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Welcome to the USAGOLD Gold Discussion Archives. The archives of this gold discussion forum are a treasure trove of information to educate investors about protecting their wealth through portfolio diversification with private gold ownership. The discussion forum also covers the wider issues of the past, present, and future role of gold in international monetary policy and the dynamics of the modern gold markets...

The opinions posted by all guests are expressly their own and do not necessarily represent the views of the management or staff of USAGOLD - Centennial Precious Metals. The hosting of the public discussion shall therefore not be construed as an endorsement by USAGOLD - Centennial Precious Metals of any of the opinions posted here.

ARCHIVED DISCUSSION FROM 6/3/2003
All times are U.S. Mountain Time

(Yesterday's Discussion.)

mikal (06/03/03; 23:54:29MT - usagold.com msg#: 104075)
G8 meeting
http://www.usatoday.com/money/world/2003-06-03-g8_x.htm
Posted 6/3/2003 3:54 PM     Updated 6/3/2003 9:11 PM
World leaders avoid talk of weak dollar, trade differences
By Noelle Knox, USA TODAY
EVIAN-LES-BAINS, France — World leaders said Tuesday that the global economy is headed for a recovery but, publicly at least, dodged many of the thorny issues weighing on the minds of American businesses, investors and consumers.
There was no mention of trade disputes, the weak dollar or genetically modified food in the final, joint statement by the eight heads of state.
"Our economies face many challenges. However, major downside risks have receded, and the conditions for a recovery are in place," said the statement by the leaders of the United States, Great Britain, France, Germany, Italy, Japan, Canada and Russia.
French President Jacques Chirac said that with the war in Iraq over, oil prices lower than they were prewar and the prospect of lower interest rates, investors and consumers should be inspired.
"I don't see a risk of deflation," he said during closing remarks of the three-day summit here. "I am not worried about the Japanese economy ... and I am not worried about the German economy, either."
Both economies, which are critical for global prosperity, are in recession. Japan also is suffering from deflation, a prolonged, broad price decline. And some economists say Germany may also be headed in that direction.
Chirac also indicated that he expects the European Central Bank to cut interest rates when it meets Thursday. Interest rates in Europe are currently 2.5% ? twice the level of U.S. rates.
Meanwhile, the dollar continued to rise after a rare comment from President Bush that the soft dollar was "contrary to our policy."
A spokesman for Japanese Prime Minister Junichiro Koizumi on Tuesday quoted Bush as saying the United States will maintain a strong dollar and added that the prime minister welcomed those remarks.
Americans now have to pay $1.18 to get one euro, the currency used by a dozen European countries. The dollar has lost about 12% of its value against the euro this year, making U.S. exports, such as computers and aerospace equipment, cheaper while making European imports, such as cars, more expensive for Americans.
Chirac said the diplomats discussed exchange rates during the summit, adding, "Every one of us considers stability in currency markets extremely important to promote growth."
At the same time, the U.S. and Europe are locked in several major trade disagreements, including U.S. exports of steel and genetically modified foods, and corporate tax benefits.
Last month, the U.S. filed a lawsuit over Europe's ban on food that contains genetically modified organisms, while Europe has drawn up a list of $4.7 billion of U.S. products that it plans to hit with trade sanctions if the tax benefits aren't changed.
The leaders also failed to reach an agreement on freezing agriculture subsidies that hurt African farmers.
Chirac blamed it on "our American friends not having given their support."
The G8 summits, Chirac said, are designed to inspire confidence in investors and consumers by showing that the world leaders are cooperating and coordinating their actions.
Besides the handshakes for the cameras, however, there were few details on just how much they are cooperating.

Dollar Bill (06/03/03; 23:13:15MT - usagold.com msg#: 104074)
{*_*}
If Jesper from Merril Lynch would talk like this........
in public. And as was posted today, no US group seems to flinch no matter what gets said by Fed officials or no matter what kind of state of affairs our financial reporting honesty is in.
Will Jesper be given a talking to? I strongly doubt that.
I am going to guess that the stock market is going to be inflated again and that will do wonders for state finances and peoples portfolios and retirement accounts.
The money is to be made not in gold at the moment, but in riding the build up of hyper inflation until...... Then, as they lose control of
the gold pricing, buy in again.
Of course, timing is unknown.
guessing agin.

mikal (06/03/03; 23:11:58MT - usagold.com msg#: 104073)
*FOR IMMEDIATE RELEASE*...URGENT...BREAKING NEWS BULLETIN.... Official National Psychiatric Diagnosis: "Military/Industrial Complex exacerbated by Chronic Obsessive/Compulsive Psychosis and Acute Suicidal/Homicidal Dementia..."
http://www.etherzone.com/2003/henr060303.shtml
COMING SOON
TO A THEATER NEAR YOU By: Ed Henry
Don't worry. Don't fret. Your president did not forget. He's got a team of George Lucas and Steven Spielberg students working hard on a full scale production illustrating Iraq's weapons of mass destruction, how they were uncovered, and how George Bush has saved the day. It's almost ready.
Part of the delay was caused by arguments over the best scenes to produce. One group wanted President Bush dressed in white robes with a staff and tablets commanding a huge desert sand storm that would unearth monstrous laboratories and silos of nuclear missiles. This was fine, but they got sidetracked with thoughts of Saddam Hussein appearing as a huge evil cloud trying to devour the good guys, sucking helicopters into his maw, and doing other things before being smote by George and his staff.
Others wanted to include Hans Blix and his inspectors being hijacked by gazillions of scarabs before Donald Rumsfeld, Colin Powell, and Condalezza Rice rush in to save and redirect them.
Of course, Ari Fleischer and the White House staff nixed all of these wilder ideas and told the producers (played by Robert DeNiro and Dustin Hoffman) that things had to be more realistic and the old UN inspection team isn't allowed on the set or to be portrayed as anything but incompetent clowns told to go home in the beginning of the film.
No matter what happens, Disney wants rights to a "Weapons of Mass Destruction Theme Park" close to Baghdad if not in the center of town. Others are arguing over hotels, restaurants, airports and airlines, even casinos, all to kick back a healthy percentage of the take to the Iraqi people and their well being on condition they accept democracy and stop complaining about the low price of oil set by the Carlisle Group. They must also drop the Euro and go back to the Dollar.
The main stumbling block and cause for delay has been the White House insistence on realism, plus some confusion on just what they want the film to portray. It's a real challenge for the producers.
Everyone agrees that the main theme and perhaps the title must be "I Told You So" but the challenge is to show plausible reason why the weapons of mass destruction were not used during the invasion, how they evaded detection for so long, work in the Al Qaeda somehow, and convince skeptics in other nations of all this. Americans are not the problem since they will believe just about anything that comes from their father-figure in the White House, CNN, Fox News, the New York Times or telemarketers.
One group wants to show how weapons of mass destruction were spirited out of Iraq just before and during the invasion, particularly to Iran that appears to be next on the hit list.
Don't fret; it will all be ready before the next election gets seriously underway and George W. Bush will look like a knight in shining armor on a white horse. Of course, by that time the elections may be called off, we may have been dealt another 9/11, and in order to solve things Bush will have simply appointed himself King. We will, however, still need the court jesters.
"Published originally at EtherZone.com : republication allowed with this notice and hyperlink intact."


