 Centennial Precious Metals Gold coins & bullion since 1973 Denver, Colorado 80246-0009 We educate first-time investors! |
for quotes and purchase information.
|
ARCHIVED DISCUSSION FROM 2/28/2002
All times are U.S. Mountain Time
(Yesterday's Discussion.)
Waverider
(02/28/02; 22:41:18MT - usagold.com msg#: 70925)
Capital spending expected to drop this year
http://www.globeandmail.ca/servlet/GIS.Servlets.HTMLTemplate?tf=tgam/common/FullStory.html&cf=tgam/common/FullStory.cfg&configFileLoc=tgam/config&vg=BigAdVariableGenerator&date=20020228&dateOffset=&hub=business&title=Business&cache_key=business¤t_row=4&start_row=4&num_rows=1
Snippit:
Capital spending is set to post its first decline in nearly a decade this year, mainly because of lower outlays in the oil patch and the airline industry, Statistics Canada said yesterday in its annual survey of investment plans.
However, economist Adrienne Warren of Bank of Nova Scotia took a more cautious view. She said the continuing weakness of corporate profits -- which Statscan said yesterday fell 5.6 per cent in the fourth quarter of 2001 -- means that "planned capital outlays may eventually be tempered further."
When lower profits are combined with the excess capacity that many companies are carrying, soft commodity prices and thin order books, "the recovery in capital spending -- and in the overall economy -- may take longer than many anticipate," she said.
Waverider: Just reiterating BB's point from the Canuck perspective, eh... Cheers!
G$
(02/28/02; 21:53:16MT - usagold.com msg#: 70924)
A Canadian post # 70906
Love your analogy of the racing engine. I am a racer myself and it is a fact that engines often perform their best and brightest just before they completley let go in spectacular fashion!!!!! We'll see
G$
Black Blade
(02/28/02; 21:43:15MT - usagold.com msg#: 70923)
National Poll Shows Broad Support for ANWR Exploration
http://biz.yahoo.com/prnews/020228/dcth056_1.html
Likely Voters Support Opening ANWR by 2-1 Margin
WASHINGTON, Feb. 28 /PRNewswire/ -- The International Brotherhood of Teamsters today released the results of a poll question on energy exploration in the Arctic National Wildlife Refuge (ANWR). By a 2 to 1 margin, 62 percent to 31 percent, likely voters support exploring the ANWR for petroleum.
``This poll shows that the American public supports a common sense energy policy,'' said Jerry Hood, Special Assistant for Energy Policy to General President James P. Hoffa. ``When all the rhetoric clears, the facts remain -- we can become less reliant on foreign oil and create jobs while exploring the ANWR cleanly and safely.''
The poll was sponsored by Job Power, a coalition of labor and business groups who support a comprehensive energy policy. The national survey of 800 likely voters was taken February 11-13, 2002. The poll question on ANWR read as follows:
Some people say we are too dependent on foreign oil and that we should drill for our own oil in Alaska. Other people say that oil exploration will damage the wildlife in Alaska and should not be allowed. Which one is closer to your opinion?
62 percent agreed with the former statement and 31 percent agreed with the latter statement. The remaining percentages didn't know or refused to consider the question. Public Opinion Strategies, a Washington, D.C. based polling firm conducted the survey.
Previous surveys from groups opposing ANWR have wrongly offered a false choice to participants. Those surveys ask questions that make the participant choose between developing new sources of energy and exploring the ANWR. The Teamsters and other coalition partners have always said that the United States should take both actions. Further, the Job Power survey is strengthened by its focus on likely voters instead of only registered voters.
``Now is the time for the Senate to act,'' Hood added. ``The American people are self-reliant and they deserve an energy policy that reflects that virtue. The Teamsters urge the Senate to bring President Bush's energy bill to the floor for a straight up or down vote.''
Black Blade: People are fringe environmentalists until until it affects their wallets. Then they are more reasonable when the issue hits home. Sierra Club and Earth First have lost their grip with mainsteam America. In fact Sen. Tom Daschle (D-SD) now supports building a new NG pipeline in Alaska. It is too difficult to ignore that without abundant "Cheap Energy" the US economy dies. Simple as that. Energy is the blood that gives life to the US economy.
Rx Gold
(02/28/02; 21:13:00MT - usagold.com msg#: 70922)
@Black Blade 'Recovery ' Canadian $$$
I have been having a discussion with a Canadian friend about gold / silver and the storage of wealth etc. I happened to make a comment about the Canadian dollar. Here is his reply...
<our dollar is weak for a number of reasons. one is that we have 650 billion of debt, more or less, and a billion here or there doesn't really matter much. but 80% of that debt is owned to non-canadians. for the last couple of years, our federal government has been running a surplus, and canadians , at least some of them, want the debt paid down.
so, every time the federal goverment pays off a billion of debt, the lender who gets the money, or most of them, sells canadian dollars to buy some other currency to take home.
u .s companies have been buying up canadian oil and gas businesses, and they had to buy canadian dollars to do that, which helped support the dollar some. without that, the dollar likely would be a penny lower.
plus, and i saw it today, remember that greenspan and the feds forced this slowdown to force business to get more efficient. so many of those laid off will not be recalled, because business finds a way of doing with less. tools, systems, no choice, whatever.
in our country, no such thing has happened. well, it has, but not to the same extent. and our production costs are higher. so i believe the countries of the world said to each other, a low dollar will help canada export stuff to us, especially the u s. it's either that or welfare.
canada used to print money to pay the bills. since about 1991, that has stopped. notice argentina is printing money to pay its bills. people there stopped paying all forms of taxes, so the govenment has no money. so it prints it to pay its bills. that effectivley increases money supply with no payback, no increase in productivity... and that leads to inflation.
in the u s , the govenment is increasing money supply, but enron ate up maybe 90 days worth, and then the banks aren't lending, so the money doesn't move out very quickly.
the other thing about a cheap dollar, is it forces all those civil servants, teachers, etc, who take tax dollars home as wages, to stay home and spend our former tax dollars, ( now their wages) here. that's good. it also encourages a lot of u s tourists, and that's happening, especially since flying is perceived to by dangerous.
so the cheap currency is part of a long term plan to bring our country back to affordable finances. the trudeau government came into power in 1968 with no debt, and stuck the country in deep. now it costs.
yes, it must be tough selling into canada.
now that the peso is devalued in argentina, ( don't cry for me argentina), we will see their beef in our stores, and that will cap our prices to some extent. the yen is being devalued in japan as you know, and that will hit the car companies. but the u s government sanctions these sort of things, because it does force american companies to cut costs, which they do, or they go out of business. i guess that's capitalism, but in the meantime, it's either a cheap yen, or welfare for japan. does that sound familiar???>
He is a buisness man and keeps up on the stock market and writes about it. He knows about gold / silver but would rather deal with the stock mkt. He receintly started looking at gold stocks. I have more faith in the hard stuff.
