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ARCHIVED DISCUSSION FROM 1/4/2001
All times are U.S. Mountain Time
(Yesterday's Discussion.)
justamereBear
(01/04/01; 23:41:47MT - usagold.com msg#: 45077)
Bonedaddy
Your solution may lie in bonds of various types, and there are all sorts of types out there, and usually you can buy in $5,000 tranches. As I recall, there is a Kingdom of Denmark gold backed bond, denominated in yen or some equally strange combination. If you want exposure to euros, there are bucket loads of them.
I do not own such vehicles, nor do I recommend them, because of my beliefs, which seem to be somewhat at varience with yours, and many attending this forum. If that will do the job you want to do, then go for it.
J'Bear
John Doe
(01/04/01; 23:18:30MT - usagold.com msg#: 45076)
@Bonedaddy
Check out internet bank, everbank.com. They offer something like 30 different foreign currencies, and foreign currency cds, all (theoretically) insured by the FDIC up to US$100K -- convenient, safe, and liquid. Or maybe look into the many mutual fund foreign bond funds for the shotgun approach.
USAGOLD
(01/04/01; 22:32:23MT - usagold.com msg#: 45075)
PH, Stranger. . . .
One thing I don't think we completely understand is the role of the specialist in all this.
In "Maestro" by Bob Woodward there's a passage about the 1987 Crash that I found fascinating. I refer to it only as a means to begin understanding the role of the Fed, the specialists and the brokerage firms play in "providing liquidity to the market." Greenspan had just come on board and the stock market goes in the tank. Corrigan from the New York Fed calls Greenspan and tells him "(Expletive)We don't need a scholarly, legalistic thing. We've just got to say in one sentence, we're going to put a lot of money into the market. Says Woodward, "In part we had a plumbing problem. Eveyone needed to be assured they could get money -- in other words liquidity or credit." Greenspan complied with the one sentence announcement: "The Federal Reserve consistent with its responsibilities as the nation's central bank, affirmed today its readiness to serve as a source of liquidity to support the economic and financial system."
That was as much a statement of philosophy as it was of immediate purpose.
I would think that the situation now with mutual funds being flooded with redemptions, international selling, etc. that there is a possibility that the Fed is "providing liquidity" once again and that may be part of what the rate cut was all about.
I have no doubt that the Fed is buying Treasuries and sending hot money into the economy, Stranger, and that might be the lion's share of the surge in money supply as you indicated. It is my view that the specialist being fed through a credit line linked directly to the Fed might increase the money supply without a consequent reduction in the money supply from a buyer. At the very least the direct buyer to seller relationship you describe might be delayed. Otherwise why would Corrigan have made the call to Greenspan in the first place asking for Fed liquidity. Theoretically, a buyer would have been standing there money in hand waiting for the seller to show up stock certificate in hand. Since he wasn't what was the effect on the Money Supply?
All of this though is a technical discussion among market afficionados. In terms of the effect on the economy and all of us as individuals operating in it, the source of the money supply isn't as important as the fact that it is growing at an alarming rate -- as you indicated. Inflation is coming from every direction and the Maestro is orchestrating it.
I put this in the conjecture column because at this point we do not know if something similar to what happened in 1987 is happening now. We do know that stocks are being liquidated and we do know that mutual funds are reporting problems. We won't know, I'm afraid, for quite some time, how the Fed is reacting to these events behind the scenes.
Good to see you back, PH.
agbull
(01/04/01; 22:01:12MT - usagold.com msg#: 45074)
Main Stream Press- Financial Crisis
Most on this board are prepared for what is coming, the LA times today did not mix their words.
Effect of State's Energy Crisis on Economy May Have Worried
Fed
By JAMES FLANIGAN, Times Senior Economics Editor
The California energy debacle is rapidly growing into a financial crisis that could trigger bank failures, disrupt funds available
for lending to businesses and consumers and spark general chaos in global markets for corporate bonds, financial experts fear.
http://www.latimes.com/cgi-bin/print.cgi
Such fears may well have been a factor in prompting the Federal Reserve to dramatically lower interest rates Wednesday,
analysts suggested.
The energy crisis poses a spreading threat to the whole banking system, given that the crisis is occurring against a backdrop of
a sharply slowing economy and fears that more corporations may default on their debts, analysts said.
A lowering of interest rates doesn't solve the energy problem, but it would ease the plight of California's embattled utilities by
reducing their borrowing costs. That in turn would reduce pressure on banks and other participants in global markets that provide
credit to those utilities as well as other businesses.
Also, whether intentional or not, the Fed action in effect sends a signal to financial markets that the central bank will support
attempts by California's utilities and political leaders to work out a solution to the companies' credit problems, analysts said.
But though Fed action inspired a rise in the general stock market, initial action by the California Public Utilities Commission
had the opposite effect Wednesday on the state's major utilities, Southern California Edison and Pacific Gas & Electric. The PUC
staff issued an initial ruling giving the utilities a temporary 7% rate hike to alleviate their problem of uncollectable costs and rising
borrowings. Financial markets evidently saw that as too little, and investors send stocks of both companies into steep declines.
To be sure, the Fed's lowering of interest rates was prompted by many factors related to the slowing of the economy. But
several experts suggested that California's crisis was a factor, noting that Fed Chairman Alan Greenspan held a highly unusual
public meeting in Washington on Dec. 27 with Gov. Gray Davis to discuss the California energy situation. Davis also met with
President Clinton during the same trip.
Until recently, the plight of Edison and PG&E to finance purchases of electricity at higher prices than they could charge their
customers was thought of as an energy problem largely confined to California.
But as the utilities' borrowings from banks and in corporate money markets have mounted, to an estimated total of more than
$10 billion, the dangers of defaults, bankruptcies and withdrawals of credit have escalated.
As such, the California energy crisis draws parallels to the Russian currency crisis of 1998. Fears that a Russian financial
collapse could trigger a global financial crisis prompted the Fed to lower rates suddenly that year, just as it did Wednesday.
The problems of Edison and PG&E have multiplied as costs have risen for the electricity the utilities must purchase from
generating companies. The utilities cannot pass on such costs to consumers because of a rate freeze dating to California's
electricity deregulation in 1998.
The utilities' loans from banks and financial markets have grown to such an extent that credit-rating agencies such as Moody's
and Standard & Poor's are threatening to downgrade their credit ratings.
"It will be hard to refinance those loans," given the utilities' worsening credit situation, said Joan Payden, president of Payden
& Rygel, a Los Angeles investment firm. "If their debts are downgraded, we could have illiquidity in the markets."
The companies face the prospect of seeking protection from creditors under Chapter 11 of the Bankruptcy Code, which allows
firms to operate under court supervision while terms are worked out with creditors.
If the debts of Edison and PG&E were downgraded to a category of less than investment grade--equivalent to "junk"
bonds--the consequences for the financial system would be severe, as would the consequences of bankruptcy.
Many pension funds and other investing institutions could no longer hold the utilities' bonds if they were not investment grade.
The sums involved are enormous.
Like all utilities, Edison and PG&E must borrow heavily to purchase and maintain equipment for providing electricity. The total
of the two firms' long-term bonds is more than $20 billion, all held by pension funds and institutions worldwide. If such
institutions were forced to sell those bonds, the result would be major disruptions in financial markets.
If the utilities were forced into bankruptcy, the effect would be devastating on banks, including giants such as Bank of America
as well as smaller banks, and on the commercial paper markets, where companies borrow and lend to each other, said William
Gross, chief bond manager for Pacific Investment Management Co., a Newport Beach firm.
This could lead to some bank failures and other problems in the banking system, analysts said. At the very least, loans to small
businesses and mortgages for consumers would be reduced.
The specter of such trouble was a major factor leading the Fed to lower rates Wednesday, said economist William Rhodes of
Williams Capital, a New York-based investment bank.
Since the Fed's open market committee last met Dec. 19 and declined to lower interest rates, there have been several continuing
indicators of worsening trouble in the economy. Notably, consumer confidence was reported to be falling in the latest study from
the Conference Board on Friday, manufacturing slowed sharply, and the debt problems of California's utilities have mounted. The
Fed's action sends a powerful signal of support, but a lot still hinges on action by the state's PUC.
The PUC issues a final ruling today on the rise in electricity rates it will allow Edison and PG&E, so they may recover some of
their short-term under-collections on electricity purchases. Standard & Poor's and Moody's have said they are watching the PUC
decision closely to determine whether they will downgrade the utilities' debts.
But prospects are not hopeful. The PUC staff's initial ruling Wednesday was for a lower rate increase than financial markets
were looking for, said security analyst Brian Youngberg of Edward Jones & Co., a St. Louis-based brokerage firm.
Edison stock fell 18% and PG&E stock fell 13% after the PUC initial ruling was announced.
Copyright 2000 Los Angeles Times
TheStranger
(01/04/01; 21:44:01MT - usagold.com msg#: 45073)
PH and a Little Boyish Glee
PH - I hope my posts #45063 and especially #45065 take care of your question. I just went through all the numbers and I think I am getting this right, despite what uyou may be seeing elsewhere. Money simply can't just come out of the market, mutual funds or otherwise. Every share sold has to be bought by someone else.
Now, I hope the room will forgive me an unabashed expression of naivete and glee. I am convinced that EVERYTHING is now right for gold. I simply cannot imagine it ever being as cheap again in dollars as it was today. I am so convinced in fact, that I can hardly contain my excitement. My seatbelt is fastened for what I see coming in the next few weeks and months.
Let 'er Rip!
rc
(01/04/01; 21:42:43MT - usagold.com msg#: 45072)
@Pandagold - Your posts about the shadow government
While I agree with almost all you stated, I don't think that this can go on indefinitely. China, for one, won't go along. And don't count the Russians out yet.
Trade rivalry between the US and EU will soon boil over into economic warfare. In the long run expect them to be at each other throat. When and how this will happen ? Pretty hard to say. But we are certainly going to live in interesting times. (Chinese meaning)
PH in LA
(01/04/01; 21:30:29MT - usagold.com msg#: 45071)
No. 1: Futures & Physicals No. 2: Greenspan's antics
"...physical gold is about to become the only portion of the gold sector that will perform,,,,, and perform as no other asset in history ever has!" FOA (01/03/01; 08:50:37MD - usagold.com msg#50)
Much as I have always been convinced by FOA and Another's vision, I am having fun trying to get my mind around this.
Apparently, the paper gold Comex futures market will have to be dismantled before there can be any separation between the paper and physical worlds. Around here, it is taken for granted that such a distinction already exists. However, last I heard, there still existed something called "delivery notice"; the day on which holders of contracts must declare their intention to stand for delivery. Because if an investor wants to, he can request delivery on his contracts.
Now, let us conjecture for a moment what that means. Let us just suppose that instead of buying 100 ounces of gold in the form of coins from MK, I decided to purchase a February contract on the futures market from my local futures broker. Instead of buying a large number of contracts with my available $27,000 cash, I adopt the unusual tactic of purchasing a single contract. On first notice day I declare my intention to accept delivery. At this juncture, (as the system is presently functioning) I would eventually receive my gold.
Now, for a physical market to open up separately as FOA forecasts, the paper-based futures market would have to vaporize instantly. Otherwise, anyone noticing that prices were higher on the physical market, would merely opt to stand for delivery and sell the delivered gold there. Far from causing the futures market to fall farther, it would merely explode higher as investors took delivery at Comex and sold it on the new Euro physical market.
Maybe this is where the forex rates become critical to the scenario. It looks like the Euro will have to first appreciate hugely against the dollar to prevent this option from being carried out by rank and file investors. It will probably mean that currency controls will have to be in effect also. What a different world they have in mind for us! And all this before 2001 is over?
Something else that keeps boiling to the surface of my mind: Greenspan's antics these past two days! At the last FOMC meeting, the board of governors decided that no rate change was necessary. Now, suddenly, a .5% cut is needed? One-half percent needed now that wasn't needed two weeks ago? Kind of hard to believe. I mean if a half percent is needed now, why wasn't at least a quarter point needed two weeks ago? Have things changed that much in two weeks?
Furthermore, are we to believe that yesterday's rate cuts were implemented for good and valid reasons that existed yesterday, and that today the situation had changed so that a different interbank rate is now called for today that wasn't called for yesterday?
This does indeed stretch the imagination. Or was it just that Greenspan forgot to cut the interbank rate by today's additional .25%? Was yesterday's rate cut a mistake that had to be corrected today?
Just what is going on here?
Why do I have the feeling that I'm missing something?
PH in LA
(01/04/01; 21:25:43MT - usagold.com msg#: 45070)
Stranger: Where it's coming from
Greetings Stranger,
Over on the BearForum.com, they are talking a lot about mutual funds redemptions. Seems that billions are suddenly coming out of the mutuals and would be going into money markets and bank deposits. What do you think?
TheStranger
(01/04/01; 21:17:24MT - usagold.com msg#: 45069)
Michael
Okay. I checked it out. The total increase in money market funds for the latest two weeks combined was $38.5 billion. To be sure, this is a good chunk of the $91 billion M-3 increase during the period . But the decline in the stock market for the corresponding two weeks (with three day offset to account for settlement) comes nowhere near to explaining such a whopping increase in money funds. The Nasdaq was only down by 160 points for the two weeks ending December 29, and the Dow Jones Industrials were actually UP 100 points.
Also, most of the gains were in institutional money market funds, which is right where one might expect the proceeds from large t-bond sales to wind up.
I don't think these data support your conjecture, Michael, but I am listening if you have any other thoughts.
Randy (@ The Tower)
(01/04/01; 21:07:42MT - usagold.com msg#: 45068)
Cavan Man
I assure you, my use of the phrase "speculative flow of events" in regard to your presentation was not intended as a snipe in any way. It was merely a manifestation of my affliction to be accurate where possible. I did not allow myself to simply refer to the "flow of events you present" because those are not yet actual events. I modified the phrase with "speculative", but I see now I should have saved us both agony had I chosen the term "hypothetical" as a modifier. It must be well past my time for sleeping.
|-)
Cavan Man
(01/04/01; 20:57:46MT - usagold.com msg#: 45067)
Randy
Most of the discussion here is speculative here is it not? I am a friend of gold and a customer of CPM but, if a thought seemingly reasonable strikes me and I need to bring in here for impaling I should do so as (hopefully) a service to all.
In Europe, for the most part, we're talking about government officials who are died in the wool socialists; much worse than here--much worse. We're talking about generations of people who have been socialized in a system that is the antithesis of the pure, US model. We are talking about people who are at once fundamentally the same as US and then again, radically different. We're talking about people who by and large are not big fans of the US.
I do not trust European governance.
Bonedaddy
(01/04/01; 20:37:51MT - usagold.com msg#: 45066)
Cavan Man & Euros
Hello Cavan Man. Interesting thoughts you have to share on Euros. I am also considering holding a small portion of my meager wealth in Euros. A couple of years ago I contacted the Mark Twain Bank, near St.Louis. They were offering savings accounts denominated in foreign currencies. I didn't take any action at that time. Last week I attempted to contact the bank several times, but the phone number was not working. The feature I found most attractive about the accounts they advertised was the ease of convertibility. If I remember correctly, you could exchange your account dollars for yen, or other major currency with very little fuss. I believe the minimum account was $2,500. What a forward thinking bunch of folks! Does anyone happen to know of any bank that offers such a service for small account balances. ($10,000 or less) It isn't that I'm finished buying gold, far from it. But with all the hanky-panky that seems to be going on with the Wizard of Fed, I'd like to be able to diversify my "cash" holdings. Suggestions anyone?
TheStranger
(01/04/01; 20:34:10MT - usagold.com msg#: 45065)
Michael
I'll see if I can't figure out what role money market ballances have played in all of this and get back to you. thanks.
Randy (@ The Tower)
(01/04/01; 20:31:54MT - usagold.com msg#: 45064)
PA; CM...my thoughts on the gold market ahead
Peter, thank you for keeping score and bringing the tally to my attention.
