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ARCHIVED DISCUSSION FROM 5/5/2000
All times are U.S. Mountain Time
(Yesterday's Discussion.)
Peter Asher
(5/5/2000; 22:50:13MT - usagold.com msg#: 30034)
Leland (5/5/2000; 17:56:19MT - usagold.com msg#: 30017)
http://www.wired.com/news/politics/0,1283,36044,00.html?tw=wn20000503
>>> Dotcom Cash Turns to ash in a Flash <<<
At least they had some cash. Take a look at the total scam version at the above link.
Synopsis: Two companies are created and a lot of press releases are put out creating the image that Company #2 is buying out Company #1 but there is no cash no business, nothing; yet the stock of Co.#1 10X's.
Topaz
(5/5/2000; 22:43:44MT - usagold.com msg#: 30033)
TownCrier (5/5/2000; 18:09:50MT - usagold.com msg#: 30019)
Sir TownCrier:
Well said and "ere-ere" re above Townie- and while the bouquets are being thrown about, I'd like to acknowledge your own 1st class contribution of late. (with a similar disclaimer)
Where in the world does one get such a wealth of world-class Fiscal Education? Nowhere I know of other than USAGOLD; (Kitco for grown-up's)
Keep it comin good Sir!!
Simply Me
(5/5/2000; 22:17:59MT - usagold.com msg#: 30032)
Town Crier's exercise.
Hi, Town Crier. I read and very much appreciate your news and your patient lessons.
Since the adroit students don't seem to be around. Maybe the student in the back of the classroom could take a crack at this one.
Goal: Drive down the price of physical gold.
Terms: Unlimited funds and no access to physical gold in any form.
Answer: Buy as many "puts" as possible in about the $240.00 to $270 range in the futures market, concentrating on June. Then after May 15th, begin rolling them over into August "puts". Completing the action before May 30th.
I just want to know if I'm on the right track to understanding this stuff. Logging on to this forum is like sitting in on a Nuclear Physics course without taking Physics 101.
simply me
Goldsun
(5/5/2000; 21:37:13MT - usagold.com msg#: 30031)
The Price of People
Gold has purchased people ranging from slaves to kings. But it will also purchase many other commodities.
The total value of the world's above ground gold is inherently equal to the total value of the world's goods and services. The latter likely more than doubled during the recent period in which the quantity of gold doubled.
However, I wholeheartedly herald Herr Holtzman's pursuit of the gold/humans ratio through the ages. If our host has a modest empty room in the castle it might usefully be employed as a repository for the fruits of this quest as they are gathered by Ritter Holtzman and other knights.
Goldsun
lamprey_65
(5/5/2000; 21:34:44MT - usagold.com msg#: 30030)
More on the CRB Index
http://stockcharts.com/commentary/mitch/mitch20000505.html
Enjoy
TownCrier
(5/5/2000; 21:21:38MT - usagold.com msg#: 30029)
On that last post...
Do not for a minute assume that that is the way of it simply because I emptied the case all over the lawn.
I am only suggesting that perhaps this would be a fine "starting point" for some of your own musings on the nature of the evolving gold market. If you can see the markets for what they are, you will surely be better able to see them for what they will become.
Time to go. It is way past my beer time...
TownCrier
(5/5/2000; 21:00:38MT - usagold.com msg#: 30028)
Picking up on two brief comments we made yesterday from The Tower
From <<TownCrier (05/04/00; 16:49:42MT - usagold.com msg#: 29942)>>:
<<Germany's FinMin Eichel remarked: "The debate about the euro, is hysterical, not rational. In Europe, far too many people are commenting on the single currency, sometimes without understanding what they are talking about. I have one thing to say: All fundamental economic data in Europe is better today than 16 months ago when the single currency was introduced. We must go on the offensive to make this clear."
+
As we suggested days ago, don't look for forex intervention from the ECB, unless it is their only "politically correct" avenue to rid themselves delicately of unwanted foreign currency assets. To this Crier's eyes, when you have gold reserves being regularly marked to market in a "free gold" climate, there is simply no reason to maintain foreign currency assets beyond what is convenient for the purpose of short-term international settlements with those specific nations.>>
Additional note that I should have stated at the time of this original post: Evidence points to these days as the infancy of a "free gold" climate, with obvious incentives in place for the ECB (among others) to see it through. Gold will truly be set free to shine when it breaks the shackles of the derivatives markets and when the metal is also made immune to the effects of artificial supply inflation at the hands of the banking sector's lending operations. Such lending seemingly puts the "funds" into two hands at once (the owner of the original deposit who is earning interest on the deal, and the borrower). This "supply inflation" depresses the value of gold in the same fundamental manner as lending also inflates the dollar (or other currency) and erodes its value over time. Evidence of the turnaround and birth of "free gold", you ask? The Washington agreement, and the IMF gold revaluations.
<<And if the ECB wanted another way to send a "politically correct" message about the nature of assets, the very next news release on the status of the Swiss gold operation would reveal that the ENTIRE 120 tonne quota allowed for this year had already been succesfully allocated through the BIS during this first week of May. If you can conceive of how this all works, there truly seems little reason to piecemeal it...except for maintaining the illusion.>>
Additional note: as stated before, the UK auctions were surely in reaction to stress in the bullion banking business...an imminent run on the banks, in all likelihood, by the owners of the multiple pockets holding claim on the same gold (as described above). Why do I suggest the Swiss gold could be "sold" (allocated) in one fell swoop? Because all euroland gold "sales" within the Washinton Agreement are very likely a disguise for "lender of last resort" operations to mollify those many nervous "pockets" who are sharing the same small gold on account. Essentially, that entire quantity of gold is already "spoken for." Alternatively, this WA supply of gold out of euroland could also in part be seen as a regulating operation...similar to when the treasury buys back in its bonds prior to maturity.
+
It is perhaps like this, in either case. The reason the same small gold is in multiple pockets is because it has been put on deposit for interest, and lent out to borrowers for the purpose of earning interest. As in normal banking operations with cash, how many times can you imagine the same gold to be put on deposit by its new owner, only to be lent out again, and again? These gold loans are the assets of the bullion banks. Back to that in a moment.
+
Under current market forces, gold today is perceived to have a low value, near 300 in either euros or dollars. Let there be no doubt that gold is held by strong hands not for its "value" today, but for its value "tomorrow". I hope by now all of you have come up to speed on the Fed's operations to add reserves to the banking system through such things as repurchase agreements or coupon passes. Through repurchase agreements, the Fed provides a loan of funds to the underlings of the banking system against the collateral of these banks' assets. Through coupon passes, the Fed provides permanent funds through the outright purchase of these banks' assets (i.e., U.S. Treasuries.) But do not worry overmuch for the "poor Fed" who "sold" (allocated) its "precious funds" (i.e. dollars) to the banking system in exchange for these assets. As these assets (interest bearing loans, bonds, etc.) reach maturity, the Fed will thereby regain these "precious funds" that it originally parted company with, plus the "extra value" of interest. And why is the Fed adding these reserves? Partly because those with funds on deposit are pulling them out.
Must I now complete the parallel to the Fed's operations in terms of the Euroland gold allocations via the Washington Agreement? I hope it is already growing clear. Wouldn't you agree that it is rather fatuous to think that the euroland central banks would be so dull-witted as to part with gold in exchange for nothing more than the dollar-equivalent as the market currently perceives? Would you be more comfortable thinking that the central banks are getting in return for this gold...a simple cash payment, or ownership of the loan asset that will theoretically upon maturity repay the gold, plus interest? Again, strong hands hold gold not for today's value, but for tomorrow's value.
Please think back to the Dutch sales. Regardless of the market price at the time or the tonnage allocated through the Bank for International Settlements, the book value reported by the ECB's weekly balance sheet was always based upon the ECB's official gold valuation for that quarter. When you are holding an asset that is a gold-denominated loan, how else would you show it's value on your books?
Quick review: Current perceptions of gold's value is low. "Free gold" is in its infancy. Strong hands hold gold for "tomorrow". Can you now imagine the central banks who are supporting the tenets of "free gold" would keep themselves in a position for the return of their gold assets at some point "tomorrow"? As the many nervous "pockets" sharing the same small gold account sees it, the central banks will have much better luck dictating the eventual repayment of these gold loans in time than they would as "lowly bullion bank depositors" at the mercy of the bullion banks' future viability as "supply deflation" sets in from the eventual phaseout of gold lending. Time is on the Central Banks side, not to mention the ability to tap into national legislative power to apply heavy mineral taxes to gold mines. And ultimately, should a number of the gold loan assets now held by the CB's in place of their physical gold assets actuall fall into default, just imagine what an enhancement that is to the currency value of "free gold". Where these gold-denominated assets may be forced to settle in cash, you can imagine what a huge return will be realized at that time, compared to the rather meagre cash value they "appear" to be getting with their "sales" today. Truly, if all gold doesn't return, it would nonetheless be as though they sold at the top. And better still for the future of "free gold", this same gold would then remain in private hands.
And lastly, here is a brief look again a part from the earlier discussion of gold market pricing where futures are involved:
<<TownCrier (05/04/00; 23:09:31MT - usagold.com msg#: 29967)>>:
<<TownCrier's bottom line: the point of all of this is simply that looking to the prices of contracts on COMEX futures markets will not likely give the adequate warning that the physical market is about to break away from demand [which is] greatly exceeding supply at these prices. It is a reasonable assumption that for every ounce of gold you have in your possession, there is someone else who provided the gold via deposit in an interest bearing account. Picture, if you will, a run on the bullion banks.
*snap* it's all over.
Enough said.>>
Indeed. Enough said.
lamprey_65
(5/5/2000; 19:35:57MT - usagold.com msg#: 30027)
MarkeTalk
Appreciate your analysis. I agree - the CRB will be important to gold's rise - just as a falling CRB was an important reason for gold's fall over the past few years.
lamprey_65
(5/5/2000; 19:25:46MT - usagold.com msg#: 30026)
My Take on Today and Important Link
http://pacific.commerce.ubc.ca/xr/plot.html
Check the link above...very handy for plotting gold in different currencies -- very illuminating too! Place gold in the "Target Currencies" section.
My take on today...cautiously optimistic on our May rally. Accumulation of major gold stocks continues.
TownCrier
(5/5/2000; 19:13:28MT - usagold.com msg#: 30025)
That was the longest five seconds I've ever seen!
;-)
TownCrier
(5/5/2000; 19:07:38MT - usagold.com msg#: 30024)
Here's a starting point...
COMEX gold futures
Contract _ Open Interest
=========================
May _ _ _ 0
Jun _ _ _ 89,734
Aug _ _ _ 16,713
Oct _ _ _ 4,029
Dec _ _ _ 19,991
NOTE: Delivery cannot be demanded on June contracts until the last day of May.
Delivery cannot be demanded on August contracts until the last day of July.
Delivery cannot be forced on October contracts until the last day of September.
And so on....
Another hint: Back in February, the April Open Interest numbers looked similar to what we now see for June, whereas the June OI numbers looked more like what we now see for August.
TownCrier
(5/5/2000; 18:59:39MT - usagold.com msg#: 30023)
One quick point...
Unlimited cash is certainly not necessary to acheive the end, but I figured that giving you ample ammo would assist the initial process of creative thinking to arrive at a solution...
Sir Henri, you might like to try your hand at this challenge also.
TownCrier
(5/5/2000; 18:46:34MT - usagold.com msg#: 30022)
Sir THC, on "spot" prices and gold futures...
This is an exercise you may enjoy.
Imagine that you are given nearly inexhaustible cash resources, but are not allowed access to physical gold either directly or indirectly.