Max Rabbitz
(02/28/02; 20:50:00MT - usagold.com msg#: 70921)
Getting ready for the next auction
http://biz.yahoo.com/rf/020228/n28543733_1.html
"The floor continued to buzz about options interest and the purchase of $295 and $325 calls on Wednesday, after a chunky
bullish call option transaction went through late last week.
Some were puzzled by the timing of such a transaction so close to a Bank of England auction, which in most previous instances the market approached from the short side.
``The market is aware that central bank sales are a threat to the market and yet we see continued buying,'' said Ian MacDonald, head of bullion dealing at Commerzbank. ``I would say it will probably be a constraint next Tuesday. I would expect the market to dip in front of the auction, so everyone can buy it in nice and cheap, as in the last couple of times.''
Max: Thanks Eddie George, I do appreciate it.
slingshot
(02/28/02; 20:44:03MT - usagold.com msg#: 70920)
Canuck
MoTU
Man of The Universe.
Canuck
(02/28/02; 20:24:29MT - usagold.com msg#: 70919)
@ sector
Good find. Sorry, what is 'MoTU'?
One thing I'm getting out of watching the news articles (re: Enron) is the 'passing of the buck' from one entity to the next. Initially the hearings focused at Enron, then to the accountants, over to the investment banks, mix in the rating agencies, the regulators and presumably back to Enron and who knows where from there.
It's the 4th quarter, 55 seconds on the clock, the receiving team is down by 21 points and are set to get the kick-off. How many laterals and 'in the back' blocks will we see on this play? The outcome of the game is crystal clear yet we must play out the clock.
I wonder if the coach, fired after the game has the initials JPM? (smile)
sector
(02/28/02; 19:16:59MT - usagold.com msg#: 70918)
Enron's "other shoe"...hovering
http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT3QZ8919YC&live=true&tagid=IXLI0L9Z1BC
CSFB team played key role in Enron partnerships
By Joshua Chaffin and Stephen Fidler in New York
Published: February 28 2002 20:44 | Last Updated: March 1 2002 01:24
A group of bankers at Credit Suisse First Boston played a central role in creating controversial partnerships that Enron used to hold billions of dollars of poorly performing assets and that eventually contributed to its bankruptcy.
CSFB has handed over to Congressional investigators materials related to its dealings with Enron, including the partnerships, as the focus of lawmakers' attention shifts from the accountants that checked Enron's books to Wall Street.
+++++++++++++++++++++++
The "other" shoe is of course gold and silver trading since Enron paid $450,000 for an LBMA member seat. There are folks who believe that doesn't prove they traded gold. The best policy in an investigation is to follow the money and $450,000 is money that wasn't spent for window dressing.
Now, when Anderson's Duncan [Mr. Shredder Man] and his immunity blessed, tweety bird friends finish singing we will have the crux of a really big gold carry trade intertwined with Ngas and all served up in tidy little derivative packages by JPMorgan...a Federal Reserve Bank.
Then we can all marvel at how such a thing could have possibly escaped the ever watchfull eye of the MoTU himself.
Black Blade
(02/28/02; 19:01:23MT - usagold.com msg#: 70917)
RE: Gimme Shelter
I really am not sure what the response will be should the US economy collapse. I suspect that we would see many more "New Deal" proposals and perhaps an overhaul of the US system of government and government control of the economy similar to what occured in the 1930's. The US system of government could change as it is "different this time" and is a "national security issue". Tight government control of "big bad evil business" could be taken to placate the masses. This could even lead to a form of national socialism I suspect. Then again, we might just get "very lucky" and like the Phoenix rising from the ashes, get a return to a free market society. I reallydon't know what would happen as this is sheer speculation. As you can see, I have no confidence in the government or in man for that matter. That's why I say always look out for "number one" as when "push comes to shove" no one else will. Cheers!
- Black Blade
slingshot
(02/28/02; 17:18:40MT - usagold.com msg#: 70916)
Gimme Shelter Msg#70914
Thank you for the link. Checked it out and I would prefer to keep it close to home. ;)
slingshot
Gimme Shelter
(02/28/02; 17:09:41MT - usagold.com msg#: 70915)
signing out for a few hours
Have to go for now.
Gimme Shelter
(02/28/02; 17:04:31MT - usagold.com msg#: 70914)
MSGS# 70911,70913
Black Blade, what do you feel the world will do after this two or three month chaotic mayhem following the economic fall?
How will we revolve?
Do you believe all of the education the talking heads are throwing out about nuclear problems, is because "they" may need another distraction for all of the sheeple to deal with while "they" figure out how to keep control of "us"?
slingshot
(02/28/02; 16:43:21MT - usagold.com msg#: 70913)
Solomon Weaver Msg# 70884
The way you do business.
As with many posts at this forum the best is saved for last.
Your last sentence,"and instead of cash,I will be happy to take payment in Au. My thoughts exactly!
Now I ask you Solomon Weaver, if you say, "I will trade you in Au", would there be any reporting to the I.R.S at any amount since there is no cash exchange and the value is equal with no additional income involved. I am thinking that this transaction could be treated like a rollover.
Slingshot
Black Blade
(02/28/02; 16:39:49MT - usagold.com msg#: 70912)
Recovery? What Recovery?
From the mouths of the nations' CEO's:
This morning I noticed that the CEO of Electronic Data Systems (EDS) siad the exact same thing every other CEO at their convention in Boca Raton, FL said. Without any capital spending how can there be any recovery? He went on to say that to a man all the CEO's that he had talked to said the same thing. There is no increase in capital spending and that translates into lost jobs and declining revenues.
The only ones forecasting an economic recovery are propandists on Wall Street economists and the financial media pundits. From the people on the front lines and the generals in the corporate offices the situation is rather "GRIM".
Get prepared for any contigency. Gret out of debt, get enough cash on hand for several months expenses, get Gold and Silver portfolio insurance, get a nonperishable food and basic goods storage program started. And I might add - begin sleeping well at night.
- Black Blade
Gimme Shelter
(2/28/02; 14:11:17MT - usagold.com msg#: 70910)
Regarding those who need a new payment system
Interstate, you and the others are dead nuts on needing something for us Joe beer drinkers.
See my message 70795 (Feb 26) and the others from today regarding this type of payment system for us.
There are currently no laws regarding the exchange of gold as a commodity. This seems to be the only commodity the feds and others have not regulated. (Probably because the BB's dont want to pay the regulatory fees other bizs have too.
So if you and I turn gold into digits with the physical being stored and audited (oz per byte) then we can transact digitally or physically anonymously, outside of the current fiat systems.
