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ARCHIVED DISCUSSION FROM 11/30/1999
All times are U.S. Mountain Time
View Yesterday's Discussion.
Lafisrap
(11/30/99; 23:20:10MDT - Msg ID:19974)
The Stranger (11/30/99; 8:20:37MDT - Msg ID:19948)
Howdy Stranger,
***
The Stranger (2/24/99; 22:16:21MDT - Msg ID:2723)
JA
As far as I know, the equities market is a zero sum game. Money cannot start "coming out of it". When you sell,
somebody else is buying for the identical amount.
***
As stock prices go up, the total sum invested goes higher. It may be that stock sellers have tended to re-invest profits from stock sales back into the stock market. Considering just these two dynamics, it does appear that the stock market could be a black hole for money, and that stock prices could continue higher and higher. The money flow could be seen to be a one-way flow. Perhaps the tax laws contribute to heavy re-investment in the stock market. We might even be at a point wherein stocks that pay large dividends would be sold off so that the money could be invested in stocks tha simply go up in price. Imagine if the majority of stocks suddenly started paying large dividends. Would the stock market crash as the majority of stock owners suddenly sell in a dwindling spiral in which the money effectively seeks stocks that do not pay dividends?
I think someone mentioned Another at one time saying the price of gold was going down because so many people are buying it. I cannot remember the logic involved, but it was quite interesting.
Lafisrap
Tanglewild
(11/30/99; 22:27:27MDT - Msg ID:19973)
RE: Black Blade post on Y2k
http://www.angelfire.com/ma/mauicool7/timesq.ram
This is where the video on y2k-times square can be seen. You need real audio for viewing it. FYI
Tw
Goldfly
(11/30/99; 22:05:13MDT - Msg ID:19972)
From that "other" board....
About a year ago. Seemed apropo.
>>>>>>>>>>>>>>>
Date: Mon Nov 23 1998 21:02
Petronius (Inflation, Deflation, Money) ID#225236:
Copyright © 1998 Petronius/Kitco Inc. All rights reserved
Before the infaltion/deflation issue can be answered, let me ask some stupid question:
What is money?!!!
When gold was money/money was gold the inflation/deflation questions could be answered simply. Today, is a different world. Hilary is featured on the cover of Vogue magazine as a model of "women dignity" for letting Bill run around with cheap sluts. What is dignity and what is money?
After dollar was de-coupled from gold, everything became relative. To allow government to spend money, without infalting ( ? ) the main money supply (or M1) , other categories of money were created: M1, M2, M3, M4, government bonds (are all these money?!) What if one of the categories increases drastically (inflation) and other decreases drastically (deflation) - what is it then?! Is government debt money?
To preserve retirement money, people started buying stocks. To preserve excess money generated in an up-business cycle, companies started buying stocks (are stocks money?)
To feed the appetites for stocks, a lot of companies went public that never made any money (here is that word again) and never had a plan to make money (internet stocks) . Are internet stocks money?
If M1 dramatically decreases and total capitalization of internet stocks dramatically increases, what is it, inflation or deflation?
Current US financial system is a ton of garbage built upon a ton of garbage, built upon a ton of garbage, etc. The government has effectively declared that the old rules of economy (producers, consumers, supply, demand, balanced books, debt amortization, competition, trade balance) no longer apply. Well, the rules of nature (real economy is based on rules of nature) have a tendency to re-assert themselves in a drastic fashion. The longer the garbage is fixed with dirty tricks the larger it grows and the harder it is going to crash.
The prediction of the centenial correction made by prominent E-wave theorists that was to start in 1996 did not come true. Was this wishful thinking? Are we perhaps destined to ride the millenium wave?
Black Blade
(11/30/99; 22:04:59MDT - Msg ID:19971)
The Hmong were our best allies in any of our conflicts through our nations history.
Published Tuesday, November 30, 1999
Some Hmong immigrants fear Y2K, especially those who don't speak English
Statewire
ST. PAUL (AP) -- Some older members of Minnesota' s large Hmong population are frightened of the Y2K computer bug because they have picked up only snatches of the discussion -- mostly the frightening parts. Hmong have little or no tradition of a written language and some older members are beyond the reach of the mainstream U.S. media because they do not understand English. Millennium rumors floating through St. Paul' s Hmong community -- estimated at between 65, 000 and 70, 000 people -- include nuclear warheads falling from the sky, 47 days of darkness, the return of the Hmong king and even the apocalypse. At the less extreme end, elderly Hmong are worried about surviving the cold of a Minnesota January without heat. City officials have held several meetings in Hmong neighborhoods to attempt to quash these Y2K fears. The largest meeting yet -- featuring Mayor Norm Coleman and Hmong leader Gen. Vang Pao -- attracted about 500 people Monday night. Xaicho Yang, 79, of St. Paul had imagined total darkness during the first days of 2000. He also feared hunger and homelessness among the Hmong and began collecting 100-pound bags of rice. But after Monday' s meeting, he felt better. " I' m happier now, " he said. " There shouldn' t be a problem. It' s going to be all right." A Hmong language radio show also has been broadcasting Y2K reassurances and meeting notices for weeks.
For some Hmong families, however, reassurances might already be too late. Chou Lee, who works for a community council in a predominantly Hmong neighborhood, says some Hmong have already left the country. " They went back to Thailand, believing the end is coming, " he said. Lee estimates that about 60 families have returned to southeast Asia, but Lao Family Community official Kim Dettmer estimates that five or six St. Paul families have left. Dean Hove, director of the St. Paul district of the Immigration and Naturalization Service, said he has heard of Hmong families leaving St. Paul because of Y2K concerns but said his office has no evidence of it. The reasons are partly religious; there are Christian Hmong preachers who advance apocalyptic interpretations of biblical prophesy, Lee said. There is no connection to the animist Hmong religion and Y2K fears, however. For the most part, older Hmong people are concerned that computer-dependent Western technology will fail Jan. 1. " They understand that Y2K is tied to our computer society, " Dettmer said. " They think much more damage will occur here than back home. The other fear is the cold weather, if we lose heat and electricity. You can live off the land easier in Southeast Asia." Younger members of the community, who are more likely to be fluent in English, have been reassuring their elders. " My parents are 55, and at first they were afraid a lot, " says Zoua Lor, a receptionist at Lao Family Community. " I told them it would not be bad. I asked them to prepare canned food, extra blankets and sleeping bags and warm clothes."
" It' s really an issue of language more than culture, " said Sean Kershaw, who coordinates neighborhood Y2K preparedness meetings for the city of St. Paul. " Many Hmong who speak English fluently and are connected don' t feel this way. It' s mainly people who are cut off by language. " Our point is there are segments of the population who are scared right now. We still have the responsibility to reach out to them."
Black Blade
(11/30/99; 21:54:12MDT - Msg ID:19970)
A little dated, but shows real concerns from our friends in S. Africa
The Week Ahead: Gold, Oil Markets May Be Tested
Business Day (Johannesburg)
November 29, 1999
By Jonathan Katzenellenbogen
Johannesburg - Barring any unforeseen shock, the local bond and money markets are probably almost on hold until well into January, but the gold and oil markets may well be tested in the week ahead.
While some markets may be pretty thin because of looming Y2K worries the world over, central and commercial banks and airlines will be boosting their offensive to assure the public that their systems are compliant.
The world trade talks which begin in Seattle this week will have potentially the largest long-term impact on the global economy.
The subdued bond market is the result of last week's decision by the monetary policy committee to fix the repurchase or repo rate until its next meeting that will be only held in the second week of January.
Most dealers are expecting narrower trading ranges for bonds and volumes that are a lot thinner than at the start of the latest rally.
A 12% fixed rate can be described as neutral with a tightening bias. And the monetary policy committee has also taken most out of any potential surprise out of this Thursday's release of the figures on the forward book.
