USAGOLD Gold Discussion Forum Archive

1-800-869-5115
We welcome your inquiry.

USAGOLD Menu BAR

Welcome to the USAGOLD Gold Discussion Archives. The archives of this gold discussion forum are a treasure trove of information to educate investors about protecting their wealth through portfolio diversification with private gold ownership. The discussion forum also covers the wider issues of the past, present, and future role of gold in international monetary policy and the dynamics of the modern gold markets...

(Discussion Forum Hall of Fame)

(The Gold Trail)

("Thoughts!" by ANOTHER)

The opinions posted by all guests are expressly their own and do not necessarily represent the views of the management or staff of USAGOLD - Centennial Precious Metals. The hosting of the public discussion shall therefore not be construed as an endorsement by USAGOLD - Centennial Precious Metals of any of the opinions posted here.

FORUM ARCHIVES

Select date of the archive you wish to view

Month Day Year
Archives date back to September 22, 1998

WELCOME TO THE ARCHIVES!

(View Today's Discussion) (View Previous Day's Discussion) (View Next Day's Discussion)

ARCHIVED DISCUSSION FROM 10/7/1999
All times are U.S. Mountain Time

View Yesterday's Discussion.

ORO (10/07/99; 23:45:23MDT - Msg ID:15827)
Yellin' of troy
Wellcome to our discussion.

There is an issue to be thought through in the soiled paper we use for exchanging goods and services. History, as FOA and ANOTHER have shown, repeatedly shows that a concept can not replace the reality, only represent it. Your acceptance of $ in electronic or paper form as payment for your work is doubtless a function of your expectation to be able to purchase someone else's production or service. You see in a $ a representation of your work, but not its embodiment. The embodiment of your work would easilly be found in your refrigerator, your seat and the room you are in.
If I were to print up new thallers you would not be interested in them at all, you might take them because they are so much prettier that printed $ are. If these were reciepts for say a gallon of 92 octane gasoline, redeemable on demand at a local gas station, wouldn't you take them as payment for your goods and work? If you had full confidence in my ability to supply value (gasoline) you would take it any day.
As a bank would do, I could print up more gas thallers than I ever intend to cover by purchase of gasoline, knowing that people will trade them rather than redeem them all. Yet if people knew that that was what I was doing, they would readilly discount the thallers relative to gasoline at hand.
Taking this one step further, I could make the issue of further gas thallers solely on condition of their return with interest. At first, there would be a boom in thaller creation as people need not trade anything but their good name in return for them, and they would trade at some significant discount to gasoline since it would be obvious to all that I have printed more than there will ever be gasoline. Later, however, as loans come due, the thallers would have to be returned, and more thallers than were issued would need to be returned, particularly if I raised the interest rate upon each loan rollover. And one day I would just say that gasoline would not be an acceptable replacement for thallers. This would create the necessary demand to have them trade at a premium to gasoline after some time. Or at least so the thinking goes.
In reality, I would be faced with a bank run as people rush to pick up gasoline in return for my discounted notes as I start to rev up the lending. I would then be faced with the need to supply gasoline. Where would I get a sufficient supply if I had issued so many more notes than the gasoline on hand? Answer - I won't. I will call up my friendly government and tell them that the whole economic system will fail if they force me to put my gas where my printing is. The distraght government would then declare that the notes are no longer redeemable for gas, but they now have the full faith and credit of the government to back them, and the government now takes upon itself the control of further issuance of thallers by ORO and other gas bankers. And if you don't trust us, we have the blessing of the Academy of Motion Pictures, MGM, Bill Gates, Gregory Peck, The Beatles and even the local Rabbi and priest, and printed their representation on the note, see "in celebrities we trust". And just in case you don't, you will surely trust the gun at your back if you don't accept this at the going rate.
Through the coordination of all the bankers (now they can just be called bankers because their actions no longer have anything to do with gas), I and the government can assure demand and supply of thallers, and prevent their redemption in any particular item. A sufficient number of people is in debt, and at least a minimal demand would be there. If I am not too greedy in printing the thallers up, and only print them up as debt, then the demand will always be sufficient.
This has happened many times in history and in many places.
The thing to remember is that banking (the second oldest profession and just as repurtable as the first) is an unnecessary deciet that can be restructured to avoid these situations by not allowing anyone to issue more obligations than can be redeemed at the date of the note. "On demand" was where the lie was hidden, and should have included in it the disclamer "if we have it" in big letters.

So, in order to create value in any concept money, you need it to have gone through a step in which it was actually redeemable in something, when it was a representation. The maintenance of value is through artificial demand of debt or taxation. If these are missing, there would be no value whatsoever. If people did not take loans or just went bankrupt, there would be no further demand for a concept currency. See Ludwig Von Mises for the fine study and analysis of the history and reality of money.

As the process of elimination of $ denominated debt around the world continues, whether naturally, or through force of EU and Japanese policy, you will see how the $ erodes. This decade of fun in America is a direct result of a policy intended to put the US in a debt trap. We are all in it. Face it.

Chris Powell (10/07/99; 23:21:06MDT - Msg ID:15826)
A feast from GATA
Enjoy a feast from GATA.

John Hathaway of the Tocqueville Gold Fund
on the inevitable and deadly math of the
growing short squeeze in gold.

http://www.egroups.com/group/gata/240.html?

GATA Chairman Bill Murphy says the European
central banks are holding firm in support
of gold.

http://www.egroups.com/group/gata/241.html?

A good Reuters article on the shorts.

http://www.egroups.com/group/gata/242.html?

Disclosure of Goldman Sachs as the largest
creditor of the now-ruined Ashanti Gold.

http://www.egroups.com/group/gata/243.html?

Reg Howe on the Cambior catastrophe and
a very GATA-like way out of it.

http://www.egroups.com/group/gata/244.html?

Black Blade (10/07/99; 23:06:59MDT - Msg ID:15825)
Slow night
Au down $4.80, someone better check on the chart guy at Kitco. He must be asleep or worse! Kitco shows a flashing light and is flat-lined. Poor guy might need an ambulance!

Flierdude, I wouldn't advise anyone on their investments, only that in the last couple of weeks since my return to the US, I have adjusted my portfolio to 35% PM's. This includes Stock (HGMCY, PDG, FN, SWC, etc.), and physical PM's. I think about what I could have gained in options but "chickened out" before the big move. I'm waiting to see if the "hedge-fund" miners are going to drag down any innocent bystanders along with them. Obviously "bean counters" have no business trying to lead the PM business. Most CEO's, CFO's, and directors in this business are inept. They come from other industries or are from industries outside of mining and they haven't got a clue about the unique dynamics in this industry. Some companies have begun to notice this "small detail". One case in point...The new CEO to be at PDG, Jay Taylor, this guy has quite a bit of background in this business. Finally a logical move by a Au producer! I would expect some good leadership at PDG, whereas I tend to avoid companies such as ABX, ASL, and even DROOY where they have no confidence in their product (ie. forward sales, hedging, etc.). This of course is my opinion only, but I am sure each of us could give you a different line of reasoning why each invests the way he/she does. I can only say do the research, see what your risk tolerance is, and invest accordingly. My personal rules are quite simple: (1)Safest - Physical PM, (2) Ivestment - Stock (for longterm), and (3) Spculative - paper trades such as options (all types and strategies). As the so-called experts say "will you be able to sleep at night?" So have fun.

ET, where you been guy? with Townies Y2K posts and links, I thought that you would be all over this forum like "flies on dog....". What new Y2K info do you have?

jinx44 (10/07/99; 22:33:05MDT - Msg ID:15824)
Al--your 15811 on a new suit
I like your question about what do you get for an ounce. I think if the $ price rise in gold is your 100:1, I would say that suits will go for 10:1. There will alway be suits, but only so much gold. I think an added zero after each $bill would just about do it. If gold goes to $US3000, the suit may actually go down in price. Who knows??

ORO (10/07/99; 22:31:54MDT - Msg ID:15823)
FOA the new Monetary order
As the commentary in the thread has shown there are problems in this conception. Which, in some years into its establishment, will cause a disaster no different from that of the $. Gold would then suffer severe discredit.
The main flaw in the system is the insistance of governments on issuing scrip bearing their dead personages of history and the continuation of the banking farce without converting the bank structure into an honest capital pooling mechanism. The latter will occur anyway, eventually.
The secondary flaw is the imposition on the markets of a preference to gold that is not of the market's own choosing. So far, my thinking indicates that this will cause the junior, but more rare, PMs to push gold out of the marketplace and replace it with these surrogates for which the governments do not bid. Again, a gold bubble would form since that is what this system is all about, then the markets will find retribution through the other metals.
Has there been any thinking in this regard?

jinx44 (10/07/99; 22:14:32MDT - Msg ID:15822)
The "ED Spread"
jinx44
I think the euro and dollar rise in gold (I will call it the "ED Spread") will widen as the velocity of circulation and concomitant increase in monetary aggregates in euros occurs through more widespread usage. Perhaps a way to speculate on this phenomenon would be to purchase an insurance annuity in euros using dollars now. Lock in the rate at 107, almost parity , but pay out in euros in 10 years might see the rate at $US20=1euro, or 18 to one.

The rise of the euro against gold will slow as the dollar rise in gold starts to roll hard. The euro may be a near gold substitute that could stabilize at perhaps 1oz.Au=500euros=3500$US. Just speculation.

megatron (10/07/99; 22:13:05MDT - Msg ID:15821)
gold worriers
Worrying about this or that seems to me to be pointless unless your a fully involved day trader. Gold isn't the investment for day traders though. NEVER will be IMHO.
It's a position to be held in physical ownership and not lost sleep over or traded away like the idiots in our gov'ts. You and I and EVERYBODY knows inately that money is going to be worthless and it's the timing that's critical.
Like the smart man said, it's in the 'you'll find out dept'.

Tomcat (10/07/99; 22:08:07MDT - Msg ID:15820)
flierdude

Regarding your portfolio:

What are your objectives? The fact that I am very very heavy on the physcial side should be of no help to you because I have my own personal objectives that holding physical satisfies for me. For example, I have a very long term wealth transfer program for my kids to be executed when I do my final act. For this, physical works. A friend is a Las Vegas entertainer/gamble/womanizer who would croak before adopting my plan.

We are a long way in our understanding of the PM scene. What conclusions have you drawn about gold and silver? Where to you stand on the scale that goes something like:

Weath Preserver
Investor
Speculator

Most important, where do you stand on the current short situation.

We know have tons of direct and circumstantial evidence to help us draw our own conclusions. I would bet that if you spend some time working it out, then you'd be suprised at how strong an opinion you hold about the future POG, POS, and paper gold and silver.

16-penny (10/07/99; 21:57:07MDT - Msg ID:15819)
purchasing power
an oz of gold will buy as many goods and services as you need or want. as opposed to currency say $50 for milk

Gandalf the White (10/07/99; 21:52:38MDT - Msg ID:15818)
OK Spot , -- time to wakeup !
Jump Spot JUMP ! (317.10)
<;-)

gidsek (10/07/99; 21:48:29MDT - Msg ID:15817)
shorting the dollar
You can simply sell dollars and buy another currency, easily done but I sense that you are after leverage. Comex has Futures contracts based on currencies and CBOE, Chicago Board Options Exchange offers currency options I think.

Taking a look around though and seeing the damage done to hedge funds (LCTM and others) and the gold shorts by holding the wrong derivatives at the wrong time it seems to me that there are much better ways to make money. My experience was limited to a few DOW and S&P put options and it wasn't a happy one. It's rude I'm sure to offer this advice but in your interest.. if you have to ask how to go about "shorting the dollar" that's a very strong clue that perhaps you shouldn't be playing that game. Derivatives haved creamed a couple of Nobel winners after all..

