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ARCHIVED DISCUSSION FROM 12/29/2006
All times are U.S. Mountain Time

(Yesterday's Discussion.)

Druid (12/29/06; 21:16:45MT - usagold.com msg#: 150572)
Central Bank Gold Agreement - Sales in 2006
http://www.financialsense.com/editorials/phillips/2006/1229.html

"Latest sales under the C.B.G.A

The week ended the 22nd December saw one of the signatories of the Central Bank Gold Agreement sell and another BUY gold leaving a net sale of 2.7 tonnes of gold.


Yes, the holidays began at the end of last week even for the Central Banks, so what better time to throw the cat amongt the pigeons. In the seemingly innocuous statement above it seems that we are seeing a change in policy by European Central Banks that we have been expecting should happen, but in these bureaucratic halls felt that the issue was too stacked against it happening without a public drama. If this is the case it has been announced without a whisper, simply as part of their weekly report. The information is huge and in a nutshell is:

One Signatory to the Central Bank Gold Agreement has bought gold!



We must be cautious here, still, because We don't know how much was bought or why it was bought, so we cannot say for certain that there has been a major policy shift by one of the signatories. However, so as not to minimize this event, it definitely shows that at least one of the signatories has approved and acted on an approval to purchase gold. Consequently there does appear to have been by one of the signatories of the Central Bank Gold Agreement, a major change of policy on gold in their reserves.



Could this be a signatory that has not sold previously and now wants to buy? If so how much more will it buy?

Is this a signatory that has reversed its policy on selling and now wants to buy in the future?

Perhaps this was a "housekeeping" purchase [but cannot see why it could be?] to tidy up the books, but this just doesn't make sense.

This is an event that has not happened for almost three decades.

It is deeply significant that a European Central Bank [not just one of the Arab or Asian banks] should actually buy.

Maybe this is a ‘feeler’ purchase to see just how the market will react once they realize what has happened. So far it appears that we are the frst to highlight this event. Once it becomes generally known perhaps it will affect the gold price?



If it is a change of policy of just one European Central Bank, we believe it will affect the thinking of other global Central Bankers and cause them to re-visit the place of gold in the monetary system.



If this is correct then the gold market could move firmly into center stage in 2007. With so little gold around, the race to acquire it by Investors across the spectrum could be fast and furious taking the gold price to new heights.



We will be developing these points in later issues of the Gold Forecaster.

Slovenia's joining the C.B.G.A.

We did not dwell on the standard statement issued when a new Central Bank joins the C.B.G.A. agreement, which reflects the initial position of all signatories to the agreement and that is,

"Banka Slovenije has agreed not to expand its gold leasing and its use of gold futures and options over the period of the agreement"

So as to absorb the full impact of this statement, we have to see that it strictly limits the activity of member Central Banks activity in the futures and options markets. However, it does not prevent them from both selling and buying gold. The agreement is only a limitation on the amounts to be sold and a restraint on future activity in the futures and options markets."


Druid: Enjoy the read.


White Rose (12/29/06; 19:23:59MT - usagold.com msg#: 150571)
2006 and 2007 guessing contest
Yes, I started this "contest" in early January 2006. I asked what the high price for gold would be in 2006 and what would be the final price. Smeagol guessed the final price within $4. It is now official. Smeagol is the winner of the 2006 contest.

Yes, there shall be a contest for 2007. The rules are simple: the winner and the loser both get nothing. Guess the high price of gold in 2007 and the final price.

To make it more interesting, please note that from 2001 to the present, gold has gone up 15-18% per year. Except for 2006, in which gold is up 23%. So, as you make your prediction, please state the percentage up (or down) from the present price. If it is outside the 15-18% band, briefly explain why you think this will be so.

Goldilox (12/29/06; 18:44:25MT - usagold.com msg#: 150570)
Tensions rise in Belarus gas row
http://news.bbc.co.uk/2/hi/business/6216277.stm
snip:

Belarus and Russia have traded accusations of "blackmail" in their dispute over gas prices.
Russian state-controlled energy giant Gazprom wants to raise the price Belarus pays by 123%, threatening a cut-off at 0700 GMT on New Year's Day.

While negotiations continue in Moscow, however, Belarus President Alexander Lukashenko has said he will not agree to the price rise.

The stand-off could see a reduction in supplies to Europe.

