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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...

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ARCHIVED DISCUSSION FROM 11/5/1999
All times are U.S. Mountain Time

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onlychild (11/05/99; 23:25:53MDT - Msg ID:18464)
EMSAEMSA-- Niche market for silver
Just an educated guess, the drawback with electric automobiles is the weight and bulk of the power source (lead-acid batteries). A lighter, more efficient battery would revolutionize the electric car. Which, by the way, would sell a lot of batteries. The downside is that this new battery is expensive because it contains silver. But think about how cheap it might seem in comparison to $2.50/ gal gasoline. Does Buffet know something about oil and cartels that we don't know.......?

DD (11/05/99; 23:14:03MDT - Msg ID:18463)
Too much stuff going on at the same time
Hi all-

I saw DD's (no relation) info a few days ago and debated about putting it on the forum. I decided there wasn't enough data to support her claims. However, it's still another bullet in the chamber of the smoking gun that has yet to be fired. What's the smoking gun? INTERCONNECTS!! Nearly every computer on this planet (including embedded systems) is connected either directly or indirectly.

The formula for probability of systems break down based upon the number of subsystems is 1-(1-p) to the n where n = the number of subsystems. A short chain of ten subsystems with a 5% chance of subsysten failure would compute to as 1-(1-.05) to 10th power or 1- .95 to the 10th. This works out to a probability of failure of this short chain system to 40%. At a 10% subsystem failure probability the probability of system failure in the short chain is 65%.

Obviously, there are millions of primary chains and most are considerably longer that 10 subsystems. It's not difficult to imagine innumerable nasty surprises just based upon probability. How many system won't be fixed worldwide? How many will be partically fixed? How many will be fixed badly? How many bad systems will infect good ones? How many data bases will be scrambled? Now, add in the historical number of latent defects in remediated and end to end tested systems (by the way, there will be few or NO end to end tested systems because everything is connected and end to end testing is, for practical purposes, IMPOSSIBLE) and the probability major systems failure becomes virtually a given.

What are the odds of Saudi Arabia having oil problems at the well, in the pipe lines, at the ports, on the ships? Or of the US oil companies having problems in the ports, or in the pipe lines or in the refineries or in the distribution systems? Or how about in the government agencies that control oil flow out of Saudi Arabia or into the US? Or? Or? Or?

Me thinks we got a heap of trouble. We haven't even talked about those tens of thousands of banks worldwide that AG says of "99% compliance is not good enough". And speaking of AG. Hey Al. How are you doing with the 300,000+ connections that have to work compliantly at the FED. Good luck.

Logically, it's impossible to make a case for a bump in the road. That bump in the road will be road kill for the unprepared, IMHO. Best, DD

Black Blade (11/05/99; 22:37:39MDT - Msg ID:18462)
Do I see a lack of confidence here? hmmmm.....
http://cnniw.newsreal.com/cgi-bin/NewsService?osform_template=pages/cnniwStory&ID=cnniw&storypath=News/Story_1999_11_05.NRdb@2@5@3@159
Y2K compliant companies now asking "What if?"

Black Blade (11/05/99; 22:29:11MDT - Msg ID:18461)
Koskinen not pulling the party line?
http://www.zdnet.com/zdnn/stories/bursts/0,7407,2388858-1,00.html
So, the prez's Y2K czar is a wee bit concerned is he?

By Jim Wolf, Reuters
November 5, 1999 5:15 AM PT

WASHINGTON -- President Clinton's chief adviser on the Year 2000 technology glitch warned the nation Thursday that Jan. 1 would not mark the end of Y2K-related concerns.
At the same time, a working group led by the Treasury Department voiced concerns about the Y2K readiness of key public and private institutions and the infrastructure of many countries including China, India, Russia.

The President's Working Group on Financial Markets cited concerns about small- to medium-sized enterprises worldwide, including in the United States, and about "the financial sector in several small European markets" that it did not name.

"One risk is the potential for a 'domino' systemic effect brought about by significant disruptions to these groups because of the Y2K rollover," said the working group, which consists of the Treasury, Federal Reserve Board of Governors, the Office of the Comptroller of the Currency, the Securities and Exchange Commission and the Commodity Futures Trading Commission.

Many of the countries that are least prepared for the Year 2000 are important energy exporters, said the report, prepared at the request of Rep. John Dingell of Michigan, the ranking Democrat on the House Commerce Committee.

Engery exporters threatened
"Any significant disruptions from the century date changeover that impact (the energy) industry locally could have a negative impact on the U.S. and global economies," the report said.

It cited Russia, Iran, Venezuela, Nigeria, Algeria, Indonesia, Turkmenistan, Malaysia, Uzbekistan, Nigeria, Angola, and Colombia as among energy exporters that "may experience disruptions tied to Year 2000."

John Koskinen, Clinton's Y2K czar, told Congress that one of the most troubling Y2K myths "is the notion that January 1 is a seminal date on which everything, or nothing, Y2K-related will occur."

In testimony to a joint hearing of House of Representatives subcommittees, Koskinen said Y2K problems "can happen any time a computer that is not Y2K-compliant comes into contact with a Year 2000 date -- before or after January 1."

'I think it is important for the public to know that January 1 is just one of the important dates in the life of the Y2K issue.'
-- John Koskinen, chairman of the President's Council on Year 2000

Koskinen, chairman of the President's Council on Year 2000 conversion, said experts would have to monitor automated systems "well into the new year for flaws in billing and financial cycles and possible slow degradations in service."

"So I think it is important for the public to know that January 1 is just one of the important dates in the life of the Y2K issue," he said.
Koskinen said basic U.S. infrastructure was ready for Jan. 1, when unprepared computers could crash if they misread the last two zeros in the date field and mistake 2000 for 1900.

U.S. perfection impossible
But not every system will be fixed in time, "and no amount of testing can ensure perfection," he said. He noted that a few federal agencies encountered glitches -- even in systems that had been fixed and tested -- when fiscal 2000 began on Oct. 1.
"We also expect failures in sectors where large numbers of organizations were late in starting or, even more troubling, are taking a wait-and-see approach," Koskinen said.

In separate testimony before the House panels, J. Patrick Campbell, chief operating officer of the Nasdaq stock market, disclosed plans for a public relations blitz designed to prevent any panic sell-offs as 2000 approaches.

The securities industry is taking out ads in major daily newspapers -- including the New York Times, Wall Street Journal, Washington Post and Los Angeles Times -- in the next few weeks to "separate Y2K fact from fiction," he said.

The text of the ad call on investors to "stay invested for the long term," adding: "We believe the market will continue to reward prudent investors with the patience to stick to sound investments over time."

Scrappy (11/05/99; 22:28:10MDT - Msg ID:18460)
Solomon,
Thank you.
That info is a big 'wow' in my book. Silver is rarer than gold? (Based on above ground reserves, check.)
So, in terms of using a metal as a world-class asset, gold is the more realistic choice? Easier for them to get a grip on? What ARE they going to do about all the silver shorts? Just let them go 'boom'? I'm tired, so please forgive me if I am not getting this.

Also, I really do have to get to sleep. Work at 5:30. If I don't say thank you for a forthcoming response, that is why. But I will look tomorrow.

EMSAEMSA (11/05/99; 22:16:33MDT - Msg ID:18459)
BATTERIES NOT ROBOTIC
SCRAPPY
BECAUSE OF THE HIGHT CONTENT OF SILVER , IT WAS NOT ECONOMICAL FOR REGULAR BATTERIES AND ALSO FOR RECYCLING PURPOSE A GUEST, BUT THE CAPACITY WAS THE INEREST THERE WAS SOMETHING FOR CARS BUT NOT ENOUGH SILVER IN THE WORLD SO THIS WAS OUT THE WORDING MAY BE A LITTLE OUT BUT THE SPIRIT OF THE ARTICLE THAT ACCORDING TO MY MOMERY...

JLV (11/05/99; 22:16:27MDT - Msg ID:18458)
Scrappy
I believe it has to do with gold's unique ability to be used as a political and financial weapon.

Scrappy (11/05/99; 22:15:26MDT - Msg ID:18457)
Good night, all.
I must do the 'thud'.
I'll check in tomorrow, of course.

Sweet golden dreams, to everyone.

Solomon Weaver (11/05/99; 22:14:34MDT - Msg ID:18456)
silver as money
Scrappy

This is only MY opinion...

I think that the USA has used massive fractional reserve foolishness, massive "paperification" and "debtifying" of monetary assets. I agree with many on this forum that the dollar as the main reserve currency is in trouble. It is unfortunate for us all that y2k is happening in the middle of all this.

The result: People will be burned by banks and be cautious about investments. In the new era after y2k recovery, people will be attracted to money methods which have PM backing.

In the new era, the intrinsic value of gold will rise so high that it would be almost impossible to spend gold coins (like spending $1000 bills). Silver makes a good coin. Cheap enough that the common man can afford.

The main drawback I see to the use of silver is that for the last 50 years, we have been mainly using up inventory. IF ANY MAJOR COUNTRY MADE A SERIOUS EFFORT TO GO OVER TO A SILVER COIN (IN CIRCULATION) THEY WOULD DRAMATICALLY INCREASE THE YEARLY DEMAND.

Silver now trades at about 5$. Gold at about $300. Roughly 60x. The above ground reserves of gold are about 3.8 billion ounces. The above ground reserves of silver are between 500 million and 1 billion ounces. BASED ON ABOVE GROUND RESERVES, SILVER IS MORE RARE THAN GOLD. The "short" position in gold is about 10,00 tons, or somewhere around 1/10 of above ground (means that even all the shorts could be theoretically covered). The "short" position in silver is over 1 million ounces which is more than the entire above ground stock of reserves".

SHORT SELLERS HAVE MADE A VERY DANGEROUS MISTAKE IN SILVER MARKETS: Because they could lease silver, just like gold, they have played the same game. But in silver, the game has gone much to far.

The Town Crier had this to say tonight in his after the market report:
[Wasn't silver selling for approximately $5.25 prior to September 21 UK auction and subsequent announcement of the Washington agreement? Woof! Down sharply, while gold maintains sizable positive ground gained from its pre-auction level near $255. The lesson here is that they are fundamentally different assets responding to fundamentally different factors.

I would propose that the REASON THAT SILVER returned so quickly back to the levels it was at is that UNLIKE GOLD which was so large that many short portfolios can live with 280-300 for gold, silver is such a thin market with such a large amount of hopeless shorts that it was manipulated very quickly back down. I BELIEVE THAT THE FED IS MANIPULATING SILVER BECAUSE A PROBLEM THERE COULD TRIGGER A PROBLEM IN GOLD.

Poor old Solomon

Scrappy (11/05/99; 22:07:34MDT - Msg ID:18455)
JLV
Thank you.
But still, I wonder. Why? IS gold more readily recognised on a world-wide level? DO central banks include silver among their assets? Anyone know?

JLV (11/05/99; 21:56:00MDT - Msg ID:18454)
Scrappy
What FOA MAY have meant is that silver would increase dramatically in $ price, but that gold would absolutely RUN AWAY from everything, including silver.

FOA holds 1% of investments in silver.

y2kwiz (11/05/99; 21:43:10MDT - Msg ID:18453)
(@Lafisrap) Chevron/Tenneco Post Y2k Production Levels
In another post it was disclosed that a Senate witness spoke of reduced levels of petroleum product production (30%). DD1stLight may have seen or heard of that testimony and incorrectly remembered 10-Q's (which generally hide more than they reveal). There was also a recent posting mentioning that at least one (Chevron?) recent 10-Q was unavailable (perhaps briefly). It has been widely observed that almost all corporations and most other organizations will not reveal all of the pertinent facts supporting any position they take regarding their Y2K readiness. DD1stLight would be less likely to offer her views if she were either employed by or consulting for a major oil company.

Jake (11/05/99; 21:42:36MDT - Msg ID:18452)
USAGOLD
Eldorado is one of my favorite works of Poe but never knew it had been recorded and by Donovan, one of my old, old favorite singers. You say a year or two back? I must find it. Now I have quest...Thank You for that information.

Scrappy (11/05/99; 21:40:36MDT - Msg ID:18451)
Solomon,
Do you know what role, if any,
silver will have in the world money changes? I seem to recall that FOA said that gold would leave silver far behind at some point. I don't understand this, as it seems to me that silver has, also, always been money. Is this not true for all the countries of the world? Is that why?

Solomon Weaver (11/05/99; 21:34:16MDT - Msg ID:18450)
Buffet made a 20% return on silver in the first year
http://www.gold-eagle.com/research/butlerndx.html
There are a couple articles at the above link on Buffet and Silver...one thing that struck me...Buffet went out and bought over 10% of the world's silver and then got an instant windfall of $1 per ounce by agreeing to keep the leases open on a lot of that silver.

--

"One person who obviously has made that connection is Warren Buffett, the world's most successful investor. I've been thinking about Mr. Buffett lately, as my piece a fortnight ago indicates. One of those thoughts is how entertained Mr. Buffett must have been to read Martin Armstrong's recent comments about how Mr. Buffett made a "serious mistake" in his well-known silver purchase. As the world's most enthusiastic silver bear, Mr. Armstrong can be excused for his extreme statements, but it got me to thinking that one of his more outlandish predictions - that silver was going to $3 - actually came true. You see, the sub-$5 cost basis for Buffett's purchase must be reduced by the dollar or so leasing fees that Buffett received in consideration of lending silver to avert a default last year by the shorts. I bet Mr. Buffett really gets a kick out of Armstrong."

Poor old Solomon

Scrappy (11/05/99; 21:31:11MDT - Msg ID:18449)
EMSAEMSA
Sure wish I knew more about robotics.
Perhaps you are right.
But if that's the case, I wonder how long before silver 'goes to the moon' again?

Solomon Weaver (11/05/99; 21:26:41MDT - Msg ID:18448)
stay out of paper silver
http://www.gold-eagle.com/gold_digest_98/butler111498.html
In this article called "A PERMANENT SILVER SHORTAGE" we find the following advice to stay away from contracts (the only safe play in silver is taking delivery (buy on hold?)

---

"With the real silver long-term situation so tight as to leave you in awe; the last thing this market needs is the largest paper short position in history. Given the historical precedence, when the crunch comes, paper longs will not be able to convert to physical, as their contracts proclaim. It is just not possible. There is too much paper and too little real metal. In the crunch, at the watering hole, paper won't hold up."

Poor old Solomon

EMSAEMSA (11/05/99; 21:17:26MDT - Msg ID:18447)
SILVER USAGE (BUFFET)
BUFFET'S HOLDING IN GILLETTE AND DIVISION DURACELL ,THEY ARE WORKING ON A BATTERY THAT WAS USED FOR THE ROBOT ON THE MOON I REMEMBER IT WAS SILVER WITH SOMETHING ELSE PERHAPS LITHIUM AND IT TOOK AROUND 20% SILVER IF MY MEMORY IS WORKING WELL TONIGHT.HAVE THEY FOUND A NICHE MARKET FOR THAT PRODUCT????EMSAEMSA

Scrappy (11/5/99; 20:48:36MDT - Msg ID:18446)
Capella,
I've been wondering about silver quite a bit, as well
After all, if the likes of Mr. Gates and Mr. Buffet are buying huge chunks of it, why not? There are so many possible scenarios for all the situations out there these days...

But, as someone pointed out to me, their reasons for buying into silver could be related to possible industrial demand. Something about the need to come up with a differnt 'solder of choice' in the manufacture of computer parts. Silver is a leading contender. (Lead is used, at present, which poses health and diposal problems).

Of course, that is only a pOSSIBLE reason that some prominent 'big' money is going into silver.
Just a thought, why were these two acts made so public?
A possible diversionary tactic? What common person would think that gold was going to be the 'next' big thing, (again}, if the billionaires are buying up all the silver?
Anyway, I don't know if the worlds' central banks include silver in their listed assets, but I do know they include gold.

Lafisrap (11/5/99; 20:43:11MDT - Msg ID:18445)
Tenneco's Q10 for 3rd quarter 98

. . . no such statement in Tenneco's Q10 for 3rd quarter 98.

The URL is:
http://www.freeedgar.com/Search/ViewFilings.asp?CIK=823549&Directory=950129&Year=98&SECIndex=3503&Extension=.tst&PathFlag=0&TextFileSize=80089&SFType=&SDFiled=&DateFiled=8/14/98&SourcePage=FilingsResults&UseFrame=1&OEMSource=&FormType=10-Q&CompanyName=EL+PASO+TENNESSEE+PIPELINE+CO

So, I could find no support for DD1stLight's general message in the Chevron or Tenneco's Q10s. Therefore, upon investigation, the lack of supporting evidence tends to discredit DD1stLight's general message.

That's the way it is. The Q10s do NOT say what DD1stLight claimed.

Just for the record though, I expect enough economic disruption attributable to Y2K to cause a recession, at least a recession.

About Gold: I am hoping the price continues down. If POG reaches $275 again I will be very happy and buy as much as I possibly can.

Lafisrap

Scrappy (11/5/99; 20:28:15MDT - Msg ID:18444)
ALL
Thanks so much
for all of the wonderful wishes. Really, I wasn't fishing. I was, in fact, sharing a little of my own bitterness at the irony of it all. (Does that make sense?)

ORO, uh, thanks, but, paper cake goes up in flames faster than my daughters' choclate chip cookies.

