because we've all lived in the midst of the paper. It is rather, honest hard money punctuated by relatively short bouts of shakey paper money. --------------
Sir,
This account is but one portion of the story. The corruption of wealth did not begin or end with this moment in time. Walk backwards from 1794 and view the context as it is punctuated with debasement of the metal itself in between and before these bouts of shaky paper. A search of our
manuals will indeed pinpoint the exact time when gold the money wealth became the object of wars and revolutions. That year was when man decided to combine the wealth concept of gold with the credit concept within him. From that moment on gold began it's troubles.
Now, walk only a short step forward from the French period as they strive a resolution of their money problems. Here we see where it all began again, even into this day.
You write:
----- It's our misfortune to be near the tail-end of the latest and most wide-spread paper experiment in history. So far, in pure form, it's lasted only about three times as long as the ten-year French experiment 200 years ago. It's longer because it's more wide- spread.---------------
Sir,
The British before us were lending and printing credits long before the US learned how. We should not judge their gold period a sucess either. Just because they brought the world a long period of gold based money did not hide their inflation. Political styling, as it were then, demanded a constant search for subjects so as to steal through warfare that gold they did not have. Inflationary expansion
through expropriated gold is inflation by any means necessary and the same mind would print for the same purpose, if needed to achive a political end. Hard money historians would have us think the King would not have printed gold receipts if he had no gold. When gold is money, it will be inflated by a society unable to controll their controllers.
You write:
----- It's a little different this time. Things are daunting for other reasons, but the out-come will be the same, reinstitution of transactional gold.-------------------
--------TG, you already know gold shines as the premier wealth preserver. If title to it can be transferred securely and easily from person-to-person, it once-again becomes the odds-on favorite for the inflation-proof transactional medium it has always been. It's the very fact of the ease of
electronic transfer of title made possible by the internets, combined by the legendary advantages of gold money that nearly guarantees this outcome.--------------
Sir,
I do not consider gold as a wealth preserver. Nor does any other Physical Gold Advocate. We consider gold itself as wealth. Indeed, "odds-on favorites" you say? Our history is full of new forms of paper receipts that would better work as the transactional medium of their day. As I told ET and
others on the Trail, man cannot control his controllers, nor can he discipline fiat with gold.
To young ears, (and I know Another will smile while reading all this) this speed of electronic transfer sounds like new news. Yet, with each new form of paper currency came the next generation of faster settlement. None of these advancements, including your latest item, addresses how it will avoid the political stress such systems face during downturns, crisis and war. As the turn of these events is marked, so to is the national money also marked. The cry goes out, if fiat is our money, we must borrow it. And if gold is our money we will borrow that too. We will make money as needed!
While it's true that all wealth is appropriated during crisis for the good of all, anything that is fiat and
receipt in nature is inflated the worst. Your "electronic gold" is nothing new in function, only new in promotion. It will succumb to the same human faults all gold receipts fall into, greed, corruption and paper inflation. No matter the safeguards in place. The Physical Gold Advocate moves forward in modern times to use and embrace the same fiat society will tamper with. All the while owning the wealth of ages as the ancients did, in your possession. In this way, the average family will know their wealth is real while society at large fights their historic war with man's credit money.
Thank You all
TrailGuide
================
Econoclast
(4/26/01; 17:46:09MT - usagold.com msg#: 52646)
An Answer
"Monetary Laws don't help, the evil ones will go around them."
Any system that could possibly be thought of or proposed must include the use of law. Part of the answer (transparency) includes a complete treatise of the "new" laws written in simple, direct English (8th grade level—2 pages instead of 2000). The laws would be directed towards controlling the bankers, not the people for a change. The laws would be written with input from bankers, but not by bankers.
Penalties for financial fraud/counterfeiting/etc. would be severe. I am against my government killing people in my name, but perhaps penalties would have to include death. At least 20-30 years for offenses. If we can have mandatory minimums for people using a small amount of a drug other than the govt approved alcohol or tobacco, we can have ridiculously harsh minimums for bankers committing fraud with people's money.
What follows is the beginnings of an incomplete outline. I'm sure that there are a million questions and problems to be worked out. I am not a finance expert, and as I've written here before, I have a degree in economics from a good school yet in my whole formal educational experience I was only given about 3 hours (actual-not class hours) in monetary policy education.
To continue from above, the key word is "transparency". Transparency throughout the whole system, with any management role in a non-profit, purely functionary capacity. I imagine that computers would handle much of the day-to-day operational load, reducing humans in the system to the role of simply performing labor for the brains in the computers. Eliminate the potentials for greed to act.
Somebody posted here sometime back, the idea with much of the math, of weaving OUR gold supply, literally, into gold dollars. Hypothetically, lets say this system goes into effect 1/1/02. The US holds about 1 ounce for every adult citizen. I seem to recall that the posters’ math came out to about $30,000 gold coincidentally. On 1/1, every American citizen would have the right to claim from the mint, their 30,000 gold dollars for no charge (its ours right?). Free money to every citizen would guarantee public acceptance and even enthusiasm for the major financial change. These gold dollars would have to circulate. It would be good to have a few year duration legal tender law that they must be used for any transaction say, under $10,000. Any dollars could also be redeemed for gold dollars. Either the govt would have to buy this gold or the 30,000 starting point adjusted to take into account the dollars in bank accounts that would be changed.
This new gold dollar system would function alongside the current FED system. Any large debts (mortgages, business debt, most importantly, govt debt) would be denominated in fiat dollars. That way govt could continue to operate (maybe, ha ha) and the banksters could still have their play money to manipulate and try to capitalize on. A free market would exist to redeem back and forth as necessary. This free market would show the relative worth between the two currencies. Gold for the people, fiat for the govt and banks.
"What is to stop "me"….from lending paper credits…"
Contracts could be denominated in gold dollars, however these "gold notes" are strictly non-transferable. If someone wants to sell their gold note, they can't. It is only enforceable between the parties that entered into it originally. All forms of paper gold are illegal-fraudulent. Any debt larger than the legal tender law amount has to be denominated in fiat, smaller can be negotiated.
"How do we stop this ages old evolution of ‘thinning our gold’ when our economy slows?"
The fiat portion of the economy might slow but I think we would see a radically different reality for the people's gold dollar denominated economy. The business cycle would end as we know it. The gold dollar supply would increase to handle growth through people bringing their private gold into the mint and having it woven into dollars. Maybe the govt would also have to take over some mines (can you say Barrick, Newmont, etc.) due to their defaults shortly after 1/1. Mine supply would belong to the people and we would be paid our annual dividend in gold dollars.
On 1/1 the complete, simple system and laws would be given out with the gold dollar supply, posted by law in every bank, on govt websites, published in newspapers, etc. Complete transparency throughout the system.
Bankers are people too and might even own enough gold themselves to still be in their lofty positions. I'm sure that large banks also have their own bullion.
I'm sure there's tons of things I haven't yet thought of but here is an outline of a beginning. Obviously, I'm in dreamland as far as govt and banking establishment accepting such a change but hey, I'm dreaming of the Constitution and the concept that govt is the servant of the people which it IS supposed to be. That's our gold in the Federal Reserve vaults, let's get it and use it. I think a lot of the as yet unseen or missing pieces could be worked out due to the dual money system. The shoes go on the other feet. Gold for the people, fiat for govt and the banks.
Only citizens could exchange at the mint.
Hopefully I haven't held myself out as a complete fool here.
Maybe someone like ORO could take it from here. Or anyone. I have more thoughts underneath my mind if anyone has questions like "what would happen with so and so debt/asset?"
Well, I guess I'll post this now, otherwise I could keep thinking of another thing and then another.
tg
(4/26/01; 17:40:48MT - usagold.com msg#: 52645)
(No Subject)
http://www.comstockfunds.com/
"Bulls are placing their bets on the continued stability in the housing and auto industries as well as the aggressive Fed rate cuts. However, the interest rate reductions will have a tough time turning around an economy that is declining as a result of the previous capital spending boom. Why would anyone borrow to build unneeded capacity or to buy consumer goods when the labor market is so weak? In addition both the housing and auto markets are highly vulnerable to current conditions and are more likely to deteriorate rather than carry the rest of the economy to recovery. As the unemployment rate rises and the labor market weakens, housing is almost certain to feel the pinch. People uncertain about their job prospects are unlikely to purchase a new home. The same goes for the auto industry, which is plagued by global overcapacity. As a result auto prices have not increased in four years and the industry has been forced to entice consumers with unusually low finance rates and cash rebates. The average value of vehicle incentives has now soared to a record $2,500, and manufacturers cannot eliminate them without destroying their sales. All in all we think that investors will find the coming economy extremely disappointing, and that the highly overvalued market will sink to a level where valuations are reasonable or cheap."
©
beesting
(04/26/01; 16:36:30MT - usagold.com msg#: 52644)
Hi ORO****John Q's house quest.
ORO, I see you've been talking to some Real estate people.(Big Smile) Estimate 99.9%(R.E. people) will give John Q. an explanation similar to yours, and I'll guess most of your figures are very accurate.
All I can offer is my own personal experience:
Was lucky to land a good job at age 26. Rented 2 different places(an apartment and a small house in fairly respectable areas close to my work place.) for the next approx. 7 years. Rent was less than one weekly take home pay check.((VERY IMPORTANT))Got so involved in finding a home and not being cheated I went and got a real estate license, only to completely understand finance & real estate.
During the 7 years a co-worker sold me a duplex he owned. Because I realized the more downpayment is made on the house, the lower the monthly owner financed mortgage payment. I was able to get the mortgage with monthly payments close to my rent payments.Half the rent from my 2 tenants paid my mortgage, the other half was saved putting another small monthly amount into my savings.I still lived in a rental of someone elses. In two years time I had saved enough for the downpayment on another duplex. I put over 1/3 down which made the rent from one rental enough to pay the mortgage.(on 2nd house)So I was now living rent free as I moved into the 2nd duplex.
After 2 more years I paid off house # 1, which gave me more in pocket income,(from the rentals) also with two duplexes the tax burden was offset. After about 8 years of ownership house # 1 had appreciated almost 33% and it was sold. At that point in time, approx 12 years from getting my job, we could have easily bought a new house for cash with proceeds from first house sale and additional savings.(By this time I was exploring and investing in the investment world)
So, the point is buying a house for cash can be accomplished with lots of effort, motivation, will power, and a steady job.
P.S. Also spent a lot traveling(out of the U.S.) in those days every year.
Back to Gold!...Again, Great to Have You Back ORO!
....beesting.
Randy (@ The Tower)
(4/26/01; 16:07:03MT - usagold.com msg#: 52643)
GFMS provides the numbers, you must provide the grain of salt.
http://www.usagold.com/wgc.html
In its latest report providing figures for year 2000 supply and demand, GFMS provided this outlook for year 2001 pricing:
"The gold market in 2001 has the potential to be more exciting following a rather dull 2000 as the threat to fabrication from a US-led world economic slowdown squares up against the higher possibility of an investor-led recovery in the price. Although no 'flight to quality' has yet been discernible, the prospect that gold could profit from a recession-induced financial crisis and a decline in the US dollar cannot be discounted."
Over the year, the primary source of supply (from mining) totalled a record high 2,573 tonnes.
Total fabrication demand was cited at 3,739 tonnes.
Clint H
(4/26/01; 15:55:01MT - usagold.com msg#: 52642)
Orville Goldenbacher
Orville Goldenbacher, you said "no offence" in your msg#: 52612.
I find it very offensive. If it is not necessary to say something then it is necessary to not say anything. Your comments added nothing to the gold discussion. This is a worldwide forum.
Lafisrap
(4/26/01; 15:29:22MT - usagold.com msg#: 52641)
CA energy crisis
http://www.reuters.com/news_article.jhtml;$sessionid$GBJVR0QAANMMECRBADLSFFAKEEANMIV2?type=topnews&Repository=USTOPNEWS_REP&RepositoryStoryID=%2Fnews%2FIDS%2FUsTopNews%2FNEWS-UTILITIES-CALIFORNIA-PRISON-DC_TXT.XML
Probably will make the situation worse:
excerpt
***
SAN FRANCISCO (Reuters) - A group of California state lawmakers, saying out-of-state energy firms are soaking California consumers for billions of dollars, introduced a bill on Thursday that seeks to imprison anyone convicted of price gouging in the state's volatile energy market.