slingshot (06/03/03; 23:06:01MT - usagold.com msg#: 104072)
Building a better mousetrap.
Cavan Man
In the pass couple of years I have noticed an increase in the products from China. More and more families are going into business at fleamarkets and the majority of merchandise is from China. As for Walmart a entrepenure has opened a warehouse (old K Mart) and it is something to see as the boxes piled high to the ceiling dissapate week to week and more from his loading docks fill the floor space.
I call it the store that has everything, but hard to find what you want. It is rare to see a box stamped, Made in the USA.
Slingshot------------<>

Dollar Bill (06/03/03; 22:47:31MT - usagold.com msg#: 104071)
^/^
..Jesper Koll, from Merrill Lynch (Japan), told a Minerals Council of Australia conference that reports of the imminent collapse of the Japanese banking system were nonsense. Mr Koll said because interest rates were zero, banks were infinitely wealthy to the point they could buy a country.
.."If Japan wanted to buy Australia, it could buy Australia tomorrow," he said. "With zero interest rates, Japanese banks can fund any asset, whether it's a good asset or a bad asset. With zero interest rates and zero funding costs there cannot be a financial crisis because the banks are infinitely wealthy."
..Making such property-infringing transfers ARE the point of the Grand Illusion (transfers away from creditors and towards debtors, from 'sticky wage' employees to importunate employers, from savers to consumers, and from hard-working citizens to parasitical ruling elites), the Court Jesper has still forgotten one basic law of economics - that of marginal utility.
..For even if the first extra unit of money could somehow do some real good, the next one would do less, and the next one less, and so on, ad infinitum, until the money, being in infinite supply, becomes a 'free good' and is therefore worth nothing - a process most nearly approximated in that wealth destroying pathology known as a 'hyperinflation'.
..All in all, another case of infinite money meaning infinite, if concealed, penury.
..All other nations must be induced into prostituting their own currencies at a rate commensurate with the process at work in the US, so that the dollar's debasement does not become too objectionable by comparison, else foreign workers will not continue to squander their savings on pampering the Western gerontocracy and their over-consumptive offspring.
..Infinite money will equate, as ever, to infinite mischief.
Sean Corrigan
..Only 13 out of the 50 US states are in a fiscally sustainable situation.


Black Blade (06/03/03; 22:16:31MT - usagold.com msg#: 104070)
U.S. seeks to avoid winter natgas shortages
http://biz.yahoo.com/rc/030603/energy_gas_supplies_1.html

Snippit:

NEW YORK, June 3 (Reuters) - Facing concerns about natural gas price spikes or even shortages this winter, the U.S. government is taking steps to avoid any crisis that would leave consumers out in the cold next heating season. With gas inventories still near record lows and production struggling to catch up, concerns have been growing that supply might not suffice to meet heating needs six months from now. "This winter could be a disaster. We're really concerned about making it through, but it's tough to do anything in the short-term," said Stephen Thumb, principal at Virginia-based consultants Energy Ventures Analysis. U.S. Energy Secretary Spencer Abraham has called a June 26 meeting of the National Petroleum Council, an advisory panel, to devise ways to boost natural gas supplies this summer. While analysts generally agree that there is little government can do to immediately boost supply, they cite several steps that can be taken to avert a spike in prices above last winter's record high near $12 per million British thermal units (mmBtu), almost four times the average over the past 5 years.


Black Blade: It's way too late to be thinking about "quick fixes". There simply are none. They sandbagged the issue for the last few years and now the chickens have come home to roost. Another point to consider is that several nuke power plants have shutdown for repairs due to cracking in containment heads and for long term maintenance. Some of the "quick fixes" are unlikely as there are few "dual fuel" facilities anymore, fuels are not readily interchangeable, many older power plants have been decommissioned, etc. Alan Greenspan has good reason to be concerned.



Dollar Bill (06/03/03; 22:14:20MT - usagold.com msg#: 104069)
*>*
Greetings Silvercollector,
You said you perhaps were cranky, well, I dont know, I think THIS guy might qualify however.

One day after US President George W. Bush met with the new Chinese president and invited him to the United States, Republican House Majority Leader Tom DeLay, said....

"The (People's Republic of China) is a backward, corrupt anachronism run by decrepit tyrants: old apparatchiks clinging to their dying regime,"
"The notion that these oppressive and dangerous men could convince the United States that their murderous ideology should be imposed on a free and independent Taiwan is absurd. And refusing to say so, for fear of upsetting Beijing, is not tact: it is infantilism."

Dont majority leaders get schooled in diplomacy?




mikal (06/03/03; 22:07:32MT - usagold.com msg#: 104068)
Financial leverage is on borrowed money and borrowed time
http://www.gold-eagle.com/editorials_03/lewis060403.html
Chaos-onomics -Dave Lewis
Excerpts: "'The (People's Republic of China) is a backward, corrupt anachronism run by decrepit tyrants: old apparatchiks clinging to their dying regime' -Republican House Majority Leader Tom DeLay

Media deregulation, accounting scandals, Jayson Blair, PM Blair, President Bush and weapons of mass disappearance fill the airwaves these days and there is one simple thread which ties them all together, deception. Trust in the institutions of our times is fading fast and yet the powers that be continue to play the same old tired games.....

Returning to the public faith in Wall St. or to be more specific, the financial sector, let's examine today's graph. The aspect of the data which caught my attention was the enormous growth of financial sector debt. From a mere 8.6% of GDP and 6% of total debt in 1965, financial sector debt has ballooned to nearly 100% of GDP and 50% of of total debt today. For a sector that is supposed to intermediate, the finance buys sure seem to be borrowing lots of money.
I wonder if this growth in financial sector debt is related to the Federal Reserve's willingness to act as lender of last resort, or as an economist comic might ask, "can anyone spell moral hazard?" To what ends are these debts incurred?, not profits at least if you consider that 1987's 38:1 ratio of financial sector debt stock to profits has become 2002's 49:1. Of all the deceptions out there, this one takes the prize. Fiat money is not money and to the extent the system only operates if the financial sector becomes ever more leveraged, we are likely to discover just how un-money-like fiat money can be."


silvercollector (06/03/03; 21:57:07MT - usagold.com msg#: 104067)
Socrates964
...and it was only the other day that you leveled Ari for not giving other posters the time of day. I forget the word you used, I never use a word with more than 10 letters, I would only forget it.

People turning into rhino's, don't know the play but I'm pleased that although you have belittled Roach and presumably myself in the process nowhere in your post do you alright say that Roach is wrong.

