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ARCHIVED DISCUSSION FROM 7/6/2002
All times are U.S. Mountain Time
(Yesterday's Discussion.)
Max Rabbitz
(07/06/02; 22:43:19MT - usagold.com msg#: 80016)
Rich
Thanks, I'll take a look. I appreciate Noland so much because he took the time to clearly explain things like collaterized debt obligations and structured finance. It seems to me like modern finance is a very creative attempt to hide risk with paper creations. Currently I tend towards the belief that the Fed will end up monitizing all the bad loans. We shall have the hyper inflation?
Tomorrow I attempt to install a hardwood kitchen floor. Pray for me.
R Powell
(07/06/02; 22:29:08MT - usagold.com msg#: 80015)
Correction
I think the 1,000 ounce silver bars will do nicely for the walls and outbuildings but I'll use the 100 ounce bars for the walkways. They'll be easier to work with and will look better too.
"I say I don't know but I've been told.
The streets in heaven are paved with gold."
But the sidewalks are made from silver bars, just a little smaller than a regular sized brick.
I guess I'd better get some sleep.
Goodnight good people.
Rich
R Powell
(07/06/02; 22:17:04MT - usagold.com msg#: 80014)
Max Rabbitz
http://csf.colorado.edu/longwaves/
Max, if you like Doug's Noland, you might like some of the stuff at longwaves.
Chapman has some thoughts on debt economy collapse too. Basically, can the Fed make money fast enough and convince banks to lend and borrowers to borrow to keep the system going? The Greenman has to keep this train running at full throttle. It will derail at any slower speed.
I hope the link works!
Rich
sector
(07/06/02; 21:56:16MT - usagold.com msg#: 80013)
And...Max...The Best Part is "They" Don't Know you have it
Nor can "They" ever tax your "Capital Gains"
I prefer to to think of profitable physical gold sales as local currency losses so one ought to be able to book the metallic "Gain" AND write off the currency "Loss".
R Powell
(07/06/02; 21:56:13MT - usagold.com msg#: 80012)
Black Blade
Yes, Asarco is part of the Grupo Mexico company. I would think but don't know for sure that, as such, Grupo Mexico would have no problem paying off $6.3 million or, at least, renegotiating the loan.
I've wondered for a long time about metal loans and whether they are normally simply rolled over when due. Maybe the interest rate changes a little but rolled over just the same. Wasn't the original sales pitch made to central banks to induce lending - interest on metal that otherwise wasn't producing any profit- so why not, from the bankster's point of view, roll over the loan for continued interest. This assumes that they aren't worried about eventually getting physical back. Bankers think interest, not default on capital. They are unaware or don't believe anything that would make them think otherwise concerning repayment. They're probably happy to collect interest on leased metal until kingdom come and a few years beyond if they could without ever recapturing the "principle". They won't let me pay off my mortgage without constantly telling me that the house should be mortgaged!
I've heard that interest on metal loans must be paid in metal. I've never seen this confirmed and, last year, asked David Morgan about this. He said he had never seen any lease forms for metals and thus did not know.
I do believe that silver supply will get tight soon and even 1.5 million ounces will be a significant amount. In 1000 bars, I could create some nice landscaping designs- walls and walkways and small outbuildings with 1.5 million ounces. I guess I'd have to hire a guard. No, I'd watch it myself while selling tickets to visitors!
Any more lease info?
Rich
Max Rabbitz
(07/06/02; 21:40:52MT - usagold.com msg#: 80011)
Sector's Real Estate
http://www.prudentbear.com/archive_comm_article.asp?category=Credit+Bubble+Bulletin&content_idx=13186
Yes Sector, Someone at this site turned me on to Doug Noland 48 weeks ago. What an education. You can't buy this at any University I know of. It's like seeing a train wreck in slow motion before reading about it in some dusty old history book modified for political correctness.
Also, Gold is the best kind of real estate. You don't have to pay taxes while waiting and it's transportable. What a deal for times like these.
Black Blade
(07/06/02; 21:38:39MT - usagold.com msg#: 80010)
Mexico The World's Largest Silver Producer
Mexico is the largest silver producer in the world. Production comes from several primary silver mines, with silver also being produced as a by-product of base metal and gold operations. Silver production totaled 89 Moz in 2000. Mexico contributes approximately 17% of the world's total annual output. Four states were responsible for 74% of the country's silver output, listed in decreasing order of output: Zacatecas, Chihuahua, Durango, and Guanajuato. The largest producing company, Industrias Pe--oles, that contributes approximately 40% of the Mexican total. More than half of the company's output is derived from the Proa--o operation near Fresnillo in the Zacatecas State. Penoles' other major mines include the Las Torres mine in Guanajuato and the Naica lead zinc mine in Chihuahua.
- Black Blade
Black Blade
(07/06/02; 21:15:02MT - usagold.com msg#: 80009)
Re: R. Powell
BTW, wasn't Asarco acquired in October 1999 by Grupo Mexico SA? I don't think that Asarco exists as a company anymore. Grupo Mexico is the world's third largest copper producer, fourth largest silver producer and fifth largest producer of zinc and molybdenum. Grupo Mexico is the leading by-product producer, with a total output of approximately 700t each year, mainly from its Santa Barbara and San Francisco del Oro lead zinc operations in Chihuahua and Charcas in San Luis Potosi. Other major producers were Grupo Frisco, that produces 200t each year from its Real de Angeles lead zinc mine. The Real de Angeles mine is to supposedly cease operation. Still, it is quite strange that such a large producer cannot meet its obligation on such a small debt. Cheers!
- Black Blade
steady
(07/06/02; 21:02:51MT - usagold.com msg#: 80008)
how the fed reserve uses sdrs. and are more on the way?
http://www.gold-eagle.com/editorials_01/walker110901.html
SDR Allocations and the Gold Price
After writing Bombshell from the IMF, I decided to take an in-depth look at the introduction of the Special Drawing Right (SDR) and see if there was an effect on the gold price.
First, an SDR is a reserve asset that is issued by the International Monetary Fund (IMF). Gold is also a reserve asset that is found on the balance sheet of a central bank.
My theory was that if there is X amount of gold on the balance sheet and a new asset is created that is designed to be a reserve asset, then the SDR would be filling a slot that would normally be held by gold.
Using that basis of thought, one would expect a decline in the gold price as the SDR was introduced. To date there have been two allocations of SDR's. The first period shows a link to a gold price decline, the second does not. The current period of the third allocation indeed does show a relationship with the decline in the gold price.
It is important to note that the third SDR allocation is not formally approved and awaits the vote of the United States to approve the Fourth Amendment to the IMF's Articles of Agreement.
Black Blade
(07/06/02; 20:55:18MT - usagold.com msg#: 80007)
Re: R. Powell
A couple of years ago Dakota Mining went tits up and left the Bank of NY on the hook for a few $million of forwards. Pegasus Gold also went tits up and the financiers took over the company in bankruptcy. The company changed its name to Apollo Gold and recovered their investment (though I am unsure if this necessarily involved forwards). The bankers recovered their investment by operating the mine no less. We nearly saw similar events with Ashanti, Cambior, and Emperor Mines. They are still around (though perhaps on borrowed time). Cambior is just a shell of their former selves after divesting themselves of some mining operations and Ashanti just threatened nationalization unless given acceptable terms. They are all buried deep under crushing debt and still may not survive (especially if the POG continues to rise).