"Today we are making sure that generators, suppliers and pipeline owners who exercise market power and rob millions of Californians (of) billions of dollars will be guaranteed significant jailtime," Dennis Cardoza, the principal author of the bill, told a new conference in Sacramento.
***
. . . considerable incraese to the risk of doing business in CA might tend to increase the price of energy.
ORO
(4/26/01; 15:25:52MT - usagold.com msg#: 52640)
beesting, John Q's house and mortgage
First, it should be noted that JQP has to live somewhere during the period until he buys a house.
If he rents the same house, he will be paying the owner enough to cover the latter's interest expense or to cover his opportunity cost arising from his refraining from the sale of the house and the investment of the funds at current interest rates. The commercial real estate loan would end up being some 2% more expensive than a GSE mortgage, and the owner would expect to earn the competitive return on the equity portion of his position, which normally starts at 50%, though often it would be less.
Therefore, rent payments would be nominally higher than the mortgage payment by 2-5% at the least, even if the owner is relying on appreciation over time.
Furthermore, the interest payments on a mortgage will be tax deductible, thus lowering the effective cost by the marginal tax rate: 15% or 28% for John, lowering the overall out of pocket expense by 11% to 20% throughout the loan period, particularly in the beginning.
Furthermore, housing appreciates with price inflation. If you wanted to buy a modest 3 BR ranch in a a 1960s suburb, you would take the $1800 it cost at the time of construction and compare it to the current $99K going price - and you have a 7.5% average appreciation rate, which, if you kept your funds in short term CDs or money market accounts would have compounded at 6.7% if the bank were kind enough to give you the Fed funds rate (Fed's lending rate to banks).
Compare this in the case of a given $1000 monthly savings rate while you live with your folks or in a tiny appartment in the wrong part of town, with current short term rates of 4% and current average home appreciation rates in the US which were 4-5%. You would have had a 1% loss relative to your target house for each year of savings, so the $100K house will take you to 8.3 years of savings if homes appreciate at the same rate as short term interest, and when home appreciation cost is 1% over short term rates, then it would take 9 years. Over the period, you would see also the effect of the tax advantaged interest rates according to your marginal rate. On your savings you would lose 1/3 (on average for Americans) for income taxes, and that would bring the housing inflation adjusted interest rate from -1% to -2 to -3%, which would bring the savings time to 10 years. While you still have to fund your living place!!
Is it any wonder that your father took mortgages?
Up till the late 60s there were only two relatively short periods of serious price inflation during your grandpap's life. You should be ever so lucky.
Lafisrap
(4/26/01; 15:02:59MT - usagold.com msg#: 52639)
COMEX gold and silver warehouse stocks-April 26
http://www.futuresource.com/search.asp?source=story¶m='id=i4145151354925088769'&filename=story
No change in COMEX gold stocks today.
However, it is interesting to note that COMEX gold stock at HSBC Bank USA has only 3,844 ounces of Au listed as eligible. Also, no replenishing of COMEX gold stocks detected this week.
bob leppo
(4/26/01; 14:50:09MT - usagold.com msg#: 52638)
(No Subject)
I am happy to start posting on this thread. I have been a speculator since 1977 first in US stocks, then commodities and venture capital. I am currently long gold futures (the June Comex contract) in part because of my lurking on this thread and le metropole cafe.
In the 1980's Saudi Arabia was single handedly propping up the price of crude oil by cutting their production. They cut their production from something like 10M barrels a day to under 4M before the price collapsed and I had to sit and wait for over a year. I think the central bank selling/leasing of gold is an analogy and doubt that the day when the central banks efforts to hold down the price will collapse can be delayed more than a few more months. It is beyond me why the private Japanese bondholders don't switch some of their bonds into gold...does anyone see the metrics re gold imports into Japan and what is the trend there?
Lafisrap
(4/26/01; 14:40:29MT - usagold.com msg#: 52637)
Tree: COMEX; Buena Fe: euro
Tree, thanks for the COMEX info. Watching COMEX has become much more meanignful, much more interesting, and I certainly need the education.
Buena Fe, looks like the ECB once again did not blink. The IMF continues to whine, and the euro has gained approx 3/4 percent against the U.S. dollar so far today. Seems to put some pressure on the Fed not to cut rates further anytime soon, which would make the Fed look somewhat stupid after the recent in-between-session emergency rate cut. So, how big does the spread need to get before a significantly large amount of capital moves to europe?
I sure do need POG to go to $30,000.
Lafisrap
R Powell
(4/26/01; 14:31:47MT - usagold.com msg#: 52636)
Two fer three
Two out of three today with the lease rates being the down indicator. They gave back yesterday's gain and are now just about where they were on Tuesday. That's still higher than normal.
POG ended up just shy of two bucks. The story of the day is the XAU index which was up almost 6%. In keeping with it's usual pattern, most of the upside came in the last hour of trading. I heard an opinion at the neighboring castle (G-E) that those investers who have held precious metals mining stocks through all these lean years are most likely true blue goldbugs who aren't going to sell. This stock sector probably doesn't include many eager to unload. Seems logical, no?
Rich
megatron
(4/26/01; 14:09:59MT - usagold.com msg#: 52635)
Galearis
Good! Thank you.
The odds of Joe Public buying/hoarding/panicking into gold are EXACTLY THE SAME FOR SILVER. 300,000,000 ignoramus' won't exactly be 'choosy' as to where they 'invest'(Have they ever looked at a thing called mutual funds) All it would take is .01 per cent of this capital to blow silver or gold to the moon. Why posters continue with this idiotic arguement against silver when the data is right in front of thier face, not to mention history, is beyond me. The people who will drive the silver bull(remember 1980????) are the same ones that will drive the gold bull. THEY DON'T CARE ABOUT 'MONETARY' METALS!!!!!
Mr Gresham
(4/26/01; 14:07:19MT - usagold.com msg#: 52634)
Allocation, Topaz
Fiat or E-gold, fine to use -- just, in limited doses. Why would you transfer very much of your physical into either form? Just what you would need for "spending cash", right? E-gold would protect your pocket cash from depreciation, sure, but how important is that in your overall asset mix? They're probably honest, safely offshore, etc. etc., but there must still be some discounting of the other possibilities.
As far as I can see, the only risk discounting to be done of holding physical yourself is memory: "Now, let's see; where did I put those...?"
Topaz: You _have_ heard about my investment newsletter, "The Corrigan Report", haven't you? Motto: "When Gresham speaks, investors run! (the other way)"
megatron
(04/26/01; 13:54:34MT - usagold.com msg#: 52633)
TSE gold index
Could this be the equivalent of the run-up in the lease rates months before the WA?
megatron
(04/26/01; 13:52:43MT - usagold.com msg#: 52632)
TSE Gold Index
Hey! Let's discuss why the TSE Precious metals index is in a such a bull mode! Does somebody know something we don't?
This seems to be either insider buying or an abberation, does it not? Most of the posters here, who I would consider cognicenti, are negative towards gold stocks(equities) so who are the buyers? Any idea?
Belgian
(04/26/01; 13:28:18MT - usagold.com msg#: 52631)
Arabs...Oil.....Gold
Arabs and oil are only a specific part of the entire Gold-picture. Their gold is integrated in their culture in contrast with Western gold, that is rather an individual given. Westerners lost their touch with gold. We are feeling secure and safe into that "wealth-machine", that our so called democracy has created for the last 30 years.
An increasing amount of european retireees, do rely on the additional interest rate-income from their life savings to extend their standard of living, wich was acquired, during the period they were active and productive. Can you imagine the effect of a currency collapse (or hyperinflation) for this group of people ?
These retirees will not consider it, "today", to buy a Kg of physical gold for a "just in case" argument. The gold that has been bought by individuals of the previous generation was at much higher prices and paid for with fiat that was less indebted. They see the today's result of an earlier (wise) decision: an ATL POG. Difficult to motivate them, with all kinds of theories, about how valuable gold is. This is a fundamental difference in conception with the oil-arabs. Westerners, remain price-oriented. They will re-attach to gold when the price is triggering them to do so.
Once they have bought the physical, they start to talk some theory, around it again.
So, I don't see any westerners adapt any kind of muslim economic principals. And since we are all globalised, there will consequently be, an a-typical world economy after the transition period.
Question : How should you proceed to organise a gold-sensibilation program for the following target-group ?
- 1 million retired households (middle class) with an
average of 250.000 $ paper assets, providing a yearly IR-income of 13.000 $ : Buy this year 1 (one) Kg of physical gold with this 13.000$ interest (costs 8.500$/Kg) ?
1.000.000 households x 1 Kg = 1.000 tonnes in one year !
Purpose of this question : do you think such an event is possible ? And, when or how can something similar happen ?
Relevant or not ?
JMB
(04/26/01; 13:21:57MT - usagold.com msg#: 52630)
RANDY.....ET
You guys are good....Real good! Thank you.
Galearis
(04/26/01; 13:16:00MT - usagold.com msg#: 52629)
@Agbull re silver link
The Morgan piece....
I have been listening to this gentleman for a year or more, and he, along with Ted Butler are a lock-step tap dance on the subject - with both having more than adequate backgrounds to know of what they speak.
It would be most interesting if Mr. Butler or Mr. Morgan should decide to step foot into a forum discussion on USAGOLD on this subject. There has been more than enough of views that would seem to take quite the negative stance on this metal's future on this forum. In fact we would seem to be of two camps.
Far be it of me to ever think that I should be the critic to Trail Guide's views; he would have much the more experience on precious metal markets than do I, and yet I find myself shying away from some of his recent statements. The most troublesome for me was the $.50 silver statement. Troublesome in that I am a confirmed silver and (goldbug) with more weight to the silver, but also one knowing the relative importance of silver to a modern economy. Should the $.50 silver become the actual reality it would speak to a world without modern industry. This paltry price for a vital metal in a world slashed with currency woes and hyperinflation implies a collapse of profound proportions.
I wonder if Trail Guide has given this all the thought he should?
Best regards to all,
G.
P.S. to Workingkirk: That would be the "phonics" reading method to which you refer. In Canada, of which I can only safely speak, the teaching of phonics was an accepted methodology for many years. It passed out of favour(after I passed out of these grades) to be supplanted by "sight reading" the teaching of recognition of whole words in a sentence. Phonics methodologies concentrate on teaching sounds of letters that are then used by the student to "sound out" the word to aid in recognition. Obviously, the latter serves well for facility in spelling. At no time are these methodologies in Canada really forced on teachers in the public system - although one or the other, whichever is currently is in favour (fad-like), are encouraged to be used in schools over the other.
One should always be reminded that, like a tree, lack of growth to things human means death. Many wonderful policies and processes are struck down just for the fulfilment of this. At some point this process reaches a point of diminishing returns and there is a decline due to any number of reasons but generally because the system becomes unstable and ceases to work anymore. The process is a slow one (and a generalization too), but the concept may also be applied to societies too. Change for change sake here has probably collapsed empires as it reduces economies to rubble. (Gold market anyone?) Of course, sometimes the old comes back into favour and the world is saved (smile).
Phonics is a vastly more superior methodology. But none of this is a plot. The one thing one can count on in any system, private enterprise or government is "goofiness and fadism". As gold bugs we are well aware of all of this in our area of interest.
If one needs another measure of these words (and assuming you have some better than normal (smile) accuracy of judgement), on your way home note how many death-defying stupidities and bad driving practices you see on a drive in the city. Then ask yourself how much of this is an orchestrated endeavour of private agenda, or just plain incompetence?
Best regards, again
G.
beesting
(04/26/01; 12:38:57MT - usagold.com msg#: 52628)
Randy(@ The Tower) # 52596***response.
Hi Sir Randy,thanks for answering and all the work & time you have contributed to make USAGOLD the outstanding forum it is.
I am in total agreement with your statement:
<<The problem arises when the system dips into the traditional LENDING function of
typical banking institutions.>>
Which also leads us to your exersize in clear thinking on the 24th # 52480:
<<The setup:
YOU are John Q. Public. You are young, energetic, highly skilled and
intelligent. You
have an established, reliable career currently paying you $3,500 per month.>>
And This:
<<Monthly payments of U.S. currency totalling $1,120 per month over thirty years;>>end of snip.
beesting comment:
I think all of us reading understand the present banking system has helped some people in some ways but has hurt many others. Please allow me to voice a minority opinion.
