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ARCHIVED DISCUSSION FROM 5/4/2000
All times are U.S. Mountain Time

(Yesterday's Discussion.)

TownCrier (05/04/00; 23:28:30MT - usagold.com msg#: 29968)
Gold Stolen From Albania Treasury
http://dailynews.yahoo.com/h/nm/20000501/od/gold_1.html
Does it surprise anybody that it was gold, of all things, stolen from the Albania Treasury? Three officers in charge of guarding the treasury were arrested in connection with the disappearance of $2.8 million in gold coins.

TownCrier (05/04/00; 23:09:31MT - usagold.com msg#: 29967)
Sir THC, other than semantic details, I think we agree
If you take another look at my post, you should find that I provided the necessary conditions to justify my comments as written. Here is a simple example of our agreement, although the essence of your post would imply that you feel otherwise.

You said:
---BEGIN quote------------
2. "Immune from Delivery Obligations"
The only way a short can be "immune from delivery obligations" is to BUY back the contract. The futures markets require that anyone long at expiry take delivery, and anyone short deliver the commodity.

If the shorts or the longs want out, they must take the opposite trade.
---END quote---------------

Whereas I said:
---BEGIN quote-------------
Where it comes to gold on the COMEX, however, the key thing to recognize is that contracts can ONLY be called for delivery when their expiration month arrives. The "active" (price determining) month is always the next one out into the future, so THESE positions are ALWAYS SAFE from delivery obligations, and hence, they provide a perfect opportunity for any sizable entity who wants to sell them into the ground with impunity.
[...]
Another reason the "passing of the buck" probably does not artificially inflate the delivery intentions and hence the apparent quantity of gold scheduled to change owners (prior to the April 28 deadline) is that ********* *********THIS IS THE IMPORTANT PART****** ********* the institutional players without gold but with a desire toward suppressing the price would have settled their April contracts with cash (probably with a profit?) prior to being subjected to delivery obligations on First Notice Day (March 31). ******* ******* ********** ********* ************ **************
Upon the arrival of this important deadline, they would have moved into the future month of June, making it the active one, and would continue to short with delivery immunity while the April delivery drama would play out behind them.
---END quote--------------------
As you can see, this settlement I refer to is done exactly as you say...with cash to buy the offsetting position.

The point I was making was that these short positions can always be leap-frogged into the nearest active futures month in order to remain outside of the delivery window.

I did not intend for anyone to draw the conclusion that prices for any given contract month are determined by anything other than the supply and demand forces upon those same contracts as you address in your #1 item. What was mean by the "price determining" month was that the most active futures contract is used for the mathematical calculation of spot prices...appropriately adjusted for the "future cost of funds" involved, both metal and paper.

In my original post I explained how such a condition of contract price backwardation could occur as the delivery month goes toward expiration with delivery notices being served and possibly "passed along to the next guy". Similarly, you said, "the longs could hold these contracts for delivery, thereby pushing up the value of these contracts as they go towards expiry." However, as I indicated, the low remaining open interest in this expiring contract puts it off the radar screen as all eyes turn to the more active month for direction. Arbitrage opportunities would be biased toward moving its price toward the more active future month which could itself be sold into oblivion as needed. At what point in time will the contract longs simply give up on this no win avenue?

Looking at this years remaining months and the current open interest on these COMEX gold futures, we see the following:
Contract _ Open Interest
May _ _ _ 0
Jun _ _ _ 89,734
Aug _ _ _ 16,713
Oct _ _ _ 4,029
Dec _ _ _ 19,991

There is no question that the newswires focus on the price as determined by the June contract action. And if you follow this open interest, you will see the June postion decline significantly just prior to the arrival of the June window for delivery notices, and at that time August will take over the show. These are all cash deals with offsetting postions. If institutions truly wanted to keep a cap on gold, they need do little more than maintain this leap-frog strategy, and sell the next month out as agressively as needed to accomplish their objective. And what might you expect the longs to do under falling prices and perhaps margin calls as well? They would probably cash out of their position by selling it long before expiry, wouldn't you? As things panned out in April, less than 10,000 contracts (an outstanding number, nevertheless...all things considered) were held up for delivery, while open interest in that month had earlier been ballpark 80,000.

Those desiring real gold would do well to simply pick up what they need on the cash market. Consider for a moment this quote from FWN:
---BEGIN-------
"Gold climbed predominantly on short-covering and some inflation fears
and while it's not amazing, demand is good for physicals," said Leonard
Kaplan, president of Prospector Asset Management.
---END---------
Wasn't Lenny just a short while ago the chief bullion trader at LFG Bullion Services?? But nevermind that. My point is that what Leonard describes as "good demand for physicals" clearly has nothing to do with COMEX longs holding for delivery. Open interest for May is ZERO as you can plainly see...there is no position in which delivery could be demanded.

(But to say again, I don't know the TOCOM rules. Perhaps on TOCOM delivery can be demanded thoughout the contract life.)

TownCrier's bottom line:
the point of all of this is simply that looking to the prices of contracts on COMEX futures markets will not likely give the adequate warning that the physical market is about to break away from demand greatly exceeding supply at these prices. It is a reasonable assumption that for every ounce of gold you have in your possession, there is someone else who provided the gold via deposit in an interest bearing account. Picture, if you will, a run on the bullion banks.
*snap* it's all over.
Enough said.

Peter Asher (05/04/00; 22:43:39MT - usagold.com msg#: 29966)
Kinda' like the war on gold. Same people too.
http://news.excite.com/news/r/000504/18/congress-delay

WASHINGTON (Reuters) - House Republican Whip Tom DeLay
said Thursday a small elite of opinion-makers was waging a
"cultural coup d'etat" on the country's fundamental values and
called on Americans to wage a faith-based counter-attack.

They are selling what one historian calls the morality of the
cool," the Texan said. "The morality of the cool teaches that
flag-burning and nude dancing are protected speech, but prayer
before a football game is not."

aunuggets (05/04/00; 22:18:04MT - usagold.com msg#: 29965)
FARFEL....
Have you seen S.J."Kaplan's Corner" Question #2 for the evening (05-04-00) ?

ThaiGold (05/04/00; 21:54:53MT - usagold.com msg#: 29964)
Pen Mighty'er than the Sword
Attn: AREM (05/04/00; 20:59:07MT - usagold.com msg#: 29960
....
...
..
Thanks AREM.

Your final conclusion is a Classic.!.
[Quote]
As I
have said before, if the government wants my gold coins, they are more likely to get lead, and it will be hollow point
lead at that. I pity the politician who has the bad judgment of supporting gold confiscation.
[UnQuote]

They say: "The Pen is Mighty'er Than the Sword".

Well, that was in the OldDays... When they used smeary Ink.

Now, it's the "Pencil is Mighty'er than the Pen".

...Because it can be erased.
So, nowadays, I always write with a lead pencil.

But if that fails, well, there's still the 44.
Hey.!. Is that UnEraseable lead, or what.?.

ThaiGold
===================================================

Peter Asher (05/04/00; 21:44:08MT - usagold.com msg#: 29963)
Caven Man
http://google.netscape.com/netscape?query=macarthur+speech+may+12+1962
The link I posted from was http://www.pbs.org/wgbh/amex/macarthur/filmmore/reference/primary/macspeech06.html
But the search page link above is more comprehensive, and has some alternative text formats and info.

This also will intrigue you:
Quotations from the Founding Fathers and Other Notable Personalities
http://www.io.com/~velte/quotes.htm
Samples:

"What the subcommittee on the Constitution uncovered was clear - and long-lost proof that the
Second Amendment to our Constitution was intended as an individual right of the American
citizen to keep and carry arms in a peaceful manner, for the protection of himself, his family, and
his freedom."

-Senator Orrin Hatch, Chairman, Subcommittee on the Constitution, Preface, "The Right to Keep
and Bear Arms"

"The only purpose for which power can be rightfully exercised over any member of a civilized
community, against his will, is to prevent harm to others. His own good, either physical or
moral, is not a sufficient warrant."

-John Stuart Mill, "On Liberty" 1859

Chris Powell (05/04/00; 21:21:24MT - usagold.com msg#: 29962)
Barrick chief sees 20 percent rise in gold
http://www.egroups.com/message/gata/450?
Reuters via GATA.

Chris Powell (05/04/00; 21:20:07MT - usagold.com msg#: 29961)
Midas commentary for May 4
http://www.egroups.com/message/gata/449?
"Midas" commentary for May 4 by GATA
Chairman Bill Murphy.

To subscribe to GATA's dispatches by email
and get them immediately so you don't have
to go look for them, send an email to:

gata-subscribe@eGroups.com

AREM (05/04/00; 20:59:07MT - usagold.com msg#: 29960)
Thaigold's Unconcealed Gun
I loved your posting about your unconcealed gun. I have a .357 Magnum Colt with a long barrel. It is scary just to look at. Your gung ho attitude was a welcome relief to some of the nervous sentiment being expressed about gold confiscation. The idea that we can legally buy gold coins minted by the US government and then be concerned that at some later date they will declare them illegal and tell us to turn them in, is abhorrent and absolutely unacceptable. As I have said before, if the government wants my gold coins, they are more likely to get lead, and it will be hollow point lead at that. I pity the politician who has the bad judgment of supporting gold confiscation.

AREM

TownCrier (05/04/00; 20:52:52MT - usagold.com msg#: 29959)
Continue your education on banking operations: On reserve requirements and the quest for interest
http://www.bog.frb.fed.us/BoardDocs/testimony/2000/20000503.htm
Testimony of Governor Laurence H. Meyer on "Payment of interest on reserves and Fed surplus" before the Committee on Banking and Financial Services, U.S. House of Representatives -- May 3, 2000

In this testimony, Fed Governor Meyer gives an excellent overview of the "ins and outs" of banking reserve requirements, and you will see how close the banking system plays to the edge, all in the name of getting some "performance" out of their otherwise stale currency funds held in simple reserve.
---------------------
From the testimony:
"Depository institutions currently expend considerable resources to minimize their required reserve balances by developing and operating various programs, such as business and retail sweep programs, in order to minimize the balances recorded in their transaction accounts. From society's point of view, these expenditures produce no net benefits, and paying interest on required reserve balances would reduce the incentives for depository institutions to engage in these practices.
+
Depository institutions have always attempted to reduce to a minimum the non-interest-bearing balances held at Federal Reserve Banks to meet reserve requirements. For more than two decades, some commercial banks have done so in part by sweeping the reservable transaction deposits of businesses into nonreservable instruments. These business sweeps not only have avoided reserve requirements, but also have allowed businesses to earn interest on instruments that are effectively equivalent to demand deposits. In recent years, developments in information systems have allowed depository institutions to begin sweeping consumer transaction deposits into nonreservable accounts. These retail sweep programs use computerized systems to transfer consumer transaction deposits, which are subject to reserve requirements, into personal savings accounts, which are not. Largely because of such programs, required reserve balances have dropped from about $28 billion in late 1993 to around $6 billion today, and the spread of such programs has not yet fully run its course.
[...]
In light of the resources used by depository institutions to try to circumvent reserve requirements, some might question the reason for having such requirements. Indeed, reserve requirements have been eliminated in some other industrialized countries. Let me review the historical and current purposes served by reserve requirements.
+
Although the word "reserves" might imply an emergency store of liquidity, required reserves cannot actually be used for this purpose, since they represent a small and fixed fraction of a bank's transaction deposits. I should also note that reserve requirements are quite different from capital requirements. Capital is a buffer against losses, and capital requirements are an important aspect of the prudential supervision and regulation of banks. Reserve requirements, by contrast, have no role in banking supervision and prudential regulation.
+
Reserve requirements are a monetary policy tool. In the past, they have been employed to assist in controlling the growth of the money stock. In the early 1980s, for example, the Federal Reserve used a reserve quantity procedure to control the growth of the monetary aggregate M1. Indeed, the current structure of reserve requirements, with relatively high required reserve ratios on transaction deposits, which are included in M1, and zero or relatively low ratios on nontransaction deposits, which are not, was originally designed to aid the control of M1. For the most part, however, the Federal Reserve has looked to the price of reserves--the federal funds rate--rather than the quantity of reserves, as its key focus in implementing monetary policy.
+
While reserve requirements no longer serve the purpose of monetary control, required reserves continue to play a valuable role in the implementation of monetary policy in the United States. They do so because reserve requirements induce a predictable demand for balances at Reserve Banks on a two-week average basis. As you know, depository institutions trade reserve balances among themselves every day at the interest rate called the federal funds rate. The Federal Open Market Committee sets a target for the federal funds rate that the Open Market Desk attempts to maintain. The predictability of the overall demand for reserves is important in helping the Desk determine the amount of reserves to supply through open market operations in order to achieve a given federal funds rate target. Because required reserve balances must be maintained only on an average basis over a two-week period, depositories have some scope to adjust the daily balances they hold for this purpose and this process helps stabilize the federal funds rate. For instance, if the funds rate were higher than usual on a particular day, some depository institutions could choose to hold lower reserve balances that day, and their reduced demand would help to damp the upward pressure on the funds rate. Later in the two-week period, when the funds rate might be lower, those institutions could choose to hold more reserves and make up the shortfall in their average holdings of reserve balances. [...] A number of measures taken by the Federal Reserve also have helped to foster stability in the funds market, including improvements in the timeliness of account information provided to depository institutions, more frequent open market operations which are increasingly geared to daily payment needs rather than two-week-average requirements..."