IMVHO

gidsek

nugget0 (10/07/99; 21:40:48MDT - Msg ID:15816)
FLIERDUDE
re your investments...
I think what FOA has been hinting at..paper is paper is paper is paper......

Golden Truth (10/07/99; 21:38:24MDT - Msg ID:15815)
GOLD DOWN $6.05
Looks like someone is starting to "shoot" back.
Thats o.k you're still not going to get my GOLD!!!
Also i can ride this downturn to hell and back and not even be out of breath.

How does it feel MR.SHORTIE to be losing money hand over fist? Get real used to it,you slime buckets have caused alot of grief around the World and now its your turn to die!!!!!!

P.S Good Luck you're going to need it! BAAAh HAAAAh HAAAAh! Baaaaah haaahaahaah you fools.

au49 (10/07/99; 21:32:32MDT - Msg ID:15814)
elavator guy
buy another countries money and you are short the $usd. the euro is best bet-- maybe.

elevator guy (10/07/99; 21:08:35MDT - Msg ID:15813)
How does one go about "shorting" the dollar?
Does any one know what investment vechicle, or financial product can be traded so as to "short" the dollar?

Thanks!

Golden Calf (10/07/99; 21:08:12MDT - Msg ID:15812)
A drop in the markets is due
It looks like me may be in for a bit of the down
side. Markets are poised for a drop, and may take
oils, PMs along for the ride.

Are you ready emotionally...it may be a shaker!

Al Fulchino (10/07/99; 20:11:46MDT - Msg ID:15811)
FOA? What does this ounce in my hand buy if....?
Forgive my intrusion, but just what does this $30,000.00/oz.of gold purchase? I see so many, almost stammer at what 10,000 and 20,000 and 30,000 dollar gold means to their portfolio. But does this ounce that buys a suit then buy 92 at 30k? My view is no, that gold has been undervalued. Simple? Yes , of course, but at the same time, I do not believe that I will be buying 92 suits with the ounce. FOA, how do see the purchasing power of that ounce? Thank you in advance should you have the time.

au49 (10/07/99; 20:04:12MDT - Msg ID:15810)
retrace
just went short gold.

Bonedaddy (10/07/99; 19:44:54MDT - Msg ID:15809)
Flierdude
I too worry about such things from time to time. It is good to trust ones instincts. Find the investment mix that allows you to worry less, and sleep more. Which is the bigger problem, missing some price appreciation on a mining share or losing it all in one of the various paper crash scenarios? Gold, it's the money you get to keep. Keep enough in cash to pay several months bills. Godspeed, Bd

TownCrier (10/07/99; 19:39:50MDT - Msg ID:15808)
U.S. executives leery of Y2K bug - poll
http://biz.yahoo.com/rf/991006/oa.html
A poll released Wednesday revealed that most executives responsible for corporate Y2K planning will stockpile cash and stay off airplanes at year's end.

TownCrier (10/07/99; 19:36:05MDT - Msg ID:15807)
Fed Says Y2K Could Affect Bank Reserves
http://dailynews.yahoo.com/h/nm/19991006/bs/yk_fed_2.html
Fed Vice-Chairman Roger Ferguson said Wednesday the Fed was storing cash around the country "to allow banks to meet any sudden or unexpected spikes in the currency needs of their customers." He warned against complacency, adding, "No one can say with certainty that there won't be any problems or disruptions during the century changeover."

Thanks for the honesty, Mr. Ferguson. We love you for it.

flierdude (10/07/99; 19:31:37MDT - Msg ID:15806)
FOA and others.
I am quite worried about my investments because of the FOA postings.

At this time I have 100% of my investment funds in one form or Another in Precious Metals. I am presently diversified as follows. 38% in physical silver, 32% in BMG , DROOY , and CALVF gold stocks, 20% (value at this time) in December 310 and 320 gold calls , and 9% (70 ozs.) in physical gold.

I would appreciate any opinions as where I should change my position. Do I have enough time to ride out the Dec Calls? Should I unload the stocks? If so by when? Should I take the proceeds and put it only in physical gold? I like silver only because of Buffett, Soro's and Gates position.

Thank You

TownCrier (10/07/99; 19:23:45MDT - Msg ID:15805)
To anyone interested in the full text of Mr. Hathaway's commentary excerpted by Sir SteveH
http://www.usagold.com/HathawayPyramid.html
It has been available at USAGOLD's Gilded Opinion page since the end of August. Click the link and enjoy your reading. It does mesh well with all that has been laid out here at the Round Table and Hall of Fame.

Enjoy your reading experience, and hurry back with your thoughts.

TownCrier (10/07/99; 19:15:20MDT - Msg ID:15804)
After the Close: the GOLDEN VIEW from The Tower
http://biz.yahoo.com/rf/991007/vv.html
Last month the Bank of England's Monetary Policy Committee surprised the markets by raising its base rate by 0.25% to 5.25%. Today, however, the MPC chose to leave the UK interest rates unchanged, a decision that was welcomed by business leaders and unions which claimed that another rate rise now would damage UK industry and lead to job losses. Isn't it apalling...the degree to which our level of existence is now determined by borrowed money and the ease with which more may be borrowed and repaid? The world has only one permanent money supply (gold), but with the current high level of outstanding gold loans, even this most stable of all money has been artificially inflated, creating an artificially low value. So when you look at gold as in the same boat as the pound, if the prospects of a 0.25% rate hike would cause such "trauma" to the borrowing masses, imagine what damamge has been done within the gold world with annualized rates rising from 1% to nearly 10%, and currently hovering near 4%. (see table below)

Gold lease rates (expressed as an annualized rate)
1-month 3.9160%
2-month 4.1120%
3-month 5.1760%
6-month 4.9360%
12-mnth 4.8188%

When this sorts itself out following "the mother of all bank runs for gold," the boys here in The Tower would like to see future lending operations limited to national currencies only. Gold must be left uninflated in order to function globally as the immutable standard against which all currencies may be fairly compared. "Paper gold" must become a thing of the past. Somebody please phone the BIS and get to work on this right away. The Tower thanks you, and our children's children's children will surely thank you, too.

On Wall Street, the DOW lost half a percent while the Nasdaq finished even. NYSE decliners outnumbered advancers 17 to 12, and new 52-week lows totaled 124 while only 44 reached new highs.

The 30-year Treasury Bond lost 4/32 in price, pushing the yield to 6.18%. Traders had a hard time explaining the morning volitility in pricing for the bond, but rumors circulated that data from tomorrow's employment report had somehow been leaked. Focus is certainly in that direction for tomorrow's official release of payroll and employment data. Traders were also somewhat disappointed that the BOE and ECB independent decisions to leave intrest rates "as is" didn't translate into stronger price action for the US bond given the "weakening aspect" of those decisions to their respective currencies. The ECB refinancing rate was held steady at 2.5%. Analysts weren't widely expecting rate hike by either entity today, although ECB President Wim Duisenberg said the bank's tightening bias was still present "in full force."

Staying with currencies, the dollar gained 0.24 yen to close at 107.55 yen. The euro gained .45 cents against the dollar, closing at $1.0734 (and 115.09 yen).

In the gold trading arena, today was another one of those types we described yesterday wherein a "price correction" was entirely accommodated within the day's trade. The London markets briefly took the price down to $314 before buyers promptly returned it to within $1.70 of yesterday's closing mark in NY. Spot gold was last quoted at $322.30.

Reuters reports that the world's gold industry is currently sifting through the wreckage brought to the balance sheets of bullion bears to assess the extent of the destruction from the recent and sudden price surge. (A $70 rise is child's play when you consider the global potential, and not just a COMEX-driven phenomenon...in fact, you've already seen the oversees markets take the lead in price run-ups. For example, here's something you'll never see on the COMEX trading floor: Taiwan's gold imports totaled 6.741 tonnes in September, compared with 4.063 tonnes in September one year ago--a 67% increase.) Reuters says much of this damage won't be revealed directly, but will emerge annecdotally in Q-3 financial statements, or as players simply drop from sight.
+
A chief dealer at a bullion bank said, "Months from now you are going to see people restructuring departments and getting out of the business. But you are not going to know anything until these things happen." Another bullion bank dealer said, "Everbody is talking about people getting hurt in this market. I think there have been people that have probably gotten hurt, like people who have credit exposure (to these gold customers). But nothing is crystalized yet so nobody really knows what the damage is going to be." A bank analyst chimed in, "All that stuff they keep fairly close to the vest for competitive reasons." You can read more at our featured link.
+
So while some of these hardship cases will disappear quietly into the night to lick their wounds and never be heard from again, others prefer to make their exit kicking and screaming all the way...
Bridge News--London--Oct 7--The recent euphoria in the gold market cannot mask the
underlying erosion of gold's role in official reserve portfolio management,
according to a presentation prepared for the Nikkei Gold Conference by Andy Smith,
analyst at Mitsui Bussan Commodities. The paper, titled "The Fall of the
Golden Wall", argues the philosophy behind holding gold, is doomed, like the
Berlin wall, to collapse "under the weight of its own contradictions."
+
Well, well certainly defer that call to you, Mr. Smith, as the undisputed master of contradictions. Wasn't your last quote something to the effect that gold was money, and it was the central banks' duty to step in and reliquify the market? And the day before that you were quoted as saying gold was a tiny market traded by locals, and was fundamentally no different than copper. You're only succeeding in drawing unnecessary attention to yourself, dear friend. My we suggest you try the "quietly fading" option?

Here's how Bridge News put the wraps on today's action among the gold bookies...

NY Precious Metals Review: Dec gold dn $1.70 amid choppy trade
By Mary Powers and Tina Petersen, Bridge News
Washington--Oct 7--COMEX Dec gold futures settled down $1.70 at
$324.30 per ounce amid quiet, range-bound trade. Traders said the market
is consolidating after gaining $26.50 since Oct 1 as players stood by to
see whether the short-covering rally would continue.
Traders said the markets are using these quiet days as an opportunity
to consolidate recent gains, but most remain bullish on the precious
metals markets.

Trade buying helped Dec gold to come off its lows in the morning, but
the funds were said to be largely absent from the market today.
The gold market remains volatile, trading in a broad range, with
support at $315 and resistance at $330. Leonard Kaplan, chief bullion
trader at LFG Bullion Services, said "the market keeps moving in that
range but it is my strong feeling we will be moving higher. Short-covering
has not been fully accomplished," he said.

If other producers such as Cambior Inc.--which Wednesday said it has
hedging positions for 2.7 million ounces of gold at an average price of
$318 per ounce through 2007--have oversold their production, "then there
is still a lot of short-covering to be done," said Kaplan.

In the near term, many said they are waiting to see if the recent
price moves in gold will work their way through the market. Traders said
that the fact that the market closed above $320 was relatively positive.
"The moves that we saw above $320 were made on fresh long buying as
opposed to short-covering, so that means there is more short-covering to
be done," a trader said.

One trader said he expected the market to open lower Friday morning
then to be pushed higher ahead of the weekend. "Friday tends to be a
sell-off day, but with the type of momentum we've had, some players might
take advantage and push prices up for the weekend." He said there is
strong buying in the mid teens.
***
(c) Copyright 1999 FWN Reprinted at USAGOLD with permission. For details please go to:
http://www.futuresource.com/internet.shtml
No further reproduction without written permission from FWN
---
In a FWN alert with no attendant story, "ECB's Duisenberg rules out EU gold-selling agency." We'll keep an eye open for any elaboration on that, as it would have some significance regarding whether the LBMA was expected to survive widespread balance-sheet carnage as described above, or not. Here's a tip for whomever is left standing to pick up the gold market pieces...you can sell it all you want. Just don't lend it. Ever again.

During yesterday's COMEX futures trading, 69 new October contracts were established, bringing the open interest at day's end to 140. Over 11,000 December contracts were settled, open interest there closing at 115,682. The total OI for all COMEX gold contracts stood at the end of Wednesday's trading at 204,535 contracts.
Today there were delivery intentions given on another 40 of the October contracts, the total so far for the month is now 2,504 contracts (nearly 8 tonnes.)