Our largest obstacle is gold is expensive to purchase as I have found. By the time one buys and delivers with all of the fees attached your are about US$45.00 over spot. This of course includes insurance and warehousing. Then the payment system provider needs to add fees to pay for the audits internal and external, the software for useage, the banking license fee to remain under the radar, storage and insurance, sales, customer service, etc...
It is easy to see that the feds left the silver behind for monetary reasons.
One item that is of the utmost importance, we do not have to let the feds create all of the money, we can too, but value backed!
There are only four companies out there doing this. The other three I am not associated with are very good. I just believe a physical delivery 1 oz GID 999.9 fine of gold and the ability to digitally transact face to face will segregate us from the pack.
It is nice to see this forum take on a what can we do approach. Until now it seems, (and I am a fairly new lurker of about a year) each has only shed the gloom of the economic system. I believe we all know this, especially now.
Now is the time for the aware to prepare.
I would welcome some input from this very educated group of minds to help evolve a payment system for the masses.
Gimme Shelter
This article or message is not intended to coerce or influence anyone inside of or outside of any government.
Interstate
(2/28/02; 13:36:33MT - usagold.com msg#: 70909)
Christian msg. #70888
I LIKE your idea. I can see so many possiilities in forming our own gold conglomerate. Are legal ramifications involved in getting one started? You are so right about us Joe Six Packs. It brings to mind a movie "Pink Cadillac" from many years ago, when the common shareholders of a corporation banded together and voting together (no proxies) and were able to take the corp over. The aim (for me) would be not to gain wealth, but to survive on what I earn without the gov't/banksters taking such much in interests and capital gains. Any more thoughts/plans?
Later, Interstate.
goldenpeace
(2/28/02; 13:34:36MT - usagold.com msg#: 70908)
Fannie Mae Hedge position
Today's WSJ editorial says 99% of FNM's year end 2000 hedge position, which was immense, was held by only 5 counterparties. FNM's balance sheet grew another 20%+ in 2001. The counterparties must be bulging with even more derivatives now.....want to bet wether J.P.Morgan was one of them?
Bowing
Jin-Yin
(2/28/02; 13:16:56MT - usagold.com msg#: 70907)
Wall Street Journal article
Excerpt:
"Abandoned for years by all but a loyal group of investment curmudgeons, Wall Street has got gold fingers again."
__________
Curmudgeons - vulgar or rude persons, boor, lout, oaf, jerk, clod, churl, cad, etc.
I don't find labeling people as rude jerks refreshing. Aaron's four viewpoints for being fully invested in gold are real possibilities if one can think for himself and can project future possibilities.
Excerpt:
1) You think stocks are overvalued.
2) You believe corporations are going to default more often on bonds and other debt-obligations.
3) Deflationary pressures, or a weak economic recovery, will erode corporate earnings.
4) The U.S. dollar will fall and banks will be weakened by their lending and derivatives exposure to parties like Enron.
"Because many gold bugs take some or all of these views, they stand apart from Wall Street's bulls. Indeed, rather than pore through balance sheets or examine corporate trends, as many portfolio managers do, gold bugs tend to be well-versed in such things as the history of central banks' monetary policies."
__________
I get the impression the author implies physical gold investors cannot decipher balance sheets or corporate trends like the professional fund managers, his expert witness. If gold investors don't understand these basic investment tools, they must be idiots or rather better yet, curmudgeons. Does or can anyone understand balance sheets today because what you find on them is fraudulent off balance poppycock. He didn't mention the recent errant ways or our corporate raiders and what damaging effect in confidence this will have on our economy far worse than what nineteen barbarians flying planes into buildings could do.
Are portfolio managers held in higher esteem for some reason? I don't think so because if they were, they would be making their clients money, which they aren't if these are fund managers he speaks of. Most are down for the past two years, which he fails to mention. Look over balance sheets all they want to, it hasn't seemed to help the fund industry's performance as they fail to beat the S&P 500 index year after year since inception. That's right. If you managed a fund with the 500 companies in the S&P, you would beat 85% or so fund returns historically. You have heard the saying, "Beating the S&P?" Well that's it, not many accomplish it.
Excerpt:
"And Barrick, he says, is the lowest-cost producer in the business and also is less vulnerable to market fluctuations because it sells gold in advance at set prices, which protects shareholders if the price of gold falls."
__________
That's what you call 'hedging' forward production. He doesn't use the word 'hedge' as it carries a bad connotation today unlike boor, jerk or clod. Investors are at least understanding the difference between hedged and un-hedged miners because Barrick has probably under performed its un-hedged peers. He forgot to mention that Barrick is trying to unwind its hedge book as it sees the price of gold increasing in the future.
Who ever benefited and made lots of money by getting the inside scoop from the press? No one! They are always a day late and a dollar short. Simply amazing but reassuring too. Thank you WSJ for the heads up dis-information and counter advice. When the press resorts to this style of reporting for the smart money insiders, which historically happens at the bottom of markets, one knows the time is fast approaching. The trick here, in tricky times, is in trying to figure out which market is bottoming. Hmmmm.
A Canadian
(2/28/02; 13:01:26MT - usagold.com msg#: 70906)
TAKE COVER !!!
Am sweating bullets at realization of just how fast window of cheap accumulation is closing. (today purchased more physical and traded my S.A dreamhole for a Canadian one; unhedged and debt free.)
The way I see things there will be a HUGE stock market correction which will make 87 look like a kneescrape. Things just weren't as inflated back then (and the chain of finance not as treacherous).
Like a high performance engine that wins all the races the greedy OWNERS of our economy refuse to put it in the shop for critical maintenance. They just want to keep winning. The oil is blacker than molasses, fuel filter's clogged,rad's leaking. ( YA BUT THAT BABY SURE CAN FLY! )I don't want to be anywhere near that track when she blows!
Play with paper save with gold.
escapethematrix
(2/28/02; 12:32:45MT - usagold.com msg#: 70905)
JPM link from MSG# 70896
Thanks, Rich
A very interesting and eye-opening read. Some select snippets:
The Federal reserve requires bank holding companies with over $150 million in assets to file the Consolidated Financial Statements for Bank Holding Companies, known as form FR Y-9C. I thought readers would be interested in knowing what was filed in JP Morgan's report, dated December 31, 2001.
Today, Morgan's judgement compass may be broken, but their bank definitely isn't, and it looks like Morgan is attempting to influence the price of gold again. But this time they are doing it in the shadowy world of derivatives. So they've used the bank to facilitate producer and central banks short sales in gold with notional levels listed on year-end FR Y 9-C report exceeding $41 billion dollars! So they question remains-Why does JP Morgan take on such exposure, and why do so many companies do their gold "trading" with Morgan? I would answer that question with another.