- Black Blade
Black Blade
(07/06/02; 20:45:40MT - usagold.com msg#: 80006)
Trading on former glories
http://www.timesonline.co.uk/article/0,,630-347963,00.html
London's declining role in world trade
Snippit:
SINCE the days of the coffee houses of old, London has played a pivotal role in setting the price of world commodities. The traditions live on, influencing events thousands of miles away, from goldmines in New Guinea to bulk carriers rounding the Cape of Good Hope.
Famously, the London gold fixings take place twice daily, at 10.30am and 3pm, at the offices of NM Rothschild on St Swithin's Lane. The ceremony, which involves five men lowering tiny Union Jacks, has been enacted here since September 1919 when it began as a way of marketing South African gold.
Each fixing takes about ten minutes. The chairman suggests an opening price, which is relayed by the others to dealing rooms by telephone. He then asks who wants to buy or sell 400-ounce gold bars. The gold price increases or declines accordingly. When the business is done, the flags are lowered and the price is fixed.
Black Blade: Increasingly London is becoming irrelevant. Trade will likely go online 24/7.
R Powell
(07/06/02; 20:36:52MT - usagold.com msg#: 80005)
Lease default
The New York branch of Deutsche Bank stated that Asarco has defaulted on a lease of 1.5 million ounces of silver. The lease was extended at least once (last Dec.) and due recently but payment was not made.
I don't know if repayment in metal form was demanded or not. The monetary value is $6.3 million and the silver was used for hedging.
Did the company hedge more than it could mine? This seems unlikely given that the lease was extended once giving the company more time to mine. Did the company sell leased metal thinking it could buy back at a lower price and get burned with a higher POS? It would not appear so as $6.3 divided by 1.5 = $4.20/ounce. This could have been bought back at that price and even lower during this year. The lease extention was granted last December. Did the company lease and sell silver to raise working capital which is now gone with not enough monetary mining profit or metal to repay the loan? Would you move your family out of your home if you couldn't pay the monthly mortgage or would you pay the mortgage with a credit card? Perhaps a low interest (for six months) loan. Perhaps this company prolonged its life, hoping for better times (higher prices for its product) which never materialized?
Perhaps Mr. Blade, who is very knowledgeable about the mining industry, will comment. Anyone else? Is this the first of many metal leases defaults?
Rich
Black Blade
(07/06/02; 20:11:00MT - usagold.com msg#: 80004)
Crash Test
http://www.msnbc.com/news/776029.asp
As markets dip to their lowest level in years, some wonder whether the crisis in corporate confidence could trigger a far more serious downturn
Snippit:
THIS WEEK, on Tuesday, the Dow broke through the psychologically significant 9,000 mark during the session. And the Standard & Poor 500 index (which contains financially troubled Tyco International) followed in step, falling to a four-year low. "What we're seeing is individuals throwing up their hands and saying, it's just one thing after another." global investment strategist for J.P. Morgan Fleming Asset Management "It's all about confidence and faith in corporate profits," says Stuart A. Schweitzer, global investment strategist for J.P. Morgan Fleming Asset Management. "What we're seeing is individuals throwing up their hands and saying, it's just one thing after another." Could the growing crisis of confidence trigger another market crash?
Black Blade: A somewhat overly optimistic article in my opinion, however, at least the author admits that investors are fed up with corporate malfeasance and corrupt/inept boards of directors who act in concert with criminal auditors like Arthur Andersen. With a "Scandal a Day", it's a tough call for anyone calling an end to this "Bear Market".
Black Blade
(07/06/02; 19:12:59MT - usagold.com msg#: 80003)
Gas drillers tap coal beds
http://www.usatoday.com/money/energy/2002-07-05-methane.htm
Snippit:
The thousands of wells that now dot the basin produce about 1.5% of all U.S. natural gas, and if ambitious plans of Williams and other energy companies go through, coal-bed methane in the Powder River Basin could supply almost 10% of U.S. production, a potentially crucial boost for a nation that uses more and more of the clean-burning fuel but is finding less and less from conventional wells.
A report by the federal Energy Information Administration on the potential for gas production here and elsewhere in the Rocky Mountain region refers to the area as a possible "Persian Gulf for natural gas," noting its resources "are more than adequate to meet the expected increase in (U.S.) demand." Companies had produced coal-bed methane from gas-rich coal seams in Alabama and Colorado for years before production caught on here. As late as the mid-1990s, most production companies thought the Powder River Basin held little promise for coal-bed gas production, noting that the gas content of the water here was not as rich as other areas and guessing the little gas that bubbled up from coal de-watering wells was a localized phenomenon.
But the coalfields here are immense. From a small plane a few thousand feet up, the open-pit mines between Casper and Gillette are stunning for their sheer size, studded with enormous mechanical shovels and mammoth dump trucks, and attended by busy coal-hauling trains that seem to stretch forever across the high plains. As producers drilled more and more successful wells to tap coal-bed methane, they realized they'd stumbled on a rare "elephant" a gas field of the size rarely found anymore outside the Gulf of Mexico or Alaska's North Slope. "It took enough people pumping long enough to convince themselves it wasn't just a local play around the gas mines," Zavadil says. The land boom that ensued saw companies snap up 95% of the available land in mineral leases.
Black Blade: The Powder River Basin is a potential energy target of nearly 24 Trillion cubic feet of methane. It is the largest potential source of methane energy in the lower 48 states. Its development is absolutely necessary if the US economy is to have a prayer of survival. Without energy the US economy is toast and this source of energy is a rare untapped resource. Regardless, the world is fast approaching peak energy development couple with rising economic development and growing population and will soon enter a period of permanent energy crisis. We live in "Interesting Times".
misetich
(07/06/02; 16:56:53MT - usagold.com msg#: 80002)
Say A Prayer, He Won't Be The Pretender
http://www.pimco.com/bonds_commentary_fed_focus_0702.htm
Snip
That essay remains the favorite thing I've ever written, and its conclusion remains as true today as it was eighteen months ago:
"Both Wall Street and Main Street are currently exploding bubbles, and the explosion will self-feed, not self-correct, until (1) the Fed eases massively, and/or (2) the federal government proactively reduces the budget surplus.
Debt deflation is the beast of burden that capitalism cannot bear alone. It ain't rich enough, it ain't tough enough. Capitalism's prosperity is hostage to the hope that policy makers are not simply too blind to see."
...............
Deflation is indeed the beast of burden that private enterprise cannot bear alone, because the private sector does not own a press that prints money. Only "we the people" can address deflation risk, by demanding that our government lever its balance sheet to support nominal aggregate demand, underwritten by liberal use of the Fed's power to print money. Yes, that's the essence of Keynesian macroeconomics: attack private sector deflation with public sector reflation. And policy makers owe nobody any apology for doing so, as it is capitalism's own excesses and hubris that create deflation risk. When capitalism's stuff is hitting the oscillator, it is democracy's duty to unplug it.2
Mr. Greenspan is trying with a 13/4% Fed funds rate, and fiscal authorities are trying with budget deficits of some 2% of nominal GDP. Will it be enough? A few months ago, I thought so, and said so.3 But I'm also mindful of Keynes' dictum that when a man gets new information, he should be willing to change his mind. And recent months have revealed new information: many, far too many, balance sheets in Corporate America are not just infected with illiquidity, but are reeking with the gangrene of default risk.
