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ARCHIVED DISCUSSION FROM 4/27/2001
All times are U.S. Mountain Time
(Yesterday's Discussion.)
Journeyman
(04/27/01; 23:02:41MT - usagold.com msg#: 52730)
Don't take it from me - - - BUT fiat is "impractical," "unconstitutional," "immoral" and "dishonest." @Randy, ALL
http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=22597
Hi Sir Randy!
Well, as I suggested in my last post, in any contest between fiat and gold, it's fiat that is found wanting, is impractical, and in fact, a square peg in a round hole. Here's someone that seems to agree with me, as reported in an article in World Net Daily, link originally posted by Leigh, I believe.
"A congressional source told WND, 'There is no doubt in my mind that the current monetary system is not only impractical in an economic sense, as well as being unconstitutional, it is immoral and dishonest from a biblical viewpoint.'"
-'66 Greenspan article supports gold standard
Fed chairman still backs his words from newsletter,
source says, By Jon Dougherty
© 2001 WorldNetDaily.com
Regards,
Journeyman
P.S. ORO, I noted and agree with your observations on the use of "Sir," however it's use softens the presentation of opposing viewpoints by demonstrating respect. It's my feeling that that use in this context outweighs those other considerations which you so ably raised.
Black Blade
(04/27/01; 22:42:35MT - usagold.com msg#: 52729)
Cheney: Calif. Facing a 'Tough Summer'
http://dailynews.yahoo.com/h/ap/20010427/pl/cheney_interview_1.html
Snippit:
WASHINGTON (AP) - Vice President Cheney, who is drafting a national energy policy for President Bush , warned blackout-weary Californians on Friday that they are in for ``a tough summer. " ``The fact is, if we look at the higher price we're paying for energy, it has a lot to do with the fact that our supplies are limited,'' Cheney said, adding that environmental regulations also push prices skyward.
Black Blade: Could get interesting this summer when elderly Californians begin to drop like flies when the temperature soars and there's no air conditioning. A summer of discontent? The next heat wave could be a "Death Wave." California also faces the prospect of a severe recession as rolling blackouts are a given. BTW, Dick Cheney gives his panels' recommendations in a speech on Monday.
auspec
(04/27/01; 22:14:58MT - usagold.com msg#: 52728)
Rich
Question
"How do we find out how much supply is available to replenish Comex supply and over what period of time??"
I'm waiting for an answer to that one! Hint: become a GS partner. Other than that we probably just need to watch together, yes?
auspec
(04/27/01; 22:07:19MT - usagold.com msg#: 52727)
Rich
Thanks for your comments, Rich, in regards to gold drawdown on COMEX. It is very interesting as mentioned by Belgian when the pieces of the puzzle start coming together with pressure from multiple sides pointing at the anti-free gold forces. Lease rates up, COMEX supply dwindling, Howe and GATA suit, TSE and XAU moving up, and showcasing of "Custodial Gold". Pressures are building and this is usually the time a rabbit {BoE announcement] is pulled out of the hat, but even that big red white and blue top hat only holds so many rabbits.
Trail Guide has been quite specific that the USD is largely supported by the paper gold market, so we watch COMEX together, no? Randy's 'theory' that much existing gold has multiple claims of ownership is very sensible as was his example of a known trader's techniques for same. The question arises as to how much of this is actually taking place, a bit or extensively?
FWIW, I believe they will soon have to release a tad of this pressure and allow gold to rise some {pick a higher price to defend}. $300? It will be a real balancing act as the spike after WA showed, but other than Eddie George's blabbering about the 'abyss', little panic was shown. Bet he got scolded. Pretty remarkable really how gold was managed back down. Hats off to you guys for that round. Unfortunately it just means a much higher POG later when control is lost and more time for accumulation. At $300 there will certainly be some casualties for "them". Oh well.
The really nice thing about ANOTHER/FOA's message is that the ECB and BIS are following in the footsteps of giants! It is NOT us against all the world's CBs, fortunately. Even if it was they would ultimately give in to market forces. A few more Powells on the case and we could shorten the noose by a few years anyway.
So we wait for ECB and BIS to get their act together and come out with WA2, hopefully with some teeth this time, that gumming was merely annoying. Of course the time factor is quite important; wouldn't it be nice to have a few surprises right before Euro currency hits the streets? I cannot conceive of gold not reaching a significantly higher level before the end of this year. Oh yes, the gold carry trade.............brought to you by those aligned against their most precious posession {no souls there}. Gold is getting a bit too heavy to be carrying, right?
Yes, this should be great fun!
auspec{tacular squeeze in the making}
R Powell
(04/27/01; 21:27:37MT - usagold.com msg#: 52726)
Lafisrap (52722)
I've been wondering exactly the same about Comex supply sourses. If available supply gets low there's no problem if more is available. Almost like gas for my truck- when I see the gauge reading low, I stop and fill up. The question becomes, how much more is available and when?
I know that in the cotton market, supply is often withheld for a time to move prices, sales (exports) reportings are often delayed for the same reason and big cotton merchants often buy, store and resell just to influence the price of cotton. Market manipulation is not unique to precious metals, just perhaps more devious and political and, of course, harmful as gold is still money.
How do we find out how much supply is available to replenish Comex supply and over what period of time??
One or two reasonable answers always seems to birth many more questions. So many questions- so little knowledge!
Any thoughts? Anyone!
Rich
Horatio
(04/27/01; 21:13:32MT - usagold.com msg#: 52725)
Dominion Power and Energy crisis
As long as I.m beaten up on politicians ,Maybe I shoulden.t leave out rate regulators and Power Co Execs.
A few years back Virginia Power over built Nuclear and coal fired plants with money they overcharged customers ,then SOLD off the excess capacity.Then they bought a power plant in England....Yes England ,with money paid for by the rate payers of Virginia.They formed a "holding " company from what was Virginia Power so they woulden't have to reduce rates and give back the money to rate payers. Now they send "Energy share "pleads with thier bills begging you to help pay someones else bill that can't pay . They waste billions with mismanagement and then cry "help you neighbor "pay his bill.
R Powell
(04/27/01; 21:08:53MT - usagold.com msg#: 52724)
auspec/ drawdown of Comex supply
Your mention (52717) of the outflow of Comex supply over the last few months brings up the possibility that available gold supply (for physical delivery) outside of the Comex is in short supply. Comex delivery has been an almost token amount compared to that which changes hands outside of Comex. Same with silver, I believe. Most big suppliers and users of metals deal directly or through brokers but not through Comex other than to perhaps hedge purchases/sales for some long term future security. If the rising and volatile lease rates and rising mining company stock prices are indicating short supply (at least short term), then demand for physical delivery would have to turn to Comex and it would seem from the numbers you quoted (from Cafe Midas) that Comex will not be able to supply the demand much longer, no? If outside Comex trade can not fill orders, then Randy's theory that much existing gold has multiple claims of ownership should soon come to the light of day? Can we really be close to a real awakening and the grandma of all short squeezes from years of gold carry trade shorts? This could be great fun. What thoughts??
Rich
Horatio
(04/27/01; 20:54:46MT - usagold.com msg#: 52723)
N.Y and Maine Brainchilds
In My previous comments on Schumer from N.Y. I forgot to address the Republican Senator from Maine .Isn't that the state that
built a giant WOOD burning power plant to solve its energy problems some years back?Thats what we need a GIANT WOOD stove!The air polution was gross to say the least, and these two Senators want to tell us how to solve the energy crisis.
Why we just pay them to shut up and stay home.
Lafisrap
(04/27/01; 20:39:27MT - usagold.com msg#: 52722)
COMEX drawdown
In light of the information posted here today regarding COMEX drawdown of gold stocks (down %60 this year? wow!), it would follow that COMEX is indeed being used as a source of physical. By who? I don't know.
Yes, I understand that COMEX is mainly a casino where bets are made and settled in dollars; however, if those who supply COMEX with physical gold wish to continue doing so, it very well may be that some happy gold buyers will continue to take physical delivery of the gold.
If physical gold can be obtained from COMEX (originally supplied by bullion banks, CBs, private owners, whomever, the buyer cares not), and if the price is right, deal. I think we can expect that.
Of course, there may come a day when no more physical gold
is supplied to COMEX. That will be an interesting time. That's why I am watching COMEX.
Thanks to everyone for the education. It is much more fun this way.
Lafisrap
Tree in the Forest
(04/27/01; 20:22:10MT - usagold.com msg#: 52721)
Randy
Hi Randy. You said:
"There seems to be a prevailing fantasy that there are stocks of gold here or there, and as soon as it is spoken for, BAM! we're off to the races...The problem is quite the opposite. It isn't that we are waiting for such "available stocks" to be absorbed into ownership, but rather, we are waiting for the reality to set in that the same limited quantity of gold is being "owned" many times over by a multiple of people... a phenomenon unique to the banking industry, and the cause of "bank runs" as seen throughout the rich history of gold banking. by the parties that conduct their business through these POC's."