As Enron manipulated power contracts at exorbitant prices, and oil soared, gold never moved. After 9/11 gold spiked and then fell back; crude gapped up five dollars and then got crushed. There was only selling in the energy market. Was it because of the marginal decrease in oil consumption due to the decrease in airplanes flying, or was it the frantic selling by the market prop that needed to get out, before the company imploded on itself?
. Now we have that evidence. JP Morgan's notional principal amounts of gold contracts due within 12 months are $17.044 billion; those due over one year through five years are $18.843 billion, and those over five years are $5.363 billion. That's $41 billion dollars, or 150 million ounces of gold. $17 billion of gold due within twelve months, at an average price of $274 is 62 million ounces of gold. What part of this is hedged? JP Morgan says that information is proprietary. How is it hedged? JP Morgan won't say. Where can they get the 62 million ounces for delivery? Today the NYMEX has 1,285,701 million ounces of gold in warehouse stocks, of which 87,534 ounces are eligible
Hmmmm....Spring, and perhaps something else?? Is in the air.
Gimme Shelter
(2/28/02; 12:27:28MT - usagold.com msg#: 70903)
Metals as Money and other Ideals, with a Challenge.
I find several items of these discussions profound.
I asked why were the 90's so good. Even though I understand the fiat system and our national debt. My conclusion, be it good or bad was Bill Gates or more importantly, computers with operating software the masses could utilize. This spawned economic positives everywhere and saved the USD. (My take Robot Guy)
This has also allowed us the ability to, for the first time in mans history, to follow what our so called leaders are doing instantly. Most importantly the computer and internet allows us to plan ahead.
This planning has also lead us to this wonderful discussion forum that we can be educated to help ourselves, THANK YOU CENTENNIAL.
Which leads me to my next discovery. I have found most sit and watch but never do anything to prepare.
How do we get out from the bursting bubble collectively without damage?
I agree with Solomon Weaver, Christian, Darkhorse. How do you begin your own monetary system? This was my question several years ago. Do you let the government roll back through with another system designed for them? (See Black Blades idea on this a week or so ago.) I think not. There needs to be value.
Somewhere in between a monetary policy and barter lies another creation, digital gold.
I would like to challenge you all again. If you had the opportunity to help change the fiscal world we live in positively, with one large obstacle, the worlds monetary enslavers, how would you do it?
"... it does not require a majority to prevail, but rather an irate, tireless minority, keen to set brush fires in people's minds..." -- Samuel Adams, "Father of the American Revolution"
GIMME SHELTER
This article or message is not intended to coerce or influence anyone inside of or outside of any government.
balzac
(2/28/02; 10:07:04MT - usagold.com msg#: 70902)
IN PRAISE OF BLACK BLADE
I very much appreciate your diligent research and prolific posting over the years. In my opinion, you are definately
the most steadfast and resolute goldbug of all.
Thanks, Balzac.
Old Yeller
(2/28/02; 09:57:45MT - usagold.com msg#: 70901)
US current account deficit
http://globalarchive.ft.com/globalarchive/article.html?id=020227001353&query=US+current+account+deficit
"An unsustainable black hole."
Nothing too new here,just the usual assortment of frightening numbers that are given scant notice,as the financial talking heads bet on the recovery date.
Running fast from reality has worked well so far,but every day the monster grows larger.
Where else are you going to put your savings?
RobotGuy
(2/28/02; 08:51:59MT - usagold.com msg#: 70900)
DJIA
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=djia&sid=1643&o_symb=djia&freq=2&time=13
Can you guess which direction we're headed?
David Linkley
(2/28/02; 08:38:31MT - usagold.com msg#: 70899)
Wall Street Journal article
I ran into the article WSJ article referenced in two places this morning.
At the link provided, the headline reads ------------
"Gold Is Beginning to Sparkle Again As Investors Seek Safe Havens"
At Dow Jones On-Line, the headline reads -----------
"Gold Has New Luster for Investors"
Did I miss something here? I see this as positive for gold and gold bugs.
Quoting the article by Aaron Elstein,
"Abandoned for years by all but a loyal group of investment curmudgeons, Wall Street has got gold fingers again. The precious metal recently rose above $300 an ounce, its highest level in nearly two years, and mutual funds that invest in gold mining companies have been star performers against a backdrop of dismal performance in other areas of the stock market.
The rise stems largely from increased demand in the U.S., where low interest rates have made bond and money-market yields unattractive, while fears of war in the Middle East have people looking for safer investments. Also giving the price a boost is renewed interest by Japanese investors who are looking to guard against the falling value of the yen. Many Japanese, worried about the health of commercial banks amid a prolonged economic crisis, also have been shifting money out of savings accounts into gold as their government prepares to end blanket deposit-insurance.
To some, the minigolden age has been a long time coming. Indeed, to a group of hardy investors known as "gold bugs," the rise in gold price isn't so much a profit-opportunity as vindication.
"Gold has been a currency for 3000 years and it's only in the past 20 that people have forgotten about its importance," says Henry Bingham, a strategist at Van Eck Global, a New York investment firm that specializes in natural-resources stocks and commodities. Bingham says he has invested in gold since 1967. "What we are seeing now is a secular revaluation of gold, back to somewhere close to where it belongs," he says.
- - - - - - -
Linkley Comment: Though the article does cite some negatives (particularly when it comes to stocks at high price earnings ratios), overall it presents a very refreshing break from the negative scenario on gold usually associated with mainstream press.
Waverider
(2/28/02; 08:16:02MT - usagold.com msg#: 70898)
Mining Cellphones, Japan Finds El Dorado
http://www.nytimes.com/2002/02/28/technology/circuits/28CYCL.html?ex=1015563600&en=4626925881cfbaa2&ei=5040&partner=MOREOVER
Snippit:
"SABURO MASAOKA speaks with the enthusiasm of a Klondike prospector. In rapid-fire sentences that roll figures and the fanciful into one, he talks about panning for gold, silver, platinum and palladium. But Mr. Masaoka is no ordinary 49er. He is a salesman at Yokohama Metals, a scrap metal recycler whose mother lode is found on the dark side of the wireless revolution: the millions of cellular phones thrown in the trash heap each year.
Cellphone recycling is in essence a numbers game, and the numbers are sufficient to make it viable while, as yet, voluntary. Last year Yokohama Metals hauled in 1.7 million used handsets, about 10 percent of Japan's recycled phone market. The company pays 10 yen (7 cents) for each handset it buys; the gold and other metal in each phone is worth about 30 yen. In all, 120,000 phones are needed to produce a one-kilogram bar of pure (99.99 percent) gold, which sells for just under $10,000."
Waverider: Interesting article - I had no idea cellphones contained so much Gold. BTW, Nickel62 - thanks - great to see the whole article posted. Cheers!