The evolving "crisis" in Corporate America is not just about a few crooks in the executive suite, but rather too much debt relative to a "balance of risks" tilted towards deflation (the FOMC may say that the "balance of risks" is balanced between deflation and inflation risks, but from a policy perspective, that is poppycock, per the Volcker Doctrine; and Greenspan knows it).
................
Minsky passed away in 1996, as corporate financing patterns of the New Age Economy were following precisely his script, moving progressively toward Ponzi Finance Units. And at the end of the decade, the Fed did indeed declare the economy to be in an inflationary state (even if it wasn't) and sought to exorcise the (irrelevantly low) inflation with monetary constraint (I like how Minksy called it "constraint," rather than "restraint"
a more fulsome word!).
And sure enough, Ponzi Finance Units have been evaporating ever since, with ever more putative Speculative Finance Units being exposed as Ponzi Finance Units in drag. These developments are, as Minsky declared, a prescription for an "unstable system" - to wit, a system in which the purging of capitalist excesses is not a self-correcting therapeutic process, but a self-feeding contagion: debt deflation. Eighteen months ago, I dubbed the outlook to be a Minksy Moment.
It still is. I don't, however, think we've reached a "tipping point" into a Minsky Meltdown in the United States. But we're far closer to the point than I thought we would get eighteen months ago, or even three months ago. What frightens me most is the herd notion "in play" right now that all Speculative Finance Units must strive to rehabilitate themselves into Hedge Finance Units; to wit, that the only truly "money good" credit is a borrower that can both service and amortize its debt with cash flow from its operations. This is the emerging, and frightening paradox of our times: for a company to prove that it is a going concern, it must prove that it could liquidate itself.
.............
Bottom Line
It is time for Mr. Greenspan to order banks to expand their "liquidity" lending, and cease contracting it: good loans are made in bad times, and the time has come to make them! And as part of the "deal," it is time for Mr. Greenspan to commit actively to pursue higher inflation, by declaring the "doctrine" of pre-emptive tightening to be dead: short rates will not be raised to prevent rising inflation, but only raised once inflation is rising.
Capitalism's beast of burden won't go away until the Fed is willing to slay it. It's time for Mr. Greenspan to use all his armaments. Unless he does, he will ride into the sunset himself as the Pretender, who started out so young and strong against inflation, only to surrender to debt deflation.
Misetich:
Debt deflation - we live in "interesting times"
Got gold?
Chris Powell
(07/06/02; 16:47:21MT - usagold.com msg#: 80001)
An exchange about the commodities exchange, and the "sport of kings"
http://groups.yahoo.com/group/gata/message/1172
An exchange about the commodities exchange
and the "sport of kings."
http://groups.yahoo.com/group/gata/message/1172
To subscribe to GATA's dispatches
by email and get them immediately so
you don't have to go look for them,
send an email to:
gata-subscribe@yahoogroups.com
misetich
(07/06/02; 16:43:48MT - usagold.com msg#: 80000)
Clint H
Krugman editorial was posted not for its political message (if any) - but more importantly as it relates to Corporate accounting frauds and the alleged "outraged" Bush - and SEC's Harvey Pitt and his predecessor Arthur Levitt inaction
which has/is causing financial distress within the US borders and worldwide.
Here's an excerpt of ANOTHER column by Krugman (NY Times, June 28, 2002)
Finally, there's the WorldCom strategy. Here you don't create imaginary sales; you make real costs disappear, by pretending that operating expenses cream, sugar, chocolate syrup are part of the purchase price of a new refrigerator. So your unprofitable business seems, on paper, to be a highly profitable business that borrows money only to finance its purchases of new equipment. And you can sell shares at inflated prices.
Oh, I almost forgot: How do you enrich yourself personally? The easiest way is to give yourself lots of stock options, so that you benefit from those inflated prices. But you can also use Enron-style special-purpose entities, Adelphia-style personal loans and so on to add to the windfall. It's good to be C.E.O.
There are a couple of ominous things about this menu of mischief. First is that each of the major business scandals to emerge so far involved a different scam. So there's no comfort in saying that few other companies could have employed the same tricks used by Enron or WorldCom surely other companies found other tricks. Second, the scams shouldn't have been all that hard to spot. For example, WorldCom now says that 40 percent of its investment last year was bogus, that it was really operating expenses. How could the people who should have been alert to the possibility of corporate fraud auditors, banks and government regulators miss something that big? The answer, of course, is that they either didn't want to see it or were prevented from doing something about it.
I'm not saying that all U.S. corporations are corrupt. But it's clear that executives who want to be corrupt have faced few obstacles. Auditors weren't interested in giving a hard time to companies that gave them lots of consulting income; bank executives weren't interested in giving a hard time to companies that, as we've learned in the Enron case, let them in on some of those lucrative side deals. And elected officials, kept compliant by campaign contributions and other inducements, kept the regulators from doing their job starving their agencies for funds, creating regulatory "black holes" in which shady practices could flourish.
(Even while loudly denouncing WorldCom, George W. Bush is trying to appoint the man who drafted the infamous "Enron exemption" a law custom-designed to protect the company from scrutiny to a top position with a key regulatory agency. And some congressmen seem more interested in clamping down on New York's attorney general, Eliot Spitzer, than in doing something about the corruption he has been investigating.)
Meanwhile the revelations keep coming. Six months ago, in a widely denounced column, I suggested that in the end the Enron scandal would mark a bigger turning point for America's perception of itself than Sept. 11 did. Does that sound so implausible today?
Misetich
As revelations and frauds are exposed, .....
Got gold?
Clint H
(07/06/02; 16:21:33MT - usagold.com msg#: 79999)
misetich (msg#: 79997)
misetich
<<Everyone Is Outraged -
Don't know whether or not Krugman is a democrat or a republican- but he makes his point - can't trust politicians>>
Krugman makes HIS point. Not necessarily fair or balanced. This deserves a counter point but this forum is not the place.
sector
(07/06/02; 16:05:47MT - usagold.com msg#: 79998)
C'Mon Woodie
Physical is Physical
Don't imagine that you should trade it as if it were some dot-bomb paper.
One must always think of gold as prime undeveloped real estate the one smart players do with real estate is to WAIT.
Wait for the US financial house of cards to ...well...fall down.
The above link to Doug Nolan's latest ought to be enough to convince anyone of the prudence of holding gold...in a sock drawer if necessary...or in plain sight.
Visitor probably have never seen the stuff before.
misetich
(07/06/02; 15:46:19MT - usagold.com msg#: 79997)
Everyone Is Outraged - Are they genuine?
http://www.nytimes.com/2002/07/02/opinion/02KRUG.html
Snip:
Arthur Levitt, Bill Clinton's choice to head the Securities and Exchange Commission, crusaded for better policing of corporate accounting though he was often stymied by the power of lobbyists. George W. Bush replaced him with Harvey Pitt, who promised a "kinder and gentler" S.E.C. Even after Enron, the Bush administration steadfastly opposed any significant accounting reforms. For example, it rejected calls from the likes of Warren Buffett to require deduction of the cost of executive stock options from reported profits.
But Mr. Bush and Mr. Pitt say they are outraged about WorldCom.