It disclosed that the net open foreign currency position was at $14,5bn in mid-November, down from $18,3bn at the end of last month. This marks solid progress in reducing foreign bankers' concern about the amount SA is effectively liable to delivery in foreign exchange markets.
Money supply and private sector credit extension due out this week are expected to be within the bank's safe bounds of below 10% year-on-year growth. And the trade that has not been expected with improved growth.
At about $297,37, gold is firmly under the $300/oz level and will be tested again on whether or not remaining central bank planned sales are fully priced by the market.
Today the Bank of England will auction off another 24 tons of gold and give an indication of whether or not the gold price will drop by more.
Gold is already well off its year high of $324,50/oz it reached after the mainly European central banks agreed only to go ahead with planned sales and sell no more for five years.
However, given the drop from its year high so far, the message from the market is that SA cannot hope for a rising gold price to contribute substantially to the recovery.
SA's trade account could be back under the pincer - a low gold price and a high oil price - with gold weaker and Iraq's move to withdraw from the United Nations oil-for-humanitarian-aid deal boosting the crude price.
The bad news on oil may be out now. The consensus is prices will be sharply lower next year, based mostly on the idea that a cutback agreement among the major producers can't hold.
In the medium-term, rising oil prices will encourage higher production and ultimately bring about a lower price.
However, there is the problem during the next few months of pressure being kept on the oil price as a result of higher global growth - especially if the major producers are able to enforce cutbacks in output after their agreement which is to expire in March.
Television screens may be filled this week by pictures of protesters in Seattle calling for globalisation to be turned back. That is unlikely to happen, but its extent and form will be moulded in Seattle in discussions on trade in agriculture and services.
Yet there are also a host of other issues on the agenda, including the matter of a link between labour and trade rights proposed by the US.
Most developing countries, particularly the once again fast exporting countries of southeast Asia, can be expected to oppose the link the US is attempting to make between the right to trade and labour standards as a protectionist measure.
The SA delegation has yet to say where it stands on the US proposal, but given the labour legislation of the past few years, it will be of considerable interest to see where the SA delegation stands on the issue.
Black Blade
(11/30/99; 21:48:59MDT - Msg ID:19969)
Interesting article, what are they worried about?
Daily News
FBI Stops Net Y2K Film
The Capital hillbillies Bill and Hillary assure us all is well. Yet they send their goon squads out to silence opposing voices. hmmmmm......
By Robert MacMillan, Newsbytes
November 30, 1999
In what could be a first-of-its-kind incident, the Federal Bureau of Investigation approached Internet-based filmmaker Mike Zieper, and asked him to remove a short film he shot in cinema verite style, from his Website. The only problem is that the law enforcement officials did this without a search warrant or a court order, which could amount to a violation of the First Amendment. Zieper, as first reported in the Village Voice, declined to shut down the site, so the FBI approached the Web host, BECamation, and asked that company to take down the site. BECamation complied. Mark Wieger, president of BECamation, confirmed that he shut down the Website in response to FBI requests nearly two weeks ago, but declined to comment further on the situation.
The issue, according to the Voice, centers around a short film that purports to be military intelligence on a US government-backed attempt to start a race riot at Times Square on New Year's Eve. The short film evidently resembled real life a little too much, causing a harsh reaction from the FBI, which previously acknowledged that it is trying to combat the possibility of race riots and other end-of-the-world-style scenarios which some fringe groups purportedly have been planning to mark the date change from 1999 to 2000. The law enforcement agents who approached Zieper, he said, were part of a "Y2K readiness team to address all these issues." "They said there's a lot of activity on this Website of yours, and a lot of people who are planning vacations, and coming into New York City on New Year's Eve. How do we get people to stop looking at this Website of yours?" Zieper, who goes by the name Mike Z., initially approached the American Civil Liberties Union (ACLU). He told Newsbytes that he would be willing to work with the ACLU on trying to define the role law enforcement should play in putting any sort of art or speech online, but added that he is not specifically pursuing any sort of legal remedy for his film in particular. The FBI declined to comment on the story. According to the Village Voice article, however, the FBI did not seek a court order to shut down the site, but instead worked with the US Attorney's office, and implied to Zieper that he could face a subpoena or arrest because of the Website. Zieper said that his film was intended as fiction, but that his moviemaking style reflects an attempt to "get closer to reality." He added that the film was made merely to provoke discussion, and that despite the loss of his Website to federal pressure, the movie "has been mirrored all over the place." He also said that his Website in about two weeks logged 3,700 hits for the short film. Zieper also said that he does not hold a grudge against the FBI for trying to uphold the law. "They're very good at what they do," he said. "I'm glad they're working for America... but I don't want them to have a debriefing next year and say 'what works when you have a Website that you don't like the looks of?'" Zieper also said that the Internet remains a communications medium that is relatively uncluttered with regulation, but that this also has the downside of leaving too many open questions about how to handle free speech issues. "(The Internet) is not regulated, not restricted. It's full of promise," he said. "It's funny how that promise is taken away from you."
Journeyman
(11/30/99; 21:16:09MDT - Msg ID:19968)
The Great Flation Debate: Terminology II, The Application
Using the old muddled terminology of "inflation" vs. "deflation,"
it's difficult to make the follolwing statement without seeming a
bit of a buffoon: "Inflation causes deflation."
_ . _ . _ . _ ._ . _ . _ . _ . _ . _ . _ . _ . _ . _ . _ . _ . _
If, on the other hand and in line with suggestions from a
previous post, the word "deflation" is used ONLY to describe
shrinking businesses and unemployment, while the word "inflation"
is used only parenthetically to patch the term "currency
depreciation" into current muddled phraseology, then we COULD say
"currency depreciation ('inflation') causes deflation."
_ . _ . _ . _ ._ . _ . _ . _ . _ . _ . _ . _ . _ . _ . _ . _ . _
Stick with me here, and you'll see why someone might WANT to make
such a statement. The reason people don't like "deflation" is
that by definition (the new terminology remember) it means
businesses fail and people are thrown out of work. One reason
this might happen is that, by one means or another, an excess of
monetary tokens comes into existence at a particular time and
place which causes them to depreciate ("inflate.") Prices,
increased to compensate for this monetary token depreciation, are
then too high for people to afford because wage increases always
lag monetary token depreciation ("inflation.")
_ . _ . _ . _ ._ . _ . _ . _ . _ . _ . _ . _ . _ . _ . _ . _ . _
This means people buy less because their salaries' buying power
is less. Having fewer sales and lower profit, businesses lay-off
employees and shrink their operations. Exacerbating the process,
banks and other lending institutions increase interest rates to
compensate for the depreciating monetary tokens, shrinking their
operations and cutting off loan money, even to still profitable
businesses. Etc.
_ . _ . _ . _ ._ . _ . _ . _ . _ . _ . _ . _ . _ . _ . _ . _ . _
Thus straightening out the terminology (substituting "currency
depreciation" for "inflation," and using "deflation" to refer to
real-world contractions in business and employment) we can say in
effect, "Inflation can cause deflation," and not seem complete
idiots. Perhaps the seemingly contradictory and thus confusing
terminology explains why the Keynesians were completely blind to
the "inflationary depressions" which have become the hallmark of
late 20th Century economics.
_ . _ . _ . _ ._ . _ . _ . _ . _ . _ . _ . _ . _ . _ . _ . _ . _
Perhaps because of the confusing terminology, Keynsians simply
couldn't conceptualize "inflation" (monetary token depreciation,
remember) and "deflation" (or as Murray Rothbard used to say,
"Boom and bust") happening simultaneously. When they did,
Keynesian credibility and influence declined rapidly. Could it be
that Keynsian economics was killed by its own confusing
terminology?
_ . _ . _ . _ ._ . _ . _ . _ . _ . _ . _ . _ . _ . _ . _ . _ . _
Confuse the language, confuse the mind, as the saying goes.