There are 2 kinds of people in the world:::SAVERS & NON-SAVERS. My own Dad was a non-saver. My Grandfather was a saver.Please allow me to compare the 2.
Dad: Used the banking system to buy new cars and a total of 4 houses in his lifetime, the last 2 were new houses. On the last house(custom built) after a few years he found his small savings were being used to pay ever rising house payments.(worked for others into his 70's) He sold the house at a loss, and lived the rest of his life in apartments, where my mother still lives today.
Grandfather:
Scottish immigrant, at about age 24 landed a job as a printers apprentice. Worked part time in real estate, and learned about loans, finance,investing etc. The rumer passed down to me was he lost 1/4 million in the 1929 stock market crash, a huge sum in those days. Was semi retired from his early 50's on living by selling off his own real estate holdings.Upon his death(1958)he OWNED a beach(and huge house) on Cape Cod and hundreds of acres of lands in the surrounding areas.His advice to me: SAVE YOUR MONEY!!!
So, the point I'm trying to make is, the current banking system works for some(the ones that completely understand the system) and forces the rest into a state of servitude.
Now lets go back to John Q. Public. How many people figure out how much that house John is buying wiil cost him over a 30 year period? Well lets figure it out for him: $1120 times 12 months equals $13,440 per year(The first 7 to 8 years payments are almost all interest) $13,440 times 30 years equals $403,200!!! I would guess the original price of the house is somewhere around $125,000. So, we have(I'd like to call him poor John) Mr. Poor John Q. paying somewhere between $200,000 and $280,000 to the($403,200 minus $125,000 ++ or --, bankers(INTEREST)representing 30 years of Johns working life. House repairs not included.
Now lets say Poor John is a good saver, of Gold or any other convertible form of stable money, he puts off buying a house now and saves the $13,440 per year(amount of house payments) in about 7 to 10 years if he is lucky he will have enough to buy a home cash if he wants to, and for the next 20 years of his working life Poor John now becomes Rich John because he has an extra $13,440 of spendable income per year he didn't have before.
This is a poor over simplyfied example of an alternate financial plan for John Q. but it has worked very well for the few that have had the fore sight to implement it, believe it!
On to electronic-Gold banking:
Although monopoly's are supposed to be illegal in the U.S. the Federal Reserve System has done their best to create a worldwide monopoly in banking. Any account at any charted bank worldwide can be accessed at any time and seized(WITHOUT A TRIAL) at any time.
So far the electronic banking as I see it is a healthy compititor to the entrenched worldwide banking system that has many, many people in the shoes of John Q. Public above. As I understand it the electronic banking system(e-gold) is made up of individual segments(The same as a local bank would be without the attachments to the Federal reserve System) The type of "Banking" the local guy indulges in is at his own discretion. He may or may not decide to get into the loan business. His banking policies are not dictated to him from someone in New York or London or Zurich.
Bottom line:
An alternate worldwide Gold backed banking system is now available to those who wish to investigate(not a typo) it.
Thanks for reading....beesting.
Randy (@ The Tower)
(04/26/01; 12:13:04MT - usagold.com msg#: 52627)
Feedback for Henri's msg#: 52623
----- rule of thumb # 3 ...[use gold holdings] as collateral for a low interest rate loan of fiat. Do not outright sell your gold for paper.------
You might want to think long and hard about that one. What alternative collateral is commonly used today for car loans or mortgage loans? Still works tomorrow? Then fine. And just as today, we often know the moment when it is simply more appropriate to dip into our savings to fund expenses rather than become saddled with debt from a new loan.
If the collateralization you propose is not of a discrete, allocated nature such as seen with pawn brokers, then you have merely reinvented the bullion banking system as the bank sits on a pile of fungible collateral. A shell game ensues where a little bit satisfies many owners.
Now let me nit-pick here, because I think the distinction might prove helpful to some. You said:
-----"The fiat value of gold held dear will increase but this is depreciation of the fiat not the appreciation of the gold."-----
I would say, rather, "The fiat PRICE of gold held dear will increase; this is partially depreciation of the fiat, and partially the appreciation of the dearness of gold."
Why would gold increase in relative "value" over time? Because due to its particular characteristics as a rare and non-renewable in-ground natural resources, the growth rate of the avaliable goods and services in the wider economy will likely be increasing at a faster rate than new supplies of gold are unearthed for additional use by the pool of savers.
Randy (@ The Tower)
(4/26/01; 11:47:40MT - usagold.com msg#: 52626)
Carl H and Tree in the Forest
If you both consent to having me broker your exchange of e-mail addresses, please both send an e-mail (sitemaster address at bottom of page) with your posting handle in the subject line.
Randy (@ The Tower)
(4/26/01; 11:37:06MT - usagold.com msg#: 52625)
ET, you are a marvel, one of the world's true wonders!
http://biz.yahoo.com/rf/010426/tau024784.html
You said to Topaz, "FOA and Randy are leading us to believe that the euro will indeed provide this transition but I don't believe it is the case nor is it cast in stone as the future. They have tended to give the marketplace shortshrift, as if the Europeans have total control over said marketplace. .... They ["European bureaucracy"] can issue currency after currency, but if they attempt to arbitrarily fix the currency to a standard measure without actually trading in the marketplace, their system will have no credibility, hence, no value."----END----
Your complete and consistent failure/refusal to grasp what has ACTUALLY been said (reapeatedly, and frequently directed for your individual attention) puts you in a class by yourself. I stand in awe. Given ALL that has been said on this matter, how can you possibly continue to gather that the European currency is to be fixed to a standard measure (presumably you mean gold) that wouldn't be "actually trading in the marketplace"?
The guaranteed freedom to convert your excess paper currencies for gold on the free market is a fine thing, is it not? From 1933 through 1974 Americans did not even have this blessed freedom. The past 30 years has been a transition, where free ownership came first, to be followed by free market value.
Here's a small glimpse from Reuter's of the growing structure of political thought. Just extend the sentiment to gold:
TOKYO, April 27 (Reuters) - Japan's new Finance Minister Masajuro Shiokawa said on Friday foreign exchange rates should be left to the markets.
"I don't think foreign exchange rates are something you can manipulate. It should be left totally the markets," Shiokawa told a late-night news conference. "We should not try to manipulate currency rates based on whether the current rate of 122 yen to the dollar is advantageous or not."
Journeyman
(4/26/01; 11:09:47MT - usagold.com msg#: 52624)
Of Belching, Arabs, Gold & the End of Austrian Economics @Elwood, Trail Guide, Beesting, ET, Randy, ALL
Great conceptual bridging post Elwood! I think you put
FOA/Randy/Aristotle into a most useful psychological perspective.
I've sensed for quite awhile we're all pretty close together and
only a whisker away from the neo-Austrian perspective (which by
my read includes I.O.U's as part of the bidding money supply.)
In fact, somewhere in my unfinished writing is a partial post
attempting a "bridge" similar to yours!
And unfortunately for me, I'm going to have to try very hard to
leave this discussion - - - other things are happening.
Four other comments however: (Started out as _two_ comments, but
like Greenspan reportedly said of his job as FED Chairman, "It's
like eating peanuts; you always want a few more!")
1. As far as belching in an American restaurant - - - and
extending the anology - - - If indeed belching is _no longer_ the
custom, it seems to be experiencing an unexpected resurgence.
Perhaps we were all Chinese from 1800 thru 1933, and are
beginning to rediscover our lost heritage.
A little less allegorically, if you use an "electronic gold"-
backed card, at least the way I understand it at this point (will
have practical experience shortly), no one will know the
difference except you. No belch.
If you're arguing that Americans don't like gold, you're arguing
slightly against acquiring it since without demand _here_, the
price won't as likely rise. I don't think that's what you
believe. It may well be, on the otherhand, that gamblers, ah,
that's investors, don't like gold currently, but apparently the
average American hasn't lost touch with it.
Banks call their credit cards "gold cards" for a reason. "Good
as gold" still means just what it always has. The main reason,
apparently, that "Westerners" don't use gold is that it was
purposely made unavailable and cumbersome to use. If the growth
of that first "electronic gold" business is any indication, it's
business model has made the use of that form of very tightly
controlled gold derivative (the "deriviative" is the title to the
gold, presumably existing in storage somewhere) easy enough to
allow the average American to once again handily use gold for
his/her transactions. And, it seems, we are in rapidly
increasing numbers.
See, I knew it all the time. We're not as stupid as advertised!
Ah-oh! I forgot - - - this is the internet age. I have no way of
knowing what nationality those folks using the "electronic gold"
is!!
2. As far as the end of Austrian economics, brought low by Arab
gold thinking:
EVERYONE HAS HIS/HER PRICE. (Sorry about the caps, but this point
needs mucho emhasis.)
It's true gold would have to trade much higher - - - but we
already knew that, right? The problem may have become that
because of the extremely low prices for gold, those folks who
value it emotionally have taken far more out of circulation than
they otherwise could have. And since they have an emotional
attachment, they may demand a higher price to part with it.
Somewhere I've been getting the impression all Arabs are rich and
hold huge amounts of gold. I'm pretty sure this isn't the case.
Undoubtedly some Arabs hold massive amounts of gold, though even
they may no longer be as rich as we imagine: Reports indicate the
Saudi's over extended and were on the edge of bankruptcy awhile
back.
One way or the other, everyone _still_ has his price. Even
Arabs. Even for gold. Meaning at the right price some of those
Arabs will trade their gold. For example, if their kids were
starving. Or they had to farm the desert.
It none the less seems quite reasonable, given the cultural
affinity for gold in that part of the world, that there must be
some holding massive amounts of gold. If they're prudent, they
are indeed saving up for an oilless future. And there have
always been "Midas's," after all.
Perhaps there's a concentration of them in the Mid-east. Whether
"real money" is gold or oil, the ultimate problem for them is
what ORO characterized as "Triffin's Dilema" awhile back. That
is, the countrys that produce "money" (oil, gold, dollars?) more
cheaply (or accumulate a bunch), in accord with "division of
labor" and "comparative advantage," they quite logically produce
the money and not other things. Down the road this leads to
problems - - - if the money they manufacture (or produce or save)
loses it's comparative edge, they've "exported" their farming-
industrial-etc. base and now have to rebuild - - - or starve.
This is also an apt analogy for the situation the U.S.A. finds
itself in with the massive "exports" of the "strong" dollar in
return for foreign goods rather than producing them here. Great
- - - as long as the dollar holds up. The problem is
particularly precarious if the "money" you've been exporting
might _suddenly_ lose its appeal. How fast can you get a crop
out of the "north 40," now completely forested-over? How long
for Homestake to reopen? I agree with the Arabs. I'd rather
count on gold holding up myself.
As far as "too high a price for oil" in terms of gold, markets
adjust. If the world had remained on transactional gold and the
oil producers, whether Saudi, Venezuela, Mexico, etc. had priced
their product "too high," perhaps by sucking so much gold out of
circulation that the "price" of gold increased drastically, other
"alternative fuels" would have become economically viable. I
believe at around $40 per barrel, the tar sands and oil shale,
60% of which are located in the U.S. and Canada, become
competitive for example. And gold mining would have become very
lucrative.
No doubt if we were using transactional gold (instead of
transactional fiat) the world would be a different place. And in
my opinion, a better place.
3. As for folks making loans, Sir Randy, what's wrong with that?
The problem isn't the loans, it's disguising the loans as gold
that causes the problem. Like they did when they issued all
those "redeemable in gold on demand" Federal Reserve Notes
without enough gold to redeem them between 1913 and 1933.
With "electronic gold," assuming the inventory mechanisms are
honest - - - and that there are many competing "electronic gold"
bank-like organizations - - - there will be little or no
electronic paper disguised as gold.
The "notes" promising to pay "interest" will clearly be promises
to pay rather than "money." As such, they can and will be
discounted by the market, just like any other bond or other
vehicle, based on market perception of the likelyhood the promise
to pay will be met. The supply of these "bond" money substitutes
will thus be curtailed by these perceptions - - - and the degree
folks are willing to put their NON-DEPRECIATING gold savings in
the hands of professional economic gamblers (the equivalent of
today's loan officers).
