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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...   (Discussion Forum Hall of Fame) (The Gold Trail) ("Thoughts!" by ANOTHER)   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.

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ARCHIVED DISCUSSION FROM 5/4/1999
All times are U.S. Mountain Time

View Yesterday's Discussion.

Tomcat (5/4/99; 23:59:22MDT - Msg ID:5598)
The magic of Aristotle

Fellow Ladies and Knights. I bid for your attention. Have you noticed that Sir Aristotle often takes several mundane facts and joins them together to arrive with a magical result that tranforms ones understanding! Truely, with this man one plus one tis greater than two. Tis magic I say. Me thinks his power is of the Gods. This could be how it comes to be that he shares so much of his wealth.

Perhaps Sir Aristotle could hold the royal position of Royal Alchemist. What say ye?

Tomcat (5/4/99; 23:44:23MDT - Msg ID:5597)
Chicken man

Your numbers from Germany are astounding.

Your point that we now have much faster communications is one with many ramifications. When the inflation starts many people won't have time to get out of the stockmarket and get into cash and then buy something of value. Three days could be equivalent to three german weeks (1940s). Makes one more good reason to keep physical gold.

BTW, I like your writing style with all the ... I never liked all the formalities...maybe I'll do a little myself... :)

I sure have not planned to use my Soc Security. I do have lots of pre 65 silver though. I am a believer in silver for hard times purchasing power. I plan not to spend gold in hard times but to hold it to preserve wealth.

Anyway, I enjoyed and benefited from your reply.

Aristotle (5/4/99; 22:28:07MDT - Msg ID:5596)
Hey, Chicken man...we had coincident posts in time and content.
Amazing. I've got a headache and am turning in. Sorry for the sloppy content as a result. We'll get into this a bit more tomorrow, ok? I've got some Belgian gold francs on the way...the excitement must have gotten the better of me. (Now you all know what the stirrings were in the castle's treasury today. Anyone care to donate fresh horses to the knights in charge of delivery?)

Excitement. Get you some. ---Aristotle

Chicken man (5/4/99; 22:14:14MDT - Msg ID:5595)
(No Subject)
http://www.kitcomm.com/comments/gold/1999q2/1999_04/990427.174050.thin_long.htm
Hope this works!.....One must read the riddles of life!

Aristotle (5/4/99; 22:07:59MDT - Msg ID:5594)
Wow--an overnight price hike of 50% for fuel in Saudi Arabia. Very interesting.
canamami, thanks for this enlightening post earlier--"Re: Saudi/Iranian Rapprochement."

Tomcat and Al Fulchino:
I don't believe I can with any level of credibility provide answers to your worthwhile questions...there are simply too many variables as the government would surely try to fight the path of least resistance in an effort to retain a measure of future control over the currency. In a general sense, it would be safe to say that the prices of all real things, including wages, would rise as a result. Some would adjust faster than others, depending on their position in the economic 'food chain.' Nothing would rise rise by a multiple greater than Gold, as its value would be assured by its eminent role in the monetary system. So while a good suit may in the future sell for several thousand devalued dollars, once ounce of Gold might very well be the monetary equivalent of two, maybe three good suits. Simply look at what happened to the prices of things in nations notorious for past devaluations, and on top of that, epect Gold to be held in much, much higher regard everywhere.

In such a scenario, we would expect those with cash savings to be hit the hardest, as its purchasing power drops with the devaluation. Debtors would happily pay off their loans with devalued dollars, while their lenders would suffer by equal and opposite degree. Gold savers would make out best of all. Businesses with inventory to sell would do ok also, as they are high in the food chain. They could easily mark up prices to compensate for the weaker dollar (just like they did in Germany in the early 1920's.)

Again, this is primarily a mental exercise that must be greatly simplified to generalizations. As long as markets remain open and vital, the economic principles of supply and demand , etc., can help you reason through a plausible outcome.