Representative Michael Oxley, the Republican chairman of the House Financial Services Committee, played a key role in passing a 1995 law (over Mr. Clinton's veto) that, by blocking investor lawsuits, may have opened the door for a wave of corporate crime. More recently, when Merrill Lynch admitted having pushed stocks that its analysts privately considered worthless, Mr. Oxley was furious not because the company had misled investors, but because it had agreed to pay a fine, possibly setting a precedent. But he also says he is outraged about WorldCom.
Might this sudden outbreak of moral clarity have something to do with polls showing mounting public dismay over crooked corporations?
Still, even a poll-induced epiphany is welcome. But it probably isn't genuine. As the Web site dailyenron.com put it, last week "the foxes assured Americans that they are hot on the trail of those missing chickens."
.............
Now to the story of Harken Energy, as reported in The Wall Street Journal on March 4. In 1989 Mr. Bush was on the board of directors and audit committee of Harken. He acquired that position, along with a lot of company stock, when Harken paid $2 million for Spectrum 7, a tiny, money-losing energy company with large debts of which Mr. Bush was C.E.O. Explaining what it was buying, Harken's founder said, "His name was George Bush."
Unfortunately, Harken was also losing money hand over fist. But in 1989 the company managed to hide most of those losses with the profits it reported from selling a subsidiary, Aloha Petroleum, at a high price. Who bought Aloha? A group of Harken insiders, who got most of the money for the purchase by borrowing from Harken itself. Eventually the Securities and Exchange Commission ruled that this was a phony transaction, and forced the company to restate its 1989 earnings.
But long before that ruling though only a few weeks before bad news that could not be concealed caused Harken's shares to tumble Mr. Bush sold off two-thirds of his stake, for $848,000. Just for the record, that's about four times bigger than the sale that has Martha Stewart in hot water. Oddly, though the law requires prompt disclosure of insider sales, he neglected to inform the S.E.C. about this transaction until 34 weeks had passed. An internal S.E.C. memorandum concluded that he had broken the law, but no charges were filed. This, everyone insists, had nothing to do with the fact that his father was president.
Given this history and an equally interesting history involving Dick Cheney's tenure as C.E.O. of Halliburton you could say that this administration is uniquely well qualified to chase after corporate evildoers. After all, Mr. Bush and Mr. Cheney have firsthand experience of the subject.
And if some cynic should suggest that Mr. Bush's new anger over corporate fraud is less than sincere, I know how his spokesmen will react. They'll be outraged.
By PAUL KRUGMAN - NY Times (registration req'd)
Misetich
Don't know whether or not Krugman is a democrat or a republican- but he makes his point - can't trust politicians
- you got to love that line -
"the foxes assured Americans that they are hot on the trail of those missing chickens."
Got gold?
misetich
(07/06/02; 15:37:08MT - usagold.com msg#: 79996)
Japan in denial - Japan Battles Bond Rating
http://www.nytimes.com/2002/07/06/business/worldbusiness/06DEBT.html
Snip:
Japan's total debt to G.D.P. is expected to hit 157 percent at the end of this year, according to the International Monetary Fund almost triple the level of a decade ago, and triple the American level. That is the highest any major industrialized country has faced in about 50 years.
Japan's stock of government bonds has risen 15 to 20 percent a year lately, to the equivalent of $4,000 for each Japanese citizen last year. Although few people doubt the willingness of Japan to pay its debt, many say the burden is only worsening Japan's economic problems.
Although Japan's government plans to increase bond issuance by only 1.5 percent this year, to about $1.1 trillion, this figure may come under pressure if tax receipts continue to fall. On Thursday, the Finance Ministry reported that because of an economic contraction, Japan's tax revenues last year were 5.5 percent below projections.
Over the last decade, the economy has stagnated. After shrinking by 1.3 percent last year, Japan's economy is expected to tread water this year. At the same time, the average age has crept up to 41, the highest in the world.
Japan's foreign reserves and overseas assets look small when compared with its $5 trillion in primary government debt, $3.7 trillion of which is bonds.
The reserves "are just a drop in a bucket against its outstanding debt, equivalent to $4.6 trillion, unless the government is contemplating paying off investors with U.S. Treasury bills at 9 cents on the dollar or foresees the day when the U.S. dollar is trading at 1,463 yen," Marshall Gittler, currency strategist here for the Bank of America, wrote recently.
Even $11 trillion in private savings looks less impressive in light of Japan's mountain of debt, which stands at $9.3 trillion if government loan guarantees and unfunded pension liabilities are included, said Takashi Asia, author of a financial newsletter.
............
Misetich:
"unless the government is contemplating paying off investors with U.S. Treasury bills" - With the US $ ready to fall off the cliff - Japan needs to diversify - Hashitomo where are you? Sell US $ and buy gold!
NY Times requires registration
Boilermaker
(07/06/02; 15:27:42MT - usagold.com msg#: 79995)
Asian Currency
http://biz.yahoo.com/rf/020706/economy_asem_kobe_1.html
snippet:
COPENHAGEN, July 6 (Reuters) - Five years after the Asian crisis, the countours of a future regional currency regime is starting to emerge with a study that calls for the creation of a currency basket system and ultimately a single Asia currency.
The proposal, which foresees a single Asian currency, an Asian central bank and a monetary union after 2030, is part of the Kobe Research Project, an initiative launched by Asian and European finance ministers (ASEM) in 2001.
On Saturday Japanese Finance Minister Masajuro Shiokawa presented the study to his counterparts, who were attending the fourth ASEM meeting here.
Japan has been very active in helping create a web of central bank swap agreements to avoid a repeat of the region-wide crisis which began with the Thai baht's plunge in 1997.
comment; No mention of gold as part of reserves. Looks like paper on paper. What's the point? Looks like an attempt to get in on the US$ scam.
misetich
(07/06/02; 15:14:38MT - usagold.com msg#: 79994)
Ominous portents from the NextBank meltdown - Doug Noland
http://www.prudentbear.com/archive_comm_article.asp?category=Credit+Bubble+Bulletin&content_idx=13186
Snip:
July 1, Bloomberg: "A failure by WorldCom Inc. to pay interest on its bonds would roil the market for collateralized debt obligations, affecting one out of eight of the securities. Of the 800 such securities in the $350 billion market, at least 100 have WorldCom debt pooled with that of other companies, said Stephen Anderberg, an analyst at Standard & Poor's in New York. Collateralized debt obligations are bonds backed by other kinds of debt, and are held mainly by pension funds and insurers... Sellers of collateralized debt repackage corporate bonds and credit-default swaps into new securities. They profit from the gap between the interest they pay on the debt and the higher rates they get from the pool. They promise investors who buy the safest part of the fund triple-A ratings and a very low risk of default. They can do this because they put all the security's risk into a small portion of low-rated bonds and unrated equity that absorb losses first. Fund managers complain the cushions aren't enough and say defaults in the investment pool put the principal at risk. Some of the synthetic investment-grade collateralized debt
obligations are just too leveraged to deal with one-off-shocks like this, said John OGrady Walshe, who helps manage $3 billion of asset-backed debt for Zais Group Investment Advisors in Dublin."
...............
Expecting a "post-Bubble" barrage of major defaults, it's been our fear that some of these types of structures would soon be in serious jeopardy. We suspect that we have now reached this point, although there is little if any transparency.