Cavan Man, I would be wary forming your conclusion (i.e., "Gold is held in check and European CBers continue their fiat game. Gold then is kept in the closet until Euro exhausted.") from the speculative flow of events you present in your msg#: 45056, particularly those of the paragraph following the numbered sequence.
If I may, let my share my thoughts on your item #5: "To stem the dollar's slide, gold is sold down the drain in paper market as the dollar is an alternative to gold."
While I do see the potential for selling of gold derivatives "down the drain", I do not see it being done to effectively stem the dollar's slide in any material way, nor could it. The forex rates and import prices would already tell the tale. The potential I see for continued selling of paper gold under a falling dollar was expressly described in my post yesterday as follows:
---(usagold.com msg#: 44963)---"If you are a hedge fund that has previously borrowed gold from a bullion bank in order to raise a source of low interest funds for investment purposes, please marvel how very easy it is to offer the short side of futures contracts as necessary to create the stagnation in this realm of price discovery as needed to buy the time (and metal!) to unwind the prior gold loans. Simply put, some financial "chapters" are written for the benefit of the overall book."
But then, as stated more recently, I would say again, "If the extant gold pricing mecahnism does not allow for a separation from the dollar and its current structure under greatly weakening dollar, just imagine the potential for additional physical offtake that cannot be supported at the hands of rising foreign currencies." The situation would not endure for any length of time, and eventually lead to an adjudicated work-out of the positions in the shattered gold derivatives market.
This is why I recommend and hold personally ONLY an advance position in physical gold metal. As for mines, I have little faith in management's ability to navigate the possible volatile pricing turmoil (Ashanti upside, bankruptcy downside), and less faith in government's resolve not to administer windfall profits taxes or otherwise orchestrate a gold-style Texas Railroad Commission.
TheStranger
(01/04/01; 20:29:01MT - usagold.com msg#: 45063)
Michael
There is no way I can think of to take one's money out of the market without getting someone else to put an identical amount in (Asher's Law). The effect on the money supply of all this selling, therefore, is net zero, unless you know something I don't.
Clearly, the Fed has been buying bonds. In 5 weeks, M-3 has grown by some $141 billion, an annualized growth rate which is north of 20%. This, and not the fed funds rate cut, is the real story of recent Fed activity. Greenspan is trying to avert a worsening recession scenario, and inflation is the weapon he has chosen.
Thank you for your gratitude. I greatly enjoy contributing to this marvelous forum you have created. It gives me something to do while I await the inevitable mother of all gold rallies.
Cheers!
Cavan Man
(01/04/01; 19:56:33MT - usagold.com msg#: 45062)
Gold and the Euro
Whither a "store of value"
Question for the forum:
If, following the Gold Trail one concludes that the USD is on its' last legs and that the Euro is the next "world reserve currency", then why not denominate your wealth in Euro and not gold? My small Euro investment is the only winner I have at this juncture. Is part of the answer that gold has no borders? My Euro's can only be spent without exchange in Europe but; 1. I can bring them home in exchange and 2. If we'll all be using Euro someday (I do NOT agree with that opinion) then, I won't need to make any exchange just be patient.
Something just dawned on me and I am probably wrong but...
1. Do European CBers have more confidence in gold than they do in their own currency? After all, a gold standard is not coming back right? True, France, Germany and Italy are large gold holders but, their monetary regimes are fiat. Fair weather friends are they yes?
2. Why wouldn't ME interests sell dollars for Euro and denominate a large part of their wealth in Euro? Regardless, they will still be buyers of gold in significant quantities. After all, the Euro is the next reserve currency. Everybody wants to own it right.
Not trying to be argumenative to the disadvantage of someone not here now, often but, these are my humble thoughts.
FOA has said that oil backs the Euro. I think the Euro is drafting behind oil. I think there is a strategy to put all that gold out to leverage; massive, paradigm shifting leverage.
USAGOLD
(01/04/01; 19:45:04MT - usagold.com msg#: 45061)
Misc. . .
Stranger. . .Thank you for your astute updates on the inflationary situation. I too have marvelled at quality and content "deflation" as the government and Fed brag about "inflation" being under control. On M3, I wanted to throw out the conjecture that much of this out of the box growth has to do with "old money" coming out of the stock market and reincarnating in money markets. I was introduced to this concept a few years ago by Richard Maybury who ran some studies where he included the money invested in stocks as part of the money supply ( I believe he worked on that with our mutual mathematically inclined friend, John Carder) -- an interesting concept that inferred stocks as a form of "money" and drove home the point that though money was not available to push the prices of goods and services higher, it was available for such. The longer the Fed forestalls a liquidity searing crash, the greater the possibility that this money migrates to money market accounts, and in my estimation eventually to gold when investors realize that we are at a way station to massive inflation. As an interesting point of information that you would consider important, I am increasingly on the phone with financial advisors and money people looking to move their clients into gold. These people are astute and usually ahead of the thundering herd. I think it telling. My best to you and your family for the New Year.
Holtzman. . .I have to say that I thoroughly enjoyed your post today. I took some time at the end of the day and my staff , I think, may have thought me going daft as I chuckled out loud reading your entertaining and thoughtful post. You, sir, are not only astute, you have a marvelous way of presenting things. Thank you for posting here and I look forward to much more of the same.
Paul van Eeden: Welcome and thanks. We are privileged to have you pull a chair to this extraordinary table. Your Introduction to Gold which resides at our Gilded Opinion page is a masterpiece. There are so many levels to the rate cut -- so many points of discussion -- that I don't think we could possibly cover them all even here. But I welcome you to try. (smile)
All: Just as I thought we might have reached some sort of zenith, it gets even better. You have made this what it is -- so many quality posters and so profound that you pull up the page start scrolling and have difficulty choosing where to start. I would not even attempt to start naming names with respect to my appreciation. Just know that I appreciate what goes on here and couldn't be a prouder of our mutual achievement.
Randy: Thanks for everything but mostly for your spot-on daily comments. It was important today that the Asian central banks moved to lower their rates in response to the Fed while the ECB held fast. That which is hidden shall become known (and things are moving fast). Isn't it interesting how the needs of Europe have somehow coalesced with those of the U.S.? Perhaps that is what cycles are all about. Also, I think we better make sure that the Holtzman post(s) take their rightful place in the Hall.
FOA: Thanks for your timely return. I must say what I said to Randy in private: I usually do not realize how much I miss you until I read that first post upon your return. As I have said before that chair is always reserved for you, my friend, no matter what. And we also keep one near for our good friend, Another. Just in case. By the way, how did you know that AG was going to make his move? I could not think of a better scenario for gold than what has unfolded in the past 30 days. Yes? My best to Another.
To everyone: Respond if you wish, but I didn't post any of this to get a response.
MK
RAP
(01/04/01; 19:43:19MT - usagold.com msg#: 45060)
Sears closings
http://quote.bloomberg.com/fgcgi.cgi?s=AOlTqeRKyU2VhcnMg&T=marketsquote99_news.ht
Hear is a link to the sears closings.
Peter Asher
(01/04/01; 19:34:50MT - usagold.com msg#: 45059)
Cavan Man msg#: 45057)
Re-"Right analogy. Wrong crucible. :>)"
I know, CM; I know. But that crucible is described in countless tongues and I don't want to open that up any more then we have here.
silvercollector
(01/04/01; 19:26:51MT - usagold.com msg#: 45058)
@ Holtzman
From your post;
"As the last two decades have demonstrated, gold is not always a safe haven. However, with each grindingly lower year, gold becomes more and more a safe haven. But how much lower can it go? Quite a bit. Will it? There's no way to know"
...and...
"Hope lies in realising that it's not necessary to achieve perfection. As most leaders of men will readily affirm, it's almost always unwise to try to acquire 100% information before making a decision. The final 5% will take longer to acquire than the first 95% did. But more often than not, being 95% certain of something is sufficient."
So now that I am 95% certain that gold is undervalued is it unwise not to buy?
Cavan Man
(01/04/01; 19:02:00MT - usagold.com msg#: 45057)
peter asher
Right analogy. Wrong crucible. :>)
Cavan Man
(01/04/01; 19:00:08MT - usagold.com msg#: 45056)
Randy
Now, Greeks I know something about but, I digress....
Could the following be correct:
1. FED targeting share market and by extension, US economy.
2. "Katy bar the door" with money supply growth.
3. Dollar is sacrificed in the process and falls against Euro and perhaps other world currencies.
5. Inflation gains.
4. US trade imbalance improves.
5. To stem the dollar's slide, gold is sold down the drain in paper market as the dollar is an alternative to gold.
6. Dollar continues to weaken.
7. POG dropping.
8. Physical demand accelerating.
9. At some point physical is exhausted vis a vis futures and new gold market begins.
BUT, what if Euros are "bought" instead of gold. Then, dollar drops, Euro rises and gold falls but, since gold is settled in USD, ECB books and their "mark to market" strategy make them look like heroes. Gold is held in check and European CBers continue their fiat game. Gold then is kept in the closet until Euro exhausted. What's going on here? Thanks....CM
John Doe
(01/04/01; 18:57:06MT - usagold.com msg#: 45055)
@Peter Asher
Your assertions are correct. Nearly all the elements are byproducts of a very natural process -- solar fusion followed by supernova explosion. Unfortunately, that process operates on a solar (! not planetary) scale (lots of matter), involving unbelievable amounts of energy, over eons of time, and the elemental end products are highly radioactive, requiring further eons of time to dissipate and stabilize.
The limitations in replicating such processes, in miniature, safely, economically, and in a controlled manner are likely beyond human ability (or need). It's much, much simpler to use the bankers' alchemy, the REAL alchemy. Want gold? Make up "money" out of thin air, convince (or force) people to accept that it has "value", and "buy" all the gold you could ever want. Need more gold than exists? Good luck.
Peter Asher
(01/04/01; 18:42:20MT - usagold.com msg#: 45054)
John Doe
Are not the stars the crucible from which all the elements are smelted? If Gold and all the rest can be formed from the basic fusion furnace fed by hydrogen, then is not the formation of the elements a physical process whose secrets could be some day unraveled and manipulated?
Peter Asher
(01/04/01; 18:36:46MT - usagold.com msg#: 45053)
Randy
We all know that markets move in anticipation of events and then often move against their effects when the events actually take place.
Several months ago, I suggested the decline of the euro was in part due to the fact that it was being discounted for the impending dilution of value as the smaller economies and the former iron curtain disasters were folded into the mix.
Now that is taking place and the currency is recovering. Not to say that is the ‘only' factor but as is always the case in a planetary economic system, one of a group of factors whose summation determines direction.
-------
Also, beesting, Mr Gresham and CavenMan have all seconded my nomination for Holtzman's masterpiece.
John Doe
(01/04/01; 18:24:12MT - usagold.com msg#: 45052)
@Peter Asher
You've touched upon the raging debate among futurist writers and their audiences. Science "fiction" is fiction more or less adhering to the limitations of known physics, or at most, hyper-advanced theoretical physics, whereas science "fantasy" does not adhere to these constraints. Switching dimensions is common way around this while still retaining some "plausibility". Some sci-fi fans go ballistic when the author willy-nilly switches between the two or blurs the line of separation.
For the Earth-bound, I would categorize molecular matter transmutation as science "fantasy", whereas the replicator is firmly science "fiction". The transporter is probably somewhere in between...depends on the design and operational parameters.
I don't believe future alchemists will have any better luck than the Medieval, unless you'd call massive explosions and radioactivity a success... :o)
PS. All gold comes from the cores of exploding stars!!
TheStranger
(01/04/01; 18:11:23MT - usagold.com msg#: 45051)
Holy Moley!
M-3 was up $35.5 billion this week! Holy Moley! What are we, mobilizing for war? I hope everyone in here is getting the significance of these weekly money supply numbers.
Randy (@ The Tower)
(01/04/01; 18:10:59MT - usagold.com msg#: 45050)
Transitional performances always appear crippled due to the suboptimal operating conditions for the ultimate design task
To wit, battleships getting a tug out of harbor...jet airliners being pushed around at the terminal...euro gold reserves under a dollar-based derivative scheme of pricing as the euro begins to rise (dollar begins to fall)...etc.
In the European Central Bank's final weekly financial statement for the year 2000, through the quarterly mark-to-market revaluation process we can see the two reserve systems at odds now that the euro has established a meaningful uptrend against the dollar. As the much-discussed price discovery mechanism leaves gold listless with respect to the dollar, the rising euro/dollar exchange rate translates into a shrinking level of reserve assets when denominated in euros.
As such, the total gold assets of the Eurosystem registered a numerical decline on the ECB consolidated books of 7.874 billion euros to 117.073 billion euros from the previous week. (If the extant gold pricing mecahnism does not allow for a separation from the dollar and its current structure under greatly weakening dollar, just imagine the potential for additional physical offtake that cannot be supported at the hands of rising foreign currencies). Buy gold now and bide your time.
In the paper arena, the ECB's consolidated foreign currency assets fell in level by 13.7 billion euros to 254.5 billion euros to mark the end of the quarter and the year.
On a somewhat related note, with Greece now on board as of the new year, adjustments will likely be seen to the consolidated ECB financial statement next week to reflect the additional gold reserves. It should also reflect the net adjustment to forex paper as any current ECB-held "foreign" Greek paper becomes domestic and as non-euro Greek-held forex paper bolsters the ECB's consolidated mix.
Fun stuff, this.
Peter Asher
(01/04/01; 17:44:43MT - usagold.com msg#: 45049)
Where no Alchemist has gone before
@ RossL, John Doe:
It's that nutcase with the ‘Matter Transmuter" that could make unlimited Gold. Now that could really mess up the distant future's economy per Holtzman's post today.
Maybe we could make a good one hour episode script out of this. I think the going rate for those is 20-40K. {:-))
Peter Asher
(01/04/01; 17:26:39MT - usagold.com msg#: 45048)
RossL
That's a "Catch up" on the DISCOUNT rate which was only dropped a quarter point yesterday. It's the FED FUND rate that was dropped the half point yesterday.
Cavan Man
(01/04/01; 17:26:13MT - usagold.com msg#: 45047)
Holtzman
Would you comment on the Gold Trail series?
John Doe
(01/04/01; 17:24:51MT - usagold.com msg#: 45046)
@RossL
I'm not sure, as the replicator apparently requires segregated elemental/molecular materials to build the target. Though seawater contains pure gold, seawater is not a component of "pure gold". However, pure gold and a hundred or so other elements could certainly be fed into a replicator to produce "pure seawater".
Simple filtration of seawater would be as effective in producing pure gold, even now. But will the free market price of the gold extracted cover the cost of power consumed in running the filtration process, the labor and capital costs, and the environmental costs? I guess if we could get the Federal Reserve or the Treasury to subsidize us...
RossL
(01/04/01; 17:16:31MT - usagold.com msg#: 45045)
Calif. Regulators OK Interim Electricity Rate Hikes
There is no mention of natural gas in the article referenced. Apparently these people cannot understand that when a state fixes prices, that market is not deregulated... that market is very highly regulated. Socialism lives on in California.
SAN FRANCISCO (Reuters) - California energy regulators, grappling with a financial crisis that threatens to bankrupt the state's two biggest public utilities within weeks, on Thursday approved temporary electricity rate increases of up to 15 percent and warned that the crisis was far from over.
-snip-
"EPITAPH" FOR DEREGULATION
Carl Wood, a CPUC commissioner, said the commission's action spelled an end to the state's chaotic deregulation effort. "What we are voting on today is the epitaph for deregulation in California ... deregulation is dead. It is time to put this behind us and clean up the mess it has left behind," Wood said during the discussion preceding the vote.
-snip-
RossL
(01/04/01; 17:04:20MT - usagold.com msg#: 45044)
John Doe - question on the trekkie stuff
The seawater of the Earth contains many thousand tons of gold. Wouldn't I just need to feed seawater into the inventory of a replicator to get 999.9 gold bars out of it?