Gold. Get you some. ---Aristotle

Chicken man (5/4/99; 22:05:13MDT - Msg ID:5593)
Tomcat
Interesting questions!....."how fast?"..In 1918 in Germany an egg cost a quarter of a mark...in the summer of 1923 an egg cost 5,000 marks...by November of that same year it cost 80,000,000,000 marks!......fast enough for you....?...comes from page 177 of Jerome Smith's "Coming Curriency Collapse" copyright 1980....I'v been waiting for this a long time!.....oh..btw...comunications are a bit "faster" today!
"what could be the trigger?"....my guess..(?)..I'm thinking maybe the "cooking oil will demand to be paid in real cheesecake" as per the poster "Long Thin and Hard on This[THOUGHTS] over at Kitco on Apr 27 at 17:40......was posted here later that evening.......REAL good read...read it as a riddle and when he said "I know".....I have the feeling he is in a position that does know how the "story will unfold".......let's face it ...Some "one" knows how this is going to turn out....but do to their position in the system can NOT go on record as the one who "spilled the beans"....I am greatful that those who "know" share their insite to the "huddled masses"...we could meet in a phone both...not to many paying attention as to what is happening today behind the sceines (sp)....can't think and spell at the same time!
"Control inflation"....by price control?...just makes for a black market with No tax receipts...ie Russia
"The big loser as to debt?"...take a look at that guy in the mirror in the morning...that is the loser....the taxpayer's so called Social Security Trust Fund....we are the biggest holders of gov debt....nice feeling....eh?
"rapid collapse vs controlled one?"...in 1964 our Quarters were silver....4 quarters would buy 4 gallons of gas...today the same 4 silver quarters will still buy 4 gallons of gas....but when we got the phoney quarters(one for one...remember? )...it now takes 20 phoney quarters to buy 4 gallons of gas.....our curriency has lost 80% of it's buying power in 25 years...a drip at a time...so why is their such a big concern about the remaining 20% .....?
Thx tomcat
Aristotle...I'll respond soon.....got to do more thinking on that one!

PH in LA (5/4/99; 21:39:12MDT - Msg ID:5592)
New essay by Ted Butler
http://www.gold-eagle.com/gold_digest_99/butler050599.html

Ted Butler has a new essay over at one of those other forums (see URL). His comments have always seemed well thought out, even if I can't pretend to completely understand them. Maybe some of the better minds here than mine will be able offer some elucidation.

FOA (5/4/99; 20:57:32MDT - Msg ID:5591)
Muslim defence force with Saudi Arabia!!
http://www.khaleejtimes.com/
Khatami for military alliance with Riyadh

"TEHERAN - Iranian President Mohammad Khatami
yesterday stepped up calls for the creation of ajoint Muslim defence force with Saudi Arabia, saying a powerful alliance with Riyadh would make their enemies "fearful."

"The security of Saudi Arabia and other countries in the region is our security. We don't need foreign forces for that," the Iranian president told visiting Saudi Defence Minister Prince Sultan bin Abdulaziz."

ALL: I think the region needs a new gold coin to start things off correctly! Perhaps one is in the works?
Will have more to say on this defense pact in a few days.

FOA

beesting (5/4/99; 20:54:44MDT - Msg ID:5590)
Another good reason for a stronger EURO in the future.
http://www.barney.co.za/news/may99/eurobourse4.htm
Eight European stock markets agree to form Pan-European market.

Europe's biggest markets,London and Frankfurt were joined by those in Amsterdam,Brussels,Madrid,Milan,Paris and Zurich.....See above URL.

Although Britain is not currently part of the Euro-Zone all British quoted companies are free to issue shares in EUROS.

(Alan Greenspan quote:Competition in the market place is healthy for all parties.) Got Gold???........beesting

Tomcat (5/4/99; 19:30:04MDT - Msg ID:5589)
From mozel at Kitco

Date: Tue May 04 1999 20:18
mozel (@chris @The Hinge of Gold ) ID#153110:
Copyright © 1999 mozel/Kitco Inc. All rights reserved

Saw your posts. Someday, I suppose somebody will locate the ultimate source of the phantom barrels of oil which overhung the oil market and caused oil to follow gold down in $US. The consequences of it will be arriving for some time.