Me: Well if that is the fact my friend, then we may well be here for a very long time indeed! When was the last significant "bank run" in US history? I believe it was some 70 years ago. You see the problem here is that the situation in gold is not dissimilar from the problem in an ordinary bank. The dough ain't there! Fractional reserve! Only some 10% is there (or is it now down to 5%?) And we all know this but noone seems very worried now do they? Even Y2K was a non event! As long as I can get the money I need when I go down there, hey I'm happy. As long as people who need physical gold get it, no problem. These types of runs do not occur when uncle Henry is sitting in the tub washing his ears out and suddenly has an epiphany and runs down to the bank naked to get his money out!<grin> Something must trigger it. Certainly the CBs have enough gold to continue this charade for a long time. While they wanted to support the dollar, they used this gold for exactly that purpose. But do they still want to give away their precious gold for peanuts? This game ends when they say stop. And the impression I am getting from TG is that they are saying this now. Runs don't happen because someone has a revelation. It's triggered because someone goes to the bank and doesn't get his money or in this case gold. The only way, "for the reality to set in that the same limited quantity of gold is being "owned" many times over by a multiple of people" is for someone to go to Comex and NOT get his gold. In other words, Comex defaults on their contracts. Bank runs don't happen very often but when they do they are pretty spectacular and happen due to a trigger. Otherwise, US banks would have had oodles of runs in the last 70 years, because the dough ain't there and we all know it.
Journeyman
(04/27/01; 19:56:24MT - usagold.com msg#: 52720)
Electronic Gold - - - to allay your fears, Sir Randy! @Randy, Trail Guide, ALL
Hi Sir Randy!
I don't wish to participate in "gold banking!" I wish to participate in gold transactions.
The main "electronic gold" business isn't engaged in "investment banking," at least as far as I can tell - - - it's involved in warehouse banking - - - and funds transfer. Period.
As far as a "gold standard," I think if you read back over my posts lately, I'm advocating "transactional gold." If someone, a company, a country, etc. wants to peg it's currency directly to a certain weight of physical gold, that would be a "gold standard," and they're welcome to do so.
As far as "price discovery," that will happen if and when gold transactions become common to "the folks" rather than being completely monopolized by the big guys. It will happen as more and more people want to keep their excess buying power (or perhaps all of it as they do now) in perceived safe locations yet still available for easy spending. As these folks bid their fiat for physical gold, that's how the finally honest price discovery will occur. It is that transactional use for gold that will power this. Sort of a backdoor.
As far as transactional gold being a square peg in a round hole, well it's actually fiat you're describing. Or perhaps you're describing a "gold standard," that is a government-banking amalgam dishonestly claiming their promises to deliver gold are actually covered by actual gold while they have no such gold?
Somewhere way back I listed the "accomplishments" of fiat in juxtaposition to Alan Greenspan saying those in his profession didn't think gold appropriate. If I have the time, I'll try to look that one up - - - believe me, it's fiat that comes up wanting, not gold.
I think I've addressed most of your points in several previous posts, but by your comments I suspect you may have missed those posts, understandable for a busy poster and WEB honcho. At any rate, I'm leaving easy web access in a day or two and can't take the time right now to do the topic justice. Perhaps we may continue when I return?
Hi TG!
I have not looked at the "electronic gold" closely until recently. I wouldn't be surprised if there was lock-up a few years ago. As I said, when I first looked at it it wasn't going anywhere. When the voulme is small, lockups are probable.
It's just recently that it seems to be catching on quite quickly. This indicates to me once a path is open to sound money people will take it. As you say, we'll see. As far as comparisons with LBMA, note that "electronic gold" establishments are, so far at least, warehouse operations, not typical "gambling" (investment) banks. As long as they maintain that business profile, they're not in danger of losing money for themselves or anyone.
For warehousing, as long as they control the gold they claim, they won't lose any _gold_ for anyone. If someone is gambling that the gold in their account is going up or down and are planning to "gamble" on that prediction, a lock-up could cost them "paper" profits. Oh well.
In fact, such warehouse banking operations are safe for any size organization. Even mom and pop operations. And James Turk's new operation will not likely squeeze easily into that catagory anyway.
Hi regards,
Journeyman
turkey hunter
(04/27/01; 19:43:49MT - usagold.com msg#: 52719)
US Treasury gold page has been updated 4-26-01
http://www.fms.treas.gov/gold/01-03.html
Details for March 31 2001 looks the same as last month. Now they have a note at the bottom of the page which says:
Note: The information in this report has not changed since September 2000 due to changes in the U.S. Mint's reporting. For questions, contact Public Affairs at (202) 354-7222.
abudahhab
(04/27/01; 19:40:56MT - usagold.com msg#: 52718)
@auspec
Regarding the "spoken for" gold at the Comex warehouse. This is gold held in safekeeping. That's all. The gold is not eligible for delivery. It wasn't put into the warehouse to change hands, but to be kept in a safekeeping vault. It is "allocated" gold.
Therefore, only some 350,000oz of eligible gold left for delivery. There were some 1,500,000oz eligible at year end.
Comex deliverable bars are 100oz, not the 400oz monetary bars.
auspec
(04/27/01; 19:26:13MT - usagold.com msg#: 52717)
Randy {@} The Tower
COMEX
Yes, Randy, we are handling the same piece of papyrus. I fully understand that the gold leasing is OUTSIDE COMEX and lending credibility to same {thanks to you}. They move gold around that has multiple claims of ownership and some ends up on COMEX- clearly a shell "proper".
Now from there, the COMEX players also WILLINGLY participate in a 'shell game' {defined as more nuts than peas} because they are just paper traders, gamblers, or whatever you want to call them. I have done it for years with not the least intention of ever seeing anything yellow. They {we} don't really care how much gold is supporting the paper as long as market credibility exists. My point is that some place in time it will become apparent that this game is a fraud, the very perception that most or all participants could mathematically claim physical is no longer viable. This COMEX game is THEN seen as the shell game that it is NOW {and becoming more so with each loss of underlying gold ounce}. We are talking semantics to a large degree and I believe we are in fairly complete agreement in this matter. I see Trail Guide's paper gold collapse much along these lines. The paper POG MAY soar as long as it is actually credibly possible to cash in for physical, but as that likelihood vanishes the whole underlying and essential purpose of the market is gone. Thus the trading place will collapse. We may as well take positions with each other in regards to real estate on planet Jupiter. The dog will again wag the tail.
Here's a quote from a recent Cafe Midas:
"Some big players are taking gold out of the Comex warehouses as I mentioned to you would be the case in a previous Midas. On Monday, stocks were reported down a whopping 135,070 ounces, Today, they dropped another 16,000, leaving the new total at 858,307 ounces. That is close to 60% less than a few months ago. It is important to remember that about 500,000 of these ounces is spoken for by various parties and not available to the market - many of these are long time, gold holder players that will hang on to their gold for dear life." END
To extrapolate from what you are saying tells us that even some of this gold that is "not spoken for" has encumbrances outside of COMEX from which it possibly came. Is this what you refer to when you say "All significant gold {meaning all, above ground} currently has an owner..."? Otherwise I am now confused from Murphy's seperation of "spoken for" and "non-spoken for" gold. Feel free to help me out if further clarification is necessary.
As gold finds its way into stronger and stronger hands the weak hands will be left without much to grasp, no? SOON, according to all the signs.
R Powell
(04/27/01; 19:06:51MT - usagold.com msg#: 52716)
Randy/ Comex price discovery
Thanks for clearing the air as to where the leasing shell game is transpiring, outside of the Comex.
You stated that the Comex will be discredited "when growing premiums must be paid additionally to the derived theoretical spot price in order for physical gold to be supplied." Any "future" contract bought will cost more than the spot price. This is called the carrying charge and pertains to storage and finance charges. If, at any time in the future, gold becomes more costly outside of the Comex, then certainly would be buyers will buy on the Comex. Thus the Comex is still a valid price determing mechanism.
Yes, it is possible that there are more contracts for gold than there are in the Comex storagehouses. This is true of most all traded commodities, most all the time.
What then if delivery is demanded for more than exists? Then we have a short squeeze and the price will rise until enough holders of contracts are persuaded to sell. A good estimate is that more than 98% of contracts are regularly settled in fiat. All part of the game. Also, if the game gets too volatile, the margins (percentage or downpayment necessary to hold a futures contract) may be raised to insure that the players can back their plays. No problem here for options and if more margin is needed for futures positions then one's position has appreciated sufficiently that the extra currency margin can be furnished.
It is most unlikely that price appreciation would not be able to equate buyers with supply through contract settlement in cash. Not impossible but very highly improbable and this condition is by no means unique to gold or silver. IMHO the Comex will remain the main price determinant for the foreseeable future but, then again, I don't think anyone can argue against gold in hand. Or silver!
Rich
Randy (@ The Tower)
(4/27/01; 18:27:44MT - usagold.com msg#: 52715)
Clarification fo auspec
From your reply, I'm not sure if my point was made clearly enough.
The gold leasing occurs OUTSIDE of the COMEX operation. There is no intimate connection beyond the fact that the free source of gold being supplied into the market via leasing merely serves to give temporary credibility to the unrelated COMEX gold contract prices.
There is essentially no shell game among traders of COMEX gold futures because nearly none of them ever expect to turn over their shells to claim the gold underneath. The enter with cash, place their leveraged bets with each other on the direction of subsequent bets by their peers who follow, and then settle up with cash based on the degree to which each man guessed right or wrong. There is no need for gold to move among these COMEX participants in order to give an air of validity to this cash-based speculation/hedging arena.
