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Welcome to the USAGOLD Gold Discussion Archives. The archives of this gold discussion forum are a treasure trove of information to educate investors about protecting their wealth through portfolio diversification with private gold ownership. The discussion forum also covers the wider issues of the past, present, and future role of gold in international monetary policy and the dynamics of the modern gold markets...   (Discussion Forum Hall of Fame) (The Gold Trail) ("Thoughts!" by ANOTHER)   The opinions posted by all guests are expressly their own and do not necessarily represent the views of the management or staff of USAGOLD - Centennial Precious Metals. The hosting of the public discussion shall therefore not be construed as an endorsement by USAGOLD - Centennial Precious Metals of any of the opinions posted here.

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ARCHIVED DISCUSSION FROM 1/4/2002
All times are U.S. Mountain Time

(Yesterday's Discussion.)

Black Blade (1/4/02; 23:53:25MT - usagold.com msg#: 67717)
Waverider - Nationalization in Zim

The situation in Zim has many in SA concerned, especially those in the SA government. Since the mines are the major employers in SA are the mines and any nationalization of the mines would disrupt SA society. This is the last thing that the SA people (black, colored or white) want. Besides the whites, coloreds, Zulus, and even many Shonas would unite to bring down the government if they tried anything remotely similar to what is happening in Zim. Also there are a lot of powerful weapons stashed away and accessable. So there is a fairly decent political division among the populace. No one (white, colored, or black) wishes a return to Apartheid.

On the other hand, the dictator of Zim (formerly Rhodesia) Robert Mugabe is old, senile and certifiably insane - he knows that he could not win a fair election. That is why he uses his goons to terrorize the population. The leader of the occupiers even named himself "Hitler". Mugabe has openly supported the squatters (they call themselve "veterans") on the white farms. The situation is near critical as most crops will not be harvested and brought to market. There is a famine and a growing fuel shortage developing in Zim as well as a few mine closures. In spite of all this SA is rather stable. Sure crime is high and AIDs is rampant but Mbeki, the SA government, and the people do not want the same problems in SA as in Zim.

It should also be noted that the SA mines have and are diversifying outside of SA. I would also suggest that investment in mega-hedgers like AngloGold and Barrick is more risky than investment in SA Gold mines. That said, no investment is a sure thing. Cheers!

- Black Blade


Waverider (1/4/02; 23:38:16MT - usagold.com msg#: 67716)
Zimbabwe Opposition Warns over Violence
http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT314DEH2WC&live=true&tagid=ZZZINS5VA0C&reutr=1&subheading=middle%20east%20and%20africa
Timely Snippit:
"Zimbabwe's main opposition leader has accused President Robert Mugabe's ruling ZANU-PF party of driving the country towards a civil war by deploying "shock troops" to lead a violent re-election campaign. Tsvangirai, who poses the biggest challenge to Mugabe since the 77-year-old former guerrilla leader came to power in 1980, said four MDC members had been killed by "ZANU-PF shock troops" in the last 10 days. The Zimbabwean leader has said his re-election effort will be run like a military campaign -- which critics say shows the party will be stepping up political violence."





Waverider (1/4/02; 22:37:18MT - usagold.com msg#: 67715)
Nationalization
Aside from nationalization being identified on a few occasions as a risk of holding South African mining shares, I've found that very little has actually been discussed about it (yet it seems many here have SA investments). Horatio posted a word of caution on Nov. 23, 2001 (65789)in relation to the political instability in Zimbabwe and the nationalization there of the white farms under the nation's land reform laws. Since then I have kept a close watch on the South African "Business Day" website to keep abreast of further political developments. What I've learned is that there is extreme instability in Zimbabwe - there is a national election in March and Mugabe's political opponents have either "disappeared" or been unjustly arrested. Inflation is running at 100% in Zimbabwe, and the fifth white judge has just resigned from the their High Court. One article that caught my attention pointed out the fact that South African's Mbeki didn't speak out against the nationalization of white farms, and this was interpreted as a sign of political support for Mugabe. Last week I posted an article indicating that taxes on commercial fishing catch in SA are due to increase 275% over the next few years. Tonight I had dinner with a friend who grew up in South Africa and whose parents are still there. Her take is that there is a very real risk of nationalization of the mines and were that to happen, there would be *no* forewarning. Should Mugabe win the election in Zimbabwe, the economic chaos there will worsen and continue to spill over to SA, and should he not, then there'll likely be civil war which will also effect SA stability.

I only get the news on SA that I can glean from the internet, but I see alot of "red flags" here. I am most interested in other's opinions. As we've learned from Argentina, one day you can own it, the next day it belongs to the government. Can anyone provide me with sound argument on why Mbeki would *not* nationalize the mines, with/without a significant movement in the POG? All thoughts, opinions, and a cold beer welcome!
Cheers,
Waverider

SteveH (1/4/02; 22:14:33MT - usagold.com msg#: 67714)
Another thing
Gold (and silver) became a dollar enemy a few years ago. At that time, rising commodity prices and a rising market and dollar could not exist in the same universe. This is an abnormal situation, I believe, because each time this has happened the event reversed itself.

I believe much of the discussion here revolves around gold as a solution. Perhaps it is, but I believe that it isn't necesarily a solution, rather, it is a symbol of rightness. What does that mean?

I mean that gold trading along with the dollar and markets and rising should be a right thing. They should all be able to exist in the same financial universe. That they don't is what is not right. Getting gold to trade properly (freely) is what is a rightness. That it will be caused by a financial crisis of some order of magnitude beyond our control, shouldn't excite us or render us goldbugs, rather it should remind us that we elect (or should) those that manage our money and we should have done a better job.

So, the next time you go to the voting polls, ask yourself, what kind of political party system allowed gold to be relegated to an evil asset that could be sold at auctions as a non-performing inventory asset of Central Banks? Who hired the Harvard MBA's who learned about Spreadsheets but forgot about sound economic theory? Who are these people and do they represent and have they represented our best interests? And vote accordingly.

I know I will.

ps. Remember that gold is not the solution, it is a gauge or reflection of the problems we are and will face. There is no rightness in igoring sound economic theory that got the USA up through the 1971.



Black Blade (1/4/02; 22:01:47MT - usagold.com msg#: 67713)
Saudi royal family 'in complete panic' during December riots
http://www.worldtribune.com/worldtribune/breaking_2.html

Snippit:

ABU DHABI - Saudi Arabia is downplaying reports of widespead rioting last month but diplomatic sources said the nation was rocked by the worst Islamic unrest in years. The Saudi government as well as Western diplomatic sources have confirmed reports of massive riots by fundamentalists who attacked foreigners and Saudi families. The fundamentalists destroyed property and even voiced calls against the regime for what they asserted was its refusal to abide by Islamic principles. A diplomatic source said the riot in Jedda was assessed to have been aimed directly at the regime. Several leading members of the royal family were in the port city during the Muslim holiday when several thousand fundamentalists took to the street. "The riot was organized and came within one step of being an actual attack on the royal family," the source said. "The family was in complete panic."

Black Blade: If true then this disturbing situation is dire for the Global Economy. Without Saudi, Russia, or Venezuela we have NO economy. The WTC attack is nothing compared to the loss of Saudi oil. If Islamic fundamentalists topple the Saudi Royals - then the western economies are toast. Absolutely no doubt about it! A good read.


SteveH (1/4/02; 21:52:15MT - usagold.com msg#: 67712)
Fascinated
For some reason I am fascinated by CNBC's morning show and particularly two of its main characters: Ludlow and the loud mouth (no disrespect intended). What fascinates me is that their loud and vexacious spirits seem to have propelled them to their own evening show, where you get even more of the same.

These two fellows are all wrapped up in themselves. They believe the recovery is just around the corner, are excited about the recent gains in the stock markets, and lay a line of economic drivel to support their claims.

What fascinates me about this duet is their insistence of 1) a recovery and their 2) virtual disregard of the main subject matter of this website. They spin economic theory that ignores the third leg of the triad of investments. Correct me if I am wrong, but there is stock, bonds, and commodities, isn't there (with subsets of other things here and there)?

There whole spin doctoring theories rely only upon the first two legs, while insisting that the third leg has lost signficance because the price is at a 20-year low during times that if it hasn't broken out now, it never will.

Well, I have got a theory: you can't cartwheel on just two legs and no hands. If you ignore the hands, you land on your head and break something. Well folks, something is broke, and they just ignore it. Makes for good entertainment though. And it makes one wonder, who the heck found these guys anyway?

Now, what was it that Anonymous said? "Avoid the loud and vexacious for they are bad for the spirit...???

darkhorse (1/4/02; 21:45:05MT - usagold.com msg#: 67711)
something to consider...
http://www.businessweek.com/bwdaily/dnflash/jan2002/nf2002014_2151.htm
Provided just as a balance to other perspectives...

Black Blade (1/4/02; 21:38:56MT - usagold.com msg#: 67710)
AT&T to Cut 5,000 More Jobs
http://dailynews.yahoo.com/h/ap/20020104/tc/at_t_restructuring_2.html

Snippit:

NEW YORK (AP) - Long-distance carrier AT&T Corp. announced Friday it will cut another 5,000 jobs and take a related $1 billion fourth-quarter restructuring charge to cover the cost of those staff cuts as well as 5,100 others that were already planned.