***And much, much more on banking and the proposed legislative changes to banking rules...

Some other notable tidbits...

"In any case, it is important that the Federal Reserve have a full monetary toolkit, given the inventiveness of financial market participants and the need for the Federal Reserve to be prepared for potential developments that may not be immediately visible."

"The payment of interest on required reserve balances would reduce the revenues received by the Treasury from the Federal Reserve. The extent of the revenue loss, however, has fallen considerably on balance over the past ten to twenty years because of reductions in the level of such balances as banks have increasingly implemented reserve avoidance techniques..."

"The Federal Reserve System derives the bulk of its revenues from interest earnings on Treasury securities that it has obtained through open market operations. The System returns a very high proportion of its earnings every year to the Treasury. In 1999, it turned over $25 billion, or about 97 percent of its earnings."

"The surplus account has helped to provide extra backing for the issue of Federal Reserve notes. The Federal Reserve is required by law to hold certain specified assets, including Treasury securities, as collateral against the issuance of currency. The Federal Reserve buys Treasury securities, its main asset, in the open market as the counterpart to the surplus on its books. [...***Now, welcome to the world of "funny money"***..] However, legislation signed into law last year expanded the assets of the Federal Reserve that could be used to back the issuance of currency to include all discount window loans. As a result, the importance of the surplus in providing a margin of excess currency collateral has greatly diminished.
+
Traditionally, the Federal Reserve and virtually all other central banks have maintained an appreciable level of capital. For the Federal Reserve, some of that capital has been contributed by member commercial banks and some from earnings retained in the surplus account. Maintaining a surplus account may help support the perception of the central bank as a stable and independent institution by ensuring that its assets remain comfortably in excess of its liabilities. However, the need for capital in this case is limited by the modest variability of the Federal Reserve's profits, the safety of its primary asset, Treasury securities, and the substantial regular flow of earnings from its portfolio of securities.
+
Indeed, in the abstract, a central bank with the nation's currency franchise does not need to hold capital. In the private sector, a firm's capital helps to protect creditors from credit losses. Creditors of central banks, however, are at no risk of a loss because the central bank can always create additional currency to meet any obligation denominated in that currency."

"...transfers of Federal Reserve surplus to the Treasury provide no true budgetary savings. ...financing an ... outlay through a surplus transfer [from the Fed] is exactly equivalent to borrowing from the public. For reasons illustrated by this example, the Federal Reserve has consistently stated that transfers of Federal Reserve surplus do not provide true budgetary revenues and indeed that mandating such transfers undermines the integrity of the federal budgetary process. The fact that budgetary rules count transfers of Federal Reserve surplus as revenues for the purpose of calculating the budget deficit is an anomaly of federal budget accounting."

Cavan Man (05/04/00; 20:35:18MT - usagold.com msg#: 29958)
Holtzman
Many thanks kind sir for the wisdom.

Cavan Man (05/04/00; 20:23:22MT - usagold.com msg#: 29957)
Peter Asher 29909
I am happy to report I recently picked up Manchester's bio of DM for a mere pittance. I am sitting here with some moisture in my eyes at this moment. Yes, even on the 30th anniversary of Kent State, I say beyond a doubt, I love this country!

Would you be kind enough to post the link? I wish to print and send to friends.

Thanks....CM

SHIFTY (05/04/00; 20:15:09MT - usagold.com msg#: 29956)
PONZI CORRECTION ! !
Nasdaq 3,720.24 + Dow 10,412.49 = 14,132.73 divide by 2 = 7066.36 Ponzi
Down 27.36 ponzi points!

ThaiGold (05/04/00; 20:13:36MT - usagold.com msg#: 29955)
Wisdom of Solomon
Attn: Solomon Weaver (05/04/00; 11:46:52MT - usagold.com msg#: 29929)
=====================================================================
....
...
..
Hi Solomon Weaver

In your #29929, you said:
[quote]

why silver was not confiscated in 1933
Very Simple
At that time all dimes quarters and halves were made of silver....how would people have made change???
Silver lined every pocket and there was no substitute!!!

[unquote]

It appears we are on the same WaveLength, because, in my:
ThaiGold (5/4/2000; 1:37:38MT - usagold.com msg#: 29910)
"Silver Conclusion"

The same incredibly simple thing dawned on me too:
[I said]

Also, in the interim of all this, I myself (finally) realized another possible
reason: To have done-so, would have left our nation without any coinage for
day-to-day trade. Except for Penny's and Nickel's. Wooden or otherwise.

[UnQuote]

But I will defer to you, Sir Solomon, for having said it far more elegantly
in in far fewer words.!.

Cordially

ThaiGold
ThaiRanch@OperaMail.Com
==============================================================================

Cavan Man (05/04/00; 20:09:30MT - usagold.com msg#: 29954)
Harley Davidson
I was meaning to comment that your quote a couple of days ago from Plato; "An unexamined life is not worth living.", is actually attributed (correctly) to Socrates. Socrates; Aristotle; Plato; this is the chronological order of the great and ancient philosophers.

Thanks for your kind comment.

ThaiGold (05/04/00; 19:47:12MT - usagold.com msg#: 29953)
Locked Stock and Barrels
Attn: Farfel, TheStranger, and GunBugs
===========================================================================
....
...
..
5-04-2000
To: ALL

[Locked Stock]
Recently, Farfel posted some interesting thoughts about "Locked" IPO Stock.
ie: Massive quantities os shares held in trust, for/by IPO insiders, that
cannot be sold upon the open market during a mandated, lengthy waiting period.
And that, much of that stock is soon to come onto the market, and further that
he (Farfel) predicted (wisely) that it could have a depressing effect upon
NASDAQ and Tech stocks. During this Month of May. TheStranger echo'd similar
comments as well to re-stress the possible upcoming effect.

My thoughts on this are somewhat contrary. I respectfully submit for everyone's
consideration, that it may have just the *opposite* effect upon the markets...
And here's why I think that:

A holder of such Locked Stock, could (I'd think) go to his favorite broker,
and deposit or pledge (in writing) that stock. Let's say for example, that
he holds 100,000 shares of WhizKid.Com (his own IPO company).

Then, during the previously soaring NASDAQ periods, he could have entered
immediate "short" sales thru that broker, of an equivilent quantity of
(broker-borrowed) stock of the same flavor. But those are UnLocked shares
going into the market. And if sold in a moderate way, subdivided into -say-
5 trades of 20,000 shares each, would have not jolted the market very much.

Later, upon the mandated UnLock-Day, he'd simply pick up his phone, call
his broker, and request that his (5ea 20,000) share short trades be offset
or closed-out using the previously deposited 100,000 share locked bundle.

Doing it that way, the market might even go UP on UnLock Day, as intelligent
traders would have known of this effect; already "discounted" it into the
markets; and would be "buying on the news". So the market would tend to rise
or at worse simply ignore the event. That's just my own opinion. But today's
lackluster NASDAQ performance seems to confirm it on this first day of UnLock.

[Barrels]
Off-topic, but alot of GunBugs were posting over the weekend. I always enjoy
Steve H's 2nd Amendment writings. We should all be cognizant of that very
special right of our Constitution. The Right to Keep and Bear Arms. Unique
in most all of the world. The Free World. The Enslaved World.
On-Topic, in fact, because we may need those Arms to protect our physical
holdings, of whatever sort. Gold, Land, Trees, or Families. Maybe all the Above.
And to protect our Precious Freedoms to boot. It is an essential right.

A "Well Regulated Militia" means simply that. A well-armed populace, standing
ever ready to defend it's country. At the time it was written, the word
"regulated" as applied to Militias, or any other entity, meant "equipped".
No-way did it mean "restricted" nor "governed". So, courts bent on interpreting
it otherwise, should get themselves a circa 1776 dictionary, first.

One or two other posters made interesting posts about doing some test-shots
with his 50-calibre cannon. And how it's muzzle blast alone, would do the job
even if the projectile missed. Right on.!.

Myself, have always prefered a smaller version, my trusty Ruger .44 Magnum
Super BlackHawk, with 10-inch barrel. Bought in 1961, it never ceases to amaze
me. During the Y2K non-event, I added to my arsenal, a .44 Magnum lever action
carbine. How convenient. Both use the same ammo. I'm still looking to find
a Gattling Gun, which I could have rebored to my favorite flavor. ...

The .44 Magnum is legendary: Said to kill on the one end, and wound on the
other. (Massive recoil). Not suited for the average well-armed USA grandmother.
But for everyone else, seems generally adequate. Except for Police Officers...
They are for the most part, banned from carrying them. Because it's considered
"politically incorrect" to shoot a BadGuy with such overwhelming awesome power.

With a 10" barrel, it's rather difficult to "conceal" my Super BlackHawk. So I
gave up trying. Besides, it seemed to me the local state's incredible red tape
to obtain a "concealed weapon permit" was way too cumbersome. And probably even
unconstitutional at best. So I only bothered to get one the first time. It soon expired, and more bureaucratic fees, obstacles, and delays made it pointless to
attempt to renew it. So I didn't. Never have. Never will. I'm a pragmatist.

Instead I just used (what seemed to me) a glaring loophole in that "law":
It used the word "concealed". So, if I didn't *conceal* it, then (I reasoned)
there is no need for their ridiculous permit. Ever since that time, I simply
carry it in plain sight. Like Tom Mix. Or Roy Rogers. Or Clint Eastwood.

Some folks may feel intimidated by that. But I certainly am never intimidated.
By anyone. The Good. The Bad. Nor the Ugly.

You can Quote me, if I'm Wrong.

Cordially

ThaiGold
ThaiRanch@OperaMail.Com
===============================================================================

USAGOLD (05/04/00; 19:23:38MT - usagold.com msg#: 29952)
All. . .
Please scroll through MRCI before the numbers go away, and see what an inflation driven market looks like.

Stranger, is this the first time this has happened in recent months or have I missed it. Haven't seen this sort of alignment in awhile. My first clue was the metals moving up pretty much in tandem, but when you look at them all, it looks like a good old-fashioned inflation driven financial and commodity markets. Wheat, oil, gold, silver, platinum , unleaded gas, coffee CRB ----all up solidly. Paper in all its forms - - - down!

THC (05/04/00; 19:12:23MT - usagold.com msg#: 29951)
Towncrier Re Futures Markets
Good day and thank you for your comments.

However, I must state that I have a very different understanding of the futures markets (primarily based on the Tocom, which I trade/follow on a daily basis).

1. The "Price Determining" Month
In reality, the price of each futures contract month is determined by the buyers and sellers of that contract (such as the April 2000 Pt contract). I ALWAYS look at the prices for all of the contract months whenever I check my positions or consider buying/selling, and I would assume that this is common sense. One can only understand if the market is strong or weak (backwardation vs. contango) by looking at all of the contracts.

In reality, there is no "price determining" contract.

2. "Immune from Delivery Obligations"
The only way a short can be "immune from delivery obligations" is to BUY back the contract. The futures markets require that anyone long at expiry take delivery, and anyone short deliver the commodity.

If the shorts or the longs want out, they must take the opposite trade.

While it would be possible for someone to sell a huge number of far out contracts, thus pushing down the price of these contracts, by the same token, the longs could hold these contracts for delivery, thereby pushing up the value of these contracts as they go towards expiry.