Within the COMEX gold depositories, today marked the first day this week that gold was moved in or out. It was in fact moved...out. 2,986 ounces of Registered gold was withdrawn from the ScotiaMoccata vault, marginally reducing total COMEX inventory to 924,634 ounces.

Having more than doubled in price over recent months, the Fifth Horseman has kicked off his shoes and is walking barefoot in the grass these days. November crude settled down 82c at $22.45 on the release of surveys showing that OPEC compliance with production-cut agreements had slipped in September. The going concern is that these higher oil prices are encouraging some oil producers to increase production. Here's what the survey reveals: September compliance for all of OPEC was 87.9% compared with 89% in August. Hardly anything to worry about. Looking closer at the numbers, OPEC's September oil output (excluding Iraq, of course, who is pumping all that they can in a bid to become the 51st state) was 23.50 million bpd, up 60,000 bpd over August output. That 60,000 barrel daily rise over August is one-quarter of one percent of daily OPEC (sans-Iraqi) production. You can't even measure that reliably, let alone justify an 82c drop in price per barrel on the news.

Meanwhile, Jordan's King Abdullah II, travelling now to the United States, has been accused of "passing notes in class" by the tattle-tale kid in the back row, as one report claims that Iraqi Deputy Prime Minister Tariq Aziz passed a message to the Jordanian prime minister (allegedly for delivery to the US administration) when Mr. Aziz arrived unexpectedly in Amman to give "a thorough account (of the situation in Iraq) to allow the Jordanian leadership to see things clearly if it [Jordan] wants to raise Iraq in its Arab and international talks." Jordan has often been seen as a promoter of peace for the region, and these meetings with Iraq are seen to be business as usual. At any rate, the denials on both sides are officially in: Jordan has not been given any specific message to deliver to Washington on Iraq's behalf. And now, if the King is caught chewing bubble-gum on the plane ride over, we sure hope he brought enough for everyone to share.

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

FOA (10/07/99; 19:12:16MDT - Msg ID:15803)
Reply
USAGOLD (10/07/99; 15:18:27MDT - Msg ID:15788)
The Monetary Triangle

------------From reading your most recent thinking as summarized in Msg#15713, I get the distinct impression that you believe that the Europeans have mandated their version of closing the gold window, thus making gold dear for any purpose, the settlement of gold carry trades being the most
severely affected. Some have said that this event of September 26th by the European central banks ranks in the annals of monetary economics with Nixon's closing of the gold window in 1973 and letting yellow metal seek a free market price. Following the Nixon decision, we had ten years of dollar devaluation. On the other hand, the European closing of the gold window could lead to ten years of euro appreciation against the dollar -- the exact opposite of the 1970s U.S. experience.--

Hello USAGOLD,
To the above---- "Absolutely"!!
I don't know if the timeline will be that long (ten years). The dollar will most likely fully collapse into some form of controlled inflation with exchange controls and all. ORO (#15721) wrote a good outline using Another's, trying to conceive the form of a new currency structure without the current dollar system. Today, in the middle of all of this, the pressure is indeed on to increase the value of gold "in all currencies". Make no mistake, no one wants this, but the majority has accepted that this is the only way out from under the dollar.

You write:

----At the same time, if you superimpose a chart of gold in euros over a chart of gold in dollars, a startling observation can be made -- one that graphically shows how much the world of international money has changed. The movement of gold in both currencies is nearly exactly the
same! Having watched the Asian contagion unfold and run the graphs on several sick currencies, there was one relationship that always held true -- as the currency depreciated against in gold, so it depreciated against the dollar. This led me to believe that once the euro was established as an international reserve competitor to the dollar that when the euro went up against the dollar, it would be able to buy more gold. I waited to see if this would be the case and am somewhat surprised to see a new phenomena -- as the dollar has depreciated against the euro, both have depreciated against gold.

Michael,
Continuing from my above: It's going to be a two phase operation. For the Euro to continue gaining credibility against the dollar, it needs a rising gold price in both currencies to build the Euro perception. In this stage they don't want the dollar exchange rate to collapse, but rather draw trade flow settlement into the Euro. It's expected that a steady interest rate policy and the lack of aggressive intervention will place them in a better light. But, most importantly, a rising gold price will detract from the dollar on a world basis more so than it will the Euro on a Euroland basis. Using points we have covered many times, the ECB will have more than enough resources (read that dollars on hand) to keep a firm bid under gold. This act of bring in gold as Euro reserves (not currency backing) and cannot help but undercut the dollar's world position. Especially now that the world dollar gold market is "on the ropes" and about to drive the dollar gold price to the sky.
Their item about commiting gold supply to 2,000 tonnes was a farse. Yes, the supply is needed to controll the burn, but a gold rush will cause much greed to retain the bullion. The BOE may continue, but all of them will cut and run when the gold price starts to rise. I bet they still sell for show but hold a backdoor deal to retain the metal.

Your words,

----How do you interpret this new phenomena -- this new and to my knowledge unique triangular relationship? Does it not give Europe the opportunity, to issue bonds to finance whatever Europe would like to finance including the military, public works projects etc without damaging the euro's credibility or injuring its market? And by this, do not the Europeans solve a sore problem -- getting their new currency into circulation (something you and I have discussed before). If so, this could be a clever political/economic move indeed and might answer the questions why Europe made the September 26th Gold Sunday announcement as they did when they didn't have to. In other words, at the beginning of 1999 EU launched the currency. Now EU is going to get it into circulation internationally in the form of bonds held in national treasuries. The next step will be make it stick. At that point, I would agree with you -- Europe could become a gold buyer unloading unwanted dollars perhaps through the unwinding of the gold carry trade.
Wouldn't it be a total irony, if the gold carry trade turned out to be little more than a detour that brought us the back way to the same place....gold being used in international settlements as the currency of last resort?-----

Yes sir to all of it!
This will process over one to two years. Or does it work out into the new 5 year plan of the ECB? We shall see. The dollar crisis should be worked over by then. Perhaps our much needed time frame to work gold into the thousands?
Once the Euro begins to see a run for it's currency (next year or so?) the gold price in Euros will stop rising as fast as the dollar gold price. Simply stated, the dollar/Euro exchange rate will halt most of the depreciation of Euros against gold. This is the second phase that Another spoke of long before the Euro was even born. Here we see gold at perhaps several thousand Euros, yet in the many many thousands of dollars. This is why it was so important for them to hold ECB committed gold paper. Euroland could later lock a low oil price using high gold as partial settlement. It will be a spectacular boom for their economy.

Michael, it's world class history in the making, Yes? Thanks FOA

SteveH (10/07/99; 19:02:01MDT - Msg ID:15802)
Butler
www.kitco.com
Date: Thu Oct 07 1999 20:20
ted butler (APH) ID#317184:
Copyright � 1999 ted butler/Kitco Inc. All rights reserved
Two things. One, I wanted to post something the other day about you but lately, sometimes you just can't get in, and later, it's not the same. But, for the record, for those who might not know, APH is the best technical trader I've ever seen ( save oldman, it's a tie ) . I'm not a technical analyst, but I can tell you, you won't get rich betting against him. He is as good as it gets.

Having said that, I want kill two birds at once. I'd like to warn APH and everyone. This market ( gold and silver ) is really starting to scare me. I think we're on the verge of out of control. I think even the slightly hedged miners could face real problems. I think one day ( don't ask me which day ) we could come in 50-100 higher in gold and 5 in silver. I would hate to see anyone here get hurt. Yeah, we could go down first, then up - but so what? - down 20 in gold, then up 200? Down 50 cents in silver, then up $20? There is no ulterior motive. Take a clue from the miners - don't do what they did wrong - selling calls or open liability exposures. Don't be short. If you must bet the downside, buy puts. Let's be careful out there.

SteveH (10/07/99; 18:50:16MDT - Msg ID:15801)
It works (the short list on kitco with a URL)
http://www.kitcomm.com/comments/gold/1999q4/1999_10/991007.201544.sauleeeee.htm
***
Here is where Oro and I find the FOA track holds. For example, either Hathaway is a secret admirer of A/FOA or they have the same conclusions and or the same information. In essense, gold leasing resulted in the greatest distribution of wealth to the masses ever seen and made the folks who knew when to unwind early rich in the process. To those holder's on, well...that is another story still in the telling, eh?

snippet:

The Great Gold Fire Sale

It is axiomatic that the way to create a shortage of a particular asset is to under price it. The US government has proved this beyond doubt across a wide assortment of commodities. There are various ways to set prices such as ceilings or price supports. These methods have been applied to gold with stellar results. Gold�s special characteristics, which include a large above ground inventory and monetary attributes, subject it to other forms of price fixing. As with paper currency, gold�s value is affected by the cost of interest, or the lease rate.

The mis-pricing of gold credit has been a central cause for the late stages of the gold bear market. The development of deep forward markets has only occurred in the last decade. The gold pyramid that we have described is nothing more than a conduit for the divestment of central bank gold into the physical markets. Gold in the vault has been replaced by phantom "gold receivables." If the lease rate were comparable to market rates for paper currency, the gold derivative pyramid could not function. The carry trade would blow up and the arbitrage between paper currency and gold, which is the foundation for mine hedging, would not exist.

Pierre Lassonde, President of Franco and Euro Nevada, recently wrote in the Northern Miner: " The single greatest damage caused to the gold price has been indiscriminate leasing, by central banks, of their gold reserves at giveaway interest ratesS.These suicidal rates are a gift to the speculators, hedge fund managers and producers who hedge." Low lease rates of 1%/year, he observes, represent an inappropriate 75% discount to US T-bills.

If gold leased by central banks totaled 10,000 tons as of June 30, the interest differential exceeds $2 billion. Since the new age central bankers view their institutions ( incorrectly ) as profit centers, sub-market lease rates appear to be a glaring departure from their mission. The ill-conceived leasing trade has depressed the value of a major reserve asset, and it has also transferred an embarrassing level of wealth to non- citizens.

What is the correct interest rate for gold? No one can answer the question. Interest rates set by committee lead to distortions and miscalculations. While the interest rate on gold has not been set by a committee, it does reflect the collective negative attitudes of central bankers towards a reserve asset they inherited from the previous generation and a willingness to trust in paper assets, which they did not inherit. In reality, the rate is based on nearly unanimous acceptance by central bankers and mining executives of the bullion dealers� sales pitch, in short, a virtual committee.

Who is benefiting from the fire sale? Financial speculators and bullion bankers are high on the list. Even higher up, however, are the world- wide consumers and investors who form the physical markets into which central bank gold is disappearing. Thanks to the gold pyramid, they are able to acquire vast quantities of the precious metal at prices well below the cost of production: present, future, and probably past, if inflation adjusted. Recent dispatches on gold consumption show very positive trends. For example, India, the largest consumer, reported 80 tons of imports in June, on a pace to shatter last year�s record. Other Asian economies show similar patterns. The US is minting golden eagles at an annual rate of 365 tons, a record pace. Jewelry consumption worldwide is showing strong positive trends. According to the World Gold Council, consumer demand rose 16% in the first half of 1999. Refineries, which melt down central bank gold bars, are as heavily backlogged as any time in history.

Consumer demand for gold is breaking all records. Thanks to the depressed gold price, consumption for jewelry and investment exceeds sustainable sources of supply, mine production and scrap by a wide margin. Without the giveaway engineered by the bullion banks, there would be a shortage and the gold price would be much higher. As with the US dollar, there are twin deficits. The first deficit is the short interest arising from the mismatch between gold derivatives and physical gold. This is a technical market condition, which will be resolved at some point by short covering. The second deficit arises from the growing appetite of world gold consumers, fed by artificially low prices. This chronic, fundamental market deficit will be closed only by much higher gold prices, over a period of years. At some point, frenzied short covering will crowd out consumer demand. Perhaps the grass roots owners of gold will oblige the shorts by melting down their holdings. Issuers of gold derivatives choose to ignore these facts in pursuit of ever greater profits in their risky business, girded in the belief that they have the staunchest of allies in the witless compliance of nouveau central bankers and death-wishing gold mining executives. Few of these players are receptive to a wake up call. Denial is still in high gear.