Siochain
(2/28/02; 07:21:51MT - usagold.com msg#: 70897)
Wall Street Journal view of gold
http://online.wsj.com/article_email/0,,SB1014765130814110240,00.html
They don't think too much of goldbugs...or LT futureof PMs that paper is here to stay...but suggest if you are going to buy..consider Newmont...or ...get this...Barricks...then they say in effect/implication...goldbugs don't do the DD!!!
R Powell
(2/28/02; 07:13:50MT - usagold.com msg#: 70896)
The House of Morgan
http://www.bluecollarfund.com/page659052.htm
Thanks to bullion, next door, for the link.
nickel62
(2/28/02; 07:07:21MT - usagold.com msg#: 70895)
With apologeies to Waverider, I thought the article from the Financial Times that he posted was so significant that it should be posted in full...
Plunge Protection may Plunge the Economy into the loo
By Brady Willett
A curiously understated article was released last week from the Financial Times:
Feb 21 -- Japan suspected of stock market intervention
When considering that earlier in February Finance Minister Masajuro Shiokaw confirmed Japan's newly formed 'stock buying body' would intervene (buy stocks) when needed, 'suspicion' hardly seems like the most appropriate word. Moreover, when considering that the Japanese 'SBB' officially started operations on Friday February 22 with 4 Trillion Yen at their disposal ($15.15 billion in 02, and 03) it would appear that further mention of 'suspect' trades will no longer be the course de jour. Rather, the fact is that Japanese officials are aiming to legitimize their newly formed organization of plunge protectors.
The SBB arrives at a time when Japanese banks are more likely than not preparing to sell their stock holdings. At the end of March (fiscal year end) banks will be required to book their equity holdings at market value -- not an encouraging development for bank balance sheets when considering that the Nikkei has been on a multi-year slump. Furthermore, beginning in April 'the process will begin to scrap guarantees on bank deposits' (Reuters). Clearly, as the government attempts to rid banks of bad debts there is the danger of triggering a stock market collapse. It is this expected weakness in share prices during the upcoming March/April period that provided the incentive for the formation of the SBB.
The PPT and the SBB
Unlike the America plunge protection team, which tends to undertake market manipulations incognito, the Japanese stock buying body's sole purpose is to openly support the financial markets. Furthermore, there is considerable doubt as to whether or not the body's mandate is to simply cushion the blow as banks continue to sell-off their enormous holdings (the original concept for its formation), or if it is attempting to underpin a stock market that would otherwise deservedly fall regardless of such bank sales. To be sure, the rhetoric from the body's creators has been that the markets must stop falling:
"We must halt this fall in shares. It's like diarrhea, we must stop it. The stock-buying body was set up precisely to absorb such selling (offloading of cross-shareholdings by banks). If February is such a month, there is no excuse for not functioning at that crucial time." Finance Minister Masajuro Shiokaw -- Feb 7
"We agreed that the market's current level is clearly undervalued and needs to be corrected" Prime Minister Junichiro Koizumi's economic adviser Heizo Takenaka -- Feb 15
The phrases 'we must halt this fall in shares', and 'the market's current level is clearly undervalued' do not appear to be 'defensive only' mantras. Rather, the new body is being portrayed, at least by those who believe the very purpose of the SBB is 'suspect', as an active agent against any further stock market declines. The question is, is the SSB trying to save a market that is falling for the wrong reasons, or is it only glossing over the deep-rooted structural inefficiencies which have caused the markets to decline in the first place? The SBB, and to a lesser extent the PPT, would certainly like use to think it is the former rather than the latter.
Timing The Plunge
As is becoming increasingly evident within the America equity markets, if shares rise for reasons other than corporate earnings (or related strict fundamentals) the fallout can be that much more severe. Moreover, the fallout can be that much more unpredictable: one day the money in the markets does not care about earnings only manipulated revenue gains, and the next any company without earnings, regardless of revenues, sees its share price get decimated.
With this in mind, consider the Nikkei: the languishing leading index of corporate Japan is back above 10,000 after hitting an intraday low of 9420.85 on February 7. Drawing upon Mr. Shiokaw's previous statements, which not surprisingly came at the same time the Nikkei 'bottomed', the recent rally in the Nikkei may be confirmatory of an array of events, including: 1) the banks continue to sell as expected 2) the government is buying as prefigured 3) no one with any intelligence is shorting, and 4) speculators are hoping. That 'no one with any intelligence is shorting' is a deceptive statement. For certain, shorting specific Japanese stocks may be fundamentally sound, but how can someone short when the government is saying the market is cheap and they will now for the first time ever be buying shares directly? As for 'speculators are hoping': clearly Mr. Shoikaw's comments played a role, however small, in stopping the Nikkei's slide rather than any strict 'value' developments in the marketplace.
With these 'timing' thoughts in place, a much larger question comes into focus: should secret government backed groups be propping up the markets?
Take first the argument that the markets should not be allowed to fall, or at minimum 'rapidly fall'. To illuminate how this could be dangerous occurrence imagine Greenspan and company saying they will not let the Nasdaq fall below 5,000 back in March 2000 (granted this an extreme example that borderlines on the absurd. Perhaps 4,000, 3,000, 2,000, or 1,000 would be more applicable?) Nevertheless, if Greenspan helped form an American version of the Japanese SBB back in March 2000 would the Nasdaq still be at +5,000 today? If so, what would the average P/E on the Nasdaq be -- 1500? Further, would now defunct dot coms have continued to recklessly spend because of the ready availability of capital through share offerings? Would overall telecom debt still be enlarging, risking the very sustainability of the US financial structure? Perhaps, if Greenspan played his cards right, Henry Blodget would still be employed, Cramer would still be acting like a complete psychopath on CNBC, and the FASB would still be influenced solely by corporate America? Questions, questions...
The point to be taken from the above hypothetical is that improper use of plunge protection can serve as an exacerbating agent when any downturn does arrive. If the Nasdaq were held beyond 5,000, more debts would have been granted to nonprofitable entities, more shares would have been issued, more lies would have been told. Ultimately, more damage would have been done.
To Plunge or Not To Plunge?
The case against market manipulations can pose equally interesting scenarios. Consider September 17, 2001 -- the first day of trading in New York following September 11. What if Greenspan and company did nothing? What if the SEC did not rig the game so that corporations, and underfunded mutual funds could buy, buy, buy? In sum, what if the initial sell off was not supported, pessimism was allowed to grow, and prices continued to plunge?
These 'what ifs' are exactly what the plunge protection teams are supposedly trying to avoid. Arguable the PPT's motions helped quell the tides in September.