The International Monetary Fund and system was conceived and put into place to accommodate the refusal of the United States to settle trade in gold. To accommodate a fiat reserve currency, in other words. Now, the hinge of gold is set to swing in the other direction. When nations reduce or eliminate their holdings of $US as reserves, and every nation in the Euro circle has already done so, the position of the United States in the IMF SDR basket will be reduced. When the exchange markets see this pending, the $US will trade lower. Gold will rise, and a liquidity crisis and draults will ensue. The foreign exchange markets will sell the $US. These developments will further undermine the $US position in the basket of currencies. At this point the US could very possibly fail to make the cut that keeps the $US in the basket at all. The liquidity of the IMF itself will fail from these same consequences. The international monetary system based on the IMF will either be no more or gold will become a marked to market monetary asset within the IMF. In any case,
when the IMF no longer serves its purposes, the United States may very well liquidate its deposit and walk away from it.

SteveH (5/4/99; 19:12:54MDT - Msg ID:5588)
Ooops!
Peter,

It just did $286.90 but then mine is 30-minutes behind too.

SteveH (5/4/99; 19:08:37MDT - Msg ID:5587)
Peter
I too noted that gc9m hasn't budged since what? ... 19:12. If spot is indeed up by that amount then that is very good. A run tonight above $290.00 would do wonders for this baby gold bull.

Steve

Peter Asher (5/4/99; 18:52:29MDT - Msg ID:5586)
Steve! Gandalf! ?????
Kitco spot now up $1.30, Quote Com not yet showing any gcm9 bid and asked, in the time frame since the jump so no way to confirm.

Tomcat (5/4/99; 18:43:44MDT - Msg ID:5585)
Oil Prices and Y2k

Noone can predict how much of our foriegn and even domestic oil will be impacted by Y2k. One can predict, however, that even a small amount of oil/y2k trouble will give the oil firms an excuse to the raise the price at the pump. Even in a scenario where Y2k did not have a big impact nationally, the international troubles from y2k will provide a great excuse to raise prices.

If the y2k scare is high, people might be more than willing to pay higher prices and be thankful they have gas available to purchase.

Also, there will be an opportunity for compliant oil firms to purchase non-compliant firms.

Al Fulchino (5/4/99; 17:49:17MDT - Msg ID:5584)
gasoline
In case anyone is interested...my wholesale went up two more cents today 61.55 reg super is 81.55 cts/gal can remember the middle price this 18 cents in about 45 days

SteveH (5/4/99; 17:48:46MDT - Msg ID:5583)
June gold now...
$287.10. Going to be one hell of a year. Already:

War
Littleton
Oklahoma
Y2K
Dow 11,000
GS IPO
Hurricane forcasted to be worst than most.
Lowest oil prices and other commodities in 20 some years.
More and I can't remember...
What next?

Al Fulchino (5/4/99; 17:45:35MDT - Msg ID:5582)
value of gold
I have a question for the forum. There is much talk here about the true unhindered price of gold. If it were to rise substantially or meteorically as has been suggested here, would it take along with it things such as real estate, autos, normal items we purchase, or would it actually rise by itself, having been supressed and now have a higher purchase ability? I often hear it said that an ounce of gold always will buy a good suit. Is that the case here, where we will see items like this rise with gold...or will we be able to purchase dozens of suits? Thank you

canamami (5/4/99; 17:44:29MDT - Msg ID:5581)
Iran/Saudi Arabia
http://www.stratfor.com/services/giu/050499.ASP
Maybe this linkage will work.

canamami (5/4/99; 17:29:13MDT - Msg ID:5580)
Re: Saudi/Iranian Rapprochement
Further to a topic raised by FOA, this is an interesting article on the possible Saudi/Iranian rapprochement.

http://www.stratfor.com/services/giu/050499.ASP

TownCrier (5/4/99; 17:00:33MDT - Msg ID:5579)
Oil rally stokes Brent price to 17-month high
http://biz.yahoo.com/rf/990504/bhz.html
Oil, and dwindling "stockpiles."