In a market where those wanting delivery exceeds those who want to deliver, there is price backwardation. Where the reverse is true, we have contango.

As we have seen in Tocom palladium and more recently April 2000 platinum, the price of a futures contract GOES UP when insufficient metal is available to support delivery......in other words.......we have a squeeze.

Please show me an example of a commodities market where:
1. Commodity supplies on the open market could not meet demand.
2. The futures contract specified delivery at expiry.
3. Warehouse supply levels were insufficient to respond to significant delivery requests.

When the above conditions exist, there should at least be backwardation, and at some point possibly a squeeze. How could prices be "sold into the ground"?

Thanks,

THC

Harley Davidson (05/04/00; 18:56:14MT - usagold.com msg#: 29950)
JA...
We all know the reality of the budget surplus and how it is actually just an accounting slight of hand that replaces Social Security funds with IOUs and presto, chango, we have a budget surplus! Then we see Mr. Greenspan on Cspan, sitting before both the House of Representatives (Banking Committee) and the Senate being asked for his opinion on how the surplus should be spent. After the obligatory caution that "we really don't know how much surplus will actually materialize" blah blah blah, he goes on to say, in this order, "buy down the debt, tax cuts, and some other, inane suggestion to keep the Democrats happy (spending programs I think...I forget). I just look around the room for validation that it is not me who has lost touch with reality. So it appears he is participating in the charade. If you tell a lie long enough, people start believing it, and, based on this kind of behavior, I don't see how one can reliably interpret what the man says.

YGM (05/04/00; 18:29:06MT - usagold.com msg#: 29949)
Barrick Sees 20% Increase in Gold/$
Barrick Comments in 6 Months........Say ...Jan /01
Well, Jeez we never thought it would go "That Far"..........
All we can tell the shareholders is that Barrick has no control over the madness machinations of the Markets......

"You Sorry Assed Crooks" is the retailiation of the "Class Action" lawsuit........(smile)

oldgold (05/04/00; 18:04:49MT - usagold.com msg#: 29948)
Farfel
Let's drop the APH obsession. He has made plenty of good calls, but some real bad ones as well.

The fact is that other expert technicians completely disagree with APH on the gold outlook.

The greatly respected Elliot Waver Peter Desario projected a gold bottom between $264 and $274 when bullion was around $280. And that forecast turned out to be right on the mark.

Mr. Desario projected that gold would rally $50-$60 from the low before the trend reversed. Precisely the opposite of APH.

South Africa's respected Clive Roffey also is completely at odds with APH.

So let us watch and see who will be proved correct.

BTW, all the nonsense here about gold shares being bad investments compared with physical have turned out to be a crock of sheesh. The shares are far outperforming bullion on this rally as they have done in the past.

TheStranger (05/04/00; 18:01:24MT - usagold.com msg#: 29947)
JA and TownCrier
Hi, JA. I hope things are going well for you up there in the land of famous potatoes. Greenspan undoubtedly meant to remind the banking industry of the importance of prudent risk management. If some institution "too big to fail" gets into trouble, the Fed may be forced to bail out the customers, but it will confiscate ownership from the shareholders and terminate management as conditions. This is pretty much how the savings and loan fiasco was resolved ten years ago, and it only makes sense.

***********************************************************

There were rumors on Wall Street today of coming corporate consolidation among gold miners. Some analysts say they have been waiting for consolidations to begin before they will raise ratings on the group.

***********************************************************

TownCrier...Thanks for posting #29945. I just hope Farfel saw it.

YGM (05/04/00; 17:52:41MT - usagold.com msg#: 29946)
Worthy of Repost....."Goldbugs Revenge"
Thanks for Great Day of Reading Here!
Markets : Options Buzz

Revenge of the Gold Bugs
By Dan Colarusso
Associate Editor
5/4/00 12:54 PM ET

With a 50 basis-point interest rate hike likely in the offing and concern
about inflation lingering, the gold bugs and their single-digit stock prices
may no longer be the market's most trod-upon sector.

Action in the options market today may be pointing toward some spark of
interest in gold as an asset, with unusually heavy volume cropping up in the
Philadelphia Stock Exchange Gold/Silver index contract -- known as the
XAU -- this morning.

Volatility Index
Today % Change
34.97 +1.33
Source: ILX

"Gold has gone from being a mandatory 10% of an investor's portfolio to
being like it doesn't exist," says Jay Shartsis, the senior options
strategist at R.F. Lafferty in New York. "But the market cap of the sector
has gotten so low that any shift back can bring an explosion."

The XAU was up almost 4% from the get-go this morning, as traders bid up key
components such as Newmont Mining (NEM:NYSE - news - boards), Homestake
Mining (HM:NYSE - news - boards) and Placer Dome (PDG:NYSE - news - boards).

Put/Call Ratio
Today (Noon) Previous Close
0.45 0.61
Source: ILX

The spurt was somewhat unexpected, especially in the wake of a report
yesterday from Lehman Brothers (LEH:NYSE - news - boards) analyst Peter
Ward, downgrading four major gold names.

Options action came early and often on the XAU. Before 11 a.m. EDT, more
than 3,000 of the in-the-money June 50 calls and 1,000 May 55 calls had
traded. It appeared to be action inspired by buyers and while the price of
the June 50 calls rose only 3/4 ($75) to 12 3/4 ($1,275), the market for the
contract had risen 13 1/2 to 13 5/8.

By midday, the XAU was up 2.32 to 62.12.

Open interest on both call options was slight and was far outstripped by
today's action. If the volume seen today was indeed initiated by buyers, it
would indicate some significant interest in a bullish play on gold. If the
call action came from sellers, those players would essentially be
speculating on a weak finish to the month for contract.

Newmont calls were also busy. With the stock up 15/16 to 27 3/16 before
midday, the June 27 1/2 calls traded more than 500 contracts and spiked 1/4
($25) to 2 1/2 ($250).

Shartsis says the rebound in Newmont has been impressive. After being
battered for the better part of the past year, Newmont is up more than 20%
since March 2.

"There's no real news propelling it either, and that's impressive," he says.
"It's been a long night for gold stocks. Gold is the antithesis of the paper
money explosion ... but has the world changed so much that gold isn't
considered money anymore?"

Calls were also busier than normal in Homestake, which was up 5/16 to 6 7/8,
and Placer Dome, up 1/4 to 9 3/8.

TownCrier (05/04/00; 17:42:12MT - usagold.com msg#: 29945)
HEADLINE: Canada's Barrick sees strong gold prices ahead
http://biz.yahoo.com/rf/000504/nr.html
Reuters reports today that Canada's Barrick Gold Corp. is predicting year 2000 gold prices improve by "about 20 percent over 1999". The report states that the general manager (Igor Gonzales) of Barrick's Peruvian operation indicated that, "driven by increased Asian demand and renewed interest by investors in gold as an alternative to inflation-threatened currencies, prices are set to shine."

TownCrier (05/04/00; 17:23:16MT - usagold.com msg#: 29944)
Thank you, Sir Skip, for the affirmation of my earlier words to ThaiGold
http://dailynews.yahoo.com/h/ap/20000504/bs/commodities_61.html
As I said, "There is no question in my own mind that the dynamic of the Forum is enhanced considerably by the input of new posters, especially those novices that are newly arrived with simple thoughts and questions about the world of gold economics." And also, "Whether they realize it or not, it is my opinion that many of the regular posters here know more about the intricacies of the gold sector than most financial analysts understand their own chosen field of employment."

The link I've provided is an example of what I mean. It is an Associated Press article with the headline: Gold Rises on Inflation Fears.

In its commentary, they quote a fixture in the gold markets, one Bill O'Neill, senior futures strategist for Merrill Lynch. According to the AP, Mr. O'Neill ----"disputed others' view that inflation worries are involved in recent gains, saying the metal's allure as a safe haven isn't what it used to be. "In my view, gold is not serving as a monetary asset at all.""------

How ridiculous is that comment? Either he has been living under a rock and missing the news, or else it is pure Merrill Lynch propaganda with a hidden agenda. Surely everyone at the forum knows better, and could cite two very obvious points to clarify his "view". The first bullet-point of the Washington Agreement, and the watershed event whereby the IMF bowed down from the unbearable weight of their past fiction in order to start marking some of their gold assets to market prices.

Hill Billy Mitchell (05/04/00; 17:13:47MT - usagold.com msg#: 29943)
Official release
http://www.bog.frb.us/releases/H15/update/

Official: Federal Reserve Statistical Release

Release Date: May 4, 2000

Rates for Wednesday, May 3, 2000

Federal funds 6.05

Treasury constant maturities:
3-month 5.91
10-year 6.40
20-year 6.49
30-year 6.11

right-side up spread FF vs long bond = +.06%

This is a first in some 41 days.

On March 22, 2000 this rate spread became negative and stayed that way with only 3 minor exceptions (03-24-00 +.02%) (03-29-00 +.01%) (04-27-00 +0.00%)

I have a hunch that the Fed is not finished but only being very careful in hopes of not stepping off the cliff. The long-bond buyers have pushed up the long rates the last few days. The Fed does not react as quickly as the market. We will see if the Fed continues to march towards recession as thing unfold over the next 10 days.

Sir R Powell

We watch this closely. I have a hunch this is the real thing; however this is a game of "chicken" and the last time it the Fed was so dispossed Sir Alahad took for the ditch.

hbm

TownCrier (05/04/00; 16:49:42MT - usagold.com msg#: 29942)
German Finance Minister Hans Eichel speaks out on the weakness of the euro
http://quote.bloomberg.com/pgcgi.cgi?T=markets_newsfeat99.ht=&ptitle=EMU%20Top%20Stories&touch=1&s=AORHUsBZrR2VybWFu
In a speech on budget and tax policy delivered at the University of Cologne, Germany, FinMin Eichel remarked:
"The debate about the euro, is hysterical, not rational. In Europe, far too many people are commenting on the single currency, sometimes without understanding what they are talking about. I have one thing to say: All fundamental economic data in Europe is better today than 16 months ago when the single currency was introduced. We must go on the offensive to make this clear."

As we suggested days ago, don't look for forex intervention from the ECB, unless it is their only "politically correct" avenue to rid themselves delicately of unwanted foreign currency assets. To this Crier's eyes, when you have gold reserves being regularly marked to market in a "free gold" climate, there is simply no reason to maintain foreign currency assets beyond what is convenient for the purpose of short-term international settlements with those specific nations.

And if the ECB wanted another way to send a "politically correct" message about the nature of assets, the very next news release on the status of the Swiss gold operation would reveal that the ENTIRE 120 tonne quota allowed for this year had already been succesfully allocated through the BIS during this first week of May. If you can conceive of how this all works, there truly seems little reason to piecemeal it...except for maintaining the illusion.

JA (05/04/00; 16:32:28MT - usagold.com msg#: 29941)
Greenspan's Comments
http://dailynews.yahoo.com/h/nm/20000504/bs/economy_fed_7.html
I would be interested in hearing from members of this forum as to how one should interpret Mr. Greenspan's comments below: Is he saying there will be no more LTCM bailouts? Is he hinting that the PPT has run out of money? Or is he saying there is a change in approach, while in the past they have adopted the "too big to fail approach" that is the case no longer? Or is it simply a line of BS to keep the sheeple guessing?

Greenspan also cautioned market participants, and in particular private investors, not to rely on the Fed to bail them out in the event of a bank failure.
``There are many that hold the misperception that some American financial institutions are too big to fail,'' he said.
While the Fed and other supervisors would try to ensure an ''orderly liquidation'' of a failed institutions, Greenspan warned that ``shareholders would not be protected, and I would envision appropriate discounts or 'haircuts' for other than federally-insured liabilities''

ORO (05/04/00; 16:11:34MT - usagold.com msg#: 29940)
Holtzman figures
How sure are you of the figures?

My Fed source figures for 1995 have 3.575 billion ounces.

Mining production for 1998 sat at 80 million ounces and scrap recovery at 26 million

Data for 1999 show an 82 million ounce mine supply and a 16-17 million ounce scrap supply.

Since scrap does not change the aboveground values, the numbers don't work out right for your 1998 and 1999 figures.

While gold production rates grew by 5% annually in the 90s, the production rate has nearly stalled at a 3% growth rate in 1999.