If these synthetic CDOs are today at risk of "blowing up," then the value of the insurance they have written now comes into question. This would mark the commencement of what we expect will be major counterparty derivative issues.
...........
The fragile underpinnings of contemporary consumer lending were brought to light this week, as the American Banker reported on the escalating cost of the failure of pioneer Internet credit card lender NextBank. It is now estimated that this failure will cost the bank insurance fund between $300 million and $400 million, rather shocking news (although I don't believe it was covered in the Wall Street Journal). When the Office of the Comptroller of the Currency closed this bank on February 7th, it's assets totaled only about $700 million and insured deposits were $554 million. Just a few months ago (April 17th), a spokesperson from the FDIC stated that losses were expected to be about $25 million. This proved an especially poor estimate. The ugly fact is that this bank was closed down only 30 months after NextCard acquired it. At the time, it had only $3 million of assets. NextCard proceeded to aggressively market insured jumbo CDs that enabled it to easily raise more than one-half billion of deposits. We live in an exceedingly dangerous financial environment.
The NextCard fiasco is pertinent today on many levels.
Misetich
A must read!
Got gold?
Siochain
(07/06/02; 13:56:43MT - usagold.com msg#: 79993)
ChapX
Would you be so kind as to list reference for the Executive Orders....Thanks
Black Blade
(7/6/02; 13:36:21MT - usagold.com msg#: 79992)
Re: Woodie,...All PM Insurance
Your position is not unique. Most everyone wants to be in "the game". I would suggest that everyone take care of his or her most basic needs first. That is to secure food and shelter of course. I would also suggest that everyone get out of debt as soon as possible. Once that is done you can sleep a lot easier as that sword is no longer hanging over your head. Also start a storage program of several months of nonperishable food and basic necessary items. You just never know when some financial or natural disaster will strike. With the growing numbers of layoffs it is good to be secure with no (or very little debt) and to have enough food for yourself and your family. Then it is best to take care of other needs such as stashing enough cash for expense that you are likely to encounter for several months should you find yourself unemployed either through layoff, illness, or injury. Then as Alan Greenspan said, have gold as the "ultimate" form of money to insure your investment portfolio. I tend to add physical in proportion to my stock investments (yep, I like to play "the game" too). In the current economic environment I see more danger than in the recent past so I had added to my precious metal position while adjusting my stock portfolio to sound defensive investments (mostly profitable and some good yielding energy, utility, and non-hedged gold shares, with a dash of biotechs and (gulp) mortgage bankers). Still I keep a portion of my investment portfolio in physical precious metals, as it is the "ultimate" form of money. I have been in many countries around the world and most everywhere gold is revered above all currencies. In many areas of SE Asia when I show people a U.S. dollar bill, they just don't get it. When I show them a couple of specks of gold in a rock sample, their eyes light up because they do understand gold. Now if only the Argentines had set aside a portion of their cash in precious metals they would have been much better off today. I did not acquire any gold Argentinos when offered at USAGOLD, though I did get some Gold pesos from Uruguay. Both Argentina and Uruguay are deeply mired in a worsening economic disaster. This has already begun to spread throughout the region to Brazil, Colombia, and Venezuela. Chile is also feeling the heat as is Mexico far to the north. When LatAm crumbles the bankers and politicians in the U.S. will be under intense pressure for yet another bailout. It look to get very ugly. We in the US are not immune from similar problems. Look at the near disaster triggered by LTCM. The derivatives mess on Wall Street and in the major world banks dwarfs any concern once held by the LTCM and Russian bond defaults. As I said, be glad that you have taken steps to acquire some measure of insurance in this uncertain world. When the collapse comes it could be rapid and it will be difficult to get out of the way as everyone runs for the exits all at once.
Cheers!
- Black Blade
Off to the gym!
barnaclebob
(7/6/02; 13:13:04MT - usagold.com msg#: 79991)
@Woodie: Markets to fall further 50 per cent
http://investor.ft.com/custom/ftmarkets-com/news/story.asp?guid=%7B2835FD6E-9D6E-4F56-8C5F-60E21F334C6D%7D
With most economic predictions suggesting major economic declines thirties style, you own and possess the greatest assett available, it's compact, fungible, and the value does not rely on any underlying assett. Is there any better "storehouse of value and wealth" than Gold in times like these? If there is, I have not found it!
LONDON (FT Investor) - Hugh Hendry, Europe's best-performing fund manager, believes equity markets will fall a further 50 per cent before bottoming.
Despite this year's rise, Mr Hendry is running scared of equities since detecting a significant shift in the markets in mid June.
"Up until the second week in June I was up about 22 per cent, now it's 15 per cent. The last three weeks have been quite difficult."
Rather than flowing into the equity markets, as has historically been the norm, this liquidity has flooded into assets such gold, property and commodities.
"I have been consistently 100 per cent invested for the last three years, but I am now selling stocks," he says.
Mr Hendry admits he is not certain what will happen next, but he is raising the possibility that we may be heading for a 1930s-style depression, rendering it impossible to make money from the markets.
"One has to give serious consideration to that now the bear market has encroached into my golden 5 per cent [of stocks]. And no equity strategy succeeds with that outcome: value growth, good management, strong balance sheets, nothing works."
As an example, Mr Hendry says global markets bottomed in November 1929 at an average price-to-earnings ratio of around 10. Caterpillar, the tractor manufacturer, would have looked good value on a p/e of eight, but investors who thought so would have lost 95 per cent of their money in the following three years.
The 1929 example also supports his thesis that bear markets typically bottom at p/es of around 10-11, with 12 in 1962 the highest on record.
So where will it all end? Mr Hendry argues that the last five years of gains from a bull market are typically wiped out in the following bear market.
As markets peaked in March 2000, we need to fall back to March 1995 levels before reaching the bottom, he believes.
Black Blade
(7/6/02; 13:06:51MT - usagold.com msg#: 79990)
A tear for Argentina's pension funds
http://hoovnews.hoovers.com/fp.asp?layout=displaynews&doc_id=NR20020704670.2_4598004e5fbaaeb4
Snippit:
A quarter of the Argentine population is unemployed. Over half the population is now officially below the poverty line. Rioters loot supermarkets. A people, once proud of eating the best beef in the world, now fight over carcasses of cows when cattle-trucks overturn. The exchange rate has gone from one peso to one US dollar - fixed for over a decade under the convertibility law - to over three pesos to the dollar: Argentines' savings have been cut by two-thirds in five months. The government has defaulted on its $150-billion debt. Bank deposits have been frozen since December and the government now proposes to give depositors long-term peso-denominated government bonds in lieu of their US dollar deposits. Cash has disappeared since only limited withdrawals are allowed. The stories of interest on radio stations are those that involve ATMs that still have cash. Barter is rampant in private transactions. The entire banking system, shut down several times in the past four months, is now bankrupt.
Black Blade: The reports out of Argentina get worse all the time. It has been reported that many Argentines are scrounging for food in landfills and garbage cans. Some are eating stray pets and toads. Crime is rampant. Now Argentines not only have lost their savings, but now they have lost their retirement funds. More hopes and dreams are dashed. How far behind are the other dominoes in South America? And how long until the U.S and other western nations follow? In a word "Grim".
