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ARCHIVED DISCUSSION FROM 3/4/2004 All times are U.S. Mountain Time (Yesterday's Discussion.) Great Albino Bat (03/04/04; 23:46:31MT - usagold.com msg#: 118045) Black Blade: " Base metal prices have risen higher putting pressure on the Mint to find cheaper substitutes." That's the accepted way of putting it, but actually,it's not that the metal prices are higher, but rather that the value (purchasing power) of the dollar is lower.This necessary change in the composition of common base metal coinage, becomes more and more frequent as inflation accelerates.It's a very typical third-world phenomenon. We'll be seeing a lot more of these changes from here on.Next, the penny is going to disappear completely. Nothing cheap enough to make a penny out of! (Plastic, maybe?) It will be interesting to see how this problem is handled.The GAB Liberty Head (03/04/04; 23:37:41MT - usagold.com msg#: 118044) The Honest Nickel I think we should have a new nickel that tells it like it is.It would have Kerry's head on one side and Bush's head on the other side.The inscription would read "Heads, You Lose"Best Wishes specie-man (03/04/04; 23:01:15MT - usagold.com msg#: 118043) New Nickels Nickels are actually 25% nickel and 75% copper (by weight).As of a month or so ago, the melt value of a US nickel was two and a half cents. That is approaching the pain threshold for the government.The composition of the US "nickel" coin has not changed since 1866 when the nickel 5-cent coin was first introduced.That is, except for a brief period during WWII. Nickel was needed for the war effort so it was removed from the coins. For a few years, the composition of the 5-cent coin was actually 56% copper, 35% silver, and 9% manganese.The silver-containing nickels can easily be identified by a large mint mark letter ("P", "D", or "S") above Monticello.Some of the 1942-dated nickels have silver, and all of the 1943, '44, and '45 dated nickels are silver.All this brings up an interesting question. Canadian nickels dated 1955-1981 (and some earlier years) are pure nickel. With the current high nickel prices (and advantageous exchange rate) I wonder if it would be economically viable to start "harvesting" those Candadian nickels from circulation ?Those of you in Canada, do you see 1981 & older nickels in circulation very often ? Black Blade (03/04/04; 21:50:18MT - usagold.com msg#: 118042) New nickels are on their way http://money.cnn.com/2004/03/03/pf/debt/new_nickels/index.htm Snippit: The first redesign in 66 years of America's five-cent coin becomes a reality this month. Last April, the U.S. Treasury announced that the nation's five-cent coin would be redesigned. In November, when the government unveiled that new pattern, it added a twist: There would be two new nickels issued in 2004, instead of just one. This week, the U.S. Mint announced that the first of those two editions is ready to go. The change marks the first alteration to the nickel since the most recent version was introduced in 1938. That familiar piece depicts Thomas Jefferson on its front, with an image of his Monticello estate on the back. The backside of the nickels now entering circulation features the Jefferson Peace Medal. This was a ceremonial medallion presented to Native American chiefs during treaty signings and other big pow-wows. It displays clasped hands and a peace pipe overlapping a hatchet. The second nickel will be released in the fall, and will be engraved with an image of the keelboat used by Lewis and Clark in exploring the American West. President Jefferson was that expedition's chief patron. Black Blade: No mention of a change in metallic composition but it has been discussed over the last couple of years. Base metal prices have risen higher putting pressure on the Mint to find cheaper substitutes. Aside from the nickel, pennies use to be copper and now are primarily zinc. The price of zinc has risen higher to the point that some law makers have proposed eliminating the penny altogether. goldquest (03/04/04; 21:08:39MT - usagold.com msg#: 118041) Flow of Funds Accounts of the U.S. http://www.federalreserve.gov/releases/z1/current/default.htm Under F200, Gold and Official Foreign Exchange Holdings, Total U S Reserves, they have -8.3 billion. This seems like a lot of negative reserves if I am reading this