Black Blade: The "Bone Pile" grows as more phone "Bones" are cast aside and discarded. Not a good sign for a supposed "recovering economy."


Black Blade (1/4/02; 20:43:48MT - usagold.com msg#: 67709)
MarkeTalk - Silver

Good reading. The question that I have is how much of that 105 million oz. in the COMEX warehouse is registered and how much is readily available for leasing? It would not surprise me if Warren Buffett is a bit nervous about the security of his investment under the current environment of high lease rates, supposed silver supply tightness, and the Enron silver position.

Just a couple of days ago the LBMA made a curious statement about extending delivery dates and then quickly reversed its decision. Several primary Silver mines and base metal mines with by-product Silver have closed or reduced production over the last several months. Now the US Mint must go onto the open market to purchase Silver for its Silver Eagle and commemorative issues (if that will continue or not). Strange happenings in the Silver markets. Cheers!

- Black Blade

Pizz (1/4/02; 20:13:24MT - usagold.com msg#: 67708)
Now all I have to do is learn HOW to post
Sorry for the double. XP has done some strange thinks to my computer lately.

Pizz (1/4/02; 20:10:00MT - usagold.com msg#: 67707)
Horatio
At no other time in the history of mankind has there been so much information IMMEDIATELY available for investors to make "informed" decisions regarding either the purchase or sale of financial assets and liabilities.

At no other time in history has there been so many world-wide investment "choices" executed at the speed of light, for as many diversified reasons as there are diversified individiuals making these "choices".

My perspective is from accounting, control, and management. Others base decisions from economics, statistics, industry fundamentals, public service, education, etc. It's not who's right or wrong or who agrees or disagrees. It's how we, as individuals, use the knowledge, experience, opinions, and advice of others to increase our collective wisdom and further our own specific goals - whatever they may be.

Thank-you for your contribution regarding your perspective for the reasoning behind producer hedging. Do I agree for the reasons you state? Not entirely. (I'll post a view from MY PERSPECTIVE later this weekend.) What your post did do for ME was make me start thinking about nationalization, the INTERNATIONAL mining merger rush, deep-vault gold on the US balance sheet, and that it could be just possible that the mergers may be in part due to fear of nationalization. I believe, like a few others, that the US may just have a "gold-gap" that will have to be filled.

One thing I do know, I'll be more knowledgeable and a bit wiser by Sunday. It's the synergy of a group that makes the group more successful than any one participant. Again, thank you.

Pizz

Pizz (1/4/02; 20:09:10MT - usagold.com msg#: 67706)
Horatio
At no other time in the history of mankind has there been so much information IMMEDIATELY available for investors to make "informed" decisions regarding either the purchase or sale of financial assets and liabilities.

At no other time in history has there been so many world-wide investment "choices" executed at the speed of light, for as many diversified reasons as there are diversified individiuals making these "choices".

My perspective is from accounting, control, and management. Others base decisions from economics, statistics, industry fundamentals, public service, education, etc. It's not who's right or wrong or who agrees or disagrees. It's how we, as individuals, use the knowledge, experience, opinions, and advice of others to increase our collective wisdom and further our own specific goals - whatever they may be.

Thank-you for your contribution regarding your perspective for the reasoning behind producer hedging. Do I agree for the reasons you state? Not entirely. (I'll post a view from MY PERSPECTIVE later this weekend.) What your post did do for ME was make me start thinking about nationalization, the INTERNATIONAL mining merger rush, deep-vault gold on the US balance sheet, and that it could be just possible that the mergers may be in part due to fear of nationalization. I believe, like a few others, that the US may just have a "gold-gap" that will have to be filled.

One thing I do know, I'll be more knowledgeable and a bit wiser by Sunday. It's the synergy of a group that makes the group more successful than any one participant. Again, thank you.

Pizz

MarkeTalk (1/4/02; 19:59:58MT - usagold.com msg#: 67705)
Update on silver
It has been some time since my last post, partly because of the holidays and partly because I am on the phone constantly with clients of Centennial. While I don't post as often as I would like, I do try and read as much as possible. So here are my latest thoughts.

As my clients already know, in the past I did not think silver had as much upside potential as gold, Ted Butler notwithstanding. You know, I was cleaning out some papers in my office recently and I came across a Ted Butler article dated in 1998. He was saying the same thing ($50 to $100 silver) back then as he is now. You know what they say about a broken clock. Well, anyway, my attitude towards silver has changed and I find myself in the bull camp on silver, even if just for a short time. Here is why.

Silver has been driven down by short sellers as well as a fall off in industrial demand due to the recession. We at Centennial could not figure out who would be selling short at such low prices ($4.50 and lower) until the bankruptcy of Enron occurred. Then all the dirty laundry came to light. Apparently, Enron used Rudolf Wolff as its commodities broker to clear its trades. And so did Warren Buffet. And good old Warren deposited his physical silver with Rudolf Wolff and Enron helped themselves to it through the leasing program. Everything was going along just fine until Enron went bust.

The story out on the street (which has been mentioned on this site before) is that Warren Buffet now wants his silver back--approximately 50 million ounces of his 130 million ounces total. The problem is that Enron sold it into the market and now it is gone. Normally, that would be the end of the story because bankruptcy discharges all obligations. But in silver and gold leasing deals, a third-party guarantor is required just in case things go sour. That third-party guarantor is one of the major bullion banks. (Take your pick from Goldman Sachs, Deutsche Bank, JP Morgan Chase, et al. Nobody knows for sure because nobody is talking.)

My "deep throat" source who tipped me off back in November has been 100% correct so far. As the silver price broke above the downtrend line at $4.24, an acceleration occurred up to around $4.50. Then a minor selloff back to $4.30 before its recent advance to $4.72 (London spot). Yesterday's and today's action moved silver right up to and slightly above the 200-day moving average at $4.66. Comex March futures are at $4.65 which is a 7 cent discount to spot. So depending on whether we use spot or March futures, as far as this indicator goes, the jury is still out. It is entirely possible for a sharp selloff to occur from this level. It is my personal belief that silver will punch through the 200-day moving average before it falls back towards $4.50. (Today's low in Comex March futures was $4.52 early in the session). And here is the real kicker.

Silver trades in both London and New York. The upward pressure is now occurring in the London spot market, most probably because that is where Warren Buffet had delivered his silver initially way back in 1998. You all remember the story of "someone" draining the Comex warehouse of silver and then shipping it to London. It took a lawsuit by "injured" parties against Phibro Salomon before Warren Buffet emerged from the shadows as the client. And I presume that the leasing arrangement took place in London as well. This makes sense to require the borrowers of Buffet's silver to return it to London, not New York. And here is where it gets interesting.

I have been tracking the Comex warehouse silver stocks since the third week of December where they stood at roughly 103 million ounces. Silver lease rates in the meantime have fluctuated between 7% (bid) on the low side and 29% (ask) on the high side. As the price of silver has risen in both New York and London, so have the New York Comex warehouse stocks. This increase is most likely attributed to the high lease rates. Where else can you earn 20% on your money (silver) annually? As a result, there are now 2 million more ounces of silver in the Comex warehouse (approx. 105 million ounces) than just two weeks ago on December 20, 2001. Normally, more supply drives down prices and not the reverse. How could this happen?

The answer lies in the fact that the silver on this side of the Atlantic Ocean does not meet the specifications for delivery in London. So it is not simply a case of loading a bunch of silver bars onto an airplane and flying it to London. The bars must first be refined and then delivered. In the meantime, there is an appearance of a glut of silver in the U.S. which could be drawn down to meet demand. I am sure that the "monied interests" on Wall Street who are short silver up the wazoo are very happy to see rising silver warehouse stockpiles. Furthermore, I am sure these same people want every silver speculator to sweat it out and have sleepless nights, fearful that the spot price could crash without notice.

Bottom line here is: until sufficient supplies of deliverable silver arrive in London, we will see the spot price trade about 7 to 10 cents above March futures. For a change, we will see the spot physical market leading the futures market, i.e. the dog wagging its tail and not the tail wagging the dog. Also I think silver will breach the 200-day moving average and go higher. Technically, the weekly trend has turned up and silver just completed a 114/115 week cycle low in mid-December. Thirdly, when (not if) events in Argentina spin totally out of control, both gold and silver will jump dramatically. I expect this to happen in January, maybe next week. Please read related articles posted on this site earlier today about Argentina's defaulted debt doubling to around $270 billion. ( I bet the banksters did not count on this happening.)

Now add to the foregoing points the introduction of the Euro as a real trading currency on Tuesday; the burgeoning M3 money supply (over $1 trillion increase last year); the rising consumer and government debt with the need to raise the federal debt ceiling another $750 billion (so say the Republicans); the lowest interest rates in almost 40 years; political and military confrontations (India v. Pakistan, Israel v. Arab world) around the globe which could lead to a major war at any time; now we have the real makings of a bull market in gold and silver to be accompanied by a collapse in the U.S. Dollar. I seriously doubt that foreigners (and especially the Arab oil interests) will want to hold Dollars exclusively especially when we are now running huge deficits and there is an alternative (the Euro) which is partially backed by gold. I consider the arrival of a real physical Euro to be the final piece in the puzzle. In short, all of these events coming together at this time is truly prodigious and it augers well for gold and silver in 2002 and beyond.

