 Centennial Precious Metals Gold coins & bullion since 1973 Denver, Colorado 80246-0009 We educate first-time investors! |
for quotes and purchase information.
|
ARCHIVED DISCUSSION FROM 7/3/2006
All times are U.S. Mountain Time
(Yesterday's Discussion.)
Flatliner
(7/3/06; 23:36:04MT - usagold.com msg#: 145749)
Collapses in chaos
Sierra Madre, Your posting stacks up nicely on the collection today. The only clarification that I would make on your statement is that it's not the whole system that collapses, but the system build around the US dollar. There is a subtle difference between that and the entire system going down. If confidence is lost in the US Dollar, strength will be found in gold that will strengthen the Euro and Ruble and currencies of other countries that have beefed up their reserves in gold. Thus, the whole shebang doesn't have to go down for gold to shine – just the US Dollar.
MK, I also believe there is more on his mind then reserves when the UAE bank governor speaks. I tend to be suspicious when I read articles and I couldn't help but see today's article as an official statement that the "bank" (being a political tool) is making it clear that in politics they are not buying gold or Euros. But, it may be that gold is flowing into that country in large amounts – but it is not the bank! Picture a UAE equivalent Warren Buffet moving his assets into gold. It is very private, but in the gold markets, very public. Thus, even though a state may sign a political contract with the west, it doesn't mean that they are going to be able to stop every single investor in their country from diversifying into hard assets. Or, what if there are just a lot of "Big Investors" in the region that are shipping in gold. In either case, if there are contracts that force the state to make one type of decision, yet the people in the region perform different actions, I would expect the bank to stand up to make such a claim. Or, basically say what this guy said today – they have not bought gold and they have not bought Euros and they are buying debt instruments. They are still following the letter of the law between countries to support the strong dollar.
Goldquest, I believe that you are correct, they are buying, but the hair that I'm splitting here is that it's not the CB that is buying. The CB, being a political instrument, can not buy. So yes, they – as meaning the people of the region that have lost confidence in the US Dollar – are dropping dollars for gold just like you and I are doing the same.
Sundeck, Why would a central bank buy gold? As I see it, the act of a central bank buying gold gives strength to gold as a currency. This is a conflict of interest on behalf of the bank. In reality, the bank doesn't want any gold AND it doesn't want to hold any foreign currency. What they want is the right to collect interest in the country of origin and they get this right by maintaining the people's confidence in the currency of that state. The official stand of every central bank must be that gold threatens the local currency – thus everything must be done to discredit gold and strengthen the people's confidence in the local currency.
Even when you look at the European banks, you don't see them buying gold. Rather, they are working hard to maintain confidence in the fiat currency and have used gold with a strategic purpose. They even sell gold into the markets reducing their hoard knowing that by doing so they strengthen their currency. The number one priority of a central bank is to maintain the right to print the local currency. You do that at all costs.
Today, I believe (which may change tomorrow) that the game of gold hoarding is a very strategic game. The political units all around the world give lip service to hoarding, but do not. Statement after statement comes out of China, always from some underling, that says the country should buy more gold for its reserve. But does China? Does the official state bank do this? No. They will not. They have no motivation to do so. But, by speaking so, will they encourage the private sector to by gold? Absolutely! The goal is to seed the country with gold. It doesn't matter who has the gold, it only matters that the gold exists in the country so that it can trade freely.
IMHO, all the countries that have been talking about gold in the last few years have spoken publicly words that it cannot follow through on privately. Thus, what I would expect that we will see is that every central bank will speak favorably of gold, but will not actually buy it for itself. Rather, they will encourage the private sector to gather the gold. When you really think about it, any central bank that hoard gold will be an easy target for war. Any central bank that disperses the gold through its citizenship will grow rich through dispersion.
Following this thinking, the words from the UAE governor say to the world – we are not hoarding gold and we are following the rules to support the US Currency (so don't kill us!). Meanwhile, the private citizens race to gold in any way that they can.