RossL
(01/04/01; 16:49:58MT - usagold.com msg#: 45043)
Fed cuts again
Two days in a row !!!!
NEW YORK (Reuters) -
On Thursday, after the close of regular trading, the Fed cut the discount rate again -- by another quarter percentage point -- to 5.5 percent.
John Doe
(01/04/01; 16:41:56MT - usagold.com msg#: 45042)
@Holtzman
WARNING - Trekkie talk, please skip if easily bored...
I hate to belabour the intricacies of the workings of highly theoretical technological devices, especially on a gold thread, but as a low-level Trekkie I will, as this has some (theoretical) bearing on the "future value" of "future gold".
Both the transporter and replicator supposedly work by disassembling and reassembling the molecular and/or atomic structure of a source object. Neither operates at the sub-atomic level. In other words, the transporter does not break an object into protons, neutrons, and electrons, apparently because of the tremendous amounts of energy that would be required and because it is not necessary to break an object down into the sub-atomic in order to transport it, if such a device were even possible.
Sister-technology replicators do not create objects out of thin air. For a replicator to actually "create" gold would require an immense inventory of protons, neutrons, and electrons, themselves not easily or cheaply collected and contained, and these would need to be assembled into the elemental molecular pattern of non-radioactive gold, requiring tremendous amounts of force in the process.
Instead, the replicator supposedly actually acts on a store of elemental materials, such as hydrogen, oxygen, nitrogen, carbon, etc., and uses these to replicate another object by referring to a pre-stored pattern, such as alcohol, and then produces a simulation of the real thing by mimicking its molecular structure using the stored elemental or molecular building blocks. Great for making "food", complex molecules comprised of simple common, elements, and lousy for making pure gold, a single, rare element.
The transporter cannot make gold, it can only transport existing gold. The replicator cannot create gold, it can only shape existing gold into other compounds or artifacts.
No level of technology can reverse or remove the laws of physics. Not in this dimension anyway. The people on Star Trek can't "make" gold any more easily than Alan Greenspan. Why do you think the Ferengi hoard gold-pressed lanthanum?
Now future mining technology is a whole other issue.
I now return this board to normal people... :o)
Mr Gresham
(01/04/01; 16:12:26MT - usagold.com msg#: 45041)
Peter
Yes, but Beesting #45023 was the 1st 2nd. ;)
R Powell
(01/04/01; 16:12:19MT - usagold.com msg#: 45040)
Sears closings
Haven't heard of any Home Depots closing but the evening news reported a number of Sears stores are being shut down with a large lose of jobs. I was half listening so I can't give accurate numbers but in Massachusetts where we live, many Sears stores are the big "anchor" stores of the malls they occupy.
This and other bad news may IMHO quickly overturn the Fed's rate cut "happy days are here again" move.
I remember when Warren Buffet accumulated 89 million ounces of silver during the summer and fall of 1997 before his broker was forced (by the filing of a lawsuit) to disclose that it was Buffet buying. Mr. Buffet then stated that he had 89 and intended to take final delivery of 129 million ounces, which he did. He shipped them to London and the suit was dropped. He said he was buying to "restore equilibrium in the silver market". If he could buy 89 million ounces (over many months) once, just 3 years ago, it would seem that very large accumulation is possible before any price reaction in silver at least. It would seem that if things get bad enough, safe haven in metals will be sought (even if only temporarily). We probably won't know it has happen until well after the fact.
The closing of a number of Sears stores will be looked at, in hindsight, as one of the warnings of something terribly wrong with the economy.
I make my living in the construction business. Oh well, nobody said it was supposed to be easy!
Rich
Mr Gresham
(01/04/01; 16:10:44MT - usagold.com msg#: 45039)
Superstition
http://www.bearforum.com/cgi-bin/bbs.pl?read=98101
Supersitition
is a word you don't hear much anymore. Usually because "them's fightin' words." One man's faith is another man's supersitition.
We (the West) used it last on the Third World's "primitive" (that word went away, too) religions, then found they weren't so "dark" or that we had just better be more polite until we knew what we were talking about. Once conquered, I guess maybe it didn't matter what we called them.
I would venture that superstition exists today, in spite of the disappearance of the word from daily use. (And just like the fish, who has no word for "water", or any other words for that matter ;), perhaps it is because we are "swimming" in superstition, as humans have done from the beginning.)
Maybe it's because, once you have a people totally befuddled, you don't let a little light in by using the word "Superstition", lest you provoke some penetrating thought. You use good buzz words like "enlightened", "liberal", "free market", "conservative".
Perhaps superstition arises from a near approach to the truth, or, to paraphrase Holtzman and others: "close enough for clerical (as in clergy) work". You have encountered, by accident or pursuit, some truth but are momentarily blinded by it. How long that moment may be remains the question. To continue the diligent pursuit, or rest with the attained truth? (Risking your grip on the earthly flock you've gathered.)
Religious revivals have occurred not only as a reaction to the encroachments of science on everyday life, but secondarily out of a discovery of Western humanity's superstitious faith in science. That's right, science can become superstition, when its seekers rest on partial truths and ingrown biases. Spiritual seeking then re-asserts itself, as an integrator of science and faith (not-"knowing"), and sometimes through religion (as human groups; "religio": "binding together") as a fearful backlash.
I will say: I think there is at birth an "empty" part of the human brain that CRAVES to be filled up with religion (and similar belief) of some sort, in either/both a healthy way, and/or a manipulable way. In those distinctions is all the excitement we find in the topic.
I hear Stevie Wonder warming up: "When you believe in things that you don't understand, then you suffer. Supestition ain't the way."
Economics has paraded itself as science (better funding) through most of the 20th century and humans have been able to churn out much superstition from it. We write about and attempt to puncture those superstitions daily here.
Superstition is visible today in the stock markets: "Buy and Hold" and "stocks always come back (but to wait 25 years?), "stocks earn 9% long-term" (but won't during the remainder of YOUR lifetime).
Superstition is what we are accused of in seeking gold. In fact, if you probed the average American's thoughts, gold would be associated with some medieval time of leeching (I think of Steve Martin's Barber of York skit here), and witch-burning, rather than with the 20th century U.S. currency up through 1933, or 8000 tons still held by USG.
"Barbaric", quaint, comical, obsolete. (Until it's not.) Very unscientific and UN-HIP. Who can fight against that much bad PR and deprecating attitude? You can recall more examples of this yourself, I'll bet. When you realize you are in those crosshairs, summarized as "Nyahh, nyahh, superstitious!", you see how truly difficult it has been for us to offer up a different view of "truth", no matter how many facts in support.
Oh well, enough "coffee talk". (Honest, officer, it was just the coffee talking...) Link above not related, just a hoot...
Cavan Man
(01/04/01; 16:10:41MT - usagold.com msg#: 45038)
peterasher
Yes Peter; that is a second from me. His post was magnificent.
Peter Asher
(01/04/01; 16:02:24MT - usagold.com msg#: 45037)
Et Tu CavenMan
Was that a seconding of the nomination also.
Do we now have the three required via you, Mr.G and beesting?
Peter Asher
(01/04/01; 15:58:44MT - usagold.com msg#: 45036)
Mr G.
Was that the #2 second for Holtzmans post? If so, we need only one more to put Randy to work.
Peter Asher
(01/04/01; 15:57:23MT - usagold.com msg#: 45035)
Artie Farkle msg#: 45031)
Re- "Could it be that there was a massive (PREEMPTIVE) strike on gold two days before the cut.
Any thoughts from anyone on this."
Peter Asher (01/03/01; 13:32:38MT - usagold.com msg#: 44958)
@Pandagold
I have not doubted you for a minute about the "Big Fix."
Today is a perfect example: Gold spends several days in a down-draft with all sorts of theorizing as to why.
Answer: The inside money knew the event was coming, simple as that.
Cavan Man
(01/04/01; 15:50:27MT - usagold.com msg#: 45034)
Holtzman
almost belongs in a castle "hall" of his own.
I especially like the line about asking for a kosher meal during a hijacking. Good show!
The Hoople
(01/04/01; 15:13:29MT - usagold.com msg#: 45033)
Journeyman
I know of no Home Depots' that are closing. Possibly someone could have confused Office Depots' annnouncement of 70 stores closing.
Mr Gresham
(01/04/01; 14:45:03MT - usagold.com msg#: 45032)
Holtzman vs. Romanticism
Dagnabbit! Now I'm not gonna get any work done today with this writer's words a-simmerin' in my head. So I might as well get this out.
To start, IMO, any post that can hang its philosophical threadwork on "Chicken Run" (and the exegetic study of Mel Gibson's works) deserves the HOF Oscar.
This year, I've spent time in Europe (Italy), the US East Coast (where I used to live), and (where I live) the West Coast. I've noticed the differing bands of attitudes before, but, for brevity's sake, I'll say that this year I've discovered the label for it: Romantic Zones.
Bad label, I know. But it is the differing levels in romantic outlook on life which strike me as we move from west to east and back again.
(I am torn. To continue writing this today is a romantic outcropping of belief and enjoying the power of expression of words and shared joy of communication. To stop, and get my client calls and billing done is pragmatic, survival-oriented, and self-needs-centered. As usual, I'll try to slice it both ways.)
The frontier spirit was the myth that most captured the American imagination, and those who are able to speak it unabashedly and who appear to be living it (John Wayne, Ronald Reagan) become the unquestionable icons of American life. Occasionally, the frontier myth captures Europeans as well and they send us lots of money. Thank you. Merci. Grazie. Danke.
(Side thought from an ill-educated goy: Israel and Zionism seem to have a great frontier romantic component behind them, as well as their stake in pragmatic survival.)
Religion is at the furthest extreme of the romantic imagination and it commands a certain baseline respect within American life, no matter the actual practices of the adherents.
With regard to Christianity, I have known people to become believers in order to recover from alcoholism, to save troubled marriages, to recover from childhood abuse. Personal "salvation." (Note: This does not necessarily invalidate the religion itself, just makes the believer a less-relevant proselytizer to me.)
I have also known people whose beliefs originated more "rationally", from the Social Gospel of Jesus' teachings. "Wouldn't it be a better world if everybody..." (These don't proselytize at all.) Many attend churches primarily for the social companionship. Yet Dr. King and others have shown the prophetic, even mystic, potential of religion based on nonviolence and justice.
In my own romantic youth, I "stormed the gates of Heaven" out of some other metaphysical need, probably the desire to know what was real and if this world we see around us is all there is. The wish, at age 20, not to wander in a wilderness missing a fuller life I could have had by a little more curiosity.
I had (a few) experiences that told me that the foundation of the religious quest is probably real, that Jesus (and others) were most likely really there as the less-translated accounts say, but that the useful discovery of them must be made in each individual's life, and that that would take a lifetime of, yes, wandering in the wilderness. (A hard and incomprehensible "Answer" to receive at age 21.) But, like Holtzman, I'm not sure even of this, and none of it to the point I would impose on another. I can live with that, and do.
I found no group, book, or single philosophy that could give me the Easy Way Out. Only temporary oases or rest stops (some with very nice, clean bathrooms.)
Fundamentalism and evangelicism share that sense of romanticism (and have a very large market share). They don't present themselves to me very well as philosophies, even based on what we know of Jesus and his teachings. They are very much, as Holtzman points out, American phenomena.
Yet I can't dismiss them, because I know that INDIVIDUALS are having the learning experiences they seek and are capable of, and they WILL come to their own conclusions, as only they can. Yes, I want to know what inspires them. And if they only find shelter for awhile from chaotic times around them, I don't begrudge them that. I've been there, and the need still flares up once in awhile.
NWO and other conspiracy theories are a sort of anti-romantic romanticism. Study that Devil! They can be V-E-R-R-R-Y exciting! But then, so was National Socialism, as Leni Riefenstahl showed us. Sorry, that was clipping my topics together a little too closely. (I am somewhat interested in them, but wary.) Oy vey!
I guess the issue I have been pondering this year is "how to learn to somewhat distrust the things which excite me." Kind of like contradicting the human being's Prime Directive,eh? I guess I'll always be an "Excitable Boy"?
Holtzman writes about the pragmatic, survival-oriented diversification of viewpoints and experiences, relying none-too-heavily on any. I understand this. This is what happens to us in life anyway, after the excitement is over. I think of Yevtushenko's "let me be forever tossed between the City of Yes and the City of No." Hardly willingly.
(I will jump, of necessity now, to a possibly not very satisfying or well-established conclusion here.)
Jesus was nothing if not a Teacher. Wherever students gather, a good Teacher should be welcomed and recognized. His teaching words -- HOWEVER WE GOT THEM -- contain live nuggets of wisdom that penetrate our thick brains and with merit have lived for generations. Common people recognize common sense in them. Here I refer as an example to the "Pearl of Great Price" parable.
If your market research, life experience, and peering-round-the-markets'-corner wisdom tells you that gold is undervalued like no other asset. Then you get a credible guy like Trail Guide telling you that gold will "out-run everything on the planet so as to get to that inflation price starting gate!", you have a likely once in a lifetime "Pearl".
You are already diversified -- in your career, your life in these Dollar States of America, your house and family. Why not 100% pick for your liquid assets the investment that holds the best risk/reward ratio -- in YOUR judgment -- and thus will "outperform" any other? Or is this just my Romantic side looking for a good story to live in for awhile? Have I been "seduced" by the good company "watching together" at this Round Table?
And lest anyone confuse the level at which I just segue'd this post, I am mindful as we all should be that he taught: "for where a man's heart is, there will his treasure be also." I doubt that any of us will find, upon searching, that our hearts reside in gold. It is but a tool, and we come together to better learn how to use it, although that day may be off in the future.
There! Three hours well-spent. Yikes! Back to work!
P.S. Ben Kingsley, though Yorkshire-born, was born Krishna Bhanji, with his father an Indian doctor from Kenya. I remember hearing that by some coincidence his Indian family line goes back to the same village Gandhi was from, but I couldn't find any confirmation of that today even after some searching.
Artie Farkle
(01/04/01; 14:38:14MT - usagold.com msg#: 45031)
Old Yeller post 45024
Hello all
I have been lurking for several months. This is my first post.
Old Yeller asked if there would be aonother strike at the heart of gold in connection with the Fed. rate cut.
Could it be that there was a massive (PREEMPTIVE) strike on gold two days before the cut.
Any thoughts from anyone on this.
Journeyman
(01/04/01; 14:29:07MT - usagold.com msg#: 45030)
Home Depot reported to be closing several stores @Hoople
OOPS! THIS version is correct, the one directly below is misleading. Hoople wasn't reporting on any CNBC info as far as I know. SO completely disregard the other version of this message!!
"Another barometer to watch
is Home Depot stock. If it begins floundering it is practically the default setting for voting for this
industry. I would view a break of $40 as ominous. Since it is a mutual fund darling an exodus would
probably be cronies getting tipped off." -Hoople
According to CNBC (didn't take specific note) Home Depot will be closing several of its stores this year.
Regards, j.
Journeyman
(01/04/01; 14:26:08MT - usagold.com msg#: 45029)
Home Depot reported to be closing several stores @Hoople
"Another barometer to watch
is Home Depot stock. If it begins floundering it is practically the default setting for voting for this
industry. I would view a break of $40 as ominous. Since it is a mutual fund darling an exodus would
probably be cronies getting tipped off.
Reported on CNBC today." -Hoople
According to CNBC (didn't take specific note) Home Depot will be closing several of its stores this year.
Regards, j.
turkey hunter
(01/04/01; 14:07:19MT - usagold.com msg#: 45028)
Swiss Gold News
Swiss Natl Bank gold holdings fall
A corrected version follows:
(Adds details on gold, SNB 2000 earnings, background)
ZURICH, Jan 4 (Reuters) - The Swiss National Bank said on Thursday the total amount of gold held on its books as reserves by the end of 2000 fell by 2.276 billion Swiss francs ($1.42 billion) to 34.725 billion francs.