CoBra(too), thanks for the lead on the worlds' best PHYSICAL
cake, (Did you catch that, ORO? PHYSICAL cake)

YGM, ah, yes, the delusion of eternal '29'. But, my old Irish grandmother always said, "Once ye start worrying about how old ye are, don't tell 'em yer younger then ye are, tell 'em yer 10 yeers elder then ye are. Then they'll alway marvel aboot how GOOD ye look fer yer age"

DD, That sounded so elegant! "The Scorpio Lady of the Table Round" And how wonderful, to be a kid again! Thank you!

Leigh, doesn't matter. Monikers' a moniker, and there are several that are attatched to me, not all of them nice. :}
I only was trying to lend a personal touch in a time when several of us had our nerves a little frayed. As long as you remember the 'touch', it doesn't matter how you address me. (Too late, I've blown my cover, they'll find me for sure, now.) :}

All: I am very happy to see that the subject of 'cake' has not disappeared entirely, over the last few days. I find PHYSICAL cake, (Physical, ORO, like, in my hands), at least as soothing as gold in my hands. And if it's CHOCOLATE, well, now you know how to get a bit of gold away from me. Maybe. (TWINKIEStm don't count. Yech.)

Capella (11/5/99; 20:24:37MDT - Msg ID:18443)
could silver become the metal of choice?
Hello folks, I'm wondering with all the manipulation of the world's economy that we see...if the big guys, the puppeteers could just decide that they would base the economy on maybe silver, and say that gold was old-fashioned and now only worth anything as adornment and dental caps. I mean...they could do it, right? It might not mean much to the citizen for awhile but they could force it to happen if they wanted to. They could pass laws that it is unlawful to pay debts with gold and punish those who do. And I wonder about this especially when I hear of people like Buffet buying up large amounts of silver.
What I want to know is what is Henry Kissinger doing with his money? He is one of the Council of 300 and made that statement about taking his money out of the banks (the statement was immediately hushed up they say). So, where did he put it after taking it out of the banks?
I'd love to know what you people think of this. I also wonder what people think the worldwide economy is going to do if the predictions of the US only having 20-40% of it's oil supply available for the years to come. blessings to all from the mountains.

Lafisrap (11/5/99; 20:12:16MDT - Msg ID:18442)
Chevron's 3rd quarter Q10

I found Chevron's 3rd quarter Q10 at:

http://www.freeedgar.com/oem/ccbn1/ViewFilingsContentNF.asp?OEMSource=ccbn1&UseFrame=0&Directory=93410&Year=98&SECIndex=20&Extension=.tst&PathFlag=0&TextFileSize=109154&CIK=93410&datefiled=11/6/98&formtype=10-Q&CompanyName=CHEVRON+CORP

It does NOT contain any statement supporting what DD1stLight said in Msg ID:18416.

However, it does address the Y2K problem in a way that is not at all reassuring. Here's an excerpt:
***
Chevron's business diversity is expected to reduce the risk of widespread disruptions to its worldwide operations from Year 2000-related incidents. While the company believes that the impact of any individual Year 2000 failure will most likely be localized and limited to specific facilities or operations, the company is not yet able to assess the likelihood of significant business
interruptions occurring in one or more of its operations around the world. Such interruptions could prevent the company from being able to manufacture and deliver refined products and chemicals products to customers. The company could also face interruptions in its ability to produce crude oil and natural gas. While not expected, failures to address multiple critical Year 2000 issues, including failures to implement contingency plans in a timely manner, could materially and adversely affect the company's results of operations or liquidity in any one period. The company is currently unable to predict the aggregate financial or other consequences of such interruptions. However, the company does not expect unusual risks to public safety or to the environment to arise from potential Year 2000-related failures which may impact its operations.
***

I'll look for the Tenneco Q10 from 3rd quarter 98, but I must say in the Chevron 3rd quarter Q10 we do NOT find support for DD1stLight's general message.

Lafisrap

TownCrier (11/5/99; 20:09:03MDT - Msg ID:18441)
After the Close: the GOLDEN VIEW from The Tower
It's Friday, and Friday's are supposed to be the most casual business day of the week, so we'll start with gold, and stick primarily to gold in today's end-of-week GOLDEN VIEW. Sorry for the dearth of news throughout the day. We got busy chatting, and that took care of that. Not much of interest crossed the radar screens anyway.

The closing number on spot gold at $288.60, reflecting a decline of $4.20 from yesterday's NY close, seems larger and more traumatic than should be interpreted. You may recall that while yesterday the December futures closed up only 40c, spot found a last minute springboard and vaulted up in the final minutes to end up $1.50. Today, we simply see the unwinding of that brief (and odd/rare) occurance of price separation, spot giving back its extra $1.10+/- on top the the futures' loss today of only $2.70. On a related note, there are some of us who feel that an era may soon arrive in which the spot price on physical gold permanently separates (upward) from the futures prices if these derivative markets fall into disorder along with any possible collapse in gold lending operations. Let's see what they were up to at COMEX...

NY Precious Metals Review: Gold down $2.7; silver at 3.5-mo low
By Darcy Keith and Melanie Lovatt, Bridge News
New York--Nov 5--COMEX Dec gold futures settled down $2.70 at $291.00
after dipping to a nearly 1-week low of $288.50, while Dec silver settled
down 13.7c at $5.085 after dipping to a 3 1/2-month low of $5.080. The two
metals were lower on trade selling, and were undermined by stock- and
bond-friendly US jobs data which encouraged money flows away from precious
metals. "The gold euphoria is over," exclaimed one bullion trader.
[Wasn't silver selling for approximately $5.25 prior to September 21 UK auction and subsequent announcement of the Washington agreement? Woof! Down sharply, while gold maintains sizable positive ground gained from its pre-auction level near $255. The lesson here is that they are fundamentally different assets responding to fundamentally different factors. This statement by a bullion dealer is misplaced because euphoria had nothing to do with the gold market. However, to the extent that longtime goldhearts were ecstatic over the sudden development and price-swing, the remark is likely true that these initial feelings have been tempered by this period of uninspiring, grinding trade at this level...very much like trading was in advance of the Sept 21 Bank of England gold auction. The next one is November 29, with 25 tonnes on the line. The previous auction was oversubscribed 8 times, all successful participants submitted prices HIGHER than spot price. What could be more odd, yet more bullish than that?]

The trader said that after several sessions of rangebound trading,
market participants have grown frustrated with the inability of gold to
mark gains and have decided to sell it off on the last trading day of the
week. "People are throwing in the towel," she said.
[That confirms two things. First, it confirms the nature of the remark and my suspicion about the frustration of those who want to see gold move one direction only, and very briskly, at that. Second, it confirms (to you, the reader) that I typed up my interjection before reading ahead to the next paragraph. Damn. Would've saved me some typing!]

While not wildly outside of expectations, US jobs data were somewhat
weaker than expected and have eased fears of a US Fed rate hike. Stocks
and bonds rallied in relief, leaving gold and silver with little investor
interest.
[That's were there is a current disconnect with reality. Price discovery on the futures markets do little to reflect anything other than the willingness of the next long or short futures contract buyer to enter the futures market. It has nothing to do with the reality of someone in Indonesia using a gold chain to buy a rice paddy, or of the paddy seller who is now glad to have this gold chain, or of the paddy buyer's intention to repurchace a gold chain with the future profits from rice sales. The world is huge, COMEX is small, and that rice paddy transaction would have taken place with the gold chain even were the futures price to be dropped to the floor due to lack of buying interest in that particular venue. Sure, you might argue, "But I'm an American, and the dollar price IS important to me because I buy things priced in dollars." That's valid, but consider this...where do many of the products come from? Sure, you pay in dollars for everything you buy at the local department store, but many of those item are IMPORTED from other countries...Indonesia, for example.
+
The US is running an annual trade deficit that is SHATTERING the previous record. From memory, the imports have exceeded exports by nearly $25 billion each month for the past three months alone. At what level do we reach their breaking point? By adopting a narrow, purely domestic viewpoint, gold would be seen as little more than a form of monetary insurance (albeit a good one!) However, gold takes on a whole new shine if you take a global view. Allow the words of Fed Chairman Alan Greenspan to guide your thoughts in this matter. Shortly after Britain announced its decision to sell gold (for reasons we've touched on before), on May 20th Chairman Greenspan told the House Banking Committee that "gold still represents the ultimate form of payment in the world. Germany in 1944 could buy materials during the war only with gold. Fiat money in extremis is accepted by nobody. Gold is always accepted." Further on this theme, at what point are gold futures contracts accepted by nobody? The Tower cautions you not to neglect the possibility for an "extremis" position to develop in this out-of-touch-with-the-world realm that, at least for a time, still maintains a stranglehold on price discovery for gold in dollar terms. Real, individual people, on the other hand, engage in real gold's price discovery in rice paddy terms. Back to the Bridge report...]

Non-farm payrolls rose 310,000 in October, close to the market
expectations of an increase of 300,000. Analysts widely expected a rebound
from the job losses caused by Hurricane Floyd, but a Labor Department aide
said the only effect was the addition of about 7,000 construction jobs for
cleaning up storm damage. Average hourly earnings rose only 0.1%, below
the consensus estimate of a 0.3% increase. The jobless rate fell to 4.1%
in Octo ber, below the consensus for it to be unchanged at 4.2%.
Doris Hildebrandt, dealer with Toronto Dominion Bank, said the jobs
figures "just added to the weight of a market that was unable to push it
higher."
Also, many traders are just now returning from gold-related dinner and
cocktail party festivities in New York this week, allowing for some more
active trading to return.

[There it is, folks...the closest thing you'll see in the media reporting on the slow trade due to hangovers which we mentioned in a previous GOLDEN VIEW.]

Hildebrandt said gold is still basically in a $288-295 range. She said
the fact that gold is now stuck below $300 is not good for market
psychology, and there is considerable disappointment that gold could not
hold on to more of its recent powerful rally.
Initial support is seen at today's Dec low of $288.50, said brokers.
After that, good support is expected between $285-288.
William O'Neill, analyst at Merrill Lynch, forecasts that gold prices
will remain stable and in the $280 to $305 range over the next month or
so.
"The majority of the tightness seems to be over for now, but assuming
the European Central Bank makes good on its pledge not to expand the
amount (of gold) it sells and the amount it lends, the price seems to have
bottomed," he said. He pointed out that the announcement made by the ECB
and the Swiss National Bank in late September that they would cap gold
sales and limit gold lending has essentially "created a higher price
structure" for the metal.

While few players are predicting that gold will see a spectacular
rally and hurdle $400 before the end of the year, some, like O'Neill,
suggest it is possible that price spikes taking prices close to $340 could
be repeated. This is especially the case given that, as the end of the
year approaches, gold could be supported by buying for Y2K insurance
purposes. Some players are expected to seek portfolio diversification and
protect themselves from any calamity in paper assets by putting money into
hard assets like gold.
Ultimately the next good indicator of the gold market's fortunes could
be the UK's third gold auction, set to take place on Nov 29.
***
(c) Copyright 1999 FWN Reprinted at USAGOLD with permission. For details please go to:
http://www.futuresource.com/internet.shtml
No further reproduction without written permission from FWN.
---
Here's a short, two-story combo that says a lot. With allies like this, who needs conspiracies??
+
London--Nov 4--Beleaguered Ghanaian gold producer Ashanti Goldfields said
today the mark-to-market value of its hedging portfolio as at Nov 1 was US $219
negative at a spot gold price of $292 per ounce. The "delta" of the portfolio
was estimated at 9.7 million ounces, implying that a $10 move in the gold price
would alter the mark-to-market value of the portfolio by about $97 million.
+
Johannesburg--Nov 4--South African gold producers have criticized the South
African Reserve Bank's decision to lease some of its gold reserves, but some
added that it was not in the industry's best interests if the gold price was to
rise too quickly.
Reprinted at USAGOLD with permission. For details please go to:
http://www.crbindex.com/reviews/index.htm
No further reproduction without written permission
---
The commitments of COMEX gold futures traders was released today for positions as of November 2. The non-commercial speculators held 27,786 contracts with long postions (down 5,684 from the previous week), and 43,069 contracts we held by speculators with short positions (down 4,016). The balancing contracts to evenly match shorts against longs out of the outstanding 208,907 contracts in open interest at that time was spread between the commercial traders and the non-reportable postions. Overall, open interest had dropped by 9,009 contracts from the previous week.

The gold continues to move at the COMEX depositories as settlement owed for past deals are only just now being settled, or positions are being put in place for anticipated delivery intentions. Another 33,717 ounces (337 contracts-worth) were logged into the Scotia Mocatta Eligible inventory (32 different ounces fled into the fresh Autumn air while all this was going on.) However, before the day was over, 60,742 ounces of Eligible gold was transferred into Registered stock. Not surprisingly, this corresponds to the total amount of Eligible gold that was deposited on Tuesday and Thursday. Total registered stock now stands at 844,647 ounces (8,446 contracts-worth), while Eligible stock is 123,990 ounces (1,239 contracts worth). As of the conclusion of yesterday's COMEX trading, there were 99,088 December futures contracts, the open interest increasing on this particularly popular future by 430 contracts. Trade was slow yesterday--as we warned (hangovers and whatnot)--only 10,102 December contracts traded hands, sprung to new life, or were closed in final settlement.

On the bigger picture of monetary matters, Treasury Secretary Lawrence Summers said today in prepared remarks delivered to the Senate Foreign Relations Committee, "The global economy is not out of the woods yet," and issued a warning against emerging nations adopting fixed exchange rate systems as a form of quick cure. Among lessons learned from the recent emerging markets' crisis was "adopting a fixed exchange rate system without renouncing domestic monetary policy discretion is a recipe for trouble. These crises have brought home once and for all that a fixed, but not firmly institutionalized exchange rate regime holds enormous risks for emerging market economies in a world where fast-flowing capital and insufficiently developed domestic financial systems coincide." These comments were preceeded by "we have learned that conditioned international support can play an important role in countering the bank run psychology that has taken hold in the recent crises. But any amount of external support will just flow straight back out of the country if that domestic commitment is lacking."

Anyone who confidently sits back with the notion that the dollar and its fate is carved in immutable stone had best take note of the SecTreas' later discussion:

"Financial crises of the scale and severity we have seen in recent years pose a major threat to the construction of a strong, truly global financial system - a threat to which the international community has rightly and vigorously responded in what has come to be called the reform of the global financial architecture.

"This has produced some important achievements, of which perhaps the most significant over the long term will be the rejection of the idea that it could be the work of the major industrial nations alone. We have seen this reflected in the creation of the G20. This grouping, which will meet for the first time next month, will be a permanent informal mechanism for dialogue on key economic and financial issues among industrial and emerging market economies who among them will account for more than 80 percent of global GDP." [...]

"The reform of the global financial architecture is an organic and many-sided process that will never entirely be completed. But recent events have highlighted important areas for reform - and major issues that the United States and the international community will need to address going forward." [...]

"As I have said, many of the economies worst affected by crises have made enormous progress in the past year. But as global confidence begins to return and memories of the crises begin to ebb, it becomes even more important for us press forward the frontier to ensure that countries are less vulnerable to the kind of bank run dynamic we saw take hold in Asia and elsewhere." [...]

"Finally, as we consider the international financial architecture we have and the one we would like to have, we must always consider not merely the individual parts of that system such as the IMF, but the sum of those parts."

And in conclusion:
"Mr. Chairman, as I said earlier, the reform of the IMF and the global financial architecture more generally is a process, not a journey with a final destination. However, taken together, it is fair to say that the events of the past few years - and the changes they have helped to set in train - mark an important new stage in the system's evolution....In a world of sovereign nations our goal cannot to be to prevent governments from ever making mistakes. What our goal must be, as we move forward from the events of the past few years, is to provide the best possible system for encouraging sound policies - and for minimizing the broader costs to the international system as a whole when crises strike."

The Bridge gold market review gave a decent review on the Labor Department's employment data for the day, so we won't bother to cross that bridge again. Here are the final numbers, short and sweet.
The stock markets had another one of their spike openings, followed by buyer's remorse throughout the day. The initial 200 point gain on the DOW was largely given back, ending only 64.8 points higher(+0.61%) on volume that broke the rare one billion threshold for the NYSE. The Nasdaq Composite had no trouble continuing its trend of record finishes on heavy volume, trading 1,346,519,000 shares in the process of lifting the index another 46 points (+1.52%) for a new record 3102.29.

NYSE advancing issues led decliners by 1,745 to 1,300, while new highs bearly beat new lows by 95 to 92. In OTC trade on its sixth busiest day ever, advancers led decliners 2,196 to 1,806, new highs beating new lows 203 to 76.

The 30-Yr Bond gained 23/32 in price to ease the yield down to 6.040%.

After trading 36c higher earlier in the session, December crude settled down 14c at $23.00.

In a late breaking development, Judge Thomas Penfield Jackson has rendered a decision favorable to the government in the Microsoft Antitrust case, citing three primary facts that support the conclustion that Microsoft enjoys monopoly power:
1)the company's large and stable market share,
2)the high barriers to market entry, and
3)the lack of a commercially viable alternative to the Windows operating system.
The judge also found that Microsoft used its powers to punish competitors, and that its actions harmed consumers.

Could this be the pin? The Nasdaq is now poised as never before to *pop*!

And that's the view from here...after the close.

Canuck (11/5/99; 19:59:01MDT - Msg ID:18440)
YGM #18405
That message is awesome, it is BEYOND hitting the nail on the head.

"I'm prepared to be right or wrong about Y2K,
ARE YOU."