Aristotle's posts on how slogans replace logic were quite
apropos, only in this case in reverse. The terminology
"inflation" and "deflation" strongly discouraged formulating the
logical "slogan," "Inflation can cause deflation." From the Asian
style inflationary depressions - - - which have now extended as
far as Russia Turkey, Greece, and as far as Ecuador and Brazil in
South America - - - which have resulted from the advice and
economic meddling of today's "monetary authorities" (World Bank,
IMF, U.S. Treasury, Federal Reserve, etc.), one could easily
conclude that these "monetary authorities" have confused their
own minds as well.
_ . _ . _ . _ ._ . _ . _ . _ . _ . _ . _ . _ . _ . _ . _ . _ . _
Regards, Journeyman
Peter Asher
(11/30/99; 21:09:04MDT - Msg ID:19967)
Gandalf
http://www.quote.com/livechartscom/
Those crystalline pyrotechnics are no surprise. As you may have noticed, I've been carping on the 60% increase in market volume over the last five weeks, and how it can't get a new high out of the bellwether Dow that people think is "The Market."
I recommend everyone call up the quote-com link, click on candles, volume, and D for daily. It's a picture to warm the coldest contrarian's heart. If all that added volume can't break through that supply plateau, then Alan and King Billy might as well walk away from it. If this much new money won't support the market, the PPT hasn't a prayer.
401-k earnings maybe one leg of the support system, but margin funds are another, and those are the printed kind! That margin quantity is the portion of the money supply that is going to evaporate in a torrid boil-off when the redemption stampede gets triggered.
ORO
(11/30/99; 20:51:48MDT - Msg ID:19966)
The Stranger - Savings and investments
http://www.federalreserve.gov/releases/Z1/Current/z1.pdf
The Stranger (11/29/99; 21:35:08MDT - Msg ID:19926)
In your post of yesterday, you pointed out something interesting.
--->"For some reason, the government figures subtract capital gains from savings, yet they do not include stock market holdings in their calculations. No wonder they come up negative. Doesn't this also explain a paradox. We keep decrying the billions that are being invested in stocks yet worrying that nobody is putting anything aside. Hello!"
Though this may seem odd, the selling of stocks transfers money to the seller but takes the money out of the buyer's account. The capital gain is a reflection of the buyer dis-saving. If the seller puts this money into a different form of savings, then net savings will grow. Stocks are not considered savings by the government because they do not include an obligation on anyone's part to repay the sum invested. Because of this, it is not savings per se. People think of investing and saving as the same thing, they are not. You must take into consideration that savings do not have a "market value". If you hold something that has to be marked to market as NAV, then it can't be "savings"
It could be thought of the other way around - here I am going contrary to the above:
Think of a savings account and a checking account as money available on demand. Somewhat like a wallet and a strongbox. CDs, bonds, and stocks are securities - they are investments. The question is, which can be viewed as money (what one saves) - available on demand. Since most exchange traded securities are liquid enough to sell a week before some bill is due, it shoulf be interesting to take into account all available sellable exchange traded securities. In this light we can view Greenspan's allusion to the Fed's thinking of all liquid securities as part of the money supply, their PPT operations and recent recognition of agency securities and mortgage backeds as eligible for use in exchange for reserves, indicates that the Fed is thinking in new terms.
CDs can be redeemed early, and have a guaranteed redemption rate, lower than available at maturity. The guarantee is an obligation that is no different than that of the bank's checking account. So the money is available on demand, and is viewed as a less liquid form of cash deposit.
Short term bonds are traded and have no redemption guarantee but at marurity, when they are paid off. These are the holdings of money market funds. This can still be counted as near-cash because of the liquidity of these instruments, that are only two degrees away from cash deposits. They are particularly liquid and have an implied guarantee when in the form of a money market account. The implied guarantee is a defacto action by the fund management companies to compensate investors for any losses, which are usually temporary. Since the average maturity is in the 10 15 day range, it is very much a near cash account and can be counted as such (in M2).
M3 includes commercial, non guaranteed (not FDIC insured and not fund management insured) CDs and US owned Eurodollars.
Retirement account bank deposits and MMFs are not included because they are not readilly accessible to the individual. They require a paper trail and involve a penalty. However, these are so easy to do that I would not consider them any different, though I would discount the penalty and tax when calculating them into a new monetary aggregate, see below.
When taking bonds outside money market accounts into consideration, anything under 3 months is close enough to cash so that the discount in the market is rather small. Say 5%-6%, smaller for government securities. So taking a 5% discount on this into account for small holdings and a 7% discount for a large holding (liquidity discount) we can put this into an M4, though no guarantee is given. For convenience sake, we can add cash value of insurance policies into this accounting.
The point for anything longer term, is that it is affected by three factors; long rates, liquidity, and credit risk discount. So, in considering these as part of the money supply one would put different values on the discounts to face value and market value. For all practical purposes, face value is irrelevant when considering bonds over one year maturity. These are to be considered only at market value. When assembling these bonds into a monetary aggregate, say M5, these should be considered at a 5% or so discount to market value.
When considering mutual fund holdings, who's liquidity is very high for the retail investor, one would take the NAV of the funds less 5% to compose a secondary aggregate, M6.
Taking into account individually held stocks, the liquidity constraints and market volatility make these into very tricky numbers for aggregation into monetary aggregates. Taking a 10% discount on these would be appropriate, perhaps a slightly greater discount is due, but it can be left at this range for now and incorporated into an M7.
In 401K plans, beneficiary loans are quite common. Some statistics show that individuals have borrowed 70% of the 50% allowed under most plans. This means that the plans are 50% near ready cash. M8 is appropriately a sum of half the 401k balances with the above.
Equity and bond portions of IRAs, vested Pensions and 401Ks, can be taken into account as well, with a 50% penalty and taxes discount as M9. Excluding the 50% of vested 401k plans that can be used for borrowing, M9 can lump the rest of the bond and cash accounts in these plans at a 50% discount.
Unvested portions are not accessible till definite dates, and are not appropriate for inclusion in any monetary aggregate, they arwe even "heavier" than real estate.
Putting it all together, and ignoring small discounts we have:
M4 M3 + Short term bonds at face value held outside retirement accounts..
M5 M4 + Intermediate bonds and long bonds at market value held outside retirement accounts.
M6 M5 + All non retirement holdings of mutual funds (not including money markets)
M7 M6 + Individually held stocks outside of retirement plans.
M8 M7 + 50% of vested portion of 401K plans.
M9 M8 + 50% of total vested retirement accounts excepting 401ks, + 25% of 401 K plans.
So we can now look for a shortcut to obtain these figures for total liquidity. This liquidity figure essentially relates all financial assets; currency and currency equivalents, securities exchangeable on the open market for currency - tradable assets.
In Tables L100 and L9 in the Fed Flow of funds report (URL above), is a figure that is easily converted to reflect this: Total financial assets - Q2 standing at over 32 $t, less Pension assets, just under 10 $t, less equity in non-corporate business, just over 4 $t. This leaves 18 $t in the hands of individuals. From Table L101 we have cash and securities of corporations at 7.7 $t less 6.5 $t in illiquid or non-financial assets. Leaving 1.2 $t.
Total 19 $t. In 1993, this total was 11.4 $t, growing to 12.6 $t in 1995, and 15.2 $t in 1997, giving 10% growth in the first two year period to '95, 20% in the 95-97 period, 25% in the next.
Is that not vast excess? Would it not be vast excess if during this time nominal GDP rose less than 5% per year annually, and only 22% over the whole 5 year period in which liquid assets grew 51%? If incomes grew only 24% over this period? If in parallel, personal indebtedness grew 30% and the rate of growth in liabilities grew from 7.4% to 9.2%?
Chris Powell
(11/30/99; 20:42:02MDT - Msg ID:19965)
Why JCI Gold has never hedged for revenue
http://www.egroups.com/group/gata/297.html?