It echoes a fierce row last year between Russia and Ukraine, and comes as Russia is pushing up prices for many of its customers.

"Belarus won't bow to Gazprom's blackmail," Mr Lukashenko said, according to Belarus state news agency BeITA.

"If they keep putting pressure on us we will go down into the bunkers, but we will not surrender."


RUSSIAN GAS COSTS FOR 2007
Ukraine: $130 for 1,000 cubic metres (was $95)
Georgia: $235 ($110)
Moldova: $170 ($160)
Belarus: Gazprom wants $105 ($47)
Azerbaijan: Gazprom wants $235 ($110)

Earlier on Friday, Gazprom vice-president Alexander Medvedev was quoted by France's Le Figaro newspaper as calling Belarus's tactics of warning of shortages in Europe a "grotesque blackmail".

Talks are due to continue on Saturday after the sides failed to reach an agreement on Friday.

Energy diplomacy

Russia has been accused of using its energy muscle to reimpose its will on what is sometimes called Russia's "near abroad" - the countries that were once part of the Soviet Union.

Although some of the targeted countries, such as Ukraine and Georgia, have strained relations with the Kremlin, Belarus has historically remained an ally throughout the post-Soviet period.

Gazprom insists the planned rise from $47 to $105 merely reflects market prices.

However, as has been the case with Belarus, the price rises are often coupled to demands for shared ownership of those countries' gas or oil distribution networks.

A half-share in Belarus' gas monopoly Beltransgaz, which operates its own pipelines and Gazprom's export pipeline, is up for grabs - but only, says the government in Minsk, if the price of gas stays lower.


People in Belarus may have to wrap up even warmer at New Year

Russia's gas customers, meanwhile, are urging that a deal be struck as soon as possible.

Europe, in particular - which gets about 5% of its supplies via Belarus, accounting for a fifth of the country's exports - is keen to avoid a repeat of the gas shortages which accompanied the Russia-Ukraine dispute.

At that time, Gazprom accused Ukraine of siphoning off gas meant for Europe, and is now warning Belarus against doing the same thing.

-Goldilox

It looks the Russians are emulating the tactics (market price in manipulated markets) used by the ENRON cartel to bleed many US consumers dry before their collapse.

USAGOLD / Centennial Precious Metals, Inc. (12/29/06; 18:00:16MT - usagold.com msg#: 150569)
Open 24/seven for your convenience. Step inside!





TownCrier (12/29/06; 17:55:41MT - usagold.com msg#: 150568)
Eurosystem reserves
Each member national central bank in the Eurosystem enjoyed an 11% valuation increase on a MTM basis for each and every ounce of gold held on reserve.

For those same banks, every dollar on reserve devalued, coincidentally, by 11%.

It certainly hasn't been imprudence that guided the ECB and member banks toward current reserve asset proportions whereby gold forms a share larger than half of the total while letting the net position in foreign currency taper off from what had been a 70% share in the beginning to its current status less than 50%.

Choose gold... relatively speaking, on a value basis it hasn't even begun to stand up and be counted!

R.

Smeagol (12/29/06; 17:43:53MT - usagold.com msg#: 150567)
Ach! We forgot, too and now we ssee...
...that we might've unofficially won White Rose's Unofficial Price of It Guessing Contesst...sss...and after a whole year, precious! The ssatissfaction of hitting the longesst of shots is a worthy enough prize, to us!

Ssooo... does anyone want a go at 2007 high and end-of-year? >8-)

P.S. the "Fiat Money in France" article is a real keeper!!! =8-0





TownCrier (12/29/06; 17:14:48MT - usagold.com msg#: 150566)
North Korea holds gold mine of protection
http://washingtontimes.com/world/20061228-103346-3567r.htm
December 29, 2006; SEOUL -- North Korean leader Kim Jong-il is positioned to escape the effects of international sanctions imposed on his regime by legally mining and selling gold on world markets, said investors and others dealing with his government.

Gold exports from North Korea are nothing new: From 1983 to 1994, the communist nation exported a ton of gold a month via London markets.

Although production fell off in the 1990s, rich seams wait to be mined. King Kojong, Korea's last independent king, sold concessions for gold mining at Unsan, in the nation's far north, to U.S. interests in the late 1880s.