I challenge everyone in this forum to investigate the value of the gold hoards of the central banks and compare that to the value of the fiat currency that they print. There is NO comparison. Then look at the political games that they must play as to not be labeled a terrorist state. They are doing everything that they can to not be labeled this way. At the same time, they ALL know that if enough people (ants) buy gold the weakness of the Strong Dollar policy will be exposed. The ants will establish the next defacto reserve currency through their actions and no central bank will be blamed for the broken system. If it works, the war to support the US Dollar will be very limited. This is in the interest of all people living on this planet today.
Ten Bears
(7/3/06; 22:57:21MT - usagold.com msg#: 145748)
Call for New Bretton Woods
http://www.larouchepub.com/other/2006/3326nbw_bakhtiar.html
@ Sierra Madre #: 145747
Others share your view.
Sierra Madre
(07/03/06; 21:39:56MT - usagold.com msg#: 145747)
A possible International Monetary Conference...
Dear Mr. Kosares:
I am back at this Forum, moved by a wish to comment on your article of some weeks ago, in which you expressed the thought that an international conference would have to take place sooner or later, to take up the reform of the international monetary system.
My comment on the possibility of such a Conference:
It seems to me that at this time, all the Central Bankers of the world know perfectly well that a reform of the International Monetary System is urgently required. Perhaps Bernanke does not understand this, but Paulson is a very practical man and certainly, he must agree that the present monetary system is totally shot.
The problem is, that the moment such a Conference is known to be in the process of being set up - and keeping it a secret would be impossible as too many people would be involved in such an undertaking - the whole financial world will know quite clearly what that means: a re-establishment of gold at the center of such a reformed monetary system.
And seconds - not weeks, days or hours, but SECONDS - after the news of an impending Monetary Conference filtered out, the price of gold would rocket upward into the thousands, totally out of control.
All the important parties to such a conference know that that would happen. And so, no such conference can be planned or take place. No one dares propose it!
So, that leaves only one alternative: to continue down the present path until the whole shebang collapses in chaos. And when that happens, of course, gold will rocket upward into the thousands anyway.
All this, just my opinion, of course.
All the best for you and USAGOLD!
Sierra Madre
Toolie
(7/3/06; 20:38:07MT - usagold.com msg#: 145746)
UAE CB's comments
Is it unlikely that the comments made by the UAE CB are intended to distract investors and speculators away from the gold market? Shake loose what may be shaken loose while they accumulate. Wouldn't every ounce help?
The Invisible Hand
(7/3/06; 19:48:06MT - usagold.com msg#: 145745)
The moment of impact (FGD) is nearing
Western diplomats (maintained alive with stolen tax
money) are now giving Iran an ultimatum for July 12,
six days before FreeGold Day (FGD).
The repeat by the UAE that it is diversifying into
gold and euro is by the same token a political statement.
It is certainly a political statement if one considers that the messenger is naively drawing attention to the fact that the UAE wants to put its hands on CHEAP gold. But even our gentle host seems unable to understand such subtleties. Or does he? He can't get his mind about what is going on here and therefore can only guess that the statements project a great deal more for the gold market than what the words signify.
http://www.atimes.com/atimes/Global_Economy/HG04Dj02.html
SNIPS
Quotable
"When it's a question of money, everybody is of the same religion." - Voltaire
+
The size of funds under management by the US mutual funds, life insurance companies and pension funds overwhelm, as an aggregate, the total official reserves of the Asian central banks. What the Asian central banks do is important, but what the US real money accounts do is really important."
==
Asian CBs $-reserves --- $ 2,7 trillion ---
Put this in perspective versus the
--- $ 18,6 trillion --- which the US MONEY ACCOUNTS(funds) are managing.
But if only a small fraction of this dollar-giant
does not remain loyal to the dollar and wants to replace greenbacks with tangible Freegold, then the dollar-giant could collapse. Why? Because the dollar is nothing else than a debt bubble.
