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Welcome to the USAGOLD Gold Discussion Archives. The archives of this gold discussion forum are a treasure trove of information to educate investors about protecting their wealth through portfolio diversification with private gold ownership. The discussion forum also covers the wider issues of the past, present, and future role of gold in international monetary policy and the dynamics of the modern gold markets...   (Discussion Forum Hall of Fame) (The Gold Trail) ("Thoughts!" by ANOTHER)   The opinions posted by all guests are expressly their own and do not necessarily represent the views of the management or staff of USAGOLD - Centennial Precious Metals. The hosting of the public discussion shall therefore not be construed as an endorsement by USAGOLD - Centennial Precious Metals of any of the opinions posted here.

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ARCHIVED DISCUSSION FROM 12/29/2000
All times are U.S. Mountain Time

(Yesterday's Discussion.)

Rx Gold (12/29/2000; 23:49:45MT - usagold.com msg#: 44711)
test
test

justamereBear (12/29/2000; 23:17:58MT - usagold.com msg#: 44710)
All


I have been meaning to post this, and keep forgetting it when I sit down to my computer.

Prior to about 1990, the Canadian government issued its maple leaf coins at a "999"purity,whereas after that time they issued at "9999"

If today you wanted to sell that same coin (999), institutions such as banks would be very interested in buying but only with a steep discount, over and above hanling charges, spread etc

Things like Spread etc, aside the banks etc will want an often impossibly huge discount, often running of up to 5%, simply to make more money under the premise that it was a remelting fee, for those who want to sell immedistl4 .

Forewarned is Fore armed, and all that

Best wishes for the coming year
j'Bear

SHIFTY (12/29/2000; 21:59:05MT - usagold.com msg#: 44709)
GSR Reprices and Extends the Exercise Period of 1999 Warrants
I hope that someone can explain to me what this means.

$hifty

------------------------------------------------------------
Golden Star Reprices and Extends the Exercise Period of 1999 Warrants

DENVER, Dec. 14 /PRNewswire/ -- Golden Star Resources (Amex: GSR; Toronto: GSC) is pleased to announce that it has obtained all necessary approvals for the amendment of the exercise price of 3,061,150 share purchase warrants issued in connection with a public financing completed on August 24, 1999 from US$0.70 to US$0.52 per share. In addition, the share purchase warrants previously scheduled to expire on February 24, 2001 will now expire on the earlier of (i) August 24, 2001 and (ii) the 30th calendar day following the determination by Golden Star that the 10-day weighted average trading price of its common shares for any 10 consecutive trading days is greater than US$0.62 per share.

Of the 4,223,150 warrants issued in August 1999, 515,000 warrants have been previously exercised and 647,000 warrants issued to insiders could not be re-priced or extended.

Commenting on the re-pricing, Mr. Allan Marter, Chief Financial Officer of Golden Star, stated that, "Although our plans for expansion in Ghana have been delayed, and although we continue to experience a depressed gold price, we are optimistic as we head into 2001. We feel that the re-pricing and the extension of expiry dates on our share purchase warrants represent an opportunity for the warrant holders and the Company."



auspec (12/29/2000; 21:54:59MT - usagold.com msg#: 44708)
HBM / JFK
Believe I am in need of a history lesson re JFK not being a "liberal". Guess I just assumed, from watching Ted in action for so many years, that they had a lot in common. So there was a lot more than just Camelot to Jack, eh? Thanks for your input and we look for more.

auspec (12/29/2000; 21:46:54MT - usagold.com msg#: 44707)
Cavan Man
If I remember right they tasted more like veal cut-lets.
HNY to you and all.

Hill Billy Mitchell (12/29/2000; 21:09:05MT - usagold.com msg#: 44706)
Cavan Man 2 # 44703 and auspec


JFK was not the last Democrat who was not a "liberal". He was the only Democrat in the 20th century who was not a liberal, with the possible exception of Truman. Truman, I believe, was neither liberal nor concervative, but rather a flat-out bull-headed, independent minded coger. We really never got to know JFK. He was still growing up with Bobby. We will never know how good and different things might have been.

I just get an empty feeling when I think about what might have been without LBJ and the Liberal Republican (Keysian)Nixon.

Sorry for butting in.

HBM

Cavan Man (12/29/2000; 20:59:54MT - usagold.com msg#: 44705)
Michael Metz
If you followed his advice in 1999 you probably got murdered. He was finally vindicated. Sooner or later we're all going to be right....CM

Cavan Man (12/29/2000; 20:50:51MT - usagold.com msg#: 44704)
YGM
Coming to a mall near you soon.....

In your opinion, who has "got it wrong"? That's a picture worth a thousand words. I side with the East because they have 5000 years of history on their side.

Cavan Man (12/29/2000; 20:46:27MT - usagold.com msg#: 44703)
auspec
Whether or not JFK was assasinated because of his monetary proclvities, anyone who believes the murder was not a conspiracy among strange bedfellows is dead from the neck up. JFK was not a liberal. In fact, I believe he was the last Democrat who was not a "liberal".

YGM (12/29/2000; 20:43:11MT - usagold.com msg#: 44702)
Visit Arabic Gold Dealers Showroom......
http://www.kfshrc.edu.sa/directory_services/html/gold_souq.html
Anyone feel like immigrating?

Cavan Man (12/29/2000; 20:41:45MT - usagold.com msg#: 44701)
auspec
I'm sure they "taste like chicken". HNY..CM

auspec (12/29/2000; 20:27:14MT - usagold.com msg#: 44700)
Cavan Man
This one is coming from deep inside the bag of tricks--When I was a wee lad I was introduced to the famous western mountain range oysters in somewhat of an unusual setting. These particular delicacies were separated from their remorseful owner for no more than two minutes before discovering a hot griddle and subsequently a mixed dentition equipped with salivery lubricants. Talk about FRESH! The poor calf ambled away, branded, vaccinated, and a little lighter, never to realize how incomplete his life was to become {or to play any golf}. Are we still being family friendly?
Go Gold, Silver, GATA, and West young man!

auspec (12/29/2000; 20:08:06MT - usagold.com msg#: 44699)
Randy {@ The Tower}
One For You Randy

I said:
"I was told this week by a wealthy Iranian Family that their money is exchangeable for gold. I know this is a very restrictive society and you could not get much gold in or out of the country, but did not think ANY country was on anything resembling a "gold standard"."
You said:
-------
"How much resemblance are you looking for? Right here in the United States our nation is among many that has currency which is exchangeable for gold (among many other things). Just give Centennial a call next week to find out how the process works in America -- or else visit the link above if you are eager to satisfy your curiosity."

Can see that I will have to watch my words a bit more closely or an enterprising individual will use them to separate me from my chips! Well done on behalf of your fine establishment {your check is in the mail}! Should my fellow workers be so opportunistic! I will personally visit CPM once GWB is Pres and I receive the pardon he has promised, thus allowing for return to my homeland. I am deeply intrigued by these "many other things" that my currency can be exchanged for, such a country you have. Now, let's start again from near the bottom of the cask. Does anyone know the formal Iranian Government's official position or link between their currency and any form of Iranian government gold backing???????????? There are no ISs in that sentence and you may not use a lifeline to call our lame {duck} President. Thank you, thank you, thank you.




Cavan Man (12/29/2000; 19:51:23MT - usagold.com msg#: 44698)
ORO
While I have the utmost respect for FOA and his friends (genetic antiquity you know), the Europeans do not impress me at all. In fact, they don't have enough rocky mountain oysters among them to field a foursome for nine holes of golf. I wanted to use a little stronger language but in deference to HBM, I have tried to be more tactful.

Let's see, the Brits we've beat twice on battlefields etc. (although the BOE may be the ultimate adversary). We've beaten the Germans twice and bailed out the French and Brits twice. Sorry if this hurts your business MK. God Bless the USA. I'd rather fight the socialists on this side of the pond....Good evening...CM

Cavan Man (12/29/2000; 19:45:15MT - usagold.com msg#: 44697)
Hello ET
I play a set of Hogan Apex with speed slot in toe. These are 30 years old and cost $100 FRN per stick! the way i play, nothing fancy or expensive would help me. Best2U....CM

ET (12/29/2000; 19:30:36MT - usagold.com msg#: 44696)
ORO, Cavan Man

Hey ORO - thanks again for all the time and effort you make here. It is appreciated.

Cavan Man - a couple of things. I saw your heating bill was over $300 and likely headed higher. We live out in the sticks and have a propane-fired furnace. Starting the first of this month we have used nothing but our two wood stoves with the furnace set at 62 degrees. Occasionally it would pop on very early in the morning if we didn't throw a few more logs in the stoves in the middle of the night. So far, all we've used is about a half a cord of seasoned hardwood. The house stays about 68-70 and is quite comfortable. I figure my heating bill for December is going to come in around $60 to $70. I'll have to admit I'm pretty pleased with the performance of these stoves.

In the category of "world standards are collapsing", let me add this note. I received my Herrington catalog this week and on the cover is Callaway's new titanium driver ($499), yikes! Anyway, the interesting thing about this club is it is not USGA (United States Golf Association) approved, meaning you cannot use it in tournament play (because it would be cheating!). The reason it isn't approved is because it hits the ball an additional 25 to 50 yards using technology specifically outlawed by the USGA in its ongoing effort to protect the integrity of the game. Remarkably, Callaway has gotten Arnold Palmer to endorse the use of this illegal club. Let me quote the tail end of the promo;

"Good for Golf - Maybe you just don't think you'd get extra enjoyment from consistently catapulting the ball farther than you've ever hit it in your life, at the same time improving your ability to keep it in the fairway. If so, this club's not for you. But if you'd like to experience the golfing thrill of a lifetime, I suggest placing your order today, because we'll take more orders for ERC II than we can possibly deliver promptly! At the same time, you can send a message to the USGA that you agree with Ely Callaway, Arnold Palmer, and Lee Herrington. For those who play the game mostly for enjoyment, and who occasionally take a Mulligan or a gimme, play Winter Rules well into Spring, or bend a branch out of the way - all without calling a penalty on yourself - add the ERC II to your bag, and have some real fun!"

C-M, this kind of reminds me of the argument for fiat money, eh? Geez - I suppose we'll next have Callaway selling illegal balls, irons, wedges and putters all in the interest of having fun. I'm sending in my USGA renewal tomorrow.

Hope this finds both of you well. Happy New Year!

SHIFTY (12/29/2000; 19:20:49MT - usagold.com msg#: 44695)
Randy @ The tower
How about it ?
Le Metropole Members,

REALAudio: GATA's Not So Impossible Dream - Onward to
South Africa

The Gold Anti-Trust Action Committee has recorded
a REALAudio presentation to facilitate our fund
raising efforts to support Reg Howe's COMPLAINT
versus Defendants: Bank for International Settlements,
Alan Greenspan, William J. McDonough, J.P. Morgan &
Co. Inc., Chase Manhattan Corp., Citigroup, Inc.,
Goldman Sachs Group, Inc., Deutsche Bank AG and
Lawrence H. Summers, Secretary of the Treasury.

The COMPLAINT may be read at:
http://www.gata.org/latest.html or at The Matisse
Table in www.LeMetropoleCafe.com.

There are many individuals that believe that all
human beings are only 6 degrees of separation from
each other. That must be less so among those that
utilize the Internet.

Why don't we put that to a test?

"As Victor Hugo once said, "Nothing is more powerful
than an idea whose time has come." If each person
that listens to this audio, emails 3 other people
that believe in free markets and suggests they that
also listen, it won't be long before GATA's idea
is resounding around the world."

You can listen to GATA's REALAudio at www.GATA.org
and in the Café at The Matisse Table.

In addition, Café/GATA webmaster, Geoff Barnes, has
worked up a downloadable zip file for any other
webmaster to just click on, then they can post at
whatever sites they like without our intervention.

Exposure is key.