The recipe for a shortage has been carefully followed. A few finishing touches may be required before a market epiphany. There is no known reconciliation between paper and physical positions, and none will be attempted until after the squeeze. The weakness of credit analysis and supervisory oversight, as well as the many ambiguities in the linkage between paper gold and physical can flourish only if there is supreme confidence in gold�s permanent downtrend. The trust and confidence essential to balance the gold derivatives pyramid depends on three critical errors: that mine reserves = physical gold; that gold receivables = gold on hand; and that financial markets will enjoy smooth sailing indefinitely. Trust is nothing more than a state of mind. When this levitation is finally exposed and its illusions shattered, it is ludicrous to think the imbalances can be corrected by a small rise in the price and within a comfortable time frame. Expect the resolution to be swift, furious, and uncomfortable for those caught short.

John Hathaway
August 20, 1999

***

Canuck (10/07/99; 17:29:06MDT - Msg ID:15800)
gidsek and ss of nep
FN

gidsek,

Thanks for your message 15776, noticed today that FN did not take the hit that ABX and PDG did.

ss of nep,

Caught your message yesterday re: phone call to FN.
Thanks. P.S.: Have been to Carling Ave. often this week.
As I approached the wicket today the sweet young lady said,
" ... another onze sir...?"

FOA (10/07/99; 17:17:32MDT - Msg ID:15799)
Comment
Cavan Man (10/07/99; 09:24:38MDT - Msg ID:15758)
FOA
Darn. I missed you. Cavan Man here. I am not interested in "timing" but, time frame or range of time would be helpful. Thanks.

Hello C Man,
For anyone that wishes to hedge their other wealth with a portion in gold bullion: We are on the road NOW! FOA

Also:

AEL (10/07/99; 15:09:55MDT - Msg ID:15786)
Hathaway

AEL, very good link, sir!

FOA (10/07/99; 17:15:32MDT - Msg ID:15798)
Comment
ORO (10/06/99; 23:44:47MDT - Msg ID:15721)
SteveH - Your letter - a mechanism

Oro,
With that fine post! You have opened up the "essential concept" for viewing. This is indeed where we are going on an "official basis". It will be one great chess game to watch. Thanks FOA

Also:

Simply Me (10/06/99; 23:59:12MDT - Msg ID:15722)
Thank yoo, Sir FOA.
Your words of encouragement are needed now more than ever.
Many of us are "in" gold to the hilt...according to our means

Hello SM,
If you are "to the hilt" in gold bullion, "according to your means": Then you stand square in the middle of the preferred "real security" holding through out our history. Come what may, if the price rockets or plunges, all paper moneys have failed as society returns to gold. Believe it! FOA

FOA (10/07/99; 17:13:01MDT - Msg ID:15797)
Comment
SteveH (10/06/99; 22:20:05MDT - Msg ID:15718)
To a friend Leroy,

SteveH,
Leroy is in for some show if he only follows this trail with us. With this crowd getting much larger it increases the chance we won't miss anything. Even if one does not invest, it's worth walking from a historical view point. "we watch this new gold market together, yes?",,,,,, Yes! Thanks for writing FOA

FOA (10/07/99; 17:11:21MDT - Msg ID:15796)
comment
Orca (10/07/99; 09:59:09MDT - Msg ID:15763)
(No Subject)
The Economist .. Peter Drucker says it all

Hello Orca,
Just wanted to say thank you for that article. Every investor needs a base perspective when listening to all this modern input. All of us should hear things spoken in different ways as no one person can ever make the best point for our individual ears. FOA

PH in LA (10/07/99; 16:34:10MDT - Msg ID:15795)
Kitco Reposts
SteveH:
By opening Kitco in Short Text mode the link that appears to open the whole post can be brought here intact and will continue to function. I, for one, do not object, however, to your cut & paste as it saves time, especially when Kitco access is restricted. Also, ORO's technique today of pulling together the whole thread so that numerous posts do not have to be searched for, was much appreciated for the same reason.

TownCrier (10/07/99; 16:15:46MDT - Msg ID:15794)
�383 a pint? Pull the other one
http://news.bbc.co.uk/hi/english/business/your_money/newsid_467000/467742.stm
One hundred years ago, a pint of beer cost one penny, and if prices continue to rise as they have, a pint will cost �383.57 by the end of the next century according to this BBC article. A survey showed the average price for a pint of ale to be �1.64 today.

This speaks more about the money than it does about the ale. You'd best get your solid and liquid gold now while the prices are still so favorable.

*Ching-ching*...gulp, gulp... AAaahhhhhhh!

SteveH (10/07/99; 15:59:25MDT - Msg ID:15793)
nummus aureus
Thanks for your thoughts and I agree a link SHOULD do but unfortunately, kitco, can be 10's or 100's of pages of posts in one day. To link and then make a reader find said significant posting is work that might force a miss of thought. Convenience in the face of links in the case of kitco save us all time. You may note that the link to Mozel referenced beaucoup other relevent posts and an invite to read them. Kind regards.

TownCrier (10/07/99; 15:55:46MDT - Msg ID:15792)
Tea leaves
http://biz.yahoo.com/rf/991007/w0.html
HEADLINE: IMM currency futures end mixed in light trade
Some up, some down, and best guesses why are given.
(Isn't that how it always is? The absolute truth is simply not explainable in this format.)

watcher (10/07/99; 15:45:03MDT - Msg ID:15791)
ORO response
Thanks for your quick response and I follow what you said.
I have been trying to figure out what they might try to do next seeing that the previous action as you stated is no longer working. Is there a way that they could funnel the money from overseas (USD's) in a way that it would convince those from overseas that the market will not totally collapse because of this intervention. Maybe similar to Japanese holding up their markets. If they don't come up with something and all foreign money leaves that will be I believe the bell that will ring for the end of USD as we know it.

TownCrier (10/07/99; 15:37:26MDT - Msg ID:15790)
Fed operations--The Tower has been corroborated...first time in print!
http://biz.yahoo.com/rf/991007/hy.html
"(Rising) currency in circulation is the main factor draining reserves from the banking system and that will be the main factor draining reserves through yearend, especially with Y2K." --Dana Saporta, economist at Stone & McCarthy Research Associates.

Saporta estimated that during the current bank reserve maintenance period the daily add need by the Fed is $15.3 billion. The highest we remember previously was near Labor Day at $11 billion per day. It's hitting the fan already, but the blades are turning slowly...

USAGOLD (10/07/99; 15:24:52MDT - Msg ID:15789)
The Monetary Triangle
http://pacific.commerce.ubc.ca/xr/plot.html
I wanted to add to the bottom of my last post a note of thanks to Professor Werner Antweiler at University of British Columbia for his wonderful Pacific Exchange Rate Service. It has shortcut many hours of research that would have taken a great deal longer to conclude without its availability.

USAGOLD (10/07/99; 15:18:27MDT - Msg ID:15788)
The Monetary Triangle
http://pacific.commerce.ubc.ca/xr/plot.html
FOA, Another and All....
FOA, I read your post with a great deal of interest. If you are the Delta dog barking toward the back of the pack, then our friends Spot and Spike must be the Alphas leading the way and I the straggling Omega trying to make sense of a wild two week run. On we go.......

From reading your most recent thinking as summarized in Msg#15713, I get the distinct impression that you believe that the Europeans have mandated their version of closing the gold window, thus making gold dear for any purpose, the settlement of gold carry trades being the most severely affected. Some have said that this event of September 26th by the European central banks ranks in the annals of monetary economics with Nixon's closing of the gold window in 1973 and letting yellow metal seek a free market price.

Following the Nixon decision, we had ten years of dollar devaluation. On the other hand, the European closing of the gold window could lead to ten years of euro appreciation against the dollar -- the exact opposite of the 1970s U.S. experience.

At the same time, if you superimpose a chart of gold in euros over a chart of gold in dollars, a startling observation can be made -- one that graphically shows how much the world of international money has changed. The movement of gold in both currencies is nearly exactly the same!

Having watched the Asian contagion unfold and run the graphs on several sick currencies, there was one relationship that always held true -- as the currency depreciated against in gold, so it depreciated against the dollar. This led me to believe that once the euro was established as an international reserve competitor to the dollar that when the euro went up against the dollar, it would be able to buy more gold. I waited to see if this would be the case and am somewhat surprised to see a new phenomena -- as the dollar has depreciated against the euro, both have depreciated against gold.

My question is for both, or either, of you:

How do you interpret this new phenomena -- this new and to my knowledge unique triangular relationship? Does it not give Europe the opportunity, to issue bonds to finance whatever Europe would like to finance including the military, public works projects etc without damaging the euro's credibility or injuring its market? And by this, do not the Europeans solve a sore problem -- getting their new currency into circulation (something you and I have discussed before). If so, this could be a clever political/economic move indeed and might answer the questions why Europe made the September 26th Gold Sunday announcement as they did when they didn't have to. In other words, at the beginning of 1999 EU launched the currency. Now EU is going to get it into circulation internationally in the form of bonds held in national treasuries. The next step will be make it stick. At that point, I would agree with you -- Europe could become a gold buyer unloading unwanted dollars perhaps through the unwinding of the gold carry trade.

Wouldn't it be a total irony, if the gold carry trade turned out to be little more than a detour that brought us the back way to the same place....gold being used in international settlements as the currency of last resort?

All.....the link above can be used to draw your own euro and dollar gold charts, etc. Have fun. And thank you to the Pacific

TownCrier (10/07/99; 15:13:46MDT - Msg ID:15787)
Fed pre-announces 90-day tri-party system repos
http://biz.yahoo.com/rf/991007/s2.html
This may be in addition to the Fed's normal operation expected for Friday. Today, the Fed added nearly $14 billion of reserves to the banking system through a dual operation of overnight and five-day fixed system repos. The five-days totaled $7.515 billion, and the overnights totaled $6.155 billion.

AEL (10/07/99; 15:09:55MDT - Msg ID:15786)
Hathaway
http://www.kitcomm.com/comments/gold/1999q4/1999_10/991007.163242.sauleeeee.htm
Date: Thu Oct 07 1999 16:32
saul (ABSOLUTELY MUST READING FOR VERYONE _ LATEST FROM JOHN
HAHAWAY - Tocqueville Asset Management) ID#93123:
Copyright � 1999 saul/Kitco Inc. All rights reserved

Simple Math & Common Sense:
A $66 Billion Problem
By John Hathaway

Don't be confused by self-serving outcries from various parties trapped in the gold short squeeze. I am amazed to hear reports that so-and-so has restructured their hedge book or that this or that group has covered its short position in gold. Such statements are misleading, if
not false. What is happening is that the self-made victims of the growing gold short squeeze are passing the hot potato back and forth among themselves in a desperate attempt to wriggle free. This activity amounts to little more than frenetic paper shuffling. The gold market is in the
throes of a spreading credit crisis. . . . .

(go to link for the rest of the story......)

(if you are in a desperate attempt to wriggle free,
go elsewhere....... :) )

TownCrier (10/07/99; 15:04:28MDT - Msg ID:15785)
U.S. buying on credit surged in August
http://biz.yahoo.com/rf/991007/s6.html
This unsecured, revolving credit increased by $10.8 billion in August, the largest gain in 7 months. Wall Street economists had expected a $6.9-billion rise.

