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ARCHIVED DISCUSSION FROM 12/29/2002
All times are U.S. Mountain Time

(Yesterday's Discussion.)

OZ (12/29/02; 22:53:56MT - usagold.com msg#: 92906)
Sinclair's latest
Subject:

Let's Talk GOLD STRATEGY

From
James Sinclair



Chart tomorrow on www.tanrange.com in the Chairman's corner


First, we need to clean up an item of establishment media disinformation that has found its way into the community. Yes, gold’s strength has an ingredient from the potential Iraq conflict and now from the saber rattling by North Korea in their announced nuclear intentions. However, that is NOT the reason for gold’s bullish trend. Gold’s major uptrend is a product of the Five Golden Keys which are the Five Fundamental Reasons for a long-term gold bull market. These fundamental factors transition their price influence to gold through their affect on currency relationships. Gold was not decommissioned in the past twenty-two years. In fact, during the long twenty-two year bear market in gold, it performed perfectly. Gold’s perfect performance was its inverse relationship to the US Dollar.

I have strongly suggested to the community that during the sideways chop of gold (305-330) selling 1/3 of the core position at key TA points in order to maintain a positive psychological outlook quality trading gives and increased profit overall.

Because of recent currency developments, which I will outline in this review, we need to readdress our GOLD DEALING STRATEGY. We are no longer chopping sideways in gold, but are now trending higher. Gold will, in my opinion, reach the predicted $372 level and trade above $400 in 2003. You have seen my willingness to book up to $100,000 in wagers with our Prechter friends. My wager is that gold will reach the Prechter point of no return on their $200 prediction by trading at least $401. It is in light of my firm conviction that gold will better $400 in 2003, that I need to be very careful in my guidance to you for gold trading.

My friend Kenny Adams (IMO, the world’s most talented technician now or ever) feels that from the point gold hit is $354.50 bid - $355 offered, the reaction to follow would ideally take eight trading sessions in which replacement of the sold positions could be possible. There are two possibilities. The first is a quick reaction into the $330s. The second is the sideways chop I envision in the high levels presently being experienced. We have witnessed a reaction in gold but so far it was blitzkrieg to $341.50 and then back to $351.50. We therefore have ideally until the Monday after New Years where repositioning is possible assuming one had sold 1/3 of their position into the $354.50 hit.

My challenge in the chop in gold between $305 and $330 was to give you accurate and exact places wherein selling was wise. Next, my job was to keep you long and not sell on that move which would record the breakout above $330. Now my job is to guide you by keeping you totally long through the best part of this leg of each gold move. It is for this reason that I issued the Christmas to New Years Heads Up.

We have five more sessions in which there is a technical possibility of reaction. However, IMO, gold will move to $372 and possibly above $400 on this leg of the gold bull market.

Because:

The dollar has broken below both 104 and 103 on the USDX early. Charts are where you find them and it is a good discipline to do chart work on newspaper chart illustrations. The chart I have offered here is from the Saturday, December 28, Financial Times, carried in an article on the Euro. It is the Euro defined in US Dollars. The bottom formation which makes up most of the Euro’s trading history SCREAMS OUT at you. This SCREAM says I am a formation which is, IMO, best interpreted as a completed Reverse Head and Shoulders bottom formation. It has a measured move of $1.20 - $1.23. Since gold has moved in a tight inverse relationship with the dollar, this chart means a great deal to gold. It means that gold will go to $372 and possibly all the way to over $400 soon.

Therefore our STRATEGY now is to be sure we replace the 1/3 sold, not in laggards, but rather in the front running leaders in the gold shares field and of course bullion. Our goal now is to stay fully invested to maximize each leg of the gold bull. Be assured I will do my level best to help.

If you want the Heads Up and VIP messages in your incoming email box as a service to Financial Sense members let me know.

Gold share investors no longer will put up with management that speaks “spin city” to their shareholders or changes their accounting methods to hide derivative losses. Gold share traders know how to add, so if you hang out a shelf offering that so exceeds the need for registration of new warrants, don’t expect your shares to be front running any more. Gold share investors are getting smarter and will refuse to stay in a gold share -- be it a major producer or a junior -- that pumps and dumps on the shareholders via insider stock options. When the management of a junior has a stable of other public juniors all these stable members public companies will fall into the tank. Gold share owners now demand ethics, total focus and good management both from the majors as well as the junior gold companies. The age of stupid investors is over. This gold community knows what it is doing and what they do not know, I do.

Note on Silver: Change the key level in silver now to $4.89 which would signal a significant change in the intentions of silver to positive and probably positive violently.