The Howe Complaint legal expenses are going to be
considerable. The Reg Howe/GATA camp needs to raise
a great deal more in contributions to take on the
High and the Mighty. We hope that webmasters all
over the world might put up this audio for a period
of time. Just some of those we are counting on include:

www.goldensextant.com
www.financialsense.com
www.safehaven.com
www.gold-eagle.com
www.usagold.com
www.kitco.com
www.cairns.net.au
www.silver-investor.com
www.miningweb.co.za
www.e-gold.com
www.the-privateer.com
www.goldworld.net
www.devvy.com
www.sightings.com
www.thebullypulpit.com
www.buycoin.com
www.wexfordcoin.com
www.cointoday.com


Café members: if you know any other web sites that
will post a link to www.GATA.org so that our REALAudio presentation might receive even more exposure, it
would be greatly appreciated.


HAPPY NEW YEAR! It surely is going to be one for
gold and goldshare investors.




<A HREF="http://www.LeMetropoleCafe.com/entrance.cfm">Le Metropole Cafe</A>

All the best,

Bill Murphy
Le Patron
www.LeMetropoleCafe.com


Buena Fe (12/29/2000; 18:08:49MT - usagold.com msg#: 44694)
A bold new world......I've got a map of what's ahead....looks alittle bumpy!
http://www.msnbc.com/news/508283.asp
Russia, Iran expand military ties

TEHRAN, Iran, Dec. 28 — Iran and Russia said on Thursday they had agreed on broad military cooperation and declared that a 1995 Russia-U.S. deal that prevented Moscow from selling conventional arms to Iran was effectively dead. The announcement was likely to anger Washington, which has put pressure on Russia not to sell arms to the Islamic republic.


Buena Fe (12/29/2000; 18:04:52MT - usagold.com msg#: 44693)
auspec (12/29/2000; 17:16:08MT - usagold.com msg#: 44687)
Si Senior........chaa chaa chaaaaa!.......Lets Party...THE CABAL IS TOAST IN 2001......my new mantra......do-yah like it or what?

The way the markets closed today-nasduck-dow-usbanana, conversely oil-gas-crb seems to point to as close to capitulation as I can remember.......it is inevitable of course!

Cheers FOA-TG & the rest of you mighty men of valour!

Randy (@ The Tower) (12/29/2000; 17:59:37MT - usagold.com msg#: 44692)
Thank you, ORO
Earlier today I read your posts detailing the international supply/demand volumes for dollars and euros. Very helpful...and I thank you. Have a safe and happy New Year.

Randy (@ The Tower) (12/29/2000; 17:56:29MT - usagold.com msg#: 44691)
auspec, saw your comment...
http://www.usagold.com/onlinestore/special.html
"I was told this week by a wealthy Iranian Family that their money is exchangeable for gold. I know this is a very restrictive society and you could not get much gold in or out of the country, but did not think ANY country was on anything resembling a "gold standard"."
-------
How much resemblance are you looking for? Right here in the United States our nation is among many that has currency which is exchangeable for gold (among many other things). Just give Centennial a call next week to find out how the process works in America -- or else visit the link above if you are eager to satisfy your curiosity.

Randy (@ The Tower) (12/29/2000; 17:45:20MT - usagold.com msg#: 44690)
From CNN: Gold seen higher in 2001
Being too cold to put in time on the rooftop, I have labored in other regions of The Tower and happened to see just moments ago on one of the other floors Stuart Varney of CNN Moneyline interview Michael Metz, managing director for CIBC Oppenheimer. First, Mr. Varney congratulated Mr. Metz on his impressive call last year--Mr. Metz had been bearish on the U.S. stock market for 2000 at a time when few others were.

When asked what he sees for 2001, Mr. Metz continues to see tough times for U.S. stocks, and sees the dollar weakening. He said that foreigner investors are even bigger trend followers than Americans, liking to put their money in investments enjoying an up-trend within regions where the local currency is also enjoying an up-trend. He said that condition is now dissipated in the U.S., prompting these foreign investors to start looking elsewhere.

Mr. Varney then asked him essentially, "What about gold? It's been out of favor for 20 years, do you see any changes?"

Mr. Metz replied that the answer is naturally YES given his expectations for the weakening dollar and expected shift of capital. More specifically, he expects [to paraphrase by memory] "a big move up in gold early next year" (2001).

oldgold (12/29/2000; 17:43:50MT - usagold.com msg#: 44689)
Farfel
My favorite short-term SM indicator -- the McClellan Oscillator -- reached its most overbought reading in a LONG time yesterday, so today's reversal is no surprise. I still think the stock market will do OK for a few months, but the Dow probably will pull back another 300-500 points before the uptrend resumes.

NAZ, by contrast, now somewaht oversold. Another big down day will make it a strong trading buy. With tax selling out of the way -- do not be surprised if the the NAZ rallies in January as the NYSE tanks. Exactly the opposite of the pattern seen the last few weeks.

Farfel (12/29/2000; 17:27:53MT - usagold.com msg#: 44688)
Fuel for stock market recovery is fast running out....
The 401k scheme to direct monies into the stock market worked well as employment swelled during the Nineties. Moreover, during the past decade, foreigners preferred to direct investment monies into America.

However, with announcements of US layoffs escalating, from the decimated tech sector to Old Economy industries (Montgomery Ward, LTV, etc.), then the 401k fuel is drying up. Lower employment = less 401K money directed into stock markets. Simultaneously, foreigners are pulling monies out of America, as they see dropping interest rates ahead, PLUS a slowly weakening US Dollar.

Yet the Nasdaq absolutely depends on those 401 K funds PLUS foreign funds inflows, and of course, the Dow is dependent ultimately on the health of the Nasdaq. If the Nasdaq were to crash (despite its drop to date, it has NOT truly crashed yet), the negative spillover effect would implode the Dow.

No matter how you look at it, GOLD remains the truly best defense against market hell, simply hecause it IS a genuine investment alternative to the US Dollar. Oil stocks are iffy, since collapsed financial markets would reduce oil demand significantly. Platinum and palladium stocks are iffy, since collapsed markets would reduce industrial demand for metals that are primarily industrial metals. Real estate is iffy, since so much of it is leveraged, and panic sales of leveraged real estate would likely reduce the value of ALL real estate.

Today saw a most amazing bearish key reversal in the markets, the day before New Years. That is NOT the way to inspire optimism amongst beleaguered investors for the coming New Year. If January does NOT prove to be a very bullish month, then the ingredients for a sell panic are in the soup, and then it becomes no longer a question of "if," but simply a question of "when?"

For those who believe a market bottom is now in, then they need only examine a variety of stocks, still selling for PE's in excess of 200. Research in Motion (RIMM) is a prime example, with a PE of 2000 (???). When a panic capitulation bottom occurs, it is highly unlikely that any tech stocks will sell for a PE in excess of 30.

Hope all have a great 2001.

Thanks

F*


auspec (12/29/2000; 17:16:08MT - usagold.com msg#: 44687)
Buena Fe----US$banana
Dammit-Why Didn't I Think of That!
Excellent, Buena Fe! It is not the US$Banana, but the US$banana. May I tweak it slightly to become the US banana??
Hopefully never the us banana? If I am not mistaken your left cerebral hemisphere has seen some recent activity! Keep it up, amigo.

Cavan Man (12/29/2000; 16:57:49MT - usagold.com msg#: 44686)
Heating Bills
Mine was $100 higher and we've had a couple of calls from neighbors already. Perhaps this will have a positive effect on POG although, I don't mean to be understood as a crepe hanger. ($311) to heat 2400 sqft at 69 F for 30 days

Cavan Man (12/29/2000; 16:55:28MT - usagold.com msg#: 44685)
miner 49er
Thanks. 5-13-99 is the date when I bought my first coin from CPM.

Mr Gresham (12/29/2000; 16:33:45MT - usagold.com msg#: 44684)
Golden Exchange between two of Bearforum's best
http://www.bearforum.com/cgi-bin/bbs.pl?read=95439
Vilnis: "I think it was England that defaulted on loans from the Venice bankers, which bankrupted the Italian bankers, about 500 years ago, but England partied on. This is also know as a bustout. You take the assets out and do not repay the debt.
"The debt pyramid can be collapsed to one tenth of one percent of its size by a 1000 to 1 currency exchange. The amount of unemployment and other pains of readjustment are a function of how quickly prices are allowed to adjust to the new reality: how quickly prices get to levels at which transactions can clear in a free market. This can be facilitated by a quick write down of the debt and the introduction of a new currency. I do not endow the people at the Fed with super human powers, only with having a clear understanding of free market economics. "

tz: "Another thing that could create problems is the phasing of the collapse - we've got to attack the euro, or at least make sure Euroland collapses within 6 months of our crash, maybe faster. Capital (what's left) will otherwise teleport to wherever things are going up. If Euroland still hasn't collapsed and the Euro is rising (basically mirroring the US now), it might pull in capital. "





YGM (12/29/2000; 16:32:08MT - usagold.com msg#: 44683)
auspec...
afternoon pot...food for thought...
your post#44672 qualifies in the food for thought category...it's a subject not often broached!
.....Shadowland in all it's glory.....Conspiricy, WHAT conspiricy?....Out, Out, damned spot!

GO GATA/HOWE
PS: could you post any links to the Kennedy siver issue as they've been lost to me for a long time (2 crashes ago)

Mr Gresham (12/29/2000; 15:57:29MT - usagold.com msg#: 44682)
Oro
So much, so much...

The depth of thinking about Euro-US comparisons, something we never get into, though we've talked about the Euro earlier and more than any other site does...

So the assumption that the Euro is going to "win out" based on US debt overload doesn't wash completely? Strengths and weaknesses in both camps and you do well to remind us of the strengths we have here. Almost a playbook for the re-instated "Bushes" to follow...

Check me on this: The history of US capital buildup is to suck in capital from the Old World -- they just love our adventurous pioneer frontier spirit, don't they? -- and then sidestep the debt and share values and leave us with the built-up infrastructure. Canals, railroads... what else was there?

Your invocation of differences in corporation formation and operation between the two gives me a vague sense of mis-translation between the two worlds -- that the Europeans seeing through their own capital experience a different animal than is really over here (hard for us to see it clearly ourselves from within), may be "playable" to the advantage of our local capital users.

We are able to create something that we will keep -- say, the Amazon.com e-tailing model copyable by a dozen other mega-retailers -- while the actual Amazon goes down in flames carrying X billion of Europeans' invested savings with it. (I don't really know what stocks European money is primarily in, any info?) We suck in capital, sidestep the payout obligation, and build new enterprises using the technology. (How do bankruptcy laws and practices differ?) Your take?

In the chess game ongoing, sounds like you're the doubter to FOA's Euro optimism (I'd have to read him again to recall the level of it) though you both concur it means gold rocketing, just for different reasons. In your view, that launch is doubled, or at least accelerated by Euro failure added to dollar failure. Have I got it right?


miner49er (12/29/2000; 15:34:18MT - usagold.com msg#: 44681)
Cavan Man - POG 5/13/199
From kitco.com historical data by month (their daily charts only begin unfortunately on 5/20/99) shows London AM to be just over $278, and the PM appears to be right at $278.

Hope this was close enough...

miner49er

Cavan Man (12/29/2000; 15:09:49MT - usagold.com msg#: 44680)
POG Help!!
Can anyone tell me what the POG was on or about 5-13-99?

Thanks...CM

auspec (12/29/2000; 14:51:58MT - usagold.com msg#: 44679)
Iranian Gold/ Money?
Couldn't stay away long! I was told this week by a wealthy Iranian Family that their money is exchangeable for gold. I know this is a very restrictive society and you could not get much gold in or out of the country, but did not think ANY country was on anything resembling a "gold standard". We did have a degree of language barrier so there is some room for misinterpretation. What gives???
As much as I value Goldman Sach's hands, I cannot help but admire Iran's lack of crime as my friends relayed. Probably like most countries-- the people are beautiful, but the Govt is a separate issue.

auspec (12/29/2000; 14:41:11MT - usagold.com msg#: 44678)
Deja vu
Another week has passed, another Friday afternoon,and "IT" has not yet happened. Not really disappointed, because this has been the acceptable routine for so long now it almost gets comfortable. I do feel a little bad for the folks that hang on every $.60-$2.00 move in the POG {OK, dollar fluctuation}. They better have a heart specialist for a relative or neighbor when they wake up one morning to a real move. Might need their jammies dry cleaned.
Managed to take a little of the cheap stuff {Ag} off their hands this week and that is always special. If they can hold our favorite topics of conversation right where they are for 52 more weeks I will {hopefully} reach satiation {Nirvana}.
Also bought some more of an extremely well run, diversified, and capitalized Junior this week for approx $2.70C. It used to sell up to $25C and wasn't then the co it is now. With 22 or so joint ventures on large projects, I will gladly accept this mining risk. One large success and they will be off and running again toward previous highs. I'm thrilled this week, but will have to tune in next week, and the next, and the........................
New Years Eve Resolution---I resolve to celebrate mightily when "IT" happens in 2001 {unless "it" hits the revolving blades and short circuits the ENTIRE house of cards}.
Best to all.