PH in LA (10/07/99; 14:54:21MDT - Msg ID:15784)
Kind and gentle Centurian, Nummus Aureus:
Could you please be more specific in your claim of "plebeian and inaccurate agricultral financial portrayal" in the writings of Lord Mozel, by more clearly explaining your meaning?

Also, your request that "the words of the other lands stay in those lands," needs more careful consideration. Those words are sorely needed here in this land. Unfortunately, for some unknown reason, some knights and lords choose not to bring their words directly to us. However, even as Another's Thoughts were always meant "for all", words "uttered in other lands" must eventually be considered here, if we are to unravel the mysteries facing us all. The service of Sirs SteveH & Oro in bringing those words to us is helpful to many. Access to the other land is, at times, difficult if not impossible and having those "other words" posted here greatly simplifies life in this land, leaving more time to ponder and understand the topics discussed in those other lands as well as in this land.

Leigh (10/07/99; 14:48:51MDT - Msg ID:15783)
Goldspoon
We'll miss you, Goldspoon! You brighten up the Forum a lot! Are you travelling on Horse with No Name? He's faster than the Concorde!

Goldspoon (10/07/99; 14:33:56MDT - Msg ID:15782)
**Comex Close Winner***
Sorry..don't know having 'puter problems on my end....are you there...can you hear me?? no seriously... Congrats, i know it wasn't me....won't hear from me for a couple of days...Leigh, quit cheering that's not nice... i know you all are tired of Gold treading water ...i've become my own contrary indicator....so in the intrest of everyone my guess for tomorrow is...$292.63.....
Yellin of Troy...welcome, thanks for the horse input!
Gandalf...(thanks)....for what?...think a minute....

fox (10/07/99; 14:26:19MDT - Msg ID:15781)
fox
http://news.24.com/English/Business/Companies/ENG_151120_705957_SEO.asp
sorry, forgot the link
gold night to everyone especially to my overworked brother in law Fred

fox (10/07/99; 14:21:58MDT - Msg ID:15780)
fox
the Ashanti goldmine is in trouble
and the vaultures and the eagles are waiting;
Ashanti sames a good deal and for anglo and for gold fields

ss of nep (10/07/99; 14:16:19MDT - Msg ID:15779)
RRSP

RRSP =
Reserve Resources for the Socialist Parasite

Yellin' of troy (10/07/99; 14:15:20MDT - Msg ID:15778)
ORO's monetary thread
A dollar can be readily distinguished from a non-dollar, and
so can be valued separately. Its value is whatever the market says it is, based on its uses, supply, and demand,
just like any other item; no ultimate, foundational source
of value is needed. The dollar is useful, and so has value,
because it is money, currency: You can buy a cup of coffee
for .xx dollars at much lower transaction costs than a pur-
chase for gold or whiskey would entail. It's the de facto
standard. That dollars are valuable is no more unbelievable
than that a Microsoft product is more valuable than its technical merits might suggest. These things can be quite
conventional and weird; e.g., note the difference in price
between a 1.00 carat diamond and a .99 carat diamond. Use
for paying taxes and loans (legal tender laws) can help to
launch a currency and give it a floor, give people confidence in it, but that's hardly the whole source of the
value.

nummus aureus (10/07/99; 13:36:51MDT - Msg ID:15777)
Sirs SteveH & Oro #153110 & #15766
Gentle Sirs;
I observe you both have reposted this day a treatise by a Lord Mozel of the House of Kitco, in the land of Papergeldt.
I have no intention to split hairs, or demean what ever the point the Gold Lord took 500 words to make in his address, but I find the fruit of his statement tainted, with his opening analogy and justification based on a plebeian and inaccurate agricultral financial portrayal. I realize we are closely allied with the Papergeldters in the current campain, but this old centurian cannot take on faith the council of an outlander remiss in facts.
Gentle Sirs, I bear no blade against any in this struggle. Who among us can claim his coin purse is to heavy? I only suggest that the words of the other lands stay in those lands, with perhaps, a simple link to show the way. I remain, kind Sirs;
nummus aureus

Yellin' of troy (10/07/99; 13:29:49MDT - Msg ID:15776)
leigh
For an amateur, at least. More than I should, I suppose.

gidsek (10/07/99; 13:19:22MDT - Msg ID:15775)
OPPS Re message below, for Canuck

gidsek (10/07/99; 13:17:44MDT - Msg ID:15774)
FN .. for JCS.. from Kitco
Date: Thu Oct 07 1999 14:53
Mo in To (James (Mo in To@ I see ) ID#347205:
Hi all,
Just popped back to see what's happening. James, the correction was printed in the Globe this a.m. in a teeny tiny box on page two of biz section, correction stated that FN and Viceroy are NOT hedged. I think the damage was done....!
MoinTo
----------------
gidsek

ORO (10/07/99; 13:17:22MDT - Msg ID:15773)
watcher
The Fed has been using the exchange stabilization fund for direct intervention and was using directed loans through the banking system to allow the trading desks to save themselves, not by hedging but by countering the trend that puts them at risk.
If you are a bank's trader and you sold puts on the OEX you know you do not need to hedge, all you need to do is have a credit line with near-direct feed from the fed. The moment your puts are largely underwater, instead of delta hedging (what one should be doing theoretically) which moves the market further against you, the bank buys futures in order to move the market. This is the PPT activity.
In gold, up till the ECB made its move, the gold market was treated the same way. If the shorts were under water, then more was borrowed and dumped into the market, or more futures were sold to squelch the rise and bring the POG within the company profit bands.
Now this does no work under tight liquidity as we see today.

The money one looses in the stock market is the size of your margin credit line and your feeling of wealth.

The monetization at the window is done without the money hitting the markets unless directed otherwise.

watcher (10/07/99; 12:53:49MDT - Msg ID:15772)
ORO
THANKS for all your work

Could the fed try to settle many gold contracts in off market transactions with the overseas dollars now being bought back and monetized. Also to stop a falling dow could they also not use these monetized dollars to prevent a steep collapse in the markets.I think greenspan was quoted as saying he believes that in stocks that the money goes to money heaven , never to be seen again. In options ,he believes it is a zero sum gain(which I don't completey buy)
With this in mind,When the markets (stock) retreat the money disappears accept those who have options or are short which is a zero sum gain,one winner and one loser.The tranfer of wealth goes to those on the positive side of the option trade . Those who also sold at the top of the downward moving market also benefit but that is just a Function of current pricing and subsequent liquidity at that snapshot in time in the market. If there was all sellers liquidity would be zero and no pricing possible in the extreme. So in this scenerio , the fed adds liquidity and the real place to be is in options as they maintain a semblance of liquidity and then therfore a floor on the market where the place to be again is on the other side of the option trend as the fed buying pushes up the market.
These overseas dollars being monetized then find their way into the bubble allowing the game to continue with the traders making most of the money .
This I thought would be a good way to supply monies to those parties at risk in the trading houses (banks)
without being obvious.
This still might bring inflation but might stop a total collapse in the markets and the dollar.
Does this make sense at all.

JCS (10/07/99; 11:45:51MDT - Msg ID:15771)
Re: financial panic article
Sorry for the poor paste job.
Also, its "Murphy" not "Murphey"

JCS (10/07/99; 11:42:01MDT - Msg ID:15770)
Reply to auger, re money panic in early 1900's
auger, et al

This is an excerpt from an article sent to me and I am trusting in its reliability and historical significance:

"By the end of the 19th Century, American industrialists and bankers, through the Industrial Revolution, had
achieved great wealth. An excellent account of this is Matthew Josephson's 1934 book, entitled "The Robber
Barons: The Great American Capitalists 1861-1901" - (by Matthew Josephson, Harcourt, Brace and Co. New
York, 1934: available secondary market).

The industrialists were known as "Big Business" and the Wall Street bankers as the "Money Trust". The most
prominent of these was banker J.P. Morgan.

It was Morgan, working with the European banking dynasties, who created the "Financial Panic of 1907".
This was an effort to manipulate Congress to approve of a central bank.

In 1912, Woodrow Wilson became President. His chief advisor and administrator was Col. Edward Mandell
House, who was a proponent of world government, a representative of the European banking dynasties, and
had close ties with the Morgan interests.

In 1912, House wrote a book, wherein he laid out a plan to bring America into a world government. ("Philip
Dru: Administrator", by Col Edward Mandell House, 1912; available at General Birch Services, P.O. Box
8040, Appleton, WS 54913-8040). On page 222, he wrote:

"...our Constitution and our laws...are not only obsolete, but even grotesque."

His plan, and, to use his own words, "a conspiracy, " would seek to achieve:
1. The establishment of a central bank;
2. A progressive graduated income tax; and
3. Control of both political parties in the U.S.

What was House's goal? "Socialism as dreamed by Karl Marx". House, who called himself the "unseen
guardian angel" of the Federal Reserve Act, in concert with the Wall Street and European bankers, convinced
President Wilson of the central bank concept.

The Federal Reserve Act was passed on December 23, 1913 (by a vote of 298 to 60 in the House of
Representatives, and 43 to 25 in the Senate).

After the vote, Congressman Charles A. Lindberg, Sr. (father of the famous aviator) told Congress:

"This act establishes the most gigantic trust on earth...When the President signs this act, the invisible
government by the money power, proven to exist by the Money Trust Investigation, will be legalized...The new
law will create inflation whenever the trusts want inflation..."

You will never find them listed in phone directories under "government offices". It is a private corporation
owned by approximately 300 Class A Stockholders. These people own the Fed by owning the stock of the
largest member banks in the New York Federal Reserve Bank, which, for all practical purposes, is the Federal
Reserve.

The controlling interest is held by less than a dozen international bankers, whose names, until recently, was
one of the best-kept secrets of international finance:

1. Rothschild Banks of London & Berlin
2. Lehman Bros. Bank of N.Y.
3. Lazard Bros. Bank of Paris
4. Kuhn, Loeb Bank of N.Y.
5. Israel Moses Sief Banks of Italy
6. Chase Manhattan Bank of N.Y.
7. Warburg Bank of Hamburg & Amsterdam
8. Goldman, Sachs Bank of N.Y.

The most influential of the European interests is the Rothschild family in London. Each of the American
interests is, in various ways, connected to this family, including the Rockefellers, who are by far the most
powerful of the Fed's American stockholders (primarily through the Chase Manhattan Bank).

Thomas Jefferson issued this warning: "If the American people ever allow private banks to control the issue of
currency, first by inflation, then by deflation, the banks and the corporations that will grow up around them
will deprive the people of all property until their children wake up homeless on the continent their fathers conquered."

******************
I sent this article to Bill Murphey and his reply was: "Thanks Claude, That is all part of it, for sure. Bill"

The fact is, the Fed is a private corporation, not affiliated with or controlled by, the United States
Government. The NY Fed is, effectively, the Federal Reserve Central Bank, and it can do whatever it pleases. It has never been audited and only with the help of people like Murphy is there any likelihood of the "real facts" being exposed.

Belinda (10/07/99; 11:35:43MDT - Msg ID:15769)
gold
http://www.usagold.com
does anybody know which Gold stocks are not hedged/ sold forward?

ORO (10/07/99; 10:57:03MDT - Msg ID:15768)
Internets
Internet index soaring you might think they were gold stocks...
Great rejoicing over Yahoo's managing to "surprise" the street in generating the few pennies of profits that will make for a next year PE of 250 - 300.
Great investments at the end of the 20th century.
Stock goes bonkers after going bonkers in expectation of going bonkers...

elevator guy (10/07/99; 10:55:12MDT - Msg ID:15767)
Thanks for your input, Journeyman!
I'm just a little guy, who is just now climbing out of the financial ignorance of my upbringing.
I risked a little discretionary income, and now have a small wad with which to re-invest in things that will go up!
Without this forum, and a few others like it, I never would have been alerted to this opportunity.
Obviously, real gold is where its at. Looks like the dollar will never be the same.
Please forgive my feverish exuberance, as I try to time my exit from options with the greatest advantage.
We sold the Dec 270s, and the Feb 270s, because as the price of the option goes up, it becomes increasingly illiquid. Didn't want to be left with paper, with no buyers.
(Did I get that right?)
Our objectives now are-
Store earned value of wealth in a form that cannot be manipulated, or corrupted, ie; accumulate physical gold.
Gold stocks, silver stocks, go long.
Short the DOW, as the dollar burns.
Thank you everyone for sharing your thoughts.