Remember, one reason there's so much money floating around out
there to loan is that if you don't put your spare (fiat) "change"
in the hands of today's pro gamblers, it's for sure worth _less_
tomorrow.
4. Just a half-baked note on "media of exchange" in general,
reflecting my currently muddled but on-going thinking. It may be
relevant here:
Media of exchange are all, at base, psychological "vias." That
is, they are a path to facilitate trade, partially necessary
because we must compare things (and partially through confidence
in the medium of exchange to avoid the time-costs of direct
barter). Is it better to take a cruise or buy a new car? (The
most important though usually neglected question, particularly by
Austrians, is "How much does each cost in terms of the hours of
our lives?")
Money greatly facilitates and simplifies cross-product comparison
and "indirect barter." But it also acts as a funnel through
which trade must pass. What's the "correct" size of the
nozzle?? In theory, it might be possible to by-pass this funnel
entirely. "In the end, all the world was direct barter a-la
Ebay." Not entirely far fetched: Some of the four and five party
barters worked out in Russia around 1998 were quite amazingly
intricate. And they were put together without benefit of
computer.
At any rate, as Mises suggests (no time to find exact quote),
fiat could work if the issuers would only keep the supply in
check. The problem is, they never have. That's human nature.
The question is, for the good of us all, how do we handle that
situation. The best answer has always been to use something as
money that is extremely hard to "inflate". Shaving coins, etc.
was always a problem, of course, but as nothing compared to what
is possible with printing presses - - - and computers.
Gold: transact you some!
Regards,
Journeyman
Henri
(4/26/01; 11:06:38MT - usagold.com msg#: 52623)
Honest gold alongside fiat. Why we need fiat.
It seems to me that if a few common sense rules of thumb were able to be followed (most of the time), that the price of gold could climb radically without disturbing a matrix of fiat interactions.
OK
rule of thumb # 1 keep your gold if at all possible.
rule of thumb # 2 If you see an opportunity to profit over the short term always use fiat to accomplish the action.
rule of thumb # 3 If you must put up fiat to spin up more fiat (profit)and you have to consider using your gold holdings, use them as collateral for a low interest rate loan of fiat. Do not outright sell your gold for paper. Open a fiat credit line that fluctuates in value with the market price of gold. Use a small fraction of that fiat credit line to work your profit opportunity.
rule of thumb # 4 once the profit is sufficient to keep the venture profitable (assuming it is of a business ongoing nature), unencumber the gold first. If the profit is made unencumber the gold collateral and remove it from the publicly visible sector.
rule of thumb # 5 lend gold at your peril.
rule of thumb # 6 sell gold only when it is the absolute last alternative.
If the world maintains these rules most of the time, gold will become "dear" due to its scarcity. New supply will come from mines. The only other way would be if someone engaged in a venture with a gold collateralized loan and it went bust. The portion of the gold placed at risk now belongs to the fiat lender along the terms of the escrow agreement. Would it be placed up for sale to recover the lost fiat?...not likely for the gold was the prize all along. The fiat lender did not gamble nor did he collect great interest. The borrower gambles his real wealth on the venture to obtain the means to acquire more gold with his profits.
rule of thumb # 7 understand that there is no such thing as an opportunity to hold a long term asset (including gold)that will profit the holder. Gold is gold it does not create more gold by its mere existance.
The fiat value of gold held dear will increase but this is depreciation of the fiat not the appreciation of the gold.
family gold can be acquired by converting short term fiat profits or having many daughters (smile)
YGM
(4/26/01; 11:04:31MT - usagold.com msg#: 52622)
Correction
I have absolutely NO interest in topics of religion but in previous post I meant to say Christianity vs Islamic/Muslim
religions looking in the mirror in previous post...To each his own...GO GATA & Gold & GO PHYSICAL.....YGM
YGM
(4/26/01; 10:51:51MT - usagold.com msg#: 52621)
US_Army(RET)
Arab system & Inflation....
Omar...I believe I've read that a certain coin of silver in the Arabic world in ancient times (time of Christ) bought one Chicken at market and that same coin today at market buys one chicken...I cannot remeber the reference but.....
My view is that Christianity and the Muslim religion could
both do well to look in the mirror before castigating the other side.....YGM
YGM
(4/26/01; 10:45:42MT - usagold.com msg#: 52620)
Orville...
No offense taken....
Religion plays "NO" part in my personal studies of Gold, the Banking system or other financial matters.....Maybe we see their religion as some fanatasism (sp) but they are way and far above the crowd in the Financial end....Regards...YGM
US_Army(RET)
(4/26/01; 10:34:10MT - usagold.com msg#: 52619)
YGM - ...Arabs & Gold/Banks/Usury
YGM, et.al.,
RE: US_Army(RET).......Arabs & Gold/Banks/Usury
Sooo much terrific "wisdom" to be had here on this forum!
The fact that "Usury" (Riba) is one of the greatest evils ever concocted by and upon mankind is well documented thru the ages. Hence the ancient and well-founded prohibitions against it in many past societies and cultures.
The fact in itself, gold is "interest free" makes it the only moral and natural medium of exchange in today's world.
It is apparent to me that most participants, both readers and posters to this forum take it for granted that our current worldwide financial system is in a near state of collapse and cannot continue in its present state much longer. The dollar is clearly on its last legs and with it, our complete monetary, financial and economic system. The very foundations of our current social structure and "so-called" order.
There is great room for discussion on how we got here...whose "fault" it is...how close we are to the financial "Armageddon"...and how to best get thru, whatever this is supposed to mean.
What is not clear to me, is how most view the end result of this great coming evolutionary upheaval. Gold Forum participants are certainly on the right track to obtaining and preserving present and future "wealth"...but to what end?
I doubt everyone here is a greedy gold hoarder, gathering in this valuable limited resource for the only purpose of allowing him/hers to survive while all else starve or become sold into slavery...
What is our future economic/political/social system going to look like after what can only be imagined as this very "ugly" transition?---which is no doubt coming.
Is there room here for another contest like the "Fifth Horseman"??? --- "Where we are headed?...How do we want the new economic system to "look?"...How will we get there?
I, for one, want a system that,
1. Provides need fulfillment and a respectable source of earnings for all.
2. An equitable distribution of income and wealth.
3. Provides growth and stability.
Sound familiar? - such a "divinely directed system once worked for over 1000+ years...and created what may be argued as the greatest civilization known to modern man. Can we get there again?...the opportunity is coming...
ge
(4/26/01; 10:24:05MT - usagold.com msg#: 52618)
Return to Classical Gold Standard
Fiat Euro : I still oppose it - with a grin.
*Geopolitics: First of all there is a geopolitical motivation for its introduction. "The superpower typically has a veto over the international monetary system and because it benefits from the international use of its currency, its interest is usually in vetoing any kind of global collaboration that would replace its own currency with an independent international currency" says Mundell. This is not evil in itself, and it is quite rational. However it is still a political decision - if we have free choice, individuals should have the opportunity to like or to dislike a political decision.
*Sociological stratification - Return to middle ages: The present power system gives the authority to print money to a selected class of individuals. This is oligarchy - plain and simple. In principle, the situation is not quite different from the middle ages in which the authority to own private property was granted to the feudal lords. The return to the classical gold standard would leave the money lords unemployed. The Italian film director Visconti (who has aristocratic origins) knows what that means and has expressed it in his famous film Leopard. The decision to accept or refuse an Oligarchy is a political decision. A decision which cannot be forced on the individuals in a democracy. Electronic gold appears to have the potential to topple the monopoly to print money.
*Gold for Oil: Yes, it appears that the Saudis are accumualating gold. Due to the complicated forward selling contracts of the gold mines, they may even buy gold at 400 when I am buying it at 2000. I do not know. If true, hats off. Nice move.
Finally I have called Alan Greenspan for further clarification! :
Begin Quote
An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense-perhaps more clearly and subtly than many consistent defenders of laissez-faire-that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other….
In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value.
End Quote
Counterpoint: This New Era descriptions of the fiat Euro - aren't they like the dot-com commentary?
Buena Fe
(4/26/01; 10:18:56MT - usagold.com msg#: 52617)
in case the Euro should surge! Hee Hee
IMF urges modest ECB rate cut; cites low inflation, global economy
Washington, April 26 (BridgeNews) - The clamor for the European Central
Bank to cut interest rates grew louder Thursday as the International Monetary
Fund again called on it to ease monetary policy in the face of slowing demand
from abroad and receding inflation at home. While it prescribed a modest
reduction in rates, more aggressive action was recommended should the euro
surge or the global economy stumble further.
( Story .20153 )
agbull
(4/26/01; 10:09:27MT - usagold.com msg#: 52616)
The Real Silver Picture
http://www.financialsense.com/transcriptions/Morgan2.htm
Take a look at thses graphs....
agbull
(4/26/01; 10:07:29MT - usagold.com msg#: 52615)
Very good silver charts and discussion
http://www.financialsense.com/transcriptions/Morgan2.htm
This interview came out on Monday, and it shows in graphic form how many months of silver remain, very interesting. Worth a look...
Mr Gresham
(4/26/01; 10:07:29MT - usagold.com msg#: 52614)
US_Army(RET) "Omar"
I hope you'll be with us for a long time. Your perspective into the Arab culture is a rare and valuable one. Helping us to put aside American prejudices would be to our own long-term benefit, as well. Welcome, and please speak freely on the areas your experience has touched upon!
ET
(4/26/01; 09:49:58MT - usagold.com msg#: 52613)
Topaz
Hey Topaz - how's things down under! Thanks for the kind words! You write in part;
"Excellent offerings as per usual - the "Power to the common man" you mentioned, albeit a noble thought, will have a far
better chance through transition (via Euro) than through shock/meltdown.
Not too many "common men" I'm aware of (and I know a few <g>) have embraced the metal(s) to date, and THEY will
need to position themselves in PM's via a Fiat medium. (methinks)"
I don't know that the euro offers any transition at all. FOA and Randy are leading us to believe that the euro will indeed provide this transition but I don't believe it is the case nor is it cast in stone as the future. They have tended to give the marketplace shortshrift, as if the Europeans have total control over said marketplace. I think the Europeans are in denial about the size of the credit problems, energy problems and tax problems. I'm sure their intention is to provide this "transition", however, there is certainly no guarantee of its success.
"If the Euro crowd are prepared to let Au stand unsullied, aren't they then going to be all the more Fiscally responsible -
knowing full well the spectre of a full-blown gold/silver standard is there to reward monetary mis-management?"
The European bureaucracy has no vested interest in being fiscally responsible as they would put themselves out of power by doing so. They can issue currency after currency, but if they attempt to arbitrarily fix the currency to a standard measure without actually trading in the marketplace, their system will have no credibility, hence, no value. The European people have, in my humble opinion, already been tricked by the new tyrants of Brussels into believing the European Union offers the average guy a better lot in life. Should we now believe those same tyrants are offering us all a better lot in life via their new currency? It strains credulity.
Orville Goldenbacher
(4/26/01; 09:33:32MT - usagold.com msg#: 52612)
YGM, no offence, but...
The Islamic religion is so full of superstitians (they are more than happy to kill you if you do not believe like they do), used to controll a persons every movement. The Islamic banking system is fine in the sense that it uses gold and silver as a medium of exchange, but they want to push their religion along with it.
Call me a kafir, tell me i can't go to the whorehouse in the sky, Islam is just not for me. I'd take usury any day over Islam. The "rabid religous right" are angels compared to these folk.
To each their own, i have nothing against Muslims, just like i have nothing against homosexuals, so long as they keep it to themselves, it's really none of my business. But when they come trying to recruit me, they better be prepared to fight.
All the "free" gold and silver in the world is of no use, if you are shackled to mindless religion.
Free and Islamic is oxymoronic.
OG
USAGOLD
(4/26/01; 09:21:31MT - usagold.com msg#: 52611)
Today's Commentary & Review: Central Bank Recalls Gold. . . . .
http://www.usagold.com/Order_Form.html
4/26/01 (www.usagold.com ). . . . Gold firmed in late London and early New York trade as over the counter options moved to expiration and tight supplies continued to weigh on the market. Lease rates spiked to 3.7% in London yesterday; reflecting the scramble for physical metal needed for settlements. According to a Bridge News report this morning, a central bank is calling in a gold loan. The spike in lease rates and the gold price suggests bullion bank(s) are scrambling to find metal to pay back the loan.Bridge News, however, put an odd spin on the story . . . . . . . . .