Your assignment, should you choose to accept it, is to cap the cash price of gold. Could you do it? And more importantly for this exercise, HOW would you do it? (Remember: unlimited cash...no gold.)
This tape will self-destruct in five seconds...
Al Fulchino
(5/5/2000; 18:31:03MT - usagold.com msg#: 30021)
Henri
Henri (05/05/00; 10:17:45MT - usagold.com msg#: 29992)
Hey Al Fulchino
There is an ad at the bottom for the "Finding God in Physics" book you sent.
***********
Henri,
Long time no talk! Hope all is well. Yes I see the ad around from time to time. I believe Joseph Farah, the Editor of World Net Daily and the author, Roy Master's are friends. Anyway, hope the book was meaningful to you and others who have read it.
Best to you,
Al
THC
(5/5/2000; 18:22:23MT - usagold.com msg#: 30020)
Oro - Futures
Oro, good evening, and thank you for the very detailed response to my inquiry.
I agree fully that "there is more to the PM markets than the futures." But at the same time, there IS a futures market for the PMs! (smile).
I understand the importance of the "PM banking system" that you have described, and I can see how the lack of "metal in hand" could result in serious problems should the depositors ever ask for the metal. I accept the possibility that these deposit slips may in the end not allow one to take delivery of metal.
And, I accept that at some point in the future, other PM futures markets may follow in the footsteps of Tocom palladium -- metal not available for delivery. It is clear that Tocom Pt, and Nymex Pt and Pd are highly vulnerable.
However, as long as a futures market enables delivery of metal to those who request it, I find it goes against my common sense to accept that:
"There could be a large and ongoing discrepancy between spot prices and prices of futures contracts on the day of expiry."
The reason is that longs would take delivery and sell into the spot market, bringing the prices of the two markets together.
Naturally, should delivery no longer be allowed, this type of activity will cease, and the futures market will die out.
Are we in agreement?
A good day to all........
THC
TownCrier
(5/5/2000; 18:09:50MT - usagold.com msg#: 30019)
Sir ORO, please permit me to take a risk...
It is a risk that all men are familiar with who compliment their fair maidens on occasion, only to then be met with some such nonsense as "Well, if you are saying I am a gem today, what was wrong with me in the past??"
Of course, we all know the answer to that one.
Putting all that aside, allow me to say that your posts have really been a marvel lately, almost as though you turned an important corner in your thought about six weeks ago, I would say. To this observer, it is as though you uncovered a vital piece of information to bridge some tiniest gap in your perceptions and evaluations, leading to an onslaught of exceptional commentary outclassing your prior work. Can you recall some moment of clarity arriving in mid-March at which everything seemed to "fall into place" for you, or do you not share my perception on that account?
Bottom line: Thank you for sharing your time and analysis with us. We are certainly made the better for having it.
SHIFTY
(5/5/2000; 17:56:52MT - usagold.com msg#: 30018)
Ponzi
Nasdaq 3,816.82 + Dow 10,577.86 = 14,394.68 divide by 2 = Ponzi 7,197.34
Up 130.98 Ponzi points
Leland
(5/5/2000; 17:56:19MT - usagold.com msg#: 30017)
Dotcom Cash Turns to ash in a Flash
BY SAMANTHA MAGNUSSON
06may00
THE boys down at 131 Shop.com.au had a lavish season. They wined and dined with the best
of them in a box provided as part of their Brisbane Broncos sponsorship package.
The next season, however, is not looking so good.
Like many of Australia's fledgling high-technology companies it is burning cash at a rapid rate.
If the online directory company continues to spend at its current levels it will be out of pocket
by June.
During the March quarter, it spent $2.83 million leaving it with just $2.5 million in cash. Of that
money $1.5 million was spent on advertising while it received just $368,000 in receipts.
The company's share price has already slumped from a high of 90c to 11c yesterday. In its first
half to December, 131 Shop announced a $3.3 million operating loss.
The Australian has compiled the most comprehensive list summarising the cash flow
statements -- the first ever to be issued under Australian Stock Exchange requirements.
The table shows the 75 companies held just over $920 million in cash at the end of the March
quarter. However, with more than a third of that held by pay TV company Austar, the remaining
74 companies have little more than $542 million in the bank.
At the beginning of that quarter they held more than $657 million.
There are some success stories. A handful are cash-flow positive, a few can boast acceptable
revenues and there are some with solid business plans that will ensure their survival.
But many have stunned investors with the rate at which they are burning their cash. About 14 of
those that have been operating for more than three months have less than a year's spending
money left at their current spending levels.
Some of the most troubled stocks include online real estate company Realestate.com.au.
During the quarter it pulled in $417,000 in receipts and at its current revenue rate has just over
four quarters of cash left.
Another is POS Media, which puts video screens into shopping malls.
With receipts of just $71,000, its cash positioned halved during the period, falling from $8.4
million to $4.2 million. Aspiring Internet service provider eisa started the year with $35 million
but by the end of March this had dwindled to just $6.9 million. The company has until next
Thursday to raise about $180 million as it attempts to buy Internet company OzEmail.
But with the April 17 technology stock market crash souring investors' appetites towards such
stocks, finding new funds to carry these companies through is proving more difficult. Investors
are less willing to commit money and banks are also increasingly reluctant to provide further
funds to companies with poor cash flows.
As a result, expect a spate of takeovers, mergers and perhaps collapses in the industry. Those
that have run their balance sheets too low could well find themselves ripe picking for those left
with cash.
ith cash.
Others will need to reassess their business strategies to stop the money tap from being turned
off.
"If they are low on cash they will be doing everything to adjust their business," Gerard Eakin,
Ord Minnett technology analyst said.
While it may be the start of some tough times for companies, it is good news for investors.
"The shakeout has ended the capacity to take rubbish to the market ... and it will stop
investors getting hurt," an analyst said.
There will be much more scrutiny applied to business plans and this week's requirement by the
ASX for companies to provide cash-flow statements for the first time is a step to further
informing the market.
However, access to that information remains difficult for the vast majority of unprofessional
investors, many of whom were not informed of its release by the company or the ASX and
would have difficulty finding it anyway.
(Thanks to THE AUSTRALIAN, and Fair Use for Educational/
Research Purposes Only)
THC
(5/5/2000; 17:02:28MT - usagold.com msg#: 30016)
Oro - Thank You
This is the kind of stuff that I LOVE to find here at USAGOLD.
Thank you......
Will be back with my thoughts soon.
Cheers,
Peter Asher
(5/5/2000; 16:59:56MT - usagold.com msg#: 30015)
Euro Anthology, the rest of the kilo-bytes
used the euro as a catalyst to install systems that track spending habits
and credit-card usage of individual customers across Europe".
You didn't think big brother was only in America did you!!
ET (12/6/98; 21:25:15MDT - Msg ID:1196)
Uncertainty
It seems to me that the reason people are stocking up is uncertainty. What we've always
regarded as 'normal' now seems abnormal. The Euro, y2k, stocks, the economy are all reasons
that have created this uncertainty. But overall, I believe people are detecting the end of an era;
the era of unsound money. It is at the root of everything we see around us. The euro would not be
created if the dollar were sound. Y2k has bought out in the open the faults of not considering the
long term picture. If money were sound, such judgments would be thought out much more
thoroughly, not wanting to risk capital on short term 'investments'. Stocks would never have
reached these levels. The economy would be based on producing real things.
It is the perception of some kind of change in 'money' that is driving this movement. I believe
many people know that the end is near but can't put their finger on it. But this is where
uncertainty will drive markets. If we knew the outcome of the Euro introduction and y2k, we
would certainly be looking at things differently. If we knew the outcome of the spreading
deflation ..., the equities bubble ...
Many events of worldwide importance are coming to a head. The uncertainty of the outcome is
what is driving the demand for hard assets.
History shows us the best money is made when things are changing rapidly. It looks to me that
things are about to change rapidly and with a magnitude very far removed from most people's
experience. This is a once in a lifetime opportunity. My goal is to make the best of it.
Peter Asher
(5/5/2000; 16:53:58MT - usagold.com msg#: 30014)
Once-upon-a-time, on The Forum
Euro, We Hardly Knew Ye'
USAGOLD (12/2/98; 17:10:50MDT - Msg ID:1110)
"A monstrous wooden horse.........
Will gold move upon euro introduction? Yes. I think euro introduction will turn out to be the
most important monetary event since Nixon devalued the dollar in the early 1970s. We all know
what that did to the gold price. And yes. I think it will move the price of gold substantially
higher (though I would be surprised if the movement was immediate). Why? Because it will no
longer be necessary to defend the dollar, or accede to the dollar, with a viable alternative
available to anyone who would want to use it. I think that's why the euro was introduced in the
first place. Let me put it this way: If the world financial community and central bankers,
particularly of the European variety, were satisfied to live with the dollar, why would they
bother introducing a new currency in the first place?........ In the upcoming issue of News &
Views (about ready to go to the printer) I liken euro introduction to the Trojan Horse. While our
illustrious leaders tell us ad infinitum that somehow the euro is going to be good for us and the
dollar, many of us wonder with what understandings these statements are being made. In looking
up the passage in The Odyssey about the wooden horse, I was interested to see that Homer is
very specific that the Trojans themselves wheeled the horse within the walls of Troy.
USAGOLD (12/2/98; 17:22:46MDT - Msg ID:1111)
FORUM BUSINESS....CALLING ALL FELLOW GOLDMEISTERS!
What is the most often mentioned reason for purchasing gold these days:
1. Euro introduction
2. Y2K
3. Stock market over-valuation
4. Economic breakdown (Asia contagion)
bmacd (12/2/98; 18:21:36MDT - Msg ID:1112)
USA Forum Business
I haven't posted much at all lately, and I've felt a bit out of touch, but this sounds like something I
can tackle. Personally I think that the strongest reason used for the rise in the price of gold is
between the Euro Introduction and Economic breakdown. I think the two are fairly well linked
really. The Asian contagion, is setting off a wave of currency troubles and devaluations. It is
also setting off a wave of economic troubles due to trade balances and imbalances and
commodity pricing. That's a very short summation, and overly brief I know. The US dollar as
the last bastion of currency safety doesn't look too stable when you pick apart the economy, the
ridiculously overvalued market, and paramount, the over-time rolling of the printing presses
(again very brief). So as this happiness is all hitting the fan, along comes the Euro (in like a
month!!). Well now what happens. If people flock to the Euro, down goes the dollar, and up
goes the price of gold. Definitely central banks are going to hold some Euro in reserves. I see
selling of American dollars to do so. None of this is going to be smooth. Enter some extra
confusion and turmoil....enter gold. Now I know that Another could (and I wish would) go into
incredible depth about these balances, he/she is great at it. There is no way that the Euro
introduction will be easy and flawless (humans are involved) and already too many doubt that
it'll survive anyways. Also with world trade, certainly with commodities and oil priced in US
dollars, there's got to be incredible turbulence with the Euro's introduction, and this will hit the
dollar. The dollar has been that last strength for so long now, that I believe to hold value, buy
financial insurance, and level off massive fluctuations, that then people will go back to gold.
Now maybe these are the arguments that I hear the most, because I tune into them, and maybe
they are two entirely separate issues (#s 1 and 4) but that's the way I hear/see it anyways.