ORO (10/07/99; 10:41:22MDT - Msg ID:15766)
Reposts - monetary thread
Date: Thu Oct 07 1999 04:33
ORO (@Eldo @Cap Kirk) ID#71231:
Copyright � 1999 ORO All rights reserved
The fixed thing is a distortion, it is not the pure barter money system.

Captain Kirk - The printed paper/electro money relies for its value on legal tender laws. These are a form of enslavement through the force of a gun at your back if you refuse to get payed in it. The second element is unrelenting indebtedness through taxation or bank loans ( expanding money supply so that savings are impossible and the only way to buy something of value for most of us is to burden ourselves in debt ) . Also the value of slavery money is extracted from us through the collections departments of police and private repo-men. The enforcement of debt repayment is ultimately a govie function. Once indebted, one allways returns MORE than was given. The government has softened the support for the creditor through limited liability laws and bankruptcy proceedings that end in our being debt free. But the basic issue is still there - there would be no demand for paper money if we did not borrow it, have to pay taxes in it, or just plain forced to take it.
So, though undefined, the fiat has a value as both cash and debt settlement media. The cash value is derived from your enslavement, the debt settlement demand is something that the real effects of the existence of fiat forces on you.
Also, the govie supports the fractional reserve banking system by not forcing banks to disclose that they are insolvent by definition. i.e. they are banks because they tell you you have your money as they lend it to someone else who pays it to you in return for, say, your cake. Thus they have your money, and your cake was payed for with your own money. In reality, you still have your money in hand, but you have lost your cake in return for a promise.
I would prefer a fund structure, where you know you are buying and selling securities, and the money you deposit in an account is yours and the bank can't lend it.

Date: Thu Oct 07 1999 04:33
Captain_Kirk (Nicodemus@sheeple) ID#339203:
Copyright � 1999 Captain_Kirk/Kitco Inc. All rights reserved

You make a good point, and the present dollar scheme must have a semblance of order for it to work at all, and to a certain degree it is working. Of course when you build a 100 foot tall dam which will only hold 50 feet of water but not 100 feet, you can go along quite nicely with your 50 feet of dry season water. After a long dry spell, maybe even for years or generations, you get to believing your dam would hold the 100 feet just like the builders told you it would, but you have never tried the dam at 100 feet. Of course, when the 100 year flood hits, the lake fills to the 100 foot level and the dam busts. Everybody downstream is killed, and the original builders are gone. Who are you going to blame? Just yourself, for not checking out the dam before you decided to build in the flood plain below it. Now was it the water that killed you or the dam that killed you, that is the question? Likewise, will it be the financial chaos that bleeds you dry, or will it be the defective money system that bleeds you dry, that is also THE question?

Date: Thu Oct 07 1999 04:14
Captain_Kirk (ORO@grabbers) ID#339203:
Copyright � 1999 Captain_Kirk/Kitco Inc. All rights reserved

Sad but true, what you say, it does seem. The bankers' commodity is his dollars, and if no one takes his dollars, he still has a bunch of grabbed gold. One small group of people possessing large bunches of gold is no problem for the free market. The build themselves a bunch of castles, but they PAY OUT THE GOLD, putting it into circulation, which keeps the money function of gold operational. Or they sit on it, and commerce happens with the available gold. They can't dump the gold like they can today, because they would have to spend the gold which would not affect the money property. The gold prices of things would not change by very much, the market would adjust. Free market exchange value ( price ) is only established at the moment of exchange, therefore value is only established at the moment of exchange. The gold is not the wealth, money is not the wealth, labor is the wealth. Money is the mechanism for adding efficiency to the exchanges of goods and services. The banker's scheme is a simple mechanism which is used to direct the exchange of wealth according the desires of the banker's. But it is never a free market mechanism, which is the most efficient mechanism available, but most often it is a mechanism which misdirects exchanges so that the efficiency of the wealth producers is retarded. Using our present scheme is just plain retarded. No sane man could accept such a plan, if he undersood what was going on.

So it is not the fact that the bankers have a bunch of gold which is bad for the markets, it is the fact that they have the dollar scheme which is bad for the markets.

Date: Thu Oct 07 1999 04:11
auger (Eldorado) ID#264134:
Copyright � 1999 auger/Kitco Inc. All rights reserved
Your 3:27 & 3:29, We are definitely on the same side here. I agree that the main problem of the hard backed currency right now is volume and I think additionally ( incredibly ) acceptance.
The Bimetalic standard just made it easier for the common person to engage in some of the manipulation for his own benefit ( much fairer ) . Some time in the 1900 to 1910's there was a money panic, as I understand just not enough to go around. Those that had it ( very few ) basicly had a monopoly on the money and most people suffered economicly regardless of the skills or productive ability they possessed. This is the type of manipulation to which I was refering, and it can happen with a single metal backed currency. Of course the timing of the money panic seemed to set the stage for the introduction of the federal reserve act in 1913. Tah Daa WE will solve all your problems, trust US! Today, it looks like the cure was worse than the disease. The pendulum of history ( repetition ) swings back and forth through time. As for me, I looking for some honest money. Even if it can be manipulated, it has to be done through a marketplace rather than government back room, good ole boy, backscratchin, bribe takin, etc overseers. I suppose the greed is the same ( gov vs market ) but the market has to be honest about it.

Date: Thu Oct 07 1999 04:08
Eldorado (@the scene) ID#226299:
If you want to use paper currency, fine. Just imbed a grain of gold in it and call the paper 'One Gold Grain', or 'One Silver Grain'. Whatever. Keep the 'Bravo Sierra' away from it!
Date: Thu Oct 07 1999 03:58
Eldorado (@the scene) ID#226299:
Captain kirk -- The dollar is a 'contrivance'. A supposedly fixed one at that, in that time. Who needs it but the money changers? Screw it! Go gold; Go silver; And nevermind the supposed 'certificates'!

Date: Thu Oct 07 1999 03:54
Eldorado (@the scene) ID#226299:
Captain Kirk -- Let me add that you cannot get an exchange through medium ( gold/silver ) if that medium has for some reason gotten TOO expensive/valuable to use. It then is not a 'medium of exchange', but a 'rare painting'! That happens when a so-called 'fixed value' is put upon it. That has happened in this country in the past. that can easily be avoided.

Date: Thu Oct 07 1999 03:54
Stone-Gold (@Thin) ID#274315:
What I mean is, here we are fixing gold to a currency value, which
isn't fixed to anything. Like Captain_Kirk said, the cart is before the horse. Your foot might be fixed inside the ice-skate, but put that iceskate wrong and you ain't going the way you wanted to go.

Date: Thu Oct 07 1999 03:53
Captain_Kirk (Eldorado@revaluation revamped) ID#339203:
Copyright � 1999 Captain_Kirk/Kitco Inc. All rights reserved

Is the dollar the gold or is the dollar the number. Logical inconsistancy to call a number something, it is just a plain ol number. You can have natural numbers, and fractional numbers, and transcendental numbers, but their definitions are logically consistent within the realm of numbers. You can count some THINGs or you place some THINGs in an order, but you have to have a definition of the THINGs so that the action of counting is reproduceable by a third party. Going around counting angels that only you can see, does not allow for communication and commerce. The problem with the post-1933 dollar is that NOBODY can describe what it is. It can't be a type or class of numbers because, then it can only be defined within the logical mathematical system of numbers. If it is just a word, then to have 5 dollars you have to have the word "dollars" printed 5 times. No, dollars must be defined. And to say that dollars are "value"...., well you see where you end up with that, sorta "out to lunch", were talking psycho ward time here.

Date: Thu Oct 07 1999 03:41
Eldorado (@the scene) ID#226299:
Copyright � 1999 Eldorado/Kitco Inc. All rights reserved
Captain Kirk -- In a general barter scenario, is one of the items fixed ( except in your own mind of course ) ? Think in those terms. You should know that in a world where supplies in everything fluctuate on a daily basis, as well as wants and needs, that NOTHING remains static, and there really is no way to keep a medium of exchange somehow static according to all that. Don't even try! You'll only create congestions in one manner or another. We've seen that crap happen in this country! I think the ONE real thing you want to see in a common medium of exchange is that it is NOT necessarily important to hoard, as it is no more important or valuable than anything else on the market. Thus, except for perhaps savings in one form or another, why keep it?
Right now, many of us see a particular value in 'hoarding' or keeping metals because of all the pitfalls of paper and what it will undoubtedly be undergoing. It only makes sense. But in a 'real' world, we would treat it as we have done with paper; spend what we need to and save a slice for a rainy day and retirement.
Boats float, and so should everything else!

Date: Thu Oct 07 1999 03:37
ORO (@Captain Kirk - demize of the grabbers) ID#71231:
Copyright � 1999 ORO/Kitco Inc. All rights reserved
Once the $ goes back to its spiralling decline, halted by the institution of a debt trap for the US, then the future chaos in the $ world will find the grabbers with empty hands as 99% taxes on miners start in SAf, SAm, and anywhere else.
Without the artificial $ strength, the US soon looses all its' strengths - first the liquidity of its banking, then credit from the world, then its economic prestige, then cheap oil to transport goods over its sprawl, then loose attractiveness to high tech immigrants both old and new, these will return home to build new silicon valleys compeeting with ours, then we loose credibility, then the high tech military edge and the ability to field a large army alltogether.
It just all blows away.....

Date: Thu Oct 07 1999 03:29
Captain_Kirk (Eldorado@revaluation, or devoid of value.) ID#339203:
Copyright � 1999 Captain_Kirk/Kitco Inc. All rights reserved
Fixed revaluation is one thing, floating revaluation is something else entirely. You see the fiction here? My dollars are somehow based on this here gold I have, because I have a fixed value of dollars for a fixed amount of gold. This is where the cart got put before the horse. First you had the note which was a note for a fixed weight of the gold, then you had the gold which was the gold for a fixed number on the note. It sorta works out in peoples minds because, well, something is FIXED, which somehow fixes value. But if nothing is fixed then either the special numbers and special papers are the money, or the gold is the money, but not both, cause we need something FIXED. Now, if the special numbers/paper is the money, then why do you need the gold, and more importantly, why do you DESERVE the gold? They ain't going to be able to answer that question. This is why ANOTHER don't make no sense to me. He is just some old man with dreams of having all the GOLD in the world. Hell, we all have dreams, but it ain't going to happen the way we dream, don't you see.
Date: Thu Oct 07 1999 03:29
Eldorado (@the scene) ID#226299:
ORO -- Not that they have no value, but they have no volume. That's a BIG key in a common currency!

Date: Thu Oct 07 1999 03:27
Eldorado (@the scene) ID#226299:
auger -- As you will notice, it was the price ratio fix between gold and silver that caused the problem. Thus, let the suckers float. End of problem...

Date: Thu Oct 07 1999 03:24
ORO (@Eldorado- El debto is there with full Louis Viton Luggage) ID#71231:
The debt is allready there. It is ready to drive repricing in all shiny metals. Industry will just have to learn to deal with it. The slightest surge in investment or Jewelry demand will send the prices moonwards. The plad, plat, rhodium, iridium have all the properties of gold save maleability for some, they are mostly more rare, and have industrial uses besides, and free markets to boot - with no govie stock overhang to mess things up with. They have allways traded at or above gold prices, which will serve as a floor even if gold skyrockets above them initially.
Whaddaya say

Date: Thu Oct 07 1999 03:13
Captain_Kirk (ORO) ID#339203:
Copyright � 1999 Captain_Kirk/Kitco Inc. All rights reserved

Quick scan of your Another monetary system post. Much food for thought. Will ponder more tomorrow.