Excellent policy statement on
hedging by South Africa's
Brett Kebble.
Peter Asher
(11/30/99; 20:36:49MDT - Msg ID:19964)
Stranger
Regarding your
>>>>>> The Stranger (11/30/99; 09:10:58MDT - Msg ID:19951)
Peter, Again
Your point, which {{I believe I was first to present to the Forum,}} is a good one, but has no bearing on what I was trying to say. People can save by investing directly in securities, or they can go through an intermediary such as a bank. Either way, they provide capital for growth.
And - Peter Asher, Look what I found in the attic:
The Stranger (2/24/99; 22:16:21MDT - Msg ID:2723)
JA
As far as I know, the equities market is a zero sum game. Money cannot start "coming out of it".
When you sell, somebody else is buying for the identical amount. <<<<<<<
From ****** Peter Asher (10/25/98; 22:47:20MDT - Msg ID:799)
Here are some further thoughts on that "glacier." Pension funds,
automatically, and IRA's etc., voluntarily keep generating money needing a place to park, so
long as the "economy" stays in gear. {{Now, spending stock market profits is, in effect, spending
some of the investment money of the guy you sold it to. He doesn't have it any more. It's not "in
the Market." What is "in the Market" is what he gets when he sells it.}} So, in a sense, stock
securities are a global currency like dollars, franks, marks and yen, serving as a storage of value
which can go up or down for similar reasons. As currencies are traded like commodities, the
dumping of a nation's currency can cause a loss of productivity due to less sales (exports).
That's sort of the tail wagging the dog, since in a healthy economic environment, the productivity
would determine the value of the currency. Likewise, a recession can curtail the momentum of
the investment "glacier". Or the collapse of the value of this stock market currency can create the
recession.*****
Of course when people invest "through" a Bank by deposits, CD, etc. they are providing funds to be lent to others. Whether that contributes to growth or not will be a product of how those funds flow to creating means of production or to consumer credit. BUT, money invested in stocks, other than IPO's or new share issues, capitalizes nothing!! In one brokerage account and out the other.
There are three kinds of money flow in the stock market; Transfer, Transfer and Transfer!
TownCrier
(11/30/99; 20:21:09MDT - Msg ID:19963)
The GOLDEN VIEW from The Tower
http://www.usagold.com/NewMillenniumGold.html
To start with, be sure to read MK's (a.k.a. USAGOLD) Market Report for today...Msg ID:19953. Without alteration it should be simply adopted as this evening's GOLDEN VIEW. It was a very slow news day, but a few facts and figures merit a quick overview.
For the second straight day, Japan intervened on the foreign exchange markets selling yen and buying dollars. By the close of the U.S. market, the dollar remained below ¥103 and the euro was below $1.01. The Fed was rumored to be buying Treasuries "under the table," perhaps on behalf of Japan. The long bond enjoyed its best finish since the Fed hiked rates on November 16, gaining 7/32 in price to ease the yield to 6.281%. However, the bond was sold aggressively down from its highs of the day, and traders expect the weakness to continue, fearing additional rate hikes by the Fed.
The DOW lost 70 points today. NYSE trading approached one billion shares, and the company shares hitting new annual lows wiped out the new highs by 260 to 39. The Nasdaq Composite suffered its seventh-largest one-day decline, losing 85.21 (-2.49%) on its fourth-heaviest session.
While COMEX traders sold the February gold futures down 50¢ to $293.00, spot prices last quoted in NY were also down 50¢ at $290.10. Reuters reported from London that Helen McCaffrey, treasury analyst for N.M Rothschild & Son, said the $290.00 level is expected to hold now, saying further "Two of the key questions going forward is whether we will see the re-establishment of short positions by investors and whether there will be any withdrawal of central bank deposits prior to the year-end." Good questions. If you took a glance this morning at the new addition to The Gilded Opinion (link repeated above for your convenience), you'd be inclined to lean toward the demise of any significant future shorting programs.
Stats from yesterday's COMEX trading revealed that the December futures positions in open interest fell by 9,243 contracts on volume of 22,942 to start this day at 11,504. But unlike the previous day, there was no corresponding increase in February futures.
Of this remaining December open interest, COMEX delivery intentions on this first notice day totaled 3,057 contracts (305,700 ounces). The Bank Of Nova Scotia was tapped for the most postions to deliver-- 2,622 contracts (262,200 ounces)--while Deutsche Bank Futs was seen taking delivery of the largest postion with 1,406 contracts (140,600 ounces), and Goldman Sachs was a significant second, on the receiving side of 684 contracts.
As you might anticipate, there was plenty of shuffling of gold inventory within the COMEX vaults. So much so, that it defies description, so check the table below to see the net changes in inventory. (Units given are in troy ounces.) For perspective, keep in mind when you look at these totals that today's first round of delivery notices amounts to 305,700 ounces.
Combined Totals of Scotia Mocatta and Republic National Bank of New York
Gold__Previous__Received__Withdrawn__change__Adjustment____Total
Reg___889,793__110,435_______0____110,435____33,873____1,034,101
Elig___84,928____56,169____3,954____52,215____-33,873_____103,270
====================================================================
Ttl___974,721___166,604____3,954____162,650_______0_____1,137,371
So, where is the gold coming from? Not from Mexico, apparently. The National Statistics Institute said today Mexico's gold production in September fell 29.9 percent compared with September a year ago.
Don't hold your breath for gold from Euroland, either, although we did see the first tiny adjustment in physical gold reserves (not just the price) since the small gold adjustment at the start of the year. In its weekly financial statement, the European Central Bank said that on November 26 their total gold assets were down €1 million (approximately 3,300 ounces) to 114.987 billion euros. We wouldn't be surprised to discover that this small quantity went to feed the vital demands of the Austrian Mint for Philharmonic production. Does the ECB have their priorities straight, moving this quantity of gold? We may never discover the reason for the adjustment, but we can take heart as to their priorities. While gold assets declined by only 1 million euros that week, the ECB's foreign currency assets were depleted to the tune of 400 million euros, dropping those paper reserves to 236.6 billion euros. Seemingly, they're keeping the gold and moving the paper when necessary.
OIL
A technical sell-off on the NYMEX crude market led to a rout in the price ahead of the release of American Petroleum Institute data. January crude fell $1.37 to settle at $24.59 when its key support level was breached. After the market closed, API data revealed a larger than expected drop in U.S. crude stockpiles...down 3.564 million barrels. Overnight ACCESS trade had crude futures rebounding by 26¢ on the news.
And that's the view from here...after the close.
RossL
(11/30/99; 19:50:05MDT - Msg ID:19962)
canamami, BOE Sale
One more point to ponder, how about the rapid decrease of the open interest (December contract) at the COMEX. Curious. I believe it's a little early for all the gamblers over there to give up the game. I haven't seen CB2 post the implied one-year interest rate in a few weeks, but it was still increasing last time I checked. (Dec to Dec contract).
Gandalf the White
(11/30/99; 19:18:59MDT - Msg ID:19961)
LOOK OUT BELOW !
WARNING ! The Hobbits came running in to tell me to come and look at the Crystal Ball as it is all black smoke and flashes of fire. -- Twas a very bearish reversal today in most all the markets, even gold. -- The day-traders better have learned what "money" really is, cause paper is going to start burning tomorrow !
<;-)
canamami
(11/30/99; 18:34:52MDT - Msg ID:19960)
BOE Sale
I'm still recuperating from month-end, and still too tired to think. Just some point form comments, some of which are contradictory.
1. Running with MK's theory that lease rates had dropped because the carry trade (demand side)did not want to risk playing with gold loans. To build on that premise re the rise in rates, is the demand side in the gold carry trade back on? Is the POG manageable again for the manipulators?