Hey it felt great to post again. Thanks USA Gold for asking the right question!!!
bmacd (12/2/98; 19:55:00MDT - Msg ID:1116)
USAGold
No doubt, your friends are dead on right that the Fed is printing like crazy to buy back the flood
of US Treasuries coming back into the market. But here's the paradox (keeping in mind that I'm
no genius, nor do I have Alan Greenspan's job, but sometimes things seem too obvious not to
comment on). So they manage to buy back the debt being sold into the market. In doing so, the
world markets are now awash in US dollars. What has really been accomplished? Central banks
and investors have been holding US dollars as well as US Treasuries for security. So one has
been replaced for another. Seems pretty useless to me, especially when in 29 days and counting
there's a new currency (a major currency I might add) to give the oversupplied US dollar some
competition. Fill me in- is there a method to this madness? To boot, some central banks will sell
US dollars, as well as US Treasuries to buy Euros. I'm not clear on how simply buying time,
isn't going to backfire really badly. The last thing I'ld be happy with is hard currency right now.
Hey, I really missed this!!!!
USAGOLD (12/2/98; 20:22:09MDT - Msg ID:1118)
bmacd: "What has been really accomplished?" bmacd: "What has been really
accomplished?"
What has been accomplished is inflation -- beyond anything that we already understand. The
floodgates are open. What is astonishing is that a man of Greenspan's character and
understandings would be a party to it. Few people know that Greenspan started as a gold bug
(he used to address our conventions before going over to the Fed). He learned his economics at
the knee of Ayn Rand. His deep-seated concern about inflation stems from the fact that his family
lost its wealth in the Nightmare German Inflation (at least that's the story I've been told.) The
name of the game for many years for the U.S. government and the Federal Reserve has been to
buy time. Like the characters in Ayn Rand's novels, Greenspan perhaps sees himself as the
heroic figure who with the full impact of his intellect and will stands against the gathering tide.
bmacd, I have puzzled about this for many months. I do not know if the U.S. Federal Reserve's
position is to fight the euro in behalf of the United States or succumb to it in the full bloom of a
new world order. This is the question on the table, and the one for which I greatly anticipate an
answer in 1999. Your question and concern is a good (valid) one but at the moment it cannot be
answered. This dovetails into the timing question on the future price of gold. If American
decides to fight for the dollar, this battle could stretch on. If America is throwing in the towel on
the dollar, the market's retribution could be quick and deadly, like it was in the early 1970s
when gold rose fivefold in less than 24 months. This is where Another's argument finds
application.
As you can see, I have no answers only a framework within which perhaps we can all consider
what we are really facing here.
PH in LA (12/2/98; 20:39:34MDT - Msg ID:1119)
Forum Business, Golden Reasons and News Items.
Forum Business:
Thanks MK for tossing a little fuel on the fire here. This forum is unique in that there is already a
tradition of extremely well-thought-out posts (from Another and FOA to Aragorn and all the
other thinkers who have graced these pages) that are not easy to just toss off. Much thought goes
into them and it helps motivate us knowing that someone will read them. It would be interesting
to have an idea of traffic on the site even on days when there is little (or no) posting activity. In
any case, it is great to see a little life here again on one of the (potentially) most important sites
on the web.
Reasons for gold purchase:
As for the questions before us, I like bmacd's point that the Economic Breakdown in Asia is
Euro related. This has been discussed by Another and I even recall his (or FOA's) assertion that
Asia was smashed by the BIS to forestall a pre-euro rally in gold. Furthermore, inasmuch as the
gold and yen carry trades have been encouraged by the BIS (and other European CBs) to
provide international liquidity until the Euro becomes reality, the over-valuation (#3) of the
stock market is also part of the same big picture. The strength of the dollar shows that
international investment funds have flowed into US equities (and bonds) which has added fuel to
the US markets. And it has often been pointed out that the introduction of the Euro just at this
time was done to take advantage of financial chaos, offering a whole new financial system that it
would appear will come complete with new computers, software, etc. However, this theory
does seem like a bit of a stretch since the Euro has been in development for decades...more than
long enough to have fixed the Y2K computer problems, as should have been done long ago. In
any case, it would seem like the Euro WILL get some added impetus from financial choas in the
dollar-denominated world, should that actually materialize as predicted (by some). Just the mere
perception of this should be a tangible factor.
So, my thinking is that the financial turmoil headed our way is in many ways a combination of all
of the reasons set forth. Not very original inasmuch as all this has been discussed at length here
with Another and FOA, but that's the way I see it.
News
I was working on a post consisting of a translation of a newspaper story clipped from the
Spanish press in October that was lost during a power interuption yesterday. Rather than slog
through it all again I will sumerize:
Until now, gold purchases in Spain have been subject to the Value Added Tax (VAT) regardless
of whether the purchase was for investment purposes or for industrial usage. The European
Commission has now determined that the application of this tax creates inequallities between
countries and could serve to encourage or discourage investment in gold from one country to
another. Therefore, it has decreed that the VAT tax will no longer be applicable in any of the
Euro countries. The effect is expected to stimulate gold purchases in Spain. The question of
privacy was also behind the new regulations, since the paperwork involved in administering the
tax could be utilized in tracking private gold movements, something that would not be seen as
liberalizing the flow of investment in gold.
There was also a story this morning on "All Things Considered" (National Public Radio) about
efforts within the European Union to equalize tax laws and eventually criminal laws to further
homogenize conditions throughout Europe. The focus of the story was on the reaction to these
trends in England, where popular opinion has precluded (for the moment) England's
participation in the Euro. Prominent mention was made of the politicians' support for English
membership in spite of popular resistence, etc. Mention was also made of a growing awareness
that the Euro is expected to bring economic benefits to participating countries, something that
English leaders are reluctant to renounce.
Did anyone else hear the story? It would be interesting to hear FOA's take on this one. In any
case, an important implication of both items is the progress already being made towards the
monumental task of creating a single European currency. Also, how the currency is but another
step towards the overall goal of European unification, which will ultimately even include
standardization of the various legal and tax systems from one country to another. The
implications of this story just keep getting bigger and bigger. Michael Kosares is right on when
he says that the Euro is argueably the biggest story for gold in the whole 20th century (and
beyond).
PH in LA (12/2/98; 20:56:24MDT - Msg ID:1122)
Little-known facts about Alan Greenspan?
USAGold:
In addition to your mention of Alan Greenspan's previous incarnation as a gold bug is the
equally little-known fact that he is a full-blown member of the board of directors of the BIS. I
have commented on this before, and recall also that Another replied to my comment.
Is this a clue to the direction the Fed plans for defense of the dollar versus the Euro? In many
ways, it almost seems like the Fed has aided and abetted in the creation of the Euro. For
example, their maintenance of the high interest rates that nourished the yen and gold-carry trades
for so many years.
USAGOLD (12/2/98; 21:53:01MDT - Msg ID:1124)
PH in LA....Thank you for showing up tonight...
I want to say how much I appreciate your kind words with respect to me and the FORUM.
As I understand it, Greenspan is not a full fledged voting member of BIS' board, but an observer.
Is this right? I think that the Europeans have seen the handwriting on the wall for some time with
respect to the dollar's overproduction and are simply taking advantage of a bad situation for the
United States to free themselves of long-standing dollar hegemony.
Greenspan's motives are another thing. This massive printing of money that is going on today and
distributed worldwide might be the dollar's swan song. Mr. Greenspan should be questioned
rigorously about gearing up the printing presses "to save the world." I am sure he understands
what this will mean to the American people in the years to come especially when the euro
comes on line to make the dollar "honest" so to speak. He surely knows that the United States
will be unable to keep the paper dollar game afloat when the world has a better alternative, yet
he prints money like there's no tomorrow. This is being done by an individual who should know
better ( as alluded to earlier.)
In the past we could export our inflation and keep prices down in the U.S. by keeping the
dollars, by one machination or another, overseas. At least as chairman of the Fed he could
intellectually justify his actions to some degree by assuring himself that the dollar reserve
advantage made inflation possible without damaging the U.S. economy. Soon we will be unable
to do that. Then what? Are we to endure hyperinflation in this country in order to save the
world?
The great compromise of values engendered by the current Greenspan policy, as we grow to
understand it, could mean the final betrayal of the dollar.
USAGOLD (12/03/98; 17:22:07MDT - Msg ID:1136)
From today's International Herald Tribune..........
"Also hurting the U.S. currency was widespread talk in the markets that the new European
Central Bank, which will manage monetary policy for the 11 countries adopting a single
currency next year, might sell billions of dollars as it looks to beef up its yen reserves."
Such sleight of hand....with one hand you lower interest rates to support the dollar, while you
sell your dollar holdings with the other.
Peter Asher (12/04/98; 12:09:26MDT - Msg ID:1150)
So, starting with the Euro. Much has been said about the potential of this "composite" currency
to compete with the dollar. However, what quacks like the mark and the franc, also quacks like
the lira and the peso. The Euro is, by packaging the Common Market, a currency equaling the
dollar in its scope. But, the strength of the major currencies converting into it could be
weakened by the historical vagaries of the other components. Therefore, the fact of
UNPREDICTABILITY could actually drive assets INTO the dollar, and this could even be
negative for Gold.
USAGOLD (12/4/98; 15:40:04MDT - Msg ID:1151)
Our chief supplier, who does major business with the European banks, tells us that once the euro
is introduced, if the dollar starts sliding, premiums on all these items could go up dramatically
as the dollar goes down -- once again no matter what gold does. Supply could tighten even
more. He says, "I would hedge my bets and buy at least some portion of my gold nest egg now
before January 1, 1999." As most of you already know, $20 gold piece premiums have already
gone through the roof. Also, most pre-1933 items come from European hoards. Another concern
he had is why would any European take dollars for gold if the dollar goes in the tank. Something
worth considering...on a balmy day across the land.
Peter Asher (12/5/98; 00:21:11MDT - Msg ID:1157)
About the Euro: Michael, you questioned why a European would take dollars for gold if the
dollar was going in the tank. Why indeed? We forum folk "believe" that the introduction of the
Euro will cause a fall of the dollar. Certain logics predict this. But what is the truth, and
furthermore, is that truth to be unfolded or is the script already written. It has been said, in
designer circles, that the most powerful man in the world sleeps in a room with floral
wallpaper, but they were referring to the President of the United States not of the Federal
Reserve!
Possibly not even God knows what the Greenspan Gang is really up to, but if A.G. sat down
with all those banks and LTCM, etc., they weren't being speculators!! Now Aragorn III is
referring to the Euro as a Gold Standard, but I thought I caught the word "commemorative" in the
original announcement. A hundred Euro coin could be five cents of zinc, twenty cents of copper,
five dollars of silver, or whatever of gold. (Weren't people turning in pennies for copper in
1979 or so, triggering the zinc alloy of today.) I remember traveling in Italy in 1956 when
anything bigger than fifty lira (eight cents American) was paper. You needed a wad of money to
go to dinner. However it falls out, the coin would have to have a gold value far enough below
its face value to maintain its existence through the highest anticipated (or planned?) price of
gold. Otherwise, the old-fashioned meaning "melt down" would come into play. So what would
be the point? I think the Euro may be as wild a card as the stock market. "Perceived values"
could rule the season, and the trading in the Euro could then create a new set of fundamentals.
Peter Asher (12/6/98; 17:27:05MDT - Msg ID:1184)
Euro/Gold
I just now read a Sunday feature on the Euro. The one item that jumped out was the claim that
corporations will incur far greater expense converting their systems to use it than they are
spending on Y2K. But also, many companies are putting off coming up to speed on the currency
because they are immersed in Y2K preparations.
It seems that "electronic transactions" must be denominated in Euros only after 2002.