For those clients of mine who want to add to their holdings, now is the time to act. For those prospective clients who want to get started, now is a good time as well. Just give me a phone call at extension 102.

GC

EagleOne (1/4/02; 19:54:56MT - usagold.com msg#: 67704)
LimitUp Msg #67701
Why not? Count me in. I will even be happy to suggest a 7 point strategy to create and promote a "self directed" 24(K) Precious Metals Savings Plan to get things started, if no one else is willing to step forward.

TownCrier (1/4/02; 19:36:19MT - usagold.com msg#: 67703)
If you think you know enough "ins and outs" of your domestic system to step lively during crisis, then think again
http://biz.yahoo.com/rf/020104/n04266332_1.html
The rules of the game will likely change, thus limiting your options or trapping you to the common fate of the population.

Argentina continues to serve as an example of changes in rules in financial affairs, including new government impositions on imports, exports and the disposition of natural resources. Where you see in this article that taxes are imposed on oil and gas exports, you can easily imagine heavy taxes applying to the new production from mines, too. In such an event, what would that do to the bottom-line profitability of your mining investments through which you sought to leverage yourself to a rising price of the metal?

To be sure, the trend these days is to remove the tax impediments to private gold ownership, while at the same time retaining authority to tax corporations or to selectively set other controls as deemed to be in the natioinal interest in times of economic/currency crisis.

From the article:

--------BUENOS AIRES, Argentina, Jan 4 (Reuters) - Argentina's new government sent a bill to Congress Friday seeking powers to reform the foreign exchange and banking systems -- to pave the way for devaluation and a dual exchange rate.

[some of] the main points of the bill:

- Special powers requested for executive to reorganize financial, banking and foreign exchange system.

- Public emergency declared on economic, financial and exchange matters.

- Authority requested to regulate the prices of goods and services to protect consumers from possible price distortion ``or monopolistic acts.''

- Private contracts in dollars to be converted to pesos...

- Temporary tax on oil and gas exports to compensate banks for loss implied in ensuring value of deposits and converting dollar debts to pesos.-------------


If you have become rightfully concerned with your ability to "play the game" to your own advantage, you are hereby encouraged to learn all you can about stacking the deck in your favor to the extent possible. For that, this page has been provided for your additional enlightenment and full consideration: (copy the URL into your browser's address window)

http://www.usagold.com/cpm/Hoppe.html

Good luck!

R.

The Invisible Hand (1/4/02; 19:33:17MT - usagold.com msg#: 67702)
The golden winter of 2002

Apparently, the Bush administration has links with Enron. The Securities & Exchange Commission and the US Justice Department are therefore examining what may be America's worst financial scandal, writes this Saturday's London Telegraph.
http://www.portal.telegraph.co.uk/money/main.jhtml?xml=/money/2002/01/04/cnbush04.xml&sSheet=/money/2002/01/04/ixcity.html

Belgian wrote to me recently on the Forum (and I'm paraphrasing because quoting from memory) that when the dinosaurs will change their view on gold, the FT's Barry Riley will inform us of this. Well, Barry Riley is quitting. He's writing his final column in Saturday's FT.

Interesting for goldbugs is however that he writes that the longest recent history which professional investors take into account covers 20 years (and, adds The Invisible Hand, that in those 20 years, gold has been languishing).

Two snippets (which don't do justice to the entire column):

This is fundamentally a post-bubble crisis. Bubbles are generated by excessive growth of debt, and they typically blow up in the stock and real estate markets. While they are inflating they create apparently free wealth and great political windfalls, usually credited at the time to an economic miracle, and never to financial recklessness. When they collapse, though, they destroy consumer confidence, sharply raise the cost of capital for companies, and expose banks and bond investors to substantial bad debt risks.
+
Recently I have been gloomier about the prospects for markets and investors than I would have liked, but as I wrote two years ago in the millennium issue: "The late 1990s technology bubble has represented one of the great manias of stock market history, and it will end like all the others".
http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT38J2B82WC&live=true&tagid=FTDZ14FSNUC

Belgium's De Standaard newspaper is reporting this Saturday morning that although the Belgian Money Laundering Act forces banks to ask for identification to a customer who wants to change euro 10,000 of Belgian francs into euros, banks are even asking for identification for transactions below the threshold of euro 5,000 set by the Belgian Securities & Exchange Commission for the euro conversion.
http://www.standaard.be/nieuws/economie/index.asp?articleID=DST05012002_077&Doctype=detail.asp

Euroland inhabitants still have two months to convert their black money to gold.

LimitUp (1/4/02; 18:37:02MT - usagold.com msg#: 67701)
I Want To Contribute
$100 fiat to a gold & silver education program using main stream media advertising. Come on, lets put our fiat where our mouthes are. What do you think MK?

RobotGuy (1/4/02; 16:37:11MT - usagold.com msg#: 67700)
My fellow Canadians
How do we convince our government to return to a gold backed fiat? We must make everyone scream. convince all easily moved lemmings. If we really work at it, and back our arguments with legimate arguments similar to those found in this forum we might be able to at least get some media attention. Other countries are headed in the golden direction, we must join to survive. Like Mr. Craig Harris said, 'it's amazing we actually exchange our hard work for paper.' I will begin by formulating a simple (in my own words) e-mail for my friends, and ask them to chain mail it. I really believe this is the best thing Canada can do right now given the current world situation. Maybe someone with an idea or loud voice will agree and assist. Isn't the government really supposed to do what the people want and need? We don't necessarily need our dollar to be 100% gold backed, but at least partially. Don't you agree?

I hope USAGold doesn't mind if I include a link to this discussion forum, I believe this is the best thing on the internet.

Thank you All for your abundance of information and variety of expression!

P.S.,.. Why is the one ounce Maple leaf only a 50$ denomination?? Maybe I can convince someone to sell me all theirs for 60$ apiece! Haaa YaRight.

Andúril (1/4/02; 16:26:15MT - usagold.com msg#: 67699)
Horatio and company
Says Horatio, "I am still of the opinion that this whole hedging mess was started by the S.African miners namely Anglo as a means to get wealth out of the ground and out of the hands of a government that will eventually nationalize the mines. The Rand is collapsing, money and brains are leaving the country and the mine owners will continue to hedge as a means of getting wealth out of the ground.The idea is to borrow gold and sell it and move the money out of the country leaving a lein or mortgage on the mines."

Many people would do well to consider your thoughts here more closely, bearing also in mind that the government inventories are not the only source of fungible gold deposits being lent among the bullion banking system.

To the point, one must ask how it can be that there exists a group of people that vilify hedgers and gold lending in one breath, while calling for a return to a gold standard with their next breath -- the so called "honest weights and measures" or "sound money" people. If they only took time to think, they would see how a return to a true gold standard would turn the financing of ALL corporations into gold hedgers. Joining the ranks of Barrick and AngloGold as gold borrowers (i.e., forward sellers) would be Exxon, GE, Ford, Microsoft, AT&T...joined also by the ranks of families with home mortgages.

In their conflicting breath it would not seem that this would be the desired effect they anticipate, yet they would have it. They vilify gold banking as it occurs on a "small" scale, yet want it on a grand scale. The mind reels with such demonstrations of foolishness. Better for them if they come to terms in understanding what is and what shall be. There is only one 'Gold Trail', and it is for everyone. You are on it now, know it or not. Best to recognize the landmarks and travel accordingly -- with gold as wholly-owned PROPERTY.

Canuck (1/4/02; 16:01:46MT - usagold.com msg#: 67698)
Rock and roll !
What an awesome day, momentum is building.

I hedged into a tech fund (smile) just before Christmas in case this little run had some legs. I saw the 'Duck' and the TSE up during the morning so I bailed out just before the 1:00pm deadline. The fund is up near 12% and now the talking heads are asking if tech is getting ahead of itself...duh?

I played the superhedge in oil late December in a oil & gas trust (if economy improves or war escalates ie: Iraq) and the trust is up 8 % in 2 holiday interrupted weeks.

Unhedged silver and gold (PAA, G, FN, etc.) setting or near setting 52 week highs. Newmont/Franco putting the boots to AU.

My old lady.....er....better half, won on all 3 fronts, index fund (TSE300), energy fund & PM fund. I have her equally split between the 3 and no 'guff', I have checked her portfolio every 2 months or so and she has never been down over two years.

Sorry for the boasting, after the thorough whipping, trouncing, shellacking, mutilation and financial scarring that I have taken in the last couple of years I need to vent.

Hope everyone is rocking and rolling.