I am going to copy that, if you don't mind, enlarge it, color it and send it to the maligment people I know, that want to take the potentially dangerous path, by default.

I wrote a 'goofy' little post 8 or 9 months ago. One line stated something like, "Let's pretend that all computers are
working today; what's the likelihood of ALL the computers working on 01/01/0000."

Canuck (11/5/99; 19:44:31MDT - Msg ID:18439)
Stranger #18400
The underlying gentleness of your post is amazing, well presented.

What did Buffet say in a recent dialogue, "... the world economy is relying on the US economy which is relying on 50
stocks which is grossly overvalued...".

Canuck (11/5/99; 19:31:54MDT - Msg ID:18438)
canamami
just read the 'blood pressure' post

My wife insists we go to the new casino in Hull, Quebec all the time. We always lose what we brought into the building.

After she had lost some 18 billion dollars she clued into the fact that the 'slots' we either rigged or her odds at winning were the same as me flapping my wings and flying to the moon.

I have been, as she perceives, preaching the merits of gold.
This is my line to her, " Let's bet on gold rising, it's either going to go down 20% or it's going to go up a million
percent."

She asks, "What does that mean?"

"It means if you bet $300 and you lose, you get $250 and if you win you get $30,000."

"Oh well, ...forget the damn casino."

Canuck (11/5/99; 19:16:28MDT - Msg ID:18437)
canamami, ganymede and to all those impatient
(Not implying that canamai and ganymede are impatient)

I would like to add to post 18376.

When the market(s) are at the top, and gold is at the bottom, by default, where do we go from here.

I save interesting posts and rename them; they are then printed and filed into my own little "HOF". I have named
18376, 'Not a question of if, but when'.

I believe we are on a roll. I've been at USAGOLD 13 months;
I came here first to observe and then to occasionally speak.
Now I occasionally speak and I observe.

Gold is awesome, paper will burn; how does that go, the paper that burns twice as fast, burns half as long! Maybe
that's candles?

I think Sir Goldspoon, being that tomorrow is Saturday, should draw his Golden Sword, and carve the livers out of
some 'manipulators' or something equally daring!!

What do you say.. Goldsword/spoon!!

Phos (11/5/99; 18:49:50MDT - Msg ID:18436)
TC - post of 11/5/99, #18379 -Subject: Bank Repo's
The clarity of this exposition was superb. Thank you for laying it out so understandably. It raised a few more questions in my mind. Are the Repo's, in effect, increasing the money supply (M1,M2, etc.)? I understand that inflation is really a measure of increase in the money supply. Is the fractional reserve, as you mentioned in the post, 10% ? Does this vary or is it fixed at the same percentage? Is the fact that the Fed is 'buying' questionable paper indicative that the system is in serious trouble and they are stuffing fingers in holes in the dyke? I have heard others say that this is so.

Reading this site is certainly an invaluable education in the world of finance and banking. Thank you and the many others who have contributed so much. To paraphrase A/FOA in a Canadian way: "We watch this together, eh?"

canamami (11/5/99; 18:42:51MDT - Msg ID:18435)
Don Coxe's Conference - Y2K and Gold
http://www.jonesheward.com/commentary.cfm
This week's conference call would be interesting to members of this Forum for two reasons.

First, a lengthy discussion of Y2K. Apparently, Coxe has reversed his previous prediction that US stocks will underperform the rest of the world. Now, he predicts that the US market and bonds will outperform for the short-term (the next two months - until after January) because of Y2K concerns. Apparently, the US and US dollar are perceived by the world's investors as the safe haven for Y2K. Thus, Y2K will cause a brief rally in the US market and dollar, and will lead to new market highs. If the rest of the world, especially Asia, get through Y2K without much damage, then he believes the US will (after January) again revert to underperforming the rest of the world. Apparently, Y2K is becoming an issue at the plant level (I believe especially in Asia), just as it is ceasing to be a concern among the sophisticates.

Re gold (minutes 17:30 to 18:30, roughly) he notes that central banks have indecently re-entered the gold leasing business to protect Ashanti from the short squeeze. It was at the behest of the South Africans and Ashanti that the CB's clamped up, and then it was necessary to lease to save Ashanti. Last week, Coxe pointed out that one did not have to be a conspiracy theorist to conclude that Kuwait was helping somebody out, with its CB's announcement.

Lafisrap (11/5/99; 18:38:52MDT - Msg ID:18434)
DD1stLight Y2K alarm

In jinx44 (11/5/99; 13:29:11MDT - Msg ID:18416) "Is the fat lady singing?", at one point DD1stLight says:
******
Tenneco and Chevron actually came clean on their last year's Q10 third quarter reports and stated they expect to have about 30% production available after Y2K
******

Maybe that staement is verifiable. Maybe those Q10 reports are available on the web. I will look. Perhaps others can look too. If the reports do say that, it would tend to lend credibility to DD1stLight's general message. If not, well, it would tend to discredit DD1stLight's general message.

Lafisrap

The Stranger (11/5/99; 18:12:32MDT - Msg ID:18433)
ax
Forgive me, for I do not spend enough time in the Forum to read it all anymore. For all I know, you may have posted many times before. But, if you are as new as I think you are, welcome!

I recognize the points you make from an earlier post of your's. I should have acknowledged them at the time as I believe they are well-conceived. Since gold's September renaissance, much has been made of the hedgebook dilemma. But can a bull market in PM's be slow enough that a well-run hedge book might still manage to augment a company's revenues over time? I am thinking of Barrick, which has been much vilified by us all, and deservedly so, and whose stock has underperformed of late. How much trouble can they really be in if bullion is only slightly above this year's average price and still below the prices at which most of the hedges were placed? No trouble at all, I suspect. Do you have any thoughts on this?

Aside to Town Crier: Thanks, TC. I only wish my contributions were a small fraction of what your's are.

transparent (11/5/99; 17:54:50MDT - Msg ID:18432)
Seeking Truth In A World Of Lies and Deception
I received this 4 months ago. What this man speaks about seems so much more relevant after hanging out here reading for the past few weeks.

// Seeking Truth In A World Of Lies and Deception //

by Ron Brown, North American Investment Services

We live in a world of confusion and contradiction. Though we seem to be
living in a period of unequaled and unending prosperity, it somehow seems
hollow and artificial, as if it could all end tomorrow. The booming stock

market has gone beyond insanity yet people still think it will never end.

Whenever I have trouble making sense of the distorted and obviously
conflicting information presented to us daily by government and the media,
I remember what President Roosevelt said...nothing in politics happens by
accident. I believe that is true today. In fact, I believe every report
or statement from the government is measured and designed to forward some
orchestrated agenda.

Recently, two topics in particular seem to be the source of more than
usual confusion, lies, and deceptions...

// Y2k and the Gold Market //

There has been an obviously orchestrated propaganda blitz since March 1999
regarding Y2k and the gold market. Below I offer nine observations and
some conclusions on this most intriguing situation.

OBSERVATION #1: Y2k has become a Propaganda War.

Jim Lord is one of the more respected Y2k experts in the world. In a
recent issue of his Y2K REALITY WATCH newsletter, Jim Lord identifies two
of the most important points I believe are missed in the Y2k debate.

First, the battleground of Y2k is not about solving the problem, but about
winning the propaganda war for public opinion. Second, Mr. Lord correctly
points out that the greatest threat of Y2k is the impact it will have on
the banking system.

Both points recognize it's not the "problem" but the "perception of the
problem" that creates the crisis and thus it's own reality. Y2k or not,
the financial system of the world is a gigantic bubble looking for a pin.
The only thing holding it together is consumer confidence. Regardless of
its magnitude, Y2k is a sharp pin that threatens to prick that veil of
confidence.

OBSERVATION #2: The gold market appears to be a rigged game.

In a news release dated 4/22/99, the GOLD ANTI-TRUST ACTION COMMITTEE
(GATA), announced that noted anti-trust and securities law firm
specialist, Berger & Montague of Philadelphia has been retained to
assist in its investigation into the alleged manipulation of the gold
market. GATA states "the price and supply of gold are being controlled by
a cartel of Wall Street investment houses and bullion banks with the
possible encouragement of the Federal Reserve and the US Treasury." This
confirms what many of us have suspected for years.

Anyone who has reviewed some of the EXECUTIVE ORDERS inacted by current
and past Presidents of the United States of America should be aware that
the events of today are really part of a much bigger plan. The crisis we
are headed for is not the result of bumbling idiots in high places. These
executive orders did not get on the law books by accident. They represent
a highly organized agenda to undermine our freedoms and national
sovereignty. Any plan of action must not ignore this frightening but
stark reality.

OBSERVATION #3: The world economy is collapsing.

Actually, the system began to unravel two years ago in the Pacific Rim
where the combination of stock market collapse and currency devaluation
destroyed as much as 80% of the wealth in Korea, Indonesia, Thailand, etc.
Despite IMF efforts to defuse the problem, the crisis quickly spread to
Russia--which is an economic basket case--slowing the economies of Europe.
The "Asian Flu" then proceeded on to South America where Brazil now
teeters on the brink of disaster. If Brazil goes, all of South America
goes.

I could elaborate, but I think you get the picture. The world financial
boom of the last 18 years is trying to collapse while the international
bankers who created this Ponzi scheme are trying desperately to hold it
together...at least until they can blame it on Y2k.

OBSERVATION #4: The United States is the "Buyer of Last Resort."

When you analyze it, the only thriving economy in the world is the United
States. Furthermore, I am convinced monetary authorities are using the US
to prop up the whole world. Think about it. The dollar is strong not
from it's own strength, but because the currencies of other nations are
weaker. Flight capital from failing economies throughout the world,
seeking refuge in the US, continues to fuel our financial markets. The
rich get richer.

In our prosperity, the United States has gone on a buying binge, importing
goods from all over the globe at distressed prices. Our trade deficit now
exceeds a record $20 billion per month and grows larger every month.

It's our imports that keep the world economy afloat, so the United States
economy must be kept strong, at least until the world recovers.
Unfortunately, distressed prices from abroad have deluded most Americans
into thinking there is no inflation. So, before we go further, let's
briefly discuss the subject of inflation, because it's our
misunderstanding of inflation that is at the root of our looming financial
crisis.

OBSERVATION #5: Most people don't really understand inflation.

We are programmed daily to believe inflation is "rising prices." It is
critical to understand that "rising prices" are *not* what inflation
*really* is. Inflation is the increase in the supply of money and
credit--period. Since everything we call money is really debt, inflation
is the increase in credit.

While it is true that the normal result of expanding credit is a rise in
prices, it is incorrect to equate the two. It's kind of like analyzing
rain. If you start with the assumption that wet streets cause rain, you'll
never come to a logical conclusion. In the same way, if you assume
inflation is higher prices, you'll never understand the true cause of it.

Politicians and bankers will continue to point their fingers and blame
everyone and everything for inflation except the true culprit--themselves.
It is the unconstitutional Federal Reserve System and fractional reserve
banking that magically creates credit, also known as debt, out of thin
air. The problem is that a system built on a foundation of debt can only
exist as long as the people maintain confidence. If confidence waivers the
debt bubble collapses causing the opposite condition--deflation.

By understanding what inflation *really* is we see that inflation has
never slowed down in spite of the spin promoted by the mainstream media.
The enormous growth in our debt structure and the value of equity markets
is proof that the supply of "money" has expanded dramatically. The only
thing that has been contained is the perception of inflation.

Secondly, because of the massive debt structure in the world, deflation
must be avoided at all cost. Remember that in a monetary system based on
debt, everyone's assets are really someone else's IOUs. In a depression no
one can pay off his IOUs. But, deflation is exactly what's happening as
world markets decline! To offset the deflation overseas the US markets
are being inflated massively to keep the world solvent.

OBSERVATION #6: The FED is continually avoiding near disaster.

In July-September of 1998, the US stock market almost fell off its
pedestal as stocks dropped 25 to 30 percent across the board. To prevent
a further panic the FED and its "plunge protection team" rushed in. They
opened the money spigot full blast to prop up failing markets. Of course
after the recovery the media establishment bragged about how resilient the
markets are, further entrenching the arrogance and complacency of a market
frothing with greed. It's as if nothing has changed. But something has
changed!

OBSERVATION #7: You eventually have to pay the piper!

Inflation fear is once again rearing its ugly head. The bankers cannot
run the printing presses nonstop without rekindling the perception of
inflation. As we discussed earlier, perception creates it's own reality.
Once the fear of inflation is ignited the whole credit bubble comes under
attack and confidence is undermined.

OBSERVATION #8: Inflation fear drives interest rates up, bond prices down.

The natural result of rising inflationary fear is higher interest rates
and thus lower bond values. Let me explain. Who's going to lend money at
5 percent if they perceive price inflation is 8 percent? Likewise, if
long-term rates rise to 8 percent, who's going to buy your bond paying 6
percent--unless you sell it at a discount. In other words, if long-term
interest rates rise from 5 to 6 percent, that's an increase of 20 percent
which would have a corresponding drop in the value of bonds. To
summarize, as interest rates rise the bond market comes under extreme
pressure.

OBSERVATION #9: Bonds are the foundation for our house of cards.

Finally, the point I want to make is our entire monetary and financial
system is built on a foundation of debt. The world debt structure has
grown well in excess of $100 trillion, and that doesn't even include
derivatives.

All debt instruments have a maturity date in which they must either be
repaid or renewed. Literally trillions of dollars of debt instruments
mature each year and must be rolled over. As interest rates rise and bond
values decline this becomes more and more difficult. The foundation for
our gigantic house of cards begins to crumble. If not stopped immediately
the process will quickly veer out of control; thus, shutting down economic
growth, collapsing the stock market bubble, and triggering a panic
stampede out of all paper assets. Obviously, an UNACCEPTABLE CONCLUSION.

CONCLUSIONS:

Make no mistake; the unraveling process has already begun in earnest.
Inflationary fears have driven long-term rates above 6 percent and the
bond price index has dropped to the lowest level since Oct 97. Monetary
authorities are now faced with the challenge of restoring confidence
before it wrecks the whole system. Inflationary fears must be calmed
immediately! Anything that undermines confidence must be attacked, and it
must be attacked immediately and with a vengeance. That is the answer to
our initial questions and explains the propaganda blitz to calm Y2k fears
and depress gold prices. They both represent an immediate threat to
confidence and therefore had to be dealt with severely.

// Y2K A Threat To Bank Solvency //

As Jim Lord explains, banks have only $3 for every $250 on deposit. Cash
withdrawals in preparation for a possible Y2k meltdown pose an immediate
threat to bank solvency. So in typical bureaucratic fashion, the truth has
to be compromised to protect people from themselves. So, the lies and
cover-ups spew forth as the establishment media acts to convince people
that Y2k is no longer a threat. My advice--don't buy into it.

If anything, the problem is greater than most people think simply because,
regardless of the magnitude of the problem technically, Y2k is a very
sharp pin that will prick the veil of confidence that holds a fragile
banking system together.

// Gold Is A Threat to the Financial System //

While a bank run on cash threatens solvency in the banking system, gold
threatens the system itself. Remember, gold is the only "real money" that
historically has provided the backing for all legitimate currencies. It
was only in the last 75 years or so that international bankers, led by the
Rothschilds, infiltrated western governments to remove the gold backing to
all currencies.

Despite all attempts to eradicate gold as the monetary standard, gold is
and always will be the money of last resort. Whenever confidence waivers
people will stampede out of paper assets and seek the refuge of gold,
silver and other tangible assets.

// The War On Gold Accelerates //

Because gold tends to rise as monetary fears increase, the perpetrators of
this fraudulent system are very sensitive to the price of gold. They will
do whatever is necessary to artificially hold the price down. The larger
the credit system gets the more critical the problem, since it takes a
smaller and smaller fraction of flight to cripple the system and trigger a
panic.

For example, in today's world if just 1 percent of the money in the system
tried to run for the exits, it would translate into well over a trillion
dollars. Do you think there is a trillion dollars worth of gold anywhere
in the world to meet such a potential demand? Well, there isn't!

In fact, one man by the name of Warren Buffett purchased 20 percent of the
world's annual silver production with less than $1 billion, and drove the
price of silver from $4.60/oz to over $7/oz in the process. What would
happen if a $1000 billion...a trillion...tried to enter the tangible asset
market? I think you see their predicament. They must do whatever is
necessary to make sure gold never gains any upward momentum.

// The Gold Lease Time Bomb //

International bankers have been struggling for years to hold gold & silver

prices down and have created their own monster in the process. Years ago,
in the early 80's, the central banks initiated a program where they leased
gold to large institutions who in turn sold it into the open market to
raise capital.

Mining companies used this technique to sell forward future productions,
but the greatest abuse of this practice was by giant mutual funds that
would use the proceeds to invest in financial markets. Do you see the
problem? The sale of borrowed gold has suppressed gold prices
temporarily, but it has created a short position that eventually must be
repaid.

It is now estimated the short position may exceed 14 thousand tons � over
5 years annual production! This amount of gold is not available. I hope
you can see that the bankers must manipulate the price of gold in every
conceivable way to put off the day of reckoning. Any rise in gold prices
will trigger a massive short squeeze!

// Gold Auctions--an Act of Desperation //

You've no doubt heard of the threatened gold sales by the IMF and the Bank
of Switzerland (possibly 1300 tons) plus auctions by the Bank of England
(415 tons). The last time this happened was Nov 78 when Jimmy Carter
announced gold auctions just prior to gold prices exploding to over
$870/oz. The threat of auctions was mostly hype then, and it's mostly hype
now. It didn't stop the panic then and it certainly won't stop it now.