Japanese colonial businesses took over the mines in the 1930s. After the country's division, the North Korean seams were operated with Russian and German technological assistance.

"It is widely known that they have very substantial reserves," said Colin McAskill, a British national who was involved in North Korea's bullion business in the 1980s and 1990s. "The problem is that most mines are inoperative due to lack of capital and flood damage in the early 1990s. They must be producing again, to a limited extent."

^---(from url)---^

It is no surprise that many countries, who know a strategic asset when they see one, have accelerated their national emphasis on the bringing of gold reserves into more productive service.

Important note to bear in mind: My preceding comment holds true whether we be talking of gold ore in the ground OR gold bars already in the CB vaults!

That is to say, gold is a an asset that will not be kept undervalued and underutilized for all time, but WILL be given its freedom to run in the sunshine, a powerful workhorse for all seasons.

R.

Cometose (12/29/06; 16:55:41MT - usagold.com msg#: 150565)
the payoff/ reward
My son is home from college ; he's been working with me the last week since returning home .....

He's graduaging next semester ......from Western State where he majored in Communications with a THEATRE EMPHASIS....

He told me he had something to share with me from school ; he broke it out a few minutes a go .....It was on his laptop .....

Projects he did in class last semester .....

One of them was a ONE ACT PLAY ..... DEATH COME ON DOWN

the other was a Screenplay ..... called ABUSE

Fantastic stuff .......

Over THANKSGIVING , I got to play guitar with two of my other SONS playing RYTHM with me .......
THEY made me sound awesome ......something about us playing together(after years of US in strife as we lived through together their teen years) put me in an indescribable state in a VERY SPECIAL DIMENSION ......


THIS IS GOLD .
THANK YOU GOD



THOSE TWO EXPERIENCES made my year.......

USAGOLD Daily Market Report (12/29/06; 16:42:35MT - usagold.com msg#: 150564)
Page Update!
http://www.usagold.com/DailyQuotes.html
The Daily Gold Market Report has been updated.

If you are considering investments in gold we invite you to request our free introductory information packet detailing the products and services offered by USAGOLD ~ Centennial Precious Metals. We welcome your inquiry and look forward to working with you.

FRIDAY Market Excerpts

Gold gains 23% for the year

December 29 (from MarketWatch, DowJones) -- Gold futures closed the final trading session of the year on a positive note Friday, chalking up a fifth straight day of gains and adding 23% in 2006.

The February gold contract ended up $1.10 at $638 on the New York Mercantile Exchange, finding support in the dollar's mixed performance against major rivals. "Trading activity slowed considerably in the final hours of 2006, as traders took stock of another exciting year in precious metals," said Jon Nadler, investment analyst at bullion dealers Kitco.

"The new year started out in the $520's but springtime had gold prices blossoming in a spectacular display of strength," said Nadler. "From the end of March to May 12th, bullion gained about $200 and did not stop until reaching $725 per ounce."

However, just one month later, gold had surrendered almost the entire gain and had fallen back to the mid $500's in an equally spectacular and sharp correction, he said.

After that, the metal attempted a mid-summer advance, but fell about $50 short of its earlier peaks. From August, the trading range was narrower and "punctuated by occasional accelerated bouts of volatility (several false starts as well as a number of dips that did not follow through on the downside)."

For 2007, the direction of gold and the other precious and base metals "very much depends on economic growth, and whilst there are signs of a slowdown in the developed nations, the powerhouses of the Far East will determine what happens next," said analysts at U.K. spread betting firm Blue Index.

But it will also depend on the direction of the dollar with more and more analysts expecting the greenback to have a rocky ride as more central banks switch reserves out of dollars into euros.

"This was the year when the dollar's waterfall slide not only accelerated, but came to a neighborhood near each individual and institutional investor," said Nadler.

"Next year may well be the year when the man in the street decides that getting out of some dollars may not only be prudent, but that it may save their very portfolio."

An announcement that Comex markets will be closed on Tuesday, Jan. 2, in observance of the national day of mourning for former president Gerald R. Ford led to buying at the Comex close.

The markets are already due to close on Monday for New Year's Day.