Come on make my day, tell me something I can understand. Tell me Roach is a jackass and he is dead wrong. I've been around for a long time, there are many, many people that have come and gone and they have ALL been wrong.

I'm not listening to stories and tales anymore. I know why gold is going up and it's not going up because Europe is going to save the day. Hard assets will rule this world, not paper, not even Europes paper. When oil, gold, water and food creation become critical issues paper money, IOU's, bonds and debt will mean nothing.

Perhaps I don't understand this cryptic association that the Euro has with gold, perhaps it is not necessary to understand this when it is certain that gold will surplant all fiat, be it a dollar or a Euro or otherwise.

That's another intellectually challenging concept to add to your list.

Sorry I am cranky, I am going to get lost for awhile, at least until this ECB/FED IR cut thing blows over.

Black Blade (06/03/03; 21:44:43MT - usagold.com msg#: 104066)
Economy may just run out of gas
http://www.msnbc.com/news/921531.asp?0sl=-23

Snippit:

THE THINKING AMONG traders is that if the U.S. industrial sector recovers, pushing up demand for energy, the price of natural gas could spike to record highs come winter and pose a serious threat to a nascent economic recovery. It wouldn't help, either, if this summer turns out to be a hot one, further increasing energy demand at a time when supplies are tight. The issue was raised by Federal Reserve Chairman Alan Greenspan during his testimony before the Congressional Joint Economic Committee on May 21. Greenspan told lawmakers that dwindling supplies of natural gas were a "very serious problem" that may put pressure on the U.S. economy. Industry analysts, government officials and traders share the Fed chief's concerns.

Natural gas prices are soaring too, as U.S. supplies sit near record lows, down 39 percent from last year's levels and 32 percent below the five-year industry average, according to Jim Williams, an analyst with WTRG Economics, a consulting group for the energy industry. Reasons for the tight supply include a cold winter and spring in the Northeastern United States, a primary natural-gas consuming region, and declines in U.S. production levels. "It's still touch-and-go as to whether there will be sufficient drilling for next winter — that's why there's so much uncertainty in the price of natural gas," said Williams. "My hunch is we'll make it," he added, "but two, three or four years on — that's another question."

Phil Flynn, energy analyst at Alaron Trading, worries that a hot summer may drain natural gas supplies, as power plants ramp up to power air conditioners, and push natural gas prices higher. With the U.S. economy already struggling to mount a recovery, a sustained rise in natural gas prices could make matters more difficult, he said. "High natural gas prices can hurt the consumer and manufacturing, which is trying to get itself on its feet," Flynn said, but added that the impact may be somewhat diminished by the Bush Administration's $350 billion tax cut, a declining dollar and an absence of inflationary pressures in the U.S. economy. "We're in better position to absorb the shock," he said. Another silver lining: companies in the natural gas sector are likely to profit from the growth in demand for natural gas. "Everyone's waking up to the fact that this could be a real crisis and realizing it could be profitable for the entire sector," he said. High energy costs hurt companies involved in manufacturing and heavy industry the most, as those sectors tend to guzzle large amounts of energy as they produce products like aluminum and chemicals, according to Williams. Companies in the services sector will also be hurt by higher energy costs.


Black Blade: It is looking ugly in spite of some positive injection data over the last couple of weeks. However, this is "shoulder season" and maybe a couple more weeks of lower than usual demand will end as summer temperatures arrive. It appears that high energy costs will hit the economy for the next several years at least.



silvercollector (06/03/03; 20:56:58MT - usagold.com msg#: 104065)
It gets better every day.
http://money.cnn.com/2003/05/07/news/companies/halliburton_iraq_con/index.htm
-snip-

"Halliburton Co.'s $7 billion contract, awarded without competition, to make emergency repairs to Iraq's oil infrastructure also gives it the power to run all phases of Iraq's oil industry, according to U.S. Rep. Henry Waxman, D-Calif.

Waxman said, based on a letter he received May 2 from the Army, that "the contract with Halliburton -- a company with close ties to the administration -- can include 'operation' of Iraqi oil fields and 'distribution' of Iraqi oil."

Officials previously had said the contract dealt only with putting out oil well fires and performing emergency repairs as needed.


"These new disclosures are significant, and they seem at odds with the [Bush] administration's repeated assurances that the Iraqi oil belongs to the Iraqi people," Waxman said in a May 6 letter to the Army. "

-end-


Socrates964 (06/03/03; 20:16:03MT - usagold.com msg#: 104064)
Mr. Roach - Rhinoceros
Reading US economists reminds me of Ionesco's play about everyone turning into rhinoceroses. Once there's a critical mass of them charging up and down the street, the remaining humans start to feel aggrieved that they haven't turned into rhinoceroses as well.

Hence, SC, Roach may have been claiming that the US is in recession, but this is about as intellectually challenging as pointing out that the twin towers of the WTC have fallen down.

His latest offering on 'Old Europe' makes me think that he is moonlighting as a speechwriter for Jon Snow and got his papers mixed up. See the impressive new horn on his nose for yourself:

"And unlike the United States, which has the luxury of addressing its economic problems from a position of strength, Europe must meet these challenges from a position of weakness."

Errr...what about that budget deficit and that trade deficit?

"...That would increase America's dependence on the rest of the world to finance its consumption-oriented economy — compounding an already serious balance-of-payments deficit problem. But that may now be an unavoidable outgrowth of new priorities now gripping the global economy."

....yup, the Euro/$ exchange rate shows that the rest of the world is queuing up to invest in the US because of the 'new priorities now gripping the global economy' whatever these are.

Now read this and laugh/cry/hurl:

"As we decompose the world through the stylized lens of the purchasing-power parity metric — all the more appropriate in these days of sharply fluctuating exchange rates — the European Union accounts for fully 20% of global GDP; that's only fractionally below the US share of 21% and nearly three times Japan's 7% portion."

and a few paragraphs later,

"Over the 1995 to 2001 period, the US economy accounted for 63% of the cumulative expansion in world GDP (at market exchange rates). Over the same period, Europe's contribution was about 8%. That means over that seven-year interval, America made about eight times the contribution to global economic growth that Europe did."

Note that when Roach wants to complain about Europe not pulling its economic weight, he uses 'the stylized lens of the purchasing-power parity metric' (sic) to emphasise the size of the Euroeconomy, but when he wants to complain about Europe failing to grow, he uses market exchange rates. On the basis of this argument, France and Germany should now be the economic dynamos of the world - given the recent revaluation of the euro, and we shouldn't forget the world's fastest growing economy - Iraq, which has quadrupled in size in the last three months (I can't say that I track the dinar in detail, but when I last saw, it had gone from 4,000 per $ to 900).



silvercollector (06/03/03; 19:11:28MT - usagold.com msg#: 104062)
Cavan Man
You are one of the guys 'at the front'. Keep us informed good buddy with the 'empty box' numbers.