right.Is there anyone who would care to decipher this?Go to the Flow Table and then scroll down to F200 to read the information. Waverider (03/04/04; 21:02:51MT - usagold.com msg#: 118040) Greenspan Eyes Irrational Exuberance in Asia http://quote.bloomberg.com/apps/news?pid=10000039&cid=ahearn&sid=aI01_k8YTdEM "If you want to make central bankers squirm, ask about the currency markets. They'll shift in their chairs, look at the ground, and invariably say: ``No comment.'' It makes you wonder what Alan Greenspan, the world's most influential central banker, was thinking this week when he said Asian central banks may soon reduce their ``extraordinary'' U.S. dollar purchases. Even more baffling is why the Federal Reserve chairman seems to be trying to jumpstart the process. The general sense here in Asia is that in his speech on Tuesday to the Economic Club of New York, Greenspan was signaling that Japan and China should curb their dollar binge. In the last two years, Asian central banks hoarded $240 billion of dollar assets. Japan and China alone hold more than $1 trillion in dollars. Greenspan seems to have two risks in mind. One, how Asia's Treasury buying binge is affecting the Fed's policies. Two, Asian central banks may be introducing a degree of irrational exuberance into global debt markets. Waverider: A good read from Bloomberg (of all places). Ag Mountain (03/04/04; 18:37:05MT - usagold.com msg#: 118039) RE: Saudi gold @Ned, gold is like an emotion You can have a lot of it but that doesn't mean you have to wear it openly on your sleeve.There's lots of ways it doesn't have to show up on the official books. Just look at the U.S. government. Think about trillions of revenue the government has received and rolled into hard assets like bridges, Pentagons, NORADs, and other things that aren't tallied on the central bank books as reserve assets.Why do you say gold and oil never move in the same direction and then conclude that Saudis don't need oil AND gold? Think about how much oil has left the sands. Right, they don't need oil AND gold, but one day there will be no oil, so you might guess they will have BOTH in the transition time as the original oil is pumped away.You can look at Norway as a different public example of an oil rich country that as it pumps away its oil it is trying to preserve that wealth in another form. In the case of Norway it is very publicly wearing it on its sleeve in the shape of the Government Petroleum Fund which you probably shouldn't see double listed formally as a monetary reserve in the central bank. For reasons that are knowable only to Norway they have decided to shape this fund with external claims of stocks and bonds, meaning on top of everthing else they have to worry about counterparty risk when their oil runs out. Won't the Saudis seem smarter when they draw on their own fund someday and everyone can see it's been as risk-free as the original oil?Fortunately with lots of oil Norway still has lots of time to learn a hard lesson and lots of time to shift the makeup of their fund to solid gold. Maybe they already see the light and have ideas for ANOTHER fund. Don't take my word for it. Here is an article, maybe it will make you think all this for yourself. It's probably too far over my head to say anything.-Reuters-UPDATE - Norway's oil fund up 39 pct in 2003 to NOK 845 blnWednesday March 3, 4:17 am ET OSLO, March 3 (Reuters) - Norway's oil fund, saving wealth for future generations, grew by 39 percent last year to 845 billion crowns ($121 billion) at the end of 2003, helped by firm equity markets, the central bank said on Wednesday.The Government Petroleum Fund, invested in foreign stocks and bonds to save cash for when vast oil and gas resources run out, was worth 609 billion crowns at the end of 2002."The return on the government petroleum fund in 2003 was 12.6 percent measured in international currency. This is the fund's highest return ever," the central bank, which managed the fund, said in a statement.The fund, which has ballooned since it was set up in 1996, was worth 803 billion at the end of the third quarter last year.Norway pumps about three million barrels per day and is the world's third biggest oil exporter after Saudi Arabia and Russia.Of the 236 billion crown increase in 2003, 104 billion was new capital transferred from the Finance Ministry, while the return on investment, measured in a basket of international currencies, corresponded to 91 billion.