---(see url for full news, 24-hr newswire)---

Thoreauly (12/29/06; 15:49:58MT - usagold.com msg#: 150563)
@ Sierra Madre and Flatliner
http://www.wesjones.com/eoh.htm

Ben Franklin said it best: "When the people find that they can vote themselves money, that will herald the end of the republic." Which is of course what has happened, as constitutional safeguards of individual liberty inevitably fell prey to the machinations of the few and the predilections of the many -- with the destruction of the constitutional dollar, and thus the corruption of money, leading the way.

And in having witnessed the rapid collapse of the Soviet Union (an eye-blink, historically speaking), I for one expect much the same with the US. For while Francis Fukuyama saw in the USSR's collapse "not just the end of the Cold War, or the passing of a particular period of postwar history, but the end of history as such: that is, the end point of mankind's ideological evolution and the universalization of Western liberal democracy as the final form of human government" (see link), little did he understand (nor does he now) that "Western liberal democracy" had long ago descended into the organized chaos of social nationalism -- i.e., of the welfare, regulatory, security state that is an abject betrayal of the liberal democratic ideal.

So where does that leave us? As Whiskey & Gunpowder writes:

__________

The United States puts out dollars, trillions of them. U.S. consumers use the dollars to overspend, by buying products from overseas, approximately $1.06 worth of buying for every dollar actually earned. Foreign governments want the spending to continue. Instead of sending the dollars back where they came from by buying American goods, they issue local currencies to buy them and put them in their central bank vaults. All this extra money is then magnified...2...3...10 times...as it is lent, re-lent and used as reserves for various financial instruments.

Meanwhile a whole new industry has risen up to help with the lending, mortgaging, gambling that goes along with this explosion of money. Derivatives now equal seven times world GDP and are growing five times as fast.
__________

While Sierra Madre is perhaps right in believing that we won't see freegold in our lifetime -- in which case there might be a bull to ride but nothing more -- I believe otherwise. Which is to say, I believe that spreading risk through the exponential growth thereof is not just doomed to collapse, but will collapse sooner rather than later and with devastating repercussions.

Do I want it to happen? Yes and no. For in agreeing with Ayn Rand that "We can evade reality, but we cannot evade the consequences of evading reality," I nonetheless EXPECT it to happen. And as this expectation is not an idle one but has in fact come with the placing of a large bet -- specifically, that precious metals will return to their rightful place in the scheme of things -- I can't help but to "want" the collapse to happen, hoping (perhaps wrongly) that I and mine will not only survive but prosper in its aftermath.

Some surely will, after all, and most assuredly the banksters and their henchmen, who know only too well that their massive fraud is coming to an end and that they, too, must prepare. Hence my question about what they will do -- i.e., retreat into their gated fortresses and hope to ride out the storm or regroup there, that the New World Order of freegold might unfold in as orderly a manner as possible?

Why would they undertake the latter? Well, as easy as it is to despise them, they are really no different than financiers during a similar time in history:

"[The] men who had charge of French finance during the Reign of Terror and who made these experiments, which seem to us so monstrous... were universally recognized as among the most skillful and honest financiers in Europe... [which shows] how powerless are the most skillful masters of finance to stem the tide of fiat money calamity when once it is fairly under headway; and how useless are all enactments which they can devise against the underlying laws of nature." -- http://www.safehaven.com/article-6594.htm

So if, as expected, their golden parachutes return the banksters gently to Earth following the collapse of that which they could not control, what will they then do, destroy their Precious with another round of fiat fraud or reap the benefits of freegold, such that savings-based production replaces credit-based consumption, the state atrophies, and freedom reigns as never before?

Flatliner (12/29/06; 14:35:42MT - usagold.com msg#: 150562)
? Sure, you wrote them down.
http://www.usagold.com/cpmforum/archives/320061/default.html
White Rose (1/3/06; 03:48:12MT - usagold.com msg#: 140013)

One has to wonder about the quest for the ring. Smeagol seems to be on the trail.



White Rose (12/29/06; 13:48:11MT - usagold.com msg#: 150561)
I forgot to write down the predictions
Except I remember predicting a high 700's number. So I know I lost. Does anybody have a list of the predictions? Did anybody win? Does anybody care?

Happy New Year!

I do hope we get to $750 by the end of January!



Flatliner (12/29/06; 11:12:38MT - usagold.com msg#: 150560)
One year older
White Rose, is it official yet?