My brother-in-law was laid off yesterday from a medium sized high-tech firm. This guy was the purchasing manager who, in 2002, saved the firm some $1.5 million in contractual obligations. Now if they can't 'afford' him they are in trouble.

My neighbor was laid off from a major high-tech firm. He was one of the production managers. This guy was leaving his house at 6;30am to be at the plant at 7;00 and leaving at 6;00pm every day. His offical working hours are 8;30-4;30: The guy was working his tail off to keep the job. I told him if the corporation had to let him go they must be near the end.

Recall a year or so ago when the speculation ran rampant about 'cash burn rates' and 'remaining cash' etc, etc. I think we will have some major burnt-out victims upcoming very shortly. (Big high-tech corporate bankruptsy)

We shall see.

silvercollector (06/03/03; 19:02:56MT - usagold.com msg#: 104061)
Roach
I can't believe you guys!

Roach for over a year (a YEAR) has been discussing the 'double-dip' recession due to consumer plight and the fact that the USA is plain and simply financially exhausted.

His theme and his expression for quite a while now has been if the US is no longer in a postion to be the economic 'engine of growth' who, that is WHO, is going to be?

Answer the question and win a prize. Now we have the FED skating (and I don't think anyone can deny that!) with IR (12 cuts) with no economic response. There is no one out there who can pick up the ball and run with it. Roach has been saying this for a year. Now you guys jump down his throat for mentioning that Europe, in particular Germany, is faltering (failing) as well.

Roach has never said that the USA is not failing economically as well. If fact, as already mentioned, he's the guy calling the 'double-dip'.

He's calling the dip, and the deflation and the upcoming global scary times because ALL ships are sinking.

Don't knock him now, his theme is the same as it's always been. He's one of the few 'bankster' types that's calling it the way he see's it and I think he's right.

Anyway, no need to speculate, we'll know this week.



21mabry (06/03/03; 18:39:49MT - usagold.com msg#: 104060)
fedex
Goldilox, Your post about fedex struck home with me.I used to work for the company, when I was hired in the company had a no layoff policy and had never laid any one off in the history of the company.I no longer work for them but evidently the no layoff policy no longer applies to them

Sundeck (06/03/03; 18:34:36MT - usagold.com msg#: 104059)
Essay - Thanks to USA Gold / CPM
Congratulatulations to John the Jute ... err I mean Dr Watson - "Frightfully good reading, old chap. Holmes will be pleased. ;-)" ... and well deserved.

...and a big thanks to USA Gold / CPM for conducting POG essay competitions ... and awarding great prizes...ANOTHER Canadian Maple Leaf for my grand children :-)

Congratulations also to Sir Goldendome - fellow vanquished knight :-( ... and also to Boilermaker and The Hoople.

..and an extra special THANK YOU to "The Master of the Joust" Sir Gandalf the White, who alone via his magic "crystal ball" knows the price of gold on 1 Sep 03 (and is not telling)...

:-)

Sundeck

Cavan Man (06/03/03; 18:26:10MT - usagold.com msg#: 104058)
Inflation and/or Deflation Musings
Inflation is a monetary phenomenom and rising prices are the end product right? Well, we certainly have excessive "monetary phenomenom" as witnessed by ongoing FED operations and prices of all sorts of very necessary products and services are registering large percentage increases in cost to both consumers and businesses.

Deflation, from my small perspective, is best viewed through the looking glass of the packaging business; specifically, corrugated boxes. I sell empty boxes for a living and one day hope to be a recovering box salesman :>)

The corrugated industry and many if not most of her customers are prime examples of deflation in real time; right here and right now. We have absolutely no pricing power--none. Pressure on selling prices and margins is incredible. I have never seen it this bad in 18 years. The real bad news is, the pressure is ratcheting up. There are five primary influences trending in confluence hampering our ability to eke out even a small profit.

1.) Overcapacity: a bi-product of malinvestment and a recessionary economic backdrop.

2.) Recession

3.) China and third world countries supplying products AND SERVICES at cost metrics the west cannot compete with.

4.) Specifically, WalMart but generally speaking, mass merchandisers of retail products with HUGE leverage on the buy side. The absolute POWER of these retailers, especially Wal-Mart cannot be comprehended easily unless you are a vendor or, selling a raw material to a vendor.

5.) Reverse auctions: This wonderful purchasing (weapon) tool is an event where an online bid is arranged and all those participating get to view their competitor's bids in real time. The lowest price gets the business. Typically what happens is the incumbent ends up retaining the business at or below variable cost.

That's what I see from my vantage point; that's my "man in the street" perspective. These five factors are weighing heavily on the packaging industry and the customers we service. For those of you from cape Girardeau, almost everything comes in contact with some sort of package and/or box. Regards....CM

Goldilox (06/03/03; 17:10:17MT - usagold.com msg#: 104057)
PruBear International Perspective, by Marshall Auerbach
http://www.prudentbear.com/internationalperspective.asp
snippit:

It is testimony to the state of US central banking practices today that nothing the Fed suggests these days has the power to shock any longer: helicopter money, currency debasement, unprecedented intervention in the fixed income markets, the mortgage market, corporate debt, the markets hardly bat a collective eyelid. Given the recent miraculous severance of domestic financial asset prices from the dollar exchange rate (which would imply foreign selling of US assets), and the similarly miraculous detachment of bond yields from stock prices, such posturing no longer appears like reckless hubris, but playing to an appreciative audience. The Bond Market Vigilantes left the theatre a long time ago, only to be replaced by a full house of inflation aficionados, applauding each new ?deflation-busting? proposal and screaming for an encore.

So it has come to this:  The Fed must fill the helicopters with dollar bills, send them aloft, and drop them first.   Households must find themselves with such bloated liquid balances that they will desire for diversification?s sake other assets in their portfolios.   Only if a surfeit of money burns a hole in their pockets will they spend it on goods, services and private assets.  It is hard to imagine any serious central bank in the world that would seek to enhance its credibility by advertising its capability of doing the equivalent of a helicopter money drops by including pictures of helicopters carrying crates in their research papers, but such is the legacy of the Greenspan Fed that this is now standard operating procedure.

Goldilox:

Were the planeloads of $$ paper for Iraq just a dry run for bigger things?

Husky (06/03/03; 17:07:12MT - usagold.com msg#: 104056)
RE: Roach "Europe is on the brink of economic failure. "
Agreed with Mr. Gresham that Roach is "carrying somebody else's water". Roach is normally and consistently a very good read. However this is at least twice now in the past 12 months or so that his comments about Europe have been very wide of the mark, I would even consider a characterisation of 'misleading' to have some substance. When you're in Europe and plugged into what is going on, this just jumps out at you, so it's not really a question of a narrow interpretation of what Roach is saying. I can understand that folks in the US can't tell the difference as they have little direct first-hand knowledge/experience of the situation on the ground in Europe, and nothing says they should have - nobody can know everything. Anyway, something is probably up as it would seem Roach's employer evidently needs to pump some very expensive hot air out the door.