Flatliner argues however that Freegold is dependent
upon the strong dollar policy in the US of A, but the only way he see Freegold is if the agreements that support the dollar fail.
Does Flatliner mean that it is only the objectives of the US of A policy which count, but that for other debt based systems such as China and Russia, it is the actual results of the policies which matter? No, he seems to argue that if the agreements that support the dollar fail, Freegold will be a fact.
Sorry, no spell checker available in internet cafe.
MK
(7/3/06; 19:44:07MT - usagold.com msg#: 145744)
Chris Powell. . .Flatliner. . .UAE gold purchases
Appreciate the articles posted, Chris.
What is painfully apparent, if you happen to be short the gold market, is that there are some potent forces aligned on the bull side. It is significant in what it portends and what can be read between the lines. As the article subtley suggests, perhaps the UAE central bank governor has more on his mind than the reserves of the nation state alone. In the Gulf, oil revenues are more concentrated in what we would call private holdings than public. The $23 billion in UAE central bank reserves is overshadowed by far by what is held in the "petroleum fund" -- $450 billion dollars.
I found this paragraph particularly revealing:
"The Abu Dhabi petroleum fund is thought to be worth at
least $450 billion. The fund never discloses its
investments and moves quietly through foreign banks,
but veteran gold watchers suspect that it is also
diversifying into precious metals."
We should be careful here. Despite the fact that most "players" talk their book in the public venue (and I consider the Sultan a player), here we have a case where the power is so situated that what is being said might very well become reality. When you think about it. . . .Why not??? If the UAE central bank can drive the gold price higher by inference or direct action, guess who benefits?
UAE official sector buying could translate to huge profits on the private side of the ledger. In other words, the gold is already acquired and more is in the can. If you can truly get your mind around what is going on here, the statements by the Sultan project a great deal more for the gold market than what the words signify.
Keep in mind that what we are tossing around here are the words and actions of one small state in the Gulf. There is much more at work here than meets the eye.
goldquest
(7/3/06; 19:28:16MT - usagold.com msg#: 145742)
UAE Gold Buying
They are buying gold NOW, dumping greenbacks. Getting the most "bang," for the buck, so to speak, before everyone else catches on!
Dump the Greenies, buy the Goldies.
Forum members and readers are already ahead of the UAE.
Sundeck
(7/3/06; 19:08:41MT - usagold.com msg#: 145741)
UAE CB Governor's statement
Flatliner #145735
Yes, it is a bit of a mystery why a relatively large potential buyer would want to signal their intentions to a market beforehand. You won't find a Buffett doing same...in fact he (Buffett) has reportedly dropped brokers who were indiscrete with his intentions...and for plenty good reason...for his own sake, as well as for the sake of the market generally!
Yet here we have a cashed-up official of some significance blabbing to all and sundry about buying gold...if only it was a bit cheaper...not really "talking down the market" is he...
But then, in recent times, he has not been alone. Russia, China, Iran and several other countries' treasury/banking officials have made similar statements. An odd behaviour indeed if they know anything at all about trading commodities.
And it is hard to believe that he really thinks gold is cheap in US-dollar terms, when he must be aware of the tightness in new mine supplies and that existing stocks are ever more tightly held as the world awaits the dollars descent.
Furthermore, one doesn't think of central banks as being short-term players, buying today and selling tomorrow on volatility. They may do this, but I would imagine that the bulk of their resserves would be relatively static assets over long periods. Why would he worry about trying to save a few bucks per ounce when they are looking to the long-term?
Maybe he is just a ninny at the game, or maybe, as you suggest, there are other agendas...just as there are for Russia and China. For sure, sitting on top of the world's oil-reserve powder keg, as the United Arab Emirates does, it is almost inconceivable that officials such as this do not send carefully crafted messages in the subtext of their announcements...