I'm just wondering if my theoretical argument on Friday, that the initial uncertainty might in fact
cause the dollar to go up, is what's mysteriously holding Gold down. This is a question, not an
assertion.
bmacd (12/6/98; 18:06:00MDT - Msg ID:1185)
Peter Asher
I think that there will no doubt be plenty of initial uncertainty about the Euro. I, myself, can't
believe that it'll go through nice and smoothly at all (ultiamtely if at all). However, the European
community has made this decision, and at this point, are determined that it will work. Japan will
hold Euros, China has also stated that they will hold Euros as well (to name two). China has
also stated openly that US dollars and or US Treasuries will be sold in exchange. Assuming that
most central banks will be holding Euros as well as US assets, then it seems likely that there
may actually be more US paper put back into the system initially. Supposing, the Euro was
really shaky and looked iffy. Personally, I'ld rather hold Swiss francs or German Deutsche
Marks then instead of the Euro. I see the Swiss Franc being very strong over the next while for
this fact alone. Maybe, just maybe, then another scenario will take place, where in people totally
lose faith in any paper currencies. Now that leaves only gold. I still maintain that how can the
bastion of safety and stability be virtually bankrupt, as is the US dollar?
USAGOLD (12/6/98; 18:12:25MDT - Msg ID:1186)
bmacd and Peter Asher........
There is a possibility that it will take awhile before the full impact of the euro is felt. There is
much uncertainty about this new currency on both sides of the Atlantic, and I do not expect
January 1, 1999 to be like a light going on in the currency markets. However, when the
realization hits that the euro will comprise a significant share of the world's reserves at the cost
of the dollar, it will be as Aragorn III says like "Lightning in the Night." This last lowering of
interest rates by the Europeans was meant to help the yen...not the dollar, just as the lowering of
U.S. rates was to help the yen. This is all meant to deal with the Asian contagion which is still
very much a reality. The reality however that disturbs me the most in all this interest rate
maneuvering is that for the first time in my many years following the money game, a U.S.
chairman of the Fed has moved not to deal with the U.S. economic situation by printing money
but the world economic situation by printing money. To my knowledge this is unprecedented.
The net result is a skyrocketing money supply that has all the old time market watchers blowing
a gasket. It is this money printing -- coupled with euro introduction -- that is so dangerous for the
dollar as I mentioned a few days ago. Anything can happen...Personally I think next week and the
following will be critical for the dollar. Now with all the moves made that are going to be made
going into the end of the year, the dollar to me looks incredibly vulnerable. We will see how
this all plays out, but this is not a time to kick back and get ready for the holidays. Anything can
happen.....Keep your ear to the rail. If things remain placid going into year end, 1999 might start
slow. If they don't, duck.....there's a train coming through the tunnel-- freight train euro...
Richard, Oregon (12/6/98; 20:54:30MDT - Msg ID:1193)
Sunday Paper - Euro
I just read our Sunday paper article on the Euro (creating Euroland) and how it will effect
pacific NW businesses. Mostly an uneventful piece but one thing jumped at me when I read it
because of a similar post here regarding US banks tracking deposits/withdrawls of customers.
The following is by John McAdam president and CEO of Sequent Computer: "Companies out
there are going to be buying new software systems and often hardware, too, McAdam said.
Banks, for example, have us
Harley Davidson
(5/5/2000; 16:51:38MT - usagold.com msg#: 30013)
Peter,
Probably the best solution is for people to understand what kind of files can cause this kind of damage. Not only are .exe files and .vbs files dangerous because they execute when opened, but even a Word document or an Excel spreadsheet (I believe) can contain a macro that executes when the document is opened and can cause damage. At least Windows will tell you that the Word document contains a Macro and ask if you want to open it. So, in addition to .exe attachments, never open a .vbs or a .doc file or .xls file without (as you said) verifying with the sender first.
BTW, I just saw on TV that, in less than 24 hours, the FBI thinks they know who the guy is - a 15 year old in the Philippines. They want a search warrant to search the kid's home. Like I said, this guy was no genius.
Peter Asher
(5/5/2000; 16:50:13MT - usagold.com msg#: 30012)
Harley re- Virus
Robin just told me that this virus suceptibility is only in Microsoft's "Outlook" e-mail program.
This may be an off-site discussion. Peter@peterasher.com
(no attachments please {:-)
Peter Asher
(5/5/2000; 16:36:13MT - usagold.com msg#: 30011)
Harley Davidson (5/5/2000; 15:38:03MT - usagold.com msg#: 30008)
That's pretty scary! Sounds like the only sure-fire protection is to query the alleged sender of an attachment before opining it.
MarkeTalk
(5/5/2000; 16:29:35MT - usagold.com msg#: 30010)
Propping up the euro
Reuters wire service today carried a story by Apu Sikri, who stated that "financial heavy-weights" were backing intervention on behalf of the euro. He quoted such luminaries as George Soros (famous currency speculator who made about $1 billion shorting the British Pound), Lionel Jospin (French Prime Minister), and Eisuke Sakakibara (also known as "Mr. Yen" when he was Japan's former vice finance minister). All of these gentlemen believe it is time for the European Central Bank to intervene and sell U.S. Dollars. Keep in mind that such currency interventions have in the past occurred over weekends when markets are closed. It appears that the U.S. Dollar is in a blow-off phase and could turn at any time. Most likely, the ECB will wait for an opportune time when economic data weaken the U.S. stock market and the inflows of money from around the world turn into outflows of money going back home.
Cycles indicate that gold and silver are bottoming between now and Memorial Day. Prices may have already seen their lows for this move and may be ready to spring higher on weakness in stocks. Commodity inflation is coming back with a vengeance. Just look at the weather around the country and you will know why the grain complex is soaring and cattle, hogs and bellies are selling off. It is the driest in the Midwest since 1934, the dustbowl days of the Great Depression. And America is now the bread basket to the world. Food prices are going higher and there is no PPT to keep them down as is done with gold and silver. Why? Because you can't print cornflakes or oatmeal. Watch the CRB Index because Alan Greenspan does. Commodity price inflation is the sleeper this year which will catapult the precious metals.
Rhody
(5/5/2000; 15:55:14MT - usagold.com msg#: 30009)
@ Willo The Warthog
Your press release from W. Duisenberg suggests that the
ECB may resist raising interest rates to defend the EURO,
as this might stifle European economic recoveries.
I am quite sure that the ECB would prefer to do nothing,
and allow the EURO carry to continue to expand the debt
trap. I don't think the EURO is ready to confront the
dollar directly yet. For one thing, the EURO group
won't issue currency and coins until Jan 2002.
The LBMA, at present rates of volume decline will not
dead market until April 2002, and I'm sure ECB members
want more time to withdraw their earmarked (monetary)
gold from the NY Federal Reserve Bank. If the currency
war becomes hot, I expect the US will seize this European
gold, and perhaps use it to bail out the derivative
exposure of GS, J. P. Moragan and other bullion banks
involved in this intervention.
If the Fed raises rates by .5% in mid May (increasingly
likely) then we could see one of my first 3 options, but
doing nothing will be difficult.
It occurred to me that a flanking attack on silver
might put a great deal of indirect pressure on the minions
of the Fed. My impression that silver is so tight that
direct purchase of a large quantity of silver, say 50 M oz
would blow up that market and place the same people shorting
gold under unbearable pressure. It might put a large number of American gold producers with large silver books
underwater, and out of business. At the present price
of silver the whole move would cost ECB members only
$250 million, all funded by sale of soon to be worthless
US Treasuries.
Harley Davidson
(5/5/2000; 15:38:03MT - usagold.com msg#: 30008)
Peter Asher, TC, additional info...
The reason this particular virus propagated so quickly is because it sent emails to everyone in the individuals machine's address book so if your email address was in my address book and I opened the attachment (which would have come in an email from someone who has my email address in their address book) then you would have received an email from me with the viral attachment. The rule is - never open an email attachment (especially a .exe, this virus is a .vbs) from someone you don't know. Having received email from me in the past (as your email address was in my address book), I suspect you would have opened the attachment.
I work at a software development company. One of our software engineers received the virus email from one of our clients. The natural thing to do would be to open the attachment, and he did. Of course he is kicking himself now. Immediately, the email showed up on my machine but I had read the CNBC article about fifteen minutes earlier and brought the issue to his attention.
This issue exposes a very real problem with the Microsoft Windows environment which is that it is incredibly vulnerable to this kind of attack. The virus was a .vbs file. This is a Visual Basic Script file. So all one has to do is write a program using this scripting tool and attach it to an email. When it is opened, it has complete and total access to the entire host machine and Windows will execute it without question. In other words, it is way too easy for anyone with a computer and a VB Script for Dummies book to cause potentially billions of dollars of damage. I went on a rant several days ago about Microsoft and what I thought of their technology so I will not repeat those thoughts here. I wouldn't be surprised if there aren't some lawyers out there wondering if there might be a class action suit against Microsoft in all of this.
Lastly, this "hacker" was no genius as he missed several opportunities to do some "serious" damage. For instance, instead of sending emails to all addresses in the address book, it would have been far more effective to cycle through the "Sent Mail" folder and email to everyone that the host ever sent email to. There are other examples but they are better left unsaid.
Hill Billy Mitchell
(5/5/2000; 15:09:58MT - usagold.com msg#: 30007)
Official release
Official: Federal Reserve Statistical Release
Release Date: May54, 2000
Rates for Thursday, May 4, 2000
Federal funds 6.05
Treasury constant maturities:
3-month 5.90
10-year 6.46
20-year 6.59
30-year 6.19
right-side up spread FF vs long bond = +.14%
Peter Asher
(5/5/2000; 14:41:05MT - usagold.com msg#: 30006)
TownCrier (05/05/00; 11:46:18MT - usagold.com msg#: 30000)
I would like to think that our group here are not part of the great thoughtless masses who havn't yet "Got it" that you don't open up an E-mail "Attachment" from a scource you don't know! As P.T. Barnum said "there's a sucker born every day."
ORO
(5/5/2000; 13:31:00MT - usagold.com msg#: 30005)
THC - price setting in futures markets
There is more to the PM markets than the futures. The PMs have a status as money and one can open gold accounts at almost any major bank and some (few) offer silver, and plat. The IMF has official settlement prices for the PMs mentioned, it does not have one for Pd.
Because of there being banking activities in these PMs the futures markets in these function as currency markets do. The one exception to this is the case of physical shortage.
The trading on the futures markets is "equalized" by arbitrage as described in the Black-Scholes equation in its various guises. The one limitation on effective arbitrage between the most active month (where the dollar volume is) and the physical markets is the availability of physical with which to take a position.
In the kind of severe backwardation we see today in Plat, and we have seen before in Pd, the arbitrageur wanting to play the "sure thing" 5.5-5.8% return on monthly backwardation would need to do one of the following, according to their position:
Holder of Pt would simply sell the Pt and buy the next month future. Alternately, he would make available the Pt to a dollar based arbitrageur at a portion of the "lease rate". Another wat to profit is to sell active month call options (which have high volatility premiums) and delta hedge the option on the same-month future. The risk is that of losing your Pt while being locked out of the market during limit up days that don't allow you to continue the delta hedge. You would not lose DOLLARS, but you risk your Pt holding.
The dollar arbitrageur can profit from the arbitrage by:
1. borrowing physical Pt below the lease rate (if possible) and selling physical while buying the future contract.
2. Selling the current active contract and buying the next contract.
3. Become a Pt owner by buying Pt and using one of the holder's strategies above.
Since PM accounts at banks (bullion banks) are not normally fully allocated, the bank has ownership of the deposited bullion and owes you the bullion upon demand or at a set date (a Pt CD). The bank will make use of the above strategies to gain profit from the arbitrage.
The most common form of arbitrage is the delta hedged option. However, delta hedging is not the smartest way to profit in "normal" circumstances. Normally, the bank will be familliar with the positions of its competitors and allies in the markets and can join with them in pushing the markets in their favor.