However, for this COMEX arena to serve as a valid means of price discovery for all OUTSIDE observers and participants in the spot gold exchange, there must in fact continue to be sources of gold provided for the spot buyers. While the spot market participants continue to look at the COMEX for a mathematically-derived spot price, they certainly do not look to the COMEX as the source for the gold being bought or sold on the barrelhead.
The "shell game" proper occurs among the bullion banking operations where depositors' gold is lent ("leased" in proper gold jargon) and the liquidity then exists from the reallocation/juggling act among the bullion banking players. When somebody big at Bank A gets nervous and steps up to the window to say "Show me the gold", the managers of Bank A can appeal to banks B and C to patch together enough temporary liquidity to see them through the day. Up to a point.
When enough of this "shell game" gold has been taken out of play by its alerted owners, it no longer feeds appeasingly into the cash demands at the low COMEX-derived prices. As a means of price discovery, the futures markets risk becoming discredited when growing premiums must be paid additionally to the derived theoretical spot price in order for physical gold to be supplied by its owners to the barrelhead.
The COMEX gold contract trading pit is a actually a very simple business to understand as long as you don't fabricate in your mind connections to the physical gold market that don't actually exist. It is a bogus method of price discovery which maintains a semblence of validity only so long as the leased gold and bullion banking "shell game" can maintain the safe deposit confidence of the gold's many owners at the margin of necessary liquidity.
And I assure you, they can maintain the illusion of adequate liquidity within the bullion banking system (shifting a view of gold "from window to window") a lot easier and longer than when willing buyers expect gold availability at the spot "barrelhead" but find none.
Just imagine what havoc the resulting counterparty-risk element would wreak upon the COMEX "gold" exchange if/when a derivative-driven bullion banking collapse dried up the sources of claimable "barrelhead" gold at these preposterously low prices.
Belgian
(4/27/01; 16:42:25MT - usagold.com msg#: 52714)
Auspec......in a nutshell
- USTB-30 : up it goes (%)!
- POG : today's intra-day move was a display (tickling) of what is still to come. Zoeeeffffff. POG's strenght increases above Dollar's weakness. It seems that the manipulative adjustments are getting less easier done. Tension's building.
- AU + G.F. : indicators doing their job and show the underlying forces. Resistances are right in front of us.Kind off foreplay (hummm)
- IMF + ECB (G7 this weekend) : evidence of Euro/Dollar struggle wich will intensify. Strong message today.
With all the background accumulated here on this forum, we are able to understand the real meaning of daily news-events. A lot seems to fit almost perfectly.
Nikkei might jump (16.000)(TA) = Yen for Dollars ?
POO uppie and Turkey/Argentina juppie...etc...
megatron
(4/27/01; 15:26:21MT - usagold.com msg#: 52713)
RPowell
What's even scarier is it is tracing an actual uptrend line which hasn't been broken. TA might actually work on this one. Sumpin's up!
megatron
(4/27/01; 15:22:47MT - usagold.com msg#: 52712)
RPowell
If you want an eye opener look at the TSE PM index since Dec2000. That isn't JohnPublic moving that area under the curve. Someone with 'lots' of rubles is slowly taking a position/s. It looks to me like the run-up in lease rates prior to the WA, no?
auspec
(4/27/01; 15:14:08MT - usagold.com msg#: 52711)
It's Nearly Midnight, Do You Know Where Your Gold Is?????!
.
auspec
(4/27/01; 15:11:50MT - usagold.com msg#: 52710)
Randy/FOA
Shell's Bells- DO YOU KNOW WHERE YOUR GOLD IS?
Thank you, Randy for message 52706 {in relationship to 52203} and the 'bank run' scenario portrayed in COMEX {CRIMEX} gold market. This is an excellent analogy that struck me square on as I have not followed in detail your previous writings in regards to the CRIMEX gold shell game. ALL should fully digest this eagle's nest vantage point of the price setter of our POG! Don't turn off the computer w/o it. Per your post:
"He has taken depositors' gold and replaced it with monthly paper account statements that appear to pay interest. In the meanwhile, this gold has been lent into the bullion banking sector, and provides the source of physical gold that gives credibility to today's paper prices."
Now, Randy, the question arises as to how AWARE the original depositors are of where their gold actually is? Those of us who follow the gold markets are relatively scarce and word travels quickly in our niche. For one to have allocation to gold one should also be tapped into this niche somehow, right? What I'm getting at is that this type of information, when fully disseminated, may potentiate a little case of the "runs" on gold banking! What % of CRIMEX traders, or those with gold asset allocations, actually know "their" gold is subject to a shell game? The bells should be ringing soon. More:
"The problem is quite the opposite. It isn't that we are waiting for such "available stocks" to be absorbed into ownership, but rather, we are waiting for the reality to set in that the same limited quantity of gold is being "owned" many times over by a multiple of people... a phenomenon unique to the banking industry, and the cause of "bank runs" as seen throughout the rich history of gold banking."
This means the CRIMEX liquidity crunch is much worse than it appears on the surface because there are a growing number of claims on a dwindling gold supply. Last one out grab the Kaeopectate.
Sorry, I'm still hung on FOA's unidentified trophy fish and how he described it essentially as 'window dressing'. Looks like CRIMEX plays the window dressing game out of necessity also. Any conceivable link between COMEX and Custodial Gold as further window dressing? Paper gold market looking a little too fragile for some interests? Who is peering in this dressed up window with "Custodial Gold"? Are we leaving it as simply the 'oil interests' w/o further developing? Unless I have missed something this TRAIL is running cold on what was becoming a major revelation. Henri needs some help with this piscis ID on his netted trophy! FOA, a little more explanation or more clues as to further significance of 'Custodial Gold'?
DO YOU KNOW WHERE YOUR GOLD IS?
Thanks Randy. Thanks in advance FOA.
au{reasonable}spec{ulation}?
Belgian-We enjoy your work! Ready for more.
R Powell
(4/27/01; 14:37:53MT - usagold.com msg#: 52709)
Two fer day
http://www.gold-eagle.com/intra-day/XAUdy.html
Only POG was down and that only by ten cents.
Lease rates and the XAU index were up with good moves again today. The lease rates have been not only well above the average of past years but they also have been very volatile over the last few weeks.
Like the rates, the price of mining stocks has been up and down and now up again. Interestingalso that once again the stock index made about one third of its daily gain in the last few minutes of trading. The first thing that comes to my mind is large Market-on-Close buy orders, indicating large, institutional buyers, no?
If I saw a three month chart of the XAU and the link provided above for the lease rates for this year and also had no knowledge of the POG, I would guess that POG had been fluctuating violently up and down and now up again. Almost makes one think that someone/something is controling the POG in a narrow trading range. Go GATA
Happy weekend to all.
Rich
JMB
(4/27/01; 14:10:28MT - usagold.com msg#: 52708)
RANDY
When gold hits $350 we'll do lunch at "Lenny's Deli" in Evanston.
Phoenix
(4/27/01; 13:44:32MT - usagold.com msg#: 52707)
Natural Gas Supply Tight
http://biz.yahoo.com/rf/010426/n26597312.html
Anadarko CEO sees natgas staying in $4-6 range
HOUSTON, April 26 (Reuters) - Anadarko Petroleum Corp. (NYSE:APC - news) Chief Executive Officer Robert Allison said on Thursday he expected U.S. natural gas prices to remain well above the levels seen during most of the last decade.
``I think that gas prices in general terms will fluctuate between $4 and $6 per thousand cubic feet for the next several years, with occasional spikes above and below that,'' he told reporters after the company's annual meeting on Thursday.
Before benchmark U.S. natural gas futures prices started running up last year, peaking at just over $10 per thousand cubic feet in December, prices had only briefly risen above $4 once before in the last 10 years, during November and December 1997.
Prices, which have since retreated to just below $5, rose to higher levels because production has failed to keep up with demand for the clean-burning fuel which has been selected to fire most of the new power plants built in the United States.
Despite record numbers of rigs out drilling for natural gas across the United States and in the Gulf of Mexico, Allison said he did not expect domestic production to increase much.
``We think that this industry's going to have a very, very hard time adding even 2 percent of gas production over the next 3 or 4 years,'' he said.
That is because the industry has to add about 8 billion cubic feet a day of new production each year just to offset an equivalent amount of production lost each year because of the natural decline in output from older wells, he said.
In the longer term Allison said new natural gas supplies from Alaska and Arctic Canada would help alleviate market tightness.
He said it would take at least seven years before a pipeline could be built to bring Alaskan natural gas reserves to the lower 48 states and a little less time to build a pipeline that could do the same for reserves in Arctic Canada.
Anadarko, the biggest U.S. independent oil and gas producer, holds exploration acreage in both regions.
Allison said he was hopeful that the Bush administration would grant the oil and gas industry access to some of the federal lands that are currently closed to drilling.
He expressed particular interest in gaining access to hundreds of millions of acres currently off limits in the Rocky Mountains, which he said was the only region of the United States where natural gas production was growing.
As long as natural gas remained scarce, Allison said, high prices would occasionally drive away some users, such as chemical companies who use gas to make ammonia and fertilizers.
``The market, via the price mechanism, has got to drive the lower priority user out of the market to serve the higher priority user,'' he said.