-Reuters- Goldilox (03/04/04; 18:08:46MT - usagold.com msg#: 118038) Memory Lane Archives I, too, took Belgian and Randy's suggested trip down "Memory Lane" today. It brought the positions of the Oil states into much more clarity. Gold is not a religion. Nor is it a particularly predictable trading commodity currently. I think I better understand why traditional money mangers have opted for the "conservative" approach of 10% vestment in hard currencies. Given the unfolding major currency upheavals, I can see increasing that number, but not to the point of illiquidity in "daily" fiat requirements. This is a secular bull, with many trendy pitfalls along the way. We may lose some lesser committed friends as the story unfolds, and we should gain some new ones, as well. Some of the more "irrationally exhuberant" may be tempted to "play" this market and find out the rigged game can bankrupt them in bull accoutrements, as well.Physical holdings equal wealth stored, above and beyond transactional needs. Everything else is truly visiting TPTB's honky-tonk to purchase their hospitality and ride their mechanical bull.Tic toc . . .Got gold? Socrates964 (03/04/04; 18:01:59MT - usagold.com msg#: 118037) Ned 1. Jim Sinclair has final dollar low in the low 60s.2. The point I wasing to make was that regardless of how much gold the Saudis have, they won't show their hand, a) because the princes who rule it aren't accountable to the general public, and b) because it would be counterproductive to show their hand. I.e. imagine that there really is an oil for gold swap going on. If the market saw large and ongoing accumulation of gold, it would immediately work out that gold was a petrocurrency, and would price it accordingly, probably sabotaging the whole operation. Socrates964 (03/04/04; 17:54:16MT - usagold.com msg#: 118036) From tonight's MIDAS Posted at the GE Forum and ECU Silver forum:"I think this is important and nobody has noticed (texasgold) Mar 04, 11:41 Good Folks:I have been a lurker, but a situation is setting up that I want to draw everybodys attention to. When the heavy currency interventions started in the fall, I noticed that the bonds would rally every time the dollar got hammered. This inverted the normal relationship where US bonds should sell off when the dollar sells off. Heck, even Sinclair himself ( I think around Sept) was buying bond puts figuring the dollar fall would start the collapse of the US debt bubble. But it didn't happen, and bonds pulled off a completely unexpected rally in the face of an improving economy. Well, we all now know why. The Japanese, Chinese, et. al. were issuing debt (bonds) in their own currency, taking the cash proceeds, selling the proceeds (their own currency), buying dollars, and with those dollars buying US treasuries, Agency bonds, and who knows what else (could they be buying up the stock market too). Well come December of 2003 and the news stories started hitting about size of the monthly BOJ currency operations and the Japanese Ministry of Finance increasing their own foreign currency holding limits to some unbelievably huge number of trillions of Yen for 2004 to further facilitate the USD currency operations(with the requisite Japanese Gov Bond issuance to finance the whole thing). I had to say to myself "what idiots would buy Japanese Government bonds (JGB's) at almost zero yield", and thus give the BOJ the ammo to fight with. I pulled up the JGB chart fully expecting to see the bond selling off in the face of such huge additional issuance (300+ Billion USD worth of additional JGB's issued that the market was not expecting) .... and what I saw totally confounded me. The JGB bonds were not selling off, but were in fact rallying to new intermediate term highs! As I researched the JGB market I found that almost all advisors (Dawa Securities, Mizho Securities, etc.)were calling for increased demand for JGB's, which totally confounded me. I couldn't understand why with such huge issuance, with such a risky and nontraditional Central bank ploy, junk-bond status, why would Japanese citizens, banks, corporations, and foreign investors buy this junk paper yielding almost nothing. (Japanese government debt was downgraded to below junk status in Spring of 2003 by