TownCrier (5/4/99; 16:55:14MDT - Msg ID:5578)
U.S. Senate takes up bank reform amid threats
http://biz.yahoo.com/rf/990504/bhg.html
Two sides of the same fiat coin: Republicans and Greenspan square off against Democrats and Rubin.

el St.One (5/4/99; 15:34:00MDT - Msg ID:5577)
$ Price of GOLD
According to Gold analyst Philip Gotthelf writing in his recent book, THE NEW PRECIOUS METALS MARKET, a fully Gold backed world currency system would put the book value of Gold at $200,000 an ounce. A 100% Gold backed US dollar would give Gold a book value of $50,000 an ounce.



CoBra(too) (5/4/99; 15:19:58MDT - Msg ID:5576)
@ Town Crier re Munk post
Give me a break - Peter Munk's ABX, the mother of all gold forward sellers, blames CB's and the rest of the alledged gold colluders for weak POG. Seems to fear shareholder's crucifying him as gold takes off, realising he won't ever be able to buy back in time ($400/oz - I bet'cha) .

Tomcat (5/4/99; 15:10:15MDT - Msg ID:5575)
A good definition of open interst
http://www.cftc.gov/dea/exfutopt.html

FOA has provided some golden advice to follow the open interest. I found this link helpful because it also includes the definitions for reportable positions, non-reportable positions, percent of open interest, and spreading.

CoBra(too) (5/4/99; 15:05:19MDT - Msg ID:5574)
Vertigo...
May 5 1999 - after reading Town Criers post "milestones" of DJII I felt the urge to check pertinent intraday charts. Vertigo, or the fear of flying seems an accurate description (IMHO).

(Has Abbey shot the last bull(et) at 11.00 p.m. last nite, as promised to old bud RR, or is it just coincidental. BTW GS IPO was trading up 46% at initial trade after being "conservatively" priced at 21,5 P/E. Let's wait for the double before all know the bubble was just that, a bubble.)
The only chart remaining pointing steeply upward was the 30y tsy yield curve closing at 5,72%, while XAU and other GM Indices at least formed a saucer type recovery.
Go Gold, man!(if you can)

TownCrier (5/4/99; 14:46:38MDT - Msg ID:5573)
Circular logic -- Y2K and banks
"[Sen. Gramm spokesperson] Dempsey also reiterated that Americans' money is safer in banks rather than under a mattress or in a jar even if a glitch should occur, because the money is insured by the Federal Deposit Insurance Corp. (FDIC)."

USAGOLD (5/4/99; 14:39:40MDT - Msg ID:5572)
Peter Munk Blasts Hedge Funds and Central Banks for Undermining Gold Market
In a Reuters report released in Toronto about an hour ago, Barrick Gold Corp. chairman Peter Munk blasted central banks and hedge funds "for undermining the value of gold." In a report that Reuters converted from an attack on central bank/hedge fund disinformation to an anti-gold propaganda piece, Munk condemned central banks for fostering "enormous negativism by "effectively exchanging hundreds of tons of gold in favor of interest-bearing U.S. dollar denominated securities." Munk also told reporters that hedge funds " 'out to make a buck' had exaggerated rumors and a general lack of information in the gold industry to profit from the downward spiral in bullion prices."

---------

The story came over our in-office Reuters service. I could not find an internet link to the full story.

Tomcat (5/4/99; 14:11:10MDT - Msg ID:5571)
Clint H

Clint, I believe you are right. It has been said by many that there will be an avalanche of short covering. I just don't how much short blood would spill.

However, you make a very good point in that you can control the POG downward movement a lot easier than you can control the upward movement. Thanks for the correction.