**My thoughts: Anadarko has their hand on the pulse of natural gas in North America. Prices will be high for quite some time to come.
Randy (@ The Tower)
(4/27/01; 13:15:43MT - usagold.com msg#: 52706)
For Tree...and all others. A true story on gold leasing.
Your comments:
"When they have no more metal (silver or gold) they cannot set the price. That's what I'm looking for. It was FOA/Another and possibly yourself who first led us to consider this price discovery mechanism as a major cause of the problems..."
The latter part is quite right about the price discovery method being the problem. Specifically, the problem is that there is no firm connection between the COMEX gold contract "prices" and the gold in COMEX. Please realize that the COMEX could dissolve its associations with Scotiamocatta and with HSBC and the "window dressing" they offer, and this paper method of price discovery would continue unhindered.
To be sure, the physical supply of gold that sustains the credibility of the low COMEX prices is the gold that comes from OTHER sources...from weak hands and from the "shell game" frenetically underway through formal leasing and bullion banking operations. And I use the word "formal" in the loosest sense.
Let me put this in perspective for you. One evening this past winter I walked into a sandwich shop with a book or two and a folder of documents under my arm, intent upon killing two birds with one stone (eating and working). I placed my order and filled my cup with Coke. Given the lateness of the hour I had a wide choice of available seating options so I took a tall table near the counter and began reading. The sandwich guy was clearly bored at this slow hour, but being a personable and outgoing fellow, he struck up a conversation with me, asking what my project was.
When he heard the word gold he perked up and asked if I had ever heard of a particular trading firm working the commodities exchange in Chicago. Rather than answering 'yes' or 'no', I simply mentioned the name of that firm's (former) chief gold trader. The sandwich guy then REALLY perked up and said, "Yes! I used to work at a desk right next to him in Chicago a few years ago!"
I smiled and nodded, marvelling to myself what a small world it was that the guy now making my Italian submarine sandwich used to sit side by side with "Mr. Chief Bullion Trader" at the exchange. As he continued talking (once started he never stopped), he revealed, "Boy, that guy was sure into gold! He was always at his desk talking about gold. He always kept talking about it and trying to put together an operation to offer gold leases."
The rest of the story? While I didn't bother to ask what brought this sandwich guy so far from the trading biz in Chicago (he talked so much I figured he'd already have volunteered the details if he cared to share the reason), I do happen to know that Mr. Trader has since (a year ago) left his position with that bullion services firm and is now actively playing around in the gold leasing game as president of an asset management firm. When I see his prevailing anti-gold messages that he frequently spins out for media consumption, I just nod with my knowing smile. Of course he has a vested interest that there is not a surge in demand for physical gold...he would face liquidity problems in his leasing game. He has taken depositors’ gold and replaced it with monthly paper account statements that appear to pay interest. In the meanwhile, this gold has been lent into the bullion banking sector, and provides the source of physical gold that gives credibility to today's paper prices. He certainly doesn't want his gold depositors to get jittery over the saftey of their gold and then opt to move it into fully allocated and unleased accounts, or worse, to ask for it to be returned outright. It is the the cusp of a classic "bank run" situation, being carefully managed by soothing words by the all-knowing bank president.
To put the appropriate cap on this commentary, let's revisit the concluding remarks I offered last Thursday. These words weren't typed to be taken lightly.
------------- (4/19/01; 18:13:41MT - usagold.com msg#: 52203)
There seems to be a prevailing fantasy that there are stocks of gold here or there, and as soon as it is spoken for, BAM! we're off to the races. As you and I have now discussed, these "stocks" of gold do not exist. All significant gold (meaning, all above ground) currently has an owner, even if some small bit of it is owned outright by the "Points of Contact" I've mentioned, or is owned outright by the parties that conduct their business through these POC's.
The problem is quite the opposite. It isn't that we are waiting for such "available stocks" to be absorbed into ownership, but rather, we are waiting for the reality to set in that the same limited quantity of gold is being "owned" many times over by a multiple of people... a phenomenon unique to the banking industry, and the cause of "bank runs" as seen throughout the rich history of gold banking.
And for as long as these owners are content to put their gold up for lease, or naive enough to think that gold on contract is truly and simply theirs for the asking, then other individuals shall also have a chance to claim a share of common "ownership" at these diluted prices. The smart ones are taking delivery, recognizing that "possession is nine-tenths of the law" in the inevitable dispute.-------------
Seize the day, and good luck!!
Buena Fe
(4/27/01; 12:44:27MT - usagold.com msg#: 52705)
Major to Ground control............
Watch the 30yr T-bond get toasted.......all part of the play.....bonds-$-gold! This is War at its most camouflaged. Back to the hide-out!
schippi
(4/27/01; 12:33:41MT - usagold.com msg#: 52704)
Select Gold Moving Up
http://www.SelectSectors.com/agpm70.gif
Hourly chart of FSAGX
Journeyman
(4/27/01; 12:15:20MT - usagold.com msg#: 52703)
California energy crisis predictions @Black Blade, ALL
Hi Black Blade!
Bet this doesn't surprise you much:
-The daily spot price of natural gas could jump 300% in Southern
California and 200% in Northern California. This will lead to an
increase in food costs. The office vacancy rate in San Francisco
is increasing rapidly. 80% of the cost of leasing commercial
office space is now the cost of energy. California's credit
rating, already cut twice, could reach "junk bond status" a year
from now. -Bill Paul, Special Energy Correspondent, CNBC, April
27, 2001, 11:58:41
Regards,
Journeyman
megatron
(4/27/01; 12:00:07MT - usagold.com msg#: 52702)
Lafistrap
Jim Dines has some very interesting things to say about 'currency wars' of the present and future. I believe he called it a 'fool's race to the bottom'.
beesting
(4/27/01; 11:51:56MT - usagold.com msg#: 52701)
When Governments Commit Crimes Are All citizens Also Guilty?
Sir Randy,
I hope you don't mind me using a part of your post # 52672 to make a point. From your post:
<<Perhaps in this explanation you can hereby understand my confusion as to why you
would agitate for an untenable gold monetary system -- a system that can only serve to
obscure the value of PHYSICAL gold as history shows again and again>>
First, as I understand it the U.S. Constitution is the supreme law of the land in the U.S. Most agree on this point.
Presidents take a pledge to uphold the "Supreme Law of the Land".
Now, in 1933 then President Roosevelt broke the law when he by passed congress and the Senate and made it illegal to use Gold in every day trade. He could have easily tried to add an amendment to the Constitution changing the type of "money" to be used in circulation in the U.S. As it stands until the Constitution is amended all of us our technically breaking the law when we use anything but Gold or Silver as tender in payment of debts, as specified in the Constitution. You and I folks or should I say, We The People, are the "enforcers" of the Constitution thru our elected representitives.
Why has this, after all this time not been corrected by the Congress & Senate? My guess is, many of the Congress people would be influenced by Ron Paul, the past writings of Mr. Greenspan, and many others that still believe the Gold system outlined in the Constitution is the fairest and most equitable and honest system for all the people.They won't debate it unless there is a public outcry or price explosion in Gold!(*GATA may force a debate!)
The arguements are; "well that system didn't seem to work well at all times for everybody." Lets examine what I think was the main reason that system didn't work well.
Congress and the Senate & President also have the power to "Regulate the Value" of the Gold & Silver,(mandated by the same Constitution) which they did by stamping a known value on each and every coin as they still do today. Thus by stamping a value(dollar) on a coin the natural "LAW" of supply and demand was ignored or bypassed.Leading always to the re-evaluation of Gold coins. However, they had an excuse, in those days how would anyone know the value of anything(unless it was stamped) without the modern communications we enjoy today. And to prove this system worked for a while better than any other system, just look at how long a $20.00 stamped Gold coin kept it's $20.00 value.My coin book says from 1849 to 1933....84 years!!! Just imagine if ANY paper money had kept it's constant value for 5 years, without Gold backing.
Most here lived or heard about the great dollar price runup of Gold in the 1970's & early 1980's. But did everyone know a universal Gold coin was being minted and being accepted worldwide also at that time and was "Banned" in the U.S. Yes, the South African Krugerrand had an exact weight in Gold and no monetary denomination stamped on it,as it was specifically made to fluctuate in value using the "Law" of supply and demand as it's pricing mechanism, as it does today.
Now the unanswerable question:
When Governments commit crimes are all citizens also responsible???
((If a Government Forces or Coerces you to steal or Kill another Human, does that make it right?????????))
Thanks for reading....beesting.
Journeyman
(4/27/01; 11:29:01MT - usagold.com msg#: 52700)
What do the Seige Of Paris and the California energy crisis have in common? @Black Blade msg#: 52671, ALL
Hi Black Blade!
Yur Black Blade msg#: 52671, "Calif. Bill Seeks Prison for Energy Price Gougers" unfortunately reminded me of my favorite "price control" story.
It seems that during the most famous Seige of Paris, "black marketeers" were sneaking through German lines at night, bringing necessary supplies to the beseiged citizens - - - but, naturally, charging high prices since their lives were on the line (or they were paying big bribes to some of the Germans). Seems that some of the folks complained about the high prices and the Paris Establishment, reacting predictably, decreed the death penalty for anyone caught profiteering in such a dispicable manner. The "profiteers" reacted logically. The city had held out for 128 days, but fell in a week once the critical supplies stopped arriving.