2. One reason people on the Forum take the BOE sale seriously is that knowledgeable posters on the Forum (I can't remember who) opined that paper overawed the small amount of physical actually in play in the market. Thus, a "fraudulent" POG arose, determined by paper games and resulting in the delivery of small amounts of physical, but being totally unrepresentative of the true price of physical in quantity. The BOE sale was to bring serious physical back into open market play, in quantities sufficient to overawe paper and make manifest the true price. When the POG did not rise, people who accepted this theory became frustrated.
3. The theory that there is a shortage of physical. A related theory, the Comex paper price reflects a discount for the possibility of non-delivery or non-completion- i.e., like the manner bonds from unstable countries trade at a discount, reflecting the risk of default. The BOE auction price closed just above the Comex POG. No real risk of default if one is successful at the auction (i.e., the British government will actually deliver the gold purchased). There is no discount due to risk of default in selling or buying BOE gold. Yet the BOE price closely reflected the open market Comex price, suggesting that there is adequate physical out there, and that there may not be a dichotomy between the physical and paper prices/markets. The price you see is the price you get, and it is an accurate market price.
Gotta stop now. I pulled an all-nighter last night to meet the target, and I'm going to bed because I can't think.
TownCrier
(11/30/99; 16:35:04MDT - Msg ID:19959)
Fed's overnight repos totaled $3.485 billion
http://biz.yahoo.com/rf/991130/oe.html
On this second to last day of the maintennance period, the Fed is still shoveling money into the raging furnace.
Pssssst...MK, your market report today sent me reeling. Fantastic piece of analysis. Everyone here in The Tower is tipping their hat in the direction of the Castle. Bravo. Take a bow!
Netking
(11/30/99; 14:54:45MDT - Msg ID:19958)
BOE Auction
Is there too much emphasis placed upon the BOE auction action.
Is it not true that the amount of Gold sold (at auction) represents only %4-%5 of the amount sold on the spot market each and every DAY?
I don't believe that we can blame the BOE for the low POG these last few months.
Golden Truth
(11/30/99; 14:24:24MDT - Msg ID:19957)
TO STRANGER
Howdy Stranger, thanks for taking the time to comment as much as you did, on Dr.Richebacher's scenario. I still agree with you on inflation ruling the day. Just look at the 30yr bond yesterday 6.31%, today 6.28%.
On Bloomberg T.V thats all they talked about yesterday, more worries about interest rates going up! Not down!
They mentioned that in Feb? that the Fed might raise rates a full 1/2%. The analyst they were interviewing at the time, pretty much agreed with them.
Thanks again Stranger, i to see inflation in whatever form it is finally revealed in? I'll place my bet on the form of currency inflation that has taken place over the last 20 years.
G.T
JCTex
(11/30/99; 10:24:07MDT - Msg ID:19956)
nickel62 (11/30/99; 7:33:43MDT - Msg ID:19942): Bottom Line on BOE
Great post. Another question I have is what are the CB's going to take in payment for all that gold they leased out?? Are they going to take Dollars that will be devaluing by the second, or are they going to become the biggest gold miner in the world??
It looks to me like the biggest suckers in all of this are the mining company stockholders, and the English citizens.
Gandalf the White
(11/30/99; 09:28:57MDT - Msg ID:19955)
Least --- NOT lease !!
<;-)
Gandalf the White
(11/30/99; 09:27:26MDT - Msg ID:19954)
The Stranger's RUMOR
SHHHHHHH !
Please at lease make it Newmont and Barrick !
(NOT with Mr. Munk at the head.) Then he can go back to selling island vacations spots.
<;-)
USAGOLD
(11/30/99; 09:18:38MDT - Msg ID:19953)
Today's Market Report: Some Analysis on the BOE Auction
MARKET REPORT(11/30/99): Gold cantered through the last day of
November attempting to digest the strange goings-on surrounding this
third of several planned reductions of the British gold reserve. The
most puzzling and perhaps interesting of the day's developments --
though there were two that caught the eye -- occurred when gold interest
rates rose over two and half times (See the grid above) as the BOE
tallied its bid sheets and doled out the 25 ton allotment. To presume
that the two events were a co-incidence would be to put too much stock
in a star-struck "fate" and not enough in baser "human design."
Simultaneously, Anglogold, the world's top gold producer, was awarded
nearly 10 of the 25 tons offered keeping the pressure -- intended or not
-- on the scrambling bullion banks who might have had designs on "cheap"
gold themselves. There are those who might read conspiracy into this
tandem of events, i.e., that BOE doesn't have the gold it says it does,
therefore it is forced into the market to borrow and keep from blowing
its cover. (I reject that notion.) A more likely scenario would be that
once the bullion banks with short physical positions saw that the mining
companies were still interested in BOE gold and that they had been
pressed out of the liquidation by Anglogold (and perhaps others?), they
moved into the open market to get the gold they needed.
As we said yesterday, let's not jump the gun on these auctions.
Yesterday's events as described above are long term bullish for gold --
and they could become short term bullish if gold lenders push for the
return of gold before December 31 -- because they demonstrate a
near-urgent need for physical metal. I disagree with the notion that the
gold is being leased to drive down the price. Until proven otherwise,
the evidence -- circumstantial as it is -- still points to the metal
being leased to fill a past need. At the same time, the lease market
shows further evidence that the lenders are few and far between and that
gold rates are hair-trigger sensitive to the even the slightest of
market needs.
Though the shorts are being unwound in the paper markets without much
difficulty, unwinding the shorts in the physical market are another
matter entirely, and the activity surrounding yesterday's auction is a
good example. You can create or destroy paper gold with impunity. You
can create or destroy paper money with impunity. But, until we resolve
the Medieval problems attached to the philosopher's stone, gold will
remain a difficult item to produce at will.
That's it for today, my fellow goldmeisters. There's is not much in the
way of additional gold news for now. Have a good day.
Please call 800-869-5115 (Ask for Mary Conway) if you have an
interest in receiving a trial subscription to our widely read
newsletter, News & Views: Forecasts, Commentary and Analysis on
the Economy and Precious Metals. Or you can go to our ORDER FORM
and submit your request by E-Mail. You will also receive our
introductory packet on investing in gold.
TownCrier
(11/30/99; 09:11:18MDT - Msg ID:19952)
Hear ye! This Week in Gold has been updated.
http://www.usagold.com/wgc.html
By now you should know the routine. Courtesy of the World Gold Council we are able to share the weekly gold market commentary assembled by their worldwide staff of important events that help shape the market. Now available is commentary for the week Nov. 22 - 26. Here's an interesting tidbit from the report:
"...the Czech and Slovak Prime ministers signed an agreement settling the division of property between the two countries following their split more than six years ago. Among the conditions was a promise by the Czech central bank to return a disputed 4.5 tonnes of gold to Slovakia. " [No big surprise that they kept close tabs on what was their share, wouldn't you agree?]
Click the link to read more about the activity regarding India's new gold deposit scheme. Nobody can read that without coming away with an absolute certainty that gold is first and foremost a monetary asset. Be sure to get yours while the getting is good.
The Stranger
(11/30/99; 09:10:58MDT - Msg ID:19951)
Peter, Again
Your point, which I believe I was first to present to the Forum, is a good one, but has no bearing on what I was trying to say. People can save by investing directly in securities, or they can go through an intermediary such as a bank. Either way, they provide capital for growth.
The Stranger
(11/30/99; 09:01:55MDT - Msg ID:19950)
Psssst...
Expect a merger announcement soon between Barrick and Newmont.
AEL
(11/30/99; 8:20:44MDT - Msg ID:19949)
turbo
Your 19932: great questions! Stimulated my mental juices this AM.
"could the value of physical cash and gold rise at the same time?" ... glad I am not the only one who has imagined this possibility.