It makes me sick to see the guy continue to ruin his credibility like this. He's better off leaving his employer and continuing to write as an independent I would think.

Goldilox (06/03/03; 16:57:47MT - usagold.com msg#: 104055)
Market Summary, by Rob Peebles (PruBear)
http://www.prudentbear.com/marketsummary.asp
snippit:

FedEx lost 2.5% today. The company said it would fire 12% of its workers, or up to 14,000 folks. As luck would have it, according to a Reuters report, a Wall Street analyst  jacked up FedEx estimates for ?03 and ?04 yesterday, figuring the company would benefit from lower fuel costs and a weaker dollar. By late afternoon, however, the company announced the layoffs and actually lowered estimates for fiscal 2004.

Goldilox:

More minions for the bonepile. Now it seems the 2004 estimates that companies were using for their C.R.A.P. earnings reporting are starting to be revised downward, as well.

Got Gold?

Cavan Man (06/03/03; 16:30:04MT - usagold.com msg#: 104054)
Mr. Gresham
Fine post sir.

misetich (06/03/03; 16:00:36MT - usagold.com msg#: 104053)
Ford - GM cut production
http://quote.bloomberg.com/apps/news?pid=10000006&sid=aC7iOXK0eVFg&refer=home
Snip:

Ford said its decline in May stemmed from fewer sales to rental car companies and corporate fleets. The company said it will cut third-quarter production by 15 percent to 810,000. The company said it would produce 1 million vehicles in the current quarter after previously estimating it would build 990,000. The revised second-quarter production schedule is also a 15 percent decline from the year before.

.............
General Motors

The automaker said it trimmed 20,000 vehicles from its planned second-quarter production in North America to 1.37 million new cars and light trucks, which reflects the lost production from the closure of a tornado-damaged factory in Oklahoma City.

General Motors also said its planned third-quarter output will be 1.225 million vehicles, down about 6 percent from 1.307 million in the same period of 2002.
********
Misetich

The auto industry is slowing as is the housing industry the two pillars that have kept the US economy going for the last two years

The "market" is ignoring all bad news of course - expecting a 2nd half recovery of gargantulan proportion -

They will be disappointed

All On Board The Gold Bull Express



CoBra(too) (06/03/03; 15:48:11MT - usagold.com msg#: 104052)
Live n' Learn
Mr. G. - your latest post could've been repeated endlessly -
as in live n' learn - thanks cb2

misetich (06/03/03; 15:44:09MT - usagold.com msg#: 104051)
John Berry - Washington Post Link
http://www.washingtonpost.com/wp-dyn/articles/A7375-2003Jun3.html?nav=hptop_tb
Jumped the gun

misetich (06/03/03; 15:42:47MT - usagold.com msg#: 104050)
Greenspan No 'Major Evidence' of Growth
Snip:

Federal Reserve Chairman Alan Greenspan said today there is no "major evidence" that U.S. economic growth is accelerating and hinted again that the central bank may soon cut interest rates to boost growth and guard against a dangerous period of deflation.
...............
The Fed is concerned not about "the issue of deflation in the sense of falling prices per se, but the issue of corrosive deflation, that is, a deflation that essentially feeds on itself, creates falling asset prices, which in turn brings down levels of economic activity," the Fed chairman said.
...............

But the Fed chairman said such predictions remain just forecasts, and as long as that's the case, a further rate cut could provide "insurance" that they become a reality, the analysts said.

..........
*********
Misetich

Often in the past the Post's John M. Berry has been "tuned in" with Greenspan's moves -

It appears a US interest rate cut is a certainty - and Sir Greenspan has left no doubt on what he alludes "deflation" as being - ASSET DEFLATION

All On Board The Gold Bull Express



Mr Gresham (06/03/03; 15:39:01MT - usagold.com msg#: 104049)
oops
Well, that's what i get for leaving the alternate "estreet" link to the forum up on my screen. Hitting a Submit on it did not feed back a confirmation as usual , went off into a lost URL 404 rejection type message... oh well, live n learn

Mr Gresham (06/03/03; 15:34:07MT - usagold.com msg#: 104046)
Roach
http://www.fas.org/man/smedley.htm
"Europe is on the brink of economic failure. "

Roach & crew are good economists, or at least I should say well-trained. They work hard observing all the dynamics that we discuss here each day. Their viewpoint has to be on the conventional side, as Morgan Stanley's fees are received for advising large clients.

I appreciate the frequent links here to their reports (and yesterday read 'em all), but it's mostly to see just how much of what we discuss here (on the dire doomer network) is being mentioned at the high levels of institutional economics. Quite a lot. (And being several years early has helped us more educationally than financially. So far. -- Well, actually, has anyone here lost a lot in the stock market??? Snarf, snarf ;)

But this Euro failure thing. Sounds like he's carrying someone else's water. What about the self-regulating dynamics of markets? Sounds like Europe is trying to keep itself in a currency of integrity so that the markets can do just that. You have to keep savers in the loop. Encourage capital formation.

I think Roach is conflating the economics slowdown with the deflation fear, and I give the deflation fear credulity only in the problem the BOJ/Fed have of not being able to cut below zero. That's a peculiar problem of the engorged financial sector, which is itself strangling the productive economies. Of course they will scream bloody murder and ask for everyone else to sacrifice again to save their worthless -- oops, rant talk -- , but it might be better to let them walk off the plank they've created and let the rest of the economy float (more) free again.

I think Europe intends not to get itself near that point, take the slowdown as it comes, and let economies bring themselves back up. At least I hope that is their understanding of how to ride out the USD "perfect storm".


This prattling about Deflation as a black hole that will suck everything into it. What? -- are people going to stop eating? Price of bananas drops two months in a row, and people will leave them rotting on the docks? I don't theeeennnk so. So much for deflation fears.

Just when consumers might NEED a price break, the business/banking economists are going to tell them, try to convince them, it's not good for them? Sounds like "Trickle Down" economics again to me.

But if we take all that Deflation ranting as coded talk for liquidity crisis, and banking failure (US, Japan, AND some of Europe), then we might be talking about something. But then, Roach and crew -- very good economists -- work for a bank, don't they?

I'm getting more and more leery of this "we're all in this together" chatter. Seems that in both economics and war, it gets flouted about when someone is about to pick your pocket or put you in front of a bullet as part of their business dealings.

Goldilox (06/03/03; 14:50:51MT - usagold.com msg#: 104045)
Wind until Snap
@Belgian and Dollar Bill:

"...smoothly up until that unknowable moment of final "Snap" in the adjustment process is there."

Sounds like the sinking feeling one gets after accidently winding a pocket watch TOO tightly. . . snnnaaaapp, and then it winds never again.