Regards,
Journeyman
Randy (@ The Tower)
(4/27/01; 11:25:36MT - usagold.com msg#: 52699)
Meanwhile, the U.S. Fed has been lowering rates, and keeps itself busy adding reserves
Todya the Fed AGAIN added permanent reserves to the banking system through the outright purchase of $754 in Treasury coupons...and somewhat supporting the market in the process.
Earlier in the Fed's open market operations, another $2 billion in temporary reserves were provided via six-day repurchase agreements.
And the world looks on....
Tree in the Forest
(4/27/01; 11:22:14MT - usagold.com msg#: 52698)
Randy - Comex gold
Re: your post as to what "we" are looking for that will happen on Comex with their warehouse stocks. There have been a lot fo fine posts over the last few days and I will have to spend the weekend catching up. But just briefly, I am looking for a collapse at Comex similar to the one that ocurred on TOCOM and COMEX with respect to platinum and palladium. I am looking for a complete breakdown of the corrupted price discovery mechanism on this exchange. When they have no more metal (silver or gold) they cannot set the price. That's what I'm looking for. It was FOA/Another and possibly yourself who first led us to consider this price discovery mechanism as a major cause of the problems (paper suppression/manipulation) of the gold market. BTW Comex gold stock now down to 860 k oz total.
Randy (@ The Tower)
(4/27/01; 11:16:35MT - usagold.com msg#: 52697)
IMF takes a more respectful tone toward the ECB
http://biz.yahoo.com/rf/010427/wbt023823.html
After scathing words by IMF chief economist Michael Mussa directed at the ECB for being part of the problem if not part of the solution toward spurring global growth, IMF managing director Horst Koehler engaged in some necessary damage control.
According to this Reuters report Mussa's comments "provoked immediate criticism from the ECB which said it would resist external pressure for monetary action."
And the world players continue to look on and access the nature of the playing board....
Horatio
(4/27/01; 11:07:25MT - usagold.com msg#: 52696)
A case for free trade
Where was Mr. Schumer when Gov.Cuomo closed down a 5 billion nuclear plant in N.Y.because Long Island didn't have a evacuation plan.An absurd concept for Long Island.Now when Republicans are in office he discovers an energy crises.
Democrats ignore the problem until Republicans get in office then they discover it just in time for someone else to deal with it.Republicans on the other hand see $ signs
and will solve the problem if only they can increase rates 300 %.I say take thier pensions away,for not doing what they were paid to do in the first place.We can form a board of directors to hire (STATE MANAGERS)without pensions.Remove the incentive to make political decisions instead of economic ones. Above all --remove the pensions and benefits from high office then pay enough to get good managers and fire the ones that are dead wood.Corporate America is doing it every day,why should public employees be a special class of citizens.These are the same politicians that want free trade with countrys that pay .50 per hour for american workers to compete with.Public employees need "free trade" too.
Old Yeller
(4/27/01; 10:52:00MT - usagold.com msg#: 52695)
Ahead of the curve?
Are we to assume from today's GDP figures,that the Fed's recent pumping and slashing is anticipatory of something that requires action of such questionable means.
We have growth of 2%,consumer spending up 3.1%,inflation guage up 3.3% and business investment up 1.1%.In addition,we have the summer's energy demands looming with what appears to be highly inflationary consquences.Interesting,maybe Mr. Greenspan will be a little more forthcoming.I think he owes the bears an explanation on why he had to surprise everybody with a 50bp cut,14 hrs. before options expiration.
Topaz
(4/27/01; 10:24:41MT - usagold.com msg#: 52694)
ET, MrG nickel.
ET,
Thanks for the reply mate, some scary things going on hereabouts (in OZ) but, trying to be vigilant.... perhaps it "is" I who live in a fantasyland expecting the Euro bloc, China and M-East financial managers to collectively agree to unshackle Gold and designate it as the ultimate yardstick for their Fiat adventures and you're right, all is cast in Jello.
Mr G,
HA! The Corrigan report LOL, I have an Italian mate who is paranoid about personal contrary indicators to the point of distraction. He'll put a bet on a horse then "feel" the entire betting ring is conspiring to nobble his steed. So he'll race back and have a "saver" on the Favourite - at which point the process begins anew. Scary to watch and - apart from this one shortcoming, a lovely bloke.
To increase subscriptions for your financial report, might I suggest a free 6 month trial and include, with each monthly issue a $10 Bill....you'll be a dot com in no time.
It was of course your namesake I was referring to....but you knew that....didn't you??
Hi Nickel,
Those blood-sucking parasites have been leaching the heap now for several generations.....don't tell me they've "forgotten" how.<w>
Goldfly
(4/27/01; 10:00:54MT - usagold.com msg#: 52693)
A link to day One
http://www.usagold.com/cpmforum/archives/2219989/default.html
For your perusing pleasure.
Actually it's for my use, but you might enjoy it!
auspec
(4/27/01; 09:42:46MT - usagold.com msg#: 52692)
I See tyhe Rogue Wave But What is That Fish??
http://www.gold-eagle.com/editorials_01/puplava042801pv.html
From James Puplava at GE:
"There will come a day without warning, at a time when nobody expects, when that rogue wave will appear. It will be a day when events overwhelm the financial markets... when the house of paper will fall... when our financial institutions will be put to the supreme test... when the mettle of a man is tested... when faith in our institutions will be called into question. It will only be on that day and in that hour, that we will know if the Holy Grail of Finance truly exists."
The Gold Carry Trade is on life support! One by one the supporting legs are crumbling. That fish is a BEAUT[!} but what.........??
auspec
Econoclast
(4/27/01; 09:35:38MT - usagold.com msg#: 52691)
Thanks for the thoughts ORO
I was merely trying to respond to a challenge by TrailGuide. I have never advocated a return to the Gold Standard. Sometimes, my idealistic comments about banks/govts/money may give that impression. But in reality, I just don't know. I don't think that my knowledge is enough to be able to make a real decision on that issue.
In my post, I reminded myself of my "formal education". What a joke! An econ major, and I only spent 1 week during a macro class discussing monetary policy. I never even heard of Mises until after I hooked up to the internet in 1995. That is when my real education began. I see now, that my parents paid a lot of money for an establishment indoctrination program.
I am not sure if Randy's comments about those who advocate a gold standard were directed at me, but I am perfectly happy to convert fiat dollars to cheap physical gold, as long as that value is released sometime during my lifetime. If not, oh well, maybe some descendants may benefit. I just wish that the game weren't up yet because I don't have enough.
I am positive that by doing so(converting)at this time, one is walking in the "footsteps of Giants". If powerful entities want something, aren't they going to use their power to make it cheap so they can accumulate? I would.
Has gold ever traded freely? Free from "fixes" or "management". For me, it is not an "investment". It seems very unwise to me to invest in something that is not allowed to appreciate.
Follow the "hot" money for modern day investing. Follow the "big" money for true wealth.
Have a nice day.
YGM
(4/27/01; 09:11:48MT - usagold.com msg#: 52690)
Trailguide...
Did I miss your answer or did you miss the question...YGM.
YGM (04/25/01; 20:19:49MT - usagold.com msg#: 52569)
FOA...TrailBoss.....
YGM
(4/27/01; 09:05:24MT - usagold.com msg#: 52689)
Randy (@ The Tower) (04/27/01; 02:13:24MT - usagold.com msg#: 52672)
Your Statement.."Gold "IS" Wealth"
.......and so is "Knowledge" my friend.......YGM.
GO GATA, Gold and 'GO PHYSICAL'
ORO
(04/27/01; 08:33:36MT - usagold.com msg#: 52688)
Econoclast - no law
I would start the constitution with Congress shall make no law. Leaving it only with the write up of law as it is practiced.
Similarly, the monetary system suffers from centralized decision making - whether by statute or by agency decisions.
My contra to your idea of a FORCED gold standard with cash accounting is NO STANDARD. Let people use for money what they may, for whatever purpose they like. Debt should be denominated in whatever units people lending and borrowing agree to. It is none of your business what someone else decides on for the unit of account for his contracts. History shows that a standard would develop with no legal assistance from government. It also shows that it is likely to be gold with a collection of other materials - silver etc.. that would be chosen for the purpose.
Your contention on the squelching of the business on a gold standard is very unlikely. So long as people get excited by new ideas for making money out of new businesses and technologies, they will invest in them in the form of equity and debt. As is our way, people will put too much into the new investment arena and get way less out of it than initially expected.
Investors will have refrained from consumption during their investment in order to enjoy greater future consumption. Inevitably, the resources they had not consumed were consumed by someone else - namely by the labor and in the equipment employed in building the new businesses and applying the new technologies.
Once the lower than expected returns become obvious, investors will shun further investment in that field. The labor involved in the implementation of these investments will be unemployed and their consumption curtailed by the lack of income.
Investors would then either chase a new dream or consume that portion of their income that was previously going into investment. If the latter, then the unemployed of the previous "new economy" will find employment in the old economy industry producing the stuff that investors once declined to buy because they expected the investments would provide more in the future.
If investors now put the proceeds of their production into artwork by old dead masters, the result would be that prices of everything else would fall relative to them and sellers of old masters will cosume their new found gains, thereby employing the prior builders of the "new economy" in scrubbing their floors, tending their gardens, and painting up new artwork that will one day far down the generations become an "old master".