Gandalf the White
(7/6/02; 12:21:09MT - usagold.com msg#: 79989)
WELCOME Sir Woodie -- You have taken the BIG STEP !
Woodie (7/6/02; 11:59:09MT - usagold.com msg#: 79988)
Got me some, ... now what?
First time poster.
===
IF you have any hesitations on the feelings of not getting "interest", just take out some of the PHYSICAL and hold it in your hand and look at it and think about it for a minute. The smile that you get on your face will be far better than the lost "interest" !! Remember, this is wealth (PORTFOLIO) insurance. Ask anyone in Argentina if they would trade you some of those BONDS for a little of that PHYSICAL ?
<;-)
Woodie
(7/6/02; 11:59:09MT - usagold.com msg#: 79988)
Got me some, ... now what?
First time poster. Let me first say thank you to all of the great and informative posts that I have been reading for the past several months. I hope to continue to learn, and become a more contributing member of this society.
I recently cashed in some positions in PM stocks, and converted it to physical. Now I can't help but wonder what to DO with it. The logical part of my brain knows that I am not supposed to do anything with it except store it in a secure place, and let it give me peace of mind as any other type of "insurance" does. But that other half of my brain is trained to think in terms of making a "profit" on my investments. Is this a common affliction of the new physical owner?
Thanks, Woodie.
barnaclebob
(7/6/02; 08:24:26MT - usagold.com msg#: 79987)
Moussaoui: Judge to Stage 'Incident'
http://news.findlaw.com/ap_stories/other/1110/7-3-2002/20020703153009_137.html
ALEXANDRIA, Va. (AP) - The only man charged as a Sept. 11 conspirator has repeatedly accused the judge in his case of trying to kill him. In a motion released Wednesday, Zacarias Moussaoui predicted how it would happen.
The guy wants to talk on the record to Congress about the alleged FBI cover-up and now he's scared sheepless!
barnaclebob
(7/6/02; 08:20:45MT - usagold.com msg#: 79986)
MOUSSAOUI CLAIMS THE U.S. ALLOWED SEPT 11 ATTACKS
http://news.findlaw.com/legalnews/us/terrorism/cases/index.html#moussaoui
Scroll down the page to "HIJACKERS" to review the motions.
MOUSSAOUI CLAIMS U.S. GOVERNMENT ALLOWED SEPTEMBER 11
ATTACKS TO TAKE PLACE. Zacarias Moussaoui, who is on trial in federal court in Alexandria, Va., for conspiracy charges in connection with the Sept. 11 attacks, has filed motions asking to talk to Congress and to a federal grand jury about the "FBI cover-up" of Sept. 11.
One of his handwritten motions is captioned "Motion to
appear in front of Congress hearing on FBI knowledge and
responsibility on the Sept. 11 attack," and in it, Moussaoui says that "I have relevant information and proof relating to conduct of the FBI regarding the Sept. 11."
In another motion, he said he wants to testify before the
federal grand jury investigating 9/11 because "I have extensive and relevant information on how did this operation happen." He says that "I will stipulate to chains, handcuffs, leg cuffs, stun belt, 20 or 30 marshalls as long as I can say what I know about Sept. 11 attack."
In another "Motion to compel the government to withdraw the
charge against me because the FBI were conducting an undercover surveillance operation," Moussaoui says that he was arrested and held in secret to prevent newspapers headlines saying that "the FBI had arrested a Muslim Arab at Pan Am [Flight Academy] the same school where [suspected hijacker Hani] Hanjour the believe hijacker train a few weeks before." Moussaoui seems to be saying that his testimony will allow Americans to know "how their
government cynically allow Sept. 11 in order to destroy
Afghanistan."
In another place, Moussaoui says that the government's
theory that the Sept. 11 attacks were carried out by Osama bin Laden is a hypothesis which is "unproven."
misetich
(7/6/02; 07:42:48MT - usagold.com msg#: 79985)
Searching for signs of "US economic recovery" - NOT in Securities industry
http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=ad_right1_topfin&bt=ad_position1_topfin&middle=ad_frame2_topfin&s=APSXTXhQoTWVycmls
Snip:
Merrill Eliminates More Jobs as Markets Decline
``There are still far too many people in investment banking,'' said Olgerd Eichler, who manages about $480 million in U.S. equities at Union Investment GmbH, including Merrill Lynch shares. ``Merrill will probably cut even more jobs.''
Misetich
It sounds like the "second half US economic recovery" is being post-poned, yet again - to 2003
Wait till next year, is the battle cry ( the Bear is licking its chops, waiting..)
Got gold?
misetich
(7/6/02; 07:26:46MT - usagold.com msg#: 79984)
Reliant takes billions off books - SCANDAL OF THE DAY
http://www.chron.com/cs/CDA/story.hts/business/1484621
Snip:
July 6, 2002, 1:01AM
Reliant takes billions off books
Phony trades inflated revenues
By MICHAEL DAVIS
Copyright 2002 Houston Chronicle
Reliant Energy has reduced its reported revenue for the years 1999-2001 by $7.8 billion to exclude the sham energy trades the company admitted to earlier this year, according to a filing Friday with federal regulators.
Reliant Resources, the unregulated subsidiary of Reliant Energy, also restated its revenues for the same three years, trimming off $8 billion in reported revenues. Reliant Resources is under investigation by the Securities and Exchange Commission for the phony trades used to inflate its revenues and trading volumes.
Round-trip trades involve a company buying and selling the same amount of a commodity.
Other companies have admitted conducting such trades but did not record them on their books. Reliant Resources is the only one that has conceded it booked the trades as revenue in its reports to the SEC.
............
Reliant Energy previously reported $15.2 billion in revenues in 1999, $29.3 billion in 2000 and $46.2 billion in 2001. On Friday, the company restated its revenues to $13.79 billion in 1999, $28.26 billion in 2000 and $40.81 billion in 2001.
It also restated its expenses for the same three-year period, decreasing its expenses from $13.9 billion to $12.5 billion in 1999, $27.5 billion to $26.4 billion in 2000 and $44.2 billion to $38.3 billion in 2001.
Reliant Resources reduced 2001 revenue by 15 percent to $31.1 billion from $36.5 billion. It adjusted 2000 revenue by 5.4 percent to $18.7 billion from $19.8 billion, and 1999 revenue by 18 percent to $6.5 billion from $8 billion, according to filings.
Misetich
Corporate America is following the principle of "what is is"
Got gold?
Pan
(7/6/02; 06:17:26MT - usagold.com msg#: 79983)
News From Asia ! Gold Certificates, backed with real Gold !
http://straitstimes.asia1.com.sg/money/story/0,1870,129875,00.html
The Straits Time - Singapore
5. July 2002 FRI
Gold rush - sure thing or passing fad?
With currencies volatile and stock markets heading south, some investors are once again investing in gold - one of the few assets that have seen a steady price rise since last year. In My Money, OH BOON PING finds out how you can participate in the current gold rush, as well as how long the rally will last
IF YOU still haven't heard, gold prices are on the rise.
It is a dramatic reversal of fortunes for the precious metal that had been shunned for much of the 1980s and 1990s.
As governments and central banks around the world converted their reserves from gold to currencies such as the US dollar and the yen, the price of gold fell from highs of US$660 per ounce in the 1980s to a low of US$252 per ounce last year.