[Editor Note: One house of the Swiss government recently voted NOT to
sell their central bank gold which reduced this concern temporarily.]

My Advice: Don't let the hype intimidate you. That's exactly what they
are trying to do. Continue to accumulate the position you need during
this lull while prices are low and metals are readily available. When the
monetary meltdown accelerates, prices will expand and supply will dry up
overnight.

// THE BIGGER PICTURE //

The international bankers who created the Ponzi scheme we call a monetary
system know better than you and I that it's about to collapse. In fact,
it's part of their long-term plan to force the world to accept a "World
Central Bank." As David Rockefeller said, "given the right crisis the
world will accept our New World Order." But the timing must be right.

Rising interest rates or a panic flight out of paper cannot be allowed to
be the perceived cause of the crisis. That would expose their fraud. I
believe the "right crisis" they need is Y2k. What a perfect cover for
their coup! After all, they can exclaim, "Every thing was wonderful until
the awful Y2k crisis came along."

// A FINAL THOUGHT //

The deeper you explore the coming crisis the more overwhelming it seems.
The natural tendency is to stick your head in the sand and pretend the
problem will go away. That's why so many people believe the propaganda.
It's the old "tickle my ears" syndrome. As good stewards we are called to
seek the truth and do our best to prepare for ourselves and for our
families.

As we attempt to do so, we eventually come to a very important
conclusion: We can't do this in our own understanding. Our only hope is
to turn to the "saving grace" of Jesus Christ and in doing that we will
find the peace we are searching for.

ax (11/5/99; 17:34:34MDT - Msg ID:18431)
WHAT TO DO NEXT

Stranger and Canamami in today's posts suggest a reasonable
plan for future investment. What we all want is to be able
to profit by the future rise in the price of gold which is surely coming, but perhaps not in the way nor at the pace we would all like. An investment now in the shares of a gold mining company which meets the criteria noted below should be such a prudent plan. Please read the following:

PROPORTIONAL HEDGING

When evaluating a gold mining company from the standpoint of a good
value at a given share price, since Sept. 25 1999, it
is the hedge book which has become a signicant criteria.
Before Sept. 25 in general the larger the hedge book, the better the
financial prospects of a gold miner, and since Sept. 25, the more
questionable these same prospects.

There are other factors which bear on how much a hedging program should
affect the value of a gold miners share price:

1. recent average earnings/share
2. recent average dividend yield
3. the size of the company

The size of the company is very important in that a large
gold mining company, which in recent years has usually contracted
certain unprofitable operations, has the capability of re-opening
certain previously unprofitable areas of operation. If not that, the
larger company has the
resources to relatively quickly expand production by other means: such
as acquisition, buying up of minority interests (eg Gold Fields
purchasing the rest of St. Helena), construction of new facilities on
currently owned properties
etc.

A large company can actually maintain a hedge program which
is not overly large in proportion to the gold mining company's
production, and can expand that production to take advantage of higher
prices and still maintain certain
hedge obligations at fixed future prices. In other words
it can have the advantage of both, protection on the downside ( as
recently we have seen may be prudent) and by expanding production, take
advantage of much higher gold prices which undoubtedly will come.

AEL (11/5/99; 16:09:10MDT - Msg ID:18430)
Dilbert, continued...
http://www.garynorth.com/y2k/detail_.cfm/6726
"Wall Street generally believes what it wants to believe,
that Y2K will be a benign non issue - a blip with no major problems. Corporate America sold the Street that bill of goods. Corporations regularly promote themselves and deceive. It is human nature" . . . .

(more at the link...)

TownCrier (11/5/99; 15:55:55MDT - Msg ID:18429)
Sir Stranger... a classic!
"So, when listening to all these inflation "experts", remember to ask yourself this question: If they didn't see it coming in the first place, why should you believe them when they tell you that it's over?"

TownCrier (11/5/99; 15:52:25MDT - Msg ID:18428)
Two fine posts, Sir ORO, you are always a pleasure to read.
I hope we didn't overwhelm Sir canamami with our two wave "assault."
I've always marvelled at the many ways to express the same idea. The truth can have many storytellers. That, or else we are all caught up in the same delusional fantasy. But if you consider how much deep thinking we have done to arrive at our conclusions for gold compared to the wanton throwing of money into mutual funds by the unwashed masses, it becomes less difficult to conclude which camp is currently caught up in a mass delusion.

Sir canamami, on your point "Will our notions of civility survive the crisis predicted by FOA?" Forgive my if my answer seems trite or less-than scholarly, but here it is..."I sure hope so." What would truly be accomplished were we to take the oilfields by force? Essentially we would be overthrowing "Middle-east, Inc." and replacing it with "Big U.S. Oil, Inc." whose management would be a small elite group of men who get to decide how much is pumped to whom for how much. Isn't that where we are now? Except that the current "Middle-east, Inc." managing board probably holds a better world view, whereas the fat cats that would run "Big U.S. Oil, Inc." would be there for the individual perquisites or angling for the big golden parachute.

Have we overthrown Bavarian Motor Works to set up our own upper-management because we couldn't all easily afford shiny new BMW's? Well, maybe in time we will. But again, I sure hope our notions of civility prevail.

YGM (11/5/99; 15:51:41MDT - Msg ID:18427)
From The Author of the Best Selling Financial Book of All Time--
http://www.rufftimes.com/body-main.html
---Clip---

Gold at $2,000?

Gold will be a major destination for money fleeing the world's equity markets and its' endangered currencies and banks. Historically, that has always been the case. But the gold market is so tiny that even a small portion of the world's safety-seeking money will have a disproportionate impact on the gold price. All the gold ever mined could be melted into a cube less than 90-feet square.

To get this in perspective, the market value of all the gold stocks and all the tradable gold bullion in the world adds up to less than half the market capitalization of Exxon!

Gold will not be the only beneficiary of the expected money flows, but it is the most predictable and leveraged.

Howard Ruff.

***But maybe he doesn't know what he's talking about either. Like the dozens of other deluded high profile Goldbugs and y2k doomers. Dow 2000 next year? Gold 2000?-- I like the sound of those numbers I must admit!---------YGM--------the wishful thinker--------

transparent (11/5/99; 15:50:43MDT - Msg ID:18426)
Oil chat Jinx44 Message 18416
These are some of the links that message/discussion about oil came from. There are people in both camps. I recommend that those interested read all the posts at :
http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=001gf6

http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=001gGj

The Stranger (11/5/99; 15:29:56MDT - Msg ID:18425)
Employment Numbers
The consensus forecast for this morning's jobs report was 290 thousand. Instead, it came in at 310,000 with an upward adjustment in last month's report of 49,000. Altogether these numbers yield an increase in new jobs of 359,000, well above consensus and big enough to bring unemployment down to 4.1%. Yet, as has been the case with strong economic news so often lately, bond traders simply declared this latest report evidence of slowing growth and threw another party.

Clearly, there is an effort underway to paint recent increases in the PPI and CPI as a temporary spurt. Don't you believe it. This economy is booming. How the wage increase came in at only .1% is still a mystery to me. (Where I live, employers seeking workers are often caught in a bidding war to fill their staffing needs. I suspect the same thing is happening where you live). Reflation arrived months ago, and one wage report, genuine or otherwise, is not enough to indicate it has run its course.

After the close, today, Bill Gross, who manages the largest bond portfolio in the world at PIMCO asset management, said that, given the current inflation environment, this bond rally is already out of room on the upside.

So, when listening to all these inflation "experts", remember to ask yourself this question: If they didn't see it coming in the first place, why should you believe them when they tell you that it's over?

TownCrier (11/5/99; 15:13:47MDT - Msg ID:18424)
Fed says weekend system RPs totaled $600 million
http://biz.yahoo.com/rf/991105/k6.html
And again, these were tri-party repo agreements, done using crap collateral.
;-)
At the time of the operation, Fed Funds were trading at 5-3/16 percent, 1/16 below the Fed's target level for that particular interest rate on interbank borrowing.

TownCrier (11/5/99; 15:08:02MDT - Msg ID:18423)
Great! Now that everyone's up to speed on the in's and outs of repo operations, we won't delay in putting our knowledge to work...
http://biz.yahoo.com/rf/991105/ji.html
HEADLINE: Fed seen adding reserves via weekend system RPs

James Blumenthal, economist at MCM Moneywatch said, "You do have something like $21.6 billion in outstanding RPs, but they still have more adding to do. If they don't do it today then they're going to be behind on Monday."

You may recall from yesterday that the Fed added $5.010 billion to the banking system using 84-day fixed tri-party repurchase agreements, and topped off the morning with an addition $2.505 billion overnight system repo operation.

An analyst expected the Fed would need to add another $4-$5 billion today. Looks like Monday they'll have to play catchup as James Blumenthal said. See the next article I'm about to post, and you'll know why.

ORO (11/5/99; 14:57:01MDT - Msg ID:18422)
Canamani - Obligations.
I think the main point that divides us goldbugs from the "normal" people, is that we ask "what if the promises can't be kept" or worse: "obligations were not intended to be kept in the first place".

Anyone who understands banking knows that the system is infaltionary in boom time, and "default-onary" in slumps. In order to cure the "default" problem, often times the government/Central Bank complex will issue "extra" currency - i.e. more inflation.

Gold banking is similar, but for one exception, the govies can't print the gold to satisfy demand for "non-defaultable" money. This makes for the deflationary episodes of the business cycle, particualrly when default cycles were prevented by government action in support of banking (e.g. lowering lease rates to the floor in order to use government guarantees to induce fresh borrowing in an otherwise insolvent market) bigger and more prolonged, since the lender of last resort has also been tapped out.

The widely accepted notion of Western nations having figured out the way to "fix" the problems of banking and apparent smoothing out of the business cycle is founded on erroneous understanding and ignorance of reality across the borders and Oceans. To a large extent, Western central banks and governments have managed to export their problems to other countries. These countries supply the goods responsible for the rise in apparent living standards locally, and this is done by lowering of future living standeards through inducement of debt growth (done by tax subsidy for home ownership and financial speculation of 401ks). As one put it to me "I don't know how to deal with my pay raise, I'll have to move to a more expensive house to get the interest exemption, but I really don't want to".

The confidence in central bankers is well beyond misplaced. Contrary to what some contend, the proof is not in the pudding, it is in the trash can, where the previous puddings are, and in the cupboard where the correct ingredient sits unopened in its original package.

Usul (11/5/99; 14:27:32MDT - Msg ID:18421)
Hall of Fame Nomination
I'll also second beesting's nomination of TownCriers post of 11/5/99, #18379 -Subject: Bank Repo's- for the USAGOLD Hall of Fame.

These liquidity-affecting operations are invariably reported without comment (see Reuters) and their significance, and potential consequences accruing from them, are rarely discussed. TownCrier has brought forth a light to shine upon a cavern of dark and mysterious dealings.

ORO (11/5/99; 13:43:26MDT - Msg ID:18420)
TC - Employment report
Another point from the reporrt:

Orr said employment growth had moderated with payrolls growth averaging about 160,000 in the past three months versus more than 200,000 around mid-summer.

``But the point is the slowdown is occurring because there are not enough workers which has totally different implications,'' he said.

There seems to be a wierd situation in construction, where shortages of workers keep contractors from bidding on work, thereby capping materials demand and prices in some areas. Materials shortages in other locales keep contractors from hiring. Hovering above this is the unwillingness of customers to part with "extra" funds to get the projects done. At times because of price commitments, at other times because of the interest rate environment that pulls down the bid for new work because of the heavier debt payment load.
The more interesting phenom I expect to see in the near future is a rise in the rate of employee turnover as people rush to increase cash flow so that they can service the new debts, and the rise of the bid for labor causing new entrants to the workforce to come out of the woodwork. Some "unofficial" greymarket work is also turning to official work, as was disclosed to me by a masonry man, since that allows the opening of IRAs with minor tax penalties on the extra income.

We are running out of workers for lower paying positions. At the same time, some non-information professionals are loosing high paying jobs, particularly in lower management and engineering.

Interesting issue is the market's "half full" view of this, thinking that the situation is tennable. This smacks of non-specialist speculation in the bond markets. The new COTs on bonds and currencies should be interesting.

canamami (11/5/99; 13:42:36MDT - Msg ID:18419)
Reply to Town Crier post#18415
Town Crier,

Thx for your reply. I believe I indicated the theory was a bit far-fetched; I like to brainstorm.

However, the Kosovo crisis showed that Europe is still completely dependent on US military technology, and still far behind the US. I don't think any country could go toe-to-toe with the US militarily; the military technology gap is so great. The one vulnerability is the possibility that another country could succeed in using weapons of mass destruction on the US; hence Clinton's plan for an ABM system.

Let's brainstorm and hypothesize some more. Query who would place the Saudis under their nuclear umbrella if the US got aggressive. Paris, London, Moscow or Peking for Riyadh, Mecca or Medina. I don't think so. Perhaps there'll be cheap oil for everybody; hence, no complainers. The Saudis won't like it, but they persecute Christians and oppress women, don't they. Sorry for being so crude, but mindsets can change over time, and quite quickly under stresses. Look at what Andrew Jackson said about the Native Indians when they "got in the way"; he's still considered a great figure of US history. As Churchill said around 1909, he feared war because all moral constraints would be lost. Look what followed. Will our notions of civility survive the crisis predicted by FOA?

jinx44 (11/5/99; 13:34:51MDT - Msg ID:18418)
Where did that come from???
That last paragraph that has the Edward Abbey, whales stuff---I don't know where that came from! Sorry.

TownCrier (11/5/99; 13:30:29MDT - Msg ID:18417)
Jake, that will pass...until Sir Goldfly puts his energy into it!
Since you refer to 7-11, we must assume that the cake of gold we desired was interpreted by you to mean a Twinkie�.

That will work in a pinch, seeing that you're late for work.

Sir CoBra(too)--your post of the Sacher Tort was certainly enjoyed here at The Tower. Might have to order one for Christmas...

jinx44 (11/5/99; 13:29:11MDT - Msg ID:18416)
Is the fat lady singing?
This is a post from kitco earlier today. I have chatted with DD1stlight on another forum and she is opinionated as indicated. I also think she makes a lot of sense.