LeSin
(04/27/01; 06:55:37MT - usagold.com msg#: 52687)
UK has "Unexpected Decline" & USA has "Faster-Than-Expected" Growth?
More "HOOTS" from your local Bloomberg Spin Doctors @ Rubbish
"U.S. GDP Grew at Faster-Than-Expected 2% Annual Rate During First Quarter"
LeSin
(04/27/01; 06:29:44MT - usagold.com msg#: 52686)
Pass The King Size Tissues - Please @ Weeping & Eyes that That Water Much
FOA/Sir TG
From Bloomberg, (it is still on their home page a few minutes ago) - I only post the headline caption. The "match" / "no-match" is now reduced to scare mongering and silly slogans that in "their" mind will make ECB's eyes water, NOT:
"U.K. Economy Slowed Unexpectedly in First Quarter, May Prompt Rate Cuts"
I ask, "Unexpectedly-Slowed Economy" - HELLO?
"They are straining at knats NOW, yes?
FOA/Sir TG - many thanks for your ongoing efforts and the renewed styly that provides improved "Clarity". Be Well and God Bless You. "S"
Trail Guide
(04/27/01; 06:13:36MT - usagold.com msg#: 52685)
comment
Cavan Man,
Thank you for your comments on our discussions here. You mentioned that I was a class act,,,,,,, Well, you should see the look in my wife's eyes when our large dinner functions conclude with a silent room and me talking about politics. HO! Ho! No thoughts of class in those eyes! (grin)
LeSin and Lafisrap,
Speaking of eyes,,,,,,, at our G7 coming up,,,,the ECB will be getting a case of the dry eye (no blinking) while everyone else in the house is crying! I'll do my part to console them in their hour of "transition". (smile)
Journeyman,
OK, my friend,,,,, you have made your case and I mine. Now we watch this all unfold and weigh the evidence. By the way, didn't the electronic gold companies have a major problem making any market at all after the Washington Agreement? I think MK or Randy may have commented on that item because customers were complaining that E-Gold (or one of these) couldn't buy or sell for a while. Funny, there was a 24/7 market for my gold during all this. (big smile while digging for old bones) Natural for me because I do a lot of digging for,,,,, old gold,,,,,, gardening and,,,, peoples
perceptions and intentions.
Thanks all
Later
TrailGuide
FredBear
(04/27/01; 06:12:14MT - usagold.com msg#: 52684)
COMEX Gold Futures
up $2.50 now.
Black Blade
(04/27/01; 05:08:26MT - usagold.com msg#: 52683)
Key Data Today
The key data to watch today is GDP. Growth is expected to be at 1%. If it doesn't meet or exceed expectations, look out. Meanwhile stock indice futures are slightly lower. We should watch and see how events play out over the next few weeks.
"Other than that Mrs. Lincoln, how did you like the play?"
Black Blade
(04/27/01; 04:57:18MT - usagold.com msg#: 52682)
European gold benefiting from euro boost
http://biz.yahoo.com/rf/010427/l27153740.html
Snippit:
LONDON, April 27 (Reuters) - Lingering dollar weakness was setting the tone of trading in European gold markets on Friday, traders said, with the metal's price ticking high amid euro and Australian dollar strength.
Black Blade: Even the Aussie Peso and Canadian Loony are higher. The Brit Slider is down slightly, and the USD is looking vulnerable. Could get "interesting."
Black Blade
(04/27/01; 04:42:40MT - usagold.com msg#: 52681)
POG and Lease Rates Higher
Gold bounced higher +$1.90 this morning. Lease rates are also higher at 3.23%. Looks as if something is afoot this morning.
Leigh
(04/27/01; 04:38:11MT - usagold.com msg#: 52680)
Another Gold Article in WND
http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=22597
WorldNetDaily has printed yet another gold-supportive article at the top of its front page. This one is called "'66 Greenspan Article Supports Gold Standard."
WND has also researched and printed an expose on the Federal Reserve that looks very interesting!
SteveH
(04/27/01; 03:36:21MT - usagold.com msg#: 52679)
Sharefin and Bugos
repost:
Date: Fri Apr 27 2001 00:19
sharefin (Lifted from "The Quiet Before The Storm" - excellant reading) ID#284255:
Copyright © 2000 sharefin/Kitco Inc. All rights reserved
Why Do/Did Lease Rates Go Up?
A critique of recent analysis from the World Gold Council titled, World Gold Council; Gold in the Official Sector, Issue 15, April 2001:
Why is it that when I pick up to read a weekly gold market update published by the WGC, it reflects nothing but contempt for gold bulls? By the way, as of today, we are replacing the soft money appointed term gold bug, with gold bull! In this week's issue, I found out that:
"When a lending rate quadruples in a matter of days, it is a truism to say something unusual is happening in a market."
In fact, that was their very first sentence. So, I'm left wondering, are they trying to suggest that when lease rates move higher, steadily, over the course of about 4 months or so, accompanied by erratic upward spikes, that there is nothing unusual to speculate on? Why, because the speculation would only qualify as truism rather than truth? Well duh! So let's see what kind of truth the WGC has stirred up for us, to explain the rise in lease rates.
Evidently, in responding to the signing of the Washington Agreement, September 1999, market participants wrongly "attached greater significance to the clause restricting lending to current levels than it warranted." Interesting. So the fact that several banks had to have in writing something they have already been doing by verbal agreement, for years, is a truth, or truism? That they had to put it in writing to keep each other honest enough to prevent a further competitive devaluation in gold reserves... is that a truth or truism? That these central banks have leased gold, which many of them still define as a monetary asset, to third party investment syndicates and bullion banks, outside of the mining industry, whose chief use for the gold is financial leverage. Is that a truth or a truism? These are all truths. Now let us shed some light on the other side.
That this gold cannot be returned unless it is bought back in the physical market, is that truth or truism? That this gold never actually needs to be physically replaced because its lenders are confident that it can simply be repossessed, with ease, and that therefore it is only an accounting entry, is that truth or truism?
Actually, that one is a bloody lie! But it was nice of the World Gold Council analyst to acknowledge this as arguable. Yet, if they ( the WGC ) can be allowed to propagate speculative conclusions as to why gold supply is so plentiful, which they do in abundance ( pun unintended ) throughout the report, it puzzles me why, regardless of the evidence to the contrary, they will not acknowledge the "truth:" that there is an impending shortage of Bullion???
We've already shown - in The Golden Bull - that reserve replacement rates have been pummeled to record lows over the past 10 years, a fact which will make the energy shortage look like a gushing Alaskan oil well, when it is broadly recognized. We've also shown that one of the effects of the Washington Agreement was to de facto withdraw nearly 90% of short-term liquidity from the lending pool. Even their own Jessica Cross confirms as much in her report on derivatives. And even with the conspicuous backwardation in the futures curve, a sign of scarcity in every other market, except for gold I guess, the World Gold Council still holds that there is plentiful supply in the physical market… that the rise in lease rates is a misnomer, probably due to "a small shift in central bank policy on the management of their gold reserves."
Pompous SOB's. How dare they have so much contempt for anyone who properly speculates that there is an impending shortage? We work for ourselves, who do they work for?
Traditionally, the WGC holds, because there is usually a plentiful supply of gold in the lease pool, lending rates had typically remained low. But isn't that the reason that there was so much supply of gold to the lease pool in the first place? What encouraged all of that lending and leasing extravaganza at such low rates, and why? Isn't the whole idea of keep lending rates low in the first place to infer too much supply?
The WGC is trying to suggest that Bullion Banks, because they are able to profit from these "hedged" carry trades, can offer gold producers and consumers a better contango. One where the forward rate is normally higher than the spot price, which provides the incentive for producers to enter into a forward sale rather than spot, and for buyers to enter the spot rather than the forward market. Undoubtedly, the extra unnecessary business, like any market making activity, will generally increase overall market liquidity. We aren't questioning that. What we are questioning is to what end are these hedges intended? Let me explain.
Under the current situation, the BB approaches the CB and asks for a gold loan at 2%. The CB says here ya go. The BB sells the gold in the spot market rather than directly to the jewelers, thus liquefying the physical market. Concurrently, the BB enters into a contract with a producer to buy some of its future production at today's prices. The producer is grateful to have such big buyers around after prices in the physical market just got hammered. Notwithstanding the fact that the only reason they are such big buyers in the first place is because they are the ones effecting price discovery in the spot market and thereby create the illusion of too much supply. And finally, why doesn't the gold council's analysis discuss the effect on the physical market of the ever larger hedging activity by tertiary players over the last decade? Unbelievable... they should be called the World Government Co-op! Read on.
Keynes and gold: Skidelsky's verdict
That was the assigned title of part of an address given by Robert Skidelsky at a World Gold Council dinner in London on November 28, 2000. Mr. Skidelsky is the author of a biography on John Maynard Keynes, whose third and final volume was published last year. As he prepared to speak, Mr. Skidelsky applauded the Council's extreme generosity and broad mindedness for inviting comments about Lord Keynes, the perceived enemy of gold.
Generosity? Since it was presented in the World Gold Council's quarterly report without critique, we see it as a symbolic up yours to the whole idea of a gold standard.