Moodys and Fitch.) http://gabeharris.com/JapanBotswana.html I was totally confounded why the JGB continued to rally, and in fact broke out to the upside while the massive currency interventions were going on. Japan had to issue over 200 Billion USD worth of JGB's in 2003 and well over 100 Billion USD worth so far this year just for currency intervention alone. Well, I finally arrived at the answer. It seems the reason that Japanese buy the JGB is that their banks are insolvent, and with greatly reduced government deposit insurance, large holders of cash have nowhere else to go for safety. So I have been monitoring the JGB chart to see if/when it breaks out to the downside. This would put a huge crimp in the Japanese Ministry of Finance currency operation (very similar to the carry trade sell JGB's yielding almost zero and buy US treasuries yielding 2% - 5% depending on maturity). http://customer1.barchart.com/custom/alaron/4015.htm As you can see from the chart the JGB has broken out to the downside. Five days in a row down which is unprecidented in recent times. Well, yesterday I also looked at long term government bonds of most of the other economically important nations like Britain, Euroland, Germany, United States, etc. (Bund, Shaatz, EuroBond, US Treasury, etc.). ... and guess what? Thhey are all sitting on their lower uptrend line and are one down day away from also breaking out to the downside. So it looks like in spite of what anybody is saying about lowering rates anywhere in the world, the bond markets are smelling the rat, and rates may be ready to rise on a world wide basis. You could just about overlay the bond charts of any major currency nation on top of each other and they would match. It is uncanny but makes sense all of the world's bond markets are linked together, where the carry trade of borrowing where rates are low and lending where rates are high (could this be the reason for the huge amount of financial derivatives at JPM, Citibank, hooligans, et. al.) Rates are gonna rise, but it looks like they are going to rise for all countries simultaneously. Looks like the end game in rates/currency is about to start. The holders of debt worldwide are fixing to be in a world of hurt if the US, British, German, Euro, etc bonds confirm the Japanese JGB breakout to the downside. MONITOR THIS SITUATION MY DEAR FRIENDS. Ned (03/04/04; 17:43:43MT - usagold.com msg#: 118035) Belgium USD is definitely in a downtrend....120>>>>84. Now a bounce to 89, is this a new trend? Maybe. Should the DX go lower than 84........80.........70? Less? Let me ask the final definitive question. When the DX has completed the long-tern downtrend what is the final number? My guess is 60, half the original 'value'.The Saudi reserves of $24 billion. Is this abnormal? Suppose they said they had a third in each dollar, euro and gold. Should we not believe them? Suppose they said half euro and half gold. Would we believe them? So they say 95% is in dollar and 5% in gold. Is this good, bad, believable, "fabrication and lies"? Maybe we shouldn't believe the opening statement of $24 billion. Maybe it's next to nothing? If I was Saudi I'd have ZERO reserves, all my reserves are beneath my feet, man!! Collateralize that!!.Let me ask an honest question. Why would you need to call my assumption that Saudi if not holding gold? The article said Saudi is not holding alot of gold in reserve, Sundeck asked why? I offered an opinion that Saudi need not hold gold. FOA always said "gold and oil never move in the same direction", recall? Saudi doesn't need oil AND gold !As FOA, Ari and you often say........smile Belgium!A bientot. Stevens (03/04/04; 17:36:26MT - usagold.com msg#: 118034) On trade imbalances, the value of the dollar, and gold. During the gold standard, trade imbalances were corrected by the flows of gold between nations. as goods were demanded in other nations, gold would flow out of the importing nation and seek exports. the price level of the exporting nation would rise as money increased in that nation, while the price level in the importing nation would decrease as the money supply contracted.Today,we live under a floating exchange rate system, and while we still have money flowing between borders, the automatic price increases and decreases of national price levels, have been muted. the currencies of nations take