Belgian (1/4/02; 15:57:11MT - usagold.com msg#: 67697)
Iran / euro -oil / Israel
Remember the Iran News (local newspaper) that had a (very) positive article on euro and oil for euros...
Today, Israel accuses the palestines of having shipped arms/munition from...yes, exactly, Iran !? Israel intercepted the sophisticated weaponary cargo.
T.G. : crude oil...US$...euro

miner49er (1/4/02; 15:22:02MT - usagold.com msg#: 67696)
Horatio -- not Horation!!! Sorry...
Waverider and I are having trub with the keyboard lately...

miner49er (1/4/02; 15:21:07MT - usagold.com msg#: 67695)
Horation @ 67693
Hello good Sir Horatio,

Personally I really enjoy your points of view. You constantly bring a perspective that is indeed different from the general consensus, and make your argument well. You have certainly given me food for thought, and the more plausible variables we can include in our analytical formulae, the more likely we are to approach a better understanding of how it all really works.

Please keep it coming. I, for one, (and I know I also speak on behalf of many), certainly do enjoy it.

Best regards,
miner

Siochain (1/4/02; 15:09:25MT - usagold.com msg#: 67694)
Is 2002 the year for Gold
http://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&guid=%7B3240BD45%2D47C1%2D4C42%2DAC5B%2D4C4C355942B7%7D
By Thom Calandra, CBS.MarketWatch.com
Last Update: 12:34 PM ET Jan. 4, 2002

Snippits:

..."I'm a bear on silver but a bull on gold," says Edelson, who had been reluctant to endorse long-languishing gold.

Gold, says Edelson, will need to clear many hurdles before it sheds its reputation as a losing investment. Many technicians, the folks who study trading patterns for commodity futures contracts, agree.

Amanda Sells, an independent consultant used by Mitsui Global Precious Metals in London, says, "Gold's upside potential will only increase to $328 on a clear and confirmed break of $292." Her comments came in a year-end report issued by Mitsui and its headline metals analyst, Andy Smith, a London-based researcher who went positive on gold in mid-2001 after shunning the metal for years.

Smith himself sees gold making strides this year as gold producers move away from their practice of selling their delivery of the metal forward to lock in higher prices. Such hedging stimulates lending of gold by central banks and others, thus diluting any gold metal rallies.

The debate between those who hedge, like South Africa's Anglogold (AU: news, chart, profile), and those who do not, like North America's Newmont Mining (NEM: news, chart, profile), will probably take center stage this year in the gold industry, says Robert Bishop, longtime editor of The Gold Mining Stock Report.

Still, the question for investors, and stymied executives at gold mining companies, both hedgers and straight producers, is entirely a $300 one. Is this the year gold breaks the $300 mark and stays there?

Edelson at The Safe Money Report says yes.

"Gold's not there yet, but it's getting closer," he said Friday. The price of an ounce trades at about $279 in New York and London. "First signal, look for a close above $282. If gold can do that, then a test of $300 would be sure to follow. And after that, any close above $306, and it's off to the races."

Analysts say investors should expect the share price of a non-hedged gold mining company to triple the percentage gain in the price of the metal. Of course, that works in reverse on the down side of the slope.

Edelson, a former Europe-based commodities trader whose job is to coach investors on the safest possible investments for their hard-earned money, sees several reasons why gold could go to $340 an ounce or "possibly higher" this year.

One is an acceleration of debt crises around the world. "Argentina isn't the only problem with debt, not by a long shot," he says.

Another is global worries about central banks' reinflation attempts. Banks such as the European Central Bank and the Federal Reserve conceivably could flood their economies with cash as they keep lowering interest rates. The likely result would be accelerating inflation, which is almost always a positive development for gold, a commodity whose net worth is burdened by no country's currency, debt levels or politics.

"This is a biggie," says Edelson. "Look at how the long bond market (in the United States and elsewhere) has had its worst crash since 1996 on reinflation concerns. Soon, that will spread, giving gold a boost," he says.

Edelson sees investors slowly registering their concerns with global politics, starting with America's war on terrorism and spreading to South American finances and things nuclear in India and Pakistan. "The wars are far from over," says Edelson.

As Smith in London points out, gold will need the support of aggressive fund managers, ordinary investors and those dastardly hedging gold miners who promote the loose lending of the metal.

The tightly knit community of gold bugs, including this writer, has its fingers, arms and legs crossed.




Horatio (01/04/02; 15:04:59MT - usagold.com msg#: 67693)
S.Africa and Hedging

I find it increasingly amusing that whenever someone expresses an opinion here that doesent agree with some posters ,they attack him personally.Someone complained that the public were becoming SHEEPLE ,that is somewhat true and many of them are right here.
This is becoming a "politically correct" forum that looks for scrapegoats and Demonizes anybody that has a different point of view.With that said ,I am still of the opinion that this whole hedging mess was started by the S.African miners namely Anglo as a means to get wealth out of the ground and out of the hands of a government that will eventually nationalize the mines.
The Rand is collapsing, money and brains are leaving the country and the mine owners will continue to hedge as a means of getting wealth out of the ground.The idea is to borrow gold and sell it and move the money out of the country leaving a lein or mortgage on the mines.
It is with this in mind that I find S.African mines to be too much risk for me.This is just a personal opinion .I was a stockholder of Homestake and now find myself in Barrick .I didn't like what happened but I don't blame Barrick for hedging ,they found a way to survive until this mess which was started by Anglo and the Brits finally ends.I found nothing in the last 3 years to change my opinion about who started this hedging business. We gold investers need diverse ideas in order to try to find the truth and make sound decisions on gold investing.
I don't see how demonizing Barrick helps anybody,its just a distraction and gives people someone to hate while they ponder how to get out of the mistakes they made.
I expect that Barrick may merge with Anglo and in the process shift all of thier hedges to Anglo
leaving Anglo as a partner with Barrick with NO No. American hedges.
This will leave Anglo -Barrack without hedges and headquartered in Canada,a country friendly to miners.At that point hedging will no longer be needed and gold will rise.
All this other stuff about individual mines hedging and merging and Goldman Sachs involvement is nothing more that people trying to survive and others trying to exploit the situation to make a buck.S.Africa is where it started and where it will end.
.IMHO

RS (01/04/02; 14:59:45MT - usagold.com msg#: 67692)
re: previous post
I was referring to the phrase "income tax break" as an oxymoron. An absurdity, anyway.

RobotGuy (01/04/02; 14:58:13MT - usagold.com msg#: 67691)
HaaaaHaHaaaa!!
"StockMarket Cheerleaders" ---- I like that one. Credit to Mr. Harris.

HaaaaHaa LOLOLOLOLOLOL

RS (1/4/02; 14:29:50MT - usagold.com msg#: 67690)
No more "federal budget surplus"
CNN reports today that the federal "budget surplus" has been consumed by the recent income tax breaks (yeah right- an oxymoron if ever there was one)...

Easy come, easy go.
At least now we can drop the inane debate over what to do with "all that money".
I believe I'll just declare a huge surplus in my own budget. I'll use the money to buy Maple Leafs. Yeah, yeah, that's the ticket...

Voyager (1/4/02; 13:54:26MT - usagold.com msg#: 67689)
MK, Cavan Man, Belgian & ALL. RE:THOUGHTS 2002 BY MR. HARRIS
I believe that we have all been struck by the same effect from these thoughts. We here at USAGold and The Café are not governed by and do not live by "feelings", but by Thoughts and Ideas and Beliefs.

Mr. Harris, in a most eloquent and simple way stated what we already know and believe. We just need to be reminded.


Waverider (1/4/02; 13:38:09MT - usagold.com msg#: 67688)
Tidbits
Belgian - you wrote a very thoughtful response a while back re: Arab repatriation of $$. I believe I neglected to thank you for your post, so..thank you.

Henri- beautiful words that touch the heart.

R Powell - that was a clever verse yesterday and much enjoyed.

Max Rabbitz & Buena Fe - thank you for your thoughts/info.

Back to work now,
Waverider

Waverider (1/4/02; 13:22:41MT - usagold.com msg#: 67687)
USAGold
Ditto the fate of the "salt of the earth" for the fishing industry in Canada. I worked many years commercial fishing (family business)and have watched its' slow demise, along with the demise of numerous coastal communities that relied on it. Beautiful wild salmon caught in the Queen Charlotte's were sold for around $1.50/lb, yet sell in the local market here at around $14.00/lb. One hardly covered fuel expenses, not to mention 10 day trips at sea, rough weather, etc. To add insult to injury, farmed salmon (horrible stuff) sells wholesale for around $7.00/lb. This past summer just about all the fishing boats sat at the dock with sale signs on them - very sad. BTW I have a nice 54lb spring on my wall I picked up at Langara - best spot in the world for sports fishing!
Cheers,
Waverider

Belgian (1/4/02; 13:00:08MT - usagold.com msg#: 67686)
@ Henri @ Cavan Man
Hoi Henri, this is the most beautifull picture of Gold and Love you framed in your post ! My I add *understanding* next to Love. Great !

CM, wanted to make exactly the same remark (euro safety valve) on voyager's posting.

I am missing some other regular posters here and am in desperate need for some more Trail Guidance.