Christine (5/4/99; 13:56:20MDT - Msg ID:5570)
US oil production down sharply from one year ago
http://www.api.org/release.cgi?id=N001278
Gasoline shortages coming?--Big decline in US oil production



Oil imports up 11% from one year ago. Current US crude
production lowest in 50 years:
http://www.api.org/release.cgi?id=N001278

Oil well and natural gas completions down dramatically
over one year ago: "Total exploratory completions were
down 40 percent in the first quarter and development
completions were down 33 percent compared to the same
quarter last year."
http://www.api.org/release.cgi?id=N001353

54,000 US petroleum jobs lost in past 16 months
http://www.api.org/release.cgi?id=N001347

What was this damage to US oil industry caused by?
Artificially low oil prices last 2 1/2 years, which
were caused by financial manipulations, oil
deriviatives, shorting, just like with gold.(See Simmons speech text)

TownCrier (5/4/99; 13:12:38MDT - Msg ID:5569)
FWN Closing N.Y. Metals: Mostly Lower; Gold Dips in Range Trading
New York-May 4-FWN--The precious metals complex
finished mostly softer here today, with gold, silver and
palladium all weakening but platinum managing a modest
gain.
Gold futures finished slightly softer in what was
described as a largely range-bound market, after prices rose
last week following an earlier decline that was tied to
worries about potential sales of International Monetary Fund
reserves of the metal. June gold slid 70 cents today to
settle at $286.90.
"With the gold, we've been in a $5 range," said Richard
Padron, director of research for Concorde Trading Group,
about the recent activity in this metal. "It's been more of
a technical picture....We're mostly range trading, and there
hasn't been much direction."

He pointed out that volume has been light so far this
week, in part because Tokyo markets have been closed so far
due to the Golden Week holidays in Japan.

He noted there are some market observers suggesting
that the worries about IMF sales may be "overblown" and that
any falls in price could be "buying opportunities."
Padron put support for June gold around $285 and
resistance around $290.

(c) Copyright 1999 FWN Reprinted at USAGOLD with permission. For details please go to:
http://www.futuresource.com/internet.shtml
No further reproduction without written permission from FWN

TownCrier (5/4/99; 13:07:13MDT - Msg ID:5568)
Watch and you shall learn! HEADLINE: Saudi Arabia Raises Gas Prices by 50% at Home
Riyadh, Saudi Arabia-May 4-FWN/UPI--Saudis were
surprised to find the price of gas for their vehicles has
increased by 50 percent without prior notice.
Gas station owners say they received instructions from
the main oil-producing company, ARAMCO, to raise their
prices today without providing reasons for the decision.
The sudden rise in refined oil came despite the fact
that Saudi Arabia is the largest oil-producing country in
the world, with 8 million barrels per day.
No official statement or comments were made about the
sharp rise and it is unclear whether the kingdom plans to
increase the price of its exported oil.

(c) Copyright 1999 FWN Reprinted at USAGOLD with permission. For details please go to:
http://www.futuresource.com/internet.shtml
No further reproduction without written permission from FWN

Clint H (5/4/99; 13:04:39MDT - Msg ID:5567)
Tomcat post 5557

Tomcat, your post suggested; <Why not let a controlled inflation occur by controlling the price of gold up slowly. Yes, the short folks would die but the gold is still in
someone's hands.>
How many ways are there to control the price of gold and let it rise slowly? If it rises at all, selling short to hold the price would be a disaster to the short seller. Bringing the price from $420 to $280 in hindsight was not difficult in how it was done. Not smart for some but still a no-brainer. Selling long would not produce the same results.
Am I missing something here?


Christine (5/4/99; 13:02:45MDT - Msg ID:5566)
@Aristotle--Your scenarios sound very plausible
Your scenarios for how the US government might traverse through this financial mess sound very feasible. Even gold at 10,000 doesn't sound unrealistic, given all the money creation that has gone on. I am praying for your sensible, intelligent view of things--may our government get it.

TownCrier (5/4/99; 11:59:38MDT - Msg ID:5565)
Greenspan, Rubin to testify May 20 to House panel
http://biz.yahoo.com/rf/990504/22.html
First in a series of hearings.

USAGOLD (5/4/99; 11:18:50MDT - Msg ID:5564)
E-Mail Question for Another and/or FOA from Steve
Michael,

I'm at work and don't have my password, but I don't want to
forget these thoughts. The Saudi/Iran talks seem to have
vast implications, not only on possible oil prices, but with
regards to reliance on the US military. Could it be that
Saudi doesn't have the same faith in the US, could it be that
a Saudi repudiation of the dollar might anger the US? An alliance
with Iran would lessen the need for US military presence, thus
opening the way for pricing oil in Euros or, perhaps, a basket of
currencies, ie dollar/euro/yen.