An SNB spokesman said the drop from December 20 to December 29 largely reflected a decline due to the SNB's regular quarterly assessment of the value of its gold.
The book value was revised down to 14,335 francs per kilo at the end of December from 15,245.65 francs at the end of September, the SNB said in a statement.
The SNB began gradually selling some of its gold holdings last May and ultimately plans to sell 1,300 tonnes, roughly half of a total 2,590 tonnes.
The SNB said at its year-end news conference in December that it had sold 160 tonnes of gold since it began the sales and plans to sell the same amount again through end-September 2001.
It is one of 15 European central banks which agreed in 1999 to sell a total of 2,000 tonnes of gold over a five year period, with annual sales not to top 400 tonnes.
In a separate statement on Thursday the SNB also said it had produced a surplus for 2000 of 28.1 billion francs.
Excluding gold, 2000 earnings totalled 2.7 billion francs of which 1.5 billion francs will go to the federal government and cantons as mandated by law.
The vast remainder resulted from a legal change effective May 1 which allowed the SNB to value its gold at market prices, well above the old book value of only 4,595.74 francs per kilo.
The revaluation led to an extraordinary book gain of 25.4 billion francs in 2000, a small portion of which will go into a special provision for market and liquidity risks, the SNB said.
The remainder, totalling 18.9 billion, will be set aside.
Switzerland has yet to decide how to use the windfall from revaluation of the gold. The Swiss government, in the wake of criticism of the country's role in World War Two, proposed placing the proceeds from sales of 500 tonnes of gold into a charitable Solidarity Foundation.
Swiss right-wing politician Christoph Blocher has opposed the plan, favouring instead using the gold proceeds to shore up the country's old age pension scheme.
The Hoople
(01/04/01; 13:37:20MT - usagold.com msg#: 45027)
JMB
Will pass housing numbers on, next release Jan 18 for December's starts/permits. That should be a pretty brutal one. Just to give a few more clues my friend who is president of a large regional midwest bank said they are tripling their bad debt reserve, adopting a repo on vehicle after 2nd late payment policy, and opening a "car lot" on the bank parking lot. He has 3 - 6 month old vehicles already repo'd or turned back in on lease. He had a $31,000 Yukon 4 months old that didn't bring the $21,000 minimum bid. As far as building materials go many are priced lower than in 1991 during Iraq war. OSB board has dropped 20% in 4 business days. Surprising to me is nothing went up today after Easy Al's juicing and in fact lumber futures approached limit down today, settling down $7.40 m/bf. One of the largest insul sheathing board manufacturers told me they would do anything to keep product flowing because their cash flow was acute to survival. Another barometer to watch is Home Depot stock. If it begins floundering it is practically the default setting for voting for this industry. I would view a break of $40 as ominous. Since it is a mutual fund darling an exodus would probably be cronies getting tipped off. Will post as can,but time often limited.
YGM
(01/04/01; 12:58:02MT - usagold.com msg#: 45026)
Will French or other Euro Participants be buying Gold???
With all the Hoarded Paper?..........Randy, any volume for CPM to Europe?
Euro Tax Man Comin....
HOW MUCH GOLD WILL BE BOUGHT FIRST?>>>>>LOTS!!!
Euro swap will trap French tax evaders
FROM CHARLES BREMNER IN PARIS
GOVERNMENTS across Europe are quietly preparing to trap money-launderers and tax evaders when a mountain of cash emerges for exchange into euros on the launch of the new currency next January.
France, which has a long tradition of cash-hoarding by bank-shy citizens and tax-averse tradesmen, is leading the way with plans to monitor the origin of big sums when people turn up with suitcases of francs in the six-month changeover period. As much as £15 billion, half of all notes in circulation, are believed to be stuffed under French mattresses, in drawers or in private safes, according to banks.
Financial institutions and the tax authorities are hoping to reap a windfall from the currency changeover. Tax authorities and banks in all 12 euro states are bracing for the emergence of billions of pounds in hidden cash when citizens are forced to convert notes before they become worthless. If handled right, the exercise will provide a windfall opportunity for banks to collar savings and divert them into investment and also for the taxman to nail "dirty" money.
However there are fears that the confusion of the mass changeover will be used by criminals to launder illicit cash holdings. The impact could be spectacular in Italy, where a fifth of the economy is officially estimated to run on cash, much of it beyond the reach of banks and the taxman. The country's antiquated banking system will make it hard for the authorities to keep tabs on people turning up with suitcases of lire, Italian officials say. In Germany, which has a smaller black economy and a tightly regulated banking system, officials still fear that criminals could use the confusion of the changeover to launder cash.
"It is going to be boom-time for drug dealers and criminals trying to shed their holdings," a Berlin official said. Belgium, which also operates heavily on cash, is taking steps to check the origin of big sums.
France, with its old tradition of cash-hoarding, is taking the toughest measures to monitor the expected flood of big-denomination franc notes, which cease to be legal tender on February 17 next year. Thrifty French countryfolk and cash-only tradesmen were told yesterday to expect attention from the taxman. Keeping a nest egg in a bas de laine, or woollen stocking, is still popular among older French, especially in rural areas. Up to 80 per cent of all Fr500 (£50) notes are said by the Banque de France to be out of circulation. With French taxes among the highest in Europe, a substantial share of the banknote mountain is assumed to be held by artisans and small businessmen who operate au noir — on the black — to stay free of the taxman and the VAT man.
The franc-euro exchange will be free, but the catch for illicit cash-holders is that all but relatively small sums must transit through an account, even if withdrawn immediately in euro notes. The ceiling on non-account conversions has not yet been fixed.
Consumer groups are fighting the rule on transit through accounts, saying it is unfair. The banks are chafing under sweeping laws that require them to notify authorities of all "suspicious" transactions.
The campaign to acquaint France with the future currency took off this week. Citizens are being advised to get used to buying a baguette for 61 cents rather than four francs.
Polls show the public and small businesses to be resisting the idea of scrapping the franc, but the Government is banking on the revival of the euro against the dollar to help to convince a reluctant country that the changeover will be worth the effort.
YGM
(01/04/01; 12:53:33MT - usagold.com msg#: 45025)
Well I Got it Right for 'Once'...
Rally & 48 hrs.....
Yesterday I said 48 hrs, hell it didn't last 24. Selling the Rally is still going on and after yesterdays gains are wiped out the selling will be given another name and new reasons by the (again) gloomy faced talking heads.......
Reality bites harder than a angry Rottwieller....YGM.
Old Yeller
(01/04/01; 12:27:30MT - usagold.com msg#: 45024)
Rate cuts, will they work?
Interesting thoughts from Mr.Moto at piraz.com.
"It all depends entirely upon whether the remainder of the investment world believes the US dollar is worth the artifically inflated valuations of the underlying assets;specifically share assets.Furthermore,in order to make them believers, the asset valuations must be driven higher in a fashion that is nothing short of spectacular and supported.Which means a continuance of US monetary expansion and therefore, another probable strike at the heart of gold.
beesting
(01/04/01; 12:01:25MT - usagold.com msg#: 45023)
A Second to Peter Ashers Nomination for Holtzmans #45018 & # 45019 into USAGOLD HOF!
After reading these 2 posts my thoughts were stuck on the lyrics from a long forgotten popular song:
"Hands Across the Water, Hands Across the Sea!"
(I'm in the U.S.)
And my favorite line in the post:
<<People who live long enough to pass in old age into the hands of their chosen maker are almost always those who knew not to raise their hands during a hijacking and ask for the kosher meal.>>
Great posts....beesting.
mhchuck
(01/04/01; 11:50:30MT - usagold.com msg#: 45022)
Randy (@The Tower)
Hi Randy,
I clicked on the link you provided, and as promised, I found both sides of the issue were well represented. It was easy for me to side with ORO on this issue. Thank you for addressing several of the questions I asked FOA.
I'm not averse to change, and yes, that "uncheatable" wealth reserve concept you mention would suit me fine.
Best Regards,
mhchuck
Peter Asher
(01/04/01; 11:44:25MT - usagold.com msg#: 45021)
Holtzmans Msg#45018-45019
Nominated to the Hall of fame!
Possibly the best post ever to appear here, this is IMO the most comprehensive covering of the two most prolific subjects on the Forum, Gold and Religion.
Newcomers to the Forum would be well served by being directed to this missive before engaging in discussion and debate.
Holtzman: One little detail. --- How about changing "German citizens who worshiped in synagogues discovered to their horror that their *faith* had marked them for death."--- to the actual reality that their *blood-line, no matter how diluted* had marked them for death.
Also. could you explain the German "doughnut" translation?
JMB
(01/04/01; 10:46:58MT - usagold.com msg#: 45020)
The Hoopie & Lamprey 65
Hoopie, those monthly housing starts and permits along with your observations/opinions would be very informative, TIA. Delinquency rates are starting to rise. Can you immagine what would happen if unemployment shoots up? I have a feeling that many home owners would become tenants. The RE market is so levered up that a super crash is all but certain. When? If you know, don't keep it a secret.
Lamprey, "but also remember the government backing(sp?) issues from last year." Did you mean 'banking'? I need some help here...can you spare a brief refresher course? TIA
Holtzman
(01/04/01; 10:31:37MT - usagold.com msg#: 45019)
Eternity (continued from previous)
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Well met, Sir HBM
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To Hill Billy Mitchell regarding (12/31/00; 13:49:07MT - usagold.com msg#: 44762 through 44771), I say EXCELLENT! You've taken me gloriously at my word when I suggested a month or so ago that we should all thoroughly challenge suppositions until their truth or falsehood was made plain. I was afraid for a time that no one was going to challenge my own suppositions, and I thank you for it.
I especially like your passage, '...to some, gold is physical. To some, gold is political. To some, gold is philosophical. To some, gold is safety. To some, gold is religious. To some, Gold is God. To most gold is a mixture of several of these.' Frankly, I think that statement would be an ideal motto at the entrance to this roundtable.
With barely two lines of text, you have wonderfully captured the point I was attempting to make in (12/01/00; 10:17:12MT - usagold.com msg#: 42604): if one would wish to know whether to buy, sell, or hold gold at any particular time, the first thing one should do is find out how his fellow market participants feel about gold at that time.
The second thing one should do, and by far the more difficult, is to then act contrary to the masses. When everyone wants to own something, that's the time to sell it to them. When everyone wants to sell something, that's the time to buy it from them. In order to successfully do this, however, one must realise that most market participants think like sheep, and one must consciously lift oneself out of the sheep mindset.
Please do accept that I mean no harm by describing my world view here. Quite the reverse: it is only by becoming aware of other people's world views that we improve our own chances of living happily to a ripe old age. As Peter Asher rightly pointed out in (12/31/00; 21:46:12MT - usagold.com msg#: 44797), 'the western bible viewpoint is a rather small percentage' of humanity. And for that matter, the mainly-U.S. fundamentalist viewpoint is an even smaller percentage of Christendom. As a result, although your own world view gives you a pretty clear idea of how U.S. fundamentalists currently regard gold, it will not help you to successfully anticipate how the other 95%+ of the gold market's participants will arrive at their buy/hold/sell decisions, simply because they are reading from different playbooks.
Note that I approach religious issues in the same way I approach political and investment ones: they are all things which, rather much by definition, cannot be perfectly known. That's why I see no incongruity in occasionally touching on religious issues at this gold-centric forum. It doesn't help us much to debate the precise number of angels which might or might not fit on the head of a pin, but every person who buys, holds, or sells gold does so for reasons which include his or her opinion as to whether angels exist in heaven or only on 20 franc coins. By observing how others around us arrive at the conclusions they draw, we can use those other conclusions to refine our own. This makes it more likely we'll survive and thrive as the world shifts and churns around us.
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How clean can I make that slate?
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You and I both genuinely attempt to start our contemplations with clean slates. But here we diverge: whilst you expect that you can perfectly clean your slate, I do not expect that either of us can ever completely clean either slate. No matter how hard we scrub, there will always be a few molecules of chalk clinging tenaciously to the surface. So, sitting here as I am with a slate which I feel I cannot perfectly clean, how can I have any hope of drawing reasonable conclusions?
Hope lies in realising that it's not necessary to achieve perfection. As most leaders of men will readily affirm, it's almost always unwise to try to acquire 100% information before making a decision. The final 5% will take longer to acquire than the first 95% did. But more often than not, being 95% certain of something is sufficient. Those who wait in hopes of 100% generally have their lunches eaten by their competitors.
For example, no president of a gold mining concern knows precisely how many ounces of gold are under his feet. But he does have a rough notion, and that's usually sufficient for him to keep things rolling. He simply doesn't care to know to the seventh significant digit how much might be down there. It's not only not possible to know, it isn't necessary to know.
Conversely, the recent political debacle in the U.S. state of Florida shows what goes wrong when people expect math to perfectly model an imperfect world. It is now literally impossible to accurately count every vote in that election, because voting forms and equipment which were sufficiently accurate to call a 60/40 election were simply not up to the task of calling a 50.0000001/49.9999999 election. Before nightfall on the day of the election, the system had already irrecoverably failed to capture the information it needed to ascertain the intention of every voter. Everything after that moment was tilting at windmills.
Nurses seldom take a patient's blood pressure more than once per visit for precisely the same reason: they could take it a hundred times and it would be different every single time. One might as well accept the first measure, because it is no less valid than would be a second or fifth or fiftieth 'recount'.
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Close enough for government work
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For me, there are no absolute truths. Not even in mathematics: two plus two sometimes rounds up to five for large values of two. But there are lots of 'close enough' truths, and most of the time they are quite sufficient. Religion provides perhaps the most contentious demonstration of this problem, particularly in regards to the notion of infallibility. When I describe myself as an apathist, what I'm trying to convey is that it does not disturb me to think that the particular edition of the Bible sitting on my bookshelf might be riddled with errors. Indeed, it reassures me.
While I'm quite confident that you, HBM, rarely if ever fall into this trap, I do observe that many people who believe without question every printed word in one book have a hard time questioning the printed word in other locations. Take the ubiquitous tabloid headlines declaring that the Bermuda Triangle is somehow supernatural. There it is in print, after all. And I'll admit to having had in my youth a deep hope that the myths of the Triangle might turn out to be true. But as an adult I learned an interesting thing: the run from Bermuda to the Bahamas is one of the most popular among amateur boaters... combine too much money, not enough common sense, and large amounts of alcohol, and it's suddenly not so very surprising that lots of boats disappear there. Nowadays I regard the Triangle as nature's way of weeding out rich idiots.
Each of us either fosters a habit of questioning everything we observe, or of accepting everything without question. And therein lies all the difference between people to whom history happens, and people who cause history to happen.
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Always demand a second opinion
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The point on which I'm sad to say I expect we shall never see eye to eye is that I do not regard any single text as a reliable document, religious or otherwise. The human authors of any text, and the innumerable human editors and translators who subsequently lay hands upon that text, each have their own world views and resulting temptations to omit and/or rephrase that which they do not like. I cannot in any way accept, for example, that the long-forgotten monk who translated the parable of the talents into Jacobean English was any more objective than is, say, the copy writer for the Gold Council.
When Dr. Greenspan speaks, is he saying what he honestly believes, or merely saying things which will cause the reactions he desires? And, as Black Blade points out almost daily, journalists who crank out economic reports are highly likely to either 1) have a personal bias even if a subconscious one or 2) lack expertise but face a deadline and so type what sounds good.
As a general rule, one rendition of a purportedly historical event should never be accepted as accurate until a second independently recorded report can corroborate it. And if the two reports disagree? Seek for a third. Even though the printer has carefully applied the letters HOLY BIBLE to the front cover in gold leaf, I still want to read an Egyptian account of Exodus before I'll be willing to accept that the story is historically factual. That the story is religiously inspirational I do not question, but that's an issue independent of determining what really happened.