USAGOLD (1/4/02; 12:54:32MT - usagold.com msg#: 67685)
Cavan Man, Voyager. . . .
Craig Harris was one of the first that I know of to advance the possibility that derivatives were being used by various "trading" organizations to hold down a spectrum of commodity prices and thus keep a lid on dollar inflation. ( I hope I got this right, Craig, if you're lurking out there. I'm going from memory. If not, please correct me.) An interesting theory since the Keynsians hold as bedrock that production (in wild and copious quantities), not monetary and fiscal restraint, is the key to holding down prices. Even Alan Greenspan has succumbed to this ridiculous notion. It would be interesting to hear FOA expound on these new ideas (ala Craig Harris and others) just surfacing.

If you produce anything these days, no matter what or where you produce it, you are a second class citizen, I believe in service to keeping a lid on the inflation rate. Middlemen and speculators reign supreme at the expense of those who attempt to make an honest buck out of Mother Earth and what she provides. Unfortunately, our natural clientele at USAGOLD / CPM are the producers -- the salt of the earth types who make it all happen -- the cattle rancher, farmer, oil man, small manufacturer, (and yes) the gold miner, and so on. Sometimes I think producers have become dinosaurs. And we suffer with you, my friends, because our business relies on you.

I listened to an interview on Colorado public radio this morning that was supposed to be on the subject of Aussie sheep dogs -- an interest of mine since I own two of them (our second pair). Terrific dogs, by the way -- smart as the canine gets.

The interview drifted away from dogs to the plight of the American sheep rancher -- a sad story. It's gotten so bad they've had to sell their ranch. If you like eating lamb (and Voyager I happen to know that you do), you might be interested to know that very little of the high price you pay for a lamb chop makes its way to the producer -- I think he mentioned they get something like 50¢ a pound (and I know that lamb prices at the store are near outrageous). I thought to myself: These people sound like our typical clients. I felt like I knew them. Like I say, a sad story.

At any rate, Craig Harris (though I haven't had time to read what Voyager just posted) appears to be onto something.

One wonders. . . . .

Buena Fe (1/4/02; 12:52:34MT - usagold.com msg#: 67684)
what up doc
Max Rabbit, you caught the it too! Sounds like GATA in the Presidency! doesn't it?

The fact that the Argentine default bank exposure has now DOUBLED to include individuals and small company's (245 billion+), will be ignored/spun as much as possible by Wall Street until critical mass is attained within the US perception of GATA's (and others) shoutings of "The king has no clothes"!

At a point ahead of us the world of financial lemmings will "snap", and the unthinkable crash will begin.

Belgian (1/4/02; 12:41:33MT - usagold.com msg#: 67683)
@ Cavan Man # 67669
You : ...London calling most of the financial tools...
Hoy Hoy, that's why that eurotunnel ( not Great Brittain-tunnel) has been build, buddy ! (joke)
2002 Intervieuws with euro-officials was interesting because EMU was unanimously defined as a "platform" (a political platform, that is) for expansionary ambitions.
And Europ will call London in the sense of...don't call us, we call you. Am I exagerating with eu(ro)phoria ? (smile compassionately).
Euro-officials, all got the same question about competition with the dollar. All answers were *subtle* neutral stances.
But I smelled the undertone of a definitely "yes", we are at the point of starting to compete.
Funny anecdote on the Brussels news: Foreigners (UK-US) residing in Belgium, wanted to exchange their pounds / dollars for euros. They were disappointed.

All : Watch China very closely in many aspects.
Our western economies can extend prosperity thanks to China's cheap labor for the production and trade of real goods. China is importing on a massive scale, the western high tech as to aim for an economic/political force to reckon with. Cfr. their support for Pakistan.
China is also building on its currency, not only within Asia but on the global platform. Why else are they digging for more and more Gold (140 tonnes/yr) within China, not ment for export ? China's fast upcoming force is driving Japan further and further (irreversable) into the dollar-block . * The Global Currency War*

Voyager : Thanks for your posting that is again a confirmation of the financial tail (engineering) that wags the economic dog.

Max Rabbitz (1/4/02; 12:28:12MT - usagold.com msg#: 67682)
Waverider and Buena Fe
http://quote.bloomberg.com/fgcgi.cgi?touch=1&btitle=Top%20News&T=sa_content.ht&s=APDODhhKqVS5TLiBC
Waverider....The above article claims $21 billion is at risk. This seems a little low to me considering the total defaulting is somewhere around $140 billion. The article claims FleetBoston is most exposed with $7.3 billion. However, JPMC refused to say how much is at risk other than that that it's affiliates in Argentina cut lending to $900 million in the third quarter from $1.4 Billion 9 months earlier. I recall reading that Goldman Sacks and others also refuse to say what their exposure is. If these banks don't disclose how much is at risk how would the author of this article, Michael Nol (Bloomberg News), know the total is $21 billion? I thought all information was now supposed to be released to the general public or not at all. Maybe what Mr. Nol really means is that $21 Billion have been acknowledged to date.

Buena Fe.......a statement from your article caught my eye. ``We have to end the decades in Argentina of an alliance that has made the country suffer, and that's the alliance between the political power and the financial sector and not an alliance with the productive sector,'' Duhalde said. "The financial sector is important, but in its proper place.''

TownCrier (1/4/02; 12:19:09MT - usagold.com msg#: 67681)
From yesterdays press conference of the ECB following a decision to leave rates unchanged
http://www.ecb.int/key/02/sp020103.htm
The following exchange reveals an international monetary shift that is in process which is sure to have a significant effect on the dollar -- downwards. While the response to the question rightly indicates that such matters as these take time to fully unfold in the marketplace, it is also important for YOU as an individual to realize the capacity for both domestic and international flows of "hot money" to punish the failing currency with lightening speed -- once the overall trend has become critically clear.

Argentina makes for a good case study on a small scale, as did the asian contagion of recent memory. Like we see in Argentina, capital controls restricting your access to your accounts makes a compelling statement for the importance of personal gold reserves, and notably pre-33 coins, held close at hand.

Here is a look at an important portion of the monetary trend in the changes ahead for the international monetary system.....

----(the following is from the press conference)---

Question:
A question to you, Mr. President, and to the Vice-President also if he maybe has something to add to the question. Do you expect a wider use of the euro as a reserve currency of central banks outside the euro zone as a denomination for bonds, especially corporate ones, or do you think it is possible that all will be paid in euro instead of dollars one day and, if so, when?

ECB President Willem F. Duisenberg:
The last parts of the question will undoubtedly be answered by Mr. Noyer. The use of the euro as an international reserve currency is increasing, but very slowly. And it was expected to be very slow, but increasingly we are getting signals that countries, especially central banks of countries, are beginning to realise the possibilities they now have to diversify their reserve holdings.

But it is not something we are aiming for, we will just let it happen. But it is happening, and the fact that, for example, in the recent experiences of the cash changeover, we have frontloaded to more than 20 non-euro area central banks sizeable sums, billions and billions worth of euro banknotes, is already an indication of this.

The fact also that in the eastern hemisphere, where we are, more than 50 countries, in one way or the other, link their currency or align their currency to the euro is also a telling aspect of the phenomenon. But I don't want to ask Mr. Noyer to speculate about the "when", precisely if I assume he knows as much as I do.

Vice-President Christian Noyer:
Certainly, I do not know more than you do. But I can just confirm that this move that we expect is not an objective per se, but that what we expect to happen will probably take place in all fields. We have seen that already in the field of the debt market, where euro issues are now broadly comparable with issues in US dollars. We have seen slow shifts in the portfolio managed by international managers, both in the debt instruments and equity, around, let's say, one-quarter of internationally managed portfolio now.

There is a clear consolidation, as the President just mentioned, in terms of using the euro as a reference currency, for pegging, as a central element of a basket, etc. In the field of official foreign exchange reserves, that develops very slowly.

Of course, the figures are difficult to interpret because very often the comparison which is given is between the figures of official reserves of the European currencies before 1 January 1999 and after. And before 1 January 1999, all European central banks – euro area central banks, I mean – had European currencies in their foreign exchange reserves. And then the Deutsche Mark or the Dutch guilders or French francs disappeared to become internal currencies. So that in terms of the word "reserves", the share of the dollar increased simply because the European currencies disappeared from the European reserves, and of course this blurs the view of developments.

But I was in Beijing myself on the day the Vice-Governor of the central bank of China, the People's Bank of China, announced that they had decided to increase their reserves in euro. I think that is a movement that is quite natural given the importance of the euro area in terms of world trade. But that will happen if and when the countries and central banks deem it appropriate.

I am personally sure that it will develop, perhaps slowly, we will see. And for your final question on invoices and settlements, well, we will see. It took decades for the US dollar to overcome the importance of the pound sterling, long after the US economy had become much more important than the British economy. That is something that simply takes a very long time to develop.

---end press conference excerpt---

R.

Henri (1/4/02; 12:01:25MT - usagold.com msg#: 67680)
Why Gold is precious - thoughts to ponder
Unlike investments which bear interest, gold makes no promises nor does it need to.

Gold is an asset which grows only when you add to it.

Gold is like love. If you extend your giving to others with the expectation of return, you sometimes get what you expect. This is not true love. True love is given without expectation of return. It is unconditional. When love is received by one who recognizes it. It is returned many fold. But sometimes not.

Like gold, love grows only when you add to it.