Date: Fri Nov 05 1999 06:28Space Ranger (It's all over...the fat lady is singing) ID#297222:Copyright © 1999 Space Ranger/Kitco Inc. All rights reserved
Sorry this is so long. But it's definitely a Must Read. Go GOLD...
=====
Y2K People Finding People - http://www.webpal.org/list.htm
The following captured discussion is, how shall I say it, not hard news. It is opinion, and the opinion of a doomer at that. Nevertheless, it has an internal integrity that impresses me. It appears to me to be INSIDER discussion. It is the sort of thing that helps shape and direct my thinking. BUT, it is not the type of thing that I usually broadly share. HOWEVER, a number of people with whom I have shared this think that I should share it more broadly.
It came to me as a secondary source of an edited version of a chat Jon Hylands participated in Oct 26. AND I have edited it further.
Many, many months ago I wrote an article saying how Gas and Oil are the SMOKING GUN of Y2K, and so this sort of thing still comes to me. To me, this verifies my position further. But you must remember the following discussion reflects the views of a doomer. Selection of a discussion by a polly could give you quite different views.
My source reports that Jon Hylands has had private conversations with DD and can vouch that she is for real and that she also had a private conversation Greg Caton ( who had a two hour phone conversation with DD ) and agrees with what is reported here. ----------------------
( Allaha ) DD, tell us about your background.
( DD1stLight ) I am a top problem solver/facilitator in the oil/gas industry so have a broader picture than most in my industry. Have been working with some large independents ( none of the 'public' companies will admit or do much ) that are doing what they can to ensure as large an output as they can.
( Ryker ) How's things in the oil industry?
( DD1stLight ) Actually I am working on a job that is geared to propane, so it feels good to be doing things that will actually aid these problems. I am in Corpus Christi right now. None of the work I am doing is close enough to my home to help us out, but it will aid some.
( Ryker ) I've heard conflicting reports on oil supply. One person says there's a 6 month supply stored up in US. Other reports I've heard say about 30 days. Which is right?
( DD1stLight ) Neither. The 'strategic petroleum reserve' is a bit of a myth. It is very poor grade and the ability to pump it out and then refine it is very limited. There is about a 3 1/4 day supply of refined product available in the system in normal times.
( Hylands ) Since the SPR is stored in caverns, I would suspect contamination problems.
( Ryker ) So, the claim of 6 month supply stored up is WAY off base?
( DD1stLight ) Well, it is MAYBE 6 months of very limited basic usage, but it would take a couple of years to get it out, transport, refine, etc. so it is basically a myth. We have deep problems some of which are not fixable - period
( Ryker ) The reserve is not for public use, just for military, power plants, and distribution of essential goods?
( DD1stLight ) Generally but even that would be improbable at best. After January, public use - even rationed - is out of the question given the short supply.
( Hylands ) That would spiral into an economic collapse so fast it wouldn't be funny
( Ryker ) I know... Think we're headed for that anyway...
( DD1stLight ) I see absolutely no way that economy will not fall very flat on its face. Remember, that at the very worst in the 70's "oil crisis" we were dealing with a 7% reduction in availability. I will be jumping up and down if my industry can supply 45% of today's refined product, ( and remember that is only about 40% at best of our daily usage at present )
( jcollins ) How would this affect the local production of oil? Booming times for local crude?
( DD1stLight ) Local crude is in deep trouble, problems down hole not possible to fix, then have to get to refineries ( which are band-aided to pieces as it is ) then distribution etc. But some of the biggest problems are that we have few 1 for 1 replacement chips. So we have to re-blueprint DAB's etc. and that takes many long months most times
( Ryker ) And chip plants are overseas which involves other problems
( y2kworried ) So, it sounds like it will take a long time to get oil production back.
( DD1stLight ) That's right. There are no quick fixes for lots of things
( Hylands ) If it takes more than a few weeks to get it back, I don't think it's going to happen at all
( DD1stLight ) Lots of power companies are stocking 2 to 4 weeks of fuel so we don't expect most problems to become critical until 3rd week of January. For the first time in my life I find myself agreeing with the Dept of Defense. They are figuring contingencies on 30% availability of today's supply of oil and gas.
( Hylands ) Susie, any new news on the Fed Reserve dude?
( susie0884 ) The guy, who retired from the Fed, was planning to spend the winter in the Northern mountains. Will be there before Nov. and to get out of DC where he is presently. Who goes to MT or ID for the winter?
( DD1stLight ) People for the most part are so terrified of it crashing that they will and are doing lots in hopes they can keep it afloat etc. Remember that half of all American households are invested in the stock market or commodities and most of them are hip deep in debt to boot. Amazing the number who have taken out home equity loans and used all or part to invest in the market. Scary
( GregCaton ) I have been getting reports this week about likely disruptions in oil supply, mostly foreign. I got a call this morning from a good friendin San Antonio who has a business associate ( retired full-bird colonel from Navy ) who has been overseas recently and confirms that very little remediation is being done where it needs to be in oil.
( DD1stLight ) Well, foreign has big troubles but not much worse than our own, I am sorry to say
( TymeNTide ) My company in Alabama has about 1000 employees, in my case. not more than 10 compliant computers in the entire biz..... still "working on it".....
( DD1stLight ) sounds about right from what I am getting from buddies who are still overseas ( most of which have come on home already ) . The best we can figure is 26% to 34% of today's availability, sorry wish it was better news. If oil production is over 40% I will be dancing in the street. I am looking for a minimum 60% drop in availability. Anyone want to hear a true story?
( Hylands ) Sure, DD1
( DD1stLight ) The 3rd week of July last year Mobil Oil got their 'analysis' for remediation. It was $460 Million + and over 3 1/2 years. They came back 2 weeks later and asked for a new analysis with differing base criteria. About 6 weeks later they did a 'merger' with Exxon, remember? 11 majors have since done similar things and the number of filings to reorganize into limited liability companies and partnerships is amazing. The majors are joining and the front companies will fold under and the back up companies will reestablish when they can. Why would an industry let itself start the big problems now when they can cash in for however many months they can? Like Exxon front, Mobil back etc. The back up companies are taking the cash and will start again under new names when they can.
( GregCaton ) Is this to avoid the effects of litigation? Distinguish between front and back companies.
( Dean--DuhMoyn ) Do they think deflation will cause all prices to drop, so a long is a big gamble?
( DD1stLight ) To take a "long" you have to figure there will be enough to go around somehow. This move is for litigation and the surety that they will fail on supply contracts. Remember they have had experience at being made the "bad-guy" to the American public. They learned well.
( GregCaton ) But with something like this, no one can believe that there is a basis to single out oil companies and make them a whipping boy.
Want a whipping boy for Y2K? Microsoft is a far more likely candidate. From a supply / demand situation... what is the basis for thinking that there will be a deflation in oil anytime soon?
( DD1stLight ) Supply has deep problems. Our refineries are some of the oldest and nastiest there are and we have been unable to build new ones in this country for many years now. They are band-aided to the max now. Remediation for most is next to impossible. It is MUCH cheaper to build new when they can.
( GregCaton ) Yes, DD, but you are assuming that the laws of supply and demand will go out the window
( DD1stLight ) Nope, supply and demand are basic but when the supply falls so far below even the minimal demand, people will get very angry. We had this situation in the past.
( Hylands ) So, does the govt know this, or are the oil companies lying to them?
( DD1stLight ) Read the Senate 100 day Y2K report, go to the utilities section. http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=001eAu and look at the part about oil/gas, and pay close attention to how they got their numbers
( GregCaton ) Explain.
( DD1stLight ) 8000+ letters sent to producers and only got back 450+ answers. Not many, so they just decided to use the 66 companies that they saw as most major and still their scenarios are a bit daunting. They tried to put a good face on it even then.
( GregCaton ) When will the problem get out of control?
( DD1stLight ) Expecting things to get sticky big time around the 3rd week of January.
( GregCaton ) Is there a probability curve here? Or are you speaking with surety?
( DD1stLight ) I have spent a good bit of time for the last 10 years gathering solid date, good math from my industry where possible. I like good numbers and want them to be verifiable in at least 2 ways; 3 is better. I would say this is real. The best I can come up with is 26 to 34% of current supply, optimistically 46%
( GregCaton ) Is there anyone here who doesn't believe that if we had 60% drop in oil for 30 days, that we wouldn't be ( a la Howard Ruff ) at 2,000 Dow in 2000 ?
( Hylands ) If it lasts for 30 days, it's all over
( Ryker` ) Greg, if we have a 60% drop in oil for 30 days, the stock market won't be around any more...
( GregCaton ) it will be around. Dormant, perhaps. Even under 2,000 points... but still around
( DD1stLight ) I am trying to be optimistic, am hoping for 40% availability of today's supplies being available
( underpaid ) Loss of oil flow - candling of pipelines - problems with tankers/ports - VERRRRY SERIOUS - End of economy PERIOD.
( Tulladew ) Gasoline might be expensive, even if rationed
( DD1stLight ) Rationed assumes there will be enough for basic services with some left over. These amounts are not sufficient for basic services etc. I expect nationalization at the least
( DD1stLight ) Can anyone here think of a single industry that is not wholly or secondarily reliant upon the oil/gas industry? Refineries take several years to build even at critical speed, pipelines the same, wells take a while too etc.
( GregCaton ) How long have you held these convictions, as to percentages, time line, etc ?
( DD1stLight ) Greg, the first time I jumped up and down in a corporate board room about Y2K was in 1976. I started gathering serious data about 8 years ago as I saw little being done still about my industry specifically
( GregCaton ) What caused you to be so concerned in 76 ?
( DD1stLight ) I needed to input 1800's info into the computers and could not.
( GregCaton ) 1800's info? Why?
( DD1stLight ) My industry pays people who own the land/mineral interests according to the % the own so is very important, also for getting the rights by lease to explore for oil/gas etc. Deeds and court suits from the 1800's are many times still in effect today.
( Ryker` ) Can I try to summarize to see if I got all this? You're saying that there may be a 60% drop in oil supply that will become evident about the 3rd week of January. And this drop may last years due to Y2K computer problems at everything from oil wells to refineries?
( DD1stLight ) Yes. Add to that problems when/if a system that is down-hole noncompliant. A system that is physically located several hundred or thousand feet below the surface and is totally not accessible, and therefore cannot easily be fixed.
( GregCaton ) Were they really that stupid ????
( DD1stLight ) give him a cigar, yes. Redrill IF you can, but it is not possible to redrill many and get production again.
( Hylands ) Greg, some of the natural gas wells up here in Alberta are dug 20,000 feet down
( GregCaton ) DD1 ) And these deep wells do NOT have manual overrides?
( DD1stLight ) not stupid, maybe ignorant - scariest thing i am seeing is some of the simplified assumptions that so many are making in remediation analysis
( Ryker` ) It comes down to short term profits. If they can drill the well and start making money immediately, that's all they were worried about... Didn't want to spend time to redesign systems to make them compliant for an event that was years in the future...
( DD1stLight ) EPA requires that the wells have RAMS - that is a great big snap valve that closes shut if there is a problem with the well that would/could make it unsafe/blowout etc. EPA required immediate response and actually very few people ever really gave it much thought
( y2kworried ) The implications are staggering, our whole economy is based on automobile and truck transportation, and planes, and ships, and locomotives
( DD1stLight ) Even hydro electric is totally reliant upon large amounts of very specific lubricant
( GregCaton ) How many in upper management fully grasp / accept what you are now saying ?
( DD1stLight ) Some. Most are like most people. They really do not want to look at the possibilities. Can't say I blame them. It's not like one guy knows the ins and outs of how his product is drilled, pumped, refined, distributed, etc.
( GregCaton ) Is there the slightest doubt in your mind that this all equates to a depression more serious than the 30's ?
( DD1stLight ) NONE. I am in a very unique position in that I am consultant to most majors and many minors and have been around so long I can get info
( GregCaton ) How is it then that you would have a broad interdisciplinary overview... but few others in the board room would ???
( DD1stLight ) Because I am a mean old lady who is more likely to kick someone on IT than kiss IT so I work strictly on contract. Also have more degrees than carter has pills and am known in the industry. I do everything from facilitate the sales of major companies to figure out how to get around a bottleneck at a refinery.
( GregCaton ) Alright. ( WIPING THE BLACKBOARD CLEAN.. ) Let's start fresh and talk about how this impacts the Inflation vs. Deflation arguments. Where do you stand on this issue? Inflationary Depression? Deflationary Depression? A complete economic collapse?
( DD1stLight ) most of the old stripper wells have been plugged, few left really but no the refineries are in worse shape than the wells
( Hylands ) No commercial airplanes. Think about that for a minute.
( DD1stLight ) we need to remember that $ is only worth anything because we all agree it is, when we stop agreeing we call it inflation or deflation. Most workers I talk to think it is only this plant that has problems. Another example of ostrich syndrome which is very understandable from a psychological viewpoint.
( GregCaton ) .... feeling like we really ARE the first people in thefirst Titanic lifeboat.
( Hylands ) Exactly my point.
( GregCaton ) Amazing when you consider than 99.8% of the people in society reading this would think we're all psychotic.
( Hylands ) Airplanes, trains, transport trucks, ships, electrical generation, you name it
( GregCaton ) How much have the electric utilities done to stockpile gas, oil, coal, etc.
( DD1stLight ) best I can find is that most are attempting to store an average of 3 weeks supply Some, like TU in east Texas, have their own coal mines and rails to them, but only have the ability to store about 4 weeks of lubricants
( GregCaton ) So then the SHTF in late January?
( DD1stLight ) Yes
( y2kworried ) What is even more important: that oil is the basis of food production
( Hylands ) oil is the basis of electricity, thus it is the basis for just about everything
( DD1stLight ) most fertilizer is made from natural gas condensates. I have looked and looked for years now at every industry i can see becoming more dependant upon oil/gas and computers. NOT less. Tenneco and Chevron actually came clean on their last year's Q10 third quarter reports and stated they expect to have about 30% production available after Y2K
( DD1stLight ) i keep hearing about the 'national grid system' which is a joke. texas has its own grid NO major AC connection to any other and only 2 main DC's for ballast
( Hylands ) There are four main grids in North America
( Alwyn ) San Onofre Nuclear Plant here sounded the all clear today ...forty people, three years, $10 million and repaired or replaced over 300 components./
( DD1stLight ) The Texas grid is totally integrated, all have it or none have it, not possible to 'island' anywhere in Texas
( GregCaton ) DD1 ) So... let's define what "10" means. In your mind will this cause the collapse of the U.S. Government as we know it?
( DD1stLight ) government as we now know it, may well be. Some form of government will remain though. It is why the very best minds I know have already stopped taking contracts or if employee just did not show up for work one day and left no forwarding address
( Ryker` ) Greg? Have you risen your estimate to a 10 now?
( GregCaton ) If you live in Watts... it will be a 10. But if you're a self-sufficient farmer living in Colorado ... it might be a 3 as far as you're concerned. Don't know.
( DD1stLight ) You got it, Greg. That's why I opt for 8.5 is a mean
( Hylands ) Greg, how many people do you think depend on electricity, even rural farmers?
( GregCaton ) Hylands - There are some farmers who have only had power since the '30's ... I think that farmers, with or without oil, are steeped in a tradition of hardship and "having to make due". "A country boy can survive..."
( Hylands ) Exactly, how many? I'll bet it's not many. Now, we're pretty smart, so we'll figure a lot of stuff out, but still...
( Hylands ) How many farms can irrigate their crops with a hand well pump? How many farmers today can grow their crops without bought seeds, fertilizer, diesel tractors, etc?
( DD1stLight ) Few, and mules and oxen are a lost art to most and not available or trained etc. not like a tractor you can't just build one you have to grow it . And those horses are for the most part "pets" LOL
( Alwyn ) They are pets, in the sense that they don't pull a plow. But, they are a resource.
( GregCaton ) I'd say enough farms for about 10% of the people to make it.
( Hylands ) Greg, that's about my figure, 10% . Yep, can you be sustainable with water, food, heat, and sanitation. People, without clean drinking water, will die
( GregCaton ) So that's the task: be one out of the ten. ( New slogan for the Marine Corp ) : "We're looking for a few good one out of tens!"
( DD1stLight ) for goodness sakes folks DO NOT just take my word for all this, do your own research, there is plenty available on the net for you to see, just go to the real sites etc., check out the defense departments contingency plan figures for oil/gas. I think the biggest killers besides cholera, typhus, thyphoid and diptheria and dysentery. Will be pure old culture shock
( Hylands ) This is why I think a 2 year food supply is a wise idea
( DD1stLight ) I have to thank Hylander for inviting me to this room, it is good to be able to talk to people who have more than 2 brain cells to rub together and play with and are not caught into immobility by fear etc. * Hylands takes a bow
( Alwyn ) Ryker...you can go low-tech and cheap on the purifier...Pur has systems for $30 that do everything a Kaytadn ( sp ) does for $300.
( Hylands ) Alwyn, problem with the PUR is it won't do 20,000 gallons, and the Katadyn will
( GregCaton ) DD1 ) ) Allow me to give you some perspective. Speaking personally, we're got two cisterns, a water well, ( motor and manual ) ... 24 solar panels ( 75 watts each ) within a complete solar system... protection ( won't elaborate ) ... ham radio equipment ( I'm an Extra Class holder ) ..... who would do this if they didn't take Y2K seriously?
( DD1stLight ) the RAMs located down-hole in the wells, we know that there are a goodly number that are NOT ok, when they malfunction we know ( by actual testing ) that they close the RAMs which cannot be reopened, cannot get to them to reset etc.
( Gary_Seattle ) but Katadyn might not handle all of the stuff pur gets rid of
( Hylands ) DD1, I'm really glad you came, and hereby invite you back again every Tuesday, same time
( DD1stLight ) well we have cisterns, well, food etc. ( actually can feed about 300+ people for about 3 months ) but not much in the way of electricity generating, no radios etc.
( DD1stLight ) one of the scariest assumptions i see people making is "it's analog, look no further" SHEEEEEESH!!! Many date sensitive chips were used in nondate related places because they were cheap, available, and did the job
( Aubrey ) I've got a First Need deluxe and a simple Pur pitcher that will take out everything up to virus size particles
( DD1stLight ) nite tyme, would not blame yall if you dreaded the day I came in. LOL and kicked Hylander for bringing me
( underpaid ) DD1 - thanks for the doom! I like to keep those stress muscles worked out - gotta go - bye
( DD1stLight ) still working with a couple of large independents that are racing to get small gas fields with propane generating capabilities up for the turnover so some will be available more
( DD1stLight ) I really am called DD
( Hylands ) DD1, I'm curious, have you noticed an increase in refinery explosions over the past year or so?
( DD1stLight ) Not really. Lots of major breakdowns, but that is to be expected from antiquated refineries. What I cant figure out is how so many miss the implications of my industry. Its like most do not even think about it in the equation. I see it even in people who are honestly looking for real info. Come to think of it, why would most know much about it? It is a very 'closed' mouth industry, very competitir. The Sea Sh�Tp �"�p in the are� Pr the express purpose of monitoring Makah intentions. If a whale hunt is attempted, the Sea Shepherd Conservation Society will be ready, the Edward Abbey will be on location and the harpoons of the Makah nation will be closely watched. The Makah Tribal Council claims that the resumption of whaling will give their people a sense of worth and identity, stop alcoholism, drug-related crime and domestic abuse. Sea Shepherd disagrees; the economic and social impacts on the Olympic region, much less the state of Washington, will greatly outweigh the cultural benefits to be had by a few for a resumed whale hunt. The Makah people are as much a part of 20th-century society as other rural Washingtonians -- they shop for the same foods and are exposed to the same cultural and societal influences as other non-native people living on the Olympic Peninsula. A society can never evolve by adopting archaic or inhumane rituals. Progress affects everyone living in this new era of the Global Village. No legitimate argument can be made that the Makah, or any other ethnic group, can move their culture forward through ritual killing. Sea Shepherd will continue to watch the Makah whaling proponents and will take whatever actions are necessary to prevent the blood of whales from staining the shores of Washington State. There is a possibility that the Makah will proceed with a hunt, regardless of their failure to receive IWC approval. From a public perspective, this coming year will be critical, and we need all the support -- political, activist-based, and professional -- that we can muster to fight the Makah on this issue at the IWC meeting in 1997. We are committed to preventing the songs of the Gray whale from being silenced again. <img src

TownCrier (11/5/99; 13:23:42MDT - Msg ID:18415)
One possible answer to Sir canamami
"What happens to SA when it's "offside" geopolitically, acts to undermine US leadership and cuts off the supply of cheap oil?"