I have read most all of Anothers stuff. I prefer my directed linear approach where fraud is fraud, and ownership of private property is respected. Gold is just a form of property. Today, the gold grabber bunch who wish to be Kings of the world, are pushing for ALL the gold, even the gold in the ground. Maybe even the word "Gold". Pretty clear open and shut scam, this gold grabbing scam. Today, gold is the money, and people have always wanted to get their hands on all the money. There is nothing new under the sun, just different shades of grey excuses for common thievery.

Date: Thu Oct 07 1999 03:12
Eldorado (@the scene) ID#226299:
Copyright � 1999 Eldorado/Kitco Inc. All rights reserved
ORO -- Platinum and paladium are about totally used in industry. I don't see them playing a role in monetary affairs anymore than 'barter'. Silver, on the other hand, is, or can be, plentiful enough to make for common currency to a large extent, even though it too is an industrial metal. The key is that their 'price' is not controlled; that their own value may fluctuate amongst everything else out there. Only then do you have a free market, and given that, actually anything can be used as a medium of exchange, but as you know, it is the most common and most familiar across the world that makes a 'medium of exchange'. Gold and silver have respectively and respectfully filled that bill. Perhaps someday, something else can/will come to the fore, but it MUST do so without 'debt' attached!

Date: Thu Oct 07 1999 03:01
ORO (@Eldo - the Scrip) ID#71231:
If govies do not give up the scrip, there will be a new "gold bubble".

Can you see any other way?
I think silver plat and plad will figure into this sceme in some odd way too. I think they are going to be future sources of chaos.
Date: Thu Oct 07 1999 03:00
Eldorado (@the scene) ID#226299:
THC -- Grains!

Captain Kirk -- They've 'revalued' it before, and I think they want it to rise to the point that not only makes it 'logistically' possible to do it again but absolutely mandatory that they do. Times have changed and we are now at the VERY beginning of that transition. It'll easily blow up on 'em if they aren't VERY careful! Got physical???

Date: Thu Oct 07 1999 02:52
Eldorado (@the scene) ID#226299:
ORO -- The control of money/currency is seemingly power. That is ONE thing they will NOT easily concede

Date: Thu Oct 07 1999 02:50
Captain_Kirk (libett@revalue USA gold) ID#339203:
Copyright � 1999 Captain_Kirk/Kitco Inc. All rights reserved

This revalue thing is a key thing, which must be studied. We need comment from mozel, ORO, and others on this very important possibility. There could be far-reaching legal law basis import to any USA treasury revaluation. How can IMF revalue and not USA/FED revalue and visa versa? Which gold is the USA treasury's, and which gold is the FEDs, published disinformation figures, are one thing, actual ownership another. My sense is that if USA treasury gold is revalued, the legal fiction USA corporation mother will crumble and fall. The cat will have jumped the bag, and there will be no turning back. Even the color of law form for post-1933 dollars will crumble, thereby exposing them for the actual fraud they are. Or is my information faulty?

Date: Thu Oct 07 1999 02:48
ORO (@Eldorado) ID#71231:
Yes indeed.
If govies were just willing to let go of the concept of currency and let it die off completely, we could have free markets.
Note that the ANOTHER scheme causes gold immobilization in the hands that have it as long as govies insist on having the power to print their multiple zero scrip ( a.k.a. slavery money ) .

Date: Thu Oct 07 1999 02:05
ORO (The ANOTHER monetary system) ID#71231:
Copyright � 1999 ORO/Kitco Inc. All rights reserved
The form of ANOTHER's expression is appropriate to a Saudi official. It is very consistent with someone with a very heavy interest in the relative value of gold being as high as possible. ANOTHER's currency system is being put in place as "revaluation" ( by the IMF ) of gold, and its' marking to market ( in the ECB ) proceed to increase its value as a reserve asset, even if not a penny of interest can be gained.
The thing most of us miss most of the time, is that the simple fact that everybody's interests, save the governing class in the US, are stacked up towards this new format for floating currencies and gold reserves. It puts everybody on an equal footing and opens the possibility of a level playing field for both banking and trade. It also eliminates the segnorage of the US in printing the world's medium of trade and debt settlement and has a chance of revaluing the debt of the EMs into insignificance - freeing them from the trap the US bankers sprung on them. ( see Mozel post ) One more issue is that the gold accumulated in Europe, Asia, and Arabia through trade, and in the US through payments for services in war is given its original weight as the representation of a whole nations' past financial achievements. ( again a good Mozel point )
The US elite is very much like the elite of Johnstown before the flood, enjoying the night in a cocktail party as the engineer tells them of the near certainty of the collapse of the dam if the storm outside continues, and even if it stops. As the custodians of the dam run for their lives, having seen water coming through the cracks, the elite continue talking of the new library they will have built, the wives talking of the benefits to the poor, the husbands organizing their conspiracy to rig the bidding. Notice that even the engineer, convinced of the impending disaster and its ramifications - including the high probability of his own death - still comes to the party. ( This account is partly fictional - so take no offense )
The working mechanism of the new currency system ANOTHER foresees and is involved in implementing is very straightforward, though only somewhat less fictional than what we have today. It just happens to artificially favor gold.
The manner of strengthening a currency is the main difference from the current system. Each country, and the IMF as well, strengthens its currency by bidding for gold within its borders. As the price of gold increases locally, the backing of the currency has both increased in quantity and in price - and therefore in percentage of backing. Other countries respond according to their need for a stronger or weaker currency for domestic or international political or economic purposes. Through the importation of gold, there is something gained for a net exporter. Through the import of goods, one's currency is necessarilly weakened as it is eventually used to buy gold by the exporter, strengthening their currency relative to the importer. It restores the best aspects of the gold standard in trade and in the settlement of debt, but it will enslave the countries that do not have their own gold and are net debtors. Countries that are US creditors but have no gold will be left with whatever the gold value of the $ would be relative to the Euro, SF and other major currencies.
The gold price in this system has no cap. All have a vested interest in keeping the gold price high. In the meantime, the gold miners will be taxed at incredible rates and gold holders will be picked at as the capital gains taxes on their gold sales are raised over and over. Initially, there would be a strong push to have the gold holders spend the money unhindered, to jump start a shocked economy. After the initial spring time for the gold owners, there would be the atmosphere of growing taxation of gold profits ( inducing people not to spend their gold ) .
Monetary policy would ammount to the throwing of unbacked paper into the market, which would cause the decline of the currency and a surge of exports. The exports will garner a large chunk of gold coming in, and would either displace the currency ( if gold is not bought to increase its backing ) or will be used by the governmnet to support the currency.
Contrast this with the current system, where one needs to devalue the $ in order to strengthen one's currency, by throwing $ into the market and buying one's own. Thus the $ gained in trade are lost in defense of a currency in what is a sure defeat if you are a debtor nation - the US Fed/banks can invent as many $ as are necessary to borrow your own currency from your banks and dump it on the market. As you raise your interest rates, your economy grinds to a halt and as you supply more of your currency to your creditors as a result of higher interest rates, you are either more in debt, or the funds fall into the market where they eventually lower the value of your currency. If this attack on your currency was accompanied by a rush of hot money out of your financial markets, your economy would be destroyed. Your $ denominated paper would be defaulted, and your debts rem

Journeyman (10/07/99; 10:23:46MDT - Msg ID:15765)
Greenspan on TIMEing
<HTML> Several posters, particularly Elevator_Guy, are concerned with timing, trying to get the last little bit of advantage before the prognosticated financial armageddon. Well, good luck, but you might want to heed Alan Greenspan: "As I testified before this committee in the midst of the Mexican financial crisis in early 1995, major advances in technology have engendered a highly efficient and increasingly sophisticated international financial system. ...But that same efficient financial system, as I also pointed out in that earlier testimony, has the capability to rapidly transmit the consequences of errors of judgement in private investments and public policies to all corners of the world at historically unprecedented speeds." -Alan Greenspan to House Banking Committee, 16 September, 1998 Here are a few examples of some of the "historically unprecedented speeds" Mr. Greenspan may have had in mind: - The DOW transportation average jumped 75 points, about 7%, in about half an hour starting about 12:30, a "startling move," apparently in response to news that Northwest Airlines was increasing fares. -Bob Pisani, CNBC, 29 Jan 1999 - The South Korean Won has depreciated 40% in the last four days, down 10% in the first three minutes of trade last night... and it is predicted that the won will likely drop another ten percent, the limit, again tonight. -CNBC, December 11, 1997 - The dollar at its low was down 11 yen, at 120.3 yen per dollar from 132 yen per dollar yesterday. This is better than an 8% drop in the dollar, the bulk of this happening in about three minutes in the middle of the night. This is an "astounding drop" in the world's largest currency. -MSNBC etc., 7 October, 1998 -"This is the biggest one day dollar drop in 25 years." -Kathy Jones, Prudential Securities, 7 October, 1998 Regards, Journeyman 

PH in LA (10/07/99; 10:19:40MDT - Msg ID:15764)
The Wealth of Nations

"It restores the best aspects of the gold standard in trade and in the settlement of debt, but it will enslave the countries that do not have their own gold and are net debtors." ORO (10/06/99; 23:44:47MDT - Msg ID:15721)

The element we know as gold, while more plentiful and therefore easier to extract in some locations than in others, can be found virtually anyplace on earth. In this sense, it is a more equitable basis for use as "the wealth of nations" than oil, which really is specific to some nations over others. The fact that gold is easier to extract in some places than others is like human survival itself... Much easier (allowing for more leisure) is some places on earth than in others. At the same time, each place on earth has its own advantages over all others, and the expoitation of this through human effort is what holds humanity ever more and more together. Yes, we will have a "one world" currency. We have always had one: Gold! The "Wealth of Nations".

PS. Fantastic discussion last night and this morning! Thanks FOA, SteveH, ORO, Mozel, and all who contributed. Just by reading we all find ourselves "In the Footsteps of Giants".

Orca (10/07/99; 09:59:09MDT - Msg ID:15763)
(No Subject)
The Economist .. Peter Drucker says it all
I first encountered Peter Drucker about 30 years ago as a new manager learning my profession. He was profound to me then... and he still has sage advise for those willing to listen. In the last edition of The Economist, Mr. Drucker puts forward a very good dialogue on the central bankers and their management or mismanagement of currencies et al.... I would encourage those who have an interest in this aspect of monetary systems to read it as it is most enlightening. The date of this issue is September 25.

I want to take one small part of Mr. Druckers piece and relay it to all... (very prophetic given the events of the last two weeks in the gold trade). From Druckers piece.....

"Every financial-services firm has to do some trading for its own account. It is a routine part of managing the firm's own finances and is aimed at minimizing risk. e.g., by bridging gaps between the maturity dates of what the firm owes and what is being owed. Beyond this a certain amount of trading for the firm's own account can and should be profitable with minimal risk; it exploits the firm's knowledge of the markets. But when trading becomes a big activity, it ceases to be 'trading' and has become 'gambling'. And no matter how clever the gambler, the laws of probability guarantee that he will eventually lose all he has gained, and then a good deal more.

This is already happening to the leading financial-services firms. Almost every big firm has now reported substantial 'trading losses'. In several cases the losses have been so heavy as to kill the firm. One example is Barings, the world's oldest and most respected London private bank; what is left is now owned by a Dutch financial group. Similar trading losses forced New York's Bankers Trust - not so long ago one of the most respected international banks - to sell itself to Germany's Deutsche Bank. Several Japanese financial giants survived their trading losses (e.g. Sumitomo speculating in copper) only because Japan Inc came to their rescue. But even Japan Inc could not save Yamaichi, one of the largest Tokyo stockbrokers, from losses it incurred by trading in property for its own account.