So yes, whilst I would regard the original lightning-graven tablets of the Ten Commandments as infallible were they still available to-day, you are quite accurate when you suggest that I cannot regard any subsequent reprint as infallible. Not even the 'original Hebrew and Greek manuscripts', you might ask? Well, so far as I am aware, Joshua ben Joseph spoke Aramaic, so every one of the Greek phrased quotes ascribed to him was already at least once translated, and that left the door wide open for errors of interpretation. And if he had learned Greek in school? Well, recall that U.S. president Kennedy stood in downtown Berlin and sincerely attempted to show solidarity with the assembled crowd by declaring 'Ich bin EIN Berliner'. Unfortunately for him, this was received by the audience as 'I am a donut'.
HBM, I hesitate to 'directly' quote Machiavelli for precisely the same reason. I do not speak modern Italian, much less 1500s Italian. I have read three English translations of The Prince, and to my complete lack of surprise I find that the resulting English phrases used vary a great deal within the same passage. But I look for the general sense of it, rather than try to tease out precisely what Nicolo might, or might not, have been subtly trying to imply. Indeed, it is the man's lack of subtlety, his preference for candour, which recommends the work to me. But even so, when he makes casual reference to minor events instantly familiar to his own generation, the references are lost on a modern audience without translator intervention. And that presumes that the translator himself understood the reference, an often unwise presumption.
One of my favourite modern examples of translation problems was the catastrophic failure of an American refrigerator company to advertise in Thailand. They hired a local fellow to render their slogan, 'Out of sight, out of mind', into Siamese. Not grasping that this was an idiom, the chap took it literally. On about ten thousand billboards all over Thailand were displayed smart photographs of these attractive little refrigerators with the slogan 'Invisible things are insane' emblazoned over them. Whilst I daresay the translators of religious documents are more careful, by being human they simply cannot be perfectly careful. Thus, the results of their endeavours cannot be infallible.
Interesting thought: the U.S. is roughly comparable in size to Europe, but the majority of Americans know only one language. Where we over here have daily reminders of the fallibility of language translation, many of you live long lives without such reminders. That may go quite a ways in explaining why Biblical infallibility is mainly an American notion.
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Safety is where you find it
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Throughout time, there have been a minority of humans who were of a mind to 'step out of the box' and look back at the world from afar. You've met people of my mindset before, though most of us have had the sense not to admit it to you. I am much more candid at this forum than I am with those who know my real name, because honesty without anonymity often invites peril. Because we are willing to see the big picture, the vast majority of us are able to avoid the limelight and present the appearance of leading the most boring, uninteresting lives. Which explains why the Chinese consider it a curse to wish for someone to live in interesting times.
Most of us use our world view for survival, not self-aggrandisement. And if that world view can assist others in seeing an approaching fist, so much the better. It's by no means necessary that others abandon their own cherished world view: by simply becoming aware that your world view is not the only one, you dramatically improve your chances. But there are things to recommend our world view, obviously, else we wouldn't live long enough to talk about it.
We're the ones who shook our heads when we saw footage of people scrambling for the last helicopter to leave Saigon. We'd already long since left the place, just as Einstein had long since left Nazi Germany before the trap sprang shut on those less observant. The phrase 'How did they not see that coming?' is, sadly, a frequent visitor in our thoughts.
But not all of us are seekers of quiet. Many of the names you find in history books, for both good and ill, number among those who position ourselves outside looking in. There's a line from the movie, The Hunt for Red October, where the head of the U.S. Security Council says to the CIA researcher, 'I'm a politician, which means that while I'm kissing babies I'm trying to figure out how to steal their candy. But it also means I keep my options open.' A small few of us keep our options open with intentions of becoming infamous, but most of us do it with intentions of staying out of harm's way.
You, HBM, place great confidence in the faith in which you were raised, and you likewise place confidence in gold over other investments. By contrast, I have no such confidence in any one thing. As the last two decades have demonstrated, gold is not always a safe haven. However, with each grindingly lower year, gold becomes more and more a safe haven. But how much lower can it go? Quite a bit. Will it? There's no way to know.
I suppose that's the crux of it right there: I do not believe in eternal safe havens of any sort. Nothing is forever safe because everything is always in motion.
The devoted faith of English Catholics served them quite well right up until 1535 when Henry VIII decided he wanted a divorce. Within the year, many who continued to look to their religion for safety found instead that it had become their doom. Four hundred years later, hardworking and patriotic German citizens who worshipped in synagogues discovered to their horror that their faith had marked them for death. Heaven only knows how many prayers from concentration camp victims went unanswered. Just a couple of years ago, peaceful citizens of the former Yugoslavia were assaulted and driven from their homes because they were Muslim (well, more generally, because they were not Serbian).
Those of you who saw the movie Braveheart witnessed a great example of the divide between HBM's world view and my own. I daresay HBM finds a lot to admire in William Wallace's willingness to stand unflinching against the enemy. For myself, whilst I do greatly admire the man's courage, I cannot help but bow to the sense of Robert Bruce's decrepit yet wise father who knew when to get out of the way of the hammer. No, I didn't like it, any more than the young Robert Bruce liked it, and I would have tried to handle it in some other way had I been that decisionmaker, but the father's act did preserve the Bruce family and give it the chance to fight again another day.
To quote another Mel Gibson movie, Chicken Run, when Ginger says 'We'll either die free chickens, or die trying', recall that one of her fellow captives then wonders, 'Are there any other options?' Whilst I myself found Mac to be my closest kindred spirit in that movie, I couldn't argue with the ever-knitting chicken's sensibilities on that question. Actually, come to think on it, there was another line she said that was very much in keeping with my mindset: 'My life flashed in front of my eyes ... it was really boring.'
People who live long enough to pass in old age into the hands of their chosen maker are almost always those who knew not to raise their hands during a hijacking and ask for the kosher meal. Most such observant people had also secreted their savings in places untouched by time or by tyrants. Sometimes those safe places included gold. Sometimes not.
As it happens, I tend to think that the present day is a reasonably safe time to gradually acquire gold, regardless of one's personal motivations. We've been descending into the valley of POG for years now, so the odds of gold's present price being unsupportably high are quite a bit less than they were in years past. But because there's no way to know for certain, I own a little of many different things, and I really don't care which one if any suddenly leaps for heaven.
Yours,
I.V. Holtzman
PS: To USAGOLD regarding (12/31/00; 21:12:58MT - usagold.com msg#: 44796), I got a great laugh from your wife's interpretation that 'he was obviously a twelve year old child trying to stay out of trouble with his mother.'
PPS: To Pandagold, who wrote in (12/3/2000; 6:54:02MT - usagold.com msg#: 42780), 'It has now become a well known cliché in Britain that Hollywood gives the "baddies" British accents.'
Well, I suppose it's to be expected. For half a century 'til just recently, Hollywood's standard way of identifying baddies was to give them either German or Russian accents. But as American movie-goers began to have difficulty pointing out Germany and Russia on a world map, Hollywood realised it had to find other ways of putting a 'not one of us' label on the baddies. You can even see where the transition occurred: the lead baddie in Die Hard was a German terrorist, so naturally they cast London-born Alan Rickman (who couldn't utter a proper German R even if he leaned his head back).
Weird casting decisions do seem to be pretty equal-opportunity, however. Scottish actor Sean Connery was cast as a Lithuanian submarine captain. Mexican actor Ricardo Montalban was cast as Sikh warrior Khan Noonian Singh, whilst Yorkshire-born Ben Kingsley was cast as Ghandi. That they each managed to pull it off brilliantly is rather more a testament to their acting skills than to the casting skills of their employers. I'm just waiting for someone to cast Priyanka Chopra as Hillary Clinton. And don't even get me started about Robin Hood.
Sometimes, though, they get it right. One of my favourite movies is the 1981 film Arthur. Most people remember it simply as a comedy about a chap laughing whilst being drunk, but it's really a story of the depths to which loneliness can drive one. The casting of Dudley Moore as a New York financier's son was panned by several film critics who argued that the son's accent ought to have been like the father's. But watch that film again and ask yourself something. Decades before the events portrayed in the film, who do you think took the time to teach the child how to speak? Arthur's biological father? No, too busy at work. Who else would have cared enough but Hobson the butler (played by John Gielgud)? Those casting decisions were spot on.
Holtzman
(01/04/01; 10:28:08MT - usagold.com msg#: 45018)
Eternity
Holtzman here,
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Central banks ARE mines
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Something of an epiphany recently hit me and, as in most of these sorts of things, I found myself wondering why I hadn't thought of it in this way before.
Like Copernicus realising that the math became so much easier once he put the sun at the centre rather than the earth, it occurred to me that the workings of the gold market became substantially easier to comprehend once I started thinking of central banks as if they were nationalised gold mines.
The United States nationalised gold mine in Fort Knox, for example, has proven reserves of approximately 8000 tonnes, and the cost to mine these tonnes is NEGLIGIBLE. For political purposes, the United States chooses not to mine its nationalised gold. But of course it could do so at a moment's notice.
By contrast, the United Kingdom nationalised gold mine in the Bank of England did choose, again for political purposes, to begin mining its negligible-cost gold in earnest.
How can a 'first-time' gold mine such as Harmony possibly compete? It survives only while a sufficient number of central banks choose not to mine the cost-free gold out of their vaults.
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Perhaps gold is Not eternal?
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Someone recently suggested that perhaps Platinum and Palladium had taken the place of gold as the safe haven for big money in the modern world. That raises two very intriguing concepts: 1) perhaps gold is not eternal, and 2) perhaps platinum/palladium can be a safe haven. While I can envision a day where 1 becomes true, I do have some reservations about 2.
As to the first, we at this forum so often blithely AssUme that gold will forever remain the purest form of natural money, simply because it has always been so regarded. But as the mantra of the stock brokers warns, past performance is no guarantee of future performance. Carl Sagan chose gold as the source material for his recorded messages on space probes because of gold's reputation for remaining eternally in the form in which it was manufactured. However, Coca Cola is nowadays bottled in aluminium for precisely the same reason. The element gold does not have a monopoly on eternity anymore.
We have only to look at our most optimistic literature to see what may lie ahead. The fictional future of Star Trek has, on several occasions, portrayed characters who do not value gemstones or gold. Oh, they're pretty to look at, but with transporter technology they can be manufactured by the ton effectively cost-free. Gold in the Star Trek era has thus had its scarcity value stripped from it. Residents of United Earth, upon observing a London Good Delivery bar lying at the roadside, would pass it by as you would pass by a discarded concrete block. To those readers whom that notion disturbs, perhaps you haven't grasped what Gene Roddenberry was trying to tell you: someday, humans may yet build a society in which citizens are so well satisfied that they have no cause to fear one another... and so have no need to stockpile defences against such threats.
But of course, the world of to-day is far from that idealistic Star Trek future. The humans alive to-day are descendants of creatures who were sufficiently cunning and lucky enough to avoid being killed just long enough to bear children. As a result, we have within us three thousand million years' reinforcement of proven survival habits, one of which is hoarding.
Of course, that urge to hoard can sometimes produce unhelpful results. Obesity is the classic biological example of hoarding: citizens of the civilised world seldom if ever encounter starvation, yet our inherited bodies seem to go out of the way to stock up on lipids 'just in case' famine should ever return (in years past, this was viewed as mainly an American phenomenon, but in recent years the waistlines have begun to spread in other nations as well). Further examples of nonsense hoarding figure prominently in the tabloids: mostly variations along the lines of 'old man's house found to contain uncounted thousands of meticulously cleaned and categorised three-inch lengths of string'.
Sometimes, however, hoarding is beneficial. Travellers on the Null Arbour Plain can seldom be said to be carrying too much spare water and petrol. The Scots managed to rebuke English invasions through the centuries by stashing weaponry everywhere (speaking of which, I'm told the most popular movie in Chechnya these past few years has been Braveheart). And there are countless instances where refugees have negotiated their way past soldiers because they'd planned ahead and had in hand a sufficient stash of gold, silver, jewellery, or some other portable and anonymous form of wealth.
Historically, gold and silver have had top bragging rights as the materials to which the frightened masses would turn in times of trouble. In contrast, platinum and palladium (like aluminium) are comparatively recent arrivals on the stage of man's emotions.
It is true that a lot of big money players are involved in both platinum and palladium, but I should stop short of describing their activities as safe haven investing. In order for something to provide a safe haven, it must be something which is about to be wanted by the masses, but which has yet to soar in price. And palladium has problems with both of those issues.
Practically every adult alive today, whether he owns gold himself or not, realises that gold delivers significant value in a small package. In sharp contrast, however, we few here at this forum probably account for 20% of the adults alive today who 1) recognise the word 'palladium' at all, and 2) know that it has recently soared in price.
As a result, the emotions of the masses have no more hold upon palladium than upon tungsten. There is no practical way in which the masses can hoard palladium, nor I suspect would they care to do so if they could. It's not even a filament of their imaginations.
Look back at any chart of any precious metal's prices. You'll find lots of rolling valleys punctuated by the occasional Matterhorn: from an otherwise calm trading range, the line will abruptly rocket to the heavens, only to plummet back to the valley floor almost as quickly as it arose. If one gradually accumulates while the price is in the valley, he'll have acquired a very safe haven indeed. However, if one begins buying in the stratosphere, he's going to hate himself later. And worse, if he's left being the owner of something which no one wishes to purchase at any price, he finds himself in the same condition as the shareholder of a defunct dot com. Or the hoarder of fiat banknotes from a now-defunct government.
The present day spike in palladium came about due to an incredible lack of foresight among consumers of palladium, primarily the automobile industry. It speaks volumes on human naivete to realise that it was the Japanese especially who allowed themselves to believe that a material 70% supplied by Russia would always be accessible to them.
The present day spike in platinum is being caused by anticipation that automobile manufacturers will retool so as to use the predominantly South African supplied metal in place of palladium. The amusing aspect of this is that, by the time the retooling is complete, the odds are phenomenally good that the South African economy will have collapsed into anarchy.
In both instances, the arrival of a recession in the largest automobile consuming nation (the U.S.) will dramatically lessen the demand for both platinum and palladium. Indeed, the anticipation of same will hammer down their prices in a descent approximately as sheer as their earlier ascent. From now until then we may see their prices double or even triple, but they could just as easily halve this afternoon. I for one have no desire to play catch with a cannonball.
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Global Conspiracy and The New World Order
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I continue to be disturbed by the trend towards conspiracy theories at forums such as ours.
Let us for a moment consider the mother of all conspiracy theories: one world government. The mere mention of that phrase seems to send shivers up some people's backs, but honestly now why should it? I find the best way to appraise a situation is to look back into history for situations which at least somewhat resembled it, then examine what became of those situations.
For example, prior to 1066, England was composed primarily of six earldoms. Heredity did count in leadership positions, of course, but it was by no means guaranteed that the eldest son of the present king would be accepted as his successor. Merit and the respect of the nobles counted considerably, and it was perfectly possible that the six earls might decide to place one of their own number on the throne if they deemed he would be the better man for the job. Of course, the opinion of the commoners was unimportant.
If this sounds vaguely familiar right now, it is perhaps because you just witnessed much the same transfer of power in the United States, where the votes of the earldoms (states) and the nobles (election officials and judges) held sway rather than the votes of the commoners.
Do any of you care how the Secretary General of the United Nations is elected? We've had a President of Earth for nigh on half a century now and most Earthlings haven't even noticed. The high king of England seldom if ever came into a commoner's house, either to benefit him or to endanger him. How many Americans have had Bill Clinton personally invade their homes? For every televised home invasion by federal stormtroopers, there are tens of thousands of interventions by local constabularies.