Clearly there is a gray area when it comes to the topic of plunge protection: during certain instances stopping a precipitous slide in stock prices can help the markets avoid crisis. At other times stopping a slide only serves to swell a much larger slide later on. However, the real question to be asked is by what methodology, if any, the PPT and SBB should operate. To be sure, the Fed released transcripts last week that showed that Greenspan and Lindsey both expressed worries about stock prices back in 1996. If the plunge protection team has been using this measure to establish intervention guidelines, then they would not have acted at all since that point. Put simply, by any strict valuation calculation the markets as a whole have not been cheaper since 1996 so there has been no cause for intervention.
However, as September 2001 demonstrates, recent history does show market manipulation on the part of the PPT. Thus it would appear that the plunge protection team acts in a contradictory manner to its own rhetoric and observations: they act on the basis of political considerations to ensure that prices do not fall at 'key' moments in time, rather than on the basis of economic fundamentals. In the current case, the question to be asked is when do falling prices during a 'bubble' indicate that we are not in a bubble any more? Ironically, this is a question the PPT avoids by not disclosing what they do. By contrast, in the coming months and years the SBB may not be so lucky.
SBB A Necessary Evil?
The SBB has attempted to legitimize government ownership of stocks because it has no other alternatives. Put simply, if Japanese banks are to adhere to new guidelines mapped out by the government they will have to sell an enormous amount of stock to do so. Nevertheless, it should be remembered that the major hang up when it comes to the Japanese economy is that the government does not take action in absolving 'bad debts'. With this in mind, one has to wonder whether buying shares from Japanese banks is just another form of bailing these banks out? To help you ponder this thought a question will suffice: is the SBB buying an opportunistic stake in viable, thriving corporations, or are they holding the value of corporate shares up hoping for the best? A bailout, is a bailout, is a bailout...
To date no one has even begun to debate when, if ever, the SBB intends to sell share back into the marketplace.
Hard Line The Only Line?
Generally speaking government backed equity markets, as China has recently become aware, do not work. Such markets function differently than regular markets where investors purchase a stake in a company by paying premiums that correlate to expected business developments. They function differently because they are regulated by political rather than economic considerations: a marketplace that may deserve by any and all measures to drop, is held up nevertheless.
In the case of Japan, plunge protection has not been reactionary. Rather, a methodical drop in share prices with the fear of further sharp drops is the reason for the formation of the SBB. With this in mind, the danger occurs when, and if, the SBB becomes unsuccessful in achieving their stated goals. If the Nikkei drops below 9,000 in the coming years the SBB would have wasted public funds, and potentially created a situation where ungrounded optimism transforms into ungrounded pessimism. What this means is that short sellers, and speculators (numbers 3, and 4) would likely pose a threat to Japanese stocks if the SBB does not continue to protect them.
The Honesty of a Plunge
The Nikkei is rising rapidly and many of those that feared a blow-up on February 7 still fear a blow-up. Nothing has changed following the SBB's formation except perception of stock prices -- not perceptions of Japanese macro fundamentals. The verdict is still out on whether or not perception is that the SBB is a good or bad thing for the markets long term.
Just as the 1990s investor was directed away from all that is 'value', and all that is 'fundamental' when investing in stock prices, so too can plunge protection bodies serve as agents of misdirection, purveyors of prosperity when the fundamentals do not support the markets. It is worth remembering that there is a double standard constantly being formed: that being that falling prices should be supported while rising prices should be allowed to escalate. As such, perhaps the only way to calm fears that plunge teams are not fouling up the markets is to form another team of 'mania monitors': at least this way the next plunge in global stock prices will be an honest plunge -- one that is as walled in as the next rally, or by the set of 'cheap' and 'overvalued' rationales bankers around the world deem fit.
Plunge protecting the world's stock markets may be a hazardous pursuit. That said, it is worth remembering that the Nikkei, thanks in part to anticipation of the new 'stock buying body', is up nearly 10% since February 7, 2002. As such, the potential dangers of governments amassing equity ownership are easily dismissed -- prices are rising!
However, to play on Mr. Shiokaw's words, the fear is that perceptions surrounding plunge protection might change to: 'It's like diarrhea, we must stop it." While you can temporarily stop stock prices from sliding down the toilet by using public funds to buy shares, eventually new capital and a stronger set of fundamentals are needed to avoid a more powerful flush.
Brady Willett
BWillett@fallstreet.com
www.wallstreetwishlist.com
March 1, 2002
Black Blade
(2/28/02; 06:52:14MT - usagold.com msg#: 70894)
Yen Recovery Fades as Japan's Woes Linger
http://biz.yahoo.com/rb/020228/business_markets_forex_dc_4.html
Snippit:
LONDON (Reuters) - A brief recovery in the yen ran out of steam in European trade on Thursday, with the Japanese unit handing back gains against the dollar on persistent fears about the state of the domestic economy. Japanese January industrial output data on Thursday illustrated the country's economic woes, posting a 1.0 percent drop when analysts had looked for a rise of 0.6 percent or more.
Black Blade: Looks ugly. The Nikkei had a paltry 14.74 point gain last night. The Japanese PPT must be like the Little Dutch Boy putting his fingers in the dike to prevent total collapse. Only this Little Dutch Boy is running out of fingers and toes in a hurry.
Black Blade
(2/28/02; 06:43:50MT - usagold.com msg#: 70893)
Grim Data
I expect that the Wall Street pimps will spin this data to sound positive. However, unlike a lazy Wall Street analyst, all one has to do is actually look behind the numbers. Jobless claims rise 17,000 to 378,000 in spite of the BLS efforts to disguise the data with seasonal adjustment. The fact that they couldn't hide a rising rate of unemployment says volumes. The "Bone Pile" continues to grow ever higher.
Also the GDP for the 4th quarter was revised upward from an estimate of 0.2% to 1.4%. However, that is mostly due to zero percent financing in the auto sector. So the US economy still looks to be in trouble. There is absolutely no positive news to justify a grossly over valued market. In a word - "GRIM"
- Black Blade
Black Blade
(2/28/02; 06:33:02MT - usagold.com msg#: 70892)
Short Changing Tokyo's Markets
http://www.iht.com/articles/49602.htm
Snippit:
Major foreign investors have serious gripes with the Japanese government's effort to limit short-selling as part of its latest plan to prop up the country's tottering financial system. In its package of deflation-fighting measures, Tokyo announced that it would tighten rules on short-selling - the market-depressing act of selling shares you don't own in hopes of buying them back later at a lower price.
Behind the crackdown on foreign brokerages' short selling lies a desperate attempt by the Japanese government to reverse the prolonged slump in Tokyo stock prices. The Nikkei stock average has tumbled about 20 percent in the past year in tandem with the Japanese economy.
Black Blade: Let's see - ban short selling and have the government use public funds to buy stock futures and selected shares to prop up the market. Wonder what happens when they run short of cash. Setting up for a fall. Hmmm...