To read these reports regularly, please join us at our private access COMMENTARY & REVIEW page. A quick, one-time, Registration is required. Please access link at top of this message. It includes free trial access to Commentary & Review, a free information packet on gold ownership, News & Views -- our popular newsletter, and our Client Intro to Centennial Precious Metals/USAGOLD (by mail).
ET
(4/26/01; 09:18:51MT - usagold.com msg#: 52610)
Elwood
Hey Elwood - thanks for your thoughts. I think you have succinctly stated ANOTHER/FOA's argument from oil's point of view. The Arab's do understand the value of gold, both as a savings vehicle/standard of value and as a medium of exchange. You write in part;
"Leaving aside the medium of exchange we could say that today's worker (us average joes) exchanges his labor for food,
shelter, electricity and everything else which he consumes, invests or saves. The Arab trades not labor but oil for all these
things. He also consumes, invests and saves, but…..after getting all the Mercedes, palaces, common stocks and what not
that he can use, there's still more oil to be exchanged. He exchanges that for gold.
"But wait! Didn't Elwood just say he's going to leave the medium of exchange out of this? Gold is certainly a medium of
exchange, history says so anyway. But the Arab is thinking differently. To him gold *is* the object of the exchange, not
unlike your house to you. The gold is the object of the exchange to him, not a medium in the way we think of fiat or in
the way we think of a gold medium."
Yes - the Arab's understand the gold standard. They save in gold because it is a known standard of value. ANOTHER's view that westerner's make the mistake of viewing their savings through their currency is absolutely correct. And his further view that that currency doesn't correctly value their savings is also correct. "Your wealth is not what your currency says it is". No truer words have been spoken.
"Ok, let's toss back in the role of money now. Let's get to the fiat! We Austrians say gold be the best medium, history
says this, no? Yes, history does say this, but there be no oil in history! History says (at various times) more people need
cows than need trinkets, so cows best medium. Then more people need wheat than need cows, so wheat better medium.
Then world becomes richer and people say this wheat different than other wheat, and this cow different than other cow,
so use gold as "standard" or "benchmark" medium even though no one "needs" it."
What is "needed" is the standard, whether it be gold or something else.
"Today oil is a better medium, because ALL people need oil (even more than need cows and wheat), and oil "standard" is
good enough. Gold returns to luxury, "wealth" item as second-best to oil. And silver? She be a base industrial metal,
tarnished with age."
Oil is not a better medium as it is difficult to use in trade. Fiat or gold are the better medium of exchange. Because something is used by all does not mean it is a better medium of exchange or savings vehicle. Oil is a commodity that is in demand, much like electricity, but would be difficult to store or swap. Fiat is a poor savings standard as ANOTHER/FOA/Randy have pointed out. So far, gold is both a good savings vehicle and a good medium of exchange.
"Oil is the best medium, but can't buy a diet soda and Doritos with oil (too inefficient), so Arab agrees to use fiat as long
as fiat creators keep gold price reasonable (gold is object of their exchange, remember?)."
Well, here is the rub. The only way to actually keep the gold price "reasonable", is to not debase the currency or in this case the medium of exchange (dollars). By arbitrarily fixing currencies to gold, whether it be dollars or euros, the government is essentially hiding its possible debasement. The fact that they do arbitrarily or want to arbitrarily fix the price of gold, should tell you volumes about their current and future intent. As ANOTHER pointed out many times, the Arabs know this.
"Today, Dollar gold price very reasonable, but where is gold? Tomorrow, Euro gold price still reasonable and there be
gold."
Ah - a supposition not yet in evidence. The only way the gold price in euros will remain "reasonable" is if the ECB does not do what all other fiat issuers do, debase the currency. Of course, the other thing they could do is attempt to fool you akin to the current situation with paper gold. My problem with the current proposal is the assumption that the ECB will "fairly value free amrket gold". It's an oxymoron. Actual free market gold does not need to be "marked to market" as it is the market standard. The fiat is the asset seeking credibility, not gold. I think FOA is right in regards to government's intention to debase the currencies. It doesn't follow, however, that the market will accept this valuation as gospel. The fiat systems are confidence systems. When confidence is destroyed for whatever reason, the system goes out the window. See today's ongoing credit bust. Gold, however, will retain its value, as ANOTHER/FOA/Randy have stated. There is certainly no reason to believe the euro will do the same. Fair warning, my humble opinion.
"Austrians say "Gold trade next to fiat? Fiat will die!" I think now, this Euro trade next to gold and survive……if Arab
agrees."
Please keep in mind that the Arabs are subject to the same supply and demand features for their product as the rest of us. I believe it is a stretch to believe that as the credit bust starts to unwind, demand for oil will remain at the pace it is today. It is the very price of energy today that is causing the bust. See Black Blade's commentary, he has this spot on. Further, keep in mind that the Arabs sell a significant portion of their oil to Europe, which will not only have to pay this much higher energy price as their credit structure goes bust but they are also one of the highest taxed people on the planet. Couple high energy prices, a credit bust and high taxes and you have the makings of a significant drop in demand for oil. Remember the petrol/tax protests/riots of last summer across Europe?
"Austrians say "Why not force direct trade: gold for oil?" I think, then gold price in oil not be reasonable. It be too high."
It is whatever it is. The free market will decide via supply and demand what the proper relationship is between all these different assets, commodities, savings vehicles, and currencies. Oil cannot hold a high "value" if its demand component falls far below potential supply. Cisco Systems is discovering this truth today with its products. The same holds for electricity, natural gas, real estate, gold or currencies. They will all seek their own level whether bankers/governments wish this to happen or not.
"When Arab well runs dry or oil's timeline be ended by technology, on that day Arab wake and wish for higher gold price,
because then he becomes seller."
The Arab at that point will only wish to trade his savings for whatever he needs. Whether his savings are in gold or some other vehicle, the free market will guarantee a value for these assets that is "fairly priced" relative to all other assets. This is all the Arab or any other saver wishes.
Carl H
(4/26/01; 08:40:51MT - usagold.com msg#: 52609)
Randy (@ The Tower) - Request!
Please Provide Tree in the Forest with my e-mail address.
Carl H
(4/26/01; 08:38:33MT - usagold.com msg#: 52608)
Tree in the Forest
Post #52535 is a good piece of work. I would like to comment on a few points:
I think that the COMEX Silver contract specs are actually a little bit looser than what you stated. I think it is 5000Oz+/-10%. It can be either 1000Oz bars or 1100Oz bars of certain fineness, etc. You pay for the exact weight of the silver which may not be exactly 5000Oz.
Regarding elligible silver, are you sure that it actually belongs to Comex? That was not my understanding, but I could be wrong.
Excellent work on the Stops/Issues/Net numbers. Your numbers have also given me an interesting idea of how we might be able to deduce considerably more information from this type of data. I will ask Randy to provide you with my e-mail address so we can discuss it off-line if you are interested.
YGM
(4/26/01; 08:18:23MT - usagold.com msg#: 52607)
US_Army(RET).......Arabs & Gold/Banks/Ursury
http://www.murabitun.org/WITO/trading.html
***See 'Articles' @ Link for more.....YGM
Snippet--------
We acknowledge that the crime of usury is being committed daily against all humanity by the banking system, resulting in the death of thousands of people throughout the world, the starvation of many others, the creation of the unnatural phenomenon of unemployment, the destruction of small businesses and the general impoverishment of most of mankind.
In the face of these well known disasters, at the time of a general recognition that the role of the banks is not innocent, when the majority of analysts recognise that interest debt is a direct cause of death and stagnation in poor countries. Everybody dislikes the banks, but are made to believe as if it were their own thought, that we need the banks! and there is nothing we can do about that! In the face of a general climate of resigned helplessness the Murabitun are creating active solutions. The way out of this usurious banking system must be based on the Islamic Model, in which usury is incompatible with life, proving that WE DO NOT NEED THE BANKS. Part of the model consists of the re-establishment of a successful network of Halal Trading throughout the world, that does not involve any form of interest-debt, control of products by speculative Future and Stock Markets, or any mediation of a bank.
The Islamic Model restores the economical power hijacked by the banks and the state to the common people. It is harmonious to the legitimate aspiration of the ethnic minorities who yearn for total emancipation from the grip of the modern banking-oriented artificial states in order to rule themselves. It returns the life to the impoverished workers by the rooting out of the parasite: The banks that live off the workers' work. In the Islamic Model unemployment does not exist, and the worker is not a slave of a salary, but enjoys his own business, usually in association, free from the compulsion of having to work for someone else for a paltry wage. In the Islamic Model multinationals and hyper-markets are eliminated; rather than one owner and one thousand employees as it is the case in any hyper-market today, in the Islamic Model we have a thousand free owners in an open Free Market. The Islamic Model removes any form of monopoly that has made everybody a humble salaried worker and thus gives a chance of independence to the self-motivated individual in a 'Free-Market-without-usury'.
The Murabitun are promoting the creation of this new way of trading ;or rather, the only one; consisting of:
Minting and putting in circulation of Gold and Silver coins.
Building Free Markets, regulated according to the Islamic Law.
Restoring commercial routes with caravans and fair contracting models.
Restoring the guilds as autonomous institutions of production
Establishing the authority of Judges to rule the commercial disputes.
The Islamic Law guarantees the removal of the smallest trace of usury from commercial agreements, thus guaranteeing the equity in the contracts. With the use of these business contracts we were forced to recreate the forms of commercial organisation that are based on these contracts and were common in the Sunna (practice) of the Messenger of Allah, salallahu alaihi wa sallam and his Companions. Thus our use of the qirad is resulting in the establishment of commercial caravans and the use of the Shirkat is resulting in the creation of guild associations. We will speak later about the caravans. The guilds were the traditional organisation of producers. We began with some established occupations, and using the Islamic model we transformed the relationship between employer and employee. In the traditional guild the Master in a trade accepts some apprentices to serve and learn. This relationship is more than a salary, the apprentice is being taught to become a Master. When the moment came the Master gave his reputation, access to his tools, his clients, his knowledge, his workshop to an apprentice or a group of them to start independently. Thus we are generating new businesses without the apprentices having to go and borrow to buy the tools, the workshop, the capturing of clients, propaganda to be known, etc. Now with the instruments of trading of the Sunna (practice) of the Prophet, salallahu alaihi wa salaam, we are quickly multiplying our business. The old Master has now learned that he is more protected and it is better to be surrounded by an army of equals than it was to have an army of slaves. Our guilds are now generating employment serving as the solution to unemployment and removing any need for the banks.
The Murabitun use in their trading the forms of contracts accepted in Islamic Law, thus protecting equity in the contracts among the people. The reason why Muslims all over the world are joining the Murabitun is out of their duties with Allah in their commercial life, since we are the only group of Muslims today standing for the implementation of a Halal Trading. Many Muslims are now abandoning the so-called Islamic Bank because they have realised that it is an usurious institution disguised as Islamic by its appearance while remaining entirely inside the usurious system. All these people are now joining the banner of Halal Trading raised by the Murabitun.
The use of the Islamic contracts led us to the re-establishment of the traditional forms of trading of the Muslims, namely caravans and commercial representatives (ambassadors). Caravans and commercial representatives were common elements in the non-usurious trade. Our caravans are, of course, no longer made up of camels but use modern methods of transportation. Our ambassadors are not the representatives of one state in another, but what they used to be, that is commercial representatives from one city to another, from one Emirate to another. The word ACCESSIBILITY is the key to understanding the tremendous importance of these commercial figures. The establishment of commercial route from one Emirate to another allows access from one to another. Access allows the sharing of the goods from one place to another. The caravan is established under a person or a group representing and selling goods from one city to another. Instead of ten people doing the journey on their own, one accepts to be the representative of all, including those who never thought of doing so because they were not prepared to do it on their own. Thus the caravan is born. The representative finds out that he is having more business as a representative than on his own, therefore instead of going once a year will go six times a year. When the traffic reaches a high enough level, the Emirate chooses a permanent ambassador in the other Emirate. Thus the ambassador is established. The opening of the routes guarantees accessibility.