But that's the key: almost all invading officials are local to the invaded. The bobby banging on your door sleeps not twenty miles from your house, so he'd best bear that in mind when dealing with you. As rare as a federal intervention is, realise how rare a planetary one is. Kosovo needed a planetary intervention. Florida only needed a federal one, and that happened only because the gridlock in that one state was hindering the needs of the other states. I daresay that if a similar fiasco were to occur in one state's governor's race, the federal level would feel no compulsion to intervene.
It is an unfortunate side-effect of human nature that many if not most people allow themselves to fall into overblown we-they mindsets, world views wherein dark forces are massing on the horizon, bent on doing harm specifically to us. The creeping terror which naturally results from such self-fulfilling world views is perhaps the prime motivator behind individual adults' acquisition of physical gold and silver (and individual children's acquisition of stuffed animals).
Being aware of that tendency among the masses, and steeling yourself to avoid falling into the same panic, is the key to knowing when to buy gold, when to hold gold, and when to sell gold.
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Getting ALL the gold
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There's a recurring theme among aficionados of conspiracy theories that 'They' are out to get all the gold away from 'Us' and, once 'They' have it all, 'We' will be at their mercy.
But think that scenario through for a moment. Let's say that NWO, Inc., somehow manages to buy, beg, borrow, or steal every ounce of aboveground gold in the world, down to the very last flake. Let us further say that NWO also takes control of (or at least has the power to destroy) every gold mine on the planet. I gather that's what's anticipated by the conspiracy fans.
In the aftermath of such a complete acquisition, I find myself asking the rather simple question, 'So what?'
Were someone to corner the world's supply of industrially crucial palladium, for example, then yes that would send distortions and convulsions through the world economy. The fact that such a cornering has occurred through post-Soviet ineptitude rather than through brilliant cunning is rather beside the point. The material in question has a very real value because it is a key component in core parts of the world economy... at least, until the major users of palladium have time to retool their systems to instead partake of an alternate material not quite so unreliably supplied. By the time the Russians have their act together, the world will have largely abandoned palladium as an industrial metal.
By contrast, if someone were to stand up to-day and announce, 'I've completely cornered the world's supply of francium and you lot can't have any', I truly doubt there'd be much outcry apart from the odd researcher.
Now let's try that with gold. 'Whilst you lot weren't paying any attention, we at NWO, Inc., have rounded up all the gold in the world and it's ours and you can't have any. Because it's ours.'
Okay, I'll grant there might be a general sense of 'wait a minute' from the world at large. And there would be the more immediately justifiable outcry from electronics makers who had only recently set to wondering why their supplies of electroplate were dwindling. There'd be an even greater outcry from all of the past purchasers of electronic equipment who, now they come to examine the sockets more closely, find that the NWO has successfully infiltrated their homes and offices and scraped all the highly conductive gold electroplate off every contact.
But again, apart from comparatively minor industrial inconveniences, 'So what?'
At this imagined and increasingly ridiculous stage, no-one would still be in possession of even a half sovereign or 5 gram wafer from Credit Suisse, so no-one except NWO, Inc., would have any further stake in any future price of gold. Indeed, by having completely removed the elemental substance from any active market, this nonsensical NWO, Inc., would have caused there to be no such thing as a price of gold, any more than there is a price of francium. Now I ask you: what possible benefit could there be for NWO, Inc., having found themselves the proud owners of a 60-foot cubed block of a substance which they themselves have just rendered valueless?
And that's the nub of it. If you're very very lucky, there may be as many as 4 atoms of francium within a kilometre of your present location, but your complete inability to lay hands upon them has hardly harmed you. Francium plays no biological part in your life, nor does it play any technological part, let alone any monetary part. Gold, come to think of it, plays no biological part in your life, and very little technological part. Nor, for billions of people, does gold play any monetary part.
Indeed, there's already been a far less effective NWO, Inc., rounding up gold for nearly a century now... the various central banks. A third of all the gold ever mined is cloistered in perhaps a dozen government vaults around the world. Additionally, perhaps another third of aboveground gold is cloistered in the vaults of petty governments and of wealthy individuals. And whilst all of that gold has been disappearing from pockets and arriving in vaults, the world economy has experienced the greatest explosion in living standards that humanity has ever experienced.
What makes gold valuable is not its elemental utility. A lump of gold is no more useful than is a still-valid slip of paper with a queen's or president's face on it. What makes gold valuable is that humans have historically regarded it as something other humans will accept in return for food, clothing, petrol, and other things directly necessary for life. What makes paper valuable is that a still-valid government imbues the paper with that same (legal tender) status. The big difference between paper and gold, of course, is that gold minted by a defunct government has the same value as gold minted by a still-extant government, whereas paper printed by a defunct government lost almost all of its value the moment said government fell.
But this notion that, by rounding up All the gold, some conspirators can gain power, is quite honestly wrong-footed. DeBeers, for example, would only be harming itself by attempting to round up all the diamonds not currently owned by them. DeBeers actively wishes for there to be many prominently visible diamonds in the world. The catch is that there should be just few enough of them that there shall always be persons who have no diamonds, and so who are willing to overpay to acquire them.
To maintain that dearth of accessible supply, DeBeers maintains vast holdings of diamonds, many years worth evidently. Just like a central bank's gold hoard. Now why should it be that this vast overhang should be ignored by the market pricing mechanism? Well, for one thing, because DeBeers is the only central bank for diamonds, and it's unlikely to do anything to cause prices to plunge. DeBeers manages the flow of diamonds in the same way that the Aswan Dam Authority manages the flow of the Nile.
By contrast, there are many central banks holding significant quantities of gold, some of whom wouldn't mind seeing a rise in POG, whilst others wouldn't mind seeing a fall in POG. Imagine competing dams, some of whom wouldn't mind seeing the lowlands become a desert, while others wouldn't mind seeing the lowlands become a lake. The result is that no single cabal exists which can control gold in the way in which DeBeers controls diamonds. Despite fears to the contrary, the price of gold is set in a far freer fashion than are many luxury goods.
More importantly, each of these competing central banks hold sufficient amounts of other wealth so that their gold component is, to the bankers themselves, not significantly large. That's why the Bank of England can sell its gold at a 20 year low and can afford to look stupid for having done so. It harms them no more than it harms you to occasionally pay Federal Express charges to post a letter. Is it foolish to pay £26 when it absolutely, positively has to get there overnight? Of course not. It's only foolish if you pay £26 for no good reason.
Likewise, the Bank of England is incurring only a very minor loss on its gold sales, yet is obviously doing so in pursuit of some greater gain elsewhere. There has been a concerted attempt since 1999 to stop sterling from tracking with the U.S. dollar, instead trying to steer it towards favourable alignment with the euro, primarily to stave off capital flight from the UK into Ireland and the rest of Euroland. As often happens with such interventions, the effect is only just now beginning to kick in, too late to retain several important manufacturers such as Sony. Hmmm, now there's a new catch phrase... 'Sony capitalism'.
(to be continued...)
Randy (@ The Tower)
(01/04/01; 10:13:08MT - usagold.com msg#: 45017)
Assorted important points for your consideration culled from Bloomberg
http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=blk&bt=ad_position1_topfin&middle=ad_frame2_topfin&s=AOlSovhZWRXVybyBT
Excerpts from this article...
HEADLINE: Euro Surges vs Dollar, Yen; Euro-Zone Still Seen Outperforming
"...investors speculated European economic growth will outstrip the U.S. even after an interest-rate cut by the Federal Reserve."
"[In today's trade,] At one point it [the euro] staged its second- biggest intraday gain ever, surging 2.59 percent [against the dollar]."
With the yen currency sliding again, please appreciate the wider implications (regarding company decisions under a sliding dollar) found in this next excerpt...
"Traders also pointed to a report in the Nihon Keizai Shimbun, a Japanese business daily, that Toyota Motor Corp. will manage its overseas profits in local currencies, rather than in the yen. The company plans a 3 trillion yen ($26 billion) fund in dollars, euros, yen and other currencies, according to the report, which cited an anonymous Toyota official."
With an eye to the future (regarding rate-cuts and currency strength) as the Fed will save banking system at all costs...
"Interest-rate cuts typically hurt a currency as they reduce the returns on deposits, and the Fed may not be through. Some analysts expect central-bank policy-makers will cut rates again when they meet later this month, further narrowing the rate differential between the U.S. and euro zone."
+
"The fact it was 50 basis points and was before the payrolls number smacks of panic" to investors, said Steve Barrow, a currency strategist at Bear Stearns International in London. "It was a totally ridiculous reaction from the dollar yesterday and it's only right it's paying for it now."
lamprey_65
(01/04/01; 10:10:20MT - usagold.com msg#: 45016)
JMB and The Hoople
You may be on to something regarding Freddy and Fanny. Trading action looks suspicious beginning on Tuesday and after nice spikes after the rate cut yesterday, they both continued to fall off to lower levels yesterday and today.
Both had run up quite a bit late last year, so that may be part of what's going on, but also remember the government backing issues from last year.
Keeping an eye on this one.
The Hoople
(01/04/01; 09:55:56MT - usagold.com msg#: 45015)
JMB
Fanny and Freddy bear watching. So do REITs. The slowdown has to be increasing delinquency rates. I pay attention also to housing permits, NOT starts. The actuals, not seasonally adjusted. Since there is about a 90 day delay between loans issued and permits if Mar/April/May are down significantly we are heading for trouble. Home Depot drastically scaling back expansion and laying off 10% of workforce was little noticed yesterday. This was another unprecedented event similar to MSFT's earning warning. I get monthly housing starts and permits if anybody on this site would like to see them.
Randy (@ The Tower)
(01/04/01; 09:40:33MT - usagold.com msg#: 45014)
Fed adds $2 billion to banking reserves via 28 day RP operation
Banks heave sigh of relief as the rate is a half-percent better than Tuesday's $10.505 billion repurchase agreements, also, the Fed funds market has eased off of the 6-11/16ths level to within 1/16th of the new 6% tarket rate.
JMB
(01/04/01; 09:18:08MT - usagold.com msg#: 45013)
Freddy and Fanny
I like to keep an eye on FRE & FNM...Real Estate will bring this party to an end, IMO. I've never seen them act this way...each down 3-4 bucks on very large volume (it's all relative of course). Some systemic problem raising its ugly head? Any ideas?
SHIFTY
(01/04/01; 09:15:31MT - usagold.com msg#: 45012)
Test
Hellooooo.....
Christopher
(01/04/01; 07:06:12MT - usagold.com msg#: 45011)
Grandalf the White
A most sincere thank-you, for the gift I recieved last week. I would be interested to learn more of your alchemy process.
Best wishes for a Golden Year
Christopher
Black Blade
(1/4/2001; 6:41:40MT - usagold.com msg#: 45010)
Wall St. hangover looms Sharp early drop in U.S. stocks indicated after Wednesday's Fed-inspired rally
http://cnnfn.cnn.com/2001/01/04/markets/stockswatch/
January 4, 2001: 8:06 a.m. ET
NEW YORK (CNNfn) - U.S. stocks are poised to beat a hasty retreat Thursday morning, as investors step back from record gains inspired by a surprise cut in interest rates by the Federal Reserve. While not an unusual reaction to a day of such sharp advances, the expected sell-off calls into question whether the market will eventually continue to rally or revert to its recent gloominess, which was powered by corporate result warnings in a slowing economy. While pleased with the rate cut, done to help save the economy from a profit-sapping slowdown, experts note that the move does not erase the facts that manufacturing has slowed, companies have reduced capital spending and consumers have reined in their buying plans.
The Nasdaq 100 futures fell 41.50 points to 2,488 in early trading. That put the futures 70.28 points below fair value, a benchmark set daily by traders based on future contracts and their underlying stocks, meaning traders expect a lower open for the Nasdaq market. S&P futures, the most widely watched futures contract, lost 2.20 points to 1,357 on the Globex trading system. That left futures 3.16 points below fair value, suggesting a lower open for the S&P 500 index. With each S&P futures point seen as equivalent to eight points of Dow Jones industrial average movement, the early loss indicated a 25-point drop for the blue chip measure. On Wednesday, U.S. stocks finished sharply higher after the surprise Federal Reserve interest rate cut.
Sancho
(1/4/2001; 6:22:44MT - usagold.com msg#: 45009)
(No Subject)
ALL: If your outgo exceeds your income your upkeep will be your downfall.....
SteveH
(1/4/2001; 5:47:01MT - usagold.com msg#: 45008)
mozel again
www.kitco.com
repost:
mozel (@Gold Miner Income = Derivatives Income + $ Exchange Price of Gold ) ID#153126:
Copyright © 2000 mozel/Kitco Inc. All rights reserved
"Euro dollars in meltup killing derivative mkts, there is no way you can unwind/delta hedge trillions of dlrs of exposure in a mkt moving 15 to 25 pts a day as Eurodollars have been the last few weeks." Homestk Kid
Where is the eurodollar rate for the forward price of gold posted ?
Behold: "In general, if the spot price is S, the forward price is F ( T ) for a time-horizon of T days ( up to a year ) , the eurodollar rate is r, and the gold lease rate is r*, we have the relation
F ( T ) = S [1 + r ( T/360 ) ] / [1 + r* ( T/360 ) ]."
If the eurodollar rate rises, more forward sales will pour from the miners and depress the $ exchange price of gold. If the eurodollar rate rises to 20%, there will be a flood of paper gold onto the "market".
SteveH
(1/4/2001; 5:41:04MT - usagold.com msg#: 45007)
TG and ORO
seem to have taken on a slightly different bent on this Euro thing. TG is still on track for a reserve currency shift in progress from Dollars to Euros. ORO seems to be saying that such a shift will be temporary because as oil is priced higher in dollars, the alternative energy sources will come on line eventually making the Middle East - Euro connection less important as they technologies take hold and it will not revert back to ME oil once that change takes place. This macro, future talk is good for trending long term but it sure doesn't help much in the day to day volatility of the market other than to know that the volatility is a result of the above unfolding. So when presented with the question, when will phyical gold rise, TG seems to be saying, once paper gold dies. Whe is that? This year it would seem as that is when he (or she) is predicting that the dollar will be equalled or overtaken by the Euro as the world's oil reserve currency. In progress... as they say.
ORO, do we have this right?
SteveH
(1/4/2001; 5:36:17MT - usagold.com msg#: 45006)
Mozel
www.kitco.com
repost:
Date: Thu Jan 04 2001 03:06
mozel (@Gold and Yer House Mortgage) ID#357270:
Copyright © 2000 mozel/Kitco Inc. All rights reserved
"Regardless of where they are deposited, London, Bahrain,
or Singapore, and regardless of who owns them, Americans or foreigners,
Eurodollars never leave the U.S. This can be illustrated with the following example.
Suppose AT&T draws a check for $5 million on its New York bank, Chase, and deposits it at a London Eurodollar bank. All that has happened is that the ownership of 5 million U.S. dollars has passed from the AT&T to the London bank in return for a Eurodollar time deposit. The balance sheet of the London bank shows a deposit at Chase balanced by a liability, the time deposit credited to AT&T. The balance sheet at Chase shows that it has traded a deposit liability of $5 million from AT&T to the London bank.
Since that money earns no interest at Chase, the London bank will not want to keep it on deposit there. Suppose it uses the funds to make a loan to duPont that banks at Morgan. Chase will show a decrease of $5 million on deposit at the Fed and a decrease in liability of that amount to the London bank. Morgan will gain that deposit at the Fed and an equal liability as a deposit for duPont. The London bank's balance sheet will show a loan of $5 million to duPont balanced by a time deposit owed to AT&T.
Note that throughout both transactions there was no change in banking system reserves at the Fed, and the $5 million remained on deposit at a U.S. bank. A somewhat more involved analysis would show this to be true even if the Eurodollars had been lent to a foreign corporation. Unlike domestic U.S. banks, Eurobanks cannot create credit money in U.S. dollars through the act of lending. Their lending only transfers ownership of deposits at U.S. banks.