Skidelsky claims that in an economic plan laid out by Keynes, "which when compromised with a scheme ( ? ) from the US Treasury, led to the Bretton Woods system" instead, he proposed that the international currency should be fixed in terms of gold.
All this mystery about whether Keynes stood for gold or not. He did not!! The idea of a gold standard is in the first place an idea to limit the power of the state in messing with the economy, and free marketplace. All of Keynes policies contradict this very essence. Keynes was a Statist; he opposed and even denounced the economics of capitalism in favor of the welfare state, perhaps unwittingly, but nevertheless quite thoroughly!
But the main defense of Keynes in this address was that neither he nor the policies, which he promoted, were responsible for the demise of the gold standard. But that he was only the "messenger" for its own inevitable demise. For, I learned:
"the virtue of the gold standard as a mechanism for keeping money scarce could also make it a powerful engine of deflation and unemployment."
Well I guess so, but don't we need something to prevent the debauchery of our currency from the likes of the Cowboy Fed? Apparently, because shocks to the supply and demand for gold can have unexpected impacts on the "price level," "a gold based currency cannot be relied upon to provide continuously the 'right' quantity of money in a progressive economy." These people just don't get it. At any rate, the other problem with a gold standard, it is said, is that you couldn't prevent the hoarding of it by individuals, and especially by central banks. Such hoarding prevents the global distribution of gold according to the "Hume-Ricardo mechanism," where gold is distributed "round the world in proportion to real national incomes."
The thrust of the argument is that by adopting a gold standard ( or fixed exchange rate regime? ) , you allow for instability in output and employment ( the economy ) , while the fiat regime of floating exchange rates sacrifices that monetary stability in exchange for stability in ( the realm ) output and employment. Thus the whole essence of Keynes is that you can achieve a sustainable level at which output is optimum and employment is full, by sacrificing stability in the monetary unit.
Well shit, any kind of overspending is going to guarantee full employment, isn't it?
At any rate, while admitting that these obstacles could all be managed, apparently the shock of war on a system governed by a gold standard could not survive. Thus it is only a fair weather system. And to top this all off, at this dinner, a gold council dinner, Robert Skidelsky quoted a passage of Keynes' from his General Theory, under Properties of Interest and Money:
Unemployment develops, that is to say, because people want the moon; men cannot be employed when the object of desire ( money ) is something which cannot be readily produced ( gold ) and the demand for which cannot be readily choked off. There is no remedy but to persuade the public that green cheese is practically the same thing and to have a green cheese factory ( central bank ) under public control.
Ending the address on Keynes, Skidelsky said that this was:
"Keynes at his most brilliant, paradoxical, and perverse. It could be said that we have been living with the consequences of making money go as bad as green cheese ever since."
I kid you not. This is what the World Gold Council puts out today. Utter crap. Wrong, wrong, wrong, wrong, wrong. I say it like that because I don't have the time nor the space this week to handle each and every one of these logical failures. I suppose that this is what is meant by the quote that, "history is written by the winners." But let me try to deal with some of the propaganda.
Of course war is a wonderful mechanism for increasing the general utility of excess fiat, if you're winning. However, it does not hurt a gold standard at all. It affects the currency of a nation involved in war, and to the extent that the nation needs to borrow excessive amounts of money while it is on a gold standard, it is prohibitive. Thank goodness. That way when our children come back from war, they can keep their savings in this country! Besides, how many wars have been fought over money and economics? It is argued, but quite true that it was a straight line from the hyperinflation in Germany, during 1923, to the rise of Hitler, and eventually war. Have a read through this if you haven't seen it before: The Great German Inflation ( click on link to retrieve ) .
Skidelsky's fallacy, as we will call it, is that a gold standard doesn't involve either fixing the currency or declaring anything, including gold, as money. It is a voluntary state of affairs and at most, ought to be nothing but a general goal of government policy to target a certain gold rate for the currency. The currency needn't be fixed. If a nation wants to devalue, it ought to do it, but it's citizens ought to have the choice to decide whether to have their savings in that currency or in gold.
The prevention of hoarding by individuals can then be achieved by pursuing proper pro free market policies, which will inspire true ( as opposed to green cheese ) confidence in the fiat currency. Furthermore, global economies have become anything but stable. It has been shown by us, and by many others, including economist Eugene Birnbaum, in a 1996 report on the very subject of stability to the Joint Economic Committee ( JEC ) of the United States, that as a matter of fact, the instability of the coin ( monetary policy so to speak ) has only augmented the instability in the realm ( the economy ) .
In conclusion, we view this analysis as a disgraceful reminder of the kind of leadership the gold council has today. The rest of the report read like a list of reasons to sell gold today. I could almost guess the answers to the questions they brought up! And that is truth, not truism.
Conclusion:
The Dow is going to 7000, long term bond yields will rise to 6.5%, Dollar/Yen will challenge last year's lows near 100, the Nikkei is going to roar, and gold is going to begin its journey en route to $2000… and one dollars… an ounce, oil prices are going to $50 per barrel, and the CRB Index is going to rally to 260. When? As imminently as next week. How, and why? Hopefully, we've already answered that.
Sincerely,
Edmond J. Bugos
http://www.goldenbar.com/
----
The above sentiment towards the WGC reflects my view also.
That the WGC is not acting on behlf of gold
But rather on the behalf of those who control the most gold.
Their integrity has been bought by the higest bidder......
As per usual..
Black Blade
(04/27/01; 03:27:33MT - usagold.com msg#: 52678)
Another Hedged Miner on the Ropes?
http://www.mips1.net/MGGold.nsf/Current/4225685F0043D1B242256A3A006806A5?OpenDocument
Snippit:
DRD (Durban Roodepoort Deeps)was threatened with margin calls by its bankers if it did not take out the long positions totaling 800 000 ounces at a massive $337 an ounce. This would have forced it to shut down its operations.
"What this basically means for DRD is that they bought the gold at $337 an ounce and now they have to sell it back at whatever the spot is," says one gold analyst.
Black Blade: The Bankers put the squeeze on another gold producer. Before long they could own a large number of gold producers.
SteveH
(04/27/01; 03:09:26MT - usagold.com msg#: 52677)
1929 (four separate depressions)
http://www.libertyhaven.com/theoreticalorphilosophicalissues/economichistory/greatmyths.html
Thanks to Sharefin for this link:
http://www.libertyhaven.com/theoreticalorphilosophicalissues/economichistory/greatmyths.html
Black Blade
(04/27/01; 02:30:17MT - usagold.com msg#: 52676)
Lawmaker Says Higher Gasoline Prices to Come
http://dailynews.yahoo.com/h/nm/20010426/pl/energy_gasoline_lawmaker_dc_1.html
Snippit:
WASHINGTON (Reuters) - Saying last summer's Midwest gasoline price spikes were a harbinger of things to come, Senate Energy Committee Chairman Frank Murkowski on Thursday said the rest of the country should prepare for even higher pump prices this driving season.
Black Blade: Going to be a long hot summer. Some predictions call for over $3.00/gallon.
Lafisrap
(04/27/01; 02:28:53MT - usagold.com msg#: 52675)
Interest rates, U.S. dollar vs euro
http://www.channelnewsasia.com/articles/2001/04/27/economic58032.htm
The USAGold news feed is currently flooded with links to articles on what IMF officials and U.S. Treasury officials have to say about the ECB not "blinking." For example, the title of one article is "IMF Angry at Euro Inaction." And from the link above, slightly(?) strong talk:
excerpt from above link
***
IMF research director Michael Mussa said that at a time when general economic downturn is the main problem, the ECB should be "part of the solution rather than part of the problem of slowing global growth."
***
In the Another/FOA scenario, this interest rate differential is part of the U.S. dollar's road to hyperinflation. Please correct me if I am wrong. It would seem that if the sting is to be carried out, the ECB cannot lower rates.
Lafisrap
Black Blade
(04/27/01; 02:21:46MT - usagold.com msg#: 52674)
Barrick seeks other power sources as prices grow
http://biz.yahoo.com/rf/010426/n26584062.html
Snippit:
TORONTO, April 26 (Reuters) - Barrick Gold Corp. ABX.TO, facing an additional $10 million in power-related costs at its two mines in Nevada, said on Thursday it was lobbying the state government to let it seek alternative energy sources. Barrick, like most producers in the Southwest, has faced increased costs as the region buckles under the pressure of insufficient generating capacity and growing demand.
Black Blade: I mentioned a couple of weeks ago that two major gold producers were in trouble over higher energy cost. "The cat's out of the bag" on this one. I hear that the problem is actually more dire than is reported in the article. Barrick's operations are extremely energy intensive. Another major producer is in the same pickle. Better get ya some gold before the miners can't afford to mine it!
Netking
(04/27/01; 02:18:36MT - usagold.com msg#: 52673)
@Agbull, Megatron, Galearis.
Silver
Well done & thank you gentlemen!(re 52616, 52635, 52629)
You can take a horse to water but you can't make him drink. There are people around the PM community who need to "wake up & smell the roses". The evidence on Silver is just so compelling that PM followers need to make sure they don't turn into "waffle knights" & miss reality.