But since the Sept 11 terrorist attacks last year, gold has been back in vogue.
The price of the precious metal surged to a five-year high of US$328 per ounce last month - a return of 21 per cent in less than one year.
Gold-related stocks and funds have put up even more impressive performances.
For instance, the United Gold and General Fund saw its net asset value rising by 83 per cent in the comparative period.
And stocks of companies that deal in gold have also doubled or even tripled their value.
The result: Whether it is the Philadelphia XAU, Toronto Gold or FT Gold Mine index, gold indexes have far outperformed their floundering equity market counterparts.
Still, to most Singaporeans today, the concept of investing in gold is both quaint and alien.
Indeed, many associate it with the ubiquitous Credit Suisse gold wafers worn around their necks or ankles when they were little children, or with old ladies exchanging hard-earned savings for necklaces or bracelets at the neighbourhood jewellery store.
Thankfully, banks in Singapore offer a number of other options.
INVESTMENT OPTIONS
United Overseas Bank (UOB) says it offers a wide variety of assets, ranging from gold bars to gold certificates, that will provide investors with sufficient exposure.
If you are after something to have and to hold, then you may want to consider gold bars or gold bullion coins.
These are sold according to the prevailing Singapore gold kilobar price, plus 3 per cent Goods and Services Tax (GST).
However, the inconvenience lies in the storage of gold bars and coins, which is not provided for.
There is therefore an additional cost associated with buying gold bars or coins - the rental of safe deposit boxes at the bank.
Alternatively, you can choose not to buy physical gold and instead opt for:
Gold certificates; or
Gold savings accounts.
Gold certificates give their owners a legal claim to physical gold.
They are also sold in multiples of one kilobar, subject to a maximum of 30 kilobars per certificate.
With no expiry date, these certificates can be exchanged for physical gold whenever the need arises.
But this is typically more expensive than buying physical gold, notes UOB.
That is because the investor is charged an additional flat fee of $5 per certificate and a storage fee of $30 per kilobar per annum.
A gold savings account, on the other hand, is for investors who expect to trade in gold more frequently.
Any cash deposited into the account is converted into grams of gold at the prevailing gold prices.
The balance held is strictly not convertible into physical gold. This means that to withdraw from the account, the customer has to sell part or all of his balance back to the bank at the prevailing Singapore gold price.
However, UOB says that if the client insists on converting the account balance into physical gold, it is willing to make an exception.
But upon delivery of the gold, GST will be levied and no storage services will be provided.
Gold account holders can make transactions at any time during banking hours in units of one gram of gold, subject to a minimum of five grams per transaction.
An administrative fee - in grams of gold - of 0.25 per cent per annum on the highest balance per month or 0.12 gram per month, whichever is higher, is charged.
RALLY - BUT FOR HOW LONG?
All right, so there are options. But what is the likely performance of the market over the next 12 months and will the rally persist?
Mr Alfred Wong, portfolio manager for UOB's United Gold and General Fund, is bullish.
Historically, gold has had a strong negative correlation with the US dollar and the continued weakening of the greenback implies that the price of gold will appreciate further.
Also, gold has anecdotally always done well in an environment with low short-term interest rates.
This is because a government attempting to pump-prime the lacklustre economy using low rates runs the risk of raising inflationary pressures inadvertently.
Thus, gold, which is seen as a traditional hedge against inflation, will emerge as a favourite store of value.
Moreover, there is still the strong investment demand for gold, especially from Japan, says Mr Wong.
'In the first quarter of 2002, gold demand in Japan was 45 tonnes, double that of the fourth quarter of 2001 and triple the volume in the same quarter of the previous year,' he notes.
A large part of this demand from Japan came about as a result of the new insurance limits on term deposit introduced by the Japanese government on April 1.
Because their deposits are no longer insured fully by the banks, Japanese savers have been channelling part of their wealth into gold.
Come April 1 next year, this insurance limit will be extended to include current accounts as well.
And should the Japanese banking system and the Japanese or global economy take a turn for the worse, one can logically expect more funds to flow into gold, which is seen as a traditional asset of last resort and has a safe haven status, he added.
Is there enough supply in world markets to meet this added demand?
According to analysts The Straits Times spoke to, years of structural decline and low gold prices have created a scenario where exploration has been slashed and producers now face the serious problem of replenishing their reserves.
Hence, supply may not be readily available.
Given rising gold prices, major holders of gold - including the world's central banks - are unlikely to sell their gold reserves.
Economics 101 teaches us that when demand rises faster than supply, prices are likely to rise.
Is gold, therefore, a sure bet?
Well, when prices have surged to new highs, the risk of the rally having run its course is always present.
Said Mr V. Anantha Nageswaran, regional head of investment consulting at Credit Suisse Private Banking Singapore: 'The risk of all this optimism about gold is that markets somehow judge that US stocks have been oversold and they suddenly start to rally.
'The other risk is that, as the US dollar weakens, central banks in Asia and Europe decide that the greenback's weakness is a bigger evil than its strength and begin to resist it by verbally talking the greenback up or through intervening in the market.'
Investors will do well to heed such early warning signs of a reversal in the upward trend in gold prices.
But until then, gold is an asset that is shining for now.
Waverider
(7/6/02; 06:15:12MT - usagold.com msg#: 79982)
Currency War
BB - you mentioned the 3 way currency war between Japan, US and Europe...maybe Switzerland makes it 4? The Swiss are quite concerned about the strength of the CHF, it has gained around 4% on the Euro and has appreciated faster than the Ca dollar against the US. For the 1st time in approximately 21/2 years, the CHF is stronger than the Ca dollar. Funny, isn`t it that there`d be a war for the `weakest`currency. Cheers,
Waverider
Black Blade
(7/6/02; 04:28:44MT - usagold.com msg#: 79981)
Breaking News - Afghan Vice President Assasinated
The Afghan Vice President Haji Abdul Qadir was just assasinated. The assassin got away although 10 of the VP's guards have been arrested. Looks like the Afghan governmnet is crippled and could collapse as there are too many clans fightening each other. That is what helped collapse the governmnet previous to the Taliba. I am not surprised though. "Interesting Times"
- Black Blade
Black Blade
(7/6/02; 03:19:13MT - usagold.com msg#: 79980)
Foreign Direct Investment Slid 56% to $565 Billion in 2001
http://biz.yahoo.com/djus/020705/200207050028000015_2.html
Foreign direct investment flows to developed countries tumbled by 56% last year to $565 billion from more than $1 trillion, Friday's Wall Street Journal reported. And it looks like they're going to fall again this year, according to the Organization for Economic Cooperation and Development, a Paris group representing 30 industrialized nations.
Leading the decline was the U.S., which saw direct investment tumble more than 57% to $131 billion in 2001, down $177 billion from $308 billion in 2000, and the lowest level since 1997. Germany, Japan, Ireland, Sweden and the United Kingdom also saw big declines....
Black Blade: The lower interest rates won't attract much foreign cash to US bond markets either. Notice how desperately the Pied Pipers are announcing the "economic recovery" today. It is doubtful that they can slow the stampede for the exits. The foreign investor has been helping to prop up US equities markets (and the dollar). Once that foreign cash goes home it will get very "interesting".