Dollar Bill (06/03/03; 14:29:11MT - usagold.com msg#: 104044)
*>*
Sir Belgian,
Maybe I'm wierd, but this line of yours has great humor in it.
"...smoothly up until that unknowable moment of final "Snap" in the adjustment process is there."


Belgian (06/03/03; 14:04:01MT - usagold.com msg#: 104043)
The global economic front.....
The global economy is stuck. What does it help solving, to describe how bad this or that particular national economy is or isn't. All boats are on the same economic tide !
The longer this (systemic) situation drags on...the more (deeper) w're going to focus on the monetary aspect(s) of the global malaise. Dollar euro that is . Ideal combination of time and circumstances for taking dramatic steps and stop the "smooth" and "delicate" balancing excercises.

Time for hyperinflation and riddence of the dollar-standard.
Time for the euro-project, showing what it has in store.
We can't have one and a half standard. A new International Monetary System that takes the old (unworkable) and new (Gold) realities into account. The great dollar > euro transition runs smoothly up until that unknowable moment of final "Snap" in the adjustment process is there. Is this the answer to COBRA's question on POG in euro ? Euro first, POG somewhat later ! Allies in the euro-project must be ready to shift out of the dollar standard. In the mean time the competition can continue on a friendlier basis and Chirac (€) and Bush ($) have a polite relationship (Politics, Silvercollector) where the Bush oil-clan is in the perception that their private interests are being served (Right Old Yeller ?).

Remember FOA's bonzai pruning ...right Gresham !?

Stephen Roach analyses/conclusions on €/$ exchange rates and IRs don't hold water ! In german we say "kurieren am sympton"...cure the symptoms and ignore the causes of a coagulating global economy. Public financial reporting is totally ignoring (covering up) the floating dollar-"Debtberg" as the main cause for the agglutination of economic activity. The blood-stream has been diluted with constant, destructive easy-confetti and we will have to face the consequences of our virtualizing prosperity.

The reporting, read minimalizing of the IBM fraud is rather pathetic. Very soon we will all realize that this past all embracing paper-bonanza must end with a sobering nightmare.

All those who were finally lured into this virtual bonanza will remember this bad tasting mistake for a very long time. The same aftermath and worse than the 1929 affair.

Ideal for having FREE GOLD !

Waverider (06/03/03; 13:43:59MT - usagold.com msg#: 104042)
VIP: DAILY GOLD MARKET REPORT
http://www.usagold.com/DailyQuotes.html
Snip:
"More importantly is that now the U.S. nominal interest rate is well below the rate of inflation making the "real" interest rate negative. This should provide good support for hard asset investments, and with weak returns in other financial assets the obvious conclusion is that by holding gold, the opportunity cost is virtually nonexistent. History is on our side on this one."

Waverider: Thanks Black Blade - you're always at least one step ahead of the mainstream media!

Black Blade (06/03/03; 13:26:28MT - usagold.com msg#: 104041)
IMPORTANT!!! - 2-Year Treasury Yield Below Fed Fund Rate
http://www.reuters.com/financeNewsArticle.jhtml;jsessionid=X4CMUY13535GQCRBAE0CFFA?type=businessNews&storyID=2871149

Snippit:

NEW YORK (Reuters) - Two-year U.S. Treasury yields fell to record lows on Tuesday, breaking beneath the Federal Reserve's 1.25 percent funds rate as investors bet the central bank would have to cut interest rates yet again. Yields began to slide after Federal Reserve Chairman Alan Greenspan said deflation would be on the agenda at a meeting of the central bank's policy-setting committee later this month. He noted that while deflation was unlikely, taking insurance against it would not cost much. The comments sparked speculation the Fed might decide to take preemptive action against deflation -- a sustained fall in the general price level -- either by cutting rates or perhaps buying longer-dated Treasuries.

ALERT!!!

The two-year note surged 5/32 in price, taking yields to 1.22 percent from 1.31 percent late Monday.


Black Blade: I am surprised that the gold market has missed this! With inflation (at least the official rate of inflation) running at least 1.7% and the nominal short term interest rate now at 1.22%, that is a NEGATIVE "real" interest rate of –0.48%!!! Historically the price of gold has a negative correlation to the dollar and low (and especially negative) "real" interest rates. It does not matter whether interest rates and inflation are either high or low, or somewhere in between. What matters is the "real" rate. For example – in 1980 when gold surged past $800 an ounce, the US had a very high inflation rate, but nominal interest rates were also very high, in fact higher. What happened then as now is "real" interest rates were negative. Well guess what? It cannot be denied that now we have negative "real" rates. Whenever this has occurred before the price of gold had a sustained increase in value (or at least held value) against a decline in other financial assets. Add to that a weakening dollar on the back of soaring trade, current account, and budget deficits against a backdrop of all time record US debt with absolutely no end in sight. This portends a rising rate of inflation as the Fed will have no choice but to cut rates further while at the same time opening the floodgates with massive infusions of liquidity. Actual "real" inflation suggests the "real" rate is even more negative. Did anyone else notice today's news? This is a big one!



Liberty Head (06/03/03; 13:02:55MT - usagold.com msg#: 104040)
WMD Update
http://www.ucomics.com/walthandelsman/2003/05/28/
The latest discovery.

Belgian (06/03/03; 12:53:02MT - usagold.com msg#: 104039)
GWB in the Middle East
He expressed his desire to establish *free trade* between the US and the ME in exchange for a viable Palestinian state !? I don't buy this free trade proposal.
The US goes for """ dollar-support """ ! In fact, I think that everything the US undertakes is for a big part in function of direct/indirect dollar-support !!! Keeping the dollar in "use" at whatever price and by any means. Keeping up dollar-appearances.

Virtual strong stockmarket, regardless of crazy overvaluation. A 20 year IR decline as to increase bond-value and keep the bondmarket as liquid as possible (Yep Socrates). Contain Gold (dollar papergold market) and oilprices (occupation of Iraq) as to avoid a dollar-flight.
Deviate the N.Korea threath in Japan's direction as to valorize US' protection in exchange for further dollar support by Japan. Trying to seduce Putin, away from his attachment from Germany. Divide Euroland as to weaken the euro as the dollar's competitor.

It is remarkable that Saudi Arabia (S.A.) is left out of this whole US-ME affair ! Iraq and Iran have been/are selling oil for euro. The real joker is S.A. member of BIS.
And next to China, one of the Big players in the dollar papergold contract market (LBMA and invisible/untracable trades). All this must be euro for oil related and a constant pain for the dollar support-campaign.

The more the dollar gets debt-loaded, the more it ($) needs different lifesupports of all sorts. Containing Gold with dollar contracts will become insufficiant. Remember that the enigma around the US' "custodial Gold"-"deep storage Gold" hasn't been decoded ! Is this Gold that needs to be honored ? What if the US walks away from honoring (to S.A.) this Gold ?