Using your 1990 number and the 65 million ounce average annual production value for 1990-1995, we have
3.2955 + 0.065 * 5 = 3.621 billion ounces at end 1995

This is only 50 million ounces above my 1995 figure.

Using the known values for 1996-1999 production, the 1998 value would be
3.621 + 0.073 + 0.076 +0.080 = 3.850 billion for 1998
3.850 + 0.083 = 3.933 for 1999.

Using my 1995 figure would give 50 million less -
3.800 billion ounces in 1998
3.883 billion ounces in 1999

The rise of gold supply in your figures from your 4018 million 1998 estimate to 4417 million in 1999 means that a 400 million supply came in all of one year, since production capacity is only 82 million ounces for 1999 and is expected to be under 85 million for 2000.

Total mine resources estimated for 1995 were 2283 million ounces. Due to reduced exploration in the years since, there has been only minor growth in this number, on the order of 5% for the whole period. (My partial tally of major gold finds sits at about 120 million for the period 1995-1999).

Using the recalculated figures for 1998-9 we have
1.55 H/Oz and 0.64 Oz/H in 1998
1.54 H/Oz and 0.65 Oz/H in 1999

Using your inflation adjusted gold prices in relationship to the number of humans per ounce in dividing the POG by the H/Oz number (checking for correlation between inflation adjusted price and scarcity factor), we get:

1850 158
1970 145
1980 974
1990 484
1998 180
1999 170

Farfel (05/04/00; 15:19:10MT - usagold.com msg#: 29939)
Warning: Never Attack the Gurus at Kitco or Else!
Some poster named HARDCASE who I cannot recall reading previously launched a bitter assault my way with respect to my memorialization/analysis of APH's recent very negative gold forecast (gold to dive below 250). I read a few of his posts today and am now ready to comment.

My rejoinders are listed below

Date: Thu May 04 2000 01:01
HARDCASE ( flierdude Re: farfel ) ID#404246:
Copyright � 2000 HARDCASE/Kitco Inc. All rights reserved

farfel is of the "new era" style of investing.

He believes that you should believe investment advice from some one who has lost 90 percent of his assets over the last 3 years ( himself, and self admited ) instead of some one who has made a good living at it for the same time period.

Farfel says:

It's true, I have had my ass handed to me on a gold platter
over the past few years. What a massacre! I am one of those guys who "swings toward the fences" when I believe in something. Unfortunately, for any goldbug or market bear, that Un-hedged type of strategy has been a disaster during these (mostly) unidirectional markets these past few years.

However I am happy to report I am back in the saddle and recovered around 30%-40% of my entire loss, thanks to the very negative bias of these markets these past two months.
I remain debt free with a quick mounting pile of dry powder.
It is encouraging especially since I have a free-spending young wife :>)

In contrast, I note Mr. HARDCASE declare today at Kitco that he has no dry powder any longer. So the tide and trend may be shifting, benefiting the contrarian fence swingers like myself at the expense of the technical hedgers like Mr. HARDCASE.

Finally, I no longer provide specific investment advice like Mr. APH since I developed a much more profound respect for the arbitrary nature of the stock market PLUS a deeper desire to avoid harming investors who might fall under my influence.

HARDCASE Says:

He believes that to be a good advisor you must be absolutely correct 100 percent of the time on your call ( himself excepted ) including when you only say that a possibility exist.

Farfel says:

No, I never said any such thing, that is a complete misrepresentation. I never expect infallibility from anyone.

HARDCASE says:

He believes that opinions on what should happen is more important than observations of what is happening.

Farfel says:

Well, as everybody knows, I do believe this stock market has been "managed" and manipulated owing primarily to the mutual fund phenomenon, the various currency and commodity carry trades, and heavy middle class participation in the markets. I do believe that the hallmarks of these markets have been cronyism and moral hazard and no other administration has intervened as often to preclude the proper market equilibriums from occurring. As evidence, I've offered everything from the Bank of England Lowest bidder gold sale to the Long Term Capital Management bailout.

So yes, I do believe that I write often on "what should happen in the markets" and those writings are as valid as observations about what is happening.

However, Mr. APH does not simply write about what is happening, he predicts the future very often posting contradictory forecasts within several days of each other and often counting on the poor memory of his readers to forgive erroneous predictions. All this whilst a hallelujah chorus trumpets his wizardry to the heavens.

HARDCASE says:

As far as him not being very nice. There has never been any evidence that he is a nice person, and the only things he is any good at are twisting words and arson ( on chair seats )

Farfel says:

Oh, yes, I can be a very bad boy, no doubt.

However, just how "nice" is somebody like Mr. APH appearing upon a gold forum then, with all his accumulated adoration and influence, predicting gold's immediate plunge below 250 at a time when many long beleagured and devastated gold investors are holding significant investments that are only a stone's throw from bankruptcy. How nice is such a man who can so impassively make declarations that will ruin the bank accounts of those whose "homes" he visits at Kitco?

That's not too nice of him, is it? Maybe he would prefer to post such dire gold predictions in confidence amongst his friends or at one of the bullion bank chat forums where they would be so much more appreciated.

No, I am NOT for censorship, rather I am simply somebody who feels that at this point in time, negative mass psychology toward gold CAN be turned around, on the mere spin of a dime. I believe that the value of any investment is a function of that mass perception. In other words, before a person will even examine an investment's fundamentals, he must be WILLING to examine it in the first place.

So it becomes important to memorialize the notable errors of those technicians/analysts who predict gold to plunge to
new incredible depths so that next time they make such dire predictions, then their disciples will recognize they are NOT at all omniscient, that they best do their own research and their own thinking and that their gurus negative opinions are just that: opinions.

So here's to reality checks, that's what they call them at Kitco (I've been subjected to many myself), and they certainly do have value.

Thanks

F*

Harley Davidson (05/04/00; 15:11:49MT - usagold.com msg#: 29938)
TC
That should be Kudos...with a "K".

Harley Davidson (05/04/00; 14:32:16MT - usagold.com msg#: 29937)
ORO...
Geeze, it occurred to me this morning as I was driving to work that I was remiss by neglecting to include you in the secret society of "Web Masters" extraordinare of which
TC and Elwood are members. (smile) I forgot all about your web site, complete with graphics of beautiful gold coins. Well worth a visit!

TC, you said "If all goes according to plan, this page will allow for on-line ordering. (Welcome to the new millennium!)". Cudos on that decision to "use the technology"! I knew you could do it! (smile)

SHIFTY (05/04/00; 14:22:39MT - usagold.com msg#: 29936)
ponzi
Nasdaq 3720.74 + Dow 10413.12 = 14133.86 divide by 2 = 7066.93 PONZI
Down 26.79 ponzi points

Holtzman (05/04/00; 14:10:26MT - usagold.com msg#: 29935)
Statistics
Holtzman here,

--------------
With pleasure, TownCrier
--------------

To TownCrier regarding (05/04/00; 12:20:13MT - usagold.com msg#: 29932), if my words can be of use to you, you are welcome to use them. Though I don't specifically advocate the purchase of any particular coin from any particular dealer, I do feel it's wise for ordinary citizens to acquire gold coins as part of their overall holdings, and I do feel that a reputable dealer is one of the most valued friends an investor can find. Whilst I've never purchased from or sold to CPM myself, I've also never heard the first discouraging word from others who have done so.

--------------
Three Sovereigns Apiece
--------------

To Henri regarding (05/04/00; 10:49:22MT - usagold.com msg#: 29927), actually the reverse is the case. Malthus a few centuries back observed that human population had been growing at a faster rate than had food production, and he projected that trend out a century or two into his future to a point where humanity would either starve or have no alternative but to resort to cannibalism. As it turns out, though, he hadn't taken into account the effects of technology. Petrol-burning harvesting machines hadn't been invented in his time. One can only imagine how astonished Malthus would feel were he to come back today and observe not only well-fed humans but an entire sector of the medical profession devoted to liposuction.

Technology delivered much the same shock to the gold mining industry. It took thousands of years of human endeavour to amass by 1970 the above ground sum of 2.2 billion ounces. It took a scant 30 further years to Double that figure. Which is to say, the supply of gold experienced 100% inflation over the past 3 decades, or an average of 2.4% inflation annually. How was that accomplished? Modern mining technologies, plus the 1970s' phenomenal increase in the POG which, though it quickly faded in the 1980s, nonetheless caused mine managers to invest in equipment as if prices would remain high forever. The resulting overproduction is now coming home to roost in a perceived oversupply. That's been the major source of downward pressure on both POG and mining stocks. Rumours that central banks might dump their holdings certainly added momentum to the downside.

Some time ago I ran some spreadsheet calculations on how much gold there had been per living human at various points in time (POG is in terms of 1998 US dollars, Oz/H means Troy Ounces per Human, Ounces means above-ground supply known to Europe, gathered from Reuters, WGC, etc.):

Year . . . Population . . . . . .POG . . . . . Ounces _ _ _ _ H/Oz _ _ _ _ Oz/H
1500 . . 0500000000 . . . 2400 . . . 0002421040 _ _ 206.5 _ _ _ 0.0048
1750 . . 0790000000 . . . 470
1800 . . 0980000000 . . . 260
1850 . . 1260000000 . . . 620 . . . 0321500000 _ _ _ 3.92 _ _ _ 0.26
1900 . . 1650000000 . . . 600
1910 . . 1750000000 . . . 500
1920 . . 1860000000 . . . 196
1930 . . 2070000000 . . . 290
1940 . . 2300000000 . . . 630
1950 . . 2520000000 . . . 290
1960 . . 3020000000 . . . 240
1970 . . 3700000000 . . . 240 . . . 2245039848 _ _ _ 1.65 _ _ _ 0.61
1980 . . 4450000000 . . . 1568 . . 2771929498 _ _ _ 1.61 _ _ _ 0.62
1990 . . 5300000000 . . . 780 . . . 3295525363 _ _ _ 1.61 _ _ _ 0.62
1994 . . 5630000000 . . . 400
1998 . . 5900000000 . . . 278 . . . 4018750000 _ _ _ 1.47 _ _ _ 0.68
1999 . . 6000000000 . . . 260 . . . 4417410000 _ _ _ 1.36 _ _ _ 0.74

The right-hand numbers tell the most interesting story. In 1970, were all the gold above ground to be evenly allocated across every human then living, the result would be .61 ounces to each human. By 1999, whilst there was a doubling of above ground supply, there was almost but not quite a doubling of human population. The per-human amount nowadays is .74 of an ounce, or about 3 sovereigns. So even though there's a lot more gold in existence today than in decades past, 3 sovereigns for each of us alive today makes gold still rather a scarce commodity (excuse me, currency <smile>).

The good part is, the markets today think there's too much gold, for many reasons already thoroughly documented at this forum. The longer those markets continue to operate under that misconception, the better it is for us, for several reasons. One, it allows us to buy gold inexpensively in terms of our ability to earn wages. Two, it savagely curtails the mines' ability to bring new gold above ground (i.e., gold inflation is being suppressed to practically nil). Three, as the oversupply of two decades ago resulted in a prolonged price slump, the presently worsening undersupply will someday result in a prolonged price elevation. The reason we here occasionally become frustrated is because the paper markets have conditioned us to expect change on an hourly basis. But the physical gold market plays out its cycles over decades.

Yours,
I.V. Holtzman

WilloTheWarthog (05/04/00; 13:25:21MT - usagold.com msg#: 29934)
Leigh
n/a
Thanks for the welcome! No mudslides here, just a few quakes. As long as they stay under 7.0 we're ok, even then we'd still recover.

I posted that article for general amusement, not that it had any other value. During this time when up is down and right is wrong, it helps me keep my sanity to read a flagrantly idiotic article. No matter how many times you read "Popular Delusions and the Madness of Crowds", it may seem that that history is far removed from the modern madness. I think this is one of the most difficult things to do today, "to keep your head when all about you are losing theirs and blaming it on you".

The reasons I haven't hung around lately is that I've been too busy working and traveling, and also the markets have been somewhat boring. I smell a little blood in the markets here lately, though, so I thought I'd drop back by and see what's happening. Thanks again for the post, it's nice to have an absence noted. I'll try to keep my posts to links and some commentary on situations outside the US that are relevant to the general discussions.