To make the banker's position clear, the business of banking is the marketing of debt. The demominator of the debt need not be on hand at all. When one opens a non-allocated gold account (the normal type of gold account), then the bank is under no obligation to have any gold to back the account. The bank only needs the gold when the gold is requested for delivery in hand or into a fully allocated account.
Thus the banker will take your dollars deposited as a gold account, and use them to buy bonds or lend. If gold or Pt was deposited the bank will do one of the following:
1. If currency interest rates are higher than metal lease rates, it will sell the metal, buy the currency and invest it.
2. If the lease rate is the higher rate, the bank will lend the metal itself.
3. If reserves are low, and there is danger of a "bank run" (depositors of metals asking for their metal) then the bank will keep the metal for reserves, however, it will sell call options into the market in order to make a return on the reserves. Often, these calls would be delta hedged.
When the banking system is over-extended, which is very very common, it can:
(1) take a defensive position by buying metal - the plus is coverage of positions, the minus is that the market will move against the bank,
(2) it can try to move the market towards its position - the plus is that the danger of depositor psychology moving against the bank is likely to be eliminated, the minus is that the banks will be further burried in their position, (3) roll over obligations to longer maturities to limit immediate demand and buy short term futures and physical to assure supply,
(4) Work with other banks to avoid them all stepping into the market in the same direction. Since all banks do the same kind of business, they will all share the same problems at the same time. The Fed got the banks together during the LTCM crissis in order to avoid having them "run for their lives" and try to liquidate the same positions as LTCM held at the same time that LTCM was doing so. Before that and since, the banks regularly confer and make decisions on this kind of "systemic risk" so as to avoid their seeking liquidity at the same time. Since banks can only supply more "paper" or liquidate more reserves, that will be what they will all do.
(5) If a bank has a very large client who has an allocated account, or has physical, the bank may look for the appropriate return for the holder so that the physical could be made available to "liquify" the bank. The return is not necessarilly in the form of monetary reward by high interest rates. It may take the form of political assistance, the selling of a desired asset well below market price (say, arranging for the buyout of Chrysler, helping Prince Alwaleed -sp? get a chnk of Microsoft, or getting both French and American forces to stage an appearance with massive force in Kuwait).
In short, things in the PM markets are in no way similar to those in the commodities markets.
WilloTheWarthog
(5/5/2000; 12:49:22MT - usagold.com msg#: 30004)
Press Release from Wim Duisenberg Today
http://www.ecb.int
This just came up on the ECB site. I don't want to beat this to death, hope it's interesting:
ECB PRESS RELEASE
Statement on the euro by Dr. Willem F. Duisenberg, President of the European Central Bank
5 May 2000
The current development of the euro's exchange rate has given rise to questions from European citizens who are concerned about the value of their currency. To them, I would like to say the following: I understand their concerns, since a persistently lower euro exchange rate might ultimately lead to higher prices in the shops. It may also undermine the perception of the euro as a stable currency. Therefore, we at the ECB monitor the euro exchange rate very closely.
Citizens should feel reassured by the fact that prices are currently stable in the euro area. Indeed, over the last decades there have been few periods in which prices have been stable for so long. This internal stability of the euro means that people can be confident that their savings and pensions will keep their value over time.
In order to counter risks to price stability the ECB has over the past six months taken measures and increased interest rates four times already. It will continue to do all it can to maintain price stability in the euro area. This will also help to turn the current economic upswing into a long period of high economic growth and falling unemployment. European citizens can be assured that the future of the euro is that of a strong currency, based on price stability and the strength of the European economy.
Galearis
(5/5/2000; 12:24:32MT - usagold.com msg#: 30003)
@Willo-the-Warthog re: Rhody
I agree, I agree, I agree. The EU really does not have to do anything except sit back and let the fiscal fundamentals assert. As ORO stated earlier, the demise of the dollar was set as of 1998 - or really from the Nixon default. Thank goodness the Euro is the firefighter to catch the victims leaping from the house of dollars.
Rhody also believes, as do I, that the ECB will not make a fools rush in to fire another golden bullet at the US again, as the fundamental weaknesses of a paper derivative market will over time address and reflect the reality. Paper burns, gold doesn't.
If they can maintain the farce over the coming months, then the bleed of physical will end up in some honest pockets (ours) at the discount of paper prices. It is the price they pay for a crooked market and it never hurts to remind gold bugs of this. For every gain there is a loss, for every loss there is a gain. Their loss is the cheap gold.
WilloTheWarthog
(5/5/2000; 12:18:56MT - usagold.com msg#: 30002)
Unrestricted Warfare
http://www.terrorism.com/documents/unrestricted.pdf
...For anyone who cares to peruse this 20th century masterpiece.
WilloTheWarthog
(5/5/2000; 12:06:00MT - usagold.com msg#: 30001)
Rhody-More on Euro
4. They can play a waiting game. That is what I believe they are doing.
It is not only the Europeans who could dump US debt. This is a strategic weakness that is not recognized (at least anywhere in the US that I have read) by most US analysts.
China certainly recognizes this. From the book "Unrestricted Warfare", two quotes:
"Today, when nuclear weapons have already become frightening mantlepiece decorations that are losing their real operational value with each passing day, financial war has
become a "hyperstrategic" weapon that is attracting the attention of the world. This is because financial war is easily manipulated and allows for concealed actions, and is also highly destructive. By analyzing the chaos in Albania not long ago, we can clearly see the role played by various types of foundations that were set up by transnational groups and millionaires with riches rivaling the wealth of nation states. These foundations control the media, control subsidies to political organizations, and limit any resistance from the authorities, resulting in a collapse of
national order and the downfall of the legally authorized government. Perhaps we could dub this type of war "foundation-style" financial war. The greater and greater frequency and intensity of this type of war, and the fact that more and more countries and non-state organizations are
deliberately using it, are causes for concern and are facts that we must face squarely."
"...if the attacking side secretly musters large amounts of capital without the enemy nation being aware of this at all and launches a sneak attack against its financial markets, then after causing a financial crisis, buries a computer virus and hacker detachment in the opponent's computer system in advance, while at the same time carrying out a network attack against the enemy so that the civilian electricity network, traffic dispatching network, financial transaction network, telephone communications network, and mass media network are completely paralyzed, this will cause the enemy nation to fall into social panic, street riots, and a political crisis. There is finally the forceful bearing down by the army, and military means are utilized in gradual stages until the enemy is forced to sign a dishonorable peace treaty."
I have seen *very* little on this in the US press. The world economic situation could change rapidly if such attacks were to occur.
TownCrier
(05/05/00; 11:46:18MT - usagold.com msg#: 30000)
Glitches, hackers, and extremely virulent computer bugs...
http://biz.yahoo.com/rf/000505/g4.html
Just another among many reasons to value to yellow metal even in a high-tech world.
According to this Reuters article, the "love bug" and is offspring have rapidly spread around the globe from astarting point thought to be in Asia. It is said to have disabled tens of millions of computers, and has created losses now estimated to be in the billions.
Samir Bhavnani, a research analyst with Computer Economics said, "We estimate $2.61 billion of damage has been done. By Wednesday, the total can reach $10 billion. We see damages growing by $1 billion to $1.5 billion a day until the virus is eradicated."
Rhody
(05/05/00; 11:31:17MT - usagold.com msg#: 29999)
Lease rates, gold above ground, EURO
LEASE RATES
An across the board increase of about .01% predicted
the fall in spot prices today, also, gold usually has a
bad day on Fridays. A lease rate surge of this magnitude
indicates that actual leasing volumes rose about 2%.
It is my opinion that the inflationary unemployment
rate figures guaranteed an attack on pog to head off any
rotation into the ultimate safe haven. Even the XAU was
hit, and this was done before the attack on pog about 10:30,
as gold stocks were weak from the opening of NY markets.
HOLTZMAN
Your study of above ground ounces of gold per capita
was very interesting. To those who are concerned that there
is a tripling of per capita gold supplies since 1850, and
that population growth seems to be slowing while mine output
remains high, we must remember that slower population growth
enhances per capita incomes, allowing more investment income
per capita to be available for gold consumption. Besides
the somewhat pessimistic ratio of gold supply to population
ignores the volume of paper assets that have been printed
in excess of physical reality. Population growth has fallen from 2.1%/yr in 1980 to about 1.8% now. This is
still exponential, and will result in the total mass of
human protoplasm equalling the total mass of planet earth
in approximately 400 years. This scenario is about as
likely as the US dollar surviving as the world reserve
currency for ten more years.
Willo The Warthog
Yes the EURO is suffering a little birth trauma here,
but I really do think the EU is far sounder as an economic
entity than the US. In fact the decline of the EURO is
a function of the lower interest rates set by the ECB, while
the high dollar is high only because of the capital sucked
in by high US rates. The high US rates are signalling
weakness. The real question here is what the ECB is likely
to do about this, given that in this second volley of the
currency war (Washington Accord was volley #1.) the EURO
appears to be seriously damaged.
1. The ECB could raise interest rates. (doubtful, as this
would damage European recovery out of the Russian collapse and Asian Crisis.)
2. The ECB could sell US treasuries. (This would be highly
inflationary in the US as they would just monetize, and
then raise US rates again to control inflation. This
in turn might collapse both US equity and bond markets,
creating systemic risk)
3. The ECB could raise the gold backing of the EURO, and
buy gold on the open market to offset the inevitable
retaliation on the price of gold.
4. ? Perhaps someone with more financial knowledge could supply some additional strategies here.
SHIFTY
(05/05/00; 11:21:52MT - usagold.com msg#: 29998)
Just for fun
A man takes the day off work and decides to go out golfing.He is on the second hole when he notices a frog sitting next to the green. He thinks nothing of it and is about to shoot when he hears, "Ribbit 9 Iron".
The man looks around and doesn't see anyone. Again , he hears, "Ribbit 9 Iron." He looks at the frog and decides to prove the frog wrong, puts the club away and grabs a 9 iron.
Boom! He hits it 10 inches from the cup. He is shocked. He says to the frog , "Wow that's amazing. You must be a lucky frog, eh?" The frog replies, " Ribbit Lucky frog." The man decides to take the frog with him to the next hole.
What do you think frog? the man asks. " Ribbit 3 wood."
The guy takes out a 3 wood and ,Boom! Hole in one. The man is befuddled and dosent know what to say.By the end of the day , the man golfed the best game of golf in his life and asked the frog , "ok where to next?" The frog replies," Ribbit Las Vegas".
They go to Las Vegas and the guy says, " Okfrog, now what? The frog says "Ribbit Roulette." Upon approaching the roulette table , the man asks, " What do you think I should bet?" The frog replies, "Ribbit $3000., black 6." Now , this is a million-to-one shot to win, but after the golf game the man figures what the heck. Boom!! Tons of cash comes sliding back across the table.
The man takes his winnings and buys the best room in the hotel. He sits the frog down and says, "Frog , I don't know how to repay you.You've won me all this money and I am forever grateful." The Frog replies ,"Ribbit kiss me". He figures why not, since after all the frog did for him , he deserves it. With a kiss the frog turns into a gorgeous 15-year old girl.
And that, your honor ,is how the girl ended up in my room. So help me GOD or my name is not William Jefferson Clinton.
Black Blade
(05/05/00; 11:10:52MT - usagold.com msg#: 29997)
YGM and getting screwed!
hey guy, don't think of it as getting screwed by the PPT. Think of it as a big sale on PMs. Actually I use my profits from my other stocks (techs, and gulp - yes dot.coms) to purchase PMs and PM stock and even some high yeilding utes. I'm content to bide my time accumulating a nice stash. I get fewer ulcers if I think of it in this manner. Besides, the manipulators will eventually get their comeuppance. You can only push a balloon under water so far, before it breaks loose and skyrockets above the surface! Take care - Black Blade.