For U.S. banks, another important distinction between their domestic and Euro operations is that no reserve requirements and no FDIC premiums are imposed against their Eurodollar deposits. Thus they can invest every Eurodeposit they receive. The Euromarket operates outside the control of any central bank.
Banks accepting Eurodollar deposits use the dollars to make two sorts of investments, loans and interbank placements.
All such placements, like other Eurodeposits, have fixed maturities and
bear interest. The rate at which banks in London offer Eurodollars
in the placement market is referred to as the London interbank offered
rate, LIBOR for short.
The general practice is to price loans at LIBOR plus a spread. On some term loans, the lending rate is fixed for the life of the loan. By far the more usual practice is to price loans on a rollover basis. This means that every three or six months, the loan is priced at the prevailing LIBOR for 3- or 6-month money plus the agreed-upon spread.
Source of Eurodollar Funds
The pool of funds that forms the basis for the Eurodollar market is provided by a wide range of depositors: large corporations ( domestic, foreign, multinational ) , central banks and other government bodies, supranational institutions such as the Bank for International Settlements, and wealthy individuals. Most of the funds come in the form of time deposits with fixed maturities.
The banks also receive a substantial amount of call money. A call account can be a same-day value account, a 2-day notice, or a 7-day notice account. The going rate for call money is pretty much tied to the overnight Euro rate, which in turn is tied by active arbitrage to the U.S. Fed funds rate. The main attraction of a call deposit is liquidity. Time deposits pay more, but a penalty is incurred if such a deposit is withdrawn before maturity. Call money is likely
to average about 10% of a bank's total deposits.
Lender of Last Resort
A question that troubles some in the Euromarket is: Who is to
act as the lender of last resort? This really involves two separate
questions: Who lends if the supply of Eurodollars dries up?
Who lends if the solvency of a major bank in the Euromarket is threatened?
Dollars can't disappear, but they can move from center to center.
It's possible, though very unlikely, that dollars in the Euromarket could
dry up because the holders decided to move their deposits from banks in
Eurocenters to banks in New York. Thus foreign banks could face a
liquidity crisis. To protect against any such risk, many have negotiated standby lines with U.S. banks.
Central banks have discussed at length the question of lender of last
resort to the Euromarket, and have concluded that each looks after its
own. Thus the Fed is the appropriate lender to a U.S. banker whether
its troubles arise from its New York or London operations. Other
central banks are expected to stand behind their own domestic banks both
at home and abroad."
Geez, Adjustable Rate Mortgages are now tied to Libor.
If there is a liquidity crunch in this eurodollar scene, an avalanche of paper gold will result
SteveH
(1/4/2001; 5:21:30MT - usagold.com msg#: 45005)
stuff
You know, yesterday's Fed move was an incredible act. Let's talk:
Fed sees markets (Duck, Dow, S&P) working there way down. They see stats of all sorts, they have a December meeting and decide to leave rates unchanged. Going into the new year, they announce a fifty-basis point drop in short-term rates in the middle of the trading day, which causes the 7th record Dow rise in history with recrod high volume; the Duck has a record high gain of 14% and the highest volume day ever. Some stocks are up 25 plus %. Hmmm.
Today, the futures are all down.
What do you call the act of putting two electronic devices on the chest to restart the heart? Any takers?
Yet, the pundits on the CNBC and CNNs all talk about the DOW and Duck are going to be ahead for the year because their research shows that in the past when these methods were applied, the year ended higher. Everyone was happy, oh so happy.
Doesn't anyone on those shows live in Seattle, where it rains alot? Are they helpless to figure out that they are dealing with a never-before-seen situation that requires thinking way over the curve and not just ahead of it?
Don't you just feel like saying to them, "Come on now, don't you see what is going on? The dollar is in trouble; we have overspent our currency; we have competition now; we must act differently this time; things have changed; don't you get it?"
These pundits are using math and models from what worked before; the Fed is the answer. Well, I guess we are about to find that out. Can the Fed bail us out? They think so.
Frankly, this would appear to be an issue of credibility. AG was under a lot of pressure to lower rates. The press was lambasting him for not doing it in December. Yesterday he fired for maximum affect and the futures are still down this morning. Well, let's wait 30-days and try again and then again and again. Hey, what about the value of the dollar throughout all this? Shouldn't we be watching that too?
To much to think about so early.
SteveH
(1/4/2001; 5:06:20MT - usagold.com msg#: 45004)
Bill Bonner
Interesting reparte'. Seems though, that several essential factors have been ommitted by both parties. I will list them:
-- Gold increases; population increases too;
-- Role of dollar as a reserve currency for world oil supply; Affect Euro will have on same;
-- Was gold demonitized or just taken off the radar screen? Fact is, it is treated as both a commodity and a currency. Don't look at their words, rather their actions;
-- The affect of the "gold-carry" trade and how it would affect the price of gold needs to be seriously considered.
-- The action of the Press anti-gold sentiment campaign orchestrated by bullion banks and others who wish to have one believe gold is demonitized: look at who is buying gold; not selling it;
-- The ESF's role and the Bank of England Gold Auction; and the Suisse gold sale on the price of gold. Also understanding the motivation for these sales. Again, who are the buyers.
-- High grading practices by current miners and its future implications on supply.
-- Lack of exploration currently underway.
-- Understanding paper gold and gold leasing practices and how those are engineered or devised.
Once your friend and you take up the above and incorporate that into your models, only then will we all get a more accurate picture of what is reall going on with gold as money; gold as commodity.
Keep up the discussion.
Black Blade
(1/4/2001; 5:01:11MT - usagold.com msg#: 45003)
PGMs are hot this morning!
Palladium is up +$3.00 at $978.00/oz, and Platinum is up +$20.00 at $634.00/oz. Unfortunately gold and silver are still comatose. Currencies continue to gain against the USD. Market futures are all in negative territory. Could be a reversal of yesterday's fortunes.
Black Blade
(1/4/2001; 4:49:09MT - usagold.com msg#: 45002)
It's time to rethink the rules: the consumer vs. the environmentalist
From Steven King's PetroDispatch
Consumers are about to get an unpleasant surprise in their mailboxes, a fat bill from their natural gas company. This winter, natural gas will cost homeowners who use it about 40% more than last year. In the Midwest, the average family will pay more than $800 this winter to heat the home. And almost everyone will be hit with bigger bills as higher prices for gas, which now supplies a quarter of the nation's energy, work through the economy. That's all thanks to a short-term supply problem. Extraordinarily low prices a few years ago discouraged drilling. That supply cutback is causing today's price spike, and only now is the industry ramping up production.
But an equal part of the problem has been the federal government, who needs to get its regulatory house in order. On the one hand, the government champions the use of natural gas as a cleaner alternative to coal and oil. On the other, it sharply restricts access to enormous supplies out of environmental concerns. If one side or the other doesn't give, consumers will find natural-gas prices on the permanent high side. Compared with other energy sources, natural gas is relatively benign to the environment. It produces half as much greenhouse gas as coal, for example, and almost a third less than oil for the same amount of energy. The result is that almost all new electrical generators are powered by natural gas, roughly 70% of new homes built are heated with it, and city buses and car fleets increasingly run on it.
But while demand for natural gas is expected to climb 45% during the next two decades, getting access to more gas is another story. Roughly 214 trillion cubic feet of gas -- a decade's worth at current consumption rates -- is off limits to drillers. A moratorium forbids drilling off both U.S. coasts. More than half of the identified natural-gas supply is blocked in the Gulf of Mexico. And overlapping regulations from several federal agencies on federal lands in the West make exploration for much of its gas impossible. But still the environmentalists don't seem to care. Carl Pope, executive director of the Sierra Club, believes that reducing consumption is the only answer. "Increasing supply doesn't require drilling our wilderness and destroying the irreplaceable. We can find quick relief by tapping into existing wells now sitting dormant. Many wells were capped when recovering the remaining gas became too expensive. Today's prices give gas companies an incentive to recover the rest."
He still clings to the false rhetoric: "Gas drilling brings problems attendant with oil drilling: fluids and drilling muds pollute the ocean and landscape, and sprawling on-land industrial production complexes destroy fragile wildlife habitats. In addition, natural-gas-drilling accidents threaten people and wipe out wildlife. Drilling for natural gas can release pockets of poisonous hydrogen sulfide, called ''sour gas.'' Across the USA, communities have suffered when sour gas clouds from local wells have leaked into town, burning residents' lungs. The leaks can be lethal to wildlife."
Instead, the public should listen to a recent Energy Department report that stated, "advances in drilling technology in recent years allow gas to be recovered with minimal environmental harm. Horizontal drilling technology, for instance, lets a well dug in one place reach gas supplies miles away. Better detection technology minimizes noise pollution. Rigs are smaller and less intrusive." That same report also urged the federal government to take a more flexible approach to bans and restrictions, and called for greater coordination among regulators.
That's what Canada is trying to do. Its natural resources department says the nation is trying to accommodate multiple uses of sensitive areas, including gas drilling, by getting interested parties together to work out agreeable terms. Already Canada has a natural-gas well just north of Maine, where drilling is strictly forbidden. Ironically, the well supplies gas to New England. So far, however, Canada's prudent approach hasn't caught on here. There has been little talk of opening the oceans to any gas drilling, and little awareness of how environmental rules conflict with the need to boost natural-gas supplies. That could change under a Bush administration. Last week President-elect Bush called boosting natural-gas production a top goal, and officials in his camp have said that means looking at areas currently off limits to drilling.
Black Blade: No Energy - No Economy. Learn to live like the Amish and then barter for trade. Costs for energy are rising and it's only beginning. PMs should be a part of ones investment portfolio because the energy costs will severely impact the economy and PMs will act as portfolio insurance when Cheeta's plans fall apart.
Hi-Hat
(1/4/2001; 3:30:42MT - usagold.com msg#: 45001)
SHIFTY
I pray that if it is going to happen anyway, that the whole
craphouse burns up today, because the whole panorama from Greenspan to debt to fiat to paper gold to energy etc.,etc.
ad nauseam is getting real BORING.
The kind of World we live in is one in which every night
anyone who is alive goes to bed in a diverse menage, with a common theme of: OUR GANG WILL GET YOU.
Black Blade
(1/4/2001; 3:17:15MT - usagold.com msg#: 45000)
Cheer-up! Interesting Snippit from dailyreckoning.com
http://www.dailyreckoning.com/
THE BARBARIC RELIC
"Your gold history lesson reminds me of what I consider to be one of the great open questions in economics," writes Porter Stansberry. "How does Nixon's action - removing the dollar from the gold standard - effect the fundamental monetary conditions you mention in your story?"
Porter's position, shared by many investors, is that gold has been stripped of its monetary role...and left to respond to market forces like any other commodity. Under normal conditions, like other commodities, time and technology should reduce the cost of acquiring gold, increase its abundance and lower its relative price. In times of deflation, the price of gold, along with copper and pampers, should fall sharply. In times of inflation, gold should rise in price.
In the 1930s, the only period of significant deflation since the establishment of the Federal Reserve System early in the century, the price of gold rose. Gold was still money then, according to Porter's view.
But in 1968, the `gold pool' was closed down. A person could no longer trade his paper dollars for gold on the London market. Then, 3 years later, Nixon `closed the gold window' at the Treasury - so foreign governments could no longer trade their dollar surpluses for gold either. Since these two actions, gold has not played an official monetary role.
But to Porter's assertion of fact, that `gold is no longer money' I reply, flippantly:
"Who says?"
To his anticipated response: "The most powerful government on the face of the Earth, the world's only remaining super- power and the custodian of the most successful monetary brand in history..." I retort:
"So what?"
For all his many talents and virtues, it is unlikely that Richard Milhouse Nixon could have achieved what no emperor, dictator, or elected official has been able to do since the beginning of time: eliminate gold as a monetary competitor. Many have tried. But gold, though malleable, is unyielding in its monetary rectitude. An ounce of gold is an ounce of gold. It is neither more nor less than it appears to be.
Paper money is a great aid to politicians. It makes it possible for them, said President Hoover, to confiscate "the savings of the people by manipulation of inflation and deflation."
"We have gold," he added, "because we cannot trust governments."
Have governments become more trustworthy since Herbert Hoover left office and Bill Clinton entered therein? I will leave that to you to decide, dear reader.
Paper currencies are, like so much else that issues from politics, subject to persuasion, ambiguity and financial gerrymandering. As a result, paper currencies are very useful for creating booms and bubbles - they can be readily multiplied and distributed.
"If your view of gold being a safe haven in times of deflation is correct," Porter continues, "then it would stand to reason that gold prices should fall during inflationary periods, right? That's how gold prices have always worked throughout history. See Davidson's work from the August 1997 issue of Strategic Investment. He traced 400 years of gold prices...up to 1970...and found conclusively that gold went up in purchasing power during deflation and down during inflation."
Agreeing that gold has acted as a hedge against deflation from the time of the Flood to the Nixon Administration, Porter brings us up to date: "But the facts since 1971 seem to indicate exactly the opposite. Gold went from $45 to $850 in the 1970s in the midst of an inflationary crisis."
"My view," says Porter, "is that Nixon's action, and the structure of the US economy - an economy based on credit, not gold - turn the historic relationships upside down. Essentially the monetary conditions that we used to call inflation are now deflation."
Let us stop here or we are doomed to wallow in confusion for the rest of this letter. The terms `inflation' or `deflation' refer to the rise and fall in the supply of money. The increase or decrease leads to an corresponding movement in the prices of goods and services. As the money supply inflates, prices rise. When the supply of money decreases, prices fall.
If the supply of gold is inflated - whether you call it money or not - it will have the same consequence...each ounce of gold will buy less of other things. This is what happened when, for example, Spanish explorers began colonizing the new world and sending ships back to Spain laden with gold.
Inflation lowers the value of whatever is inflated: whether it is paper currency or gold. Deflation, on the other hand, diminishes supply and increases value. But is it possible that a decrease in the supply of dollars could produce a counter effect - an increase in the supply of gold? When the supply of dollars declines - a deflation of the money supply - will gold act like money and rise against other goods and services? Or will it act like any other commodity...and fall?
Is gold still money, in other words? Or is it just another commodity? And to those questions, I reply, confidently: Yes. Gold is both.
More to come...
Bill Bonner
SHIFTY
(1/4/2001; 3:11:38MT - usagold.com msg#: 44999)
Trail Guide/FOA
Trail Guide/FOA: I am a small placer miner and own physical gold ( in most all forms) and also un-hedged mining company shares in equal amounts. I have a problem understanding how Gold will have a tremendous value and that this will not also be the case with un-hedged mining companies that produce the very substance that you say will be so valuable.If we hold physical gold in a safe place to be pulled out for use when needed , what makes the gold I hold better than the gold that will be poured into a bar on the same day in the future? Will it not have equal value in whatever is being used as the medium of exchange . I can see where physical may out perform shares ,and I also can see where hedged mines can go bust , but I must be missing something here. Are you saying that mining will be outlawed in the future? Or will it be performed only by a world government of some sort and all the people that own the mines can kiss their wazoo? I hope when time permits that you can shed some light on this for me. I know your time is more presious than gold right now and I pray that things work out for you and your family.
$hifty
Black Blade
(1/4/2001; 1:33:16MT - usagold.com msg#: 44998)
Gold in coma, but currencies flog the US Dollar
http://www.mrci.com/qpnight.htmhttp://www.mrci.com/qpnight.htm
This is interesting, Euro is back up +1.51 at 94.70, and other currencies except the yen are higher against the USD. The USD index is down again at 108.90. Futures are down as well. However, gold is still comatose.