Europe takes it under its protective wing? Cheap oil remains cheap oil to all willing to pay the fair price. America simply loses its long privilege to get it at no price higher that the cost to run printing press. Clearly, any need for military protection in the past was a hidden cost (printing press money again), but any need for future protection would likely come from those who perceive themselves to be benefactors of cheap oil. Okay, so America has to start working for a living (again) to attain a trade balance. What's the big deal? Europe has been working for years to pay for their oil. I imagine they will continue, but will no longer have to underwrite the American privilege by importing the American inflation.
...just the view from The Tower.

USAGOLD (11/05/99; 13:15:56MDT - Msg ID:18414)
Jake..."Ride boldly ride... if you seek for Eldorado"
In Donovan's recordings of a year or two back after a long abscence from the public venue, he put that poem to song. When I first heard it I thought "What a brilliant piece of writing." I didn't know it was EAP. The melody he put to it is as unforgettable as the words. The song makes me go back to the Donovan recording frequently.

Thanks for posting that.

Clint H (11/05/99; 13:15:55MDT - Msg ID:18413)
The Stranger Msg ID:18400)

Sir Stranger, your message to Canamami served to buck up some other people as also. To go back many years, thanks, I needed that!

Black Blade and ORO. Thanks for your response regarding the accumulation of gold by the Mideast oil nations. I know someone covered the subject. I just wish I had copied it.

Jake (11/05/99; 13:15:53MDT - Msg ID:18412)
TownCrier
Sir night this scribe tries to please.
Could have done better but late for work.

Gaily bedight,
A portly knight,
He cast an ominous shadow,
Had journeyed with jake,
Eating a Cake,
Like there was no tomorrow.

But he grew full-
This knight so dull-
And o'er his heart a burning
Fell as he found
No spot of mead
To stop his stomaches turning.

And, as his strength
Failed him at length,
He met a pilgrim shadow-
"Shadow," said he,
"Where can I find-
More cake to eat tomorrow?"

"Over the Mountains
Of the Moon,
Down by the 7-11,
Ride, boldly ride,"
The shade replied,-
"The Cake there tastes like Heaven!"

Edgar Allan Poe NOT

canamami (11/05/99; 13:15:24MDT - Msg ID:18411)
Reply to the Stranger -post #18400
The Stranger,

Thx for your post. No need to apologize. Your post was a good reality check.

You are quite right. The flood of money into index funds a la the Motley Fool is to a great extent skewering the market's signals, causing people to believe it's going up when it isn't. The fact is that many people are now using the stock market index funds as their savings accounts. As you once pointed out, over the long run equities outperform everything, and as a result investors are socking their money into low MER index funds as surrogate savings accounts. This unthinking, Pavlovian response means the big cap indices and constituent stocks go up no matter what, impervious to P/E rations, earnings, etc. A further pillar is the foreign money which drives up the big cap indicies. The foreign money tends to go to the big caps, and until the outflow of foreign capital starts again, this will be another pillar of the indices. Don Coxe has pointed out the relationship of the Euro to the SP500; when the Euro is up, the SP500 goes down as money flows out, which seems to corroborate somewhat FOA's beliefs concerning the centrality of the Euro to future developments. One caveat: the previous occasion the composition of the Dow was changed, the "removed" stocks have since outperformed the market, which may be somewhat of a counter to my "Motley Fool" index fund theory.

In all fairness to the advocates of owning the metal itself, I believe that most of them on the Forum (e.g., MK himself) point to gold as a form of wealth insurance, not as an investment. I don't believe MK has ever argued that gains in $US terms from metal ownership would exceed share ownership, just that it is a hedge against hyperinflation or the disestablishment of the currency. For example, my take is that owning some physical gold may be a good idea for a Canadian, because the country (and presumably the currency) could some day go the way of the do-do bird. I agree that some of the extreme predictions (e.g., $30,000) could be interpreted as advocating holding physical gold for investment purposes, though I would think that FOA is arguing more that the $US will become worthless for international purposes and hence the wild valuation. I disagree with FOA on that point: the underlying fundamentals of the U.S. are too strong for such a decline to take place, though the $US could be in for a "conventional" period of heavy devaluation, but not disestablishment. (In fact, it is already well off its highs vis-a-vis various currencies, but without a big gain in the POG).

The Forum is interesting because all branches of the goldbug world appear to be here, and I submit may be dependent on one another. One pillar of the POG is its valuation by some as a financial asset. It holds this value because (a) some fear the stability of their national fiat currency, (b) they view gold as a long-term, secure alternate currency and (c) prefer gold as hedge to other fiat currencies. Presumably, the POG goes up in times when such fiat currency doubts and desire for gold increase, e.g., market turmoil. When the POG goes up, gold shares go up. Others don't doubt their national currency or view gold as the alternate currency, but note the swings in the POG and gold shares, and play those swings to maximize dollar gains. (Of course, just as the flow of money into index funds drives them independently of underlying reality, the POG and gold shares can be moved by purely speculative money; however, I submit there must continue to be a faction of diehard "gold is the only ultimate money" investment to drive the swings on which the "speculators" place their "bets".)

Thus, there is a symbiotic relationship between the two goldbug factions. Without a new generation of believers in the metal to drive the POG in times of crisis (and with it the even greater swings in gold shares), then those who play the gold market will have no swings to play, because if the swings are purely speculator driven they will cease to have staying power, and cease to be profitable. My posts impliedly point to my fears that a paradigm shift of worldwide magnitude may have taken place. If gold no longer can hold or recruit a significant and material mass of believers in its role as the final currency, then efforts to play the swings in the market are doomed to failure as the gold market itself dies. Hence, my question of a few days ago: Where's the offical-sector Asian money?

I pulled much of money out of index and other big cap funds, as well as tech funds, as many predicted the Dow to drop to as low as 5500 or 6000. So I bailed at near the bottom, fearing even further drops, as well as the effect the Euro would have on the NA markets. Some of this money found its way to gold mutual funds and stocks, and a little into the metal (not much wealth to insure). In any event, if I had left my money where it was, as of today (I emphasize that) I would be better off if I had kept my money where it was, and also had never invested in the gold and other stocks in which I did invest. (Mea culpa, I was playing the pennies ---serves me right!!).

Kindest regards, canamami.

el St.One (11/05/99; 13:07:10MDT - Msg ID:18410)
Rooster
It's a thing of beauty, arrived yesterday, thanks Michael. Long live Centennial Metals, USA GOLD, and this FOURM.
It being a 1905 Gold French rooster, MS65 or better. Have to decide what to do with it, hide it away or frame and display it. All I know for sure is it will not be sold, trade for necessities maybe, but never sold.

Now if my year end guesstimate comes close to mark, we will all be doing great.

It's great to see all the new posters here. Welcome all. I'll pass on the same advice (20 odd years worth) I have given to my children, buy some Gold, hide it away, and hope you never have to use it. Sure is a great feeling to know it is there if needed. I personally feel it will be needed, also hoping I'm wrong.

Thanks again MK...........I hope my kids get to fight over the Rooster........In 20 or 30 years.......el

TownCrier (11/05/99; 12:58:29MDT - Msg ID:18409)
Very nice, Sir Jake,
very nice indeedy. Everyone at The Tower has a weakness for poetry regarding gold. And some here, as has been told. (the slenderest of the lot), has a weakness for cake.
Methinks we need a poem about a cake of gold!

Dave (11/05/99; 12:54:43MDT - Msg ID:18408)
Hall of Fame Nomination
I'd like to second beeting's nomination of TownCriers post of 11/5/99 #18379 -Subject:Bank
Repo's- into induction into the USAGOLD Hall of Fame.

I remember when I started collecting coins at age 10 and wondering "where does money really come from." I knew gold and silver coins were minted, and mines dug the metals. But I couldn't figure out exactly how that all got into circulation since we weren't all miners. I thought someday when I was older and wiser it would make sense.

Well I was wrong. The answer wasn't "over my head" then. It was just incredibly absurd that the Government/Federal Reserve could print money our of thin air and jail any competitors.

TownCrier (11/05/99; 12:52:17MDT - Msg ID:18407)
There are times when repos just aren't enough (or appropriate) to get the job done
http://biz.yahoo.com/rf/991104/7f.html
HEADLINE: Banks draw from special Y2K discount window-Fed

The Federal Reserve announced on Thursday that this week banks had for the first time made "significant borrowings" from the discount window using the Fed's special terms which were set up in anticipation of special year-end liquidity needs. Borrowing under this facility Wednesday totaled $210 million. Through these special loan facilities, the Fed will truly take on the limits of crap collateral. And yoy know the banks are at the end of their rope because the interest rate they pay under these special arrangements are higher than the Fed Funds rate, higher than the rediscount rate, but fortunately, lower than a typical cash advance on a standard credit card. Hey, it would seem that these two rantings from the rooftop today were quite timely to help some people better judge for themselves the implications of this development.

Jake (11/05/99; 12:48:55MDT - Msg ID:18406)
TownCrier
Just seems appropriate today sir knight

Gaily bedight,
A gallant knight,
In sunshine and in shadow,
Had journeyed long,
Singing a song,
In search of Eldorado.

But he grew old-
This knight so bold-
And o'er his heart a shadow
Fell as he found
No spot of ground
That looked like Eldorado.

And, as his strength
Failed him at length,
He met a pilgrim shadow-
"Shadow," said he,
"Where can it be-
This land of Eldorado?"

"Over the Mountains
Of the Moon,
Down the Valley of the Shadow,
Ride, boldly ride,"
The shade replied,-
"If you seek for Eldorado!"

Edgar Allan Poe

YGM (11/05/99; 12:47:23MDT - Msg ID:18405)
Tired of Friends y2k Denial and Being Criticised For Your Beliefs-
Just Tell Them:
I'm 'prepared' to be Right or WRONG about Y2k are you?

Go GATA, Go Gold and GO PHYSICAL.

YGM (11/05/99; 12:38:12MDT - Msg ID:18404)
The Best 'Short' Summation on Y2K---I've seen
Westergaard Site----Gabriel Heilig, Y2k-Facts, Guesses & Silence
The Link is a block and a half long--Easy in search engine if desired-----

'Clip'.....................................................................

The Y2K issue is more than a "computer crisis." It has become a crisis of public denial, a loss of public courage: (1) a loss of moral courage -- believing that electronic tools are somehow better than human truths; (2) a loss of intellectual courage -- our refusal to look at facts we do not like and face a problem that may change our lives; (3) a loss of political courage -- our leaders' refusal to candidly prepare us for what lies ahead; and (4) a loss of journalistic courage -- the press's refusal to look beneath the surface and do more than poke fun at an issue that is extremely easy to mock.

But when January arrives, the joking will stop.

***Crossroads-You are very, very welcome---YGM

Horatius (11/05/99; 12:37:12MDT - Msg ID:18403)
Elevator Guy
An updated version of None Dare Call It Conspiracy with the title, Call It Conspiracy, written by coauthor Larry Abraham, includes the original text plus new material. You can get it at American Opinion Book Services, www.jbs.org/aobs/. They also have many other books on conspiracy, which incidentally are fact not theory.

TownCrier (11/05/99; 12:34:54MDT - Msg ID:18402)
Thanks for the recognition, Sir beesting
...but I'm certain it's far too long given it's less-than riveting subject matter. For the record, though, a HOF nomination must receive at least three seconds to be considered for inclusion, unless we decide we all decide to retool the process. The USAGOLD Archives are truly the internet's Hall of Fame, with the actual HoF being a specially bright room with ample seating for our many invited visitors...a good starting point for our friends and relatives when we try to introduce them gently to the realm of gold.

I'm certain you liked the post simply because I used my favorite phrase..."crap collateral." A phrase hardly befitting a knight of the Round Table. That's why I stay up here in The Tower outpost with my cries from the rooftop.

TownCrier (11/05/99; 12:18:55MDT - Msg ID:18401)
Hello Sir Ward, welcome to our little fire-lit room
Thanks for sharing your experiences and thoughts. In your final analysis, you said "Some of you will ask why dont I just convert to bullion. Well, I already did before my bank experiment, but until (and if) things get really bad, people will want to deal with what they are familiar with, $$$." Then you asked for comments, so here's a quick view from The Tower.

This could theoretically play out in any number of variations, so the best you can do is either prepare against all of them, or where resources are limited (as is always the case) try to reasonably anticipate the most likely scenarios and prepare for those.

To say that $$$ are supreme because everyone is familiar with them seems to be a quite reasonable conclusion. Some additional items should be kept in mind, however. Just because a thing is familiar, it is not given immunity to lost confidence or contempt. Just as stocks on Wall Street are familiar during the boom, they are not wanted during the crash, and people try to get rid of them at any cost. Further, they are not eager to hitch their wagon of fortune to that particular horse for some time to follow.

Listen to these words by Fed Chairman Alan Greenspan about this phenomenon in his August 27, 1999 speech from Jackson, Wyoming:
"It has become evident time and again that when events are unexpected, more complex, and move more rapidly than is the norm, human beings become less able to cope. The failure to be able to comprehend external events almost invariably induces fear and, hence, disengagement from an activity, whether it be entering a dark room or taking positions in markets. And attempts to disengage from markets that are net long--the most general case--means bids are hit and prices fall. ...investors suffer an abrupt collapse of comprehension of, and confidence in, future economic events. It is almost as though, like a dam under mounting water pressure, confidence appears normal until the moment it is breached. ... History tells us that sharp reversals in confidence happen abruptly, most often with little advance notice. These reversals can be self-reinforcing processes that can compress sizable adjustments into a very short time period. Panic market reactions are characterized by dramatic shifts in behavior to minimize short-term losses. Claims on far-distant future values are discounted to insignificance. What is so intriguing is that this type of behavior has characterized human interaction with little appreciable difference over the generations. Whether Dutch tulip bulbs or Russian equities, the market price patterns remain much the same."

Conceivably, the dollar could suffer a similar fate, just as those familiar stocks become reviled when Wall Street crashed in 1929--a vicious circle to be sure as the market headed lower. Due to the inflated nature of our money supply, built upon bank's ledger entries, our money is largely represented by digital money, with only a very small percentage (less than 3%) in paper or coin form.

If you have convinced yourself that a situation is likely to develop in which you want to extract your deposits because other depositors' withdrawals will surely leave you "out in the cold" if you delay long enough, you'll want to recognize that condition for what it is--lost confidence in the banking system. Far more people would be left out in the cold, unsuccessful in their attempts to get their deposits, they may very well choose to completely disengage themselves from the dollar, and spend down their digital accounts in a flurry just as investors who sell stocks in a panic. Argueably in their disengagement they would flee to real assets...food, clothes, GOLD. (It's easier to park $10,000 worth of life savings in small cache of gold coins than it is to park it all in boxes of corn flakes and instant pudding.) Higher prices for everything real would be the result, and those with a fistful of real paper dollars would quickly find that they don't buy very much anymore.

Another consideration, discounting that scenario or not, would be that the government would try to take necessary measures to ensure that the whole economic structure isn't brought to its knees just because 9 people out of ten were not able to get their money in paper form. Think about it...we operate semi-smoothly today with each type of our familiar dollars having an equal par value, most of them being digital, of course. The government might, for example, declare photocopied dollars to be legal tender to help get through this crisis, or they could introduce completely unfamiliar measures or surrogate currency. But you see, there goes your familiarity argument right out the window. People may balk at the attempted stop-gap measures, and if temporary government regulations have closed the door on cash withdrawals of our familiar bucks, people will disengage as described above, gold as the natural resting place for their accumulated monetary wealth. Believe it or not, people can learn and adapt quickly to pressing economic realities. A lowly chimney sweep would likely choose not to be blackened if the reward offered were not more than paper cluttered by government designs, seals, numbers and presidential portraits. People are generally "dumbest" in good times (though they all feel like financial wizards). Only after the storm are they much wiser and capable of making rational economic decisions. The form in which they hold their wealth is likely the one choice people will look back on after the storm and say "I wish I knew then what I know now." But importantly, they will have learned the lesson, and as a gold owner you will be able to help them acquire what they want. A neighborhood boy might mow your lawn all summer long, rake leaves and stack firewood in the Autumn, and shovel the snow from your driveway and sidewalk all winter for a single gold sovereign. He sure wouldn't consider doing that today for today's purchase price of that sovereign. In this way, as it ever has been, everyone's newfound wisdom after the fall (stock bubble bursting) will will most benefit those who found wisdom before the fall. It matters not that your wisdom arrived one day in time, or two years "too soon" or ten years "too soon." That's the view from The Tower, anyway.

The Stranger (11/05/99; 11:54:14MDT - Msg ID:18400)
Now, Hold On A Minute, Canamami
Let's look at the record. You say, "I've been anticipating the end of this equity bull for over 18 months now." Well, Bingo! April of 1998 marked the top for most American stocks. Today, the average American stock is down well over 20% from it's peak of the last 18 months. If you are looking at the S&P 500, you are looking at a WEIGHTED index. That means the S&P 500 is very heavily skewed towards the stocks with the biggest capitalizations. And as each of those big stocks goes higher, its capitalization increases, therebye increasing its weighting in the index. Because of this, 1999's increase in the S&P is now entirely dependent upon, believe it or not, just 11 stocks, every one of which has an outrageous PE. So, I don't know what you owned when you turned bearish on stocks, but most stocks and most investors have had a tough go since then.