Randy (@ The Tower)
(04/27/01; 02:13:24MT - usagold.com msg#: 52672)
Just curious
A question for those of you who are most strongly agitating for "a return to" gold banking and for gold to "once again" denominate contracts of debt, it would be most interesting to know if you are currently "putting your money where your keyboard is", so to speak.
That is, are you intimately familiar with the LBMA, and can I presume that your "personal" stock of gold is among the 900 tonnes in gold-denominated transactions that are cleared daily by the Association members on behalf of their clients?
Last Thursday, to the several people that seem to be waiting for the gold inventory visible at the approved COMEX gold depositories to be bought and claimed, I pointed out that this gold was ALREADY owned (4/19/01; msg#:52203). I essentially wondered aloud what more they were waiting for on that account. I think it is fair to say that that post facilitated a breakthrough in the way that some had long been perceiving the COMEX operations.
And while I doubt that lightning will strike twice from my fingertips in a week's time, I can't help but use the same approach on you guys. As I look at the available gold banking services of the LBMA and the various offshore Ma and Pa transactional "electronic gold" schemes, I've got to wonder... what more are you guys looking for? To force the LBMA on the rest of us through absorption and conversion of the commercial fiat banks??? Then we'd NEVER know the full and fair value of physical gold. Think about it.
And while you are busying yourselves pounding square pegs into round holes, please give thought to this question: in your minds, why is it apparently not satisfying enough to simply have and exercise the right to convert your fiat earnings into physical gold wealth at whatever price the market shall dictate is appropriate for your brand of national currency?
I, for one, am satisfied to maintain a checking account large enough to cover anticipated monthly expenses, while rolling excess sources of variable fiat income into tangible wealth, notably gold. This is like putting a round peg into the round hole of an existing system, with no need to force my "quirky" will, habits, or preferences upon my majority of neighbors who collectively dictate the terms of society.
Perhaps in this explanation you can hereby understand my confusion as to why you would agitate for an untenable gold monetary system -- a system that can only serve to obscure the value of PHYSICAL gold as history shows again and again. Meanwhile, as an alternative action I speak favorably of the coming final transition to a system that more clearly allows for the marketplace to engage in price discovery for the fair market value of physical gold. If the government "overprints" or my neighbors "overborrow" such that there is a general rise in price levels, then the marketplace will compensate me (and the value of my savings) against this "transgression" with a higher price tag on the spot gold market.
My friends, it is easy to live in the moment while building for the future. It is only if enough of you "idealists" first adopt my savings habits that your desired widespread gold standard would even have any remote chance of materializing. And yet, when reality fails to deliver you this winning "gold standard" hand that you desire, I'd say a big pile of fairly-valued gold savings is a nice runner-up prize, wouldn't you? Or will you insist on holding depreciating fiat and paper gold until the bitter end?
I like Trail Guide's latest subtle change in perception: gold should not be thought of obscurely as a "store of wealth"... gold IS wealth.
Get you some.
Black Blade
(04/27/01; 02:12:05MT - usagold.com msg#: 52671)
Calif. Bill Seeks Prison for Energy Price Gougers
http://dailynews.yahoo.com/h/nm/20010426/ts/utilities_california_prison_dc_1.html
Snippit:
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.
Black Blade: Sounds like a plan. Drive away those who supply energy to California with threats and therefore ensure that the energy crisis is severe. The Grasshoppers appear to be Hell Bent for a crisis. It is also called "cutting one's own throat."
Black Blade
(04/27/01; 02:06:04MT - usagold.com msg#: 52670)
Senators Say Country on Verge of Energy Crisis
http://dailynews.yahoo.com/h/nm/20010426/pl/energy_legislation_dc_1.html
Snippit:
WASHINGTON (Reuters) - A pair of U.S. senators on Thursday said new research shows that Americans could face a future of dramatically higher energy prices -- crude oil, natural gas and electricity -- if supplies are not increased.
Democrat Charles Schumer of New York and Republican Susan Collins of Maine released a bipartisan report detailing how the ''perfect storm'' of combined energy price increases could force consumers to pay over $2,000 more per year for energy by 2010.
Black Blade: Amazing to hear this from Schumer. More sleepers have awakened. However, the Energy Crisis is a "Done Deal." Economic Upheaval coming? Definitely!
Lafisrap
(04/27/01; 02:02:26MT - usagold.com msg#: 52669)
G7 meeting and interest rates
http://www.afxpress.com/afxpress2/html/story_15708.xml
Perhaps sufficient pressure will be brought to bear on the ECB to cause them to lower interest rates. We will see.
excerpt from the link:
***
"It looks like it may be one of the more confrontational G7 meetings in quite a while," said Chris Widness, international economist at Chase Manhattan Bank.
***
Black Blade
(04/27/01; 01:47:22MT - usagold.com msg#: 52668)
Will Price Caps Keep the Lights On?
http://dailynews.yahoo.com/h/kpix/20010426/lo/397_1.html
Snippit:
Federal regulators are trying to limit the damage of California's energy crisis. They have voted to impose price caps whenever the state is in a Stage 1, 2, of 3 power alert. But will it help keep the lights on? Some critics are saying not only will this order not keep the lights on, but once you read the fine print, there could be a "poison pill" attached.
Let's say the government stepped in and set the prices at a popular chili stand, and set them at less than the going rate. The manager says it simply wouldn't pay for him to stay in business. "We operate on such a narrow margin, that it would be hard because our cost of goods... it wouldn't work out," explains manager Mark Valdez.
Black Blade: As I said before, price caps don't work. Remember the long lines at gas pumps during the Arab Oil embargo? There were price caps then as well. Check Mate!
Lafisrap
(04/27/01; 01:44:15MT - usagold.com msg#: 52667)
US Treasury concerned about slowing growth in Europe
http://www.ananova.com/news/story/sm_274052.html?menu=
From the USAGold news feed.
I'm just pointing out this article because it _could_ be an example of propaganda in a currency war that is _probably_ underway between the U.S. dollar and the euro. We recently heard the IMF whining about the ECB not following the Fed with lower rates. Now, very quickly, we see this story quoting an "unnamed official" from the U.S. Treasury casting aspersions about weak european economic growth. We may soon see more news stories of this nature.
There may be some truth to the story's main point. Such is usually the case with propaganda. no?
Lafisrap
Journeyman
(04/27/01; 00:44:11MT - usagold.com msg#: 52666)
Holding your own - - - MONEY!! @MrGresham
Hi again Mr.G!
You know, I kind of forgot about that "holding you own money" effect. And I don't know if I ever put into words. Thanks. I'd forgotten. A shame more folks don't know what it feels like!!!
High regards,
Journeyman
Journeyman
(04/27/01; 00:04:16MT - usagold.com msg#: 52665)
Shutting down the Goose That Layed the Golden Egg @ROSEBUD99
Hi ROSEBUD!
I don't think they'll shut down the net. It's become too important for the economy - - - and it grew out of DARPA NET, if my memory serves me, to maintain communications in the event of a nuclear war, so even if they wanted to, it wouldn't be easy.
And as soon as they started it up again, you'd be back in business.
As far as blocking specific individuals or sites, that's proving nearly impossible. They HAVE tried, particularly in some moslem countries and China.
It's kind of like a sport to find your way around the attempted blocks. And for those who don't want the headaches, there are sites like safeweb.com springing up which encrypts everything in and out of your machine and gives you a completely anonymous surfing capability.
Nothing once outside your desktop can be deciphered by even your network manager. This strategy defeats even "carnivore" the latest snoop attempt by the FBI.
Log on to the site & check it out for yourself. It's free. BUT beware - - - it has had dealings with the CIA. Apparently this is harmless - - - at least Wired hasn't done an expose yet. (I read up on the transaction and I'm somewhat ambivalent.) Other such sites will spring up, however.
And there are the VPN (Virtual Private Networks) which piggy-back on the internet using encrypted packets. The equation favors encryptors vs. spys by a factor of about ten.
Regards,
Journeyman
Mr Gresham
(04/27/01; 00:00:02MT - usagold.com msg#: 52664)
Journeyman
Depends on the meaning of "elsewhere", doesn't it?
"and it was not wealth unless it was possessed. ": -- TrailGuide
Anyway, of course there are reasons for either way of ownership. But one experience we here have in common that may be unique in our society is to have held our own money in our own hands.
The conformist societal diktat is that you may not "own" money without lending it to someone else (bank), or at least entrusting them to hold it for you. (My Dad started doing that with my paper route money at one point -- boy, was that humiliating!)
Holding your own money is finally feeling like a grownup, and you cross a certain line after doing that, and you can never fully go back to the unthinking way in which others strip themselves entirely of that right.
As for gold in crisis situations, like refugees in flight across borders or onto boats, I always wondered why, for example, a Nazi guard at the Swiss border would let the Jews safely pass after receiving his gold coin. He had his money, and bullets fly far. His superiors might find him out. Did he have to act "honorably" then so that other Jews still hiding back in the woods would give him their coins, too?
Were "boat people" safe once in the boats, after paying their fares in gold? Or were "pirates" waiting to kill them, so that the boat owner could go back sooner for another load? Was there a "reputation" factor involved in the boat owner's follow-through, or a deferred payment that would be made by relatives remaining behind, once word got through of safe arrival in the new country?
And, yes, they would receive my full cooperation. As well as my E-gold password (smile) (it's probably on a post-it over my computer, anyway), without hesitation...
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