ORO
(05/05/00; 11:05:11MT - usagold.com msg#: 29996)
Henri - Real dollars per person
The Holtzman figures in H/Oz are compared to real $ per oz. The result is real $ per H as a price rather than a ratio of totals (# of dollars in float per H, or something like that). H/Oz is the supposed measure of supply (Oz) and demand (H) ratio.
The concept is that there should be some correlation between them, if there is one, it should either come out when the two figures are divided (for a linear relation going through 0,0) or plotted one against the other.
The numbers don't quite work out, but they do show a consistent floor. Gold production in the 1840s and 1850s expanded dramatically, as it had at the turn of the previous century. The surprising thing is that these periods should mark the same bottoms in the price relationships.
Black Blade
(05/05/00; 11:02:47MT - usagold.com msg#: 29995)
RossL and THC, Palladium squeeze
It should not come as a surprise that there be a palladium squeeze. We hear that persistent cry "The Russians are Coming, The Russians are Coming!". Yet there is no confirmation of official deliveries from the Russians. Likely there are black market sales from the Russian Mafia and Corrupt Russian officials (Usually one and the same). The supply draw-down of palladium will likely become more severe. Even if Russia resumes deliveries, there is no way that the demand can be met. I would suspect that there will be little if any announcements about palladium. The big users of palladium don't wish to run up prices, and the exchanges don't want to create panic or else they will just follow TOCOM's lead and default. Simply put, there isn't enough palladium to satisfy demand. This monkey business with the TOCOM is just one of many red flags here. Ted Butler could be right about the silver market being in as bad of a situation as well. The big money - Buffet, Soros, and Gates have placed their bets on Silver (and possibly other PMs too). I'm afraid that much of the news about these PM markets is being suppressed. If news about severe shortages were to become common knowledge, we could expect to see the PM markets default and declare Force majuere on all deliveries. I for one will remain with physical and mostly unhedged producers. BTW, added 6.5 more ounces of Barrick safety award gold yesterday (at spot!), plan to get a bit more this afternoon.
WilloTheWarthog
(05/05/00; 10:46:38MT - usagold.com msg#: 29994)
Euro
http://www.lemonde.fr/article/0,2320'seq-2070-53522-QUO,00.html
Here is another article on the Euro, from Le Monde. You can run it through Babelfish and translate it into English if your French isn't so hot (http://babel.altavista.com/, paste the url into the slot). It's saying that the UK is the Trojan Horse of Europe, anaylzing the fall of the Euro.
Although much has has been forgotten by the general population in Europe over the past 50 years about the rôle gold plays as a monetary instrument, remember that the first shot was fired back in September for the remonetization of gold. Not much favorable is reported in the US about the EU; however, attitudes are changing in Europe. While there in March, I read articles in different financial periodicals about a conference that was being held in Portugal. Europe fully expects to overtake the US during the next ten years. They also expect the US stock market and the dollar to take a big hit sometime. Of course, the ECB may have to intervene in the short term; but there is a confidence in the future that has been slowly developing over the past several years.
Perhaps the Euro is not directly backed by gold, in that there is not a set redemption rate. But the gold reserves held by EU banks is still significant.
Sure, Europe is stuck in a quagmire of socialism and overregulation. Things are loosening up, though. Some breakthrough came this year with the allowance of temporary (work) agencies in Germany; this could develop as a backdoor way to lower the cost of employment.
I know this opinion is not popular in the US, but I view the setback of the Euro as a temporary anomaly, due to overvaluation of the US dollar rather than a fundamental problem of the currency.
WilloTheWarthog
(05/05/00; 10:26:47MT - usagold.com msg#: 29993)
From Berlin-Online
http://www.BerlinOnline.de/wirtschaft/.html/dpa_w3_afp161_4_0505_0505180800.html
ECB vice-president: Euro-guardians could intervene on foreign exchange market
Budapest, 5 May (AFP) - in view of the weak euro exchange rate the European central bank (EZB) did not exclude an intervention on the foreign exchange market. An intervention is possible, if it is judged necessary, said EZB vice-president Christian Noyer on Friday before journalists in Budapest. Over such a step he would meanwhile never express in advance, added the deputy Wim Duisenberg aside at a commercial conference in the Hungarian capital. "We always said: That is a tool, which we have in our hands "
Henri
(05/05/00; 10:17:45MT - usagold.com msg#: 29992)
Found it
http://www.worldnetdaily.com/bluesky_lobaido_news/20000502_xnlob_the_overpo.shtml
Yep there it is but there are no documented #'s to back up the claims. Just referrals to other studies from which the numbers were lifted (in context?)
Hey Al Fulchino
There is an ad at the bottom for the "Finding God in Physics" book you sent.
TheStranger
(5/5/2000; 10:09:06MT - usagold.com msg#: 29991)
Cavan Man's Question
People who are bullish tend to hold off buying until bad news is out of the way. Today, the bad news was the employment numbers. Many of these same people are short-term traders who will sell prior to the next widely expected bad news, which is likely to be the PPI and CPI.
Few investors saw inflation coming. Now that it is here, few doubt the Fed's ability to quickly dispatch the problem. For this reason, lots of people think they are going to outsmart this bear market by buying "at the lows". At the final bottom, however, these sentiments will be all but gone.
PEs are still very high by any historical standard. Bond yields are still way too low to compensate investors for the inflation we are already getting. Despite widespread predictions to the contrary, the economy has not yet begun to slow (sorry, Farfel). The Fed absolutely has NOT YET EVEN BEGUN TO FIGHT. It has taken them a YEAR just to push rates up 125 basis points. (This is why they will now have to accelerate the process. Yet, ironically, the pollyannas are hoping the Fed WILL raise 50 basis points so that we can declare it a coup de grace and get back to the bull market). Meanwhile, the supply of money continues to grow. M3 has gone from 6 to 6.7 trillion dollars in just the last 4 months(Even the Treasury is now contributing by retiring billions of dollars worth of bonds).
So, my take on this is that the dipsters are WAY TOO EARLY here. As I like to keep saying, "They didn't see the problem coming, so why should we believe them when they tell us it has passed?"
We here at the forum need to remember that, in the short run, markets ebb and flow. But, if we have done our homework well, as I think we have, things will turn out fine in the end.
Thanks for asking, CM.
Henri
(5/5/2000; 10:04:25MT - usagold.com msg#: 29990)
@ Lady Leigh
Thanks for the link, I have visited their site frequently over the last few years. Always something curiously interesting there.
Leigh
(5/5/2000; 9:55:12MT - usagold.com msg#: 29989)
Henri
http://worldnetdaily.com
Dear Henri: WorldNetDaily had an eye-opening article just the other day about how population rates are actually falling. Click on WorldNetDaily, then do a search for "population" in their search engine (on the left hand side of the screen). The article is called (something like) "The Overpopulation Myth."
Henri
(5/5/2000; 9:47:13MT - usagold.com msg#: 29988)
Holtzman 29935/29978 and ORO 29940
Thanx for putting some numbers to my query and turning around my perception that gold is an appreciating asset :-(
Interestingly, I find the UN population figures disturbing in 10 year increments
from 1970-1980 the global population rose 20% while gold stores rose 23%
from 1980-1990 the global population rose 19% while gold stores rose 19%
then from 1990-1999 the global population rose only 13% while gold stores rose 34%?
Has aids stifled population growth of the world that significantly! I think not. Sure it is only a 9 year period and the others are 10, but this could not make up the difference of 7% could it. We are living longer here in the US but dying earlier elsewhere? Did the ZPG folks actually get their message across in the seventies (I know it worked on me) Certainly China's policies could have impacted the numbers but to this extent? I would like to see the global population decrease but fear the types of circumstances that could bring this about.
The 34% rise in gold stores is believable since the price spike in the eighties and subsequent mining no doubt came full force in the last decade.
Is this all that is needed to enforce a depreciation of this asset? A higher price? More Mining/exploration? I say right on! Bring it on!
ORO
What's up with that last set of #'s you posted?
$/oz divided by Humans/oz = $/human!!!
Is this how much we as humans are worth when sent through the gold valuation filter, or is this how much each human should have invested in gold???? Looks like humanity is a depreciating asset if was ever one (an asset) at all. Seems like the # of $ circulating vs # of humans should factor in somehow. :-)
YGM
(5/5/2000; 9:33:56MT - usagold.com msg#: 29987)
Ahhh!...Another Day of Goldbugs Getting
screwed by the PPT.....
There is one "Major" positive event for us....The "Three Horsemen" of Manipulators Appocolypse riding into Washington.......Three of the greatest Advocates for Gold and free markets that we have to offer...Reginald Howe, Frank Veneroso and our own Bill Murphy.....We should be thankful for GATAs efforts.....or do we just sit back and take this crap like whipped dogs......Send $$$$ to GATA, and become a part of the solution.......YGM.
SHIFTY
(5/5/2000; 9:16:02MT - usagold.com msg#: 29986)
Albania Gold Heist
I did hear " GOLD is were you find it "
SHIFTY
(5/5/2000; 9:13:56MT - usagold.com msg#: 29985)
Albania Gold Heist
Hannibal Cannibal crowd WAS out of amo. Looks like they got some now. Hmmmmmm I wonder ???
USAGOLD
(05/05/00; 09:05:57MT - usagold.com msg#: 29984)
Let's try this again. . .Today's Report: Gold Industry Optimism Prevails
http://www.usagold.com/Order_Form.html
5/5/00 Indications
Current
Change
Gold June Comex
281.90
+0.70
Silver July Comex
5.13
-0.04
30 Yr TBond June CBOT
93~20
-0~06
Dollar Index June NYBOT
111.30
-0.40
Market Report (5/5/00): Gold surged ahead this morning on sound fundamentals, inflation
fears, short covering and a sense that the negatives on gold have become a known quantity and
already discounted in the price. In addition the gold market is beginning to benefit from the
growing sense among investors that the equity markets are possibly running out of gas, and a
prudent hedge is in order 'just in case.' We can attest to the presence of this new group of
investors by reporting a surge in business over the last few days primarily from first time investors
who are telling us that the "feel" in the markets is changing.
The good news for gold has added to the rising tide of optimism in the gold industry itself. Randal
Oliphant, Barrick Gold Corporation CEO, "sees a stronger gold price due to the nature of gold
deposits, strong supply-demand fundamentals" and the Washington Agreement among central
bankers to limit sales and leases, according to Bridge News report yesterday. He went on to say
that demand to borrow gold will likely remain at reduced levels. Ronald Cambre, Newmont
Mining chairman, echoed the same themes yesterday saying he was optimistic about prices adding
that "hedging has lost favor with investors." In what can only be described as a somewhat cryptic
comment that begs for elaboration, Goldfields CEO Chris Thompson was quoted in Bloomberg as
saying, "We do believe the industry does need to consolidate. The industry needs one or two
dominant players who can ensure that the gold price doesn't get managed by others (non-gold
companies). Our industry has a crying need for that. The climate is warming for us to do a deal."
In that we agree with Mr. Thompson that the gold price has been "managed" in the past, the
reference makes one wonder what Mr. Thompson has in mind. How would a mega-mining
company thwart the "managers?" I would say that given Mr. Thompson's solid pro-gold stance
both by word and deed, that if I had a vote on who would run that company, he would get it.
In gold news,Asia reports short covering overnight with good dealer support. There was selling in
the London market early on. The unemployment numbers came in at 30 year lows -- the sort of
thing that has rattled the stock market in the past. As we go to send this over to the server, stocks
are ignoring the unemployment numbers and gold is down a little. We'll see what happens as the
day progresses. This might not hold.