Leigh (05/04/00; 12:20:17MT - usagold.com msg#: 29933)
Willo the Warthog
The writer of the Bloomberg article REALLY needs to read the Book of Ecclesiastes! "Is there any thing whereof it may be said, See, this is new? it hath been already of old time, which was before us." The arrogant little fool probably wouldn't understand it, though!

Speaking of King Solomon (who wrote Ecclesiastes), our family was reading about his home the other day. Gorgeous -- a pre-fab cedar house covered inside and out with gold! It's in I Kings, chapter 6.

Willo, I'm very glad you're back. You disappeared around the time of the mudslides in Venezuela, and I was so worried that something had happened to you.

TownCrier (05/04/00; 12:20:13MT - usagold.com msg#: 29932)
ATTN: Sir Holtzman... and, Letting the cat out of the bag...
As coincidence and good fortune would have it, your remarks today were a perfect segue into a small project I have in the works. Specifically, these words:
"As I type this, I'm holding a Kaiser Wilhelm 20 Mark and a Romanov 5 Rouble in my hand. Both of those governments (Heartland governments, I just realised) have gone the way of the dinosaur, but their gold coins still carry value. True, in the time since these coins were minted, there's been at least a tripling of the above ground supply of gold, meaning that these coins are but a third of their original worth, all other things being equal. But retaining a third of their value is still a stunning accomplishment when contrasted against the banknotes with which they used to be exchanged one for one. Barely a decade after this 20 Mark was minted, the German printing presses were turning out Billion Mark bills for factory payrolls, engraving only one side of the paper in order to conserve ink."

Here is the story. Michael (Centennial Precious Metals) has very recently secured a beautiful cache of those same German 20 mark gold coins. He has asked me to put together a special web page to promote the availability of these special coins to our on-line clientele. If all goes according to plan, this page will allow for on-line ordering. (Welcome to the new millennium!)

I was wondering if I might gain your permission to quote your recent commentary within the context of my project. (Of course, now that I've let the cat out of the bag, all of these coins will surely be purchased by those who saw this little post and call MK before I can even get the page finished. Such is the risk I'm willing to take to make this first attempt at an on-line order page a "quality experience".)

Just let me know via the sitemaster e-mail which is a direct link to The Tower here whether I have your grace to use your quote. Thank you kindly.

TownCrier (05/04/00; 11:57:16MT - usagold.com msg#: 29931)
Comments for Sir THC on gold pricing...selling and "delivery" of futures
THC (5/4/2000; 2:43:57MT - usagold.com msg#: 29912) raised the following question:
"Do you know of any example of a commodity market where the paper contract enables the long holder to demand delivery, and yet the paper was driven into the ground while there was insufficient physical commodity to satisfy demand?
I find this scenario somewhat implausible, as long as the contract holders have the right to demand delivery."

First, let me say that I have no familiarity with the rules that govern trade on the TOCOM exchange with regard to when contract holders are allowed to demand delivery and thereby causing the meltdown in the white metals seen there recently that you've described. Where it comes to gold on the COMEX, however, the key thing to recognize is that contracts can ONLY be called for delivery when their expiration month arrives. The "active" (price determining) month is always the next one out into the future, so THESE positions are ALWAYS SAFE from delivery obligations, and hence, they provide a perfect opportunity for any sizable entity who wants to sell them into the ground with impunity. The break will come in real gold prices when ever-lower prices as determined by the futures markets fails to be accompanied by adequate metal reaching the real market to satisfy the real demand for the metal. This break away will likely be seen first as higher premiums on top of the too-low spot price, followed by complete separation of the markets for spot and futures pricing.

The following excerpt of past discussion might be helpful. If it is too "out of context" to be meaningful, please look back at the original post in its entirety.

TownCrier (4/26/2000; 12:13:43MT - usagold.com msg#: 29379)
---BEGIN quote---------------
...those who theoretically sold gold [via futures contracts] and are now faced with delivery obligations [because they failed to settle their contract prior to the arrival of the window that allows delivery demand] [...] have two options. First option, they would turn to the spot market, bringing this demand pressure to apply upon the metal to be found there. Second option, they could "pass the buck" by entering the buy side of other April contracts and calling for delivery with which they will satisfy their own obligations. This "passing of the buck" could occur many times until a seller was found that had the required gold either in the COMEX system, in their private vault, or else by turning in the end to the spot market at some point prior to the delivery deadline of April 28. Of the 9,900 contracts held up for delivery, what are the chances that the buck was passed 9,900 times to satisfy one original delivery notice for a single 100 ounce contract??? My guess is that the buck is passed to a dergee, but that in this case it would not constitute the bulk of the delivery intentions. One reason for this conclusion is that around 7,000 contracts were immediately given notice for delivery on the first possible day...March 31st.

As you can imagine, this "passing of the buck" would first put demand pressure on the April contract itself, then maybe the spot market as necessary...depending on where the gold finally came from to fill the order (COMEX inventory, private inventory, or spot). Such demand pressure on April contracts or spot markets would be acceptible, because at this point April is off the radar screen. All focus is now upon the widely reported most active futures month which is June in this case. (And as you should know by now, the spot price is mathematically derived from the most active futures month's prices.) Another reason the "passing of the buck" probably does not artificially inflate the delivery intentions and hence the apparent quantity of gold scheduled to change owners (prior to the April 28 deadline) is that the institutional players without gold but with a desire toward suppressing the price would have settled their April contracts with cash (probably with a profit?) prior to being subjected to delivery obligations on First Notice Day (March 31). Upon the arrival of this important deadline, they would have moved into the future month of June, making it the active one, and would continue to short with delivery immunity while the April delivery drama would play out behind them.

It should be clear by know that all that is necessary to cap the U.S. price of gold for those desiring to do so is to continue to sell the active month futures contracts more aggressively than anyone else can be found to buy them. Not only are they thereby IMMUNE FROM THE POSSIBILITY OF BEING STUCK WITH DILIVERY OBLIGATIONS for gold that they couldn't provide, but their depression of this highly publicized futures price will generally diffuse any desire for the remaining April longs to seek delivery of a postion that is already apparently underwater as a cash loss. And for the same reason, the typical western investor mindset will not likely be putting much demand pressure on the spot market either. (Now you get a small feeling for why this latest delivery demand upon COMEX contracts seems outside the norm.)

I wonder how many of these institutions are selling the futures (and as a bonus, possibly making some money as the price falls by their own effort) while at the same timie buying what little physical metal remains available...
---END quote----------------------

schippi (05/04/00; 11:56:30MT - usagold.com msg#: 29930)
Hourly Select Gold Chart
http://www.SelectSectors.com/agpm70.gif
FSAGX moving Up!

Solomon Weaver (05/04/00; 11:46:52MT - usagold.com msg#: 29929)
why silver was not confiscated in 1933
Very Simple

At that time all dimes quarters and halves were made of silver....how would people have made change???

Silver lined every pocket and there was no substitute!!!

Poor old Solomon

WilloTheWarthog (05/04/00; 11:45:14MT - usagold.com msg#: 29928)
The REAL problem with Soros, Buffet, etc....
http://www.bloomberg.com/feature.html
Today's feature at Blooomberg:

"Could the investment problems of Soros, Buffett and Robertson be that they are old men? It wouldn't be surprising if it were. Even in normal times there is probably a slight tendency for investors to hang around longer than they should."

Right. But the fat lady ain't sung yit.

Henri (05/04/00; 10:49:22MT - usagold.com msg#: 29927)
I. V. Holtzman
There may be far more gold above the ground now than there was when Romanov minted the roubles; however, at some point the percentage growth of new gold brought above ground has slowed and the percentage growth of new people produced to share it has accellerated.

Hmm, I wonder if the crossover point was associated with any notable historic events? That is, when (or if) the growth in gold above ground (%/yr) became equal to the growth of the global population %/yr, was there another seachange political event?

Anyone have a database to plot this? If the population is now growing faster than above ground supplies, it is only political denial that gold is a depreciating asset. Common sense would indicate otherwise.

SALMON (05/04/00; 10:40:31MT - usagold.com msg#: 29926)
Franco-Nevada
Financial Highlights (audited)
For the year ended March 31st
(millions of Cdn dollars except
per share data) 2000 1999
-----------------------------------------------------Revenues $218.2 $135.6 +61%
Net earnings 143.8 102.2 +41%
Net after tax 97.6 68.5 +42%
Cash flow 138.3 105.9 +31%
Dividends 47.6 32.2 +48%
Debt nil nil
Earnings per share 0.62 0.45 +38%
Dividends per share 0.30 0.21 +43%
------------------------------------------------------------
http://www.globeinvestor.com/archive/cnw/20000504/c1475.html

Skip (05/04/00; 10:34:37MT - usagold.com msg#: 29925)
Some thoughts...

I have some thoughts regarding two postings....

ThaiGold (05/03/00; 23:51:38MT - usagold.com msg#: 29903)

Thank you for remaining in the forum. Having re-read your posting a second time, you seem like the kind of person who would be easy to have an indepth conversation with, only to discover later that time passed too quickly. One character quality that I personally respect is the ability to disagree with some issues while respecting the other person's opinion and his/her right to hold those opinions...along with a willingness to learn.

Do you have strong opinions? Yes...and so do I. But you have also indicated a willingness to learn, and possibly modify some of those opinions (as I have over the years). You seem to have this character quality, and far too few on this planet do. Indeed, from the content of your postings, I believe that you also have other valuable character qualities that people should emulate.

We can be each others' teachers and students, and that certainly is the case on this forum.

-------------------
TownCrier (05/03/00; 18:57:49MT - usagold.com msg#: 29888)

Your posting to ThaiGold from yesterday really touched me for several reasons. You stated:

"There is no question in my own mind that the dynamic of the Forum is enhanced considerably by the input of new posters, especially those novices that are newly arrived with simple thoughts and questions about the world of gold economics."

Thank you for recognizing the value of new posters and occasional posters as well as seasoned ones.

You also said:

"I expect that some of these posters came to the table with their comprehension already in hand, while others attained that grasp while here."

...and:

"Whether they realize it or not, it is my opinion that many of the regular posters here know more about the intricacies of the gold sector than most financial analysts understand their own chosen field of employment. I expect that some of these posters came to the table with their comprehension already in hand, while others attained that grasp while here. I think it is fair to say that they (myself included) have all reached new levels of understanding by the information and opinions shared here. (I am equally certain that there are silent non-posters among us who have the same or greater "expert" status in the realm of gold market comprehension.)"

Almost all that I've learned about gold has come from the internet, with much of it coming from this forum...and a special thanks go to FOA/Trail Guide. Such respect for all of us contributes greatly to the value of this forum. May God bless your ongoing efforts to maintain this forum, and in all the good that you seek.

--Skip

schippi (05/04/00; 10:24:09MT - usagold.com msg#: 29924)
Select Gold Chart ( Up to 11:00 NAV )
http://www.SelectSectors.com/fsagx.gif
FSAGX moving Up!

Holtzman (05/04/00; 09:54:07MT - usagold.com msg#: 29923)
Of Empires
Holtzman here,

I seem to have chosen a good day to wrap this one up, as the main topic already under discussion is Empire.

--------------
Nothing stays the same
--------------

A few days ago, someone posted something here which got me thinking: "Does anyone seriously think that the awesome powers of the US Government would ever allow the US$ dollar to decline from the world's stage?"

My grandfather used to say almost exactly the same thing about the awesome powers of the British Empire and the strength of the British Pound. He was right. For a time. But as the years passed, he grew less and less right. Sometimes the status quo takes centuries to change. Sometimes it changes overnight. But change it will.

I do see a future where the U.S. dollar will remain in existence. And I do see a future where the euro won't be as hard a currency as the Deutschmark.

However, I don't see the euro becoming as soft as the lira. Nor do I see the U.S. dollar remaining the planet's sole reserve currency. There will be inflation, of course, in both the euro and the dollar, but probably not on level with 1920s Germany or 1990s Russia. I think what's most likely to happen will be an evening out of the powers.

Europe (sooner or later including the UK, Switzerland, and hopefully someday Russia) will gradually begin presenting itself as a single nation. Mind you, it may be a century before anything approaching a U.S. Constitution is signed. In the meantime, though, in terms of economic mass, Europe is already becoming a singular noun. Europe will be on par with the U.S., but it will have no motivation to wish to overshadow the U.S. After all, we have enough troubles of our own. Why should we wish to take on yours as well? This new attitude should, I hope, make our new century a bit calmer than the previous.