:-)
Chris Powell
(7/3/06; 18:54:14MT - usagold.com msg#: 145740)
Gold shines on UAE's plan to switch out of dollars
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/07/04/cngold04.xml
By Ambrose Evans-Pritchard
The Telegraph, London
Tuesday, July 4, 2006
Gold has surged to a six-week high of $625 an ounce
after the United Arab Emirates revealed plans to
invest 10 percent of its foreign reserves in bullion,
suggesting a strategic shift away from dollars by the
oil-rich sheikdoms of the Gulf.
The governor of the central bank, Sultan bin Nasser
al-Suwaidi, said the UAE would switch into gold
gradually.
"I don't think it is appropriate to buy gold now. It
is too expensive. The appropriate time might come very
soon. We could go up to 10 percent," he told the AME
Info financial service in Dubai.
"When there is a clear trend going up, you move into
it. If it is going down, you wait for the bottom and
buy. There is no trend at this point," he said.
The Russian central bank has a similar strategy of
raising reserves to 10 percent, buying the dips each
time gold falls back from a speculative surge -- a
policy that quickly puts a floor under each
correction.
Gold reached $730 an ounce in early May before
crashing 24 percent in the sharpest drop since the
bull market began in 2001. The metal has since shown
extraordinary resilience, regaining half the ground
lost.
The UAE's foreign reserves are a modest $23 billion,
but the federation of states also disposes of vast
investment wealth through oil trusts.
The Abu Dhabi petroleum fund is thought to be worth at
least $450 billion. The fund never discloses its
investments and moves quietly through foreign banks,
but veteran gold watchers suspect that it is also
diversifying into precious metals.
Separately, an official from China's Banking
Regulatory Commission said Beijing should raise its
gold holding from 1.3 percent to between 3 and 5
percent of the country's exploding foreign reserves,
now nearing $900 billion.
The official also stressed the need to ease in
gradually, buying when the price was right.
Armageddon
(7/3/06; 15:13:30MT - usagold.com msg#: 145739)
Ravi Batra
@MK - Thanks for the info on Batra
I assume you were talking mainly about Batra's latest book called
"Greenspan's Fraud : How Two Decades of His Policies Have Undermined the Global Economy (Hardcover)"
referring to the likelihood of an inflationary depression.
I also remember glancing through his book on a depression in 1990 however, I don't recall if he talked about inflation in it or not. At that time globalization was just about to take off especially in China which provided America with many cheap products thus lowering the perception of inflation dramatically perhaps preventing Batra's depression from materializing?
Flatliner
(7/3/06; 14:31:52MT - usagold.com msg#: 145738)
@The Invisible Hand's Freegold schedule
TIH, I am curious about the statement "once Iran is in the SCO (Shanghai Cooperation Organization), Freegold will be a fact". The more I watch and listen, the more I lean towards Freegold being dependent upon the strong dollar policy in the US. I do not see the actions of Iran changing that of the Strong Dollar policy anytime soon. In fact, what I see developing here is another fiat currency system built up around China and Russia that mirror what the US has done. These are debt based systems that generate tax through inflation and find support through oil and exports.
The only way I see Freegold is if the agreements that support the dollar fail.
Flatliner
(7/3/06; 14:14:40MT - usagold.com msg#: 145737)
@MK's the degree of inflation
As the penny goes, so is set the path for all coins. All coins have intrinsic value. If the US government does away with the penny, you will find that a path will be set to drive everyone to plastic – for all transactions. In a gold forum, the value derived from the intrinsic value of coins is something that is well understood to give power to the holder of the asset rather then to the issuer of the fiat currency.
Some people today find it ok to pay the inflation tax in their roll to be a ‘good citizen.’ Others, like gold bugs, do not. Wealth does not exist without intrinsic value. In that environment, it's all corporate and governmental laws that drive the flow of cash that determines individual or collective power. Where intrinsic value exists in the currency system, fair and honest exchanges are made and valued.