The problem with being out of the market is that we tend to get caught up in our awe of the performance of a shrinking minority of gravity defying names and forget that a broad majority of stocks has been steadily in decline. This is why the bubble thesis, in its broader context, is so silly. How can the market be a bubble when the advance decline line is at 4 YEAR LOWS?

Now, let's look at gold. You say, " My personal wealth is far lower than it would be if I had not bailed out of the market last late summer and early fall, during the big downturn." Once again, I don't know what stocks you bailed out of, but if you start with late last summer, August 31, to be exact, the XAU (Philadelphia index of gold and silver stocks)is now up 38%! Year to date 1999, the XAU is up only 7%, but that is a far cry better than you would have done in the average stock this year, or bond either, for that matter.

One of the problems, I suspect, is that too many of us are falling victim to pie in the sky forcasts of $3000.00 gold and beyond, which is supposed to happen overnight. We also get to believing that in order to make money one must be in the metal itself. Obviously, nothing could be further from the truth. Except for one news-dominated 5 month period, May to October, 1999, bullion has been just about glued to $300/oz. for the last two years. Still, can anyone doubt that $253 was a major long term bottom for gold and that the news background has now clearly turned in gold's favor? I think not.

Obviously, the recent gold market has required a lot of patience, but it is not without hope. It also requires careful selection and timing, but it has not been without profit. One thing it clearly does not require, however, is a collapse in the stock market. Such an event might satisfy the perennial doom and gloomer, but how is it in any way essential to what you seek?

P.S.- I just reread this thing. I sound like I am lecturing, and I apologize. Your wisdom and knowledge always inspire me, as you know, canamami. Please believe that my intent is only to buck you up, which you sometimes seem to need, and in no way to preach. Thanks.

Crossroads (11/05/99; 11:53:14MDT - Msg ID:18399)
Great site YGM!
YGM, I just finished reading the link to Davy Crocketts speech and I can't thank you enough for providing the link to devvy.com. It gave me a chill to read about such integrity and patriotism, something which every American could all take a lesson.

beesting (11/05/99; 11:31:52MDT - Msg ID:18398)
USAGOLD Hall of Fame
For those that don't know the USAGOLD Hall of Fame at the top of this page, represents a collection of the best and most educational posts submitted on this forum. To qulify a post must be nominated to The Hall of Fame, and seconded by TWO other posters.(Do I have that right Sir Townie?)

Having said that I would like to nominate TownCriers post of 11/5/99 #18379 -Subject:Bank Repo's- into induction into the USAGOLD Hall of Fame.
Can we get TWO seconds?

You're doing a great job Townie...Please keep it up....beesting

TownCrier (11/05/99; 10:42:02MDT - Msg ID:18397)
U.S. markets light up on non-threatening jobs data
http://biz.yahoo.com/rf/991105/o3.html
The Labor Department's October employment report closely matched expectations: non-farm payrolls rose 310,000 last month, compared with 313,000 as predicted by economists. Some economists are concerned over the unemployment rate falling to a three-decade low of 4.1 percent (below their forecast for 4.2 percent) because Fed Chairman Alan Greenspan recently warned of a shrinking pool of U.S. workers. Some see that the Fed now has a stronger case to raise rates.

"There's relief there and despite the upward revision to September, the payrolls came in somewhat below the 'whisper' number. But the point is the slowdown is occurring because there are not enough workers which has totally different implications."--Northern Trust chief economist Paul Kasriel

canamami (11/05/99; 10:21:35MDT - Msg ID:18396)
Reply to USAGOLD and ganymede
MK,

Thx for the excellent daily report. Very calming and good for this gold investor's blood pressure. Here's to hoping the turnaround is sooner than later.

ganymede,

Thx for your well-reasoned reply. I hope to catch up on previous posts sometime during this week, and I will then have a chance to read your Y2K posts, to which I am looking forward. A guru I follow jokingly referred to old Soviet missiles hitting North America due to Y2K (though my sense is that he believes Y2K will have an impact). However, errant Second World weapons of mass destruction are perhaps the one thing my untrained, non-scientific self genuinely fears about Y2K; I can perceive some supply problems stemming from disruptions in the less advanced parts of the world, but eventually those can be worked out, albeit at a cost. But an errant ICBM is not so lightly dealt with, given that my city is an A-list target. A country that can't stop itself from disintegrating conceivably may have forgotten or failed to make all its weapons Y2K compliant.

(N.B.: I saw Ross Perot on Larry King a few months ago: His short-term solution to Y2K is to convince the computer it's 1972, until the bugs can be ironed out.

N.B. #2: Everyone, I apologize for all the typos today.)

ward (11/05/99; 10:15:02MDT - Msg ID:18395)
First Time Post and my experience with my Bank
Hi all, long time listener, first time poster. As most of you, I am worried. First, I'm not a Y2K nut, there are as many theories out there as there are, well I'll be nice and not say. But I am conservative, and for this reason have decided to plan ahead, maybe a little bit too ahead, but as you will see below, maybe not. My personal belief is that it will be crowd psychology that will do us in, not the computers. For this reason I decided to take "some" cash out against my home equity line of credit yesterday. To do this I deposited a check into my checking account and let it clear. Yesterday, I went to the bank to get "my" money. Well you can all guess what they told me. They have to order it and it wont be here until Wednesday.

My point is this, and you have all heard this before, the banks simply do not now and will not in the future be able to handle even a slight disruption in normal operating procedure. If a normal sized branch does not have enough cash on hand ($60K) for a small time fry like me, what will happen when the media frenzy really starts the Y2K hype in December. Most people will want to take out at least a few thousand bucks, wont you? All it would take is 30 people x 2K$ to achieve the same result that I created. Those 30 people will each tell 30 people and well, that will be all it wrote.

My suggestion is dont wait till December. If nothing happens all you will lose is 1 1/2 moths interest. Some of you will ask why dont I just convert to bullion. Well, I already did before my bank experiment, but until (and if) things get really bad, people will want to deal with what they are familiar with, $$$.

Comments would be appreciated.

Joey (11/05/99; 10:11:01MDT - Msg ID:18394)
Test
Test

ganymede (11/05/99; 09:48:50MDT - Msg ID:18393)
To canamami and others
I am in pretty much the same situation as you are. I am also a fellow Canadian and I got out of the market in Oct 1998 and turned all my money into PMs. There is no doubt about the fact that this list and others are full of postings that foretell the imminent bursting of the "stock market bubble" and the long-awaited bull market in gold. There is also no doubt that this has become a religion to some people who cling to this position by faith alone, not performing their own analysis of the market or working to understand the pros and cons of the views presented. It is also true to say that some posters are gold dealers who have a vested interest in selling gold. All true.

I eagerly read all the posts here and try to investigate and think about these things on my own too. And while my reasoning should not be a seen as an effort to convince you to any action it may help you to make up your own mind one way or the other. I need to make it clear that I am not a gold dealer, I am a software engineer working for a major manufacturer of PLCs. I have been writing software since 1979.

Apart from any condition of shortage that may or may not exist in the gold market, the looming uncertainty of Y2K is real. The management of my company has said that they expect the next year to be "the most interesting year of our lives". Many things that are said about Y2K are ridiculous, but one thing is certain: We don't know what will happen and the stakes are high.

The stock market relies heavily on predictability. The market responds well to the meeting of analysts expectations, whether good or bad. All is well as long as we feel in control.

The PMs are the other side of the coin. They do well in an atmosphere of uncertainty, when fear abounds, when things look out of control.

The media, the government and the financial community have put all their eggs in the "we are OK" basket. They have painted themselves in a corner. If anything major goes wrong for Y2K the shock will be gigantic. If you are in the stock market when that event occurs you will have no hope for saving your assets. You will be left with a handful of paper. It will take an act of religious faith in the restoration of those assets so large that it will make Peter walking on the water look easy.

I don't cry over a few dollars that I lost in paper stock market gains over the last year. I know that while I lost a few dollars at least my life savings are more or less intact in PMs. If PMs don't protect you from whatever may happen in Y2K then the collapse of civilization really will have occurred and the only currency will be food and guns.

I could write more about why you should prepare for Y2K, but everything I could say has been said in this forum over the last week.

Think about it.

elevator guy (11/05/99; 09:38:56MDT - Msg ID:18392)
@TownCrier
Town Crier, thank you very much for taking the time to answer the question about bank repos. Your efforts are sincerely appreciated.

There is so much to learn here on this site, its incredible. I consider myself blessed to have stumbled in here, and found so many well read and educated individuals who are willing to educate others, with what was heretofore insider information.

Best regards, Elevator Guy. (That name doesnt sound like someone sitting at a Round Table. Maybe I should change it to Gold Elevator Guy, or Golden Retreiver, or?

USAGOLD (11/05/99; 09:26:06MDT - Msg ID:18391)
Addition to Today's Report
The following paragraph should be inserted in Today's Gold Market Report after the paragraph that ends with:

(She goes on to
say that if gold were to stay in the mid-$320s or go higher "the SFAS
133 derivatives- related damage to company income statements and balance
sheets will be staggering.")

It explains the significance of the new accounting standard:

________________________________

The net result of the new accounting procedures is likely to be a more
conservative posture at both the mining companies and bullion banks due
to the potential "staggering" damage to balance sheets, i.e., we could
see an unwinding of the carry trade or at least a significant reduction
down to more reasonable levels. As the Ashanti and Cambior instances
have shown so well, market retribution can be swift and deep with the
very existence of the company threatened overnight. Once stockholders
and fund managers see the danger potential for what it they will put
pressure on the management of these companies, particularly the mining
companies, and they will have to alter their hedge book practices. We
have already seen instances of this including the very close questioning
of Anglo's Bobby Godsell about their hedge book by a fund manager during
a recent open conference call.
---------------------

Thank you.

ji (11/05/99; 09:22:25MDT - Msg ID:18390)
test
test

Joey (11/05/99; 09:21:23MDT - Msg ID:18389)
test
test

YGM (11/05/99; 08:59:14MDT - Msg ID:18388)
elevator guy & ss of nep
http://www.gata.org/
elevator guy- Thanks I will pick up a copy for my winter reading.....Regards...YGM.

ss of nep- Somehow the term "Conspiracy Theories" doesn't fit anymore w/ the mtns of evidence presented over the last century or more. The so called theories are now coming to be realities IMO. It seems that all is done in plain view and those that see are eliminated or debunked as being from la la land. Soon I fear many will regret they so easily dismissed the warnings of Beter and lord knows how many others. As for Gold poduced it can vary from 0 oz at these prices to 100's or hopefully 1000's if one has the right creek. There are some in Yukon who do 1000+ oz clean-ups every 24 hrs. I remain in the middle somewhere, especially w/ respect to beliefs in 'Theories.' -Regards....YGM

"Go GATA" & Bill Murphy and my highest regards to those who have made a donation to the only "United Voice for Gold & it's Advocates"..................Thank You All!!!

canamami (11/05/99; 08:56:45MDT - Msg ID:18387)
Possible US Resp[ense to the End of $US Oil Settlement
http://dailynews.yahoo.com/h/ap/19991105/us/religion_in_the_news_1.html
A number of months ago, I posted that one possible (albeit far-fetched) U.S. response to an attempt to disestablish the $US' primacy as the reserve currency by changing the rules of oil currency settlement could be military action against Saudi Arabia and perhaps other Mid-east states. The pretext would be human rights - the defence of women's rights as the justification to the liberal Democrat mindset, and the protection of the rights of Christians as the justification to the conservative Republican mindset. I noted that American Evangelicals were advocating that US power be brought to bear to protect Christians worldwide. In somewhat the same vein, see the attached article "Catholics Alarmed by Islam's Rise", which highlights the fact that Saudi Arabia financed the building of Europe's largest mosque in Rome, yet denies to Christians the right to worship openly in Saudi Arabia.

George W. is a moderate Republican who would resist calls to protect Christians overseas. But he probably needs the Evangelical "movement conservative" activists to win the election. Pat Buchanan may be an isolationist, but skillful agitation by him could win the US Reform Party some support on this issue and expose a weakness on Bush's part, thereby forcing Bush fils into a proactive stance on protecting Christians worldwide.

Let us be frank and honest: Saudi Arabia violates human rights probably far more so than China, but Saudi Arabia's violations are ignored because: (a) SA is "onside" geopolitically, (b) SA does not pose a direct, clear and forseeable threat to US global supremacy, and (c) SA has lots of desireable cheap oil. What happens to SA when it's "offside" geopolitically, acts to undermine US leadership and cuts off the supply of cheap oil?

USAGOLD (11/05/99; 08:53:51MDT - Msg ID:18386)
Today's Gold Market Report: Massive Gap Between Gold Supply and Demand Bodes Well for Future in Light of Washington Agreement/ Also The Meaning of SFAS 133
MARKET REPORT(11/5/99): Gold was down this morning in what FWN
described as "trade" selling. Overnight European and Asian trading was
thin and lacked direction. When the market opened in New York, the
bears/shorts saw the current thin market as an opportunity to drive the
price lower. The FWN report quoted one COMEX trader as saying that there
was also some disappointed long liquidation. South Africa's Standard
Bank described the current gold market as being in "a quiet phase of
consolidation." Once this consolidation phase finds a bottom, we could
begin to see some upward potential manifested on gold's developing
strong fundamentals.

Here's what we mean:

In 1999 the mines will produce 2450 tons according to Gold Fields
Mineral Services' estimates and scrap will account for another 550 tons
-- a total of 3000 tons on the production side of the ledger. 1999
estimated demand is 4050 tons leaving a 1050 ton gap the largest on
record. That fact alone might not be enough to move the market because
we have had record supply/demand deficits before. Those have been made
up by forward sales, leases, the gold carry trade, official sector sale
etc. This is where the Washington Agreement (Please see our Gilded
Opinion page for details -- The Dawn of a New Gold Market.) In a
nutshell the supply/demand picture has been radically altered at least
for the next five years by the European central bank declaration of
September 26 which put a moratorium both on sales and leases of central
bank gold. What is important to grab a hold of here is that at a time
when the European central banks have shut down the leasing faucet and
the bullion banks are scrambling for metal anywhere they can find it,
this huge deficit between gold demand and supply shows up. This is
likely to exert a great deal of pressure on the price in the weeks and
months to come.

Robert de Crespigny, the chairman of Australia's largest producer,
Normandy Mines, was recently quoted as saying that the recent fall below
$300 was orchestrated "bank manipulation disguised to protect option
exposures." If true, the logical extension of that observation would be
that the price of gold is being run down by Wall Street and London
players to keep flagging mining companies and their bullion bank lenders
from taking a major hit in the options market and gold carry trade.
Whether or not these "manipulators" are successful will depend totally
on how the massive and unprecedented physical gap mentioned above is
managed -- or not managed, if you will. Perhaps that's why we are seeing
so much pressure being exerted all over the world by the British and
U.S. governments to keep gold in the leasing pipeline with the recent
pledge by Kuwait being the most notable example. But these pockets of
bullion stores are few and far between. As we have already pointed out,
that gap between production and demand is now at an all time high at
precisely the worst moment for the bullion banks. It will be interesting
to see how all this plays out.

Leanne Baker of Salomon Smith Barney, one of this country's top experts
on the gold market and gold mining companies, offers an interesting
adjunct to this scenario which could have enormous implications in the
gold leasing market. Gold leases as many of you know have played a
significant role in filling the gold deficit mentioned above. She and
her firm have issued a provocative and scholarly report titled "A New
Millennium Gold Rush: The Bull Market Is Just Beginning." In it she
drives home several important points with respect to gold's future which
we will be alluding to in the weeks ahead -- most of them positive --
but none perhaps more important than the change in accounting procedures
with respect to how options are handled on mine company and bullion bank
balance sheets.

Beginning June 15, 1999 a new accounting standard will go into effect
which will force financial institutions and mining companies to mark
their gold derivative positions to market and report them on the balance
sheet. Now these positions can be expressed as footnotes to the
financial statement and do not flow to the bottom line. Referring to the
new rule (titled SFAS 133), Leanne Baker says that "Under SFAS, the
recent gold rally and plunge in mark to market value of mining company
hedge books would result in huge hits to net income from call options
sold and to equity from sub-market forward contracts." She goes on to
say that if gold were to stay in the mid-$320s or go higher "the SFAS
133 derivatives- related damage to company income statements and balance
sheets will be staggering."

Ms. Baker makes conservative gold price estimates of $350 average for
2000 and $375 average for 2001. We'll delve into other aspects of the
Leanne Baker/Salomon Smith Barney study at a later date both here and in
our monthly newsletter (To receive your complimentary copy or our
newsletter, please see below.).

That's it for today, fellow goldmeisters. Have a good weekend.

Please call 800-869-5115 (Ask for Mary Conway) if you have an
interest in receiving a trial subscription to our widely read
newsletter, News & Views: Forecasts, Commentary and Analysis on
the Economy and Precious Metals. Or you can go to our ORDER FORM
and submit your request by E-Mail. You will also receive our
introductory packet on investing in gold.

The Invisible Hand (11/05/99; 07:29:43MDT - Msg ID:18385)
The cause of gold's recent rise
http://www.africanews.org/south/southafrica/stories/19991103_feat14.html
AFRICA NEWS ONLINE,
`
Y2K Liquidity Build-Up May Be Behind Gold Rise

November 3, 1999
By Samantha Enslin

Johannesburg - A build-up in liquidity ahead of Y2K could be behind the unexpected rise in gross gold and foreign exchange reserves last month, economists said yesterday.