--------------
Sea versus Land
--------------

During the past 500 years, the notion of Empire implied ocean-spanning conquests, from Spain's and Portugal's occupation of South America through Britain's occupation of India to the U.S.'s occupation of large sections of Europe and East Asia. This repeating pattern was documented during the second half of the 1800s by Alfred Thayer Mahan (1840-1914), who concluded from the historical evidence available to him that sea power was the surest source of Empire. From the Roman Empire (basically the shores of the Mediterranean plus non-Scotland Britain) all the way up to the British Empire (an island which held sway over parts of every continent), it seemed clear to Mahan that naval power was the key to world domination.

It's important to realise that Mahan was an American, watching as it were from the sidelines while his part of the English speaking world was left out of the great British Empire. Indeed, during Mahan's college days, the Confederate States were petitioning the Empire to let them back in. Mahan viewed the remnant U.S.'s blockade of Confederate ports as the make-or-break stratagem which allowed the North to reassemble the Union. Mahan's theories published in later years only reinforced the argument among American politicians that the U.S. had to become a great naval power in its own right. His theories were also embraced by the British who saw them as independent confirmation that they'd gone about world domination in the proper manner.

A few decades later, an opposing notion of power was theorised by Sir Halford Mackinder (1861-1947). Mackinder viewed the world as a set of concentric rings centred round Eastern Europe (Germany to the Urals). It was his belief that whomsoever ruled that core (which he called the Heartland) would be in the best possible position from which to rule the World Island (Eurasia/Africa) and thence the rest of the world. He also believed that anyone who found himself in such a position would naturally desire to pursue that course of action. But Attila, Genghis Khan, and even the original Muslim Jihad had never sought to reach beyond the great oceans. It's even in some doubt that Hitler and Stalin would have wanted to directly rule the Americas or Australia. Render them harmless, yes, but rule them? Doubtful.

As with Mahan, it's equally important to realise that Mackinder was a Briton, watching as it were from the sidelines while alarming powers stirred to life on the Continent close by. From his point of view, he saw the Americas as largely irrelevant to the coming struggle between the sea-based British Empire and the land-based Heartland. Though regarded as an alarming scenario by the British (and later the Americans), his theories were (not surprisingly) later embraced by the Russians who saw them as independent confirmation that they could successfully wall themselves in behind concentric rings of defence.

This is why you saw, as recently as the 1980s, the layered onion configuration of the Soviet Bloc. Moscow was at centre surrounded by Russia, surrounded by Russian-speaking Belarus/Ukraine, surrounded by the mostly Slavic-speaking Eastern Bloc, with now-subdued Berlin held impotent at its perimeter. Finally, the occasional remote banana republic was held under sway as a way of distracting attention from the centre. A more impenetrable fortress could hardly be imagined. Any rational person viewing that contrivance from the outside would see it as defensive only, and yet NATO spent untold wealth preparing for an attack which, frankly, was never going to originate from the Heartland lest NATO were fool enough to provoke it.

Interestingly, the U.S. took both Mahan and Mackinder to heart. The U.S. became the greatest sea power in the world and, during the Cold War, it built a concentric Heartland within North America every bit as onion-layered as the one in Eurasia. NORAD under Cheyenne Mountain was at centre, surrounded by missile silos scattered across the rest of the country, surrounded by the friendly nation of Canada with its listening posts and, on the other side of things, us in Western Europe.

Is it any wonder that Russia feels nervous right now, especially about anything relating to nuclear weapons treaties? The U.S. onion is still mostly intact, while the Russian one has fallen away layer by layer. Now they've even got terrorists within their own borders blowing up blocks of flats in downtown Moscow. We, the rest of Europe, have been used to this sort of nonsense for ages, whether it be IRA bombs in the City, or Basque separatist bombs in Madrid, or rather pathetic neo-Nazi riots in Berlin. But this is all new and horrid to the Russians.

It is absolutely imperative that we, the rest of Europe, beckon Russia into our embrace with all due haste. Russia's psyche needs insulation. Russians need to know that they are bordered by friends. As bizarre as it no doubt still seems in some quarters, NATO minus the U.S. and Canada may be exactly the sort of outer shell Russia needs to feel safe. And a Russia that feels safe is a Russia which can deliver more raw materials and business opportunities than did the American West of a hundred years ago.

What both Mahan and Mackinder neglected in their theories was that a would-be Empire must be motivated to reach out, either by a need for scarce resources or by a need to strike first at a disturbingly powerful neighbour. The goal of Europe's leaders over the next century must be to so arrange themselves that they feel neither deprived nor threatened.

That last point is why the euro does not need to be either strong or weak. It should simply make no practical difference from the point of view of a European citizen how many outland currency units equate to one euro. Until the U.S. started obsessing on Japanese consumer electronics and Arab oil, Americans could live out their lives without once needing to know how many yen a dollar would buy. Why? You used to be self-sufficient.

The purpose of the euro is indeed to supplant the dollar, BUT ONLY WITHIN EUROPE. If others outside choose to use the euro as a reserve currency, they're welcome to. But, precisely as Dr. Greenspan manages the dollar solely with respect to the U.S.'s needs, the ECB will manage the euro solely with respect to Europe's needs. The euro is not intended to take over the world, any more than are the renmimbi or rupee.

China and India are classic examples of Empires which have historically been content with their stati quo. They are each powerful enough not to feel compelled to conquer the world in self defence (minor border irritations notwithstanding). Indeed, both have been victims of conquest several times throughout history without having been inspired to agression themselves. Likewise, though neither would be considered rich on a per capita basis as compared to the UK or the U.S., neither China nor India feel the need to conquer in pursuit of scarce resources.

Europe must do its utmost to pursue a similar pattern of Empire. To do anything else is to invite a repeat of the 1900s. Or worse yet, the 400s.

--------------
Multi-Heartland World
--------------

I expect the Empires of the 21st Century will be continental in nature: Europe, English North America, India, China. That's not to say islands will be left out. No doubt Britain will figure prominently in Europe. Japan may someday likewise become a satellite of China. Then again, it may not.

Other regions will unify (at least loosely) in order to take second-place positions at table: Australia/Oceania, Latin America, the Muslim world from Pakistan to the Maghreb, and perhaps even Sub-Saharan Africa.

In this environment, I expect the U.S. will find itself playing the role of the post-1918 British. The U.S. will still be important on the world stage. It's just that, gradually over time, it will cease to be the one voice that makes the planet shake. Which, frankly, will make the world safer for everyone, including Americans. Still, at half a dozen times more population than the UK, and at probably half a hundred times the land mass, it's doubtful the U.S. will dwindle quite so far as did we.

--------------
Balkan America
--------------

But then again, the UK is simply the core of what used to be the British Empire, and even that core is devolving as we speak. Remember I said some time back that historical change tended to result from huge and opposing pressures. Change occurs when one pressure gives way, and there's often no way to anticipate which pressure will be the one to falter. For example, whilst it's quite possible the U.S. and Canada will carry on as if they were one unified nation for the next century, it wouldn't surprise me too awfully much if, a few decades hence, North America north of the Rio Grande were to comprise a dozen or so sovereign nations rather than two. After all, where's the rallying call nowadays? The Red Menace is gone.

The most likely fracture point as I see it is Quebec. Should Quebec someday secede, the act will cut Canada into at least three nations, not two. Sooner or later, the English Atlantic part of Canada will find more in common with New England than with Western Canada. That cross-border commonality is already present today, and is felt in both directions. Residents of Seattle consider New Jerseyites much more outlandish than residents of Vancouver. Residents of Maine find residents of New Brunswick far more "normal" than Montanans or Albertans. These commonalties may in time prove more compelling than the call to remain subservient to a faraway and increasingly arrogant District of Columbia.

The most perilous part of this devolution will come when the U.S. federal government realises that most of its nuclear stockpile is located in those states which are most eager to secede: the Pacific Northwest. It's hardly surprising that the incumbent government is practically at war with the various well ordered (and not so well ordered) militia springing up from Idaho to Texas to Illinois. Moscow was just as alarmed when it dawned on them that Belarus, Ukraine and Kazakhstan were leaving the fold as well-stocked nuclear powers.

The south of the U.S. doesn't look much more stable, either. Mexico is making steady gains in its bid to reclaim the territory it lost to the U.S. a century ago. When the majority population in the southern states speaks Spanish, it'll be but a small step to New Mexico / Old Mexico reunification, then reunited Mexico will be a nuclear power. And, if one is to believe the news reports, the bottom tip of Florida has already become the independent nation of North Cuba. Finally, little Hawaii may someday awaken to find itself orphaned, an independent nation once again through no act or intent of its own. Halloo? Is anyone out there? Oh dear.

Naturally, what I've just written is quite clearly fantastic speculation. For the present. It's simply one of the hundred or so ways the opposing pressures of political humanity might lurch following a fracture. And do keep in mind that these words were written from the point of view of someone who's watching the final disposition of his own Empire. It's natural that such events would colour my expectations regarding other people's Empires. In all of this, the only thing we can be quite sure of is that the political maps in 2050 will only barely resemble those in 2000.

As I type this, I'm holding a Kaiser Wilhelm 20 Mark and a Romanov 5 Rouble in my hand. Both of those governments (Heartland governments, I just realised) have gone the way of the dinosaur, but their gold coins still carry value. True, in the time since these coins were minted, there's been at least a tripling of the above ground supply of gold, meaning that these coins are but a third of their original worth, all other things being equal. But retaining a third of their value is still a stunning accomplishment when contrasted against the banknotes with which they used to be exchanged one for one. Barely a decade after this 20 Mark was minted, the German printing presses were turning out Billion Mark bills for factory payrolls, engraving only one side of the paper in order to conserve ink.

Yours,
I.V. Holtzman

Peter Asher (05/04/00; 08:38:39MT - usagold.com msg#: 29922)
ThaiGold
The Silver reference was in the so far undocumented reference material below.

Peter Asher (04/25/00; 01:25:29MT - usagold.com msg#: 29296)
Hill Billy Mitchell (04/24/00; 22:24:11MT - usagold.com msg#: 29290)

I have a copy of the Post Office "Poster" notifing the public of the Executive order.

Your authors "Quote"

>>>>I as
President, do declare that a national mergency exists; that the continued private hoarding of
gold
by subjects of the United States poses a grave threat to the peace, equal justice, and
wellbeing of
the United States, and that appropriate measures must be taken immediately to protect the
interests of our people." Therefore, pursuant to the above authority, I hereby proclaim that
such
gold holdings are prohibited, and that all such coin, bullion or other possessions of gold be
tendered within fourteen days to agents of the Government of the United States for
compensation
at the official price, ($20.67 per ounce) in the legal tender of the Government. ALL SAFE
DEPOSIT BOXES IN BANKS OR FINANCIAL INSTITUTIONS HAVE BEEN SEALED
PENDING ACTION IN THE DUE COURSE OF THE LAW. All sales or purchases or
movements of such gold and ***silver*** within the borders of the United States and its
territories, and
all foreign exchange transactions or movements of such metals across the border are hereby
prohibited.<<<<

JMB (05/04/00; 06:39:29MT - usagold.com msg#: 29921)
test
test

ss of nep (05/04/00; 06:38:11MT - usagold.com msg#: 29920)
See: SteveH (5/4/2000; 4:16:49MT - usagold.com msg#: 29914)
From Mozel's � The Secret Stash

"It is pretty clear that the British are doing the bidding of the U.S. on demand now. The BOE auction is evidence. But, the fawning British role during the Kosovo atrocity is even better evidence. Congress has designs on the whole British Commonwealth, I think"

I think he has it backward here.

The Roman Empire moved to Britan, and there it remains to this day,
It is the US that does the bidding of the British.

THC (05/04/00; 06:27:14MT - usagold.com msg#: 29919)
Oro - Pt Backwardation
Thank you for the quick response.

I see the backwardation situation somewhat differently. My view is that spot demand is strong (requests for physical delivery), therefore spot prices pull the near month contract prices up vs. the far out contracts. For reference, you may note that the backwardation percentages are very similar for Tocom gasoline and Pt. I don't think there is much risk of gasoline going the way of palladium, so this should not be interpreted purely as a sign of "default risk."