Black Blade (12/29/02; 22:04:33MT - usagold.com msg#: 92905)
Asian Markets Sharply Lower
http://quote.yahoo.com/m2?u

It looks worse in Asia tonight. The TOCOM is closed for the holidays and will reopen after New Year's. Otherwise we might have actually seen some action in Gold tonight. Sydney has all but shutdown and recent comments by Aussie analysts condemning Gold have not helped. Of course Aussie miners are deep under water with higher Gold prices as they are forward sold to the hilt so it is no wonder then local analysts and authorities want to stem the rise in PM prices. All the comments center around the "war premium" as being short-lived though little is said about the weakening US dollar, weak equities markets, global economies in distress, rising oil prices, record levels of debt (government, personal, and corporate), etc. They are running scared and are determined to cap the Gold run below $350 an ounce. It will not work as economic conditions deteriorate and individuals take advantage of lower Gold prices in the interim. Meanwhile Comex, Tocom, etc. are now relegated to "side show" status while investors scoop up available Gold as evidenced in China, Japan, India, etc. "Interesting Times"

- Black Blade

krash (12/29/02; 21:45:58MT - usagold.com msg#: 92904)
The U.S. predicament seems to be analogous to 16th century Spain
http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1039524021167&p=1012571727085
But it is gold leasing this time.....Deja vu all over again!

Lessons from the fall of an empire -- UK Financial Times
By Harold James
Published: December 29 2002 19:05 | Last Updated: December 29 2002 19:05

It is the time of year when people are casting about for good books to read to resolve the current perplexity. If you are sitting in Washington, there are few guides to the unique position of the US, whose military expenditure exceeds that of the next 14 countries combined.

The most frequently cited historical parallels, Britain and its 19th-century pax Britannica, or 16th-century Spain, the first country to grasp New World prosperity to dominate the Old World, do not really fit modern America. Both were locked in rivalry with other nearly equal European powers: France and (in the British case) Germany.

Washington readers could do worse than go back to a study of the first real exerciser of unipolar power, the Roman Empire. The book to read is Edward Gibbon's classic study, whose first volume was (by chance) published in 1776, the year of the signing of the American declaration of independence. Gibbon's advice immediately looks quite attractive and relevant to today.

He begins with praise for the peaceful character of the Emperor Augustus and of Roman realism and multilateralism: "Inclined to peace by his temper and situation, it was easy for him to discover that Rome, in her present exalted situation, had much less to hope than to fear from the chance of arms; and that, in the prosecution of remote wars, the undertaking became, every day, more difficult, the event more doubtful, the possession more precarious, and less beneficial."

Previously secure countries can quickly drift away from the political grasp of the hegemon, as resentments and anxieties about the unipolarity of the world grow. Gibbon even had words that might help President George W. Bush understand or deal with Gerhard Schr�der's would-be independent foreign policy. "The forests and morasses of Germany were filled with a hardy race of barbarians; and though, on the first attack, they seemed to yield to the weight of Roman power, they soon, by a signal act of despair, regained their independence, and reminded Augustus of the vicissitude of fortune." This is a good description of the often counter-productive psychology of the need to slap the hegemon. But such revolt alone is not enough to overthrow hegemonic power.

Why did the Roman version of uni- polarity collapse? Gibbon's empire depended at the height of its success on a sort of multiculturalism, which Romans put in terms of the admission of local deities to the quite crowded complex of the Roman imperial pantheon. In the same way, the US has recently gone out of its way to show how eagerly it will embrace a non-threatening version of Islamic (or indeed Hindu or Confucian) values. A too emphatic insistence on any uniquely Roman virtue or divinity would destroy a precarious notion of cultural pluralism. But it was exactly that plurality of a social and economic kind that proved to be a mechanism of disintegration.

Gibbon saw his story of decline and fall in terms of a revolt against Roman universalism driven by a Christian and egalitarian protest against the unequal distribution of property. This was an early version of an anti-globalisation movement, in which inequalities stemming from the character of imperial power touched off protests. "Most of the crimes which disturb the internal peace of society are produced by the restraints which the necessary, but unequal, laws of property have imposed on the appetites of mankind, by confining to a few the possession of those objects that are coveted by many." Maybe Gibbon was also making a contemporary reference of his own, to the weaknesses of the late-18th-century British empire, with its global commercial culture, so signally exposed and attacked by the American Revolution.