That's it for today, my friends. Have a good weekend. See you here Monday.
The May News & Views is now on its way and should be hitting your mail boxes over the next
few days. We think you are going to like this issue written during the weekend after the April 14
Wall Street Meltdown.
If you are looking for a pro-gold view of the various financial markets as well as a summary of the
events affecting the yellow metal, our monthly newsletter might be of interest. News & Views
-- Forecasts, Commentary & Analysis on the Economy and Precious Metals has
been characterized as witty, urbane, intelligent and down-to-earth. Not to mention it's Free of
Charge If you want to keep up with gold, this is the way a large segment of the gold owning
public does it, and has done it for over a decade.
Just click here on link above and make the appropriate entries.
USAGOLD
(05/05/00; 09:03:56MT - usagold.com msg#: 29983)
Today's Market Report: Gold Industry Optimism Prevails
<BLOCKQUOTE>
<P><TABLE WIDTH="458" HEIGHT="118" BORDER="1" CELLSPACING="2" CELLPADDING=
"0">
<TR>
<TD WIDTH="40%" HEIGHT="32"> <B><TT><FONT SIZE=-1>5/5/00 Indications</FONT></TT></B></TD>
<TD WIDTH="26%"> <B><TT>Current</TT></B></TD>
<TD WIDTH="34%"> <FONT SIZE=+1> </FONT><B><TT>Change</TT></B></TD></TR>
<TR>
<TD HEIGHT="17"> <B><TT><FONT SIZE=-1>Gold </FONT></TT></B><TT><FONT SIZE=-1>June Comex</FONT></TT></TD>
<TD> <TT>281.90</TT></TD>
<TD> <TT>+0.70</TT></TD></TR>
<TR>
<TD HEIGHT="17"> <B><TT><FONT SIZE=-1>Silver</FONT> </TT></B><TT><FONT SIZE=-1>July Comex</FONT></TT></TD>
<TD> <TT>5.13</TT></TD>
<TD> <TT>-0.04</TT></TD></TR>
<TR>
<TD HEIGHT="20"> <B><TT><FONT SIZE=-1>30 Yr TBond </FONT></TT></B><TT><FONT SIZE=-1>June
CBOT</FONT></TT></TD>
<TD> <TT>93~20</TT></TD>
<TD> <TT>-0~06</TT></TD></TR>
<TR>
<TD HEIGHT="17"> <B><TT><FONT SIZE=-1>Dollar Index </FONT></TT></B><TT><FONT SIZE=-1>June
NYBOT</FONT></TT></TD>
<TD> <TT>111.30</TT></TD>
<TD> <TT>-0.40</TT></TD></TR>
</TABLE>
<B><TT>Market Report </TT></B><TT>(5/5/00): Gold surged ahead this morning
on sound fundamentals, inflation fears, short covering and a sense that
the negatives on gold have become a known quantity and already discounted
in the price. In addition the gold market is beginning to benefit from
the growing sense among investors that the equity markets are possibly
running out of gas, and a prudent hedge is in order 'just in case.' We
can attest to the presence of this new group of investors by reporting
a surge in business over the last few days primarily from first time investors
who are telling us that the "feel" in the markets is changing.</TT></P>
<P><TT>The good news for gold has added to the rising tide of optimism
in the gold industry itself. Randal Oliphant, Barrick Gold Corporation
CEO, "sees a stronger gold price due to the nature of gold deposits,
strong supply-demand fundamentals" and the Washington Agreement among
central bankers to limit sales and leases, according to Bridge News report
yesterday. He went on to say that demand to borrow gold will likely remain
at reduced levels. Ronald Cambre, Newmont Mining chairman, echoed the same
themes yesterday saying he was optimistic about prices adding that "hedging
has lost favor with investors." In what can only be described as a
somewhat cryptic comment that begs for elaboration, Goldfields CEO Chris
Thompson was quoted in Bloomberg as saying, "We do believe the industry
does need to consolidate. The industry needs one or two dominant players
who can ensure that the gold price doesn't get managed by others (non-gold
companies). Our industry has a crying need for that. The climate is warming
for us to do a deal." In that we agree with Mr. Thompson that the
gold price has been "managed" in the past, the reference makes
one wonder what Mr. Thompson has in mind. How would a mega-mining company
thwart the "managers?" I would say that given Mr. Thompson's
solid pro-gold stance both by word and deed, that if I had a vote on who
would run that company, he would get it.</TT></P>
<P><TT>In gold news,Asia reports short covering overnight with good dealer
support. There was selling in the London market early on. The unemployment
numbers came in at 30 year lows -- the sort of thing that has rattled the
stock market in the past. As we go to send this over to the server, stocks
are ignoring the unemployment numbers and gold is down a little. We'll
see what happens as the day progresses. This might not hold. </TT></P>
<P><TT>That's it for today, my friends. Have a good weekend. See you here
Monday.</TT></P>
<P><TT>The May <I>News & Views</I> is now on its way and should be
hitting your mail boxes over the next few days. We think you are going
to like this issue written during the weekend after the April 14 Wall Street
Meltdown.</TT></P>
<P><TT>If you are looking for a pro-gold view of the various financial
markets as well as a summary of the events affecting the yellow metal,
our monthly newsletter might be of interest. <B><I>News & Views</I></B>
-- <B><I>Forecasts, Commentary & Analysis on the Economy and Precious
Metals</I></B> has been characterized as witty, urbane, intelligent and
down-to-earth. Not to mention it's <B>Free of Charge</B> If you want to
keep up with gold, this is the way a large segment of the gold owning public
does it, and has done it for over a decade.</TT></P>
<P><TT>Just click here ---> <B><FONT SIZE=-1><A HREF="http://www.usagold.com/Order_Form.html"
TARGET="external">ORDER FORM</A> </FONT></B><--- and make the appropriate
entries.</TT></P>
<P><TT>For an on-going discussion on the gold market and the investment
universe that revolves around it, we invite you to visit our very popular
and highly visited <B><FONT SIZE=-1><A HREF="http://www.usagold.com/cpmforum/"
TARGET="external">DISCUSSION FORUM.</A></FONT></B></TT></P>
</BLOCKQUOTE>
<DL>
<DT><HR ALIGN=LEFT>
<DL>
<DT><B>PLEASE REMEMBER: It is your purchase of gold from Centennial Precious
Metals that nourishes these pages.</B>
</DL>
<DT><HR ALIGN=LEFT>
</DL>
</TD></TR>
</TABLE>
</P>
<P><HR ALIGN=LEFT></P>
<P ALIGN=CENTER><TABLE WIDTH="100%" BORDER="0" CELLSPACING="0" CELLPADDING=
"2">
WilloTheWarthog
(05/05/00; 08:46:11MT - usagold.com msg#: 29982)
The Day the NASDAQ DIed
I hope nobody minds this humor too much...
THE DAY THE NASDAQ DIED
(Thanks to Mark Stern)
(to the tune of American Pie)
A long, long week ago
I can still remember
how the market used to make me smile
What I'd do when I had the chance
Is get myself a cash advance
And add another tech stock to the pile.
But Alan Greenspan made me shiver
With every speech that he delivered
Bad news on the rate front
Still I'd take one more punt
I can't remember if I cried
When I heard about the CPI
I lost my fortune and my pride
The day the NASDAQ died
So bye-bye to my piece of the pie
Now I'm gettin' calls for margin
'Cause my cash account's dry
It's just two weeks
from a new all-time high
And now we're right back
where we were in July
We're right back where we were in July
Did you buy stocks you never heard of?
QCOM at 150 or above?
'Cos George Gilder told you so
Now do you believe in Home Depot?
Can Wal-Mart save your portfolio?
And can you teach me what's a P/E ratio?
Well, I know that you were leveraged too
So you can't just take a long-term view
Your broker shut you down
No more margin could be found
I never worried on the whole way up
Buying dot coms
from the back of a pickup truck
But Friday I ran out of luck
It was the day the NAAAASDAQ died....
Cavan Man
(05/05/00; 08:42:02MT - usagold.com msg#: 29981)
The Stranger
Regarding the financial news this morning, how can the averages rise at all? At the moment the DOW and NDQ are both up. I don't get it. Many thanks...CM
YGM
(05/05/00; 08:35:26MT - usagold.com msg#: 29980)
Repost & Comments......
london telegraph.com
Single Currency
Euro Continues to Crash
Trichet will save the euro like he did Credit Lyonnais!
THE euro crashed to new lows against the pound and the dollar yesterday, deepening the crisis of confidence in the single currency. This prompted fresh warnings that the high level of sterling was crippling British industry, but Tony Blair ruled out intervention to reduce its value.
At the close in London, the euro was valued at 57.08p, down from 58.12p overnight and a launch value of 71p. It closed at 89.18 cents against the dollar, down from 90.77 cents overnight and a launch value of $1.20. It was the first time the euro had fallen below 90 cents, an important benchmark for the currency, since its launch last year.
While the continuing fall means that British holidaymakers on the Continent will get more foreign money for their pound, the price of British exports has risen by 20 per cent in euroland. If, as expected, the Bank of England's Monetary Policy Committee raises interest rates today by a quarter point to 6.25 per cent, the pound could rise still higher against the euro.
Investors who fell for the hype surrounding the euro's launch want to cut their losses. Paul Meggyesi, of Deutsche Bank in London, said: "It has been a one-way trend for an awfully long time and investors have now decided to throw in the towel."
The fall in the euro has wrong-footed Gordon Brown, the Chancellor, who last May announced plans to sell more than half the country's reserves of gold and instructed the Bank of England to reinvest 40 per cent of the proceeds in euros. Mr Brown described the controversial plan as a sensible move aimed at diversifying the reserves.
However, the euro's weakness has led to a direct loss of £34 million. Despite some offsetting gains on dollars and yen, the overall loss is still £26 million.
Yesterday's collapse in the euro sent the pound to 14-year highs against the mark and the franc. It closed at Dm3.43 and at Ff11.49. Michael Heseltine called for Government action to prevent manufacturing industry being wiped out by the strength of sterling.
The former deputy prime minister, who announced last week that he would be standing down as a Tory MP, urged Mr Blair to put an end to the uncertainty over the Government's intentions on the single currency. He claimed that industry was facing "carnage" as a result of the current strength of sterling against the euro.
At a press conference organised by the Britain in Europe campaign, he said Mr Blair could stem the rise in the pound by making clear that it was the Government's intention to join the euro - and at a lower exchange rate rather than sterling's present "unrealistically" high value. Failure to act could bring problems similar to those threatening companies such as Rover at Longbridge and Ford at Dagenham. But Mr Blair told MPs at Question Time that "the worst thing we could do" would be to try to devalue sterling artificially.
The renewed slide in the euro coincided with the European Commission decision to recommend Greece for membership of the eurozone from Jan 1 next year. The announcement was greeted frostily by the European Central Bank, which said that Greece needed to do more to reduce its debts and bring inflation under control.
The prospect of Greek membership had little direct impact on sentiment, but analysts said that it would create a new source of tension within the eurozone. They noted that European economists were already trading accusations about which government was to blame for the euro's dismal performance.
The latest downward lurch in the euro follows news at the end of last week that Jean-Claude Trichet, the governor of the Bank of France, is to be investigated for his role in the scandal surrounding Credit Lyonnais, the French state-owned bank. M Trichet, 57, who sits on the board of the European Central Bank, was the French government candidate for president and has been lined up to succeed Wim Duisenberg when he steps down.
The Trichet affair has added to concerns about the ability of the Central Bank to manage the new currency. Analysts said that sentiment on the euro was now so negative that all news was seen as bad news. They also expressed dismay at the failure of politicians to recognise the seriousness of the problem.