ORO (12/29/2000; 14:39:03MT - usagold.com msg#: 44677)
Golden Truth - Euro
As explained, Euro supply and demand has seen reductions of substance in supply and a slight rise in demand. Dollar supply grew to beyond demand (crossing the 0 point) and demand was slightly reduced. Overall, the prediction this would result in is that the dollar should have been flat against the Euro in Sep-Nov. Which it was.

Subsequently The Iraqi Euro for oil settlement deal moved some $30 billion in demand for dollars into demand for Euro. The decline in oil prices was loudly predicted by Arab members of OPEC and caused a net drop in potential demand for dollar cash balances of $200 billion annual rate.

Hence supply of dollars exceeded demand by a $400 billion margin while Euro supply exceeded demand by 200 billion Euro. Hence a trend towards Euro strength, mainly the result of a change in oil prices, which in itself was the result of the US tapping of the SPR.

The SPR tap was supposed to aid our economy right? Well, it lowered the oil price some, and lowered the dollar. While this was too late to save LTV (foreign competition due to strong dollar and high energy costs), it was enough to kill Montgomery Wards (higher transport costs and higher inventory turnover costs due to lower dollar).

What can I say? I am not a believer in non-compete treaties among governments having a positive economic effect. Its just part of the routine grab for the money by the socialist-environmentalist left. The whole of the EU project reeks of it; the government non-compete agreements, the extended bank cartel privileges, and the collusive action of large corporations, their labor unions, and their regulators. All intended to block the escape routes for the middle class (which does not include labor union members).

The EU, particularly the European Parliament, is well beyond being a socialist snake pit. I thought the clearing out of corruption a couple of years ago was a reason for hope. Instead it was just another stage in cleansing non-socialists from the Brussels bureaucracy. Blich..


Golden Truth (12/29/2000; 14:02:25MT - usagold.com msg#: 44676)
To Blade Blade
Welcome back Mr Black Blade i was getting worried that you might of thrown in the towel on posting your energy reports.

I've been reading them for months now and they are FANTASTIC to say the least.
Glad to see your back, i think your post today was the first one in awhile, you've been gone for what seems like a week or so.

I,am very happy to see you post again, tell me where do you get all this info from anyways? In case something should happen to you i would go into Hydro-Carbon Man "SHOCK" ;-))
G.T

Journeyman (12/29/2000; 13:56:28MT - usagold.com msg#: 44675)
Another take @SteveH msg#: 44660, ALL

"watched CNBC air the President discuss the Economy
yesterday. Couldn't figure out why he was talking
about how the national debt will be reduced or
eliminated by 2009, ahead of sched. -SteveH msg#: 44660

I was wondering about that speech as well. My thought was that the dollar is in danger of falling off the cliff much too fast. Perhaps the powers that be are using Clinton to try and keep all those dollar holders believing that the US Gvt. debt is under control. If dollar holders, especially foreign dollar holders don't worry about the inflation inherent in huge govt. debt, maybe they won't unload all those precious over-supplied tokens quite so quickly.

As for the stagnant price of gold, as horrendous as it may seem, "they" are fairly obviously keeping it down. Read Reginald Howe's lawsuit. It's NOT a light-weight law suit. They really ARE holding the price down. Believe it. We will watch together!!

Regards,
Journeyman


Cavan Man (12/29/2000; 13:48:50MT - usagold.com msg#: 44674)
Shifty
Diesel can run on vegetable matter. Then again, fuel cells are in rapid development. I agree that in the short term we are in for higher energy prices. However, it is not the doomsday scenario some seem to propose. That is one thing that really bugs me about gold forums--they tend to be very negative at times. USAGOLD is an exception.

SHIFTY (12/29/2000; 13:18:56MT - usagold.com msg#: 44673)
Black Blade
alternative fuel /alcohol/a very CORNy idea !
Black Blade: What are your thoughts on alcohol fuel? My dad had an alcohol stove in the galley of his boat years ago and it was great. I also know that you can burn it in an internal combustion engine. Very clean and a renewable resource. Also existing infrastructure such as gasoline pumps and tanks can be used .
I drive a full size 4wd military surplus truck every day. It runs on diesel. I get 17.9 mpg around town and 22 mpg on a road trip. I have heard that a diesel can run on vegetable oil, also a renewable fuel. Do you think we could see this in the future?


$hifty

PS. Go GATA - Go Gold !

auspec (12/29/2000; 13:01:34MT - usagold.com msg#: 44672)
Let's Throw A Little Intrigue Into The Afternoon Pot
L. Fletcher Prouty On
JFK & The Fed
9-29-99



On June 4, 1963, a little known attempt was made to strip the Federal Reserve Bank of its power to loan money to the government at interest. On that day President John F. Kennedy signed Executive Order No. 11110 that returned to the U.S. government the power to issue currency, without going through the Federal Reserve. Mr. Kennedy's order gave the Treasury the power "to issue silver certificates against any silver bullion, silver, or standard silver dollars in the Treasury." This meant that for every ounce of silver in the U.S. Treasury's vault, the government could introduce new money into circulation. In all, Kennedy brought nearly $4.3 billion in U.S. notes into circulation. The ramifications of this bill are enormous.

With the stroke of a pen, Mr. Kennedy was on his way to putting the Federal Reserve Bank of New York out of business. If enough of these silver certificats were to come into circulation they would have eliminated the demand for Federal Reserve notes. This is because the silver certificates are backed by silver and the Federal Reserve notes are not backed by anything.

Executive Order 11110 could have prevented the national debt from reaching its current level, because it would have given the gevernment the ability to repay its debt without going to the Federal Reserve and being charged interest in order to create the new money. Executive Order 11110 gave the U.S. the ability to create its own money backed by silver.

After Mr. Kennedy was assassinated just five months later, no more silver certificates were issued. has learned that the Executive Order was never repealed by any U.S. President through an Executive Order and is still valid.

Why then has no president utilized it?

Virtually all of the nearly $6 trillion in debt has been created since 1963, and if a U.S. president had utilized Executive Order 11110 the debt would be nowhere near the current level. Perhaps the assassination of JFK was a warning to future presidents who would think to eliminate the U.S. debt by eliminating the Federal Reserve's control over the creation of money.

Mr. Kennedy challenged the government of money by challenging the two most successful vehicles that have ever been used to drive up debt - war and the creation of money by a privately-owned central bank. His efforts to have all troops out of Vietnam by 1965 and Executive Order 11110 would have severely cut into the profits and control of the New York banking establishment.

As America's debt reaches unbearable levels and a conflict emerges in Bosnia that will further increase America's debt, one is force to ask, will President Clinton have the courage to consider utilizing Executive Order 11110 and, if so, is he willing to pay the ultimate price for doing so?

(All Readers are urged to obtain a copy of Executive Order 11110 by contacting their Congressional representative, it is dated June 4, 1963.)

Reply From Col. Prouty to [witheld]

Thanks for your good question [witheld],

Your comment about "The power of the Fed" as a factor in the over-all decision to assassinate JFK is correct. Do you recall the line at the beginning of the conversation of Garrison and Man X in Washington in Stone's movie "JFK"?

Jim Garrison asks, "How do you think it all started?"

Man X (Prouty) responds, " I think it startedi n the wind. Money -- arms, big oil, Pentagon people, contractors, bankers, politicians like L.B.J. were committed to a war in Southeast Asia. As early as '61 they knew Kennedy was going to change things... He was not going to war in Southeast Asia. Who knows? Probably some boardroom or luncheon somewhere - Houston, New York -- hell, maybe Bonn, Germany... who knows, it's international now."

You're correct, and the above is what I wrote for Oliver Stone. It is what I believe from my experience. And, you are correct to go back to Exec. Order no. 11110. That money JFK putinto circulation was an enormous challenge to the business world.

I am a graduate of the American Bankers Assn "Graduate School of Banking" at the University of Wisconsin and I have heard some of the top bankers, such as Arthur Burns lecture. That was in the late Sixties; but you could still feel the stress of those JFK years in what they had to say.

JFK was serious about getting "all Americans" out of Vietnam by the end of 1965. That was NSAM 263 and my boss General Victor Krulak, with the JCS, had worked on that document. Even the Pentagon Papers made an attempt to conceal NSAM #263.

In addition to the references you have cited, may I suggest that you get the "Foreign Relations of the united States. 1961-1963, Volume IV, VIETNAM, August-December 1963" from the US Gov't Printing Office and see what it was all about in those days.

Colonel L. Fletcher Prouty [Ret. USAF]






SIGHTINGS HOMEPAGE

Golden Truth (12/29/2000; 12:57:07MT - usagold.com msg#: 44671)
To Oro
Hello Oro after reading your short analysis on the EURO. I take it that you don't like the Euro dollar or Europe for that matter, unless i,am reading you wrong?

Also you did't mention why the EURO is up 9.5% in the last month :-)

G.T

beesting (12/29/2000; 12:52:27MT - usagold.com msg#: 44670)
Science Fiction Made Real!
http://quote.yahoo.com/m5?a=1&s=XAU&t=EUR
At this moment Gold has stopped trading around the world in anticipation of the New Year Holidays. However if you click the above link, wait a few minutes and click again you will see Gold prices changing in value in relation to the Euro.
Currently just over $290.00 Euro's per ounce. Down from about $318 Euro's to the ounce a few weeks ago. A $28 Euro drop!
How can prices flucuate when the product is not even being traded?
Answer manipulation of "Fiat" money!
Real products "value" is being distorted because of the worldwide use of "Fiat" money.
The natural laws of supply and demand have been destroyed, by "Fiat" money subsitutes worldwide.

If I sound like a raving lunatic I'm sorry,but I feel if I want to buy or sell an ounce of Gold or anything else of value the price should be determined by the buyer and seller "ONLY"!!!!!
What right does anyone else have to set a value on your labor or a product that you own, and why is OPEC the only organization that's doing something about it?

Sorry for the rant! Just blowing off a little steam,and continuing to convert paper into GOLD!....beesting.



ORO (12/29/2000; 12:00:07MT - usagold.com msg#: 44669)
Cavan Man - POG and flation
The classic cycle along the fiat time line's declining vortex includes a debt expansion, followed by a deflationary condition, then followed by a reliquification. These end up relating to gold as follows:

debt expansion - slight upward pressure on gold - within the broad paper gold theory currency debt expansion is gold banknotes that are issued recklessly, reducing reserves of the issuer as he protects himself from default - the condition in which the gold banknote is discounted against the metal.

deflation - Stage 1 - external - upward pressure and a bull market on price of gold in debtor nation currencies with reserve currency prices dropping, stage 2 - internal - debt deflation reaches the reserve currency issuer (US). Gold outperforms gold stocks. Shift away from debt to gold after top rated paper (no perceived default risk) reaches absurdly low interest rates. In the broad paper gold theory this is the point where the gold banknotes are being protected by the banking system in order to avoid the discounting of paper to the metal. Gold bars are moved around rapidly from one bank to the next in order to keep anyone from noticing that "redeemable when due" is no longer possible. Banks dance around trying to deliver gold when due, to prevent holders from cashing in paper, and most of all, they desperately try to match their gold assets and liabilities on maturity at the expense of matching overall quantity.