Could you post this for opinions. I'd be interested to what
you, Another and FOA think.

Steve

onlychild (5/4/99; 10:22:12MDT - Msg ID:5563)
Christine
No, I wasn't insulting you. That is just my brand of sarcastic humor. I really do enjoy your posts as well as many others on this forum. I spent alot of time in the principals office for my sense of humor many years ago. I share many, if not all of your fears, and it is refreshing to find a woman with your views. I bet you don't know too many either. I respect your thoughts and opinions, keep up the good work! Oh, and I still owe you a beer.

TownCrier (5/4/99; 9:36:12MDT - Msg ID:5562)
A must read: Dow Jones milestones
http://news.bbc.co.uk/hi/english/business/the_economy/newsid_145000/145986.stm
Read the timeline and decide for yourself...

USAGOLD (5/4/99; 9:13:38MDT - Msg ID:5561)
Today's Gold Report: A Tidal Wave of Debt and Easy Money; Bond Marekt a Warning Shot Across the Bow?
MARKET UPDATE (5/4/99): Gold continued a gentle easing trend this morning with
London coming back on line uneventfully after Monday's holiday, Japan shut down for
Golden Week and all eyes on New York where things have been quiet for the past few
session as well. Dealers are saying that last week's short covering has abated for the time
being. The euro was up this morning on European rumors that behind the scenes
maneuvering on the Balkans War might lead to a cessation of bombing, but that could very
well be misplaced optimism on Europe's part. All in all, things are very quiet this morning
and we will be patient about this market.

Gold is doing well when you consider the dollar is soaring, the DJIA just traversed 1000
point in the shortest period in history, and U.S. markets are being viewed worldwide as a
safe haven in an unsafe world. All this rides though on a tidal wave of debt and easy money
-- an "economic Titanic" as The Reaper's R.E. McMaster calls it. Money growth (M3) is
up 11% over the past six months and most of that has gone into what McMaster calls "an
exhilarating narcotic" -- the stock market. For gold to be locked in this range just under
$290 is something of a victory for the yellow metal and warning to financial community that
underneath it all, there lies a fragile and wobbly foundation. Investor confidence, already
shaky, could graduate to a selling panic at any sign of this foundation cracking. The falling
bond market may have already issued a warning. Says McMaster (in his most interesting
latest issue a portion of which I offer as a way of bringing some intellectual interest to what
starts as a dull day in the markets): "We're seeing a blowoff, a mania in stocks, ironic, too,
isn't it, with the hit movies of late having such titles as Deep Impact, Volcano,
Armageddon, Titanic and now Noah's Ark. The DJIA represents the best of all upcoming
good times, as if the market was a discounting mechanism, while current events and movies
predicting the future are projecting the worst upcoming times. How long until a resolution
of this tension?"

We'll leave you with that thought. Have a good day, my fellow goldmeisters. The
sentiments raised in the paragraph above, by the way, are pretty much the sentiments
echoed by investors purchasing gold over the past few days. After a quiet second half of
April, due probably to the double whammy tax hit, things are picking up right where they
left off end of March at Centennial Precious Metals. Investors are buying this inexpensive,
barbarous relic as if it had some useful purpose. The financial press needs to get out the
hammer and resurrect somebody somewhere selling some gold....anybody will do. Public
interest in the yellow is on the rise again!

Please go to our ORDER FORM or call Marie at 1-800-869-5115 for a Free Copy of
News & Views -- our widely read monthly newsletter -- and introductory packet on gold
ownership.

TownCrier (5/4/99; 8:51:44MDT - Msg ID:5560)
U.S. Treasuries slide further, dealers dump bonds
http://biz.yahoo.com/rf/990504/sx.html
Short and to the point.

TownCrier (5/4/99; 8:22:56MDT - Msg ID:5559)
Monk's Gold Donations Top One Ton
http://dailynews.yahoo.com/headlines/od/story.html?s=v/nm/19990504/od/gold_1.html
As it should be...
Both cash and gold collected;
Gold gets the headline.