Accessibility revolutionises the way in which business today is understood and conducted. In the face of the helplessness of a consciously-designed unemployed worker, who is now made to believe that his condition is somehow logical and therefore acceptable we bring forward the self-sustained spirit of our commercial representatives or ambassadors. We are taking people who thought they were helpless because they did not own anything and we have taught them that not to be an owner does not matter to us, what matters is their honesty that has already been proved. We taught them that to make business, to become an independent businessman they do not need to own what they trade with, all they need is access, and the access is what we can provide for those who prove trustworthy within the Emirate. Thus, with the help of Allah, we are transforming a world of unemployment by a design of isolation into a world of independent people in an ambience of trust generated by the Emirate, the just commercial contracts, the accessibility and the sharing of wealth among the Muslims. We are liberating honest people enslaved by usury by the implementation of the orders of Allah, by Islam.
Islam is a model of common sharing with private ownership. People privately own their merchandise but through the combination of three elements of 'trust-emirate-Islamic contracts' someone else may have commercial access to merchandise in your community or outside your community without exchanging ownership. "You do not need to be an owner to have your own business". Accessibility transforms slaves of a salary into free men. Richness is not to have a lot, but to have (commercial) access to a lot, even if you are not the owner.
The caravan arrives in the Market. The Market is in fact the most essential of all the elements that constitute the practice of trading. It is the open space where trading, the pricing of the goods takes place. The Market is the space for the free evaluation, in it a substantial part of our freedom is invested. The guaranteeing of the freedom in the Market is a pillar in the guaranteeing of freedom of the society in general.
Freedom of the Market does not mean what the modern economists mean by Free Market. Free Market is that Market where usury is not allowed, monopolies, restrictions of access or prices, privileges and impositions are not allowed. For a start, the medium of exchange can not be imposed but should be commonly chosen by the people.
The Market is also the physical space where trading takes place. The protection of this physical space and the preservation of its main legal parameters is therefore a task of major importance in our days.
nickel62
(4/26/01; 08:12:10MT - usagold.com msg#: 52606)
Federal Reserve Testimony Notice no one who approved the transcripts knew what "heap leeching" was!!!!
Minutes from Federal Reserve Bank Meetings
May 19, 1992
VICE CHAIRMAN CORRIGAN. Thank you, Dick. Governor Angell.
MR. ANGELL. I've always been very sympathetic to watching the monetary aggregates, and I believe that they really are a very [integral] part of our fundamental program against inflation.
But as you know. From time-to-time I have looked carefully at other means to determine whether or not there is a shift in demand for any one of the aggregates. And I've concentrated on commodity prices as probably being the most sensitive in showing whether or not monetary restrain truly is in place or whether [policy is] characterized by monetary ease. At the present time commodity prices, although they have the reputation of being very volatile, seem rather stable to me. If there's any trend it's probably slightly upward but not as strong as ordinarily would be seen in a recovery phase. So, on the surface that doesn't seem to show great inflation signals out ahead. Gold prices probably need to be looked at some, particularly since there are those who view the declining gold prices as [unintelligible] into growth rates. This thesis holds that M2 growth has been very slow and it shows up by following gold prices. I think it's important to recognize that gold is always [unintelligible] in regard to its monetary properties and for a long period of time gold prices were lower than market forces would have dictated due to the fact that many governments wanted to sell out their gold stocks.
Consequently, gold stayed in the ($340) range a lot longer than it otherwise would have. Costs of production in many places in the world were way above that, and so there was no technology going into that industry. When gold prices are running up so the optimists believe the price is going to be in the $500 range, then you get a surge of technology into that industry. And it seems to me we're experiencing the impact of that surge. Indeed, the surge has been primarily a U.S. surge. In the United States, we've had during the 1980s over $8 billion of investments in gold mining, just as an example of what technology can do when the price outlook is favorable. That has resulted in a very quick [advance] for the United States from nowhere in the park of gold producers to the number 2 position. Indeed, production in the United States is now above 60 percent of that in South Africa and very well could exceed South African production before the decade is over. A new technology involving heat-bleaching means that the cost of production with that new technology runs closer to $250 an ounce rather than to $350 an ounce. When you look at what is happening in Chile and other areas around the world, it looks as if this same technology probably is catching on in other places. One would then expect the price of gold to fall closer to its cost-of- production in the marginally efficient areas. I give this explanation I suppose partly because I've begun to receive "hate mail" [accusing me1 of having been unresponsive to falling gold prices and [saying that I] should have been an advocate of monetary ease based upon that.
CHAIRMAN GREENSPAN. How did you answer the question?
MR. ANGELL. Well, I answered the question by saying that I have never supported $350 an ounce gold: people just think that I do.
MR. LINDSEY. I thought it was in support of gold $10 below wherever it is now!
MR. ANGELL. I see. Well, it's all right to be in that direction. It seems to me that we ought not let the current information on inflation, disappointing as it is, cause us to move to precipitate action. It seems to me that sound money is something we accomplish over a long period of time. But it does suggest to me that the level of restraint that's out there is probably not as great as many have thought it to be and that we do need to be in a posture of maintaining constant restraint over time until we get the producer price index numbers behaving better than they're behaving. There's no reason for us not to get inflation in the goods sector quickly down to zero. And I think if we maintain the kind of posture that's needed, that will occur. I do think there will be a time lag between [that and] the adjustment of inflation in the services sector to zero.
Feb 2, 3 1993M
If you would turn to Chart 6 in the Financial Indicators package that Don has provided as he always does--I was mistaken in thinking the charts were missing from the other document because they're always in this document--you will see on that bottom chart for all commodities ex-food and ex-oil a price move that is somewhat of a preliminary indication of what happened at the end of 1982 and what happened in 1987. I don't have the courage to vote to tighten at this point, Mr. Chairman, because I'm hopeful that this will get reversed. And the price of gold being--
CHAIRMAN GREENSPAN. How much is lumber in there?
MR. ANGELL. Well, lumber was up 43 percent year-over-year the last time I looked.
CHAIRMAN GREENSPAN. And it jumped to the limit in the last two trading sessions.
MR. ANGELL. Yes, but of course the beauty of this experimental ex-food and ex-oil commodity index is that it's not a [unintelligible] phenomenon with lumber; it [measures] actual house construction that is moving up and increasing demand; and it provides an indicator not only of price levels but also of real economic activity. Now, if you look at the top chart on all commodities, which is the best predictor of CPI inflation, oil's decline and the behavior of food prices do not worsen the inflation outlook.
July 5, afternoon session
CHAIRMAN GREENSPAN. President Jordan.
MR. JORDAN. peter, I want to follow up on what you said about Mexico, because something went by me awfully fast there. YOU said the Treasury has monetized SDRs to fund the Mexican drawing. Can you explain that a little?
MR. FISHER. One of the resources of the ESF is SDRs. The process of monetizing them and presenting them to us--let me say if I am explaining something wrong, Sandy, please bail me out--we take them in and they get dollars for them. And that is the major--
MR. TRUMAN. They sell us SDR certificates.
MR. FISHER. They sell us the SDR certificates; they get the dollars and we have the SDR certificates. That then is an injection of liquidity that we have to worry about and sterilize as we would any other form of intervention in that sense. So, that's the process of providing them dollars: monetizing the SDRs.
MR. JORDAN. But we, the twelve Federal Reserve Banks, own our respective shares of these SDR certificates based on the capital of our banks?
MR. TRUMAN. Right.
MR. JORDAN. HOW are we informed that we own them? How is my bank informed that we now have that in our portfolio?
MR. KOHN. It's published on the weekly H.4.1 statement; I don't know whether there is a separate internal notification. There already are $8 billion of special drawing rights outstanding in addition to the $11 billion of gold stock.
CHAIRMAN GREENSPAN. I think President Jordan is asking whether somebody is going to call him up and say "You have just become the proud possessor of an increased amount of SDR certificates." He is asking: "What's on my bank's liability side?"
MR. FISHER. Initially, it would--
CHAIRMAN GREENSPAN. Unless the New York Bank is holding them all and the increase is offset by deposits at the Fed wholly in New York--
MR. TRUMAN. The Treasury balance goes up.
MR. FISHER. The mathmatical way is that the Treasury balance goes UP, as we are all saying. That's the narrow answer. But the Chairman is asking--
MR. KOHN. And then we sell government securities, as they draw down the balance.
CHAIRMAN GREENSPAN. That's not the question I am asking. If the liquification were wholly an issue of the Federal Reserve Bank of New York taking onto its books an SDR certificate and crediting the Treasury account for the $2 billion, then the transaction is complete and the Cleveland Bank goes its merry way and nothing happens. I think the question is: Are any of those certificates going to show up throughout the System and what are the transactions on the liability side and against whom--the New York Bank, the Treasury, or what?
MR. KOHN. The current SDRs are distributed throughout the System the way every other asset is.
MR. FISHER. I may be missing the point, but in terms of the System Open Market--
CHAIRMAN GREENSPAN. No, the point is that the liquification--
MR. TRUMAN. What's on the liability side?
CHAIRMAN GREENSPAN. The Treasury takes its SDR certificate, gives it to the Federal Reserve, which simultaneously places the SDR certificate on the asset side of our consolidated balance sheet and increases the Treasury deposit on the liability side. -That's what happens to the consolidated system. President Jordan is asking what happens among Federal Reserve institutions? If you are going to allocate SDR certificates to the various Banks, then what appears on the liability side? Are we creating a deposit for the Treasury on all twelve Banks? Is it a transfer from the Federal Reserve Bank of New York? What actually is done?
MS. MINEHAN. It's done through the inter-District settlement account.
MR. KOHN. It could be the inter-District settlement account; Cathy says it is. But the other point, Mr. Chairman, is that that deposit never shows up. The Treasury knows in advance that it is going to get $2 billion. It doesn't call $2 billion of funds in from the commercial banks. So, the Treasury deposit is $5 billion or $7 billion or whatever it is the Treasury is targeting that day.
CHAIRMAN GREENSPAN. This has nothing to do with commercial banks. This is basically a Federal Reserve crediting of the Treasury account for the amount of the SDR certificates.
MR. KOHN. Right. Then the Treasury doesn't call in the funds. The Treasury's account--
CHAIRMAN GREENSPAN. No, the Treasury then disburses those funds to Mexico.
MR. KOHN. On the same day.
VICE CHAIRMAN MCDONOUGH. Wouldn't we just have a change of assets on the balance sheet?
CHAIRMAN GREENSPAN. Yes. In other words the check is then drawn on the Treasury account, if you want to put it that way, and will end up in the Fed account for foreign central banks, or whatever we do with it.
MR. KOHN. Maybe.
VICE CHAIRMAN MCDONOUGH. But on the Cleveland bank's account their share of SDRs goes up and another asset goes down, right?
MR. KOHN. That other asset is Treasury securities that Peter sells to offset the increase in SDRs.
VICE CHAIRMAN MCDONOUGH. That's what happens to Cleveland's balance sheet.
MR. KOHN. And it happens the same day. The Treasury's balance at the Federal Reserve never changes, whether the SDRs are issued or not. They target that at a given number: they know in advance what it is. They don't raise cash; they don't sell bills.
VICE CHAIRMAN MCDONOUGH. So ceteris oaribus, the total on Cleveland's balance sheet stays the same? SDRs go up and Treasury securities go down.
MR. JORDAN. You sterilize immediately so that our share of the Treasury portfolio goes down by the same amount at the same moment?
MR. KOHN. Right.
MR. TRUMAN. If I could just add one other factor--
CHAIRMAN GREENSPAN. I'm still not sure I understand this transaction.
MR. FISHER. We will endeavor to have a simplified--
CHAIRMAN GREENSPAN. We still haven't discussed how the money gets to Mexico. where it is, and who draws the check. It's an interesting issue that I will reraise outside of this meeting, unless somebody needs to know. Maybe you already understand all this.
MR. TRUMAN. One more fact is that this is a case in which the Federal Reserve has no choice as to whether it accepts SDRs.
CHAIRMAN GREENSPAN. I understand that.
MR. TRUMAN. In a lot of other transactions with the Treasury, the Federal Reserve has some choice. But the law says, I think, that the Secretary of the Treasury may issue SDR certificates and the Federal Reserve shall accept them. Period.