most of the brunt of price changes. we still see prices go up and down, but this is achieved through currency revaluation's and devaluation's.I don't think most people realize how long trade cycles take to correct imbalances. It is not a matter of years, it is a matter of decades, and indeed, can take more than a century to swing from an overextended deficit to an overextended surplus.In this context, I believe, that even though we have seen a marked devluation of the dollar, we are at only the beginning of the process. But I reject the notion that we are in the midst of a dollar crisis, we are in the midst of a process towards the elimination of our trade deficit. Now, I know of no market solution to eliminate the deficit other than allowing the dollar to fall to a point where it is a disincentive to buy the now, high priced exports, and an incentive to buy cheap American goods. However, this can take a very long time.The dollar has bounced off support at the 85 level, basis the dollar index, and could stay around the 90 level for some time, but this would not prevent the inexorable fall to lower levels. There are two things that we can be sure of: one, is that we are in a long term bear market in the dollar, and the other is that we are in a long term bull market in gold. Thus, long term patience is a virtue, and short term market reversals must be kept in context. CoBra(too) (03/04/04; 16:29:18MT - usagold.com msg#: 118033) GSE's - Where's Smoke there may be Fire http://biz.yahoo.com/rf/040304/financial_mortgages_rating_1.html Interesting that the main mortgage suppliers are only "sponsored" to borrow up to 2.5 Billion dollars in an emergency. A far cry from the Trillions they have added to their books over the last few years. The last pillars of collateral for the burgeoning debt seem somewhat fragile. Got real collateral? cb2 TownCrier (03/04/04; 15:24:13MT - usagold.com msg#: 118032) Belgian's reminder http://www.usagold.com/goldtrail/archives/GoldTrailThree.html Thanks for inspiring the trip down memory when two day's ago you suggested that people take a fresh look at FOA's messages #7, #8, and #9 at the earliest 'Trail Head' portion of 'The Gold Trail'.I took some extra time while there and cleaned up the fonts (size and typestyle) to finally match the forum. (The pages with ANOTHER's "Thoughts!" had already gotten their own facelift a few days earlier, over the weekend.) Hopefully this improves the general readability of the lengthy text.Coming finally to my point, while there I was reminded of the seminal "break-through" posts FOA created when he took us on an intimate trip to life in the "ancient" world. These posts are a "must read" for any gold advocate, and can be found at the link above, specifically posts #56, #58, and #64.Happy Trails!R. Goldilox (3/4/04; 13:49:04MT - usagold.com msg#: 118031) Ag charts @ J-BullionBe careful. Kitco and Comdirect chats for Ag show almost no correlation to each other today. J-Bullion (3/4/04; 13:30:54MT - usagold.com msg#: 118030) Silver It looks like Silver just popped back up .10 that it lost at the close. What is going on there? Goldilox (3/4/04; 12:53:05MT - usagold.com msg#: 118029) US Mint rleases new "nickel" http://www.usmint.gov/about_the_mint/index.cfm?action=coin_specifications With all the discussion of coin-metal values in this commodities bull, it's interesting that the US Mint released a new "nickel" today. I couldn't find any information on changes in metal composition, but I included a link to the metals composition for all circulating coins (Eagles excluded). Federal_Reserves (3/4/04; 12:40:47MT - usagold.com msg#: 118028) US Worker more productive http://biz.yahoo.com/bizwk/040304/sb20040330420_1.html IN retrospect, however, Rocci now attributes most of the gains to improved product sales. "There were productivity issues over there (in India)," he recalls. "Here, one guy might do the work of five or six in India." And there were cultural issues that presented major hurdles. "It was difficult to get one guy to run one project. They work in teams and it takes a minimum of two people to do anything. I remember I was over there once and I was walking by a metal-stamping press, and there were two people sitting shoulder-to-shoulder -- the whole mindset was to create jobs." Even so, Rocci notes that some administrative jobs couldn't be handled in India and were sent back to the home office.Walt Wilszewski, vice-president of sales and marketing at AM, had the same feeling. "I felt we needed one-and-a-half times the Indian programmers to do the same amount of work as U.S. programmers," he says.