Free euroGold wants to stop the dollar-management of Gold "entirely" and let Gold free to seek its own level against every fiat as a wordly tradable wealth ! This is an idea that the ME would welcome without having a presidential messenger coming down with an army of security guards to have a speech with no questions allowed, like the one we saw today !

The competition amongst the dollar-euro-Gold is a game between two to one : euro+Gold against dollar. Oil is shifting to the euro/gold side, regardless of US-ME free (humhum) trade relations. Iran is already a privileged trading partner of Euroland (and Russia). The more I think about it, the more I'm amazed that the US invader sees it the opportune moment to invite for mutual trade with the Arab moslim brotherhood. The more that Syria and Iran come under increasing pressure. How can one expect any positive respons for dollar-support ?
ME nation states are still experiencing the subjugation by the US through dollar-fiat dominance. Is this expressed in the smoothly (discretely) rising POO (Nymex crude over 30$ again) ? Remember that the POO should have been 144$/barril by now (in 2002-$).





silvercollector (06/03/03; 12:30:12MT - usagold.com msg#: 104038)
"Euro Wreck" by S. Roach.
http://www.morganstanley.com/GEFdata/digests/20030602-mon.html#anchor0
"Under these circumstances, the European policy response should be clear: The accepted script for deflation fighting tells us that authorities need to err on the side of aggressive stimulus. Yet the EMU policy decision-making framework all but rules out such an option. The special risks of Germany get swallowed up in the less alarming pan-regional averages. Therein lies Europe's greatest peril, in my view. At critical stress points such as this, stabilization policies need to become German-centric. That's true of fiscal policy, where Germany needs special dispensation to go well beyond the 3% deficit cap. It's also true of monetary policy, where the ECB needs to slash regional interest rates to levels that provide far more stimulus in Germany and ignore potential inflationary consequences elsewhere in the region; that will require a good deal more accommodation than this week's widely-expected 50 bp ECB rate cut, in my view.

Europe is on the brink of economic failure. Policy makers need to go into a state of "high alert." Unfortunately, the EMU-driven mindset shows no such concern. That must change, as the gorilla in the region moves inexorably closer to its own deflationary abyss. The recent appreciation of the euro — and the likelihood of more to come — adds a special urgency to a shift in the policy mindset. That won't be easy to do. EMU was a political endeavor from the start, basically aimed at locking in French-German détente — a goal complicated by the burden of German reunification. Notwithstanding powerful political motives, EMU never rested on a solid economic foundation, in my view. The cracks in that foundation are now growing wider. If the authorities don't move quickly, it may be too late to repair the damage."

-end-

Is a 50bp cut going to wallop gold? We will know soon enough.


CoBra(too) (06/03/03; 11:51:51MT - usagold.com msg#: 104035)
... And what else is new?
Going full circle, though with brakes on. ESF, or whatever you'd wanna call it is out in force - everyday - until force majeure ... Just watch the daily POG gyrations ... a spectacle to behold ...

From Bill Bonner's Daily Reckoning:

"The end we are writing about today, however, is not our
own; rather, it is the conclusion of the good times we have
enjoyed over the last 30 years - during the Great Boom of
the Dollar Standard.

The division of labor was simple: foreigners would make
goods, Americans would buy them. Americans would pay with
dollars...and foreigners would lend them back.

It was easy work, exporting trillions of dollars; the
foreigners were happy to take as many as we shipped. They
set up factories and schlepped far into the night in order
to make geegaws that they could trade for them. Global
trade flourished...and everybody seemed better off for it.

"We are in a country that is buying more from the rest of
the world than we're selling, and we're doing it on a big
scale," Warren Buffett remarked on May 21.

"Any other country in the world that did that on that scale
would have seen greater currency depreciation already," he
added. "We have such a strong currency historically that
there's been a delayed effect. But it's started to happen
in the last year, and unless the underlying conditions
change, it's going to continue."

Before 1971, countries had to settle their current account
imbalances in gold. The amount of money in the world was
limited by how fast miners could dig the stuff out of the
ground. The Dollar Standard had a near-miraculous effect.
All of a sudden, there was almost no restraint on the
world's money supply. The central banks sold their gold and
piled up dollars. It was boomtime.

Charles de Gaulle saw the final act, even before the show
had started; foreigners wouldn't take the dollar at par
forever. A Dollar Standard, he said in the early '60s,
would allow the U.S. to pay its bills in money of any value
it chose.

Forty years later, it looks like the world's investors may
be catching on too - the Great Boom may be over. Germany
has edged into recession. Italy, too. Consumer prices fell
0.2% in Germany in April-May. Imports from China - driving
down prices - are increasing at a 62% annual rate.
Japan...well, Japan is always in recession, isn't it?

Germany is 30% of the European economy, prompting Stephen
Roach to conclude: "Europe is on the brink of economic
failure."

Here in the U.S., yesterday brought news that it takes
longer to find a new job than at any time in the last 20
years. And the Financial Times revealed the little secret
that our own Kurt Richebächer has been writing about for
years: the productivity numbers that lift Alan Greenspan's
spirits are phony. The numbers he relies upon are gross
numbers. The net figures, which are reduced by
depreciation, show no productivity miracle - not even
close.

And so it was all a lie, after all. Every vanity of the New
Era has now been destroyed. No eternal bull market on Wall
Street. No faster GDP growth. No peace dividend. No extra
payoff from new technology. No greater productivity. No
nothing.

It is all still the same. Everything comes to an end. Even
the big dollar boom. For now, the ungrateful foreigners are
growing chary of the dollar."

Chary and weary of the dollar? Gold is the natural alternative - cb2





Gandalf the White (06/03/03; 11:48:20MT - usagold.com msg#: 104034)
IF you missed the Trumpets BLARE --- See the WINNERS
http://www.usagold.com/contest.html
The POG and ESSAY Contests winners are shown at the above LINK !
Thanks Sir Townie !!
<;-)

CoBra(too) (06/03/03; 11:01:36MT - usagold.com msg#: 104033)
lack Holes? @ Clink
Probably, as the ultimate mass material implosion of 44.2 Trillion particles of greenbacks unfunded liability - contracts to the reality of its own weight and value = ZERO!
clink to you too - cb2

Old Yeller (06/03/03; 10:53:52MT - usagold.com msg#: 104032)
Lessons on How
http://www.chron.com/cs/CDA/ssistory.mpl/business/1927461

To make 43 trillion disappear.A good backgrounder on the
report deemed superfluous to USA Corp's finances.

Seems to me that if GWB was the great leader that he and
his promotional team portray him to be,he would address
this issue,as the ability to face up to difficult realities
is what makes a leader a great leader.

Seems to me all GWB really is,is a salesman.A salesman for the rich and for the MIC.One with a vast promotional network behind him.

America has truly lost what she once had,the ability for
self-reflection and the ability to face her problems head on.

So instead,the destiny and future of the great nation,her children,are looted through a horrific debt trap.