Black Blade
(7/6/02; 03:02:38MT - usagold.com msg#: 79979)
Wall Street Still Over Its Head in Overhead
http://www.thestreet.com/_yahoo/markets/matthewgoldstein/10030231.html
Snippit:
Die-hard tech investors aren't the only ones crossing their fingers for a screaming stock market rally, it seems. Wall Street's big investment firms are talking up the prospect of a big second-half pickup, too. That would pass for standard-issue optimism if it weren't for the fact that Wall Street desperately needs business to bounce back if it is to avoid a wave of new layoffs, observers say.
Black Blade: It appears that more confidence men will be fired from Wall Street's boiler rooms. There is the same old boiler room line of "growing profits" in the next quarter or half or year, etc. A lot of analysts are screaming for investors to jump into the markets since today's "dead cat bounce". It should be quite "entertaining" on Monday whatever direction the market takes. Presumably we have a "State of the Union" address coming up next week and I suspect that the Pied Pipers will play it up.
Henri
(7/6/02; 02:46:24MT - usagold.com msg#: 79978)
Hi Black Blade
yes, I am up early. Off to Scout camp with my troop for a week. No phones no lights no TV, No internet (aaarrrggghhhh!!!!!)
5 am departure
Adios mi amigos
vaya con Dios
Henri
(7/6/02; 02:42:42MT - usagold.com msg#: 79977)
Golden Word
I hereby declare that my privately held corporation retains 500% of the par value of all its stock in pm's (gold silver and platinum)as the sole indication of its strength. Books smooks, anyone who runs a business knows that the amount of money in the checking account doesn't mean smotz unless it is balanced against current and future liabilities.
The pm reserve will be distributed to real and beneficial holders of corporate stock upon dissolution.
In addition, the corporation will acquire and hold an another 100% of the par value of its stock as assurance for each client. This pm is profered in lieu of liability insurance which my corporation will not purchase. This additional pm reserve stands along with my solemn word that I will deliver my services in good faith and meet contractual obligations. If my word and the full company's worth in pm is not good enough for a client, then i do not need their business.
Go small business!
Take that you wall street geeks!
Henri
(7/6/02; 02:30:38MT - usagold.com msg#: 79976)
Test
Ignore
Black Blade
(7/6/02; 01:23:10MT - usagold.com msg#: 79975)
Best gold & silver stocks for the half-year
http://www.mips1.net/MGGold.nsf/Current/4225685F0043D1B285256BED0051D81E?OpenDocument
Snippit:
NEW YORK -- Gold producers with reserves sold forward have paid a heavy penalty as stock prices idled relative to the supercharged performance of companies offering full exposure to the gold price. Whereas hedged producers have bested the gold price by 35%, unhedged producers were a 100% better at the half-way mark, with a 129% gap over the imperilled S&P500 index.
Black Blade: Hedgers (mainly Mega-Hedgers) have been part of the problem in the low gold price environment experienced over the last 6 years. The question I have is why would anyone invest in a hedged gold company? Isn't the whole point to have full exposure to the rising price of the underlying product? It therefore does not surprise me that non-hedgers have so dramatically outperformed the hedgers.
BTW, I am not pushing any particular stock, however, as hedgers have contributed to the lower POG they should be exposed as under performers. As disclosure I only hold highly profitable non-hedgers as well as a nice stash of physical for portfolio insurance.
Black Blade
(7/6/02; 00:43:54MT - usagold.com msg#: 79974)
Dollar Rises Against Euro
http://biz.yahoo.com/ap/020705/dollar_1.html
Snippit:
NEW YORK (AP) -- Cheered by hefty gains in U.S. equities, the dollar edged higher against its key counterparts Friday, gaining against the euro for the fifth straight day -- its longest advancing streak on the European currency in a year. After looking like it was stuck on a one-way trip lower for the past couple of months, the dollar's gains on the euro have suddenly made talk that the single currency is about to shatter parity with the greenback seem premature.
"The problem for the dollar has been capital flows and there's little on the immediate horizon to suggest capital flows are going to start coming into the U.S.," said Robert Sinche, head of global currency strategy at Citibank. "The dollar had a bit of a recovery this week but there's very little in the fundamental environment to support the dollar over the next three months," he said. Indeed, perhaps the key weight on the dollar this year has been the reversal in the flow of capital into the country, as foreign investors, who have showed a remarkable appetite for U.S. stocks and bonds in recent years, begin to shift their funds elsewhere.
Black Blade: Nearly all the action in the currency markets has been due to numerous official interventions. This is truly amazing as the US, Japan, and Europe is now all involved in a three-way currency war. This is not a currency war to maintain the stronger currency but amazingly it is a currency war to achieve the weakest currency. Bizarre as that may seem, it is necessary for each region to have the weakest currency. The reason is obvious. First the US dollar is already extremely overvalued and in a weak economy a weak currency is the only way to stimulate US exports. Second, Japan is nothing more than a factory on a couple of island with no raw materials. They must import raw materials and manufacture trinkets for export in order to survive economically. The Japanese economy appears to be in for a rough ride and their only possible hope is a weaker yen to float their economy with exports. Europe has just realized that their economy is not as strong as they had thought. In fact there are concerns about rising inflation. They too are now hoping for an increase in the export of goods to other regions. In short everyone is fighting for that piece of the shrinking global economic pie. It is quite odd that everywhere the world economy is retracting and there may simply be very little if any global economic pie to go around. Life in this world is just about to get very "interesting".
Black Blade
(7/6/02; 00:08:49MT - usagold.com msg#: 79973)
Jobless Ranks Grow Amid Sluggish Hiring
http://biz.yahoo.com/rb/020705/economy_1.html
Snippit:
WASHINGTON (Reuters) - The U.S. unemployment rate ticked higher in June amid stubbornly sluggish hiring, a sign the road back to full economic health could be long and rocky. Employers outside the farm sector added a paltry 36,000 workers to their payrolls last month, the Labor Department said on Friday -- less than half what economists had expected. Moreover, the department ratcheted down its data for April and May to show jobs growth of just 3,000 over those two months, compared to a total rise of 47,000 reported earlier. With the jobs market still so frail, the unemployment rate rose to 5.9 percent in June from 5.8 percent a month earlier.
Black Blade: Lets see here. Jobs were added and the unemployment rate grew. What the report does not mention is that many are no longer counted as unemployed because they don't qualify for benefits or the unemployment benefits have run out. Also many have simply given up looking for work while living off of savings, mortgages, or declining investments. Notice that nearly every revision of unemployment data has been a downward revision.
BTW, the rise in the markets yesterday are now being attributed to relief that there were no terrorist acts on the July 4th holiday. However, when real traders and investors return on Monday the markets could do a 180.
Horatio
(7/6/02; 00:08:11MT - usagold.com msg#: 79972)
Watch Argentina !
When the currency contracts everyone wants out!Give me my cash!Everything stops while everybody scrambles for cash and golds soars,because it can't be devalued or inflated .It becomes the currency of choice.You can't save cash because it gets converted to a bond ,you can spend it for something tangable and get good value or you can convert it to a currency like gold.All paper currencys will be revalued in the same way ,there will be no safe paper.Then gold MAY be reinstated as a backing in order to restore confidence in paper again.
Gold and Silver are always used as collateral against new financing of wars or backing of currencys until confidence is restored and then the backing is removed and used somewhere else for the same purpose,to restore confidence......
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