The Stranger
(11/30/99; 8:20:37MDT - Msg ID:19948)
Peter Asher
Look what I found in the attic:
The Stranger (2/24/99; 22:16:21MDT - Msg ID:2723)
JA
As far as I know, the equities market is a zero sum game. Money cannot start "coming out of it". When you sell, somebody else
is buying for the identical amount.
TownCrier
(11/30/99; 8:16:54MDT - Msg ID:19947)
1999 China Gold Economic Forum: a Turning-point in the Reform of China's Gold Market
A World Gold Council News Release...you'll want to read this thoroughly. Not long ago Sir Gandalf the White had posted a related article which we hope you also were wise enough (had time) to read.
The Forum
In the first week in November, the World Gold Council organised the 1999 China Gold Economic Forum in Beijing together with the Research Institute, Finance & Banking, of the People's Bank of China (PBC) and the National Economic Research Institute of the China Reform Foundation. 140 people attended the Forum.
In essence, it was an occasion at which the gold trade could voice its opinions on proposed government legislation and policies. This was the first example of its kind in the Chinese gold industry and its endorsement by the authorities bodes well for the future of gold market reform in China.
The 2-day meeting covered a wide spectrum of issues. It started with a presentation on the changing role of gold in the global monetary system, followed by case studies of gold market reforms in South Africa and India. These served as the background for suggested directions for Chinese gold market reform, via the delivery and subsequent discussion of a comprehensive research study, prepared by a team under the direction of Professor Fan Gang, Director of the National Economic Research Institute of the China Reform Foundation. This report had been commissioned earlier by the World Gold Council.
The Report
The report comes against a backdrop of rapid growth in mine production in China in recent years but slower growth in domestic consumption. An important reason for the latter is that the PBC - although it now changes the prices it uses to reflect the international price far more frequently - remains a monopoly buyer and seller under the state-unified-purchase-and-allocation-system. Such a structure, based on a planned-economy, has become increasingly obsolete in the modern Chinese socialist-market-economy and results at times in smuggling and heavy subsidy of the mines, while also frustrating the development of a modern and innovative manufacturing and distribution sector. At a time of relative stability in the Chinese economy and the on-going modernisation of other state-owned industries, now is an ideal time to bring gold market reform to fruition.
The outline of reform presented to the forum for discussion had several underlying features. First, given the many and overlapping bureaucratic layers involved in gold, lines of management accountability need to be clarified and reduced. At the same time the PBC will, in stages, withdraw from the market. Finally - and recognising some potentially difficult transitional problems - consolidation of the mining sector will be necessary if world-class producers are to be created.
*****A gold exchange market*****
The main practical proposal, however, was that a gold exchange market should be established. Given the need for learning by experience, the report suggested that this should proceed in phases - though some participants in the forum felt that the timetable might in favourable circumstances be telescoped.
In the first phase, the market would be open, for spot transactions only, to the major domestic players. Mines would be free to sell an increasing proportion of their output on the market and manufacturers would no longer have to buy from the PBC. In phase two, gold producers would sell all their output on the market, individuals would be able to use it and futures transactions might be permitted. Phase three would usher in full liberalisation with removal of the ban on gold imports and exports and the PBC's complete withdrawal from the market.
Finally the report argues that, while these reforms are moving ahead and the role of the PBC in the gold market is changing, ******* consideration should be given to increasing the amount of gold in China's official reserves. While total reserves are large in international terms, the proportion of gold is arguably too low if the country wants to avoid an over-reliance on currencies. *******!
Timing
As far as the reform timetable is concerned, it is suggested that Phase 1 commences next year and may take up to two years to complete. The steps in Phase 2 are perhaps less time - critical but the opening up to international markets envisaged in Phase 3 will, it is asserted, require full capital account convertibility of the RMB, the local currency.
Reactions
A full and vigorous debate took place around the report's recommendations and some minor modifications will be made in the light of this. While it was of course accepted that the report, written as it was by an independent research institute, carries no official weight, **** it was noticeable that no dissenting voices were heard from the audience. No one disagreed with the need for the kind of reforms advocated and, if anything, there was a feeling that they could proceed faster. ****!
The forum was an undoubted success in consolidating a consensus for the continuing perfection of the reform process. Council staff will remain in close touch with the Chinese authorities and the industries concerned in order to provide all the help necessary to bring about reform.
Initial comments from the PBC after the Forum
--It was a very good forum. The WGC has done a good job for China's gold industry. The consensus from the trade was on how to speed up the reform; the main difference is on the ways to do this and the speed of transition.
--This forum was a valuable opportunity to share ideas on the subject. The opportunity to hear different opinions from various sources is extremely useful.
--The PBC representatives will consolidate all opinions given at the forum and submit them to their superior authorities in the near future.
**The PBC strongly felt that there is a need to give more detailed training on gold banking to local commercial banks in order to allow them to participate in the gold business as part of the reform process.
------------------------------
The Forum's delegates are major players in the Chinese gold industry. They included 10 people from various governing ministries related to gold, 10 from the People's Bank of China's head office, 8 from the People's Bank of China's area offices, 6 from local commercial banks, 10 producers, 55 manufacturers and retailers, 3 from metal exchanges in China, 21 from related research institutes and 8 overseas delegates including speakers. Central bankers from other countries in the region were also present.
A few of the more prominent attendees were:
--Mr. Tang Shuangning, Director of the Gold, Silver, Currency Administration Department of the PBC;
--Mr. Xie Ping, Director of the Research Institute, Finance and Banking of the PBC;
--Mr.Wang Dexue, Director of the Gold Bureau;
--Mr. Raymond Chan, President of the Chinese Gold and Silver Exchange of Hong Kong;
--Mr. Fung Chi Kin, Legislative Councillor of the Government of the Hong Kong Special Administrative Region.
TownCrier
(11/30/99; 7:47:30MDT - Msg ID:19946)
Fed seen adding reserves via overnight system repos...did you expect anything else?
http://biz.yahoo.com/rf/991130/md.html
Despite billions of dollars in longer-term repurchase agreements already in the system, analysts say that more are needed. Dana Saporta, economist at Stone & McCarthy Research Associates, said "The overnight system RP would supplement the nearly $46 billion in RPs outstanding right now. We expect the add need to continue rising until year-end and possibly thereafter as the Fed's outstanding RPs come off."
Meanwhile, federal funds were trading this morning at 1/4 percent above the Fed's target rate of 5.5% for this interbank lending interest rate.
YGM
(11/30/99; 7:43:17MDT - Msg ID:19945)
Market Crash Overdue???
From GE Forum (Snip)
STOCK MARKET CRASH IS IMMINENT...of epic proportions
(McIsaac)Nov 30, 08:34 Advance/Decline line Comparisons
CRASH OF 1929
1928-1930 lead time to Crash initiation was 15 months
http://decisionpoint.com/HistCharts/ADfiles/AD2830.html
CRASH OF 1987
1986-1988 lead time to Crash initiation was 15 months
http://decisionpoint.com/HistCharts/ADfiles/AD8688.html
CRASH OF 1999
1998-Present lead time already lapsed is 17 MONTHS
http://decisionpoint.com/DailyCharts/ADCurrent.html
TownCrier
(11/30/99; 7:37:17MDT - Msg ID:19944)
Hear ye! Hear ye! There is a very important update to The Gilded Opinion!
http://www.usagold.com/NewMillenniumGold.html
"A New Millennium Gold Rush" by Leanne Baker and John Hill / SalomonSmithBarney provides a unique insight that reveals that not all of the Wall Street insiders are blind to the merits of gold. This one is definately worth your time to review. Grab your torch and wander down the hall guided by the link provided above. Here's a sample of what you'll find:
"The European central banks announced on September 26 that they will limit annual gold sales to 400 metric tons (mt) over the next five years, and that they will not increase their gold lending or futures and options beyond current levels. We believe that the positive implications of the announcement are not yet fully appreciated by the market--and perhaps not even by the central banks themselves.