Enough offshore magic shows and action movies,Mr.Bush,the
economic future of the homeland needs some attention.No,
that doesn't mean 1 trillion added to the debt ceiling,it
means taking responsibility for the future,now.

Clink! (06/03/03; 10:14:17MT - usagold.com msg#: 104031)
@CoBra
Would that implosion make it a case of Black-Sholes black holes ?!

Groan. Sorry, couldn't resist.

C!

mikal (06/03/03; 10:12:13MT - usagold.com msg#: 104030)
Gold bull market in very early stage
http://gold-eagle.com/editorials_03/chapman060303.html
Where are we? David Chapman 06/03/03 -Excerpts:
"...Of course there are many that argue that the cycle does not exist or today's modern monetary and fiscal policies will override such a cycle. But the record for the current Kondratieff cycle is compelling. The Kondratieff winter is all about debt collapse, a deflationary depression, and major bear markets in stocks, real estate and currencies and bonds and a major bull market in gold. We also believe that the Kondratieff winter not only is about an economic darkness but as well a political darkness. Indeed one would flow from the other as major economic problems give rise to false political prophets who have all the easy answers. During the last Kondratieff winter 1929-1933, the world suffered through not only an economic depression but also the rise of fascism and a world war.
Will this one be any different? We don't think so even if all of the pieces are not as yet evident. Our most compelling argument has been the currency devaluations and the potential for debt collapse. First the currency devaluations. As we have noted many times the 1990's was a period of currency devaluations. But a devaluation of the world's reserve currency the US$ has more far reaching ramifications.....

We leave you with a weekly chart of the Royal Bank of Canada (RY-TSX, NYSE) (www.royalbank.com, 416-974-8393) and Fannie Mae (FNM-NYSE) (www.fanniemae.com, 202-752-7115). Royal Bank has been forming a bearish rising wedge over the past two years. The stock recently fell sharply after reporting sharply lower profits. Fannie Mae has been in a downtrend since 2001 but has recently recouped back above the 40 week moving average on reduced volume. But Fannie Mae along with Freddie Mac are extremely vulnerable as they are major holders of the US's household mortgages. Their capital ratios have been cited as being under stress. Over the past few years the number of mortgages on houses has grown sharply. Many of them have been made with only 5% down. Indeed the cry of "Buy now, nothing down, 0% interest" seems to have been a rallying cry for the consumer economy and it will be the Achilles heal for the Kondratieff winter. That is where we are."


CoBra(too) (06/03/03; 10:04:32MT - usagold.com msg#: 104029)
Relative to What ? ...
Gold appreciated against the US Dollar, the japanese Yen and maybe the inconvertible Yuan (Renmimbi), while it depreciated substantially against the €, and a host of commodity producing countries like the ZAR, CDN. - NZ and Aussie Dollar - even if the latter dumped their official gold holdings.

I guess Belgian would argue from the viewpoint that any- and everything is relative in value to free Gold.

I'm not too unhappy, though, as i can average down as the POG in € is actually way cheaper than a year ago.
I still wonder, though, when the breaking point, or better hurt level is reached in the $/€ relation? Is it 1.25 or is it 1.40, who knows and who cares. In the end the only arbitrator of value will still be rock solid gold - and the freely floating global fiat system based on 'reserve' Dollars will be part of histerical aberrations for students
of monetary economic history.

Does it only seem to me that that the pricing system of any commodity in Dollars and its futures derivatives is now proving to be double edged sword? A system, which is now starting to go against its inventors - or as MK mentioned some time back we're only another Black-Sholes LTCM like implosion away, freeing POG of its derivative encumbered shackles.




Mr Gresham (6/3/03; 09:32:01MT - usagold.com msg#: 104028)
Aristotle
Just racing through and had to respond to your early AM post, in which you lanced quite well some of the psychology we're all living in.

Phrases which popped in mind to parallel your thoughts are: "Las Vegas exists" (and has been a prosperous destination point in the desert). What goes on there? Rational expectations? Capital formation? No -- people go there to LOSE their money -- as ENTERTAINMENT! That should tell us how serious people may be at following the signals of markets, trying to buy low and sell high in the rest of their lives.

Some people go to LV with a budget in mind, to lose "only a thousand" or so (never having been hungry in their lives, they can't imagine those ever being their "bottom dollars"). Others cannot control themselves, and play until they are tapped out entirely. This is why Gamblers Anonymous exists.

In a less-forgiving economic environment, these people would die, along with many of their offspring, and fail to pass on whatever genes carry the impulse toward bad risk/reward choices.

Second phrase: "Wealth happens" Yes, it could happen to you. It's happened to a lot stupider, less worthy individuals. You've done your homework. Time has been the distorting factor here, plus any shenanigans that the players are playing, with the public's investment/tax money.

We'll see, won't we? Thanks for expressing core thoughts so clearly.

21mabry (06/03/03; 09:19:42MT - usagold.com msg#: 104027)
(No Subject)
There has been quite a few posts latley about currency wars and who wins and who loses.I cant help but think that multi national corporations and other mega rich who can move in and out of currencies with little or no costs , they are the winners. It makes me think about the movie rollerball the one with James Caan not that other recent one.There were only corporations left no countries are those times in our future?

Socrates964 (06/03/03; 08:13:43MT - usagold.com msg#: 104026)
Belgian
"@ Socrates : ...dumping dollars for euro...(or better, Gold) ...
Who possibly wants dollars for euro in the present picture ?
To who does one sell a losing-dollar...? Certainly NOT to the holder of a euro-winner !? I am NOT accepting dollars for my Gold and euro !"

In a phrase - the US Treasury and the Japanese.

If the US wants to maintain the dollar as a reserve currency, it has to make a liquid market in dollar instruments. That means monetizing US treasuries. Hence if our hypothetical European bank were to sell through a proxy, I can't see how the US Treasury could fail to 'make a market'. As soon as it does, the whole $ game is over and the US has defaulted (actually I see this as a possibility, but only after the Neocons have had their fun - they then hand over the White House to a reforming Democrat who then goes down in history as the President who refused to honor the dollar).

I also expect the US authorities to be aided by the Japanese. In a previous post, I mentioned the hypothesis that the Japanese offer a quid pro quo policy 'buy our exports and we invest the trade surplus in your bond markets'. My hunch is that the Chinese have worked this one out and have realised that the way to stiff the Japanese is to keep them out of China's domestic capital markets, ensuring that Japan goes down with the sinking US ship. How does the BoJ spin this - by buying dollars. Note that US treasuries have been an indifferent investment over the last 3-6 months for a Euro-based investor, but a pretty good investment for a Yen-based investor. Again, my feeling is that this policy can only work for so long, but in the meantime, it's spin, spin, spin....



As I mentioned in

USAGOLD / Centennial Precious Metals, Inc. (06/03/03; 08:09:49MT - usagold.com msg#: 104025)
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