It will be interesting as people discover that gold coins are comparable to pennies. That is, the face value of a(n old) penny is lower then it's intrinsic value. The same thing exists in the gold market where the market price of gold is much lower then its function in the marketplace under the control of the Strong Dollar policy. What is the real intrinsic value of an ounce of gold? How long until some big economy defaults on it's commitments and sets the world market's free to chase gold? It is then that we will see what the intrinsic value of gold is.
Meanwhile, we, as ants, carry home little nuggets one round at a time.
Liberty Head
(7/3/06; 12:46:07MT - usagold.com msg#: 145736)
The Parade Just Goes On
Our nation's independence from a king named George will be celebrated once again this 4th of July. There's a bitter irony for you.
Human nature has not changed one bit since Andersen's tale of The Emperors New Suit.
Blinded by arrogance, an emperor parades his lies for all to see. Most turn out to cheer and wave their flags in support. Few challenge the emperor. After the deceit is publicly revealed, nothing changes. The parade just goes on.
We love a parade, don't we? The same parade is still going on to this day.
Human nature has a positive side as well. It is our nature to value gold highly.
I will celebrate that!!
Best Wishes
Flatliner
(7/3/06; 11:33:58MT - usagold.com msg#: 145735)
@UAE entering gold market
Sundeck, it is interesting to see this governor's comment with respect to entering the gold market. I'm pretty sure that everyone in this forum is well aware that if a central bank entered the gold market they would qualify as a Big Trader. Big Traders are locked out of the market that we use and follow with regards to price discovery. Delivery is simply not an option, thus going to the source is the only choice.
At the same time, is there something more interesting in the statement? I can't help but think about this statement "'I don't think it is appropriate to buy gold now - it is too expensive." To us ants, we see the price of gold as really cheap! We get to take advantage of the Strong Dollar and convert our few little bills into metal wealth with no questions asked and virtually no resistance. But, when we listen to this CB governor, his point of view is different. What would make him say that buying gold would be too costly? Could it be that they value something else higher then gold? Life maybe? Peace in their country maybe? Could it be that they do NOT by gold because they get services (by not buying) that are above and beyond what they get if they do buy?
There is also the statement "…waiting for the right moment to buy euros…" Why must they wait? To anyone else in the world, they would just make the purchase. Thus, the only thing that I can conclude from a statement like this is that there are contractual reasons why they do not buy Euros. On top of that, a statement like this comes as a warning to the other party that they are in agreement with in order to clearly announce that if the other party defaults on the agreement, the contract is null & void. Thus, if the party that they direct their comment towards values the contract, they will need to hold up their side of the bargain.
Finally, they say that they are generally investing in debt instruments in the US (probably part of the agreement) and that they expect interest rates to continue to go up. What's interesting here is that they are expecting rates to go up. Sure, that gives them a higher yield, but it reduces principle. The only time someone makes money buying debt instruments is when rates are falling so the money that is used to fulfill the contract has a higher value then the ones invested. Thus, the comment in this article is stating that they are still willing to take loses with regards to their investments in the US.
I see this statement as a political one. They have not publicly purchased gold and make it obvious that the value that it would provide them – right now – does not make sense. They also have not bought Euros, so if there was any question with regards to deals, that should not be questioned. Likewise, they are recycling into debt instruments.
My eyes continue to look for Russian news. They seem to be the one country not all tied up on the strong dollar game and they seem to be playing both sides seeing the current economic positioning. The question that I have is will Europe allow for taxation through inflation of the Ruble? Or, will gold balance trade?
Liberty Head
(7/3/06; 10:52:24MT - usagold.com msg#: 145734)
Washington Post Agrees with "Another"
http://www.washingtonpost.com/wp-dyn/content/article/2006/07/03/AR2006070300214.html
snippit
Gold hits 4-week high, tracks oil
A senior government economist said China should take advantage of any weakness in bullion prices to build up its official gold holdings as part of a strategy for diversifying its foreign exchange reserves.
The United Arab Emirates said the central bank was sticking with plans to convert up to 10 percent of its currency reserves into euros and could convert up to 10 percent into gold.