Reliquidfication: the pain in the fiat banking system is unbearable and the central bank and/or other government agents buy debt off the markets to provide cash to settle debts coming due. Interest rates are kept below the market clearing rate in order to attract debt sales in sufficient quantity to keep the settlement of trade running. In the broad paper gold theory this is the point where the gold banknotes are being actively discounted relative to the gold metal as the default on delivery is all but guaranteed. In slower movements gold stocks outperform gold. In sharp ones gold moves farther.
Paper gold is repriced well below par and the paper gold debt restructured to pay out a gram or two on the ounce - or none at all. Price inflation accelerates as reliauification proceeds. Gold stocks should preceed gold on the upswing. Actual gold prices rise greatly as (1) the last gold disappears from dealers' vaults at the "official price", then (2) unsatisfied gold depositors are not delivered and take a cash settlement, which they use to buy bullion "at the street". POG skyrockets.

Belgian (12/29/2000; 11:12:26MT - usagold.com msg#: 44668)
What's in a number.....
Yes, I do agree with you JM Bear. The figures are scaringly incomplete. But, my point remains : How long can we go on, and at what speed, are we allowed to continiue, creating Credit and Debt ? Global Debt in perspective of global Production.
At what point becomes, the increasing imbalance, counterproductive ? How long can "trust" be maintained artificially ? Up until what degree, can the majority, be
infantilisized ? Each dramatic trigger (POO-move/war) can be contained, over and over again. Heaven on earth, seems to be the credo.

Wealth is accumulated by the one who has a positive trade balance. Today, resulting in a global economic war. The main focus to win or loose this war...are the currencies. A dirty and unhealthy war. An ugly distortion of what economy is supposed to be.
A honorable exchange of goods and services, with equal chances. A free world where good is rewarded and bad isn't.

Hyperconcentration of power and wealth, will be the ultimate trigger, to revieuw the balances of power.
The US$ is the centerpiece of this struggle. The increasing imbalances are the centrifugal forces.
Democracy is surviving on increasing Debt. If tomorrow, creditcreation stops (or slows down)...democraty, will have quite another face. Too much politico involvement. Too much regulation.
This must be the reason that nobody is interested in gold anymore. No anchors...no tangable values...etc...
That's why it must be very easy for the gold-manipulators to freighten off goldbuyers. It is much easier to become socialistic, than to put one's shoulders under a free world.
Transform yourself in a brainless mass-product, and live happely. And don't talk about gold to anyone...
The extremely strong gold-aversion, is very significant to me. It is telling a lot about the state of mind of the majority. Amen.

ORO (12/29/2000; 11:05:07MT - usagold.com msg#: 44667)
SteveH - if a forest is simple how complicated are the trees?
The situation created is essentially that of balance between Euro and Dollar excess supply over the end of summer. BOTH were and are in excess of roughly 200 billion in each currency unit (no data till Feb but it seems to remain the case). Therefore, the dollar/Euro exchange rate should have remained within a few % over this period because of the near perfect balance.

Exterior to the international credit markets, was the oil price. It flattened out with the dollar in Sep-Nov, and cracked one day after the dollar, on the next Monday. Someone knew that the oil prices would fall, and therefore understood the dollar would follow, and maneuvered to exit dollar positions ASAP.

As things stand, the external dollar debt base is mostly intact, the external Euro Debt base is under 2/3 the size of the dollar debt base when calculated in dollars, and just about 2/3 when calculated as 1 Euro per dollar. The US current accounts deficit is more than enough to cover the difference in flows that would be generated at current interest rates which are 1-3% lower in Euro, so that Euro debt demand stands at roughly 1/2 that of the dollar, and the dollar debt demand is just over 100 bil above the current account deficit. If Euro rates rise a bit more, then within a few months the Euro excess would only be supplied by the capital accounts deficit in Europe, which now covers 1/3 to 1/2 of the Euro debt demand.

Fresh dollar debt creation at 500 bil rate is now sufficient to cover all of the debt demand not covered by the current accounts deficit leaving a nice cushion. (excess is returned via the capital accounts)

Euro supply of fresh debt is now at an excess with a smallish cushion over the excess, but the capital account is bleeding badly as investors don't believe in EU tax, regulatory, and financial reforms.

Since the ECB was spooked by the effect of oil and dollar appreciation, it did not set the debt trap at a sufficient scale, so that oil price movements are enough to change dollar demand (for cash balances) sufficiently to reverse the gains. Only after a few months where US interest rates are 1-2% lower than Euro rates is the condition stable enough to overcome $10-15 rises in oil for prolonged periods.

So...the trend is in place but the trend is not as powerful as it could have been. I think the capital flight out of the EU caught the ECB by surprise. Since it was going into paper and real assets rather than plain bank accounts, it is not repatriable at the Euro levels at which it entered. Derivatives outstanding used to hedge currency and security risk are written by potential bankrupts among the money center banks. The level of backing the Fed and Treasury/OCC regulators will allow for foreign investors in this scenario is questionable. The debt investments here are potentially worthless. Only real estate and actual productive assets are potentially worthwhile.

So far, the European corporate track record varies from bad to terrible, from mass departures of top talent from Daimeler-Chrystler amid rapid losses and dangerous debt cash ratios, to the Credit Suisse fiasco with the DLJ acquisition. Even within Europe the EU and peripheral banks are losing investment business to US based firms - Goldman being the prime Euro debt underwriter on the continent with the second being Morgan. Deutsche Bank does not seem to be ahead in its BT purchase either.

When open to real competition, EU monster companies do not fare well - not as targets for investment, not in production, not in services, not quite in telecom. Being net creditors was a monetary device, an achievement built of the depravations of their own people through shielding them from competition. I wonder whether a debt trap and a restrictive trade policy would be enough to keep a Euro centered economy functioning under WTO, or whether the EU will collapse the WTO in order to retain production, wealth and talent within the French and German tax men's grasp.



Buena Fe (12/29/2000; 10:06:59MT - usagold.com msg#: 44666)
bananas vs gold
Hey everybody!.........the US$ banana is tanking today....has any body noticed? and gold is turning around (a wee bit)...seems like this should be window dressing time.....not capitulation time?
Happy New Year!

Cavan Man (12/29/2000; 9:21:22MT - usagold.com msg#: 44665)
ORO
How do you regard inflation's effect on POG? Also, when might POG rise above $290? Do you view all the reported, accumulated debt as a threat to the US economy?

Having read FOA's last post on the trail, I am left with the opinion that events are "on hold" indefinitely. "Fluid" political events have stalled the Another scenario but not changed the end game. HNY....CM

SteveH (12/29/2000; 9:07:37MT - usagold.com msg#: 44664)
ORO, lots of details there...
but I believe your point was that unless more oil countries insist on Euro's, the oil for gold deal is delayed for now, meaning, gold and silver games at lows continue?

Is there no end to the capitulation in gold and silver? When?

MO VER MEG (12/29/2000; 8:38:05MT - usagold.com msg#: 44663)
Black Blade
I believe that the American consumer is still in denial. I see little evidence of energy conservation beyond the border of my property. Until America has a significant change in attitude, we are just picking up speed as we approach one of the most spectacular crashes we will ever experience.

Thanks for your research.

ORO (12/29/2000; 8:19:31MT - usagold.com msg#: 44662)
Cont. from previous

Bank secrecy: The EU, particularly France, are trying to impose complete control over the global financial system so as to make it possible to tax and intimidate internationally active investors by cooking up whatever excuse needed to allow the EU governments to seize through forfeiture the assets of those who oppose them ("money laundering", "terrorism", "Neo Nazi", or "racketeer") if only because these monies are fleeing the EU socialists’ grasping claws into the US or the Emerging Markets, or to the "tax haven" banking centers (if socialists had hands they would produce something instead of tearing things away from others, having the terrible deformity of claws, they can only provide for themselves and their progeny by taking from others).

Nowhere to hide. The local and international control of politicians and bureaucrats by the money interests rely on there being a mechanism for direct and indirect distribution of bribes. The opening of all bank accounts in the world to government access would immediately eliminate the most effective means of control over these officials, and leave the socialists free to pursue their agenda without recourse from the wealthy. It would also eliminate the use of currency over time as a side effect. The US can scuttle the EU plan by eliminating the bank disclosure laws, eliminating the tax withholding regulations, and eventually by elimination of taxation of interest income, capital gains, and dividends. Thus eliminating the need for reporting to government of bank balances, of stock ownership, etc.. Setting on this course would quickly denude Europe of its last lingering investors. The capital influx into the US would break the Euro and force the hand of the ECB and the BIS gold faction into the open. Rumors of upcoming capital controls to prevent further bleeding from Europe would turn into a major stampede.
Since the EU can not maintain tax levels low enough to compete with those the US can have, the elimination of these taxes on income within the US can raise the relative return on investment in the US by 50% relative to Europe.

Finally, the response to the EU led dumping of dollars can be an open declaration of legal tender status for gold, silver, and the platinum group metals at market exchange rates. This would force the ECB's hand to allow direct monetary use of the precious metals, rather than playing the bookkeeping fiction of the "mark to market" regime with which the EU sought to balance the ECB's books as it injects money to save its corporations and banks when deflation hits its financial system (which it already has, in similar fashion to the American credit markets). The legal tender use of precious metals in the dollar world, though it would have a negative effect on dollar valuation (it would fall steeply), would immediately reduce the Fed's need to inject fresh dollars into the market because of the instantaneous availability of the metals for repayment of debts of US and foreign debtors, the latter now suffering from the severe dollar creation vacuum in the foreign exchange markets (meaning that they can not borrow dollars into existence but must earn all, rather than most, through exports into the US).

Much of the current US regulations and law regarding all of these is related to treaty obligations that are not constitutional, in which the US accepts "apriori" rules and regulations adopted by international agencies, which delegates legislative power to non-Congressional bodies, a delegation of powers that is well outside Congress’ constitutionally prescribed authority. All that is needed to undo all of these restrictions is to give the Supreme Court the green light to interpret constitutional law as it is. This would allow the US executive's negotiators to shrug off a little of the European and international protest.





ORO (12/29/2000; 8:18:11MT - usagold.com msg#: 44661)
Ph in LA - interest rates - Greeny and the Bush figurehead
First, to clear the table of the issue, Bush was elected by the majority of STATE votes. The states are the only voters for president and are the only voters for the Senate. The power of selecting representatives to the top house in the Federal Government's legislature and the chief executive is entirely within the hands of the state legislatures. This country is not a democracy; it is a representative republic of sovereign States joined in a Union by a set of treaties known as the Declaration of Independence, the Articles of Confederation and the Constitution.

The elected representatives in this country are NOT supposed to represent the interests of the majority in any particular item, they are supposed to represent the interests of EVERYONE. Meaning that what is not in the interest of ALL is decidedly outside the LAWFUL power of Congress, President, and State governments (within their respective States). Congresses and the Presidents over the past obviously found this too limited a power, and have chosen Supreme Court Judges willing to subvert the law in the favor of allowing legislation favoring some at the expense of others, thus opening legislation and exercise of executive power for sale to majorities and moneyed interests in what we know by the term "patronage".

Therefore, despite the popular misconception of this being a democracy – much encouraged by our government officials, the election of a president with a minority vote is not "wrong" so long as government is not an instrument of imposition by some on others. Particularly when it is not the instrument by which some seek a perpetual free lunch at the expense of everyone else. If this is the country of life, liberty and the pursuit of happiness then all representatives are bound by the LAW to serve ALL. Therefore a minority choice is as good as a majority choice so long as the States (and thus their peoples) are represented.


Now to business

You asked of FOA regarding the interest rate issue. Since FOA has been posting little of late, I will try to fill his rather big shoes by putting out my view of the matter.

FOA claimed that the gold faction in the EU (the ECB) and in the BIS, is intending to "force the Fed to inflate".

So far, it has worked in reverse, and our creditors in Japan and the EU are the ones inflating their money supply, and despite many attempts by the European Parliament and the individual European countries to prevent it, the new moneys have been converted into dollars and are flowing like a tidal wave into the US. If the Bushes and Congress have an ounce of gray matter left between them, they will make use of the weaknesses in the EU to keep this flow going and have it expand. Europe is facing a number of problems similar to ours, but more intensely and more quickly. A partial list of the issues involved is given under the heading "us advantages" below.