This 18th-century historian's picture of empire and its rules breeding resentment is at odds with a deeply reasoned view, drawn from American social science, about the way in which the modern world can be made peaceful. The argument of the September 2002 US national security strategy initially appears compelling. Because the US can so clearly outspend and defeat (pre-emptively if necessary) any other power, all other powers have an interest in cutting back military spending and threats to their neighbours. This will probably make them wealthier and, therefore, more democratic and peaceful. The world will in this manner be stabilised by the benign force of Washington - a dream very close to that of Augustus.

Which of the arguments is right: the historian's view of long-term decline and fall, or the social scientist's of permanent peace as a result of rational calculation by rational leaders?

The answer depends as much on the stability of the country at the centre as on the behaviour of the rest of the world. The US, unlike the British empire, is building its rule on a foundation that is potentially quite unstable. The British empire in its 19th-century heyday ran enormous current account surpluses (7 per cent of gross domestic product on the eve of the first world war). For more than 20 years, in the period of its cold war victory and of the conversion of the world to a new consensus about markets, the US has had quite large current account deficits. In 2001, the deficit was 4.2 per cent of GDP.

One way of reading this odd situation - which is popular with many Americans - is that the rest of the world has bought into US stability. The deficits are financed by capital inflows, as the non-American world buys the stock of fast-growing US companies or - when the stock market looks bad - property. Indeed, there appears to be a security premium that the rest of the world pays, in that non-American purchases of US assets show consistently lower returns than US purchases of foreign assets.

But nobody thinks that this kind of inflow can be sustained indefinitely. The inflows of foreign capital could be rapidly reversed on some chance piece of bad news. Such a reversal would involve a collapse of the US stock market, the property market and the dollar. US consumers would no longer be able to binge on cheap goods supplied by the rest of the world. American producers would try to protect their markets; foreign producers would be thrown out of business and no longer see any gains to be realised by peaceful integration in a benign world economy.

The financial reversal would also bring the collapse of the US security policy and of its calculated strategy of world pacification. The cost of US defence spending would look much too high and scaling it down would give a chance to would-be rivals, at least on a regional basis - China, for example.

The American case would then look more like that of Spain (which also ran a current account deficit, financed by the outflow of precious metals from its imperial possessions) than that of 19th-century Britain. And Gibbon's story of decline would begin.

The writer is professor of history at Princeton University and author of The End of Globalization



sector (12/29/02; 21:38:17MT - usagold.com msg#: 92903)
@goldenboy You are thinking about the...
New Your Fed and its "Earmarked" gold account
That gold account holds other country's bullion in "Cages".

The gold was originally moved from European locales in order to secure it from the threat of a possible Nazi victory. The paper currencies were of somewhat less import.

The BIS does maintain a 192 tonne account for itself. The "Held in bars" category is the metal property of the various member banks and these banks must retain the absolute right and ability to redeem that gold if they desire. A less than 50% deposit to metal ratio would degrade that right and so cannot be tolerated by the BIS.


goldenboy (12/29/02; 20:49:04MT - usagold.com msg#: 92902)
Sector: I thought the BIS maintained physical gold at its own facility
and settled international accounts by moving the gold from one cage to another. What is the current practice? Thanks in advance.

Black Blade (12/29/02; 19:21:48MT - usagold.com msg#: 92901)
U.S. to Cut Calif. Share of River Water
http://story.news.yahoo.com/news?tmpl=story&u=/ap/20021228/ap_on_re_us/california_water_4

Snippit:

SAN DIEGO - California's share of water from the Colorado River will be cut next year to ensure allocations for six other Western states, the Interior Department said Friday. The amount would be enough to supply roughly 1.4 million people a year, and represents 13 percent of the water California has been taking from the river. Interior Secretary Gale Norton warned of a cutback earlier this month after the collapse of a long-term deal aimed at curbing California's historic overuse of the river. If no deal is reached, the Metropolitan Water District, which supplies 17 million people in Southern California, would lose enough water for more than 800,000 people in 2003. Farmers in Imperial, the state's poorest county, would lose enough water to supply 400,000 people, roughly 7 percent of the trillion gallons of water they use to grow $1 billion worth of food in the desert each year. For years, California has used excess water from the Colorado because other states didn't use the full amount they were entitled to under a 1929 accord. Rapid growth in the West, combined with the worst drought in the river's recorded history, has forced the Interior Department to crack down. Besides California, the other states that draw on the river are Wyoming, Colorado, Utah, New Mexico, Arizona and Nevada.