Cavan Man (1/4/02; 11:58:23MT - usagold.com msg#: 67679)
A hearty thanks Voyager......!!!
I don't know who Mr. harris is or what his credentials are but I do believe he is 100% accurate in his assessment. The only point I might offer is the Euro has a safety valve built into their monetary model and that is the marking to market of POG every quarter. If an EU member state or statesman comes out publicly in favor of gold for investment purpose than back up the truck to USAGOLD in Denver.

Waverider (1/4/02; 11:42:54MT - usagold.com msg#: 67678)
Max Rabbitz
Such fragility....I think MK asked awhile back if anyone knew which US banks have exposure in Argentina..have any admitted to it yet?
Cheers,
Waverider

Voyager (1/4/02; 11:27:56MT - usagold.com msg#: 67677)
Thoughts for 2002

Craig Harris
Harris Capital Management, Inc. CTA
January 3, 2002

As we start off the year in 2002, there is a substantial amount of uncertainty and turmoil in the world. Many investors are still waiting for the return of the double digit returns they got used to in the "roaring 90's." I'll argue that people should be concerned with a return of their capital going forward rather than a return on their capital.

In the final month of 2001, we witnessed a complete collapse of Enron, the 7th largest US fortune 500 company worth over 80 billion dollars at it's peak... now all but worthless. This was an unprecedented event... one that was unthinkable as the year began in 2001. Currently we are witnessing a complete economic collapse in Argentina along with a default of 140 billion or so in sovereign government debt. Again... unthinkable... Argentina was not a third world economy. Japan is in trouble, and there is no clear or easy fix in sight. It is in no way clear how Japan is going to clean up the bankrupt banks and it is within the realm of possibility that the situation in Japan could deteriorate from here and become a serious global financial crisis. Unthinkable? India and Pakistan are on the verge of a war which could cause the worlds first nuclear exchange. The Israel Palestine conflict is threatening to spiral out of control and could provoke a regional war that could escalate into WWIII. Unthinkable? The US is fighting a war on terrorism at a cost of 1 Billion dollars a month with no clear or easy victory in sight. Is it possible that the war on terror is not winnable? Unthinkable! I think you get my point. In this environment it is critical not to get your thinking stuck in the box so to speak. It's also critical to think independently and not to be part of the herd. The herd will ultimately be wrong... they always are. There are serious risks in the world right now that are being downplayed and distorted in the media in the name of patriotism and public good... but it isn't reality.

Against this ominous backdrop, the world central banks have embarked on a financial engineering program designed to bolster the financial markets, control the currency markets and print paper money with reckless abandon in a noble effort to "save" the financial system. The hope of the Financial Engineers is that all of the "inflation" being created by the huge increase in the money supply will be directed into the equity markets. I have been saying for the past few months that wherever this box of money lands is where the inflation will show up. Interest rates in the US have hit 40 year lows. For fixed income investors, it is now nearly impossible to earn a positive real return without taking on additional risk. After 2 years of declining share prices, the equity markets are still priced at the extreme high end of historical valuation levels based on PE ratios, Dividend Yield, price to book and price to sales.

What is an investor to do?

Clearly, in an effort to save the global economy, the financial engineers of the FED and the G7 have targeted the equity markets. Every possible effort is being made to prop up share prices because if they didn't, it's likely that the global economy would collapse. Based on valuation, it's very difficult to see how one could expect the equity markets to rise but if you understand what's going on underneath the surface it's clear to me that every effort will continue to be made to keep share prices up. I was recently quoted on CBS Marketwatch as saying that we are building a new equity market bubble but from lower levels. I think that's a good way to look at it. So, I'm not opposed to the idea of trading this sponsored market, but the idea of a buy and hold strategy from these levels is a prescription for disaster in my opinion.

If you buy a company like AOL Time Warner at 70 something times earnings expecting to hold it for the long term, you aren't likely to even earn your original investment back before you are dead. People have gotten used to the idea that public companies are like lottery tickets... well, they aren't. Taking the AOL example, you are paying 34 dollars for 43 cents in earnings with no dividend. Even if you assume a healthy 10% growth rate, you'll probably be dead by the time you've earned back your original investment. Why would anyone in their right mind see this as a reasonable investment? Well, because the public (who don't understand things like valuation) blindly invests their money with mutual fund companies whose charter it is to stay fully invested in stocks. The financial engineering program encourages this "dumb money" to flow into the mutual funds by many, many mechanisms.

The physical Euro got off to a good start in 2002 with no glitches reported. The Euro gained vs the US dollar on optimism about the smooth transition. The Euro is now poised to offer competition against the US dollar... really the only competition except the Yen. I was talking about this financial engineering strategy a lot last year... although the Euro is poised to offer more competition vs the USD, overall the competition has decreased. The financial engineers are in the process of eliminating alternatives. So now we're down to 3 choices (USD, Euro, Yen) and the financial engineers do not want ANYTHING to compete with these fiat currencies for investment dollars... that is the biggest reason that suppression of the gold price is critical. Gold (or oil or anything else) cannot be allowed to be seen by the investment community as a viable alternative to fiat money for the storage of wealth or else we could have big problems. The financial engineers do not want an anchor from the fiat currencies to anything real. If there was, then they would have to deal with issues like printing too much money, etc. So... that's the plan... prop up the equity markets, restrict investment alternatives... I don't claim to know the next step in this master scheme but I suspect that it will be to continue to eliminate currencies other than the "big three" through more "mergers," with Britain, Denmark, and Sweden being pressured to join the Euro now.

The important point is that we are entering new uncharted territory in terms of global financial management. We no longer have free markets... we have coerced, controlled markets. The world has not been technologically and financially sophisticated enough to pull this "financial engineering" off until now. Europe has not seen a shared single currency since the Roman empire. As to whether or not it can work over the long term... there has never been a fiat currency that has survived the test of time and my concern this time around is that there are too many ways and too many incentives for the central banks and counterfeiters to "cheat."

Counterfeiting may sound like a lame concern but I suspect that many extremely well organized crime entities will produce a lot of Euro's using advanced technology... hey... they can pay for all the equipment and technology in Euros! The thing is that the stakes are so high... if this plan were to fail somehow it would be a global catastrophe the likes of which we have never seen... like a big global Argentina. For the plan to work, public confidence and trust must be managed effectively.

It's really interesting to look at it that way... the actual numbers are really less important than confidence that your paper money will maintain its value and exchangeability because the paper doesn't even have any implied intrinsic value at all any more. Remember when people talked about governments debasing their currencies and it was seen as a central banking sin? Well, now at this point the currencies have been debased... there is no promise that the notes are backed by anything. If you take a step back and think about it, it's amazing that people go along with the idea at all. You are willing to give up something you produced for a piece of paper with some printing on it... and the only reason you are willing to do so is that you believe the implied guarantee that the paper will maintain its exchangeability for things you want and need. It implies supreme confidence and it will be required that the global central banks maintain this supreme confidence... a tall order... especially in these uncertain times.

With all that said, I am encouraging my clients to look at investing in real things... to seek value. I'm not that keen on real estate as an investment because real estate prices are still inflated but not nearly so much as share prices. I do believe however, that doing something like paying off your mortgage rather than investing the money in the stock market makes sense. I wouldn't advocate being short the equity markets, for the simple reason that they are sponsored and it's likely that they may get even more overvalued than they are now. The "Don't fight the FED" axiom has new meaning now with the the financial engineering program.

Commodities have been in a 20-plus year bear market. Many commodities, including some of the precious metals are selling at or below their production cost. In my opinion this is the area for investors to look for value. I do believe that the price of gold is being manipulated as I discussed above, but I also think it is the best hedge in the event that the financial engineers management plan does not work out. In other words, it's part of my "hope for the best, plan for the worst" idea. I don't expect a lot of downside in the gold price if the financial engineering plan is successful, but if it doesn't work out I think it's likely that there will be a mad scramble for wealth storage with intrinsic value, and a very sharp dramatic shift against financial assets.

Do not allow yourself to be lulled into complacency by the stock market cheerleaders on television. Think independently. Don't listen to me or anyone else... take control of your future by using common sense, thinking for yourself and doing your own research. The internet provides a wonderful tool.

I wish everyone a happy and prosperous 2002.

Craig Harris
President
Harris Capital Management, Inc. CTA
http://www.HarrisCapitalManagement.com
bcharris@gate.net






Buena Fe (1/4/02; 10:59:54MT - usagold.com msg#: 67676)
The smell of spring!
http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=ad_right1_topfin&bt=ad_position1_topfin&middle=ad_frame2_topfin&s=APDXiOhSZQXJnZW50
THIS POLITICIAN MAY HAVE SOME STAYING POWER!

01/04 12:11
Argentina to Devalue, Restore Order, Duhalde Says (Update4)
By John Lyons

...........``We have to end the decades in Argentina of an alliance that has made the country suffer, and that's the alliance between the political power and the financial sector and not an alliance with the productive sector,'' Duhalde said. ``The financial sector is important, but in its proper place.''