The current condition of the Euro debt trap on dollar investors is that the Euro balance of supply and demand on the international markets is not as deep as it would have needed to be in order to spring the trap on the US itself. As things stand, international Euro debt creation displaced dollar debt creation in the international markets, reducing dollar share from some 75% in 1998 to about 35% of new debt issues and loans early in 2000. Net dollar debt reduction over this period was a rather low 10-15%, with most of the maturing debt being rolled over rather than being refinanced into Euro this year. In this game of "chicken" with the Fed, the ECB blinked first and raised interest rates in order to stem the capital flows into the US and the dollar and out of the Euro. The increase in oil prices in Euro terms was much too heavy a burden for the EU economies and popular revolt over taxes and the price inflation in the energy markets brought EU price rises within a hair's breadth from US actual price acceleration rates, and above official US levels. They balked too early, and this will limit the extent of the Euro debt trap. The international Euro debt levels had not grown sufficiently.

http://www.bis.org/publ/index.htm
"Net issuance in the US dollar was nearly double that in the euro. This marks a return to a long-standing pattern in the international debt securities market, whereby borrowers tend to issue in relatively strong or strengthening currencies. In 1999, when net issuance in euros exceeded that in US dollars despite the euro's weakening trend, this departure from the usual pattern may have been due to a desire by large issuers to "establish a presence" in the market for bonds denominated in the new currency. During 2000, and particularly in the third quarter, borrowers reverted to their former tendency and dollar-denominated net issuance rose to 57% of the third quarter total. "
And:
"Developing country borrowers raised a net $7.8 billion from the international debt securities market in the third quarter, slightly more than in the second quarter and keeping issuance in the first three quarters close to last year's pace. Argentina, Brazil and Mexico were especially active issuers in the third quarter. However, the generally less favourable climate in international financial markets may portend a decline in issuance going forward."
"…but claims on developing countries turned negative again as repayments continued with little new borrowing. "
Even though net repayments by developing countries bottomed out in the final quarter of 1999, no clear upward trend in bank lending to developing countries has yet emerged. Banks in the reporting area reduced their claims on developing country borrowers by a further $4 billion in the second quarter, with Asia experiencing the largest reduction. Nevertheless, claims on a select few developing countries, most notably Mexico and Turkey, continued to expand in the first half of 2000. "
Also, we have the first showing of petrodollars reported:
"Another notable development in the first half of the year was a sharp increase in deposit flows from developing countries to international banks, arising largely from an improvement in the external position of oil-exporting countries. "

An interesting development was the resumption of Yen Carry:
"Renewed lending from Japanese banks in the second quarter partially offset a fall-off in European banks' lending to non-bank borrowers. The cross-border claims of banks in Japan increased by $47 billion in the second quarter of this year, accounting for almost half of the $110 billion increase in the total claims of reporting banks. … the increase in the second quarter arose from transactions with unrelated borrowers. "[meaning not within the Japanese banks themselves]


Direct dollar assets to Euro liabilities trades had, however, developed quite nicely, particularly over the summer and early autumn. These should provide a goodly set of dollars seeking Euro over the next few years, but not enough to kill the dollar. Only in Q3 had US borrowing in cross-border finance grown substantially, and that was mostly the result of Fannie Mae. The return to dollar domination of the lending environment resulted in relief in the dollar supply demand deficit which was running earlier at $200 billion (Annual Rate) and was covered by the issue of Fannie Mae paper and an increase of $210 billion in the dollar debt issuance rate abroad (AR last reported figure). This combined with petro-dollar recycling and unloading dollars from the ECB coffers to halt and then reverse the trend in the dollar. The dollar shortage must have ended in September as the trade deficit increased in size not only to the approximate $200 billion range, but to double that, while the debt market derived deficit was eradicated during the same period, resulting in an excess supply of some $200 billion.

Because the EU had a largely positive current accounts flow so that Euro supply was limited during the last quarter, as it was cut by 210 billion Euro (AR) from about 750 billion, and debt service demand has grown from 150 billion Euro to over 200, and dollar income conversion (from the US) demand increased 40 billion Euro (? exact number not known) from its roughly 10 billion Euro level earlier in 1999. This has reduced Euro supply excess over demand from about 500 billion at its peak earlier in 2000 to 250 billion over the summer quarter, and likely to under 200 billion in this quarter (all figures AR).

The dollar to Euro balance has turned from dollar deficit and Euro excess to a dollar excess and a much smaller Euro excess, to about even with the current dollar excess.

Dollar cash balance demands for oil purchases was moved downwards by the drop in oil prices and the change in settlement terms for Iraqi oil, reducing dollar demand for this purpose by $30-35 billion and increasing Euro balance demand by the same dollar amount (35-40 billion Euro). At its price peak, dollar cash balance demands for oil purchases (1 year basis) rose by about $250 billion, followed by a decline of $160-180 billion over the current quarter.

I believe the oil pricing and Iraqi Euro settlement effects had pushed the dollar over the brink. If OPEC increases prices (reduces supply) in the near future, then the relief in the dollar – Euro strain would end, and the Euro weaken (or strengthen less rapidly) unless further OPEC member convert to Euro settlement.

Euro area cash flow moved negatively due to the disproportionate oil price effect in Euro going into September. This provided an early supply of Euro that I am certain was not planned. From the Feb 1999 low of 10 Euro per bbl, oil prices rose to well over 40 (sweet crude), now back in the 25 Euro area. Though Britain and the Norse countries had enjoyed some of the benefits, the bulk of the money went to OPEC countries that used it to pay down debt and start spending. The international supply of Euro through current accounts deficits started earlier than planned, and had exacerbated the Euro slide and shook confidence in the ECB. "Reverberant doubt" and the inflationary spiral that follows were dangerously close.

US releases from the Strategic Petroleum Reserve and maintenance shutdowns of refineries in the US released enough oil into the markets to stop the price rise temporarily, till Iraq tries to sweeten its deal with the UN again by withholding oil. Since the OPEC countries are prepared, having announced loudly that they will tighten supplies due to an expectation of excess supply early next year, when SPR draws will have to be replaced and off-line refineries return online, restocking their inventories just as OPEC begins reducing supplies and when offline electric generation capacity returns into action with a new batch of pollution credits and after having completed long overdue maintenance. Some natural gas electric generation can, and will, change over to oil as soon as EPA restrictions are lightened up, which I expect they will. This will coincide with the onset of inventory building towards the driving season in the second quarter.

The Iraq Euro for oil deal and the prior Russian deal (which weakened somewhat due to Russian insistence on increasing the dollar portion), lowered EU dollar reserve needs, which made possible the release of dollar reserve flows from the EU.


Capital flows into the US are now devoid of the carry trade proper, given that interest rate differentials have fallen by the end of the second quarter into a very small spread in long term funds and a narrow spread in short term funds but still contain a strong return on assets component that favors US stocks over European and Japanese stocks, and any of the actions increasing the US advantages detailed below (see heading "US advantages vs. Europe" below) can be used to increase these relative returns that are available in direct investment and corporate buyouts/mergers, as well as general profits – as expressed in stock prices.

Fed actions to lighten interest rates will further reduce the dollar value vs. the Euro, due to the carry trade reversing, rather than just stopping.. But. Because lower Fed rates would start a profit recovery in some sectors, the recovery would bring renewed capital flows into the US, particularly into the recovering sectors.

US advantages vs. Europe
1. Corporate taxation and taxation of executive compensation. European tax rates are higher, though they do not tax income twice, which we do here by taxing dividends. Particularly hefty are capital gains taxes. Lowering taxes on corporate income and income (including capital gains) from financial instruments and real investments – by lowering corporate and top bracket tax rates, will add to the current advantages in US investment. Eliminating estate taxes will add substantially to the flow of resources into the US – including Europe's top talent.
2. Demographics: Europe has a very large baby boom generation that is retiring earlier and in cushier conditions than its American counterpart. Immigrants to Europe are treated very badly and form the scaffolding of the "black market" there. That market is the only source of growth in the EU – with the exception of exports. Integrating these immigrants into the population is impossible politically, and will keep these people on the outskirts of the economy, despite the "blind eye" turned towards them by EU officialdom most of the time. By practicing a practical, kind, and expansive immigration policy, the US can integrate the immigrants (a more aggressive and productive population than natives in any place – and in which there is no local past investment during non-productive periods of childhood and juvenile life) rapidly, and add that population to its talent pool. This advantage is related to the proportion of working to non-working population, and therefore to the potential minimum tax rates the EU governments and the US government can reach in a "tax competition". The more workers there are relative to retirees, the lower the rate.
The governments of the big EU countries and Britain have been pushing very hard to avoid exactly this kind of tax competition (and competition in regulatory costs). The main difference between the Clintonites and the Bushes is in the degree and whether they agree to participate in the attempt by socialist EU governments and the extremely left wing European Parliament to bring the US into an agreement not to compete on the following: (1) tax rates, (2) regulatory costs, (3) bank secrecy, (4) liberty and law, (5) restriction of access to natural resources, (6) free trade terms. In all of these issues, the US has an overwhelming advantage that the Democrats and government bureaucrats have been squandering for ideological reasons and in pursuit of power.

The Democrats still send representatives to the socialist International meetings, including Clinton himself. This group has continued its pursuit of international Marxist goals of the Fabian variety, where the industrial world, particularly the US, is to brought into a global government that redistributes wealth from the industrial world to the "less developed countries". The Bushes seem, outwardly at least, to be set dead against any cooperation with Europe, and seek to compete with them.

An apropos digression:
Historically, socialists and other totalitarian ideologues have been supported by financial and industrial "money bags" who hope to avoid the one threat to their status; free market competition. These people fear the temporary nature of their riches; that their judgment will fail them at some point in the future and they will succumb to competitors with better judgment. In other words, that the oft repeated pattern of "rags to riches to rags in three generations" will beset their family. In pursuit of conditions that set their superior social and financial status into permanence, these have actively supported both domestic and international laws to regulate trade, and to prevent the emergence of competing wealth (by taxation of income and by restriction on the formation and aggregation of businesses). These people thought that by bribe and blackmail they would be able to control the legislators, the regulators, and thus the legislation and regulation, both in domestic and international spheres. As experience has shown time and again, once they gained power, the government and international officials and the bureaucracies and secret agencies that grow around them turn on their sponsors.

In World War I, the espionage departments of the major industrial and financial firms were incorporated into the operations of all the governments participating in the war – including the US. In the buildup towards WWII, IG Farben in Germany "donated" its intelligence group to the
Nazi SS, much in the same way as America's top bankers did with the OSS and the myriad competitors that were later unified under the CIA banner, but still operate separately. Still today, the top levels of government rotate through the intelligence agencies and financial and industrial employment at the foremost levels. A case in point is the Bush family, as the senior Bush was THE man from the CIA.


Returning to the subject at hand:

3. Regulatory: Environmental and labor regulation in Europe is very severe and restrictive. The US still has an easier regulatory regime, which the Congress and the Bushes can lighten substantially. Most notably, they can change regulatory principles back into their lawful form, whereby application to the regulator and approval is not needed prior to commercial activity so that regulatory enforcement is done through the legal system as an additional criminal or civil prosecution following filing of a private legal grievance by a victim of pollution or workplace injury caused by a negligent or abusive employer (worker's compensation and other labor law was written by very large employers who sought to prevent legal costs for workplace injury and to prevent competition for labor through working conditions – whenever labor becomes scarce, these large companies seek to "free up" labor from small businesses by pushing government to impose restrictive work rules that require major investment by the small businesses for compliance, costs that the larger corporations can meet but their small competitors can't, and must close shop as a consequence). In Europe, business executives and labor union representatives routinely meet with regulators to plot combinations of union contracts and labor regulations that would force competitors out of business; there is no attempt to hide the purpose of the meetings, and they are quite official. The US can easily win this competition on the costs of the regulatory burden because it is not entrenched as deeply and corporate, labor and government meetings of the European type are regarded here as a form of corruption (which they are).