Chris Powell (12/29/06; 09:32:46MT - usagold.com msg#: 150559)
Will Gulf countries follow UAW in dollar drop?
http://news.yahoo.com/s/ap/20061228/ap_on_bi_ge/emirates_selling_dollars
Emirates Narrowing Dollar Reserves

By Jim Krane
Associated Press
Thursday, December 28, 2006

The wilting U.S. dollar is pushing the United Arab Emirates, a close U.S. ally, to convert 8 percent of its foreign exchange reserves into the healthier euros, the central bank governor said on Thursday.

The Emirates' nearly $25 billion currency reserves are currently 98 percent dollars. That percentage will drop to 90 percent in six to nine months if the bank's directors approve the switch as is expected, Central Bank governor Sultan Bin Nasser al-Suwaidi said.

The sale itself is a small one, worth about $2 billion. But the implications of a cash-rich friend of Washington selling off its dollars is a sign that central banks elsewhere may be looking to cut losses from a dollar widely expected to slip further in 2007.

"It's a prudent move and it's indicative of broader thinking," said Simon Williams, HSBC's chief Middle East economist. "It's another factor that will exert downward pressure on the dollar."

The dollar fell to $1.3132 euro in European trading on Thursday, compared with $1.3123 in New York on Wednesday.

A bigger worry for the U.S. Federal Reserve Bank is that the six energy-rich Gulf Arab countries may consider converting dollar holdings in their far larger government investment funds, which Williams said keep more than $1 trillion under management. Gulf governments typically do not release the compositions of those funds.

"If they're moving those assets out of the dollar on the same scale, that's a much bigger deal," Williams said.

Selling dollars on that scale could force the Fed's hand toward tightening monetary policy to help support the dollar. That would mean higher rates for adjustable mortgages, auto loans, credit cards and other debt.

The six Gulf Cooperation Council countries -- the Emirates, Saudi Arabia, Kuwait, Qatar, Bahrain, and Oman -- enjoy a collective current account surplus of around $220 billion this year, which must be invested in foreign assets.

With a faltering dollar, Williams said a smaller amount of that energy surplus will flow into U.S. assets.

"A good chunk of that will still flow toward the U.S., but less than in the past," he said. "The Fed will be watching this very closely."

Other countries, including Russia, Venezuela, Indonesia and Iran also have decided to cut their dollar reserves or, in Iran's case, start pricing oil in the European currency.

During OPEC's Nigeria summit this month, OPEC President Edmund Daukoru said the organization was "not rushing into other currencies." But since global oil purchases are made in dollars, the shrinking dollar slashes the purchasing power of oil exporters.

The Emirates decision to sell off its dollar holdings comes against a backdrop of strain in its normally warm relations with Washington.

Many here were upset earlier this year when the U.S. Congress blocked the sale of U.S. port operations to Dubai-based DP World -- a move that officials here said smacked of anti-Arab bias. Since then, talks on a free trade pact between the Emirates and Washington have also faltered.


Goldilox (12/29/06; 09:05:06MT - usagold.com msg#: 150558)
Revelry, Resolutions, and Ridiculous Prognostications
As the markets wind down their final session of the olde year, and prepare the way for the new, I humbly (or perhaps not so), submit my projection for 2007.

So with apologies to Jan and Dean, I will present my offering in lyrics to their most vererable ditty. . .

I bought a '30 Ford wagon and we call it a woody
(Serf City, here we come)
You know it's not very cherry, it's an oldie but a goody
(Serf City, here we come)
Well, it ain't got a back seat or a rear window
But it still gets me where I wanna go

And we're goin' to Serf City, 'cause it's two to one
You know we're goin' to Serf City, gonna have some fun
Ya, we're goin' to Serf City, where the jobs are sure, Oh
Gonna cross the border with my new friend "Burro"
Two bucks for every euro!

Happy New Year, Lords and Ladies of the Castle!

MK (12/29/06; 07:12:52MT - usagold.com msg#: 150557)
More on Fiat Money in France as an example for the contemporary gold owner
Some do not understand how virulent an inflation can be. To put a contemporary spin on Dickson White's accounting of 288 paper francs equalling 1 gold franc --

Under that formulation, one ounce of gold in 2006 dollar paper would exceed $180,000. Even if we used $42 (the last U.S. government benchmark) as a base price, gold would exceed $12,000 per ounce!