#####US labor in all categories is number one! US workers work. I'm proud of US workers. They bust their asses!IMHO the CEO's aided an abetted by our paid off congress are using the poor quality foreign worker to keep the wage demands of the high quality US worker in check. Its an on-going backstabbing and rape. Truthcaster (3/4/04; 11:32:47MT - usagold.com msg#: 118027) abnormal silver day Abnormal silver day with huge up's and down's on thechart and right at the close a 10 cent drop, I smell a ratthis time around. Pulled gold down with it a little.can't the feds come up with a new game? goldenpeace (3/4/04; 10:49:22MT - usagold.com msg#: 118026) Silver For what it' s worth, Murphy just reported that Goldman just bot 1300 March silver, sold 1300 May silver and bot 2-3000 April 750 silver calls expiring 3/25bowinggoldenpeace Goldilox (3/4/04; 10:43:52MT - usagold.com msg#: 118025) Ag quote - thanks @ Sundeck:Thanks for the link. My main computer is in the shop for a display issue, so I am struggling through with an old backup. The backstep in technology isn't so bad, but all of my favorite charting links are on the other computer. steady (3/4/04; 10:42:08MT - usagold.com msg#: 118024) numbers u cant change the order but u can combine digits to make for a 2-digit number. u must observe the order of operations1, 2, 3, 4, 5, 6, 7, 8 =90 Sundeck (3/4/04; 10:33:11MT - usagold.com msg#: 118023) Goldilox - Ag http://focus.comdirect.co.uk/en/detail/_pages/charts/main.html?sSymbol=SLV.FX1 Take a look at Comdirect - silver still doing its thing...the flatline at Kitco is just some site-specific issueCheers Goldilox (3/4/04; 10:21:56MT - usagold.com msg#: 118022) Ag Is something strange going on with Ag? It has flatlined for the last hour and a half of NY trading. No trades? or bad chart? Belgian (3/4/04; 09:46:47MT - usagold.com msg#: 118021) @Ned I agree with Socrates' answer : dollar-decline is major trend, zigzagged by little countertrends. From un-safe dollar-paper to safe Gold-haven.Saudi Gold-statistics : Imagine, Arabia would officially show that their total (hidden) Gold holdings are much more than those of the dollar superpower !? Remember the captured (?) Iraqi gold-trucks...Iranian Gold, etc.Always take official gold-statistics with a lot of salt. China's (Russia) gold included ! Idem dito for many gold-commitments of many different natures. Plenty of examples in history to evidence that Gold-Possession is often hidden and secret. Because there is not enough Gold for all those who want to hide in it.We might soon see 40$ (unsafe dollars) per barril ! Smile Ned. VanRip (3/4/04; 06:23:59MT - usagold.com msg#: 118020) Bank of England Keeping rates on hold at 4% http://news.bbc.co.uk/1/hi/business/3532415.stm (snip)Reacting to the MPC's decision to leave rates alone, David Frost, Director General of the British Chamber of Commerce, said: "This is the best decision for business. Socrates964 (3/4/04; 05:06:39MT - usagold.com msg#: 118019) Euro again As I said yesterday, a 1.5c bounce off support is a trend reversal in my book. We're getting very close to the 1.2230 level on the Euro. Socrates964 (3/4/04; 05:04:54MT - usagold.com msg#: 118018) Ned 1. If I can quote in Euros (the Euro + related currencies - GBP, CHF, SKR account for 85% of DX), the move down from 1.29 to 1.2050 or thereabouts is a normal countertrend, which can be a Fib submultiple (.382, .618 or .786) of the main trend (currently from 1.0780 to 1.29). A 38.2% retracement is really no big deal, although it feels that way to traders who don't look at the big picture.2. You assume that any putative oil for gold sales would go into Saudi's national accounts. I would have thought that everyone involved would go to enormous lengths to conceal the fact, so official stats showing the Kingdom's official gold position rising month after month is about the last thing I'd expect to see. USAGOLD / Centennial Precious Metals, Inc. (03/04/04; 04:12:11MT - usagold.com msg#: 118017) Put a gleam in their eye, or yours! http://www.usagold-jewelry.com/
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