Drug and substance approval is actually better in Europe, where the process is quicker and less costly because foreign research and production review programs are accepted rather than having to reproduce the whole process from scratch for US approval. Eliminating the need for approval but maintaining rules for minimal research and proof of product requirements for drugs and chemicals would lower costs substantially, and allow US leadership in agricultural and medical genetic engineering to come to fruition more quickly and at a lower cost. Maintaining or enhancing personal and corporate liability for faults would be more effective than active regulation and far less costly. The open vendetta by the FDA against Abbott Labs is a case in point as to the costs of regulatory regimes.

Corporate governance: Having failed to push the French and German governments to reduce the very light investor disclosure requirements on the statute books, large corporations in Europe (particularly those in which the government has an ownership stake) have successfully lobbied the European Parliament to issue legislation that would eliminate the last vestiges of truth and disclosure from the semi annual and annual reports from these corporations. The French and the German governments feared a capital flight to the peripheral countries in the EU if they adopted such obfuscatory rules while other countries did not. Transparency in US markets is much better despite many attempts by the SEC to provide cover to corporate executives and directors seeking to avoid competing for capital on the basis of disclosure of business plans and financial conditions (including the recent "Fair Disclosure" rules that further prevent communications between investors and the executives in corporations). This edge can be further enhanced by relaxing SEC requirements for "equal access" to corporate information (i.e. complete corporate control of disclosure through press releases instead of meeting the widely varying needs of the particular investors considering investment for specific kinds of information in particular depth), and for filing of public reports (particularly for small corporations that find this an expensive burden). The SEC reform (elimination of the bulk of their regulations) would eliminate the risk premium that investors demand due to the lack of pertinent and timely information upon demand (rather than providing whatever information the executives want investors to hear). This would immediately enhance investment flows into the US.

Mergers and Acquisitions: European rulings are near total in the degree of arbitrariness, and are subject to heavy political influence unrelated to public interests or economic outcomes. US regulatory review, though quicker and more predictable than that in Europe, is still subject to restrictions that often bring the competitive and synergistic drivers of a merger or an acquisition (or divestiture for that matter) to a much reduced benefit outcome, and in this way reduce the potential return on investment for all corporations, thereby reducing investment. Eliminating some regulator discretion, drastically reducing the scope of review, and putting severe deadline requirements on responses of the regulatory agents would enhance US competitiveness even further and enlarge the investment capital fleeing Europe.

Bank secrecy: The EU, particularly France, are trying to impose complete control over the global financial system so as to make it possible to tax and intimidate internationally active investors by cooking up whatever excuse needed to allow the EU governments to seize through forfeiture the assets of those who oppose them ("money laundering", "terrorism", "Neo Nazi", or "racketeer") if only because these monies are fleeing the EU socialists’ grasping claws into the US or the Emerging Markets, or to the "tax haven" banking centers (if socialists had hands they would produce something instead of tearing things away from others, having the terrible deformity of claws, t

SteveH (12/29/2000; 8:15:28MT - usagold.com msg#: 44660)
watched CNBC air the President
discuss the Economy yesterday. Couldn't figure out why he was talking about how the national debt will be reduced or eliminated by 2009, ahead of sched. Came up with the idea that he wasn't promoting solving the national debt, just making sure, as best he could, that the blame for not resolving the national debt problem, would fall squarley on the new Pres., imo.



TheStranger (12/29/2000; 7:36:00MT - usagold.com msg#: 44659)
Lamprey, $HIFTY, Canuck
Lamprey - The story was carried by the Dow Jones newswire.

Shifty - I hate to predict day to day because I am no good at it. However, an ugly drop in the market over the next two or three weeks is unlikely in my opinion. First, tax selling will be over with. Then, fourth quarter earnings warnings will be out of the way. Also optimism about a Fed rate cut will come into play, as will anticipation of a Bush tax cut.

Canuck - Is this administration made up of outright crooks? Well, yes, I believe one of them is a perjurer.

Cavan Man (12/29/2000; 7:15:12MT - usagold.com msg#: 44658)
RossL
Thank you for the reminder; I had forgotten. Happy New Year. The venerable 22nd will not pose an obstacle to Mrs. Clinton.

justamereBear (12/29/2000; 7:02:49MT - usagold.com msg#: 44657)
Belgian 44654

Hi there
I suspect your numbers are a bit out, but don't have the data to hand. Certainly the Federal debt is more than 5 Trillion, it is closer to 6.5 Trillion. That exact number is an easy figure to get. That is OK because, I suspect the 10 Trillion corporate debt is a bit high, however that would be an estimate, because nobody knows for sure.

The problem is, you have missed a big one. Off balance sheet obligations. The US government is on the hook for an estimated 3 to 5 times the 6.5 Trillion, (and I say estimated because NOBODY has the beginngs of a handle on even what all they are) of liabilities. They include guarentees on such things as Brady Bonds, Fannie, Freddy and Sally Maes, unfunded pension liabilities, The list goes on.

Seasons greetings,
j'Bear



Black Blade (12/29/2000; 6:25:37MT - usagold.com msg#: 44656)
Nader: Calif. Utilities Should Be Allowed to Fail
The Fun is Just Beginning!

By Leonard Anderson

SAN FRANCISCO (Reuters) - Green party leader Ralph Nader (news - web sites) stepped into California's power crisis on Thursday, urging consumers to resist what he called a ``coerced bailout'' of the state's utilities and saying the financially strapped companies should be allowed to fail. ``It's clear that deregulation has failed ... California consumers now face a coerced bailout of the utilities or their bankruptcy,'' he told reporters outside hearings on rate hikes utilities say are needed to preserve their ability to fund operations and buy power. Bankruptcy by the public utilities need not disrupt electric service in California since their operations would be taken over by the courts, and ultimately the state, Nader said. The comments came on the second day of hearings by the California Public Utilities Commission during which the two major utility companies continue to hammer away at their case for rate hikes of up to 30 percent. Earlier on Thursday Calif. Gov. Gray Davis, who has blamed the threat of utility bankruptcies for disrupting power sales to the state, spoke by telephone with the top executives of Pacific Gas and Electric, Southern California Edison and consumer groups, who remain strongly opposed to the proposed rate hikes. ``It was a frank exchange of views,'' said Mike Florio, attorney for consumer group The Utility Reform Network (TURN), who said further meetings are likely. ``A bailout is unacceptable. The ratepayers of California should not pay a penny more for the mistakes made by utilities,'' said Harvey Rosenfield of The Foundation for Taxpayer and Consumer Rights, who said the utilities should look to their parent companies for help. Southern California Edison is a unit of Edison International while Pacific Gas and Electric is a subsidiary of PG&E Corp .Governor's Future ``Hangs By A Few Kilowatt Hours'' Nader, who drew 4 percent of the California vote in his failed presidential bid, said Davis' political career ``hangs by a few kilowatt hours'' and said the governor and the state legislature must return to a form of price controls for electricity based on costs. Wholesale power prices have skyrocketed in California this year and Pacific Gas and Electric is seeking to raise rates for customers by an initial average of 26 percent while Southern California Edison wants a 30-percent hike.

The California Public Utilities Commission opened hearings on Wednesday on whether to lift a freeze on the rates the two utilities charge. That freeze was imposed as part of the landmark legislation which deregulated California's markets. The utilities have run up billions of dollars in power purchase costs this year which they have been unable to pass on to customers due to the rate freeze. The resulting cash crisis has taken them to the verge of bankruptcy. At the end of November the shortfall stood at $7.7 billion, comprising $3.2 billion for Southern California Edison and $4.5 billion for Pacific Gas and Electric. Nader said that under any utility bankruptcy the state of California could eventually step in and run the system. He said California should look to the Los Angeles Department of Water and Power (LADWP) and Sacramento Municipal Utility District (SMUD) as models of how to ``put human need over corporate greed.''

LADWP, the nation's largest municipal utility, is able to produce more than enough power to meet its needs and has been able to maintain stable prices and even plans a future rate cut while its investor-owned counterparts struggle, Nader said. Last week credit ratings agency Standard & Poor's said the two utilities risk running out of cash ``within a matter of weeks'' and warned it could downgrade debt ratings to junk status unless urgent action was taken.

Conservation Incentives

In Thursday's testimony before the CPUC, a leading state lawmaker called for a new rate structure which would encourage power conservation by making heavy users pay proportionally more. ``I urge you to look at rate changes that could help save dollars via conservation steps,'' said Debra Bowen (D-Redondo Beach), chair of the state Senate Energy, Utilities and Communications committee. Bowen said encouraging conservation was ``the cheapest, cleanest way to meet the state's power needs.'' A chronic shortage of electricity has led to skyrocketing wholesale power prices in California this year. There have been accusations that the shortage has led to ``price gouging'' by power producers. The CPUC hearings on the proposed rate hikes continue Friday. A decision is expected on January 4.

Black Blade: With government's stellar record of achievement, if they were to take control of California's bankrupt utilities, it could be quite amusing to say the least. I say "Go for it!" When the state government raises taxes to cover the increased costs of natural gas power generation, the Grasshoppers can feel so much better about it. Right on Ralphie! I actually encourage them to take over the Utes! It should be quite interesting as the utilitiies version of the Keystone Kops try to run the power grid. I wonder who will sell them natural gas and electricity? Other western states have their own electricity and NG supply problems. This is really a good social experiment. Let's watch it fail together - yes?


ji (12/29/2000; 4:42:54MT - usagold.com msg#: 44655)
Would this work?
Representative Jack Metcalf:

AMERICAN PEOPLE ARE RENTING THEIR CURRENCY !
Before the House of Representatives - September 09, 1999

Rep. METCALF: "Mr. Speaker, I would like to talk briefly about money. Everybody is interested in money. My wife asked me: "If you know so much about money, how come we do not have very much?" But I would like to talk about money this evening.

Did you know that we pay rent on our money; the cash we use, we pay rent on it? It costs the American people $100 per person per year to rent our cash, that is, the paper money, from the Federal Reserve.

Now, the Federal Reserve gets the money, it just does not spend that money or keep it. They return it to the Federal Treasury. That means that the American people are paying a tax on our money in circulation for the privilege of using Federal Reserve notes. In reality, this money is paid to the Fed by the Treasury to pay the interest on the U.S. bonds that back our money.

This is a foolish system when the U.S. Treasury could issue our currency directly without debt and without interest as they issue our coins. Most people do not know that our coins are minted by the Treasury, essentially spent into circulation, and the U.S. Treasury makes a neat profit on them.

But when we issue cash, we go further into debt. When the U.S. Government issues paper cash, they go further into debt because bonds are created to back the cash, and thus the debt increases.

With a currency we go into debt, but it makes a profit when coins are placed in circulation. This is truly a system that defies logic, and we should issue our coins or issue our cash as we issue our coins.

Here is a simple way to accomplish that; this is not complex, this is not rocket science. Congress only needs to pass legislation requiring the Treasury to print and issue U.S. Treasury currency in the same amount, in the same denominations, of the present Federal Reserve notes. No change in the money supply. The Treasury would issue these U.S. notes through the banks and at the same time withdrawing a like amount of Federal Reserve notes.

As these Federal Reserve notes are collected by the U.S. Treasury, they must be returned to the Federal Reserve and essentially to redeem the over $400 billion of U.S. interest bearing U.S. Treasury bonds now held by the Fed. So the Fed holds the bonds. We can take the U.S. currency and exchange it for those bonds. Over a couple of years we will have U.S. currency circulating instead of Federal Reserve notes, and the U.S. debt would be reduced by over $400 billion.

That sounds too simple. Well, it is simple. This is not rocket science. There is no appreciable down side, and I expect to discuss this issue a lot in the future just because somebody needs to take a look at how our money was issued and allow us to avoid paying that $27 billion a year interest just to rent our currency from the Federal Reserve."


Rep. Jack Metcalf was on the Weissbach program (570 KVI Seattle) on Aug. 7, 2000 talking about the benefits of the New Treasury Banks. Call (425) 825-5544 for a copy of the program.