(a neat little story)

TownCrier (5/4/99; 7:55:24MDT - Msg ID:5558)
Dollar opens US above 121 yen, but ECB props up euro
http://biz.yahoo.com/rf/990504/op.html
Life among marionettes, er, currency traders. They dance but they don't really know why.

Tomcat (5/4/99; 7:10:18MDT - Msg ID:5557)
Aritstotle and Chicken Man

Now, this is getting really interesting. Chicken Man and Aristotle, could you expound on what would happen, in your models, to the US indutry/business/finance sector. How fast would the currency collapse occur? What might trigger the loss of confidence? What would remain of industry/banking/finance and commerce? Are you suggesting a rapid a total collapse or a controlled one? I think you both are on to something but I can't yet think and project with the models?

Since we are speculating with various models I would like to throw one in.

Why not let a controlled inflation occur by contolling the price of gold up slowly. Yes, the short folks would die but the gold is still in someones hands. This inflation would be small enough to keep the industrial/business/finance sector intact (with many failures of course) but large enough to allow a substantial paydown of all kinds of debt by the parties that survive.

Of course, many of the survivors would be those holding gold which could easily, with this scenario, go to $3000-$10,000 levels. The lenders and governments would not lose because real estate, due to unpayable taxes, would be transferd bact to them. It would be the old fashioned way of taking all the wealth away from the little guy and make him pay the bills. The big losers would be those holding the government debt.

Christine (5/4/99; 6:44:03MDT - Msg ID:5556)
IMF and gasoling shortages--Warning--Paranoid posting
@Julia--thanks for the comments

Date: Tue May 04 1999 08:32
chris (@Mozel--Gasoline shortages and IMF, $US crisis all at once?) ID#293447:
Copyright © 1999 chris/Kitco Inc. All rights reserved
If I understand, you are suggesting IMF may go bankrupt, or U.S. may have to leave the IMF and euroland
would stay. Either way, big trouble for the US dollar. Oil will have to be paid for in euros, which will cost dearly.
So, at same time, refineries have been moved out of U.S., plus there have recently been at least 4 refinery fires in
U.S., plus more outside of U.S. Plus, per Simmons article on oil, the oil shorting that held the price of oil down to
extreme lows the last 2 1/2 years has caused serious temporary loss of supply of oil, if not permanent. To me, US
dollar and IMF instability, and a staged gasoline crisis in the U.S.,appear to be designed to occur roughly
simultaneously.

Julia (5/4/99; 6:34:33MDT - Msg ID:5555)
Christine
Christine, I've tried to find the time to write to you before now. Sorry for the delay.

I am so glad you are at this forum with the other wonderfuly intelligent minds. As I wrote in the last USAGOLD contest, I see financial manipulation as the real problem. It scares me much more than inflation. I've lived through inflation before. It is part of a free market, right? Financial manipulation is on the other hand something sinister and confusing, evil if youwill. How can a free market ever exist with that going on? The financial market is like a big gambling ring "owned" by thugs who want what they want when they want it and have found ways to do it.

I hold gold because it is real and I owe no one. But I'm a red-blooded , American and admit that the profits these guys are making are huge and it is tempting to jump in there with them. But I always come back to the idea that this bubble could burst at any moment when the thugs decide they had pushed it for all it is worth and pull out.

At any rate I read your writing with interest. You obviously have an in depth understanding of finances, which is something I lack.

Thank you for sharing your thoughts.

Julia

Christine (5/4/99; 6:00:59MDT - Msg ID:5554)
Mozel suggests the IMF may go broke
Mozel (02:19) at Kitco, suggests the euro countries may pull out of IMF, and that would drain IMF liquidity and cause its bankruptcy--this may be real motive for them to sell gold. He provides in-depth financial analysis at this post