Cabinet Chief Jorge Capitanich earlier in the day aid the government would force banks to convert dollar-denominated bank loans, mortgages and credit card debt into pesos, a plan analysts said may lead to the collapse of some banks. Most of Argentina's $245 billion sovereign, corporate and provincial debt is in dollars.

`Insolvency'

``It's a recipe for pushing banks into insolvency,'' said Christian Stracke, Latin American debt strategist at Commerzbank Capital Inc. in New York. ``They are essentially saying the banks no longer have dollar assets.''...........

PS "NO WORRIES" WAVERIDER, JUST STAY ON THE BOARD! YEE HAW



Max Rabbitz (1/4/02; 10:54:29MT - usagold.com msg#: 67675)
Rider of Waves
http://quote.bloomberg.com/fgcgi.cgi?ptitle=Stock%20Market%20Update&s1=ad_top1_snapshot&tp=ad_topright_snapshot&refer=snapshot&T=markets_frontsummary_content99.ht&s2=ad_top2_snapshot&bt=ad_position1_snapshot&bt2=ad_bottom2_snapshot&middle=ad_frame2_snapshot&s=APDXk6BSTVS5TLiBG
No hint of a problem for U.S. banks now that the markets are rising.

"U.S. financial stocks rose on optimism a market rebound will lift earnings from investment banking and trading. J.P. Morgan Chase & Co. and Citigroup Inc. rose, helping boost the Dow Jones Industrial Average a third day."

Waverider (1/4/02; 10:34:31MT - usagold.com msg#: 67674)
Buena Fe
My apologies!
Waverider

Waverider (1/4/02; 10:29:28MT - usagold.com msg#: 67673)
Santa Fe: Spain's largest Bank - 7.1 billion exposure
http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT3DWYP72WC&live=true&useoverridetemplate=ZZZ99ZVV70C&tagid=FTDO9DHMZJC
Quick Snippit:
"Santander Central Hispano (SCH), Spain's largest bank, had up to $7.1bn of loans outstanding in Argentina at the end of November, it emerged on Friday. Fellow Spanish bank BBVA is also heavily exposed via its Banco Frances subsidiary, though it has so far declined to give any financial details. Both banks could be severely affected by the Argentine government's latest economic plan - due to be unveiled on Friday - which may devalue the currency and force banks to switch loans into devalued pesos."



Canuck (1/4/02; 10:18:28MT - usagold.com msg#: 67672)
Don Coxe's latest call
http://www.jonesheward.com/commentary.cfm
Long discussion regarding Yen devaluation, deflation in Asia, and impact on markets.

Cavan Man (1/4/02; 10:06:53MT - usagold.com msg#: 67671)
@USAGOLD
RE: EU Gold Directive
MK: Thanks for the link. Nice to see the LBMA humbled by another political will.

Buena Fe (1/4/02; 10:06:08MT - usagold.com msg#: 67670)
boom boom
http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=ad_right1_topfin&bt=ad_position1_topfin&middle=ad_frame2_topfin&s=APDXHjhZ0QXJnZW50
CHAMPION OF THE SMALL GUY, THE NEW PRES. IS GOING TO ALLOW INDIVIDUALS TO DEFAULT/DEVALUE THEIR DEBTS ALONG WITH THE GOV.. A VERY BRAVE PATRIOTIC MOVE ON HIS PART. I SEE THE "INTERNATIONAL BANK WRITEDOWN EXPOSURE" TAKING A QUANTUM LEAP! BANK STOCKS SHOULD TAKE A REAL HIT ON THIS NEWS (LETS SEE HOW THE PPT KEEPS UP AS THE FLAMES OF RIGHTEOUSNESS CONSUME THEIR DEN OF DECIET)

01/04 10:17
Argentina to Convert Dollar Loans to Pesos Before Devaluation
By John Lyons


Buenos Aires, Jan. 4 (Bloomberg) -- Argentina will convert dollar-denominated bank loans, mortgages and credit card debt to pesos before devaluing the currency, a government official said.

The plan, which President Eduardo Duhalde is scheduled to disclose today, is aimed at easing the effects of a devaluation, which would drive up the cost of financing dollar debts. About 90 percent of Argentina's $245 billion of sovereign, corporate and provincial debt is denominated in dollars.

``The economic team is going to apply all of the tools that it can, because the policy of Duhalde is going to be to protect Argentines,'' Cabinet Chief Jorge Capitanich said at a press conference.

The peso may depreciate by as much as 40 percent once the government abandons a decade-old exchange rate that fixes the currency at par with the dollar, analysts said. Government officials say devaluation will help revive the $280 billion economy by making domestic making domestic manufacturers more competitive.

Since Brazil devalued its currency in 1999, Argentine companies have been unable to compete with a flood of cheaper imports from its neighbor and chief trading partner.

Official Rate

Duhalde plans to convert dollar loans of as much as $100,000 into pesos at the one-to-one rate for individuals and small and medium-sized businesses, the El Cronista newspaper reported, citing unnamed government officials.

Capitanich said that light, gas and water utilities will be restricted from raising prices. He also urged shopkeepers and other companies not to raise prices in advance of a currency devaluation in a bid to avoid soaring inflation.

Companies such as the nation's biggest office products distributer OfficeNet SA already have marked up price lists by at least 10 percent to offset devaluation.

``We cannot enter into a phase of marking up prices,'' Capitanich said. ``We need comprehension from all sectors.''

Argentina tied its peso to the dollar in 1991 to tame inflation that peaked at nearly 5,000 percent. The fixed exchange rate ushered in four years of growth of more than 8 percent a year and attracted $32 billion of foreign investment.

Critics of the peg say that it locked in high labor and production costs.

Argentina's former President Fernando de la Rua, who was forced from office two weeks ago following food riots, froze deposits in early December to prevent a run on the banks that threatened to break the dollar peg.

Cavan Man (1/4/02; 10:04:42MT - usagold.com msg#: 67669)
Hello Belgian
Peter Mandelson had a nice oped in yesterday's FT. He believes Mr. Blair will take the Euro issue to task in this Parliament if the opportunity presents itself rather than waiting upon Mr. (thanks a bullion!) Brown and the "five tests". He remarks that both gentlemen are men of "conviction" and politically pragmatic. Bottom line for Mr. Mandelson: England cannot flounder in the "middle of the atlantic". This was precisely my point to our mystery speaker many months ago back on the Trail--that the UK would ,out of geographic and trade REALITY need to move in monetary conjunction. Meanwhile, London will still be calling most of the financial tunes as they have for centuries. You can, "believe it". Kind regards...CM

Belgian (01/04/02; 09:46:32MT - usagold.com msg#: 67668)
EU Gold directive (VAT on Investment Gold) !!!!!
Thanks USAGOLD for the link !
UK row today about the euro remark of Treasury official Gus O'Donnell : The UK entry into EMU is a *Political* decision rather than an economical one !!!! Boehhhhhh.
Cfr. The Sir Douglas's Political will aspect. Yeahhh, in the heat off the battle....
Prompt denials of other officials and the whole idea must be considered as a lapsus. Noooo noooooohhhh, it isn't.
London will soon have to choose camp: dollar or euro.
Finito with riding two horses and play go between. With us or them ? Is it really that black or white ?

RobotGuy (01/04/02; 09:38:28MT - usagold.com msg#: 67667)
@ MaxxRabbitz
I know exactly what you're talking about, but I lack the ability to express it as formally. I fully believe that is what's going on. Instill a confidence that hopefully snowballs into a rumbling market. If enough people believe everything is taking off, it might add more height to the cylindrical bubble. By cylindrical bubble, I visualise it vertically with a flat top. When this bubble pops, the walls collapse in on themselves, and the top smacks the bottom with a loud painful clap. They should have let the market take it's course long ago, we would probably be back to a level plane by now. A spherical bubble pops more softly.

I know,.. I'm warped.

Max Rabbitz (1/4/02; 08:57:38MT - usagold.com msg#: 67666)
Stress in the System?
http://www.members.home.net/fallstreet1/plungeprotection/observersept01/observersept01.htm
The article from the Observer (Sept 16, 2001) referenced above states "The Fed, supported by the banks, will buy equities from mutual funds and other institutional sellers if there is evidence of panic selling in the wake of last week's carnage." Maybe also if the markets just need to go higher.

With the refinancing boom over there needs to be a new source of liquidity. A "wealth effect" from rising stock prices may be the plan.

Who knows how much banks now have at stake in the stock market. I suspect that the liquidity provided by the Fed is going more to stocks than to new business loans. With Argentina going broke (and Enron and PG&E and ...) there must be extreme stress in the system. Are U.S. banks becoming like Japan where a decline in the markets will make them insolvent? Speculators are rewarded and savers punished right up until the time there is a phase change in the system. The fragility of it all is frightening.



Black Blade (01/04/02; 08:04:20MT - usagold.com msg#: 67665)
RobotGuy

To hear the Wall Street Trolls and Pied Pipers tell it, this economy is strong and getting stronger everyday. It's all in the "spin". Good is bad, up is down, right is left, black is white, etc. Just a cursory look at the data suggests that the US and Global economies are poised for a very serious deepening Recession. Cheers!

- Black Blade

Gotta run and help the Grasshoppers keep warm this winter!