We believe the central bank agreement fundamentally alters the landscape for gold....We view the commitment to freeze gold lending as even more significant--although scrutiny suggests lending may have been approaching its natural limits. Additions to the central bank lending pool have been required for years to bring commodity supply and demand into equilibrium. In turn, the gold lending provides the liquidity for producer hedging and for speculator short selling, both of which appeared to be a "win/win" situation in recent years as lease rates were low and prices were falling. The speed with which the market has begun to adjust to the new realities of central bank lending has been remarkable, even for those of us who had argued the potential for an explosive move in the price at some point. Even more astounding, the sharp price rebound has occurred in anticipation of the lending freeze, not in response to it. "
Enjoy your education, and hurry back with your comments.
Peter Asher
(11/30/99; 7:36:48MDT - Msg ID:19943)
(No Subject)
Tri parity - Gold based?
So, All the Fort Knox Gold (Still there ?)at 15% of the Money supply = ?? per ounce
nickel62
(11/30/99; 7:33:43MDT - Msg ID:19942)
The real bottom line on BOE auction!!!!!!!!!!!!
I've been amazed at the popular media's response to the latest auction. The fact is that six months have now transpired between the BOE announcement of its large gold sales in May and seventy five tonnes have been shoveled into the market at the expense of the British pound currency holders/taxpayers.The price is now a few dollars per ounce higher than when this all began and two mid sized producers and their shareholders have been all but wiped out.Taken over by their so called advisors.
Isn't that the big picture.The game has changed!
Every weak brained gold producer that had been hanging with fear and dred to every husky wisper from their bullion bank's trading desk for the last five years has been shown in rather stark detail the true motives behind the various suggestions of "gold spiraling down in a free-fall". Michael Armstrong's self serving "$200/ounce before it turns".And Andy Smith's "demonetization of gold tirades" They have listened to all these and other scare mongers who were willing to spin any tale to scare the producers out of their gold. Well it worked and Anglogold has 14 million ounces sold forward and American Barrick 17 million ounces sold forward and Placer 5 million ounces sold forward and on and on and on.
Well yesterday Anglogold took 40% of the entire auction!Thats right 40% and the 300,000 ounces they got won't even make a material dent in the 1,900,000 that they have sold forward between now and the end of the year.
The truth couldn't be plainer NOW the producers must look over their shoulders every minute because the angry shareholders and their lawyers will be looking under every rock to nail their overpaid *ss's right to their hedge books.The producers are the buyers of the next ten years. They are the catalyst to $600 gold and beyond. Just like they were the secret to $255/ounce gold by being scared enough and disorganized and venal enough to sell many years worth of production into the spot market so the shorts could make a killing and their own shareholders could take it in the neck.
The hedge funds only prayer, since they by their very nature don't have the ability to produce the stuff, is to run ahead of the producers,and buy every ounce they can get their hands on before the public wakes up and bids it to the moon.
Day traders, Gold Stock buyers, Precious metal hoarders, Value investors ,Momentum followers,Fundamentalists,Libertarians UNITE! You have the market in your hands!
Anglogold and American Barrick et all. now know they can never possibly hope to cover at these prices.
Ashanti and Cambior (or I guess by now it would be their receivers) can't even hope to cover.
Buy physical, Buy un-hedged gold mining stocks and write your Gold Stock Company Management and tell them you didn't buy their stock to watch them trade away your upside to have them cover their #ss and pay themselves big bonuses.
REMEMBER ANGLOGOLD TOOK 40% OF THE ENTIRE AUCTION AND COVERED 2.1% OF THEIR EXPOSURE! Squeeze the shorts it could be the best ride of the next 100 years!
YGM
(11/30/99; 7:29:59MDT - Msg ID:19941)
Two Articles
Financial Times.......
Currency Markets
The Triple Whammy
1 dollar = 1 euro = 100 yen
The "E1-$1-¥100 triple whammy" of exchange rate parity between the euro, the dollar and the yen came near to reality on the foreign currency markets yesterday.
The euro dipped to its lifetime low against the US dollar at $1.004 during trading in New York and London, while the dollar again weakened to below ¥102 following an ineffective intervention by the Bank of Japan during Tokyo trading hours.
The Japanese central bank was seen in the market selling yen for dollars at around the ¥103 level.
Keith Edmonds, chief analyst at IBJ International in London, said: "The intervention was not backed up by comments from [European Central Bank] members and the BoJ was clearly playing a lone hand.
"As a result, the gains in Tokyo for the dollar have been given back," Mr Edmonds said.
The yen recovered following the intervention, and ended trading during London's active hours at ¥101.9 against the dollar.
The euro also touched a new lifetime low against the yen since its launch 11 months ago, for a nadir of ¥102.3 - raising the possibility of the three currencies converging at E1 equal to $1 and ¥100 precisely.
Nick Parsons, currency analyst at Commerzbank in London, said the three major currencies converging was "quite possible," but could cause problems of its own. "It would be neat - but also a nuisance given that the scope for confusion, errors and misunderstandings could be enormous," he said.
Other traders said the market had "made up its mind" that it wants to see the dollar reach one-to-one parity with the euro.
Trailing in the euro's wake, the Swiss franc dropped to its weakest level against the dollar for 10 years.
Traders blamed a thin market and the euro's weakness for the franc's fall.
The euro's cause was not helped by comments from members of its central bank and the Euro-11 council of finance ministers.
The finance ministers put out a statement at the start of the European lunch-hour, saying that the fall of the single currency was not a concern unless the weakness damaged the confidence of the markets in the euro.
The currency was not moved by a strong set of M3 money supply figures, showing the three-month rate of growth at 6 per cent, nor by the publication of the official statement from the ministers' meeting in Helsinki, which said: "The euro has potential for appreciation. This is firmly based on internal price stability and a sound current account".
Wim Duisenberg, the ECB's president, weighed in with his testimony to the European parliament's monetary affairs committee. But even at the same time as he told the committee: "Ultimately, there is one way the euro will and shall go, and that is up," the euro was scraping against $1.003.
His later comments - suggesting active buying of euros by the ECB as a "potential weapon" to rescue the currency - did appear to help the euro pull back from the brink of parity.
------------------------------------------------------------------------
The Bank of Japan's intervention came as a surprise and a puzzle for the market, and possibly to the central bank's counterparts in Washington and Frankfurt.
Neither the Fed nor the ECB appeared to aid the BoJ.
The intervention was the BoJ's first for two months, and sent the yen above ¥104 briefly before normal service was resumed.
Tony Norfield, global head of research at ABN Amro in London, said the intervention may only serve to hold back traders wanting to short the yen for a while, "especially those in Europe and the US who will fear going home blind of BoJ action."
Japan's fundamentals remain good, with the latest figures pointing to an economic rebound in the fourth quarter.
But Keith Edmonds at IBJ said Japan's experience in January 1995, when the dollar went through ¥100 and quickly down to ¥80, will worry policymakers, given the tentative recovery at this stage.
The Financial Times, November 30, 1999
........................................................................................
Gold Market
UK Sales Depress Gold Price
Better public than secret.
There are three questions to ask about the British government's decision, announced on Friday, to sell more than half its gold reserves over the next few years. Does the decision make sense? Is the timing right? And is the Treasury going about the job in the most sensible fashion? It is hard to be entirely rational about the case for holding gold bullion, as is evidenced by some of the comments over the weekend about this move.
For example, there is no merit in suggestions from the Conservative opposition that the sale represents in some way a plot by the government to drag the UK into the single currency by stealth.
Instead, it is just the latest in a series of decisions by central banks around the world - the Netherlands, Belgium, Argentina, Australia and Canada, to name just five - to reduce their bullion holdings.
Central banks everywhere are seeking to improve the return on their reserves: for those within the single currency, this is one of their few remaining roles.