Black Blade: This is similar to the energy crisis problems experienced in the state recently. Those upstream have first dibs on water rights (and energy rights) while California is at the bottom of the food chain so to speak. Fortunately the state can resort to the expensive option of desalination as they are situated next to the Pacific Ocean. However, that is also an energy intensive process and considering the state's energy woes it could become more than the state's economy can handle. In a word � "grim".



ax (12/29/02; 19:14:42MT - usagold.com msg#: 92900)
INCREASE U.S. GOLD RESERVES @Aristotle/Hipplebeck


INCREASE U.S. GOLD RESERVES @ Aristotle/Hipplebeck

REF: Hipplebeck 92888

Aristotle 92884


I appreciate your thoughts.


Hipplebeck:

In my view you are too pessimistic.

Alan Greenspan wants to monetize us out of this

economic slump, and it can be done once the dollar is

firmly pegged at lower levels. Firmly pegged to me means

a much greater backing by gold in the U.S. Treasury.



Aristotle:


I do not think this is a superficial solution. If the

Bank of England could cut its gold reserves in half for

reasons most of us agree were spurious, why cannot the

United States, for the right reasons, increase its

gold reserves. The right reasons would be to stabilize

the value of the USD in terms of gold so that these

extremely low interest rates and markedly increased

money supply can do its work - restimulate our economy

without making the USD extremely weak and thereby reducing

the ability of the U.S. citizen to buy goods at reasonable

prices and so forth.


Private purchases of gold by the U.S. citizen, as

I have said to you before, is a wonderful idea which

I completely endorse. That is a given. But having the

U.S. Treasury do this as well, offers a measure of

protection of value for the currency in which we all

conduct business - the USD.


AX

Black Blade (12/29/02; 19:00:26MT - usagold.com msg#: 92899)
Waverider - Happy Trails

Have a nice trip and report in when you can. I just got in from the gym and after only a week off I can feel the difference. I weighed in 11 pounds heavier after a week of consuming fatty adulterated western-style foods with relatives over the holidays. I found an entertaining cook book that I gave my brother and his wife for Xmas - "Kill It and Grill It" by Ted Nugent. The recipes look good but it is the reading that is the highlight of the book and is quite humorous. The recipes may start out with "kill something". The recipes focus on wild game and as my brother and I are avid hunters it should provide a lot of opportunities. I will add this one to my library. Anyway, enjoy yourself while on your travels.

Happy Trails!

- Black Blade

Black Blade (12/29/02; 18:49:37MT - usagold.com msg#: 92898)
Crude hits new 2-yr high above $33 a barrel
http://biz.yahoo.com/rm/021229/markets_asia_nymex_1.html

Snippit:

SINGAPORE, Dec 30 (Reuters) - Benchmark U.S. crude futures charged higher in early electronic dealings on Monday, setting new two-year highs at over $33 a barrel as the market bet on a possible military attack on Iraq early next year, brokers said.

Black Blade: Meanwhile US inventories are at low levels and heating oil supply is at very low levels. NatGas storage dropped another �95 bcf last week as warm weather slowed withdrawals in parts of the US. This week should be similar though the sharply declining production from existing fields and lack of reserve replacement will accelerate withdrawals from inventories. As I mentioned some time ago, the lack of financing from investment banks due to credit rating cuts means that withdrawals will accelerate further as companies seek to ramp up earnings by cutting costs from production and selling off their cushion of inventory. The end result is that we are headed into a fast approaching energy crisis that will make consumers wax nostalgic for the last one. Now add to this the higher oil price and low inventories that will lead to more draws on NatGas supply as several end users switch feed-stock fuels. Fortunately we are in the grips of a crippling recession and the winter temperatures have not been exceptionally cold so far. The situation should really get interesting as the US prepares for war against Iraq and the Venezuelan oil workers strike enters day 28. Scratch any hope of an economic recovery this coming new year.



sector (12/29/02; 18:46:02MT - usagold.com msg#: 92897)
@ (Lady) Leigh and Sierra Madre
After the COMEX Close and the 50/50% Metal to Promissory Gold at he BIS
The BIS pays "Interest" on gold "Deposits". They don't actually take possession of the client's gold, they just pay interest on what the client SAYS is their gold. This is promissory gold and it's level can't exceed the "Held in bars" category otherwise a member bank might not get their metal if asked for.


Lady Liegh:

It's anyone's guess what will happen the day after the COMEX precious metals section closes. Gold will still be available through distribution of US mined metal but there may likely be a two-tier gold pricing system in place.

The existence of newly designed paper currency and the two recent speeches by Fed leaders is indicative of a link between the two apparently separate issues.