CHAIRMAN GREENSPAN. Do we shift U.S. Treasury securites from our account to Mexico? Never mind!
MR. FISHER. We will endeavor to clarify it for all interested parties.
CHAIRMAN GREENSPAN. President Melzer.
MR. MELZER. Actually, I had a related question. I was curious about the same thing Jerry raised. Do we end up with an earning asset? Is there a way to earn anything on the SDRs that we hold or is that, in effect, a nonearning asset?
SPEAKER(?). It's nonearning.
MR. JORDAN. We reduce our earnings. When you're clarifying this, another question is: This is a repurchase agreement, right?
MR. TRUMAN. NO. It's outright.
SPEAKER(?). It's an outright purchase.
MR. TRUMAN. Like gold certificates, it's an outright purchase; there are no repurchase agreements on the gold certificates. They are required to redeem them under some circumstances.
MR. JORDAN. This differs from my understanding, then, because in February or March or whenever, my understanding when we were going to take yen or deutschemarks--
MR. FISHER. That would be warehousing.
MR. TRUMAN. That's warehousing.
MR. JORDAN. You are saying this is not warehousing, this is not a repurchase agreement? So, this is permanent.
MR. MCDONOUGH. correct.
MR. TRUMAN. Permanent, yes.
MR. MCDONOUGH. It's an acquisition of an asset, not a swap.
MR. JORDAN. I didn't know that.
CHAIRMAN GREENSPAN. Any further questions for Peter? President Moskow.
MR. MOSKOW. This is on another subject.
MR. FISHER. I want to thank you!
MR. MOSKOW. peter, I was on the "morning call" this morning and one of the subjects was the fed funds futures rate. My recollection from this morning was that the fed funds futures rate is now indicating a 60 or 65 percent probability of a 25 basis point cut in the fed funds rate this month. I was just wondering how that ties in with what you were saying here this morning.
MR. FISHER. I think we heard the same thing from the same sources at different times this morning. Looking through the pricing of the contract and the different time horizons one has to adjust for, there is a 60ish percent probability, if you read it literally, of a move early in the month--meaning now. And there is an implied probability closer to 100 percent of a 25 basis point easing by the end of the month. Without going too far into the gymnastics of it, that's how one interprets 14 basis points on a contract that settles near the end of the month, given the different probabilities and different time horizons.
MR. MOSKOW. But I thought I heard you saying that the majority of the opinion in the market was that there would not be a move.
MR. FISHER. Yes. I was trying to offer a note of caution about whether you should read that price literally as saying that everyone in the market has agreed that those are the probabilities attached to a move or whether it's a clearing price between some who have a much higher sense of confidence that there will be a move earlier in the month and others who don't think there will be a move this month at all. There is room for all sorts of interpretations as to whether a given basis point implication in the fed funds contract indicates a consensus view or a range of different views that find a clearing price.
CHAIRMAN GREENSPAN. I think I've got it! [Laughter] YOU are telling me that the SDR certificate comes out of the Treasury and we cancel the Treasury obligation and it is wholly an asset swap so that the debt to the public of the U.S. Treasury goes down by that amount. Is that what happens? That solves President Jordan's problem too! [Laughter]
MR. JORDAN. Can I follow up on that? The same thing happened when we changed the price of an ounce of gold from $35 to $38 and then to $42.22. The Treasury got a windfall of about $1 billion to $1.2 billion in both of those so-called devaluations. So an issue on this is: What was the dollar price of SDRs that we monetized? YOU say I have an asset on my balance sheet and I don't know what the value of it is.
CHAIRMAN GREENSPAN. It's about $42.
MR. TRUMAN. It's $42.22; it's equivalent to the official price of gold.
MR. JORDAN. We do this at the official U.S. Treasury price of gold?
CHAIRMAN GREENSPAN. Do you mean that we can lower the debt to the public by moving the price of gold up to the market price?
That could cut the debt back by a not insignificant amount!
MR. JORDAN. I have been trying not to mention that publicly for fear that someone might want to do it.
CHAIRMAN GREENSPAN. It's probably too late; we just mentioned it.
MR. JORDAN. It will become known five years from now!
MR. LINDSEY. Five years from now, it will be read in the transcript for this meeting.
MR. BLINDER. By which time it already will have been done.
CHAIRMAN GREENSPAN. Any further questions for Peter? If not, would somebody like to move to ratify the foreign currency transactions during the intermeeting period?
-END-
Topaz
(4/26/01; 06:35:41MT - usagold.com msg#: 52605)
..and ET,
...just one more thing Mate,
If the Euro crowd are prepared to let Au stand unsullied, aren't they then going to be all the more Fiscally responsible - knowing full well the spectre of a full-blown gold/silver standard is there to reward monetary mis-management?
LeSin
(4/26/01; 06:21:37MT - usagold.com msg#: 52604)
ECB HOLDS Interest Rate @ 4.75%
http://www.bloomberg.com/
http://www.bloomberg.com/
ECB Leaves Benchmark Interest Rate on Hold at 4.75% Amid Inflation Concern
The European Central Bank kept its benchmark interest rate at 4.75 percent as inflation in the dozen countries that share the euro shows no sign of receding in the next few months. More...
Topaz
(4/26/01; 06:08:23MT - usagold.com msg#: 52603)
Paper Gold-Electronic Gold-Dollar value.
In deference to the stature of those respected posters who lately have been singing the praises of this or that El-Gold service provider, I've spent some time browsing their different sites.
Yes...definately an option for travelling, trading etc IF (and thats a BIG if) Gold is fairly traded at $200, $400, even (say) $600 per Ounce.
But good Sir's.....where (we think) Gold's going....even the most ardent El-Gold supporters will be pulling their Bullion out (or TRYING to) as the "price" rockets into the Thousands, thus straining the credibility of any operator. Why? Mr Gresham said so! When the dust settles..Yes, in very small doses...until then...No Thanks.
RossL
(4/26/01; 05:46:49MT - usagold.com msg#: 52602)
Actions of federal agencies and the national debt
http://www.ashevilletribune.com/hage1.htm
This article is about a year and a half old, but is very revealing about the fed's reaction to the threat of "big float" coming back to haunt.
US_Army(RET)
(4/26/01; 05:46:10MT - usagold.com msg#: 52601)
Of Austrians and Arabs
Dear Elwood and others...
RE: Of Austrians and Arabs
Beautifully and succinctly stated!
Most of us "westerner's" have little idea of the Arab "reverence" for the yellow metal. Or the great significance it plays in both culture and everyday family life.
A short walk thru or view the gold souks of Dubai or Abu Dhabi would provide great enlightenment to many of us "westerners."
Hundreds upon hundreds of large and small shops all selling the same product…gold. The only difference of each is the shape or configuration of the same basic commodity.
The "trading" is always brisk, with the shops continuously full of both men and women, upgrading, selling and exchanging the family "treasure." Always at a given price per gram…the fineness and quality of the workmanship or current fad of design being the primarily selling feature. Very little gold weight is every "lost" in any exchange, just the configuration of it is altered.
As one of the very few (maybe only) U.S. servicemen to be lucky enough to have had the opportunity to marry into this rather closed society (to us anyway) following the Gulf War, I had to learn quickly to change many beliefs and long held perspectives. My thoughts and economic principles regarding gold were among those most drastically altered.
An important aspect of the marriage procedure (incredibly complex by our standards), - and of great importance to many family members - was how much "gold" was this marriage bringing and adding to the total family hoard. (of course in my particular case there were a number of other major issues that had to be overcome). While in the form of jewelry, it was actually the amount (weight) that was of primary concern. The recognized success and social standing of my wife and every member of her immediate and extended family was directly influenced by the volume of the precious metal provided at the wedding. In fact, it the actual delivery of it for all to see was a most important and ceremonial part of the wedding party itself. As it is for every Arab wedding.
Over time, my many of my so-called "western" views have changed drastically. But few as much as my preconceived notions of "wealth" and those surrounding the possession of gold. The display of fantastic palaces, many car garages, great buildings and infrastructure found in the Arab world today is just a façade for us westerners to "gawk" at. The real "wealth" of every Arab family is in the amount of the precious metal he (or mostly she – the wife – has in her direct possession). The only thing more important then the "amount" to every Arab, and much discussed – is how "little" he/she obtained it for.
Think about it.
Respectfully,
"Omar"
Topaz
(4/26/01; 05:30:10MT - usagold.com msg#: 52600)
Tree. ET.
Tree,
Great post on Comex - your time frame on default may need to be tightened up a tad mate....judging by the lease rate.
Another thing...4x100 Comex bars does not "London Good Delivery" make, (without effort) so any big-time rundown on Comex portends a desperate situation in the Global Physical Au investment market IMO.
NB. Gandalf's hobbits weren't seduced with a request for "Comex" bars.....get my drift?
ET,
Excellent offerings as per usual - the "Power to the common man" you mentioned, albeit a noble thought, will have a far better chance through transition (via Euro) than through shock/meltdown.
Not too many "common men" I'm aware of (and I know a few <g>) have embraced the metal(s) to date, and THEY will need to position themselves in PM's via a Fiat medium. (methinks)
Trail Guide
(4/26/01; 05:19:39MT - usagold.com msg#: 52599)
Comment
ALL:
I decided not to use my completed reply about "electronic gold". And will rework it for posting
later. It will hit on some of the good points our Randy just made (and then some).
Elwood, Now you are pulling all the parts together (smile). Nice post.
Black Blade, all of your fine documentation of our ongoing energy problem is highlighting the structural control oil has today. In this position that power has the ability to shift economic stress onto the most weak of our two current fiat systems. Both affected with only one surviving. The
transition continues.
Thanks all, be back later
TrailGuide
Elwood
(4/26/01; 01:20:05MT - usagold.com msg#: 52598)
Of Austrians and Arabs
Hello, everyone. Trail Guide, I think I'm beginning to understand finally. Thank you. (smile)
"gold and oil will never flow in the same direction"
A simple statement, but one which I don't think I really grasped until recently. It simply means that as long as Arab oil flows, the Arabs will use that flow, or part of it, to buy gold. As long as Arab oil flows. Be it 10 years, 50 years, 100 years or a thousand.
Being a frugal shopper, the Arab is like us all. He's in the market for the long run, and he's always on the lookout for bargains when he can get them. Today, the Arab, he has a problem though. Everywhere he looks he sees "low gold prices," but, being a big buyer, he finds very little "low-priced gold." It's like a sign in a department store window: $40,000 SONY STEREOS!, TODAY ONLY $270. You go to the counter with your money, but the clerk says "sold out, want a raincheck?" When you say yes, they never call you back. If you complain they'll gladly offer your money back, but you can't sue them for delivery of a $40,000 stereo which doesn't exist, eh? This is the problem the big gold buyers, the Arabs, face today. The world dollar gold markets say "Sale on gold today!" When the big buyer Arab arrives they say, "Sorry, want a raincheck?"
Now all you "Austrians" out there, listen up. I have a sneaking suspicion that Trail Guide, even though he be American, he's a little bit Austrian, too. We Austrians say, "Fiat be bad, gold be good," for all the reasons we, as Austrians, know to be true. But let's lay that aside for the moment and think about what Trail Guide says. After all, he has earned that much from us, no?
As Austrians, we dwell much on mediums of exchange, fiat and government intervention, etc. Let's look deeper, not at the medium of exchange, but the *object* of the exchange.
Leaving aside the medium of exchange we could say that today's worker (us average joes) exchanges his labor for food, shelter, electricity and everything else which he consumes, invests or saves. The Arab trades not labor but oil for all these things. He also consumes, invests and saves, but…..after getting all the Mercedes, palaces, common stocks and what not that he can use, there's still more oil to be exchanged. He exchanges that for gold.
But wait! Didn't Elwood just say he's going to leave the medium of exchange out of this? Gold is certainly a medium of exchange, history says so anyway. But the Arab is thinking differently. To him gold *is* the object of the exchange, not unlike your house to you. The gold is the object of the exchange to him, not a medium in the way we think of fiat or in the way we think of a gold medium.
You would have to be pretty hard up (hungry?) to be forced to trade your house. Why? Because you have your labor. Likewise, he would have to be pretty hard up to be forced to trade his gold. Why? Because he has oil.