My understanding of FOA's statement that "paper will be sold into the ground" is that the value of paper contracts will go down over time, while the price of physical goes up. This is clearly NOT the case for Tocom Pt.

If one purchases a far out Pt contract, the value goes UP as you hold it due to the backwardation, even if the value of spot Pt is flat. In this sense, at this point in time and given that a default does not occur, paper Pt is clearly NOT being driven into the ground (value goes up over time).

Once again, please confirm your thoughts.

Cheers,

THC

ss of nep (05/04/00; 06:10:59MT - usagold.com msg#: 29918)
All Roads Lead To Rome

Indeed.

The Empire never really died, it just changed its name and seat of power.

HI - HAT (5/4/2000; 5:00:49MT - usagold.com msg#: 29917)
SEASONS
The wheel rolls on, round the bend an old familiar vista. Europe, the hub of all colonialist spokes, now takes again the road to Empire. The seasons change, but as ever,
All Roads Lead To Rome.

SteveH (5/4/2000; 4:39:54MT - usagold.com msg#: 29916)
You folks are busy...
http://www.gold-eagle.com/gold_digest_00/schultz050400.html
On the subject of hall-of-famers, here is another winner. This one is truly inspiring, written in a prose that praises English essay writing.

snippet --

"The presidents who got/kept the US in Vietnam were Kennedy (a toddler when WWI ended but heavily influenced by his lost generation father), LBJ (a teenager in 1918), & Nixon (old enough to have been influenced by WWI). But why didn't we have a major bubble in the 60's or 70's? Answer: We won WWI. We lost Vietnam. It's no coincidence that after Germany lost WWI, it tried to create the perfect society, which resulted in Weimar inflation. After Vietnam, the US promised Utopia & experienced inflation for a decade. Losing a war does greater cultural damage than physical, as Hitler's election in the 1930's proves. Just as Hitler gained popularity by promising to "make it up to the Germans" for the WWI defeat with a huge welfare state, LBJ promised Utopia with his "guns&butter" policy."

ORO (5/4/2000; 4:19:24MT - usagold.com msg#: 29915)
THC - Expectations
The backwardation in Pd in the US markets was very severe before the TOCOM break. The backwardation was reversed and gone much closer to normal during a few weeks.

Today, backwardation in Pt and somewhat in Pd are exactly in that situation, the pricing of the paper is discounted at an annual rate of 75% per year in the close month. It comes to a 5% discount "for waiting" and prolonging exposure to a possible default.

SteveH (5/4/2000; 4:16:49MT - usagold.com msg#: 29914)
You folks are busy...
http://www.kitcomm.com/comments/gold/2000q2/2000_05/1000504.054152.mozeleeee.htm
This post from Mozel deserves to be read. This is probably a hall-of-famer, but he didn't really post it here, then did he. Enjoy!

ORO (5/4/2000; 4:08:24MT - usagold.com msg#: 29913)
Canamami - reply to your 29897
canamami 29897

A couple of issues to take you to task on.

1. Europe is far more closed an economy than the US. In nominal terms, the EU currencies were routinely overvalued relative to the dollar according to Purchasing Power Parity, but for short periods. This was a direct result of EU member's position as US creditors since the late 50s. The low Euro is a true test of the mettle of Europe's "self contained" economy. It will show up any weakness in internal supply of internationally traded goods and services.
The US has used its "extravagant privelege" of issuing the reserve currency to trap the emerging economies of the world in a massive debt trap. As a result, PPP parity with these nations would turn their exports to America into far more expensive items than they are today. On a volume basis, the US has been importing 56% of its goods and a large, and growing, portion of its services, perhaps 25%. In the event of free trade actually occuring (i.e. no more dollar reserve system), the US would be at parity with all its suppliers and the volume of trade rather than the need to repay dollars would dictate import prices. The result would be one of two for each import - either we stop importing, and live like the rest of the world does, or we pay the full price of the imports. In any case, we would no longer be able to "outsource" the bulk of our labor needs to newly industrialized countries.

2, 4,. The political bent of Europe, particularly of Germany, though difficult will not stand in the way of the Euro and the EU. It might help reduce some of Brussel's power, which is allways a good idea. However, the impetus for change that brought these countries together in the first place is still there. The drivers were true economic necessity and the interest of the large European banks. The motion to snare England worked and it has resulted in aquiesence of their financial community. The results include the Frankfurt/London stock exchange deal (which was Germany's prize for approving the Vodaphone merger), the convergence of short term interest rates, and the coming convergence of long term rates for Gilts and Bunds.

3. 4. Italy is definitely a problem, but Euro "credibility" only matters for short term trades; up to 2 years or so. Weak members should not make much of a difference to the viability of the currency of the whole block as long as Italian style socialism does not turn into pan-European socialism. The socialist Brussels establishment was chopped down once, it will be done again. Socialist officials are remarkably easy to "convince", and when they are caught we see the kind of mass resignation of Eurocrats that we saw in the end of 98. I believe that Europe's current socialist leadership was elected by the people and supported by business for the respective purposes of protecting worker's interests during the transition, and to placate the public's fear of having to compete on their own merits.

5. These fundumentals of trade surplusses and savings will, ultimately, prevail. Particularly if nations within Europe start competing for business the way states compete for business within the US.

6. 8. The US is quickly falling into the exact same debt trap it has fallen into before. Just as our bankers have done to many others before. When liquidity dries up it tends to cause hedges to backfire, creating more damage than the original position could have caused. Once the damage from busted hedges induces liquidation of the original positions, the system unwinds in a vicious circle. That is how LTCM and many others got killed. The technicals do look like a capitulation is in. However, it often takes a second capitulation to undo the trend. Often it is the spike down through a long support line of a long decline trend that marks the initial bottom. I often put limit buy orders in such "chart positions" below the market.

7. The US up Euro down of the 1998-1999 period is gone. The US markets are being pumped up by low interest rates in Europe and Japan. The drift of the JGB from just over 0.5% to near 2% and back to 1.5% is joined with the Bund yield rising from under 4% to over 4.5% to reduce relative interest rate spreads. The resultant reduction in relative spreads had the effect of raising US rates. The fact that 6.5% rates are needed to keep the dollar going, indicates an inflationary discount of 5% relative to the Yen and 2% vs. Europe. (This is because capital demands raise long term interest rates globally, while inflation expectations dictate the unique interest rate in each currency zone/country.) This indicates an inflation expectation of about 4.5%-5%. I believe the US is importing deflation from abroad and has a 6.5% (Q1 2000) to 8% (Q3-4 2000) price inflation which requires a 3% rise in the dollar in Q1 2000 in order to compensate for local inflation with foreign deflation, and this figure should be compounded with a further 3% rise in the dollar for Q3.

9. The BIS reports are pretty clear, and I use their numbers for much of my statistical analysis of "Big Float"
http://www.bis.org/publ/r_hy9911.htm
http://www.bis.org/publ/r_db9911.htm
http://www.bis.org/publ/r_fx98.htm

The following is a collection of charts showing 1. market share of various currencies (charts 1-3), 2. currency creation (fresh bank lending) less currency demand to repay outstanding debt (rest of charts.
http://members.xoom.com/Nebucadnezer/CurrencySupplyDemandBalances.htm

THC (5/4/2000; 2:43:57MT - usagold.com msg#: 29912)
Serious Question for ORO
Oro, I hope that all is well with you. Thank you for your continued sharing of ideas.

You recently wrote:

>Pt and Pd are being driven by a physical short squeeze of >the type that closed down TOCOM Pd trading. Paper is being >sold into the ground while physical can't be had. >Familliar scenario? Did not FOA/ANOTHER indicate that was >how gold will go?

In the previous palladium squeeze, insufficient metal was available to support the delivery requirements, resulting in a squeeze that pushed prices so high that Tocom shut down trading. In this case, paper went up along metal.

And currently, a simular situation is brewing, with paper/physical palladium and platinum prices very strong, and in deep backwardation.

To my knowledge, the Pt/Pd markets have yet to prove that "paper can be sold into the ground while physical can't be had"......the holders of long contracts can hold until expiration, forcing the shorts to deliver or pay exhorbitant prices to escape.

Do you know of any example of a commodity market where the paper contract enables the long holder to demand delivery, and yet the paper was driven into the ground while there was insufficient physical commodity to satisfy demand?

I find this scenario somewhat implausible, as long as the contract holders have the right to demand delivery.

Pls let me know your understanding of this issue, and if there are any historical examples of such a scenario actually occuring.

Thanks,

THC

ThaiGold (5/4/2000; 2:19:03MT - usagold.com msg#: 29911)
Duty - Honor - Country
Attn: Peter Asher (5/4/2000; 0:49:46MT - usagold.com msg#: 29909)
==============================================================
....
...
..
Peter Asher:

You just posted the Farewell Speech to West Point by ....
Kindly refresh my old and failing memory.

Who gave that immortal speech at West Point.?.

Thanks. It was a poignant speech, and as I read it, thought to
myself, golly, how times have changed.

Duty - Honor - Country

[partial quote]
He has written his own
history and written it in red on his enemy's
breast. But when I think of his patience
under adversity, of his courage under fire,
and of his modesty in victory, I am filled
with an emotion of admiration I cannot put
into words.
[unquote]

Duty - Honor - Country

Our Military Servicemen and Women still believe and uphold
such Nobleness. Would that our President could even try
to reach that Pinnacle.

ThaiGold
=================================================================

ThaiGold (5/4/2000; 1:37:38MT - usagold.com msg#: 29910)
Silver Conclusion
Attn: Peter Asher (05/03/00; 10:25:14MT - usagold.com msg#: 29845)
================================================================================
....
...
..
5-03-2000
To: Peter Asher

[You wrote]
Maybe its because I'm old enough to remember the tide of World war II being
turned by "Rosie The Riveter." The two factors that won that war were the
ability for the American soldier to think for himself and take the initiative
on the battle field when cut of from command, and, the resources and industrial
might of "Spacious Skies, and Amber Waves of Grain." Maybe that veiwpoint makes
me also one of your "Crack Pots".
[UnQuote]

Indeed, Peter. Nowadays Heroic Veterens, Warriors, and Patriots such as yourself
would perhaps be labeled as such. But certainly not by me, one of the vanishing
breed of Flag Wavers. And I've even heard of Harry Truman being labeld such, for
having the audacity to actually *win* a war.

[And you wrote]
I don't find the word Silver any where in it. Is there a more comprehensive
formal version of this order.
[Unquote]

If you could perhaps repost that same PostOffice Gold confiscation notice, or
remind me of the original post date, I'm sure it contained a reference to Silver
in the fine print of one of the lesser paragraphs. Look very carefully. That's
what triggered my curiosity. It may have been a similar post, of the same FDR
order, by someone else, just previous to yours. But as I recall, BOTH contained
the reference to Silver. Your post was in response/clarification of his post.

Regardless, the Silver non-confiscation issue has gathered some interesting
inputs now, by other posters, including:
Econoclast (05/03/00; 14:32:55MT - usagold.com msg#: 29867)
[quote]
One reason that there wasn't silver confiscation might have been simple
logistics. A few pounds of gold brought into a bank or otherwise confiscated can
be quite valuable. Silver on the other hand, is not nearly as precious so maybe
the gov't simply didn't want to have to cart around truckloads full of silver
when they could simply confiscate a small safe full of gold.
[unquote]

Which confirms the similar explanation as to that which you put forth.

And further confirming your answers, the post by:
TownCrier (05/03/00; 18:57:49MT - usagold.com msg#: 29888)

[quote]
Rarity notwithstanding, the
very existance of these silver coins until 1964 is your modern proof that
silver was not desired by the government...it was simply not needed to
settle international trade, and was not the fundamental source of difficulty
when bank runs plagued the nation in the late 1920's and early 1930's.
[unquote]

So I guess there were several pretty logical reasons why Silver was not
confiscated. And my question has been answered. Thanks to you all.

Also, in the interim of all this, I myself (finally) realized another possible
reason: To have done-so, would have left our nation without any coinage for
day-to-day trade. Except for Penny's and Nickel's. Wooden or otherwise.

Now then, we must confront the issue of "Would Silver be a good alternative
to pre-1933 coins, nowadays.?." Apparently not, as none of our coinage is Silver
based anymore. So, in a pinch, the US Government *might* lean toward Silver
confiscation afterall, since it would mostly be in the form of "hoards" in
the hands and hiding-places of Gold & Silver Bugs. And they'd target them/us
just for spite. As usual.