Black Blade (12/29/02; 18:31:31MT - usagold.com msg#: 92896)
Asian Markets Start Off In The Red
http://quote.yahoo.com/m2?u

Asian markets are getting hit at the open tonight. It looks as if it will get much worse over the next several weeks as Asian economies are in a shambles like their western counterparts. It should get very "interesting".

- Black Blade

Black Blade (12/29/02; 18:20:37MT - usagold.com msg#: 92895)
Japan's banking giants may need bailout next year
http://straitstimes.asia1.com.sg/money/story/0,4386,163456,00.html?


Takenaka pledges to stick to plan to speed up disposal of bad debt despite possible bankruptcies and job losses

Snippit:

TOKYO - Japanese banks, burdened with more than US$420 billion (S$732 billion) in bad loans, may need a third bailout in four years as the government moves to force Mizuho Holdings and its rivals to clear up dud credit. Japan's top banking regulator, Economy and Financial Services Minister Heizo Takenaka, underlined his resolve to clear up the debt last Friday by naming Mr Takeshi Kimura, president of KPMG Financial KK, to two of six panels charged with banking reform. Mr Kimura advocates nationalising banks and closing down deadbeat borrowers. Concerns that the government may seize banks sent shares tumbling last month, prompting Mizuho and its rivals to announce efforts to boost capital.

Black Blade: The title is misleading - Japan's banks must be bailed out next year, be nationalized, or close up shop! The Japanese banking sector is a lost cause. Those Japanese who leave their trust to government and the banks will have to suffer the consequences. It is imperative that investors and citizens of all walks of life look out for number one as no one else will. It is not surprising that Japanese are once again flocking to Gold for wealth preservation.



CoBra(too) (12/29/02; 18:08:03MT - usagold.com msg#: 92894)
Rumsfeld ... Won't attack Iraq -
- right away - we'll await the latest intelligence by the UN weaponry envoys under Hans Blix ... meanwhile, another 50.000 troops have been employed and more on notice.

... We'll also embargo North Korea economically ... and starve 'em totally - as they didn't accept our non nuclear premises -while our friends in Pakistan may employ their nukes on India over Kashmir - and of course vice versa!

Hell, we've got nothing against friendly nukes... only against Saddam, who may nuke "our" oilfields ... and now Al Quaida changed their financing system to Gold and Diamonds in order to escape 'detection'!

Hey, Big Brother, who cares to get raped by the systemic monetary fraud - under the shroud of drug and mafioso cloud - to declare the last bastion of real value as illicit.

A ploy, which has worked once only in the US - admittedly under force - and there's no way to repeat the same scheme for Uncle Scam, even if he's trying hard.

... Uh, No, this can't be true... and it's a real shame - the US has won all the major battles and is losing the major war.

... Damn'it, what for? For forging the reserve currency for the advantage of belittling their former great industries? As the R&D advance has counter-acted (-feited) any job or other loss by mega gains in productivity - says who? Who, else as our beloved FED Leader, Sir Alan Greenspan, who has always led us to new and unencumbered? borders of virtual prosperity.

Well, here we are and here we stay - at the end of the way - un-encumbered means outnumbered by debt - we can't ever pay, as long as the US Reserve Dollar joins the historical fray ... to be totally worthless per se! - as happened in the last Century, somewhere else,of course, anyway!

So let Rumsfeld attack Iraq - the Big Mac/Gold Ratio has already backfired via an attack on the US Constitution - the pillar of the West's Democracy - and the freedom, liberty and human rights of the US, will be univocally be replaced by Homeland Security... O(r)Well, sorry for a late 2002 rant - cu 03 cb2







Time For GOLD (12/29/02; 16:52:51MT - usagold.com msg#: 92893)
Oops-Here's the article, "International Perspective," by Marshall Auerback
http://prudentbear.com/internationalperspective.asp
A Must Read!

Time For GOLD (12/29/02; 16:48:49MT - usagold.com msg#: 92892)
'97/'98 Asian Debacle- A Cataylyst for a Sea Change in the Way Asians View The West (Especially the US)- A Must Read!
And why this will/is have a profound effect on the price of gold. The US needs 2 Billion per day to support our economy and the dollar. After reading this article, do you think Asian governments are likely to continue accumulating US Treasuries at the rate needed? And God forbid, what if they actually begin to SELL treasuries? And if that wouldn't be catostrophic enough for our economy, what if they began to buy gold to hedge their massive dollar holdings?