Belgian (12/29/2000; 3:28:37MT - usagold.com msg#: 44654)
DEBT
US-GDP = 10 Tril. / year.
Consumer debt = 7,5 Tril.
Corporate debt = 10,6 Tril.
Nasdaq loss = 4 Tril. '00
US National debt = 5 Tril.
Derivatives = 96 Tril.
And the US will be debt-free in 2010 !
BBBBBRRRRRRROEEEEEEEEHA_AHA_HA_HA_ !!!
I can't impossibly give evidence of the above figures. But I buy the story with loads of Gold. Halting and Reversing this DEBT-momentum, can only happen with a shock : A BIG SHOCK ! 3/4 of world reserves and trade will be severely affected by this shock. It is a waste of precious time to discuss, how and when this enormous Debt-shock, will develop. Just have a look at the second world-power, Japan.
GOLD is the one and only Debt resistant.
Bad money, has started to destroy (evaporize) itself.
The US$, went a bridge too far. There is no other way I can interpret the above debt-figures. This amount of tsunami-debt can only flow into 2 desastrous outcomes : hyperdeflation, where the bad-debt-money is destroyed and the good-debtless-money, survives. Or another runaway stag/inflation, period, with the well known extremes.

There is no such thing as a soft landing on a debt tarmac.
The plane keeps on circling, above the landingtarmac, as long as there is enough fuel, to engineer and mastermind,
the delay of the final crashing. This is not your captain speaking. Happy Debtyear to all.


Black Blade (12/29/2000; 2:43:00MT - usagold.com msg#: 44653)
Uncertainty is the Buzzword for Today's Market.
US Dollar is weakening as the Euro is up 0.35 at 93.51, and most other currencies are gaining as well. USD index is down to 109.95. Meanwhile, gold claws it's way back – up $0.70/oz. Overnight, markets are mixed with Japan down and HK up. Futures are slightly negative as well. Tomorrow is the last chance at "Tax-Loss" selling and the clock starts ticking for the 30 day "Wash sale" rule. The question is, will investors jump into buying for IRA portfolios, and if they do, what will they buy? A side note, the Spanish language QuePasa.com is now QuePasa.gone. Doors closed today – adios amigos! Also Monkey Wards is closing up shop after over a century in the retail business. The economic landscape is ever more uncertain for both old and new economy companies. Go figure!

Black Blade (12/29/2000; 2:30:42MT - usagold.com msg#: 44652)
Higher prices for commodity justify increased expense
By NELSON ANTOSH
Houston Chronicle

Nearly five miles below the floor of Wyoming's Wind River basin, a diamond-studded drill bit is moving toward pay dirt that wildcatters dream about: 1 trillion cubic feet of natural gas. Houston-based Burlington Resources is among those drilling the well, whose depth is expected to reach 25,800 feet. The project puts the partners on the deepest end of an industrywide search for deeper gas reserves. Geologists and geophysicists say the future of natural gas is at great depths. In regions that have been picked over by years of shallow drilling, deep gas is all that is left. Since the deep gas fields that oil companies are going after are huge, the risk of drilling is worthwhile. More drilling for deep gas prospects is occurring within known gas-producing areas, such as South Texas, West Texas, Oklahoma and southwestern Wyoming. In drilling terms, the word "deep" means in excess of 10,000 to 15,000 feet, depending upon location. The Burlington well is considered ultra-deep and is thus a high-profile hole in the industry. A year ago, during the bad times of low energy prices, oil companies were drilling low-cost, low-risk "infill" wells in fields where they knew there was oil and gas, says Dennis Smith of Nabors Industries, the nation's largest land driller. He describes these types of wells as no-brainers.

Now cash from high energy prices is rolling in, and oil companies are starting to ramp up their drilling. They are willing to take a chance on exploratory wells, said Smith. Within an oil/gas basin, the deeper the formation, the more gas-prone it is, because what may have been oil at one time has been cooked into natural gas. Burlington's Wind River site is between Casper and Riverton, near the town of Lysite, in a mountain basin full of scrub brush and antelope. Some deep oil and gas formations like Wind River have been known for decades. Burlington's Madden Field, for instance, has been producing oil and gas from shallow sands since the 1960s. Burlington always felt when it was acquiring the Madden Field in a 1997 merger with Louisiana Land & Exploration that natural gas prices would get better, said spokesman John Carrara. The rapid rise in gas prices over the past year underlines why it is willing to spend large sums on wells and a gas-processing plant. Burlington feels good that the cost of the latest well will be about $30 million. This is a relative bargain compared to wells that Louisiana Land drilled into the deep Madison formation. They cost about $40 million each and took 500 days to complete. Burlington's latest project shows how advances in drilling technology have speeded drilling and reduced costs. The Wind River drilling was started in January and should be finished around the end of this month.

The well, called the Bighorn 6-27, promises to be the deepest producing well in the Rocky Mountains, according to the Wyoming state oil and gas office in Casper. Not surprisingly, it is being drilled by what is billed as the largest land rig in the United States. Unit Drilling of Tulsa, Okla., owns and operates the behemoth, named Unit 201. Drilling costs grow geometrically with depth. Drill twice as deep, and you're apt to spend four times as much. That's OK if you're drilling into the deep Madison, where wells are known to produce 50 million cubic feet of gas per day, according to Carrara. An increased cost at the Wind River well is special high-strength, heat-treated, corrosion- resistant drill pipe and casing. It is twice as expensive as commodity-grade pipe. Grant Prideco of The Woodlands specializes in this product. In October, it announced a $7 million sale to Burlington and Grey Wolf. Innovations in technology help make this kind of well possible. The energy-field services company Halliburton did what is called a reverse cement job, squeezing the cement down the opposite side of the casing from normal. Carrara noted that this was "the only time this has ever been done on purpose." The Wyoming drilling has been slow and painstaking. The well cuts through other rock formations, and at the bottom of the hole is hard dolomite, temperatures of more than 400 degrees, a lot of pressure and gas that reeks with corrosive hydrogen sulfide. The well is categorized as exploratory because the partners want to explore 600 feet farther down. If the exploration proves successful, Carrarra said, the size of the field will grow to an estimated 3 trillion cubic feet -- before processing -- from the current 2 trillion.

Burlington's next well into the Madison formation will be drilled by Grey Wolf, a Houston-based drilling contractor that after Jan. 1 will start moving its rig No. 558 from Louisiana to Wyoming. Rig 558 has 4,000 horsepower and boasts hoisting capacity of 2.5 million pounds, which will help it lift a string of pipe five miles long. Once No. 558 sets up, Burlington will have a two-rig drilling program. Wind River isn't an isolated example of an ultra-deep well.

In Oklahoma, the Anadarko basin is being revived. It was alive with gas drilling to 18,000 and 20,000 feet during the deregulation days of the late 1970s and early 1980s. At the time, gas sold as high as $9 to $10 per 1,000 cubic feet if it came from wells deeper than 15,000 feet. But the Anadarko work died during the industry slump of the mid-1980s. It's come back strong this year. The number of rigs drilling in Oklahoma last week reached 132, up from 83 a year ago, according to the rig counter Baker Hughes. There is also more drilling now than a year ago in the northern Austin Chalk, mainly in Freestone County, according to Baker Hughes spokesman Gary Flaharty. Wells there go to 12,000 feet.

Another area of renewed activity is West Texas, extending into the area around Carlsbad, N.M. Wells are reaching 15,000 feet. In addition, activity has picked up in South Texas, which stretches from Laredo to Corpus Christi, and into the Lower Rio Grande Valley. Wells go between 10,000 and 15,000 feet, with some reported as deep as 18,000. In general, gas wells have been going deeper -- but the increase has not been dramatic. Grey Wolf's average well went from 10,900 to 11,300 feet deep in the first nine months of this year. This doesn't sound like much of a gain, but previously the trend was to drill shallower, said Senior Vice President and Chief Financial Officer David Wehlmann.

Ninety-five percent of Grey Wolf's business is drilling for gas. South Texas has been a wonderful area for gas, drilled extensively for perhaps 80 years, but there are still significant finds to be made in the deep formations, said Esenjay Exploration Chairman David Berry. The Houston-based company early this month announced that its Runnels No. 3, south of Bay City in Matagorda County, was producing 15 million cubic feet per day from 14,505 feet in the lower part of the Frio formation. Production may be ramped up to 20 million cubic feet, a significant amount of gas for a small company even after partners' shares are taken out. The plan was to drill to 15,000 feet, but the pressure got too great and the company decided to stop. At least two more wells are planned, possibly to 16,000 feet, so Esenjay can find out whether it has discovered a big field or just one big well. The secret in South Texas is using three-dimensional seismic data, Berry said. Previously, shallow wells were used to make inferences about what was below, but this method wasn't accurate. With 3-D's more detailed images, it is "a whole new world" below 10,000 or 12,000 feet, Berry said.

Black Blade: As discussed before, the quest for NG is going into more costly and complicated regions. Why? Because the demand is so great and the situation is extremely critical. We must find ways to feed Hydro-Carbon Man's addiction! The costs will be passed on - no choice. Portfolio protection with PMs is well advised.





Black Blade (12/29/2000; 2:22:41MT - usagold.com msg#: 44651)
Cold weather raises energy prices, fear of shortages Concerns about natural gas, heating oil add to California power crisis
By Dina Temple-Raston
USA TODAY


Energy prices soared Tuesday as colder-than-expected weather in the USA stepped up demand and fed concern that shortages can't be far behind. Heating oil prices rose almost 7%, or 5.9 cents, to 93.7 cents a gallon on the New York Mercantile Exchange. That's the largest one-day gain since April 19. Natural gas for January delivery rose as much as 37.1 cents, or 3.9%, to $9.95 per million British thermal units. Natural gas has been trading at or close to record highs since mid-November. Last week, supplies of natural gas were 23% lower than at this time last year.

In recent weeks, energy traders have been focusing on natural gas, not heating oil, because many utilities need natural gas to fire their backup electric generation plants. The appetite for electricity has been so great that they have had trouble keeping up with demand, particularly in California. But Tuesday, the cold sweeping the Northeast shifted attention to heating oil. ''We're starting to see some real panic when it comes to the energy situation, particularly in natural gas,'' says Phil Flynn, oil analyst at Alaron Trading. ''There's a lot more winter to come.''

Two key inventory reports will set the stage for prices the rest of the week, analysts say. The American Petroleum Institute will release its weekly supply report today. The Department of Energy will give its own estimates on Thursday. Traders expect today's figures will bear out what many fear: The cold snap has taken a bigger bite out of supplies. Freezing weather, such as the Arctic blast that hit pockets of the country over the holiday weekend, feeds concern that supplies will run out. That drives up prices. Temperatures in Chicago were well below freezing on Tuesday, and the National Weather Service forecast lower temperatures all week in New York and Boston. That's bad news. The Chicago metro area alone accounts for nearly a third of U.S. residential gas consumption. The nation's largest market for heating oil is the Northeast.

Traders also have an eye on the growing power crisis in California. Two of the state's utilities, Pacific Gas & Electric and Southern California Edison, face more than $8 billion in losses because of soaring natural gas prices. Regulations prevent them from passing those increases on to their customers. More than $2 billion in short-term debt the two companies have issued comes due in the next two months, and analysts worry the companies may have trouble making the payments. California Gov. Gray Davis met with Federal Reserve Chairman Alan Greenspan on Tuesday to discuss the power crisis as the two utilities brace for a possible credit-rating downgrade. Officials at the Fed and at Davis' office declined to comment on the meeting, except to say the two men discussed energy. Traders also are keeping an eye on the Organization of Petroleum Exporting Countries, or OPEC. It could decide to cut production because crude oil prices, unlike heating oil and natural gas prices, have dropped 25% in the past month. Venezuela President Hugo Chavez said Monday he'd urge OPEC members to agree to a supply cut. Venezuela, Iran, Kuwait and Libya have all called for reduced production. OPEC meets Jan. 17.

Black Blade: The pieces of the puzzle are starting to come together. Interesting side note – Southern California Edison is outta cash on January 4th, when payment is due for it's energy purchases. It's crunch time!