According to the Reserve Bank, preliminary gross gold and foreign exchange reserves increased to R42,6bn from R39,2bn in September, exceeding the Reuters consensus forecast of R40,4bn.

In dollar terms, October reserves stood at $6,9bn, up from $6,5bn the month before. Reserves now cover 14 weeks' worth of imports.

An increase in the Bank's revolving credit facility for the third consecutive month, now at R19,7bn, means the use of credit lines are now higher than during the height of the currency crisis last year.

The Bank was forced to draw excessively on foreign credit lines and increase the use of the forward book in an attempt to stave off an attack by currency speculators.

Noelani King, economist at PSG Investment Bank, said this time around the Bank was building up liquidity in its cash component to be able to respond to possible volatile market movements over the year-end.

"This is done to create a liquidity cushion in the event of a liquidity squeeze over Y2K and it is unlikely the Reserve Bank will use these reserves to protect the rand," she said.

Standard Bank economist Goolam Ballim said among the concerns around Y2K was that foreign portfolio investment in SA bonds and equities could lighten towards the end of the year, placing downward pressure on reserves.

Nico Czypionka, chief economist at SG Frankel Pollak, said it appeared as if foreign banks had adopted a "use it or lose it" attitude to some standby facilities, and the Reserve Bank decided to lock in liquidity timeously.

The net reserve position - which excludes the use of credit facilities - also improved, rising to R22,9bn from R21,5bn due to the effect of a 2% depreciation in the rand-dollar exchange rate.

Economists were encouraged by a continued decline in the net open foreign currency position - SA's uncovered exposure in the forward foreign exchange market - which stood at $14,9bn from R15,6bn. The forward book dropped to $18,7bn from $19,2bn.

Czypionka said this reduced exposure was crucial to SA's assessment by foreign analysts.

"To have reduced it so much since last year's peak must enhance our chances of a rerating to investment grade by Standard & Poor's." The build-up of now sizeable foreign currency balances offshore would assist the Bank ultimately to withdraw from the forward market all together, he said.

Economists agreed that an improvement in reserves supported a further easing of interest rates. But Johan Rossouw, economist at ABN Amro Securities, said other factors such as higher inflationary pressures, liquidity and other concerns relating to Y2K, should reduce the probability of a significant reduction in interest rates.

However, Rossouw still anticipates a 50-basis-point cut in the prime lending rate before the end of this month.

Ballim said that, coupled with disinvestment by offshore investors on Y2K concerns at the end of the year, a weaker gold price would negatively affect reserves and could negate the positive effects of currency revaluation.

Copyright (c) 1999 Business Day. Distributed via Africa News Online (www.africanews.org).

canamami (11/05/99; 07:01:47MDT - Msg ID:18384)
I can't believe it!!! - POG down over $2, SP Futures up over 19.10
Apparently the employment numbers were "better than expected" and the SP futures are rocketing up, and the POG and the POS are speeding dowmwards.

Time to reassess premises again. My personal wealth is far lower than it would be if I had not bailed out of the market last late summer and early fall, during the big downturn. Perhaps it would have only been a transitory, chimerical gain in wealth (which I suspect is true, as I'm still posting here), but the hard, inescapable reality is that if I were caught in an financial emergency today, and needed to liquidate assets, I would've been far better to stay in the market than accept the theories of both the anti-equities "bubble" position and the gold/precious metals position. Whatever one thinks of the fiat currencies, I have no doubt I could liquidate my mutual funds today, get $Cdn. for my mutual funds in a just over a day, and pay bills and do what I needed to do with those $Cdn. My gold/PM/commodities shares and my actual PM's just could not respond the same way, at least as of today. Now, I suspect this won't be true a year from now, but in purging old e-mails dating back over two years, I've been anticipating the end of this equity bull for over 18 months now, and the rise of the gold bull for the same period, but it never happens. At some point, the anti-equities/pro-gold theory must be proven in objective and quantifiable results, or it will be discredited.

Black Blade (11/05/99; 06:59:33MDT - Msg ID:18383)
Viper
Next BOE auction is Nov. 29th. Oh no! Au down -$4.20 at NY open, and s&p fututres +21.00. A wild ride on Wall Street!

ss of nep (11/05/99; 06:41:04MDT - Msg ID:18382)
Try The BOE
http://www.bankofengland.co.uk/index.htm

Viper (11/05/99; 06:20:44MDT - Msg ID:18381)
Question for anyone with an answer....
Hey all, Anyone have a date for the next Gold auction?
TIA :)

ss of nep (11/05/99; 04:58:53MDT - Msg ID:18380)
@ YGM

YGM - sounds to me that you are into conspiracy theories.

Check into the Lease/Loan agreement between the US & Soviets
during the 2-nd WW, where the US GAVE the Soviets ALL nuclear tech. knowledge, the Soviets got first crack at ALL war supplies and they got TWO printing presses WITH the plates for the scrip used by US millitary in Europe.

How much Gold do you mine ?

TownCrier (11/05/99; 03:17:20MDT - Msg ID:18379)
Sir elevator guy, thanks for asking the question that's on millions of minds...
elevator guy (11/3/99-Msg ID:18333)
"I often read where you talk about the Fed processing billions in "overnight repos" Is there a place, or post, where I could read up on this mysterious process?"

Like a foreign language, isn't it? As near as I can figure it out (*wink, wink, nudge, nudge*) repo operations are where you traded your wealth in on some sure-bet paper investment strategy as recommended by a slick broker or CNBC commentator. When the laws of nature in a closed system regain the upper hand, and the card houses built to the sky on a leveraged foundation come crashing earthward, these repo operations are what the Fed uses when you can't make the next payments on your two SUV's and bass boat all parked in your three stall garage.

To start with, you must understand that banks have the distinct privilege to create money from "thin air" as needed to give to a borrower rather than to be limited by the fact that what "real" money they have is often owed to someone else that might choose to claim it back at any given time. This is what fractional reserve lending is all about, and arguably is the biggest culprit to the boom and bust business cycle. (Many varied opinions on that claim, you can be sure.)

Banks are limited in their ability to expand the money supply, however, by legal reserve requirements...a minimum percentage of the bank's liabilities to its depositors (bankspeak for money deposited with the bank by its customers, particularly money held in checking accounts) that must be kept on hand to meet any anticipated immediate demand of withdrawals. If the reserve requirement were 10% and the bank had one customer who had placed $10,000 in a checking account, the bank would be required to keep 10% of this ($1,000) in readily obtainable form (cash in their own vault, for example). So while this one customer "owns" this full $10,000, and has the ability to spend it at will, the bank also has the green light from congress to lend out up to $9,000 to a borrower, who might use it to pay for a remodeled kitchen.

Let's say the contractor takes his $9,000 payment from this borrower, and he also places it on deposit in a checking account with this same bank. The bank may then set aside 10% ($900) of this additional deposit and be free to lend out $8,100 to someone else. At this point, from the original deposit of $10,000, you can see that the bank now miraculously has $19,000 (called "liabilities" because the bank owes this money to its depositors) on deposit in two checking accounts. On the other side of the balance sheet, the "asset" side, the bank has $1,000+$900=$1,900 in vault cash as mandated by the reserve requirements, it has an outstanding loan written to that borrower (for his new kitchen) for $9,000 (which the banks expects to be repaid with interest), and at the moment, the bank also has the remaining $8,100 in available funds from the second deposit (after setting aside $900 from the second deposit of $9,000). So in total assets, the bank has $1,900(vault cash) + $8,100(available funds) + $9,000(loan) = $19,000. Assets are seen to be equal to liabilities on the balance sheet. (Recall, only $10,000 was originally introduced into the banking system as "seed" money to start this inflationary process.)

The bank looks to that $9,000 loan as a profit maker for their own pockets because it gets to keep the interest when the loan is paid back. (Because the bank "temporarily" *created* 9,000 new dollars that didn't originally exist (inflation), the bank has an obligation to destroy (strike from the ledger) this $9,000 as the principle of the loan is repaid...deflation.) Clearly, the bank would like to make similar profits on its remaining $8,100 in available funds. And if these fund get redeposted with this bank, they will be able to yet further expand the money supply from that original $10,000 checking account deposit.

Let's say that there is no one else in town that wants to borrow money. The bank still wants to earn "profits" on these available funds, so the bank does the natural, next best thing and purchases U.S. Treasury bills that pays interest at 5.5% with a maturity of three months. Now, let's say that first depositor is reading this, and is now keenly aware of the shortcomings of this financial system. He decides to pull out $6,000 in order to swap it with MK for an independent monetary asset, gold.

The bank has only $1,900 in vault cash with which to pay this smart customer. Obviously, the terms of that $9,000 outstanding loan are such that it isn't going to be of any help in this matter. The bank must use its Treasury bill as collateral to seek a loan from another bank for two piles of money. First, the bank needs $4,100 to meet their vault cash shortfall on the $6,000 withdrawal. Second, the bank still has a total checking account liability of $4,000 + $9,000 = $13,000, so it must also borrow another $1,300 cash in order to meet the 10% reserve requirement on this remaining level of checking deposits.

That is a simple example of a traumatic turn of events for a bank. They don't net out much "profit" on their assets (outstanding loans and T-bills) when they are forced to be borrowers themselves from other banks, paying the Fed Funds target rate (decided by the Fed at the FOMC meetings) which is currently 5.25%.

More often, the adjustments needed to maintain reserves are small and short term. The reserve requirements are calculated on a daily average basis over a two-week reserve-maintenance period, from Thursday to Wednesday. Yesterday, for example, marked the first day in a new two-week period. In a more typical situation, let's assume one of our depositors withdraws or writes a check on $1,000. As the bank pays the $1,000 out of the vault funds, it is left with only $900 in reserves. However, that amount is only half of the 10% required on the remaining checking deposits of $18,000. They must make arrangements to borrow 900 more dollars to meet their $1,800 reserve requirement until such time as new deposits arrive from customers, or else until their 3-month Treasury bill matures (or perhaps they sell it outright on the open market for cash.)

This is where the Fed repo operations come in handy...simply put, the Fed is writing a short term loan. Repo is jargon for repurchase agreements. The two parties, the Fed and the bank in need, both agree to an effective yield that will be realized when the bank "sells" its collateral (in this case the T-bill) to the Fed for a set short period of time, and then "buys" it back at a slightly higher price that produces the agreed-upon yield. Time periods are short, from overnight, to the special 3 month period in use for Y2K liquidity needs. (Also by special concession for Y2K liquidity shortage is the Fed's willingness to accept crap collateral, referred to in my news reports as "tri-party" operations because there is a potentially dubious third party in these operations that ultimately stands behind the credit-worthiness of the asset/collateral. The Fed isn't generally worried about the USTreasury as the third party behind T-bill repo operations, but when you start scraping the barrel on agency bonds and whatnot because the bank has already sold or borrowed against all of its prime collateral, well, you can see the recipe for disaster with the Fed left holding the bag on defaulted bonds if the bank fails to buy it back as agreed followed by the third party failing to honor their own payment on the bond.

Now you know more than 99.995% of all Americans about much of the banking system, and about overnight (three-day, weekend, 7-day, etc) system repos in particular, although in truth, we only scratched the surface on repo operations, and Fed Funds, and re-discount rates, and a whole host of ways to play musical chairs to find and create money as needs. Some people say that gold is manipulated. Well, insofar as it is also a financial asset that must endure these same banking practices, and further, that it must endure the indignity of bogus "price discovery" through futures markets. That whole game finds its limit, however, where the call is made for the "virtual metal" (paper gold) beyond the ability of the sytem to deliver. Notice how the European central banks have backed safely away from the coming implosion of that degree of artificial-supply manipulation. On the other hand, The Tower submits to you that the dollar is subject to unlimited manipulation...like Quasimodo at a chiropractic clinic. There's no practical ceiling at which the artificial supply of the artificial dollar may be held in check, and worse, no practical floor at which its value may be held at any meaningful point above worthless.

Mutation (11/05/99; 02:40:11MDT - Msg ID:18378)
Netking Re:MsgID:18375
What does that say for the "civilized" world we live in. God help all sentient beings.

Black Blade (11/05/99; 02:06:08MDT - Msg ID:18377)
THX-1138 re: message 18373
I am not sure if Newmont or many other Au companies would be allowed to make bids at the next BOE auction. Only those who are part of the inner circle of banks and few miners are allowed to participate. However, it would not surprise me if some mining companies were to use those who are "allowed to bid" to act as their agents in order to participate. If several mining companies were to bid, it would certainly send a strong message to the BOE and others that the manipulation game will not be passively tolerated.

Goldiehawk (11/05/99; 01:42:22MDT - Msg ID:18376)
From Oldspeculator at the TVX Yahoo Board
Before posting this message, I would like to give a special thanks to Michael Kosares for this Forum and for the magnificent Silver Dollar received yesterday (POG Contest)
It will go nicely with my other maple leaf Silver coins.

I found this post interesting and thought of sharing it with you:

by: oldspeculator (M/Nashville, TN) 11/4/1999 11:39 pm EST
Msg: 23337 of 23345
Hello,

Any market and particularly the stock market is a game of "financial chicken". It is continuous in varied degrees of seriousness. Lately in the gold markets it has reached deadly seriousness. The opposing forces are taking the standoff to the limits and beyond. They are aware of the extreme consequences and nobody wants to blink first.

In the normal course of price discovery prices move between oversold and overbought and reverse relatively quickly. Now in case of golds they are taken to extremes on the down side and held there. In the case of the general stock market it is taken to the extremes on the up side. This is called "holding ones feet to the fire".

In the case of gold the producers and shareholders have been demoralized by the long manipulated bear and capitulate. However you can be absolutely sure at some point it will reverse. It always does.
The gold carry people and other manipulators are going to lose. Too many people are beginning to find the truth. Which is: IT IS NOT POSSIBLE TO SELL SOMETHING THAT IS NOT REAL AND PROFIT BY IT. Somebody is going to have to pay. So far the investing public has paid.

The miners and their shareholders have the goods. The shorts are obviously becoming panicky. They are going to have to deliver something they do not have. You can be sure they are not going to give up easily but they surely will have to.

I am just going to hold my golds lay back and watch the history unfold. Take care, oldspec

--------------------------------------------------------------------------------

Netking (11/05/99; 01:29:28MDT - Msg ID:18375)
What has changed since May 21. . .
Former Federal Reserve Chairman Paul Volcker said on Friday, May 21, 1999: "The fate of the world economy is now totally dependent on the growth of the U.S.
economy, which is dependent on the stock market, whose growth is dependent on about 50 stocks, half of which have never reported any earnings."

elevator guy (11/05/99; 00:19:55MDT - Msg ID:18374)
more thoughts....
Some find it hard to imagine there are any certifiable conspiracies. The antithesis to this polly-anna attitude is right under our noses. Look how the shorts hold gold down until option expiry. Just cause one does not like to admit to conspiracies, does not prove that they are not real. Rather, some who have tender hearts can not hold to the unadulterated truth, because it is too grievous to bear. Imagine the pain of having to be woke up from a simple world of transparent cause and effect, and be made responsible for information that demands those with good conscience to act. It is far easier to dismiss skullduggery, and thereby lighten the load on ones mind, and see the world through a child's eyes. Some will automatically capitulate to this easy no-load kharma right away, at first mention of any behind the scenes groups, because they are either conditioned, or have been conditioned by the media to do so.

The book is carried by Amazon.

THX-1138 (11/05/99; 00:11:15MDT - Msg ID:18373)
Upcoming BOE Gold Auction
I wonder how many gold mining companies will be trying to close out their hedge books at the next auction?
Wouldn't that be something to find out that over ten or so companies bid on the gold?
We saw how much shock the declaration from two African companies had on the market.
I hope Newmont makes a bid. I actually like that company.

THX-1138
Go Gold, Go GATA, Go Alan Keyes for President.

elevator guy (11/05/99; 00:01:57MDT - Msg ID:18372)
@YGM
YGM, your Soviet/USA theory is intriguing.

I read a book, (NO pictures!!) that showed that the minority Bolshevics took over all of Russia, from Petrograd, I think, against an overwhelming White Russian majority. They did this, according to the book, with Western financial backing of $17 million, from international banker Max Warburg. (Max's brother, Paul, wrote the initial plan for our US Federal Reserve.)

The theory postualted by the book was that real true communism was the only real threat to the worlds status quo, of division of wealth, and the ruling elite. So they set up a straw man, to show how awful and unworkable communism is. The Soviet system was the creation of Western banking money, to prove to the world that communism was not to be admired, or followed, and it would wreck a country. In setting up this false show, they hoped to disparage communism, and thusly maintain their strangle hold on the worlds political and financial hirearchys.

I must add at this point, first of all, that I am a businessman. I believe every man and woman has a place in this world, where each must work, and earn the rewards of their labors. No one deserves or needs the State to look after them. The Bible talks of making money, in an entreprenurial endeavor, in a positive light, such as in Proverbs, where the woman is honored, because she sells leather goods at the market, and uses the proceeds to buy land. God himself puts his seal of approval on the capitalistic system right there. And also, in many other ares, such as in the New Testament, the apostle Paul tells the congregation htat "He who does not work, shall not eat".
OK, you get the point.

The only thing I'm trying to point out here, is that the West looks to a manufactured enemy in the East, and this is used to unite the sheeple, and justify higher taxes. The first rule to keeping a people quiet, subdued, and pre-occupied, is to give them a common enemy, which unites them in fear and anger, and diffuses the real issue of who is enslaving them.

The book is called "None dare call it Conspiracy"

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