I hope you've been buying gold and unhedged gold stocks my friends.

http://prudentbear.com/internationalperspective.asp

Leigh (12/29/02; 16:28:45MT - usagold.com msg#: 92891)
Aristotle, Waverider, sector
Thank you so much, Aristotle, for answering my question! After three and a half years of reading about gold, there are still large gaps in my knowledge, and I appreciate your taking the time to explain things.

Waverider, have lots of fun, and we'll be thrilled to see you upon your return. If you get near a computer and have a chance to check in, please do! Oh, and if you're ever near my area (I think you have some idea where I live) you're welcome to stop by and say hello.

Sector, your posts lately are deep and ominous. You seem to be imparting a message to an audience far beyond our little group. What an amazing thing it is to read your writings.


Waverider (12/29/02; 16:13:32MT - usagold.com msg#: 92890)
All the Best for 2003
What a treat to wake up to "The Morning Blade" this morning, and on a Sunday at that! Welcome back Black Blade - you were missed here! I'm just packing for holidays for a few weeks and want to wish everyone a Happy New Year and all the best for 2003. Also, thank you to Sir MK for hosting the price guessing contest, and to Sir Gandalf for all your work in managing it and making it sooooo...much fun! Congratulations in advance to the winners. Thanks again everyone for all the contributions here which makes this absolutely by far the BEST Gold forum in the universe! Cheers,
Waverider
PS - Spot 'n Spike, be good now!

Goldrush (12/29/02; 15:59:31MT - usagold.com msg#: 92889)
Inflation in the pipeline
http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_box.ht&s2=ad_right1_topfin&bt=ad_position1_topfin&box=ad_box_all&tag=financial&middle=ad_frame2_topfin&s=APg8HhxTuUmFsbHkg
New York, Dec. 29 (Bloomberg) -- Natural gas, cocoa and other commodities fueled the biggest one-year jump in raw-materials prices in almost three decades, a rally that probably will increase U.S. consumer prices during the next few months.

The Reuters Commodity Research Bureau index has risen 24 percent this year, the biggest gain since 1973. Higher prices will likely make it more expensive for Americans to run furnaces and put food on the table, investors and analysts said.

``The trajectory of grain prices is going to be with us for at least six more months,'' said Anthony Chan, who helps manage $155 billion at Bank One Investment Advisers in Columbus, Ohio. Food prices will rise as much as 3.5 percent next year, more than double this year's pace, he said. ``That starts to be pretty significant when inflation has been so low.''

The 17-commodity CRB index last week reached a five-year high. Natural-gas futures traded in New York have almost doubled this year. Cocoa has risen 54 percent and reached a 17-year high in October, as fighting in the Ivory Coast threatened to disrupt shipments from the world's largest producer. Wheat is up 15 percent and reached a 5 1/2-year high in September as the government forecast the smallest U.S. stockpiles in 28 years.

Hipplebeck (12/29/02; 15:41:22MT - usagold.com msg#: 92888)
ax
If the US starts buying gold, the price will shoot to the moon. It will be the end of the dollar that much sooner. The US centric global economic system is on the precipice.
The world is seeing the nakedness of the empire.
All that is left holding empire together now is the big gun, and nations all over the world will soon have the big gun too. This system is finished. The US knows it, and the world knows it. Because the world is large and cumbrous it is happening in slow motion, but it doesn't change a thing. We all watch the slow motion train wreck in suspended disbelief. The masses are becoming educated. There are no longer any places on earth that don't know what a ponzi scheme is. The rubes have all caught on. The jig is up, the game is over. All there is to do is watch it unfold and prepare for what comes after.

Goldrush (12/29/02; 15:35:44MT - usagold.com msg#: 92887)
This board is rockin today
Thanks for all the info-

Dollar Bill-great post, not many analysts
seem to appreciate the Chinese miracle has
a bad loan problem.

Kahulik- I don't follow GW , I will check it out.
You might want to take a look at NBR and PVX.

silvercollector (12/29/02; 14:56:10MT - usagold.com msg#: 92886)
Aristotle
Your message 92882....
'connects the dots' nicely for novices (including myself) and lurkers.

It is, and in the end shall be, the physical supply/demand deficiency that ruptures the paper flow. As I mentioned in a post several days ago it is the paper game that is dependant of physical characteristics and not vice-versa.

I am watching in awe, BB's 'race to the bottom' in currency. Japan, China and presumably others are accumulating physical in quantities, as an article explained this morning, which could be 'seriously' under estimated.

Shame!

Happy New Year and a new year it will be!!



Black Blade (12/29/02; 14:42:19MT - usagold.com msg#: 92885)
Breaking News - Five Suspects Enter US Illegally

The FBI is searching for 5 suspected terrorists that apparently entered the US on Tuesday. Not much else is said.