Black Blade
(1/4/2001; 0:48:39MT - usagold.com msg#: 44997)
AngloGold's Godsell may have been kicked upstairs
http://m1.mny.co.za/MGCurve.nsf/Current/8525686A00324CF5422569B3005F5E9B?OpenDocument
A different spin on the appointment of Bobby Godsell as chairman of AngloGold is that he's being kicked upstairs. The official view, however, is that the move is a thumbs up for management's strategy and that current AngloGold chairman, Nicky Oppenheimer, has more onerous duties on the Anglo American board and, for course, as chairman of diamond giant, De Beers. But given AngloGold's poor operational performance of its South African mines this year, it could be argued that Godsell's intellect and strategic nous is best suited to the role of chairman. Other skills that recommend him to the new role is his ability to motivate those around him. The flip-side of this argument is that AngloGold also needs a bred-in-the-bone miner to get the mines straight. Godsell said recently that the company could well appoint an operating officer and one is tempted to think that AngloGold could seek to recruit former director and current Gold Fields MD Ian Cockerill. Cockerill was a kingpin behind AngloGold's impressive productivity improvements in the mid-1990s, and he has since done a sterling job at Gold Fields. Although Cockerill is not the only expert miner, it's difficult for South African miners to find candidates within South Africa. One rising star is Gordon Miller who, at a relatively youthful 36 years old, has an excellent reputation working through the ranks of Western Areas and now Placer Dome South Africa. But Placer Dome have snatched him away for good placing him in strategic development at Placer Dome's head office in Vancouver. It's hard work for South Africans to attract skills. Just ask Impala Platinum who are still on the lookout for a chief executive to replace Steve Kearney who resigned earlier this year. Then there's Harmony Gold's Bernard Swanepoel, but the last time I wrote about Swanepoel being wooed away, a colleague of mine ended up in hot water ... so I won't say anything.
By: Pitcher
Black Blade: It is true that mining companies are usually run by bean counters that don't have a clue about the mining business. It takes experienced miners to run mining companies. Unfortunately, shareholders do not understand this and they tend to demand CEO's with MBA's. That might work with some "ordinary" business, but not with an industry as unique as gold mining. That is a reason so many gold producers went tits up, and many more will also do so. As far as Bernie Swanepoel being wooed away from Harmony – I hope not. Though I am intrigued about what would happen to Anglos hedging policy if it were to happen.
Black Blade
(1/4/2001; 0:37:41MT - usagold.com msg#: 44996)
Snippits -
NY Precious Metals Review: Feb gold trims loss after 1-mo low London--Jan. 3--COMEX Feb gold futures managed to trim some of their losses, ending down only 70 cents at $269.30 per ounce after initially extending Tuesday's fall and slipping to a one-month low of $267.60. Like Tuesday's session, Wednesday's trading proved to be another puzzle, as gold price moves appeared to defy the usual market logic.
Black Blade: No Kidding!
Fed cuts interest rates 50 basis points in surprise move Washington--Jan. 3--In a surprise move Wednesday, the Federal Reserve cut interest rates by a dramatic 50 basis points amid mounting fears that the slowdown in the U.S. economy may turn into a recession.
Black Blade: Desperation! Hard landing is in the cards as desperate moves such as this are geared to suck the last few pennies out of investors’ pockets as they throw themselves headlong into another "suckers rally." All that cash will go to "Money Heaven."
US DLA offered 2,709.338 oz palladium on Wednesday New York--Jan. 3--The U.S. Defense Logistics Agency offered a total of 2,709.338 troy ounces of palladium from its Web site Wednesday. No material was sold Tuesday.
Black Blade: A spit in the ocean.
Europe Precious Metals Review: Gold capped at $270, palladium up London--Jan. 3--Spot gold remained capped at U.S. $270 per ounce through the European morning's trade after Tuesday's losses, maintaining a sideways path between $268 and $269. Overnight it had reached a high of $269.80 on Australian dollar strength. Silver was weaker, reflecting gold's stance. Palladium was stronger as the market continues to wait for news on Russian deliveries, while platinum was flat.
Black Blade: No deliveries of Pd are coming out of Russia!
Black Blade
(1/4/2001; 0:27:22MT - usagold.com msg#: 44995)
Peoples Republik of Kalifornia on Verge of Power Collapse (The Trials and Tribulations of a Third World Socialist Republik)
--Calif. PUC order proposes 1c/kWh SoCal Edison, PG&E rate hike
--Calif. PUC proposed power charge to be based on usage
--Calif. PUC power rate hike seen as temporary measure
--Calif. PUC power rate hike in effect for next 90 days
--Calif. PUC draft order proposes 9% residential rate hike
--Calif. PUC order proposes 7% rate hike for small businesses
--Calif. PUC order proposes 12% rate hike for medium commercial users
--CPUC order proposes 15% rate hike for large commercial users
--CPUC order proposes 15% rate hike for industrial users
--CPUC rate order does not end PG&E, Edison rate freeze
By Christine Cordner, BridgeNews
San Francisco--Jan. 3--The California Public Utilities Commission released this afternoon a draft order that would allow Southern California Edison and Pacific Gas & Electric to raise electric rates for the next 90 days by 7% to 15%, less than the state's two biggest utilities had sought. The commission will vote on the order Thursday after hearing final arguments later today. The increases amount to a hike of 1 cent per kilowatt hour based on usage for retail customers. In a statement, the CPUC said the order would grant temporary increases pending a detailed investigation of utilities' finances and market conditions, a review which could result in customer refunds. The order would raise retail rates by about 9% for residential customers, 7% for small business customers, 12% for medium commercial users and 15% for both large commercial and industrial customers. The raises are far below the 26% and 30% rate increases sought by Pacific Gas and Electric and Southern California Edison, respectively. Shares of both utilities dropped sharply after the news. At 1454 ET, Edison International shares were down 1 5/8, or 10.83%, to 13 3/8. PG&E Corp. shares were down 1 7/16, or 7.35%, at 18 1/8.
The utilities said they will respond to the draft order at the hearing. The commission said it intends to continue its investigation and would limit the rate increase to 90 days, "pending further hearings." The CPUC said part of that investigation will be the utilities' audits. Pacific Gas and Electric and Edison claim to have incurred more than $8 billion in wholesale electricity costs above the income they receive from their customers. The commission said it has hired independent auditors "to verify the veracity of these and other claims related to the utilities' financial health" and is using the 90 days to "perform a comprehensive review," including the utilities, their holding companies and their affiliates.
Black Blade: Well the other shoe dropped as the Utes said that this is not good enough, and unless they get relief from government action, then they will begin power rationing and begin bankruptcy proceedings. Just imagine, Kalifornian housewives not having access to their soap operas, and hubbies with access to their porn-on-line. Horrors! They knew this day was coming, so have no pity for them. "And the Grasshoppers danced, sang, and played all summer…"
Black Blade
(1/4/2001; 0:16:50MT - usagold.com msg#: 44994)
Natural Gas Lower Despite Record Low Storage
By Gloria Gonzalez, BridgeNews
New York--Jan. 3--NYMEX Feb Henry Hub natural gas futures ended down 14.4 cents at $8.220 per Mbtu amid forecasts for warmer weather in the key consuming regions. This is despite a larger-than-expected withdrawal in the latest American Gas Association storage report. The American Gas Association reported U.S. gas storage at 1,729 bcf for the week ended Dec. 29, down 209 from the previous week, and down 708 from the same period of 1999. Observers said the number was bullish because it was larger than both the 1999 draw of 133 bcf and the five-year average draw of 135 bcf, but that the data was overshadowed by forecasts predicting warmer temperatures in the key consuming regions. If these forecasts hold true, then the next few draws on storage are expected to be well below this week's withdrawal. "They've been screaming about supply, but the shortage is in the market," said Guy Gleichmann, senior trader at FSG International. "This number was significant, yet the weather is weak." The AGA data appears to have taken a back seat, at least temporarily, to the weather forecasts, which continue to predict warming temperatures in the Midwest and Northeast and a decline in industrial demand caused by high natural gas prices. Gleichmann added, however, that the natural gas shortage remains a serious problem with supplies about 29% below year-ago levels. "Fundamentally, the supply shortage is nothing to sneeze at," he said, adding, "1,729 is real critical because of what lies ahead."
Black Blade: NG Storage Levels are falling fast and winter is far from over. We might dodge a bullet, but then again who knows. There aren't any more spare drill rigs, not enough engineers and geologists and drill rig crews anyway, so an energy crisis is a foregone conclusion. If not this year – certainly next year. The NG producers, power plant operators, and politicians are all asleep at the wheel as we go barreling over the cliff.
Black Blade
(1/4/2001; 0:15:47MT - usagold.com msg#: 44993)
Oil Demand Decreasing, and Inventories Rising! (at least until revised next week)
--NY Feb crude down 25c on unexpected stockpile increase
--API: US crude stocks up 64,000 barrels in latest week
--API: US distillate stocks up 3.517 mln barrels in latest week
--API: US gasoline stocks down 2.677 mln barrels in latest week
--API: US refineries operate at 93.0% in latest wk vs 93.4%
--APIs imply US distillate demand 3.73 mln bpd vs 4.35 mln
--APIs imply US gasoline demand 8.62 mln bpd vs 8.58 mln
By Peter Rosenthal and John Troland, BridgeNews
New York--Jan. 3--The American Petroleum Institute (API) reported Wednesday unexpected increases in crude oil and distillate inventories, sending crude and heating oil prices lower in electronic trading. Crude stocks increased 64,000 barrels per day and distillates supply grew 3.5 million barrels, despite cold weather in the Northeast, the biggest heating oil market. Gasoline inventories decreased 2.677 million barrels, while refinery operations were slightly lower at 93% of capacity, a 4-basis-point decrease from the prior week. At 1721 ET, NYMEX Feb WTI crude was down 18 cents at $27.82 a barrel. Feb heating oil was down 183 points at 84.15 cents a gallon and Feb gasoline dipped 20 points to 80.80 cents a gallon. The data, for the week ended Friday, were delayed 24 hours by the New Year's Day holiday. The U.S. Department of Energy will release its weekly inventory data on Thursday after 0900 ET. Crude inventories had been expected to decline by 2.7 million barrels, while stocks of distillate fuel, which include heating oil and gasoline, were seen declining as much as 2.5 million barrels, according to brokersand analysts estimates.
CRUDE: Up 64,000 barrels
The rise in crude stockpiles is attributed to a 417,000 barrels-per-day increase in imports and a slight 71,000-bpd dip in refinery runs. However, based on those figures, the data indicates that crude inventories should have risen more than 3.1 million barrels, a broker said. Imports rose to 9.184 million bpd, from 8.767 million bpd the previous week. The largest rise in crude inventories was on the Gulf Coast and is consistent with the increase in imports. Stockpiles rose by 2.2 million-barrels in the region. Crude stocks also rose by 121,000 barrels on the East Coast.
In the Midwest, which includes the NYMEX delivery point for light, sweet crude oil futures at Cushing, Okla., crude stocks fell 1.863 million barrels barrels, helping to widen the year-to-year deficit there to 5.1 million barrels, from 2.8 million barrels the prior week. The strong drop in stockpiles caused one broker to suggest that the Feb/Mar WTI spread could widen 20-30c per barrel from its present level of a 73c premium in favor of February. Crude stocks also fell 723,000 barrels on the generally unrepresentative West Coast region as refinery operations there increased
2.1 basis points. The overall rise in crude inventories caused the year-to-year deficit in total stocks to narrow to 4.1 million barrels last week, from 4.9 million barrels in the previous week.
GASOLINE: Down 2.677 million barrels
A decrease in East Coast stocks was complemented by another large draw at the Gulf Coast, the largest refining center. Production dipped but was offset by higher import levels. Domestic gasoline output fell to 7.82 million barrels per day from 8.0 million bpd a week earlier, while imports dropped increased to 420,000 bpd from 174,000 bpd. Demand was steady above 8.5 million bpd. The drawdown narrowed the surplus to year-ago inventory levels at 3.25 million barrels from 5.2 million a week ago. Reformulated gasoline inventories on the East Coast, the basis for the NYMEX futures contract, rose 78,000 barrels and but are now only 3.4 million barrels above year-ago levels, versus a 5.1-million-barrel premium the previous week.
DISTILLATES: Up 3.517 million barrels
Demand for distillate fuels saw a major drop of 620,000-bpd from the previous week's 4.35 million- bpd level. This coupled with a 287,000-bpd increase in imports, to 514,000-bpd is the major reason distillate fuel inventories rose, one trader said. The largest increase in distillate stockpiles, 1.925 million barrels, came on the East Coast, the largest user of heating oil. However, while total distillate fuels increased on the East Coast, high sulfur distillate, or heating oil, actually declined by 458,000 barrels. Increases of 799,000 barrels, 148,000 barrels and 762,000 barrels were also recorded in the Midwest, Rocky Mountains, and the West Coast, respectively. The East Coast build helped narrow the year-to-year deficit to 7.3 million barrels from the previous week's 11.0-million-barrel level. The only drop in distillate inventories was on the Gulf Coast, where they fell only 117,000-barrels. Overall distillate fuel inventories are now just 6.1 million barrels
below the previous year's level of 124,255 million-barrels.
REFINERIES: Down 0.4 basis points
Overall refinery rates dipped slightly, although all regions outside the West Coast saw a decrease. Midwest rates dipped 2.4-basis points as Farmland Industries shut several units at its Coffeyville, Kansas plant for unplanned work on Dec. 23. Valero shut 88,000 bpd of capacity at its Texas City plant, which may have depressed rates in that region.
Black Blade: As the previous post would indicate, it is no wonder that OPEC wishes to tighten production.
Black Blade
(1/4/2001; 0:14:38MT - usagold.com msg#: 44992)
Saudis push for OPEC cut
By David Buchan and Ruth Sullivan in London
Published: January 2 2001 20:40GMT | Last Updated: January 2 2001 22:57GMT
Saudi Arabia, OPEC's leading producer, on Tuesday called for a big cut in the cartel's oil production this month, but the move produced only a brief rally in the oil price. The call for a cut of 1.5m barrels a day appeared to convince the oil markets that OPEC will reduce production quotas when it meets in Vienna on January 17, but that this would not necessarily halt a slide in the price from last October's peak of $35. After a weekend meeting of the Gulf Cooperation Council, which also includes OPEC members Kuwait, the United Arab Emirates and Qatar, a Saudi official told the Reuters news agency that GCC leaders had told their ministers "to do whatever is needed to achieve the targeted price of $25 for the OPEC basket". To achieve this, a cut of 1.5m barrels per day would be needed, the official said.
The size of the proposed cut took some traders by surprise. "It is a dramatic proposal, as we had been expecting calls for cuts of 1m barrels a day," said Peter Gignoux, a trader at Salomon Smith Barney. However, the Saudi call failed to shake market belief that world oil supplies are adequate or even excessive. Brent February futures on London's International Petroleum Exchange rose 98 cents to $24.90 in mid-afternoon trading before falling back to $24.46. On the New York Mercantile Exchange oil futures jumped 54 cents to $27.34 in morning trading before falling back to $26.87 at midday. Other members of the 11-nation OPEC cartel, including Iran, Venezuela and Libya, have already stressed the need for production cuts to pre-empt the seasonal decline in oil consumption next spring, making agreement on cuts this month highly likely. The US has increased pressure on Saudi Arabia to maintain oil output, but Washington's leverage will be weakened by the imminent change of administration. The Saudi official's reference to a target of $25 for the OPEC basket implies a higher price for the Brent benchmark crude. The OPEC basket, composed of the crude oils of the cartel's producers, traditionally sells at a quality discount to Brent. It traded all last week at under $22 per barrel. A cut of 1.5m barrels a day would reduce production for the 10 OPEC members with quotas by around 5 per cent to just over 25m barrels a day. Iraq is not covered by OPEC quotas, because it is restricted by United Nations sanctions.
Black Blade: Hydro-Carbon Man is about to find a bit of a supply problem now that OPEC is poised to take control of falling prices and slowing demand. Higher prices will have to be passed along in the current environment, but unlike the inflationary magic of the "disappearing ounces" of grocery items that were exposed in the media over the last couple of days, the petroleum and NG dealers can't get away with lighter gallons, liters, and cubic feet.
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