To him, gold is a medium of exchange, but only in the same way that your house is a medium of exchange to you.
We trade every day for bigger and better houses, but, for the Arab, is there a "bigger and better" gold? (If you said "silver," you get the booby prize. (smile)) Yes, thinking like this, he would have to be very hard up indeed to be forced to sell gold. The Arab is correct to think this way, for there is nothing in the world he cannot buy today with his oil……except gold.
Think, there are people in the world today who have become so rich…..who have become so wealthy, that gold (to us, a medium of exchange) has become the *object* of their exchange. Hard for us common folk to imagine, isn't it? Trail Guide's task be large, no?
Ok, let's toss back in the role of money now. Let's get to the fiat! We Austrians say gold be the best medium, history says this, no? Yes, history does say this, but there be no oil in history! History says (at various times) more people need cows than need trinkets, so cows best medium. Then more people need wheat than need cows, so wheat better medium. Then world becomes richer and people say this wheat different than other wheat, and this cow different than other cow, so use gold as "standard" or "benchmark" medium even though no one "needs" it.
Today oil is a better medium, because ALL people need oil (even more than need cows and wheat), and oil "standard" is good enough. Gold returns to luxury, "wealth" item as second-best to oil. And silver? She be a base industrial metal, tarnished with age.
Oil is the best medium, but can't buy a diet soda and Doritos with oil (too inefficient), so Arab agrees to use fiat as long as fiat creators keep gold price reasonable (gold is object of their exchange, remember?).
Today, Dollar gold price very reasonable, but where is gold? Tomorrow, Euro gold price still reasonable and there be gold.
Austrians say "Gold trade next to fiat? Fiat will die!" I think now, this Euro trade next to gold and survive……if Arab agrees.
Austrians say "Why not force direct trade: gold for oil?" I think, then gold price in oil not be reasonable. It be too high.
When Arab well runs dry or oil's timeline be ended by technology, on that day Arab wake and wish for higher gold price, because then he becomes seller.
What say you, Austrians?
Elwood
Old Yeller
(4/26/01; 01:15:47MT - usagold.com msg#: 52597)
Harnessing mice
Further on the electricity crisis brewing,Univeral One at Kitco has posted quite an ominous article from today's Wall Street Journal on the nationwide problems to be faced in the future.
It appears as if someone is going to have to make some large scale investments in upgrading the grid.
Megaproject for the new millenium?Got copper?
Randy (@ The Tower)
(4/26/01; 01:15:00MT - usagold.com msg#: 52596)
beesting, regarding your msg#: 52583 ...and others
Certainly, that transactional use "electronic gold" is glorious in its elegance and simplicity. I do not dispute that, and it is my read that Trail Guide does not dispute that either. To reiterate, the problem is not in the storage or in the transfer among system participants.
The problem arises when the system dips into the traditional LENDING function of typical banking institutions...offered on behalf of their depositors who are willing to risk their wealth to seek an "interest" return to supplement the value gains to be expected by this limited physical wealth in a growing global economic system.
Within the human-operated system, this inevitably and ultimately turns original units of real gold grams into a system dominated by units of paper or digital "representative grams", leading to price inflation, and destroying the golden avenue of escape for those looking for a savings haven as shelter from this currency devaluation.
Please refer to my post on the 24th (msg#: 52480) for a hands-on exercise that shows why the evolution of the system is tolerated by the borrowers who also helped to bring it about.
And so as NOT to promote any specific "electronic gold" banking system (e-gold is a registered trademark) over each other, nor especially over the in-house metal supply services offered by Centennial Precious Metals/USAGOLD, could we all please refer generically to "electronic gold" as we continue this line of debate? Thank you very kindly.
(For those who'd like to dabble in electronic gold, how about buying your bullion from MK to show your support for this website, then have it bailed to your preferred electronic system. And be sure you diversify your holdings with an additional order of low-premium pre-1933s sent insured to your door for your direct ownership against the unspeakable contingencies that may befall.)
The moon's up. That's it from The Tower until the sun rises.
Old Yeller
(4/26/01; 00:53:31MT - usagold.com msg#: 52595)
Inflation/deflation,the Fed,bonds,gold
http://www.prudentbear.com/boards/user/non-frames/message.asp?forumid=4&messageid=43031&threadid=43031
For anybody out there with insomnia or a little free reading time,there is quite a long thread here on one of our favorite topics.
Funny how nobody here mentions the foreign creditors and the implications of the big float.Don't forget about the 1.8 trillion in net foreign indebtedness,boys and girls.
Black Blade
(4/26/01; 00:46:27MT - usagold.com msg#: 52594)
Two Gold Shows on Discovery Channel
Discovery channel had two shows tonight that might be of interest here. They are 1) The Mint, and 2) The Treasures of the Earth - Gold. They will be rerun again shortly. Good TV for us insomniacs ;-)
- Black Blade
Randy (@ The Tower)
(4/26/01; 00:31:43MT - usagold.com msg#: 52593)
gidsek: Agentina "jockeying for terms and all that."
I commend you on sharing this very good thought. It is true enough, whatever they do.
(And personally, I indeed expect the dollars to be sent home as the "whatever" that they "do".)
;-)
Black Blade
(4/26/01; 00:30:53MT - usagold.com msg#: 52592)
U.S. Lawmaker Says Government Adds to Energy Crisis
http://dailynews.yahoo.com/h/nm/20010425/pl/energy_oil_drilling_dc_1.html
Snippit:
WASHINGTON (Reuters) - A Republican lawmaker Rep. Barbara Cubin said on Wednesday that ``paralysis'' among government agencies has slowed U.S. exploration for oil and gas resources in Western lands and contributed to the country's current energy crisis. ``It is the paralysis within the agencies....that has slowed the process down to the point where we know (oil and natural gas) is there, but we can't get to it,'' she added.
Black Blade: DITTO!
Black Blade
(4/26/01; 00:25:29MT - usagold.com msg#: 52591)
Calif. Energy Prices Limited
http://dailynews.yahoo.com/h/ap/20010425/bs/power_prices_4.html
Snippit:
WASHINGTON (AP) - Federal energy regulators directed limited price controls on California's wholesale electricity markets Wednesday, but the order fell short of the sweeping price caps California officials have
wanted.
Black Blade: Grasshopperism spreads as the Locusts want a free ride. It will only aggravate the situation as producers will sell elsewhere if it is more profitable.
Randy (@ The Tower)
(4/26/01; 00:23:28MT - usagold.com msg#: 52590)
Journeyman's comment on electronic gold payment systems; then Cavan Man
-----"when I began to look into it, it turns out it's as easy to use as a credit card. Easier even."------
And when I looked into it, it turns out that belching is as easy as eating in a fine American restaurant. Easier even. <BIG GRIN>
Yet... and I cannot stress this enough... we do not find such easy belching to be the acceptable custom.
'Nuff said, 'cept for this. In your msg#: 52579 you said well enough, "When gold is once again widely used for transactions, it's price will rise greatly just as in any case when a commodity gains another major use."
Are you at all willing to accept the notion that the simple, yet global, "transactions" of gold into and out of true wealth savings would be the adequate usage to thus boost the value of this kingly commodity to the skies? I am placing my bets that the answer is yes. Read on.
Cavan Man (msg#: 52570)
Bravo! Your words are fit for the ages!!! Such philosophies give ol' Aristotle a run for his money.
I'll repeat and abridge your key points for all to see as the golden beginning to this new day. You said:
----"With gold re-positioned as a storage of wealth, it again assumes the role of monetary predominance and is placed once again at the monetary center of the universe.
+
Keep your holdings of fiat currency to a minimum (much like the balance in your checkbook) and the rest of your "fruits" invested in gold, a medium of rising, and everlasting value.
+
What other investment/medium can one deposit life savings into today without the risk of some degree of depreciation? Gold is the bridge NOW and the foundation of your tomorrow.
...
The immediate objective for the benefit of humankind is to free the price of gold. I'll take one step at a time.---
I tip my hat to you.
working-kirk
(04/26/01; 00:10:57MT - usagold.com msg#: 52589)
E-gold Raid
This raid on e-gold was because the powers-that-be are scared. The secret service has two functions. Protect Federal officals and to prevent counterfiting as a way to protect our currency. We are all aware of the problems with
fiat. When sometimes offers the protection and the priovarcy of gold but designed for our computer/internet age, it can be a big threat to the fiat currency. So sic the secret service on them.
Let's support like the secret secret claim they were indeed looking into credit card fraud. Several ways it could have been handled. If their bank where they held their merchant account was having credit card the problem could have been handled by the bank, or credit card issuer like Vista or Mastercard. Hey, the bank and card companies LOVE problems like this. It means big service fees while they put a hold on your account.
If some customers of this portal were using somebody's card
illegally, they could refuse payments or stopp the account or other things which again means big fees. If there were an investagation they could have gone to their local district attroney or if they wanted to made a federal case out it, gone to the Department of Justice.
To me the raid by the Secret Secret sounds as phony as the
shutdown by the Consumer protection agency on the Hooked on
Phonenics who claimed the people and children who made testimonals as to how effective phonenics help them to read was wrong. In this case is was another area of where the competation made the government product look bad. In this case, the bureaucry behond the attack on Hooked on Phonenic
were The Department of Education and The National Teachers Association. The public schools were expected to teach the most basic of learning, how to read and they were failing miserable. Yet here was a little company successing overwhelm at 1/100 of the cost. (The average school gets 3,000 a year for 12 years for each student enroll. I believe the Hook on phonenic was selling a little under $100.00 with a money back guarantee. It was the guarantee that got the government upset and claim false advertising. Because the government knew it dare not guarantee it results. Instead blame the child.) Anyway, if the government is so protective of its francise to dumb down the
american citizen, you can imagine just how much more protective of its francise to make money. We have heard the last of attacks on e-gold.
Black Blade (04/25/01; 20:02:24MT - usagold.com msg#: 52565)
Journeyman
Wasn't E-Gold raided by the Secret Service and shutdown? Or was that a different E-Gold. I remember that the records of clients were seized as part of an tax
avoidance investigation. I know that the owners were fighting the charges. Any news?
- Black Blade
Black Blade
(04/26/01; 00:10:39MT - usagold.com msg#: 52588)
WHEN WILL THE JOY RIDE END?
http://www.altenergy.org/core/Fossil_Fuels_Futures/Joy_Ride/joy_ride.html
Snippit:
During the last century oil has transformed the world. British coal launched the Industrial Revolution, but American petroleum put the pedal to the metal. No other material has so profoundly changed the face of the world in such a short time. Petroleum is black magic, the lifeblood of our civilization.
Black Blade: Good read about how it could all come to an end. Today's Senate hearings on the Western Gas crisis demonstrates that there is no give on either side of the issue, so we are destined to watch the economy collapse and we get to watch the markets tumble. Gold will be King as those hapless souls wander about and wondering what hit them, They will stare at their devastated balance sheets looking for someone to blame while those who prepared will sleep well knowing that their Gold insurance will carry them through this Perfect Storm. Go I recommend putting everything into gold? Of course not. I do recommend that every investor should salt away a portion of their wealth in precious metals. Financial planners used to recommend that investor put away 5% to 10% into gold. Today gold is rarely mentioned as most have bought into the infallible Bull. Personally I prefer a 35% holding in PMs (bullion and numismatic), and some PM equities. This energy crisis will only intensify because there simply is no policy in place to deal with it. The energy crisis will be the final nail in the coffin and the hammer is on the way down.
gidsek
(04/26/01; 00:08:18MT - usagold.com msg#: 52587)
NOT to say ...
that they won't do it!
gidsek
gidsek
(04/26/01; 00:06:14MT - usagold.com msg#: 52586)
Randy
"Randy (@ The Tower) (4/25/01; 10:23:11MT - usagold.com msg#: 52524)
Argentina, Peru, Brazil
http://biz.yahoo.com/rf/010425/n25665595.html
First, Argentina did a complete about-face, abandoning last year's gyrations toward adopting a policy of 'dollarization', replacing it instead with a new plan that may soon result in the replacement of HALF of their dollars held in reserves with euros."
-----------------------------------------------------------
Randy I suspect Argentinas' "thinking out loud" about Euros was preparation for the recent free trade talks in Quebec City, jockeying for terms and all that.
gidsek
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