Jim O'Neill, chief currency economist and a partner at Goldman Sachs, said: "Investors are fed up with all those preposterous statements about the euro having potential to appreciate in the long term. If they want people to believe their statements they should back them up with action."
* In a letter published in The Daily Telegraph today, 14 Tory Euro-MPs express concern at reports that Britain's biggest companies could be forced to list their shares in euros rather than sterling after the merger of the London and Frankfurt stock exchanges.
The London Telegraph
COMMENTS......
Jim O'Neill...Goldman partner wants EURO
to take action...won't he be happy if that action is to increase Gold Reserves...."Just what G Sachs needs is a run on Gold..."
Gordon Brown caught wrong-footed....."What an Understatement"........Sell British Gold at Fire sale prices and buy EUROS w/ 40% of the cash and thus far loose
L34 million......Not to mention what was lost by allowing Cabal to neutralize Gold before the sale.....Brits should be
looking for Brown floating in the MOORs......YGM.
TheStranger
(05/05/00; 08:31:50MT - usagold.com msg#: 29979)
MK and ThaiGold
MK - In spite of oil's recent drop of 25% or so (a big drop), the CRB index has hit new recovery highs this week. This makes a mockery of claims by disinflationists that "it is just oil". Further, despite heavy support from the Treasury in the form of buybacks, 30 year bonds have gone from 5.6% to 6.2% in about a month (a big rise). So, yes, as you say, the inflation story is unfolding at MRCI. Throw in the labor picture and we will continue to have wage and price behavior like we haven't seen for a very long time.
Thai - You are talking about people, most of whose wealth is tied up in shares. I doubt very many could cough up the margin necessary to short such large amounts of stock. There is, however, one silver lining for the bulls in the IPO equation, of late. That is, most pending IPOs have been cancelled because of the poor market environment. This, at least, greatly reduces the supply of new shares.
Thanks.
Holtzman
(05/05/00; 07:46:20MT - usagold.com msg#: 29978)
Statistics 2
http://www.forbes.com/forbes/98/0504/6109050chart1.htm
Holtzman here,
--------------
Statistics Reliable?
--------------
To ORO, who asked in (05/04/00; 16:11:34MT - usagold.com msg#: 29940), "How sure are you of the figures" Holtzman posted in Holtzman (05/04/00; 14:10:26MT - usagold.com msg#: 29935).
That's quite probably the biggest obstacle to divining this market. It's known precisely how many shares of Royal Dutch there have been at various stages in the past, but it's far more difficult to determine the same thing about above ground gold. The reason is soon clear: with a paper asset such as stock, one absolutely must publicly declare one's ownership in order to practically own the asset. By contrast, with a hard asset such as gold, one's ability to continue possessing it is materially endangered by publicly admitting how much one has where.
The base figures I used came from a number of different sources, presumed somewhat reliable but by no means independently verifiable.
The inflation-adjusted historical prices for gold came from Forbes. [at link given above]
The above ground total figures came variously from Reuters articles, World Gold Council's website, and any other place I stumbled across a comment of the form, "In the year 1XXX, the total amount of gold above ground was TTTTT." I regret to say that my only means of verification was to ask the question, "Does this figure fit the curve being developed by the other figures I've accumulated?"
Finally, the human population figures came from the United Nations.
Be assured, ORO, I enthusiastically welcome correction or confirmation of these figures, and I would even more eagerly welcome additional figures, verified or not, which would help us fill in the gaps.
We research this new gold market together... <grin>
Yours,
I.V. Holtzman
THC
(05/05/00; 07:21:32MT - usagold.com msg#: 29977)
RossL - Faith & Suprising Events
Yes, you are right......I have faith that even in the event the shorts cannot deliver metal, I will be paid in fiat currency.
One thing I really think is worth considering regarding this:
"Reports have it that physical palladium is being traded at higher prices than the paper price."
Take a look at the following:
http://www.futuresource.com/cgi-bin/prices?cl,2
Future contracts ("paper") for crude oil is selling "at a discount" to spot crude oil. Is that surprising? Does it mean that soon the world will no longer be able to use the futures markets for crude oil?
Backwardation is a recurring phenomenon, and does not necessarily mean the impending destruction of the marketplace.
Cheers,
THC
RossL
(5/5/2000; 6:55:55MT - usagold.com msg#: 29976)
Sir THC
The history of the world is filled with contracts and promises that have been defaulted on. I do not see why futures contracts would be an exception. The Wall Street establishment does not want to convey that impression, of course.
I believe the root of the discussion we are having is one of faith. Those of us who say that paper futures prices will be sold into the ground have lost faith in that method of price discovery. Apparently, you have not lost that faith!
The rumor that I was referring to was that Japanese buyers were buying physical palladium at prices higher than the TOCOM contract after it went into default.
THC
(5/5/2000; 6:42:07MT - usagold.com msg#: 29975)
RossL
Hi again!
"Reports have it that physical palladium is being traded at higher prices than the paper price."
As I noted before, there are many different paper prices (many different contracts), and since plat/palladium tend to be in deep backwardation, you must be careful in making such judgements.
Since one can require delivery of a Nymex Pd contract, I would guess that the price of futures contract on the day of expiry is VERY close to that of spot prices.
"From my observation point, I can see no reason why the price of a paper palladium contract can not be sold down to its intrinsic value, which is about $0.02 !!"
As long as a contract can be used to require delivery, this sounds implausible. Can you show a historical precedent for this?
RossL
(5/5/2000; 6:22:20MT - usagold.com msg#: 29974)
Sir THC
It seems that we are all in agreement except for semantics. Reports have it that physical palladium is being traded at higher prices than the paper price. From my observation point, I can see no reason why the price of a paper palladium contract can not be sold down to its intrinsic value, which is about $0.02 !!
THC
(5/5/2000; 6:08:49MT - usagold.com msg#: 29973)
RossL -- Tocom Pd
Good morning!
I wrote the following (end of this post) after the Pd squeeze, and it describes my overview of the events.
In more basic terms:
1. The longs held their contracts, and the shorts tried to buy to cancel their shorts.
2. This pushed the prices up to record HIGHS.
3. The high prices resulted in massive financial damage to the shorts (bancruptcy, suicide, etc.), who were trapped in their positions in a series of limit up days.
4. Then the exchange basically shut down the contract.
5. It still trades (perhaps with no more physical delivery). However, the volume is less than 1% of what it used to be. For all extensive purposes, the Tocom Pd has ceased to exist.
In summary:
*The price of paper went UP.
*Then paper stopped trading (although positions can be closed for cash).
I hope this helps,
THC
**************
Anyone for a commodity market SHORT SQUEEZE?
The recent default of the Tocom palladium market proved to all who were watching that:
1. It is completely possible to execute a squeeze of a commodity market when warehouse stocks are not sufficient to allow shorts to deliver.
2. A successful squeeze can be highly profitable.
****How was it done?
While I have no proof whatsoever, I think it is likely that Engelhard (or whoever was behind their buying – Tiger Fund?) played a major role in the squeeze.
Last year I began charting the relationship between Engelhard's plat/palladium positions and the prices of these commodities, but unfortunately my computer ate the file.
In any case, I observed that Engelhard slowly built up a huge long palladium position by slowly buying in most of the contract months. If I remember correctly, their position reached about 5000 contracts, ALL long.
After they established their position, I imagine that they just let it role through to expiry. The shorts tried to bid the price up to escape, but the longs held on………with no escape from the short position and no metal to deliver, TOCOM decided to shut down the market.
It is interesting to note that a foreign institution had the long position……it could be inferred that TOCOM intervened to protect the local (Japanese) shorts.
****How much did they profit?
While one can only guess, I observed that they owned 5000 long contract when the price was around 1050 yen/gram. If we assume they closed most of it at 2000 yen/gram or higher (price frozen by Tocom at 2300 – 2400 yen):
5000 x 1500g x 1000 yen (profit margin) = 7.5B yen = $68,000,000
Not bad at all!!!
Now, the next topic I would like to consider is, will this happen again? Based on the warehouse stocks in Japan/US, the plat and palladium markets are extremely vulnerable to another squeeze.
TOCOM Warehouse Stocks:
Plat = 500g x 818 = 409,000g = 12,781 oz.
Palladium = 3000g x 247 = 741,000g = 23,156 oz
Nymex Warehouse Stocks:
Plat = 50 oz x 540 = 27,000 oz
Palladium = 100 x 283 = 28,300 oz
This is obviously a very small amount of metal. For a large organization, it would be easy to take out a big futures position, and let it roll to expiry.
The only risk would be "sudden" deliveries from Russia. But what if Russia is involved with the squeeze directly or indirectly? Then these markets are theirs for the taking.
Shall we organize a squeeze? 500 investors willing to each take delivery of one contract of platinum could take out ALL of the Nymex platinum stockpile.
Fun, fun, fun……….
The above is all based on my memory of recent events and rough calculations. If there are any inaccuracies, please feel free to point them out (but no flaming, please!).
Thanks,
THC
THC
(5/5/2000; 6:00:18MT - usagold.com msg#: 29972)
Towncrier
I would like to emphasize that I greatly enjoy the posts by yourself, Trail Guide, and Oro, as well as everyone else here at USAGOLD.
I respect the forum and everyone here, but I think it is important for participants to express "doubts" when they arise, and to hopefully reach deeper understanding through discussion and debate.
Naturally, it is quite possible that my doubts are purely due to my own misunderstandings..........
Wishing all a Golden Day,
THC
RossL
(5/5/2000; 5:48:53MT - usagold.com msg#: 29971)
Sir THC
Since you are knowledgable about the TOCOM, could you please clarify what happened with the TOCOM April Palladium contract? According to reports that I read, the following events occured.
First, there is a supply deficit and prices increase. Then a short squeeze occured as delivery time neared, and prices rise again. Then TOCOM allowed shorters to default on delivery obligations. The paper contract prices declined as positions were liquidated, meanwhile no palladium was delivered.
In your opinion, is this what happened?
Why would anyone continue trading a futures contract that didn't require delivery to keep traders "honest"?
According to the scenario reported above, yes, "paper is being sold into the ground".
THC
(5/5/2000; 5:31:38MT - usagold.com msg#: 29970)
Towncrier -- Back to Basics
Thank you for the considerate and detailed response. I appreciate your taking the time to discuss this issue with me.
I guess you could say that we do agree on some points, and at the same time on other points we see things differently. And that is fine!
But, I would like to maintain my focus, so I will return to my original concern.
I believe that FOA has spoken from time to time of "paper being sold into the ground" while "physical gold sells at much higher prices away from the futures markets." I would content that as long as futures markets are connected to physical markets through the physical delivery rules, this would seem to be highly implausible. The reason is that this would be highly "arbitragable". One could buy a cheap futures contract, take delivery, and sell into the expensive physical market. This would bring the prices of the 2 markets together (and this is what keeps futures markets tied to physical markets).
Recently, Oro cited Pd/Pt in Japan as examples of "paper being sold into the ground," and I also found this difficult to understand. As far as I can tell, the lack of physical metal has resulted in an extremely strong platinum futures market, and a squeeze in Pd. Neither of these scenarios seems to qualify as "paper being sold into the ground."
Thanks again,
THC
ThaiGold
(5/5/2000; 1:10:42MT - usagold.com msg#: 29969)
Albania Gold Heist
Attn: TownCrier (05/04/00; 23:28:30MT - usagold.com msg#: 29968)
....
...
..
TownCrier:
That's astounding.!. $2.8 million in Gold coins.
Vanished into the night. Poof.!.
When will you have it available for us.?.
<wink>
ThaiGold
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