Gold generates no income directly. And the scope for capital appreciation is limited by the probability of further official sales into the foreseeable future from, among others, the International Monetary Fund and from those members of the European Union that find themselves with more reserves than they need after consolidation of monetary affairs into the European Central Bank. The ECB has said it intends to hold 15 per cent of its reserves in the form of gold. By this benchmark the UK, which holds more than two fifths of its net reserves in bullion, can comfortably afford to cut back its holdings.
As for the timing, the bullion price is close to the low point of a broad range spreading back over the past dozen years, and although the UK Treasury is by no means the last in the queue of likely sellers, that prospect is presumably already reflected in the price.
But there is no reason to think that it would have done better by waiting. At least there were no leaks ahead of the event, and perhaps the worst that can be said about the timing is that the government appears to have been up to its old tricks of short-term news management. There were other things to excite the headline writers on the day after crucial elections across the UK.
The decision to sell the gold by way of auction, and to announce the news in advance, is entirely to be welcomed. Gold auctions work well, as the US government showed back in the 1970s. Far better to conduct them in a transparent fashion than to allow the sales to be conducted in secret by a group of insiders. And with annual mining output running at more than 2,500 tonnes, the market is well capable of handling a sale of 125 tonnes from the British in 1999-2000.
The Financial Times, November 30, 1999
YGM
(11/30/99; 7:21:11MDT - Msg ID:19940)
GATA and Bill Murphy
Morning Email....From Cafe
BREAKING NEWS -- the major gold producers are
quietly backing GATA and we intend to press
forward. SOON, we will ask all the influential
gold internet gold web sites to back our requests
of the U.S. Fed and the U. S. Treasury. We will
not ask these influential entities to back GATA,
but we will ask them to get behind our seeking
of the truth. James Saxton, Vice-Chairman of
the Joint Economic Committee of the U.S. Congress
told me last spring that Congress gets behind
those seeking to find out the "truth." That is us!
That is YOU!
GO GATA!!!!!!....................YGM
JCS
(11/30/99; 6:37:21MDT - Msg ID:19939)
Y2K
This appeared at another forum. I have no idea of the credibility of the poster and his information.
good luck
**************
Date: Tue Nov 30 1999 07:52
cornucopia (ALL USA embassy staff and ambassadors being pulled out
of Russia and CIS countries+) ID#343246:
some other surrounding areas! ALL Y2K RELATED!!!!!!! Cannot divulge
source other than It came out of one of the Ambassador's mouths!! This is
really serious!
Several other countries also have the same intentions! One Merkin
Bassador says that following a briefing, It is uniformly felt ( A75% level ) that
Nukes will be released.
Wether by accident or intentionally is not the issue but rather the safety of
the embassy personell.
THIS SHOULD BE THE WAKE UP CALL FOR THE REST OF
US!!!!!!!!!!!!!!!!!!!!!
Again, I cannot reveal my source but it is DEFINATE!!!!!
JCS
(11/30/99; 5:58:29MDT - Msg ID:19938)
Y2K: Buy Rumor, Sell News?
I just received Don McIlveny's 30+ page final report on Y2K. It contains the US Navy report of readiness of the major cities in the US. NYC, according to this report, will not have water or sewer on Jan. 1.
Questions:
1. How many people who work in the financial district are going to show up knowing the toilets in the buildings don't work and that there's no water?
2. Will the markets discount this considering that the "people in the know" will be liquidating shares NOW rather than wait and chance it on Jan. 3rd?
given the unbelievable bubble market that we are in I wouldn't discount anything happening, but my money is on the side of increasing supply from this point on.
SteveH
(11/30/99; 5:55:27MDT - Msg ID:19937)
Euro
http://news.bbc.co.uk/hi/english/business/newsid_543000/543201.stm
repost --
Germany has accused the UK of undermining the euro, according to newspaper reports.
The struggling currency fell to new lows against the dollar and yen on Monday.
According to the Times and the Daily Mail, the German Finance Minister, Hans Eichel, says the Chancellor, Gordon Brown, is to blame.
They say Mr Eichel has complained that Mr Brown's refusal to give way in talks aimed at establishing an EU-wide 20% withholding tax on savings had highlighted the problems of economic co-operation among EU nations.
The talks - in Brussels on Monday - ended in deadlock, with Mr Brown arguing that the proposals would cause the lucrative eurobond market to move out of London.
Mr Eichel says the failure of the talks weakened confidence in the euro, which has been teetering on parity with the dollar.
In London on Monday, it fell to a new low since its launch in January of $1.004, before recovering slightly.
Tax dodgers
Germany had been keen to introduce the new tax - which would have been levied at source on investment interest earnings - to help crack down on people moving money out of the country to avoid paying tax due.
Mr Eichel said the issue was vital to finding an overall solution on a package of measures to combat tax evasion.
He said: "If we don't reach a solution on the witholding tax issue, the whole tax package will fail in Helsinki," - referring to the EU leaders' summit in the Finnish capital on 10-11 December.
Mr Brown said he had no intention of backing down: "We will not agree to any directive which is against the national interest."
The Times quotes a Treasury spokesman as saying: "What would really damage the single currency would be agreeing to a directive which was flawed."
THC
(11/30/99; 4:54:22MDT - Msg ID:19936)
Y2K: Buy Rumor, Sell News?
Musings from a walk by the river:
Is it possible that the last explosions of the bull contain some element of
"buying the rumor that Y2K will be a non-event?"
If so, wouldn't it be ironic to wake up in the first week of January, 2000,
to find that the power, water, phone etc. all work, but the stock market
enters a crash for "no reason"?
After a decade of excesses and signs of serious fatigue, it would be
interesting to see the market crash at Y2K..........not because of a
computer bug, but due to simple fatigue and "relief" that we have safely
crossed Y2K..........
Your thoughts?
THC
Goldsun
(11/30/99; 4:33:53MDT - Msg ID:19935)
E Flation
E commerce could raise prices by increasing demand for particular goods. Product differentiation meets herd instinct.
Goldsun
Goldsun
(11/30/99; 4:21:52MDT - Msg ID:19934)
Journeyman and ORO
ORO
Thanks for your response. I must admit eurodollar interest rollovers never crossed my mind. Another form of derivative.
Journeyman
Thanks for your kind words and real world data.
Goldsun
SteveH
(11/30/99; 3:25:15MDT - Msg ID:19933)
Gates
www.kitco.com
but first...Dec gold now $291.00.
Date: Mon Nov 29 1999 13:47
Silverbaron (Bill Gates & PAAS) ID#297352:
Copyright © 1999 Silverbaron/Kitco Inc. All rights reserved
News Release for November 29, 1999
MICHAEL LARSON JOINS PAN AMERICAN'S BOARD OF DIRECTORS
Vancouver, British Columbia…..Pan American Silver Corp. ( TSE: PAA;
NASDAQ: PAAS ) announces the addition of Michael Larson to its Board of
Directors. Michael Larson is the investment advisor to William H.
Gates, III. On September 28, 1999, Cascade Investment LLC, Mr. Gates'
investment entity that is managed by Mr. Larson, filed a notice that it
had acquired a 10.3% interest in Pan American. Mr. Larson will fill a
Board seat vacated by Mr. Michael Maloney. Mr. Maloney will remain an
advisor to the Board of Directors.
Mr. Ross Beaty, Chairman and C.E.O. of Pan American, stated "We are
pleased to welcome Mr. Larson to Pan American's Board. His considerable
experience in corporate finance and financial management will serve us
well as we continue our growth as one of the world's premier silver
mining companies".
Pan American is a silver mining company. It is presently developing a
planned 4.5 million ounce per year silver mine at La Colorada in Mexico
and a planned 16 million ounce per year silver mine at Dukat in Russia.
The Company produced 3.11 million ounces of silver in 1998 at its
Quiruvilca mine in Peru and holds silver reserves and resources of more
than 850 million ounces.
- End -
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