----------------------
Hmmmm, Gold tracks oil. Where have I heard that before?
Oh now I remember. I read it here 8 years ago.
Best Wishes
Sundeck
(7/3/06; 05:23:09MT - usagold.com msg#: 145733)
Oops
http://english.people.com.cn/200606/15/eng20060615_274413.html
...here is the link for the story about "Stan" and his friends...
Sundeck
(7/3/06; 05:21:39MT - usagold.com msg#: 145732)
China seeks further cooperation with SCO in oil industry
Snip:
"...
China hopes to intensify cooperation with other members of the Shanghai Cooperation Organization (SCO) in the oil sector, in which its own advantages will also benefit international partners, said industry insiders attending a business forum here Thursday.
...
The SCO groups Kazakhstan, China, Kyrgyzstan, Russia, Tajikistan and Uzbekistan. In 2004, the most recent time that data is available, their combined oil output and consumption stood at 720 million tons and 452 million tons respectively.
...
At Thursday's business forum, China's vice minister of communications Feng Zhenglin said the six SCO members should speed up construction of three road networks that will link China, Russia and the central Asia nations with the Caspian Sea, Iran, Turkey and the European countries.
..."
Sundeck: China and the SCO certainly appear to be on cordial terms and on the move...and they have a significant oil surplus between them.
It helps to understan' what your neighbours have to offer...
:-)
Sundeck
(7/3/06; 05:08:46MT - usagold.com msg#: 145731)
China and Africa and Oil and Aid
http://www.asianews.it/view.php?l=en&art=6525
Snip:
"...
The purpose of his [Wen's] visit was to establish a strategic partnership with Africa. In this perspective China plans to lower tariffs on African goods, provide low-interest loans, invest in local infrastructure and help making South Africa more competitive.
..."
Sundeck: China plans to replace 15% of its oil imports by application of South African coal-liquification technology to China's massive reserves of coal. China is also in a fine position to offer "low-interest" US dollar loans to SA using some of its massive US dollar reserves. I get the feeling that "ex-coloinal" Africa is seen by China as ripe pickings indeed...
:-)
Sundeck
(7/3/06; 04:29:46MT - usagold.com msg#: 145730)
UAE Central Bank set to enter the gold market
http://www.ameinfo.com/90460.html
Snip:
"...
The UAE Central Bank Governor this week gave his strongest hint yet that the emirates will shortly enter the gold market and also purchase euros as a diversification of the national currency reserves presently held in US dollars. With the US dollar ripe for devaluation this seems a timely initiative.
...
Many economists see US dollar devaluation now on the agenda as the US economy adjusts to accommodate its twin deficits, and that means that for the UAE holding non-dollar assets like gold and the euro will help protect the value of its foreign currency reserves.
..."
Sundeck: Mmmm...they talk about a summer lull in gold buying...better be careful things don't hot up earlier and more than expected...
:-)
Topaz
(7/3/06; 01:24:36MT - usagold.com msg#: 145729)
Armageddon.
Funny old world we live in eh?
The scenario thats always at the forefront in my mind is that where the Market discounts all and every "future" investment preferring the "present" ...Cash/Gold.
I'd imagine 'ol Buck would fare pretty well vis the other Bum-wad under such conditions.
This is your DEflationary worst nightmare and Ben etal are totally incapable of warding it off.
One has only to conceptualise what things would be like NOW if say 911 and it's concurrent twin deficits etc. hadn't fortuitously come along.
All IMHO of course.
ViewYesterday's Discussion.
Permission to reprint is hereby granted where the USAGOLD name is cited along with our web address, mailing address and phone number. For electronic reproductions, citing the post heading and the http://www.usagold.com/cpmforum/ website address as the source is sufficient.
|
Centennial Precious Metals Gold coins & bullion since 1973 Denver, Colorado 80246-0009 We educate first-time investors! |
for quotes and purchase information.
|