Cordially,

ThaiGold
ThaiRanch@OperaMail.Com
=============================================================================

Peter Asher (5/4/2000; 0:49:46MT - usagold.com msg#: 29909)
ThaiGold (05/03/00; 23:51:38MT - usagold.com msg#: 29903)

Welcome back, fine post. Your words and true feelings about this forum followed by a MacArthur quote brought to mind the final lines of his farewell speech at West Point on May 12 1962. I went searching for the text and after finding it and also reading Bonedaddy's post, I decided to post it in its entirety
MacArthur gave the last great speech of his public
life on May 12, 1962, less than two years before he
died. Beset by health problems, MacArthur had
finally begun to show his age. But after accepting
the coveted Sylvanus Thayer Award, he bid
farewell to his beloved West Point with a heartfelt,
emotional address. As one account described it, by
the end of his speech "there were tears in the eyes of
big strapping Cadets who wouldn't have shed one
before a firing squad."

United States Military Academy
West Point, New York
May 12, 1962

General Westmoreland, General Groves,
distinguished guests, and gentlemen of the
Corps:

As I was leaving the hotel this morning, a
doorman asked me, "Where are you bound
for, General?" and when I replied, "West
Point," he remarked, "Beautiful place,
have you ever been there before?"

No human being could fail to be deeply
moved by such a tribute as this. [Thayer
Award] Coming from a profession I have
served so long, and a people I have loved
so well, it fills me with an emotion I
cannot express. But this award is not
intended primarily to honor a personality,
but to symbolize a great moral code - the
code of conduct and chivalry of those who
guard this beloved land of culture and
ancient descent. That is the meaning of
this medallion. For all eyes and for all
time, it is an expression of the ethics of
the American soldier. That I should be
integrated in this way with so noble an
ideal arouses a sense of pride and yet of
humility which will be with me always.

Duty - Honor - Country. Those three
hallowed words reverently dictate what
you ought to be, what you can be, what
you will be. They are your rallying points:
to build courage when courage seems to
fail; to regain faith when there seems to be
little cause for faith; to create hope when
hope becomes forlorn. Unhappily, I
possess neither that eloquence of diction,
that poetry of imagination, nor that
brilliance of metaphor to tell you all that
they mean. The unbelievers will say they
are but words, but a slogan, but a
flamboyant phrase. Every pedant, every
demagogue, every cynic, every hypocrite,
every troublemaker, and, I am sorry to
say, some others of an entirely different
character, will try to downgrade them
even to the extent of mockery and ridicule.
But these are some of the things they do.
They build your basic character, they
mold you for your future roles as the
custodians of the nation's defense, they
make you strong enough to know when
you are weak, and brave enough to face
yourself when you are afraid. They teach
you to be proud and unbending in honest
failure, but humble and gentle in success;
not to substitute words for actions, nor to
seek the path of comfort, but to face the
stress and spur of difficulty and challenge;
to learn to stand up in the storm but to
have compassion on those who fall; to
master yourself before you seek to master
others; to have a heart that is clean, a goal
that is high; to learn to laugh yet never
forget how to weep; to reach into the
future yet never neglect the past; to be
serious yet never to take yourself too
seriously; to be modest so that you will
remember the simplicity of true greatness,
the open mind of true wisdom, the
meekness of true strength. They give you a
temper of the will, a quality of the
imagination, a vigor of the emotions, a
freshness of the deep springs of life, a
temperamental predominance of courage
over timidity, an appetite for adventure
over love of ease. They create in your
heart the sense of wonder, the unfailing
hope of what next, and the joy and
inspiration of life. They teach you in this
way to be an officer and a gentleman.

And what sort of soldiers are those you
are to lead? Are they reliable, are they
brave, are they capable of victory? Their
story is known to all of you; it is the story
of the American man-at-arms. My
estimate of him was formed on the
battlefield many, many years ago, and has
never changed. I regarded him then as I
regard him now - as one of the world's
noblest figures, not only as one of the
finest military characters but also as one
of the most stainless. His name and fame
are the birthright of every American
citizen. In his youth and strength, his love
and loyalty he gave - all that mortality can
give. He needs no eulogy from me or from
any other man. He has written his own
history and written it in red on his enemy's
breast. But when I think of his patience
under adversity, of his courage under fire,
and of his modesty in victory, I am filled
with an emotion of admiration I cannot put
into words. He belongs to history as
furnishing one of the greatest examples of
successful patriotism; he belongs to
posterity as the instructor of future
generations in the principles of liberty and
freedom; he belongs to the present, to us,
by his virtues and by his achievements. In
20 campaigns, on a hundred battlefields,
around a thousand campfires, I have
witnessed that enduring fortitude, that
patriotic self-abnegation, and that
invincible determination which have
carved his statue in the hearts of his
people. From one end of the world to the
other he has drained deep the chalice of
courage.

As I listened to those songs of the glee
club, in memory's eye I could see those
staggering columns of the First World
War, bending under soggy packs, on many
a weary march from dripping dusk to
drizzling dawn, slogging ankle-deep
through the mire of shell-shocked roads,
to form grimly for the attack, blue-lipped,
covered with sludge and mud, chilled by
the wind and rain; driving home to their
objective, and, for many, to the judgement
seat of God. I do not know the dignity of
their birth but I do know the glory of their
death. They died questioning,
uncomplaining, with faith in their hearts,
and on their lips the hope that we would
go on to victory. Always for them - Duty -
Honor - Country; always their blood and
sweat and tears as we sought the way and
the light and the truth.

And 20 years after, on the other side of
the globe, again the filth of murky
foxholes, the stench of ghostly trenches,
the slime of dripping dugouts; those
boiling suns of relentless heat, those
torrential rains of devastating storms; the
loneliness and utter desolation of jungle
trails, the bitterness of long separation
from those they loved and cherished, the
deadly pestilence of tropical disease, the
horror of stricken areas of war; their
resolute and determined defense, their
swift and sure attack, their indomitable
purpose, their complete and decisive
victory - always victory. Always through
the bloody haze of their last reverberating
shot, the vision of gaunt, ghastly men
reverently following your password of
Duty - Honor - Country.

The code which those words perpetuate
embraces the highest moral laws and will
stand the test of any ethics or philosophies
ever promulgated for the uplift of
mankind. Its requirements are for the
things that are right, and its restraints are
from the things that are wrong. The
soldier, above all other men, is required
to practice the greatest act of religious
training - sacrifice. In battle and in the
face of danger and death, he discloses
those divine attributes which his Maker
gave when he created man in his own
image. No physical courage and no brute
instinct can take the place of the Divine
help which alone can sustain him.
However horrible the incidents of war
may be, the soldier who is called upon to
offer and to give his life for his country, is
the noblest development of, mankind.

You now face a new world - a world of
change. The thrust into outer space of the
satellite, spheres and missiles marked the
beginning of another epoch in the long
story of mankind - the chapter of the space
age. In the five or more billions of years
the scientists tell us it has taken to form
the earth, in the three or more billion
years of development of the human race,
there has never been a greater, a more
abrupt or staggering evolution. We deal
now not with things of this world alone,
but with the illimitable distances and as
yet unfathomed mysteries of the universe.
We are reaching out for a new and
boundless frontier. We speak in strange
terms: of harnessing the cosmic energy; of
making winds and tides work for us; of
creating unheard synthetic materials to
supplement or even replace our old
standard basics; of purifying sea water for
our drink; of mining ocean floors for new
fields of wealth and food; of disease
preventatives to expand life into the
hundred of years; of controlling the
weather for a more equitable distribution
of heat and cold, of rain and shine; of
space ships to the moon; of the primary
target in war, no longer limited to the
armed forces of an enemy, but instead to
include his civil populations; of ultimate
conflict between a united human race and
the sinister forces of some other planetary
galaxy; of such dreams and fantasies as to
make life the most exciting of all time.

And through all this welter of change and
development, your mission remains fixed,
determined, inviolable - it is to win our
wars. Everything else in your professional
career is but corollary to this vital
dedication. All other public purposes, all
other public projects, all other public
needs, great or small, will find others for
their accomplishment; but you are the ones
who are trained to fight: yours is the
profession of arms - the will to win, the
sure knowledge that in war there is no
substitute for victory; that if you lose, the
nation will be destroyed; that the very
obsession of your public service must be
Duty - Honor - Country. Others will
debate the controversial issues, national
and international, which divide men's
minds; but serene, calm, aloof, you stand
as the nation's warguardian, as its
lifeguard from the raging tides of
international conflict, as its gladiator in
the arena of battle. For a century and a
half you have defended, guarded, and
protected its hallowed traditions of
liberty and freedom, of right and justice.
Let civilian voices argue the merits or
demerits of our processes of government;
whether our strength is being sapped by
deficit financing, indulged in too long, by
federal paternalism grown too mighty, by
power groups grown too arrogant, by
politics grown too corrupt, by crime
grown too rampant, by morals grown too
low, by taxes grown too high, by
extremists grown too violent; whether our
personal liberties are as thorough and
complete as they should be. These great
national problems are not for your
professional participation or military
solution. Your guidepost stands out like a
ten-fold beacon in the night - Duty -
Honor - Country.

You are the leaven which binds together
the entire fabric of our national system of
def ense. From your ranks come-the great
captains who hold the nation's destiny in
their hands the moment the war tocsin
sounds. The Long Gray Line has never
failed us. Were you to do so, a million
ghosts in olive drab, in brown khaki, in
blue and gray, would rise from their white
crosses thundering those magic words -
Duty - Honor - Country.

This does not mean that you are war
mongers. On the contrary, the soldier,
above all other people, prays for peace,
for he must suffer and bear the deepest
wounds and scars of war. But always in
our ears ring the ominous words of Plato
that wisest of all philosophers, "Only the
dead have seen the end of war."

The shadows are lengthening for me. The
twilight is here. My days of old have
vanished tone and tint; they have gone
glimmering through the dreams of things
that were. Their memory is one of
wondrous beauty, watered by tears, and
coaxed and caressed by the smiles of
yesterday. I listen vainly for the witching
melody of faint bugles blowing reveille,of
far drums beating the long roll. In my
dreams I hear again the crash of guns, the
rattle of musketry, the strange, mournful
mutter of the battlefield.

But in the evening of my memory, always
I come back to West Point. Always there
echoes and re-echoes Duty - Honor -
Country.

Today marks my final roll call with you,
but I want you to know that when I cross
the river my last conscious thoughts will
be-of The Corps, and The Corps, and The
Corps.

I bid you farewell.
�

Hill Billy Mitchell (5/4/2000; 0:48:49MT - usagold.com msg#: 29908)
Official release
http://www.bog.frb.us/releases/H15/update/
Official: Federal Reserve Statistical Release

Release Date: May 3, 2000

Rates for Tuesay, May 2, 2000

Federal funds 6.05

Treasury constant maturities:
3-month 5.92
10-year 6.32
20-year 6.39
30-year 5.986.03

upside down spread FF vs long bond = (.02%)

aunuggets (5/4/2000; 0:28:12MT - usagold.com msg#: 29907)
TheStranger
Aaah, but putting that knowledge to a useful purpose without common sense......that is the trick.

To question is to seek,
to seek is to learn,
to learn is to know,
to know is to seek -
understanding.

Perhaps "common sense" is simply the ability to bring it all together into a meaningful and sought after conclusion. Reading Bonedaddy's previous post, a painful awareness begins to creep in that "common sense" just ain't as common as it used to be.

Peter Asher (5/4/2000; 0:20:12MT - usagold.com msg#: 29906)
Steve H --Re Gun control
http://www.io.com/~velte/pt.htm
& http://www.io.com/~velte/quotes.htm

Found this while on a net search.

Peter Asher (5/4/2000; 0:04:37MT - usagold.com msg#: 29905)
Bonedaddy (05/03/00; 23:24:05MT - usagold.com msg#: 29901)
GREAT POST!
>>> It took a family, not a village. <<<

I was just thinking of this one today. When she said "It takes a village to raise a child" that she left out that part that would have made it true statement --- "Because the family doesn't do it any more.

BTW could you spill a little beans about your posting handle? It really fits you.

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