RobotGuy
(2/28/02; 06:32:06MT - usagold.com msg#: 70891)
"End to recession"
The most bizarre thing about that statement, is that people have been saying that for over a year now. I remember hearing that last year in January. If the end of this so called recession has been so close, then why do we have to say it's near for over a year? What does near mean? 2005 near? You can read between the lines with Greenspan. Did you ever hear him say definitely? No, of course not, but you did hear him say "could falter". Honestly, with the way we boomed in the late nineties, it's going to take a lot of time, or a lot of losses, or both before the global community can experience another boom like that.
Don't forget however, I'm just a RobotGuy.
nickel62
(2/28/02; 06:27:54MT - usagold.com msg#: 70890)
coco actually a very tough question to answer because of your assumption that the Canadian and Austrailian dollar would again return to parity with the US dollar....
I don't think that would necessarily occur. I guess the reason you are forcasting that is that the economies of Austrailia and Canada are very much aligned with the production of natural resources and that in a period of rapidly rising gold and silver prices one would expect a concommittent increase in the prices of other natural resources as well. That might well be the case but I am not sure I would expect the Canadian looney or the Austrailian dollar to do much more then slightly strengthen versus a declining dollar. (A declining US dollar is the same as saying that the US dollar price of gold would go to $1000/ounce of course) I would guess that the parity of the three fiat currencies would stay roughly equal in the event of a rapid rise in gold and silver and therefore the returns to Canadian and Austrailian investors would be somewhat similar to those of American based investors. I hope this helped.
Black Blade
(2/28/02; 05:40:07MT - usagold.com msg#: 70889)
Bosnia: Main Muslim party disputes Yugoslav succession gold sale
http://globalarchive.ft.com/globalarchive/article.html?id=020227008016&query=gold
Snippit:
Sarajevo, 27 February: The Party of Democratic Action [SDA- main Muslim party] in Bosnia-Hercegovina believes that the Council of Ministers has shortchanged the Bosnia-Hercegovina citizens for more than 5m convertible marks by selling gold it had received from the division of assets [of former Yugoslavia].
Black Blade: That's nothing, Tony Blair and Eddie George short changed the Brit people to the tune of $500 million. Last BoE sale coming soon.
Christian
(2/28/02; 05:24:33MT - usagold.com msg#: 70888)
@darkhorse
We the Joe Six packs need to form groups to buy gold- lease (sell) among members - just like central banks do for credit creation purposes. The Joe Six packs need to give the middle finger to the bankers and credit card companies. There is no reason gold can not be leased (sold) among a group for needed credit creation. Why should the average Joe Six pack pay on a $100,000 bank loan for a house for 30 years and pay income tax on those earnings to make those payments when it costs the FED only $250.00 to supply that loan. The interest and principal is pure profit and placed in an offshore, off accounting account where no taxes are paid.
Belgian
(2/28/02; 04:48:42MT - usagold.com msg#: 70887)
Geopolitical Consequences ?
Saudi Arabia (Cheap oil-reserves), sudden public stance (UN) on Israel/Palestine !?
Arab states recognizing the state of Israel in exchange for.....*more* than a viable Palestinian state alone ?
All speculations about the "behinds" of this event are open.
Co-incidently, we have a POO rise of 5% (20$ > 21$).
Next conflicting event is the invasion of Irak ? Do Saudi Arabia + US + Euroland agree on the elimination of Saddam ?
In other words : have the dollar-oil-euro agreed on a temporary armistice ? Despite the Saddam hint of oil for euro !!-?? (Euroland friendly gesture)
Will the US trade deficit grow further while the final unloading of dollar-masses is on halt (political dynamics)?
Is the virtual stable dollar further hedged on LBMA with paper-gold-contracts ? Is Euroland letting the US economy suffer from its own destructive expansion (trade deficit), whilst working on the euro heel digging ?
TG-2001 : >>> I fully well expect Euroland to sell into any dollar gold market spikes <now> so as to hold the level steady,,,,in an effort to inflate paper and discredit our (US) gold market. Eventuallu they (EMU) will move to create a rift between Physical dollar-gold prices and dollar-derivatives prices.
Point : Political will/critical mass and geopolitical circumstances vis a vis the paper-gold-contract market *jeopardy* Timing.
TG :
- Noone is going to excercise their (Gold) "corner" until the dollar based Gold system is changed !
- The central banks will band together to crush any delivery drive !
- Only an Official government change away from supporting their currency with paper pricing will do it (=paper-trading grip on Physical prices) .
In the mean time the 325$ barrier is still seducing POG to come closer and closer. Mine-paper has already discounted this 325$ POG in its valuations. Profits on mine-speculations can be exchanged for the cheaper Physical yellow bird in hand ! Some story for the trade-deficitaire (Rubling) greenback wich
still buys more ultra-cheap but scarce Physical. Don't wait for the huge financial/currency crack up while $ and Ä block are pulling in as many other political trading blocks as they can.
kludge
(2/28/02; 04:42:55MT - usagold.com msg#: 70886)
(No Subject)
http://www.parousianetwork.com/Biblical_Money_Part_1.htm
Probably too late to be of use for Cavan Man's class, but provides the answer to the question "What is Money?".
See also part 2: http://www.parousianetwork.com/Biblical_Money_Part_2.htm
Presented in a Biblical context, yet maybe interesting for the gold vs. silver discussion also.
Includes another characteristic of money not mentioned recently, yet I believe critical if you are planning for "the worst": recognizability. Wouldn't take for granted that people today know the contents of a 1964 silver dollar or a French Angel.
coco
(2/28/02; 03:57:07MT - usagold.com msg#: 70885)
Silver Vs Gold
I have a query regarding gold vs silver as an investment. Back in 1981 when gold went to $875 US oz and silver to $48 US oz the Australian dollar equalled the US dollar - today it is half that: so gold at $300 US oz would be sold in Australia at $588 and in Canada $483.
Let's assume gold reaches $1000 US oz and silver $55 US oz, most likely the Aust. dollar and the Canadian dollar would again reach parity. In this case gold in the United States would see a profit margin of somewhere
around 230% whilst in Canada and Australia it would only be 100% and 80% respectively. On the other hand silver at $5.00 US oz would be $8.30 Canadian and $9.80 Australian which in the above scenario would see a profit in the United States of 1000% - Canada 600% and Australia 450%. Why would either Canadians or Australians buy gold.
PLEASE, I don't want all you mathmaticians out there to correct me as it is only an exercise put forward to get your opinions.
I was one of the people who bought physical silver approx. 18 years ago when the Aussie and US dollar was close to parity. I also have some gold. I read an article back then written by Jerome F. Smith which I still have in a newsletter dated 18th. June 1984 about silver set to increase by 800 - 1600%!! Does this sound familiar?
I'm not a regular contributor as I'm a real amateur at this but I would like to thank our hosts and especially Black Blade who has given me faith to hold on until hopefully, in the not too distant future we'll all reap the rewards of patience.