Cobra2 - If petrol prices increase substantially in Europe we just might see a repeat of the Petrol protests that occurred last year. It will accelerate the economic distress in the EU.

GratefulForGold - The BLS data has been an embarassment for the agency as many more are questioning the accuracy and validity of the data. It should be no surprise that they are trying to hide data now. It has become nearly impossible to disguise the crippling layoff picture even with dubious statistics and statistical smoothing/filtering techniques. As an agency they have become almost completely useless. So it goes.

Off to the gym to work off the excess holiday calories!

- Black Blade



Aristotle (12/29/02; 14:28:38MT - usagold.com msg#: 92884)
ax
I agree with you that Gold is the most enduringly useful and meaningful reserve asset that ANY given national central bank or treasury can hold. Always good "currency" for final international settlements in balance of trade and whatnot.

However, where the U.S. is concerned, we find ourselves mired hip deep in a monetary legacy from which the extraction is not so easily done. Your recommendation sounds good, and having Gold as any nation's primary reserve component is a worthy goal. Unfortunately, it's an overly superficial treatment to suggest it can be effectively and positively done as easily as you have stated.

The best thing it to personally take matters into your own free hands to do the good deed.

Gold. Get you some. --- Ari

CoBra(too) (12/29/02; 14:23:27MT - usagold.com msg#: 92883)
@ Sector - Who "They" Are?
Seems clear enough... and in the best (worst) tradition of the "London Gold Pools", they managed to lose about half of what alraedy dwindled down to a pitiful rest. Le beau rest was probably further diluted according to IMF statistics, as you, James Turk and others have uncovered by noting the the difference between SDR's and their Certificates.

Does it really matter if there is no short squeeze on the Bullion Banks - as they may be let off the hook by paperizing their bullion obligations, which may have been the deal from the start, anyway?

The fact is the western CB's, including the FED have squandered the only real reserve asset of their nations for what - cheap oil? ... or in all probability to uphold a system pauperizing, or better defrauding their citizens by prolonging the paper charade as long as possible.

What's more, in real economic terms the drive to globalization in itself will be uncovered as the greatest fraud in modern economics. Pricing any product and commodity on the basis and strenght of US Dollar paper printing and leverage power - a power, accentuated by the $-controlled IMF and WB. A power sinking prosperous countries around the globe to the status of LDC's and emerging LDC's to Nirvana.

And here we are - either with the US or against us, on the WAT, of course! - The alternatives seem pretty, or better petty inconclusive at best. WAT-ever, it is - a short term victory in a war already lost - the consequences will be global - as in globalization at its worst.

... The peace dividend and the victory against USSR communis'm squandered ... what's left? A global reserve currency on its last legs - declaring war to any and all non-believers in the US $ Reserve Standard.

... Are you a believerin Dollars, too? No - then go Gold ... cb2





Aristotle (12/29/02; 14:07:25MT - usagold.com msg#: 92882)
Leigh #92875
For all practical purposes, COMEX doesn't feed the marketplace with supply of Gold to the consumers, so there's no *physical* worries regarding a lockup on futures trade.

However, that's not to say there are no physical worries, it's just that physical flow and liquidity is more dependent on general confidence in commercial banking and bullion banking.

Simply said, "Nobody *shops* (for Metal) at COMEX."

But let's connect the dots. Any COMEX lockup in the trade of Gold futures would certainly undermine the current confidence in bullion banking in general, you'd find fewer private parties willing to sell their Gold at this present low price level. (The mines have no more to give.) If this is followed further by depositor demands for withdrawal from unallocated accounts, cascading default of the banking system could be threatened unless governments intervene as Gold lender of last resort (unlikely) or to force currency settlements for paper Gold (or simply to allow for their default if the counterparty is rendered bankrupt.)

Gold. Get you some. --- Aristotle

ax (12/29/02; 13:55:05MT - usagold.com msg#: 92881)
U.S. GOLD RESERVE INCREASE @ARISTOTLE -1

U.S. Gold Reserve Increase @ Aristotle -1

ref : Artistotle msg#: 92848
Cavan Man msg#: 92865
Ax msg#: 92843



12-29-02

Aristotle - thanks for commenting again on my message

regarding the increase of U.S. gold reserves.


To me, it seems to be such an obvious thing to do. China

is raising their reserves. I think the United States

must do it.


I will respond in several parts.


Just to address one part of your question the $42 / oz

artificial value placed on the reserves has no meaning

in reality. What the reserves of 8k tons represent is

about 90 billion dollars at current gold prices.