RobotGuy (01/04/02; 07:51:23MT - usagold.com msg#: 67664)
Oh Please.....gimme a break.
http://www.moneynet.com/content/MONEYNET/CategoryNews/NewsStory.asp?Cat=EQUITY&SubCat=EQTH&ID=SF-01/04-AnN04236070@NEWS-P2&Index=2&HeadlineURL=../CategoryNews/CategoryNews.asp&DISABLE_FORM=&NAVSVC=News\Category

Clipping from article posted above(snippet):

"The market seems to be gaining momentum," said Peter Cardillo, chief strategist at Global Partners Securities Inc. "Traditionally what happens in the first week or two of the new year generally indicates what is going to happen for the balance of the new year and right now there appears to be a lot of hope the economy is going to rebound."


Does that mean there was a terrorist attack during the first two weeks of last year? This has got to be one of the most feeble statements I've ever read. Who buys this crap?
Here,.. I'd like to submit a feeble statement similar to that above just for the sake of idiocy:

At the end of every rainbow is a pot of gold.

Someone better tell Peter that a complete rainbow is actually a circle, so he doesn't go chasing his tail. I send my utmost sympathies to individuals who simply devour information they read in news articles and accept it as truth.

Sorry,.. felt like groaning out loud.


Black Blade (01/04/02; 07:42:40MT - usagold.com msg#: 67663)
Lease Rates
http://www.kitco.com/market/LFrate.html
Silver rates are higher still. The rates are in backwardation. Nothing new has come to light. The rumors of Enron bailout of silver contracts and Warren Buffett not renewing silver leases continues to pressure this market. Apparently the silver supply is still tight.

R Powell (01/04/02; 07:27:30MT - usagold.com msg#: 67662)
Silver lease rates
http://biz.yahoo.com/rf/020104/104162483_1.html
Kitco has the one month rate listed at 16.8% while this article from 7:30 this morning speaks of 18-19% one month rates. Kitco has the one year down slightly at 5.4%.
In keeping with the recent pattern, London took POS higher hitting 4.69 as the high. New York opened at 4.64 and quickly hammered the price down to 4.57. The London market is much bigger and stronger than New York so the move down doesn't scare me too much, especially with the lease rates still indicating that something is out of kilter. Many are voicing opinions of a short squeeze or a temporary (?) shortage perhaps caused by Buffet refusing to re-new silver leases. Nothing definitive, of course, all speculation or "supposins".
If this is the real thing, in that remaining silver supplies may be in strong hands and the supply/demand deficit may be now revealing itself in price rationing, then the upside has IMHO just begun. If memory serves well, Buffet bought most of his stash in the summer and fall of 1997 between approximately $5.50.
As always, too many supposins and not enough factual information but it's all I can find at the moment.
Any news?
Rich

Black Blade (01/04/02; 07:23:56MT - usagold.com msg#: 67661)
Bausch & Lomb sets restructuring, slashes more jobs
http://biz.yahoo.com/rf/020104/n04235538_1.html

Snippit:

ROCHESTER, N.Y., Jan 4 (Reuters) - Eyecare company Bausch & Lomb (NYSE:BOL), attempting to right itself after missing earnings expectations repeatedly over the past two years, set a restructuring plan on Friday that includes slashing another 700 jobs globally.

Black Blade: These "Bones" are added on top of 800 "bones" announced earlier. The "Bone Pile" grows again. The rate must be slowing, this is 100 less than earlier this year - nah!


Spartacus (01/04/02; 07:19:25MT - usagold.com msg#: 67660)
Argentina
http://www.guardian.co.uk/argentina/story/0,11439,627453,00.html

...Argentine politicians are braced for a strong popular backlash that is likely to follow the announcement of a major devaluation of the peso currency today, a policy that most economists agree will force thousands of middle class households and small businesses into bankruptcy...

Black Blade (01/04/02; 07:16:57MT - usagold.com msg#: 67659)
Job Market Weakened Again in December
http://biz.yahoo.com/rb/020104/business_economy_jobs_dc_2.html

Snippit:

WASHINGTON (Reuters) - The U.S. job market weakened further in December as factories continued to lay off workers and department and toy stores kept their staffs lean over the holiday period, the government said on Friday. But although layoffs mounted and the jobless rate neared 6 percent, the pace of job losses slowed compared to the initial few months after the Sept. 11 attacks, which badly shook confidence in the economy and prompted a surge in layoffs.

The Labor Department said the number of workers on U.S. payrolls outside the farm sector fell a seasonally adjusted 124,000 in December after a 371,000 drop in November. The November figure was originally reported as a slightly milder 331,000 jobs decline. The unemployment rate rose to 5.8 percent from 5.6 percent in November. The November jobless rate was originally reported as 5.7 percent.

Black Blade: The unemployment rate grows to 5.8%, however, the rate slowed some. Hmmm… Now why would the unemployment rate slow just before the holiday season? I suggest that most waited until after the holidays to "slash and burn." The point is that the unemployment rate is still growing - not declining. This is not a good sign for those who look for a recovery - especially in light of the rate picking up over the last couple of weeks. In a word - "GRIM"


Spartacus (01/04/02; 06:52:22MT - usagold.com msg#: 67658)
The Euro
http://www.moneynet.com/content/MONEYNET/CategoryNews/NewsStory.asp?Cat=FINMKT&SubCat=FMFE&ID=SF-01/03-AnL03323719@NEWS-P1&Index=5&HeadlineURL=../CategoryNews/CategoryNews.asp&DISABLE_FORM=&NAVSVC=News\Category

BERLIN, Jan 3 (Reuters) - German Finance Minister Hans Eichel will begin a four-day trip to China and Iran next week to promote the euro as a reserve currency to rival the U.S. dollar, his ministry said on Thursday.



Black Blade (1/4/02; 00:35:16MT - usagold.com msg#: 67657)
Treasuries Could Rally if Job Report Grim
http://biz.yahoo.com/rb/020104/business_markets_bonds_dc_1.html

Snippit:

NEW YORK (Reuters) - Treasuries could rally on Friday if a U.S. government report shows unemployment rising enough to suggest the U.S. job market is deteriorating faster than investors have been predicting, analysts said. While sharp job losses in December could boost Treasuries as investors hope for another Federal Reserve rate cut, a report in line with market estimates might leave prices stuck in a trading range. Also, traders are looking to the stock market for direction.

Economists polled by Reuters estimate U.S. employers in the non-farm sector shed 139,000 jobs in December, after a 331,000 reduction in payrolls for November. That would push the December unemployment rate higher, to 5.8 percent from 5.7 percent in the prior month. The Labor Department is set to release the report at 8:30 a.m. EST on Friday.

But some market participants countered that employment statistics are backward-looking, and that joblessness is likely to keep rising even after economic growth has hit bottom. ``People are looking at unemployment as a lagging indicator at this point,'' Fimat's Hsu said.

Black Blade: Nice spin! Say it enough times and some people may actually believe it. I wouldn't say that rising unemployment is a lagging indicator in this economic environment. I expect to see an accelerating rate of unemployment leading to a deepening Recession. Remember we have RECORD HIGH corporate and consumer debt accompanied by RECORD HIGH bankruptcies. Stock index valuations are falling fast and furious as share prices rise while earnings fall into the abyss. Consumer confidence is still well below normal and many are beginning to worry about paying debt as they see mounting job losses. In a word - "GRIM"


Black Blade (1/4/02; 00:21:57MT - usagold.com msg#: 67656)
Australian gold stocks shine on Normandy battle
http://biz.yahoo.com/rf/020104/syd211363_1.html

Snippit:

SYDNEY, Jan 4 (Reuters) - Australian gold stocks rallied on Friday as an intensified bidding war for sector leader Normandy Gold Ltd (Australia:NDY.AX) shored up confidence that offers would emerge for other likely targets. Shares in Normandy jumped nearly three percent to a new four-year intraday high in early trade after Denver-based Newmont Mining Inc (NYSE:NEM) boosted its offer by 10 cents, taking it to A$4.3 billion (US$2.2 billion).

The latest offer in the drawn-out battle between Newmont and South Africa's AngloGold Ltd propelled other Australian gold players higher on speculation they are already on offshore predators' radar screens. ``The likelihood is there is going to be more action. There is going to be even more focus on those companies that are left because there is a diminishing pool of takeover targets in our market,'' Intersuisse mining analyst Gavin Wendt said.

Analysts and fund managers said it remained uncertain whether Newmont's latest bid, which valued Normandy at A$4.3 billion (US$2.2 billion) on Thursday, would knock AngloGold out of the race. AngloGold declined to raise its offer, but neither has it declared it final. A dip in Newmont's New York-listed shares late Thursday and a rise in AngloGold stock also closed the gap between the rival bids. Newmont's offer stands at A$1.92 per share, six cents above AngloGold's offer. Analysts said while AngloGold had a range of other offshore options if it did not win Normandy, it remained keen to diversify outside South Africa.


Black Blade: AngloGold is desperate to feed the hedge book at all costs. The only question that remains now is what miner will be the next target? Then again, is this Normandy battle really over? "Interesting Times"




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