God bless you all.
Jin-Yin
(2/28/02; 03:14:34MT - usagold.com msg#: 70884)
(No Subject)
nickel62 -- Thanks for your continued hospitality. Was briefly here as the French refer to money and silver.
uponroof -- Thanks for your insight. The cabal most likely have their shells and oxen in the yellow stuff waiting for the rest of us to catch on to the biggest investment opportunity of a lifetime. Without the likes of us, their investment would go nowhere. I truly hope that is not lost on them. All the world's a stage and the next act is about to start in my opinion. Maybe FOA would illuminate a trail marker or two...
Solomon Weaver
(2/28/02; 00:08:53MT - usagold.com msg#: 70883)
Fly me to the moon and let me dance among the stars....
mikal (02/27/02
Solomon, do you see the parallel world of precious for poor nations and people. I mean, even as of gold revalues and reemerges in modern use and thought, I see developing interest in silver, its consumption in North America and worldwide such as the new Arab silver denarii and the beautiful and Mexican Libertad. Despite its bulkiness in large amounts, small amounts will always go very far in medicine, industrial, and monetary use. And as you state so well, its price and supply have been manipulated to our advantage. Actually an unprecedented situation of severe shortage and unsustainably low prices-low enough to close mines and hinder supply well into the future. Like the sun and the moon, gold and silver will always shine together.
. . . .
Mikal...your question ends with my most important view...shared I believe by Rich and Galearis and others here.
I think many of the silver hounds here have come to understand the phenomenal short to mid term chances for silver, based on extreme and entrenched supply deficits in silver which have been compensated by large reserves and robust scrap recovery. The reserves are now mostly gone.
The silver game and the gold game are two very different things, and as things wake up, there is very little chance that the two move in tandem, without some dramatic divergences.
First lets look at gold: Worldwide estimate of about 125,000 tons....let's say 100,000 is in a form that would respond to monetary demand (include the chain on the neck of an Indian bride which serve as a form of dowry). At today's price of $10 million per ton, we would say there are about $1 trillion worth of gold. Now, compare that to a worldwide value for semi-liquid assets (from cash to money market accounts to herds of goats) that probably add up to around $50 trillion. One might reasonably say that the world has only about 2% of her liquidity tied up in gold. And since much gold is concentrated in the hands of organisations who need to create fiat liquidity and collateral, the average world citizen probably has much less than 1% of his liquidity tied up in gold.
So, if gold comes back as a store of value and as a real liquidity holding, it is easy to see how it could make a strong rise over a period of years to hold closer to 10-15% of global liquidity and value store... and a 10 fold increase in true purchase power value. Since such a move in gold is likely to hurt USD the most, I see no reason to believe gold might not move up to $5000 USD and stay there for quite a while....and since even a very aggressive gold mining industry would hardly add more than about 2% per annum more gold to the current system, it is unlikely to have mines tip the supply scale too quickly. In that scenario, with gold at several $1000 per ounce, even single gold ounces are likely to circulate in the background.
In this case, silver coin could see a certain resurgence in popularity (but I doubt it will be able to come back as national coinage), and it will obey Greshams law...silver the bad coin will push gold the good coin into hiding...rightly so because silver will be very volatile and not very reliable as a "savings".
Unlike gold (which contrary to popular opinion never lost its role as monetary and liquidity player), silver in the modern age was stripped of its role as coin, and replaced first by copper clad and aluminum, and now by digital bits.
Beyond a few beautiful numismatics, and some millions of commemoratives worth a few pennies over melt value, silver should now only be considered based on the value is serves mankind as a precious commodity. The situation in silver is simply that during a 50 year period in which there has been steadily increasing demand for silver in hundreds to thousands of modern conveniences (photos, electrical and electronic, medical, etc) sold internationally to exponentially increasing numbers of people particpating in the modern economy, the mining industry has not developed silver production, since large standing inventories covered well for supply deficits. The effect of rising silver prices will be to dramatically reduce zinc and copper prices, and much of the mining industry will face potential bankruptcy, depending on their hedges and their silver content.
I have no doubt that given the right silver price (stable), the mining industry will be able to turn around in about 5- 10 years and come back into a modest surplus. But before that happens, based on the very low levels of silver now, the large potential demand as leased metal is repurchased (and lease rates rise to very high constants), the negative effect of silver hedge (forward sale) contracts on mining companies, and the demand surge as industrial users move from just-in-time purchases of silver or leased silver to actual ownership of forward requirements (stocking), we are very likely to experience a strong enough surge in prices to remind us of the Hunt Brother days.....and with Icon Warren Buffet now in the picture, and to be touted as the clever guy who cornered the market by paying cash and waiting 5 years for the market to shrink until he had most of it, the pundits and analysts will be certain to claim that silver long term resistance is at about $50/OZ, with $100 an easy target.
Now, of course, there are paper tigers in silver who will do their best to paper over their losses by shorting silver as ever...but their demise will be that, unlike in the gold market where the large gold pool encourages most long bets to be leveraged paper trades looking for fiat exits, the very tight silver metal supply will drive things towards proof of physical. And since there is a very large pool of silver users who really need silver and cannot take fiat instead, and no major sources of real silver to dump into the market to handle the volatile prices....well.
There are about 4 billion ounces of gold in the world, and we are adding about 75 million more ounces per year...gold supply rises.
There are about 1 billion ounces of silver in the world, and we are removing about 100-200 million per year...silver supply shrinks.
The longer this goes on, the higher the chances that when both the moon and the sun are unlocked, that the moon sees a much stronger run. Could the sun temporarily orbit round the moon??
Anyone who watched a NASDAQ stock go from $0.50 per share to $75 per share in less than 1 year (15,000%) understands what an irrational feeding frenzy is....anyone who can't see that silver is ripe for a feeding frenzy can happily put his wealth in gold. I'll be more than happy to haul a 1000 OZ lot of silver down to cash it in when the silver gold ratio temporarily goes to 1:1. And instead of cash, I'll be happy to take payment in Au.
POS
tedw
(2/28/02; 00:00:42MT - usagold.com msg#: 70882)
Tip
Information is circulating that a well-known mining exploration company which had previously found platinum/paladium on its North American property has
had new discoveries of platinum.
Posting guidelines do not allow me to name the company but if you follow such things you probably know who I am talking about.
A word to the wise is sufficient
ViewYesterday's Discussion.
Permission to reprint is hereby granted where the USAGOLD name is cited along with our web address, mailing address and phone number. For electronic reproductions, citing the post heading and the http://www.usagold.com/cpmforum/ website address as the source is sufficient.
|
Centennial Precious Metals Gold coins & bullion since 1973 Denver, Colorado 80246-0009 We educate first-time investors! |
for quotes and purchase information.
|