This is still not very much when you consider the prices

of things, the total budget, the total GNP, the total debt,

and even the price of one aircraft carrier or supersonic

jet.


If gold is to be the financial stabilizer that it is meant

to be, then the U.S. needs more of it in its reserves.

90 billion dollars worth of a financial stabilizer is not

that much.


Foreign exchange reserves mean very little to the U.S

because the foreign countries from which these reserves

derive, themselves, use the USD as their primary exchange

reserve - often in place of gold. So what is the point

of the U.S. Treasury using these foreign currencies as

their reserves? This is a circular loop. The U.S. must

use gold and only gold as its primary reserve.


This is the function of gold. This is what is was

designed for over the centuries as a "fly wheel" to

stabilize national economies. It is in limited supply,

somewhat difficult to find, difficult to mine, somewhat

predictable in its mining costs per ounce and so forth.

Outside of use in jewerly and industry ( which is

expanding by the way ), its primary use is as a relatively

accurately defined store of value.


I will respond later with regard to what you say about

the government going further into debt to buy gold.

I would only quickly comment that if you expect individuals

to spend money on gold and assume that its acquisition

would be a good deal for them, then why wouldn't you expect

it to be a good deal for the government. Especially since

the government has the burden of backing its extensively

issued currency by it. And as another brief thought,

it would be " fiat " that the government would use to

buy this gold, the same "fiat" that is not generally

held in very high esteem.

AX




Aristotle (12/29/02; 13:41:19MT - usagold.com msg#: 92880)
Cavan Man
Sometimes I like to play dumb... it's when I ususally learn the most.

OK, so the Treasury gets additional foreign exchange reserves outta the deal. For what purpose? Would it be with a future view that our IMF (Second Articles) "Free" Float was about to become intentionally more soiled ("dirty float") from our direction?

When it comes to forex reserves for intervention purposes, right now we can do the deed with foreign currency on hand, or lacking same, we can draw upon our line of international swap arrangements as necessary to get the job done. Just like we did after September 11th, '01.

Otherwise, with new Gold acquisitions, the U.S. Govt would be turning speculator and profiteer extraordinaire on the coming Sure Thing of Gold's rising price and value. I think we would quickly find official impediments to such national opportunism as this. Sure, the IMF dabbled in this (profiteering from rising Gold) in 1999-00, but that was an elaborate scheme that involved no free-market purchases and was put forth under the guise of having international benefit (for HIPCs).

Where to from here? I think we'll find in time that we'll be able to SELL our existing government Gold at windfall gains from the current price/value, but our government's road will be blocked against efforts to buy (more Gold) low at this time in order to sell high later for forex operations. Naturally, as a recourse I wouldn't rule out effective nationalization of domestic mines for various opportunistic purposes domestically.

I'm going to have to return to my previous comment directed at Sir Ax: "Wholesale changes are needed to the U.S. monetary structure for your endorsement of a government Gold-buying spree to have much merit in my view."

Gold. Get you some. --- Ari

Dollar Bill (12/29/02; 13:15:19MT - usagold.com msg#: 92879)
Well what do you know. china is a mess.
most Chinese banks are burdened by bad debts said to exceed those of their troubled counterparts in Japan, where a loan crisis is choking the economy. During the boom of the past decade, China's banks have been lending without asking too many questions.

Induced by bribes and misguided official directives, loan officers pumped cash into nefarious construction and export schemes regardless of economic reality. Some turned out well, making China a rising nation. Many others did not.

The bottom line is that between 30 and 50 per cent of all China's loans are write-offs. Standard & Poor's, the ratings agency, estimates that the problem will cost about �300 billion to clean up, or 43 per cent of China's gross domestic product (GDP). By comparison, America's 1980s savings and loans crisis cost 3 per cent of US GDP.

Even worse, China's financial crisis extends to local governments. According to a recent report in the People's Daily newspaper, some cities have started to borrow from underworld figures because they can no longer pay for essential services.

Gordon Chang, author of the book The Coming Collapse of China, said: "When government officials have to go to loan sharks to meet their obligations, we must realise that China's financial policies are simply unsustainable."

A combination of rising unemployment, bankrupt local governments and insolvent banks has now raised concerns that a financial meltdown would almost certainly act as a catalyst for political upheaval.

Rick Baum, of the University of California in Los Angeles, said: "If the economy falls below the current growth levels, the leadership will be in real trouble."


USAGOLD / Centennial Precious Metals, Inc. (12/29/02; 12:33:11MT - usagold.com msg#: 92878)
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