Tying into Flatliner's discussion on the merits of gold ownership as an insurance policy, this thumbnail analysis tells why gold could become so important to the average portoflio planner. As Doug Casey says in the forward to Shannara Johnson's essay:

"I suspect that 98% of investors – and maybe more -- have little to no understanding of monetary history. Yet, failing to understand the past, in this case, leaves a black hole in your ability to understand the implications of the current tenuous condition of the U.S. dollar.

 While no one can easily imagine all the many ways the end of U.S. dollar hegemony might affect complex and deeply intertwined global financial markets, you can, however, better prepare for what's coming by looking back at just one of the many examples of a fiat currency on its way into the trash bin of history."

 

MK (12/29/06; 06:56:17MT - usagold.com msg#: 150556)
Chris. . .Dickson White in USAGOLD Gilded Opinion in its entiretly. . . .
http://www.usagold.com/gildedopinion/assignats.html

I appreciated the Shannara Johnson article on Andrew Dickson White's "Fiat Money in France."

Quoting the article: "One of the most riveting accounts of the catastrophic effects of replacing a gold-based or silver-based currency with paper money comes from Andrew Dickson White (1832 – 1918), the diplomat, author and educator who co-founded Cornell University."

The full Dickson White account, which I believe should be mandatory reading at every liberal arts and business school in the land, resides at the USAGOLD Gilded Opinion page at the link above.

The bottom line as described by White:

"The louis d'or stood in the market as a monitor, noting each day, with unerring fidelity, the decline in value of the assignat; a monitor not to be bribed, not to be scared. As well might the National Convention try to bribe or scare away the polarity of the mariner's compass. On August 1, 1795, this gold louis of 25 francs was worth in paper, 920 francs; on September 1st, 1,200 francs; on November 1st, 2,600 francs; on December 1st, 3,050 francs. In February, 1796, it was worth 7,200 francs or one franc in gold was worth 288 francs in paper"

Some of you even today own the same Louis d' Or Dickson-White mentions. I know because this firm placed them in your safekeeping. The "unerring fidelity" of gold marched on long after the Assignat disaster in France to do service in several other fiat money disasters from that time forward. Gold, to this day, performs the same service it did 200 years ago and with the same dogged efficiency. The fact that in turn the Assignat today holds no value whatsoever stands as one of the more compelling arguments for gold ownership/diverisifcation ever made.

______________

A happy, prosperous, and most importantly golden New Year to all. . . .


melda laure (12/29/06; 02:46:54MT - usagold.com msg#: 150554)
Is there money in heaven? Are debts paid in hell?
But before that there is one last coercion lurking: men will coerce the weather, perhaps heaven itself. Then night will fall.

Will men assault valinor?
Perhaps valinor will assault the earth?
And if neither of these, if you achive all your hearts desire, sooner or late earth and valinor will become one: free men with free energy will usher in changes unimaginable. Reality will be seen for what it truly is.

And then perhaps our long self-exile here will be at an end.

TPTB tremble and quake at all these three possibilities; but between here and there, the long road lit by a bright inlaid band of yellow.

Somehow I do not think derivatives will be allowed to fail, rather they will be superceeded- by coercive imbecility it seems. Can derivatives defeat Peak Oil? I am very confused: I thought we already had a one world goverment by Cryptocracy. Why pay a debt when you can just murder the creditors? Why drill for oil when you can just bankrupt the oil consumer? Standing here, looking back over the last century at the long march of Central Banksterism one has to wonder "what conquests remain"? Would economic freedom ensue if the banksters could balance world trade via "gentlemens agreements"?

It is now some decades since Wile-E-Coyote ran off the edge of the cliff. This conundrum cannot be solved via continuous time finance, nor by political calculation: I question whether we have an adequate view of the chess board to understand the state of the game.

Pass the dramamine, vertigo is setting in.

Knallgold (12/29/06; 01:45:57MT - usagold.com msg#: 150553)
Insurance
"I see this more as a demand for a functioning insurance policy more then a gift from someone like a central banker."

Maybe the central bankers are increasingly seeing it that way as well?I mean they created a monster and ...

melda laure (12/29/06; 01:22:22MT - usagold.com msg#: 150552)
Is it one king, or 5 billion?
http://www.lewrockwell.com/rothbard/rothbard133.html
When Everyman is King, you will have sound money.



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