Black Blade (12/29/2000; 2:16:15MT - usagold.com msg#: 44650)
Natural gas tops $10 on supply drop Crude, distillate, gasoline inventories head lower
http://cbs.marketwatch.com/news/current/futures.htx?source=blq/isynd
By Myra P. Saefong, CBS.MarketWatch.com Last Update: 6:07 PM ET Dec 27, 2000 NewsWatch Latest headlines Get Alerted

NEW YORK (CBS.MW) - Natural-gas futures prices topped $10 Wednesday for the first time as cold weather in the eastern U.S. caused a huge decline in inventories and raised concern about dwindling reserves as winter picks up. "We're in trouble," said Robert Christensen, Jr., an analyst at FAC/Equities. "We don't have enough gas to get us through the winter."


12/27/2000 2:16:46 PM ET On the New York Mercantile Exchange, January natural gas closed at $9.98 per million British thermal units, up 17.5 cents after a late break above $10. The commodity's February contract, which became the lead futures contract at the market's close, rose 16 cents to $9.286. January heating oil, another commodity used for heating homes, rose 0.21 cent to 93.71 cents a gallon.

Late Wednesday, the American Gas Association said natural gas inventories, as of the week ended Dec. 22, fell 175 billion cubic feet. Supplies were expected to be down 155 billion to 200 billion cubic feet, a Bridge survey of analysts said. A year ago, supplies fell 173 billion. Total supplies of 1,938 billion are now 632 billion cubic feet below last year's level. The nation has seen "tremendous" additions to residential and commercial natural-gas loads over the last decade, Christensen said, but all of that added load "created by this wonderful economy hasn't been tested."

The country hasn't seen a colder-than-normal winter in 15 years, he said. The U.S. entered winter 20 percent under-filled and there's still about 65 percent of winter ahead of us, he added.

Black Blade: "……And the Grasshoppers danced, sang, and played all summer."



Black Blade (12/29/2000; 2:05:21MT - usagold.com msg#: 44649)
Hydro-Carbon Man Update:
Should You Have Pity on the Grasshoppers?

As we approach the end of the year 2000, perhaps one unresolved issue that hounds us all is the rising price of hydro-carbon energy and what effects this will have on the economy. First, energy is vital to economic growth as evidenced by the greatest Bull Market in history – which was fueled by cheap oil and natural gas. "Sorry Charlie" or should I say "Sorry Hydro-Carbon Man" those days are over. Worldwide energy demand grows at almost the same pace as the overall global economy. This correlation has been proven time and again over the last 30 years, in spite of what the "New Paradigm" crowd would like you to believe. The demand for natural gas is so evident now those prices have consistently hit all time highs as new gas-fired power plants replace older coal and nuclear facilities. Virtually all-new power generation facilities will be powered by natural gas. Hydro-Carbon Man is a junkie looking for his next fix, knowing full well that prices are going much higher and will NEVER come down again. The Hydro-Carbon junkies in California who have not prepared for this day knowing full well that an energy crisis of epic proportions was developing are only a minor example of what the future holds for the rest of us.

Oil and gas supply about 60% of the world's energy. Sure, there is talk of alternative energy and some miracle "perpetual motion" type machine that will cure our insatiable desire for energy. Sorry folks – ain't going to happen! Despite efforts to develop more energy from solar or wind, oil and gas are expected to provide an even larger percentage of the world's energy going forward. Nothing else is as efficient – period! Sure, as the Grasshopper crowd begins to freeze and shiver in the dark, there may be calls to revisit coal and nuclear energy. This would help tremendously, however, there are those in the environmentalist community who would vigorously oppose any construction of such energy facilities, and besides, it would take time to not only construct the power generating facilities and infrastructure, but also to mine the necessary coal and uranium. A further hindrance of course is that many of the world's potential Hydro-Carbon supplies are in environmentally sensitive areas. As a side note, many (such as Al Gore) argue that the ANWR North Slope is some pristine wilderness. That of course is absurd, as it is a barren, black fly and mosquito infested tundra. The argument that the Bambi-like Caribou would be disturbed by man's intrusion is another fallacy. During the severe cold of winter, one could find literally thousands upon thousands of caribou huddled under the Alaska pipeline because of the warmth needed to maintain oil flow. But, I digress. Technology has allowed Hydro-Carbon Man to seek his fix with drilling in deeper water and in more challenging environments – although much more costly.

How do we feed Hydro-Carbon Man's addiction? How do we keep the Grasshoppers from freezing in the dark? Or should we? Efforts to reduce energy consumption through conservation are important steps, though unlikely to be workable for that simple human ingredient – greed! We can ask that the people pull together and conserve energy. With energy so readily available, it would be akin to a communal environment where asking that all members of the community take only what they need. There are always those individuals who will take advantage. That is the primary reason that communism was such a dismal failure, or why the early Puritans nearly all starved to death in early America. But, again I digress. Another approach is the development of new high-efficiency gas and diesel engines and possibly even fuel-cell technology. The question then becomes whether or not the energy input to create and maintain such power plants really conserve energy as new materials must be extracted, refined, and manufactured while consuming ever more energy. Remember that there is no such thing as a perpetual motion machine – energy is consumed. Perhaps hydrogen in use with fuel-cell technology is an answer. BTW, wasn't the Hindenburg one large fuel-cell ;-) OK, but most fuel-cell technology still focuses on using natural gas as a source for the hydrogen.

No matter how one views the current and developing energy crisis, substantial production of hydrocarbons will be required. Demand is expected to increase by 2% to 3% annually over the next decade. All the while, production from oil and gas fields continue to decline as the field matures. In most cases, decline rates average about 6% to 8% annually. In other words, to meet the growing demand for hydrocarbon energy, over 50% of oil and gas needed for the year 2010 must come from sources that are not even in production. Grab a good supply of blankets and winter garb. Natural gas is under even greater pressure. It may require as much as $1 trillion in development capital to bring the needed 70 million oil-equivalent barrels per year of production needed by the year 2010.

Government energy policy. What policy? The Clinton-Gore administration has been asleep at the wheel for eight years. Now the economy is collapsing and the politicians are pointing fingers and some even demanding that they hide their heads in the sand. Sorry, but it is too late. New fields that are just beginning to produce oil today were discovered over a decade ago. The oil and gas just doesn't flow unrestricted from the Earth forever. In the 1970's after the ME Arab OPEC countries put the screws to the western world for support of Israel during the 1973 war, the US and many of it's allies declared that they would decrease reliance on foreign oil. What a noble cause. The Strategic Petroleum Reserve (SPR) was developed. However, it is not enough as new exploration and development was not part of the follow-up plan. Somewhere logic and long-term planning ceased to be part of western thinking. It has come back to us in spades. We are now more dependent on foreign oil than ever before. For example, in 1980 37 percent of US oil demand was supplied by foreign sources. Today, about 52% of US oil consumption is imported. Natural gas isn't much better (in fact it is much worse). The demand for clean burning natural gas has resulted in record low inventories, reservoir drawdowns in summer months, and increased record high prices. About 90% of all US natural gas consumption is produced domestically. The problem – the domestic resource base has only about 7 years of current proven reserves (at current consumption rates). US consumption is increasing at an ever faster rate, so 7 years may be overly optimistic. We could buy time with a lot more exploration and development work, especially by "wild-catting" outside of mature production fields. Of course, we don't have a government energy policy – again, grab some blankets and winter garb!

Lastly, we come to an important consideration about how to refine oil and oil based products. Refinery utilization rates have been at near full capacity, and luckily we haven't had a real disasters as maintenance has been postponed while refiners profit margins have increased. Again, these refineries will have to cut back production foe maintenance. Note that there haven't been any new refineries built in the US for the last decade. In fact 36 refineries have been shutdown. Environmental and liability issues make it difficult to operate, especially as it is open season on US industry by any number of ambulance chasing shysters. IMO, it looks as if the economy is doomed to a prolonged recession and maybe even a full blown crash as energy prices will climb ever higher and costs are passed along to the consumer. So don't have any pity on the shivering, freezing Grasshopper or Hydro-Carbon Junkie. It is just natural selection at work. Those who prepare with Y2K type survival supplies should fare well, and other who have the ability to be self sufficient should be alright as well. Of course, one should consider how to transfer ones wealth across these coming turbulent times. Precious metals have always been a safe haven in the past. It should continue to be so. History does repeat, and that fact alone dictates how to make through some seriously rough times.

- Black Blade





SHIFTY (12/29/2000; 0:14:58MT - usagold.com msg#: 44648)
YEAR-END RALLIES USUALLY A FACADE
http://www.chicago.tribune.com/business/columnists/barnhart/
YEAR-END RALLIES USUALLY A FACADE
WATCH FUND MANAGERS DUMP STOCKS QUICKLY

By Bill Barnhart


December 28, 2000

A year-end rally appears to be under way. You might be tempted to ride along.

Here are two reasons to wait: window-dressing and portfolio-pumping.

The Standard & Poor's 500 index gained 5 percent in the last four trading sessions, including a 1 percent advance Wednesday. Nasdaq stocks climbed nearly 9 percent in the same period, including a healthy 2 percent gain Wednesday.

Unfortunately, a convincing statistical case shows that year-end rallies reflect cynical manipulation by some fund managers.

Trading patterns showing unusual price gains at the end of the year, especially the last trading day of the year, have prompted an inquiry by the Securities and Exchange Commission.

But you won't see any portfolio managers, their faces hidden in shadows and their voices electronically disguised, confessing to "60 Minutes" about manipulation.

That's because it's nearly impossible to prove the motivations of professional investors, noted Mercer Bullard, a former SEC attorney who operates a mutual fund shareholder advocacy Web site at www.funddemocracy.com.

"The best way to fight this is to get the information out there," he said.

Window-dressing consists of fund managers buying in-vogue securities just in time to have them listed in their year-end reports.

Believe it or not, many stocks have done well this year. On Wednesday, 318 stocks listed on the New York Stock Exchange reached new 52-week highs, compared with just 86 hitting new lows. On the Nasdaq market, there were 129 new highs and 38 new lows.

Qualcomm was an obvious example of window-dressing last year, Bullard said. Hundreds of fund managers rushed to buy the popular wireless communications stock at year-end. Many dumped it soon after the new year.

Even managers of money market funds may get into the act, buying super-safe Treasury securities at the end of the year to mask year-long bets on high-risk debt.

Portfolio-pumping is a more pernicious practice, often done to boost fund rankings and manager bonuses.

Managers flood the market with "buy" orders on the last trading day of the year for securities they already own, especially small and thinly traded securities, to inflate their fund's value.

"By far the strongest run-up in fund prices occurs on the last trading day of the year and the biggest drop occurs on the first trading day of the New Year," Bullard said.

The schemes often become complicated, Bullard said. Hedge funds, which are private investment funds not subject to mutual fund regulations, often swing into action in anticipation of year-end monkey business by traditional fund managers.

The result is a highly artificial market. "It's not a good thing to buy stocks on the last trading day of the year," Bullard said.



Wednesday's action: Stock prices rallied broadly in moderate trading, as shares of retailers and depressed semiconductor-makers attracted bargain-hunters.

Reports of a last-minute surge in holiday shopping lifted investor sentiment toward retailers, if not prospects for a great season for the major store chains.

Traders continued to hold hope that the Federal Reserve will cut its short-term interest rate target in the next few weeks, well before its next scheduled rate policy meeting, set for Jan. 30-31.

The Dow Jones industrial average rose 110.72 points, or 1.0 percent, to 10,803.16, on New York Stock Exchange volume of 1.06 billion shares.

Winners topped losers by a 7-3 ratio among NYSE-listed stocks. All major industry sectors posted gains, including retailing, technology, basic materials, financial services and health care.

Among retailers, Sears, Roebuck, of Hoffman Estates, rose nearly 6 percent, to $34.50; Wal-Mart Stores added almost 4 percent, to $52.56; Nordstrom jumped more than 12 percent, to $18.31.

The Nasdaq composite index gained 45.83, or 1.8 percent, to 2539.35, on Nasdaq volume of 2 billion shares. Winners topped losers by 7-6 among Nasdaq stocks.

The index of semiconductor stocks at the Philadelphia Stock Exchange rose more than 4 percent.

Network Associates, a maker of computer security software, sank nearly 62 percent, to $4.50, after the company disclosed that its top three executives would resign and the company forecast a major revenue drop.




Tannehill (12/29/2000; 0:06:23MT - usagold.com msg#: 44647)
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