SteveH (5/4/99; 5:42:05MDT - Msg ID:5553)
Mozel is Another?
Date: Tue May 04 1999 05:18
mozel (@Gold Loans @On a national basis, the United States has refused to settle accounts in gold) ID#153110:
Copyright © 1999 mozel/Kitco Inc. All rights reserved
since 1971. Countries which accummulated from trade surplus with the United States have had to choose between leaving it in the international monetary system or converting it to gold and not being able to use it in the international monetary system. Thus, every greenback which was converted to gold drained liquidity from the international monetary system. Two years of Anglo production has been forward sold. Twelve years of the NEM Indo mine have bee "pre-sold". Gold loans looked like a way to compensate for the drain in liquidity from conversion of trade suprplus into gold. And, that is what it has done. But, when the loans are closed, where will the liquidity come from ? This is the bind on the IMF which the Euro presents. Gold is monetary in Europe. Trade surplus converted to gold is not a drain on Euro liquidity. When the $US loses its position in the basket of currencies which make up the IMF SDR, it will also lose its position as the reserve currency. Oil is the commodity that crosses borders in the greatest number of transactions. If oil countries begin to contract for settlement in Euros, non-European nations will need Euro balances. When the $US is no longer the currency held as reserve by countries in the IMF, will the US remain in it ?

Naww! Couldn't be...could it?

Oregon Geezer (5/4/99; 3:41:02MDT - Msg ID:5552)
From today's New York Times editorial --- Gold vs. Greenspan
http://www.nytimes.com/yr/mo/day/editorial/04tue4.html
The title of the editorial is something like "Who needs gold when we have Greenspan?"

SteveH (5/4/99; 2:59:27MDT - Msg ID:5551)
June gold now...
$286.90. Direction determined for now. Ask is $287.40.

Aristotle (5/4/99; 0:29:23MDT - Msg ID:5550)
Article supporting one of FOA and ANOTHER's fundamental thoughts
http://biz.yahoo.com/rf/990503/bdu.html
The headline reads, "Higher commodity prices boost emerging economies." It goes on to explain that the recent upturn in commodity prices has helped turn around various failing national market economies. My understanding is that the euro is intended to further foster this upturn in global growth through a return to fairly valued commodities, based upon currency underlain by fairly valued Gold. ---Aristotle

Aristotle (5/4/99; 0:26:12MDT - Msg ID:5549)
Chicken man, thanks for the comments
I am pleased by the attention you have given my message. I'd say the difference between us is a distance not so great that it couldn't be spanned with a handshake.

The point you recently raised is valid, the U.S. is too big to be rescued by some outside agent. And maybe 20 years into the future it would be easiest if the dollar were not still limping around in a greatly devalued form, but rather, extinguished now as you suggest by a complete collapse to "zippo!" followed by starting afresh with a sound replacement.

Here is the catch I see in that scenario. First, the social and economic turmoil would be politically unbearable to abruptly extinguish the dollar, and move on to something else. The public would much more easily adapt to a dollar that smoothly evolved into the new form and value--first by the requisite devaluation, followed by the necessary sound monetary policy and appurtenant underpinnings. And second, the U.S. (happily) need not look to outside help in a bailout if the end goal were the return to sound money. As I tried to demonstrate, the level of devaluation could be determined at will by the government to nearly any level below some workable threshold point that would facilitate paying off accumulated debt with high-priced Gold; again, the government establishing the official dollar-to-Gold ratio (i.e., price). If this debt were settled with only one ounce of Gold, then your scenario plays out, because the term 'dollar' becomes meaningless at $5 trillion per ounce. Although, we then have full use of the remaining eight thousand tonnes of Gold with which to try to shock a flat-lined, comatose national economy back to life after the economic lifeblood (money) has been destroyed through this absolute devaluation.

If, on the other hand, the government chooses to initiate a bailout program on itself that would cause the least disruption, much more of the government-held Gold would be used to settle the debt, resulting in a starting point for the 'new dollar' that would be more strongly defined in gold, say, $10,000 per ounce--rather than the example given above.

Going into the future, I don't see these currencies as the same fiat currencies we have all grown to know and despise, yet I don't see the true Gold-standard that maybe many of us would like to envision, either. On the horizon I see instead an interesting variation on the Gold-standard that I'm sure we will enjoy immensely more than anything we have experienced to-date.

Gold. Save yourself--get you some. ---Aristotle



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