In every single one of these trading losses, the firm's top management has claimed that it knew nothing of the gambles, and that the gambling trader violated the firm's rules. But in the first place there is a limit to coincidences. Such widespread breakdowns cannot be blamed on 'exceptions'. They denote systems failure. But also, in every single on of these 'scandals', top management seems carefully to have looked the other way as long as the trader produced profits (or at least pretended to produce them). Until the losses could no longer be hidden, the gambling trader was a hero and showered with money."

Mr. Drucker in a related article describes the bubble in which Mr. Greenspan now finds himself trapped.

Read it if you can. Those that have been gambling in the gold trade will now realize the wrath the markets are about to inflict.

A most fascinating and timely set of articles. Thank you Mr. Drucker where ever you are.

ORO (10/07/99; 09:56:59MDT - Msg ID:15762)
Reposts + Mozel
Date: Thu Oct 07 1999 06:54
ORO (@Mozel - bankers-oil pricing) ID#71231:
Copyright � 1999 ORO/Kitco Inc. All rights reserved
The banking system would more likely be protected by Fed issued $ settled calls that will not supply gold, but may very well protect the balance sheet. The gold will be extracted one way or another from the hapless depositors in $ settlement, and from the hedged miners through bankruptcy proceedings- whether chap 11 or 13. The rest will be either leaked from the IMF, Fort Knox ( if it is still there ) , or from increased production at much higher prices. The Fed giveaway of options would cool down the urgency of demand, while lowering the concern of the BBs for the price reached if they bid for the gold to fulfill their obligations.

The Arab oil and gold pricing issue comes out to their putting away a certain ammount of gold in proportion to the price - they value the oil at say 200 bbl/oz ( see old calculation ) so at $20 oil, they have to buy 0.005 oz of $400/oz gold per barrel or $2 - leaving $18 for whatever they need for current consumption. In this way they have the irreplaceability value of oil restored to them ( just as the gold was irreplaceable-can't be mined again ) . If US oil production to replace all imported oil is possible only above $30/bbl ( I think the actual figure was $40 for coal conversion, and $30 for tar sands and shale ) , that brings the associated gold price to $6000/oz - one of the magic numbers we bandy about.
This issue is also the issue of short term vs long term pricing. Say the cost of oil extraction is $2 for the first bbl, $10 for the median bbl and $200 for the last 10%. How should oil be priced? or say Arab oil can be extracted at $2/bbl, the next level is Venezuelan oil at $5/bbl and then north sea and gulf of Mexico oil at $11/bbl. But oil's value for convenient use ( before people start sitting in cold houses and commuting 5 per car and bus lines get reestablished ) is at $60/bbl. How then should oil be priced? If all the Saudi $2 oil is consumed at $2 + a bit, what do they get to keep from the world's consumption of their patrimony? nothing? what would the world do with $2 oil? use 2 gal/mile cast lead convertibles with 20000000 cc engines and built in spas - fly helicopters to school? It would be wasted big time. No one would enjoy the greatest use from oil, then the world would be shocked when that oil was gone. If the world would price oil at a reasonable utility value, then the oil may be used efficiently.
The Arab reasoning would have been the irreplaceability issue. If they are letting go of one irreplaceable thing of concrete value, then they would need to replace it with an equally irreplaceable item at the proportion of rarity.

PS Thanks for replying yesterday, didn't have time to reply

Date: Thu Oct 07 1999 05:27
mozel (@Thoughts From Mozelland @RB) ID#153110:
Copyright � 1999 mozel/Kitco Inc. All rights reserved
What is the relationship between paper gold discounted to $6,000 per ounce and the exchange value of an ounce of gold in hand ?
None.
The first is a creditworthiness of the promise valuation. The second is not.
**********
A theory of the FOA & A Team is that the greenback "market" for gold must fail. Because there are more promises for gold delivery than can be delivered upon. Hmm. Well, let's look at it. First from the miner problem.
The Ashanti trouble is the kind of trouble farmers have gotten into when the farms finances don't look good to the banker on paper. Even if the farm is making money and the payments are up to date, if the collateral valuation falls below the loan exposure, the banker will foreclose. For the option writing miner the problem is not delivery of gold on the option, at the moment anyway, the problem is that volatility of the option price, which is his liability from the banker's on paper view of things, puts the miner's balance sheet underwater. Well, as was seen in the case of Ashanti, if the banker carries the miner's option price volatility liability, things go on. And if the Federal Reserve allows the banker to do so, things go on swimmingly so long as the miner has the gold in the ground and can mine and deliver the gold.
In the case of miners who have written options beyond their resources or reserves, it's curtains. The Big "B" as in Bankruptcy and Bre-X. Is that the end of the gold market in greenbacks ?
I don't see it yet. Maybe I'm not seeing something, but the gold market in greenbacks is, compared to say, the budget for Medicare, a mini-market. I just can't stop hearing those words of Greaseman in my head about how every two or three generations the taxpayers have to bail out the banking system. Because when you analyze the flow of consequneces from the gold loan debacle, they always end up back at the banking system, which as we all should know, was made Federal Reserve System, a.k.a. Lender of Last Resort, for just this sort of debacle.

The banking system can defend itself. It can simply make a rule that the liability for delivery of gold will be a ) reported off balance sheet b ) reported at the original option valuation when issued. Or something even more creative. It doesn't matter then if gold goes to Big Number. The banking system has immunized itself.

Another exposure is through hedge funds that are short gold. Hmm. Well, who have the lenders been ? We are told 50% are private parties, like uptick's clients. Ooops. Lender's risk. The other 50%, the European central banks, have announced their five year work out plan. So, they get whole.

Well, won't these defaults sap liquidity from the system ? Yes, but won't a rise in the greenback exchange rate for gold add it back ?

Maybe, the IMF and the IMF greenback are toast. It wouldn't surprise me. But the USA is a different corporate going concern in bankruptcy altogether.

The only thing to hang your hat on at the moment is that unit of account in .0whatever ( where is SDRer ? ) grams of gold in the euro, which if there is no legal tender 100 euro coin doesn't mean a whole lot except at international transaction settlement time.

In gold terms, the Arabs have oil overpriced. It takes a whole lot more work to get gold out of Mother Nature than to get oil. The last time the Arabs OPECed the world ( and created HIPC of the oil poor who had to have greenbacks to get any oil ) , the problem soon became how to recyle "petro dollars" into productive use. Demand for oil is elastic. Maybe this time somebody will realize the better solution is really, really to increase gold production. Like with tax and enviro exemptions instead of punitive taxation and regulation of gold production.
People say $600 per oz. is the equilibrium greenback exchange rate for gold. Where do they get that figure ? It's not high enough to attract a rush of investment funds. But, it's too high for the Indian jewelry market. I don't think anybody has a clue about what a new international monetary agreement will finally be.

Broken Oak (10/07/99; 09:56:13MDT - Msg ID:15761)
Hipplebeck
At a certain point people will not sell their gold until they know the upper band of trading. They want to maximize their take in the market vis a vis their dollar denominated obligations. They will wait so as to trade as little gold as possible to settle the debts or to maximize the purchases of performing assets (such as businesses which pay a good dividend, etc).

When we think that $xxx price is high enough to sell then we must also compare this with the entire context and situation. Right now you think that you would easily sell your gold for $10,000 per ounce. Possibly not at that time though.

Journeyman (10/07/99; 09:35:01MDT - Msg ID:15760)
Swiss Gold Riots -- Judas! (Economy, that is)
Just ran across the following two news items from January 14, 1998 (about 1.75 years ago) while looking at some old links. They've taken on new meaning for me since I've been following this forum. The items were on the same "page" but separated by several other items in between: 'The Judas Economy' ... Recent events in Switzerland point to its currency, the last pegged to gold, as about to become unchained. An article in New American magazine suggests that lurking behind recent outrage over Jewish Holocaust-era gold hidden in Swiss banks is a subtle plan." "The mass media manipulators have not suddenly become conscience stricken about victims of the Holocaust, horrible as that was. Rather, it is a cloak for undermining Swiss independence. The Swiss franc stands as the last impediment to the worldwide debauching of currencies now in progress. The Swiss money, at present, is a roadblock to the planned world banking monopoly. The master plan, now in high gear, is "the establishment of a "world" central bank which could create a common paper money for all nations and then require them to inflate together at the same rate." The Judas Economy," is the title of a book just published by an editor at Business Week magazine. [Actually that Business Week editor is CNBC "Chief Commentator" Bill Wollman. -Journeyman] The global corporations profit from the labor of the producers they employ, but rather than reward these workers for their contribution to corporate wealth, the corporations throw them out in the street and hire cheaper-costing Third World employees." 'Riots' Riots in Indonesia, riots in Switzerland. ("In Switzerland, where five banks have already gone bankrupt over the past three months, people have begun converging on supermarkets, pharmacies and hardware stores, buying up canned food, medicines, bottled water and other necessities. There has been rioting in Bern and Geneva." Weekly World News. Near-riots in France. And this is with the "good economy." What happens when the "bad economy" arrives? ... -Jan. 14, 1998 <http://www.montco-pa.com/docs/news/observer/obs011498nn/htm> Regards, Journeyman

USAGOLD (10/07/99; 09:33:03MDT - Msg ID:15759)
Today's Market Report: London Dealer -- "There Are Rumours about People in Trouble."
MARKET REPORT (10/7/99): Day Nine of the Big Breakout....Gold came back nicely
at session end yesterday after retreating in the early going -- a good sign.....In today's early
going, the yellow metal tracks sideways......Difficulties with the hedge books at Canada's
Cambior Mines and Ghana's Ashanti Goldfields fed the rally off lows yesterday. Cambior
has sold in the form of forwards and calls double its production for 1999. Ashanti defaulted
on its forward positions unable to make the margin calls. Both are in trouble because they
laid heavy bets that the gold market would continue to fall. Both were wrong. Both watch
as the value of their shares plummets and gold stubbornly clings to the $325
range................... The difficulties at these two companies could be signaling problems
with hedge books all over the mining industry. It will be interesting to see how the bullion
banks respond. Can they assume the risk and/or bail out a good chunk of the industry?
Would they?.................... Reuters reports that Fiji's Emperor Mines Ltd is also in hedge
book trouble...............Lease rates are tracking down indicating either a pause in leasing
demand or new supply. Where's the gold coming from?:..........................Some
interesting insights from this morning London Reuters report on the gold market: "While
many remained delighted by gold's reversal of fortune, some in the bullion banking,
mining, fund investment and fabricating sectors were counting the cost of having been
resolutely bearish on gold's prospects. 'There are rumours about people in trouble. The
market's quiet out of fear and that's fear about jobs rather than the price,' said a London
dealer. 'People could easily turn around and say 'Why are we in this game?' he added in
reference to bullion operations. Bullion desks represent boutique business worth hundreds
of millions of dollars to banks versus the billions at stake in debt, foreign exchange and
equities operations."......................Bridge News is giving the last of the gold bears,
Andy Smith, full play today. Says Smith: "The recent euphoria in the gold market cannot
mask the underlying erosion of gold's role in official reserve portfolio management,
according to a presentation prepared for the Nikkei Gold Conference by Andy Smith,
analyst at Mitsui Bussan Commodities. The paper, titled "The Fall of the Golden Wall",
argues the philosophy behind holding gold, is doomed, like the Berlin wall, to collapse
"under the weight of its own contradictions.".........Speaking of contradictions, perhaps
Andy Smith has not had time to read the joint declaration signed by 15 central banks on
September 26, 1999 in which they insisted that gold does play a significant role in the
international monetary system. And far from being doomed, investors around the world are
adding gold to their individual portfolios at a record rate.............By the way, the only
Berlin Wall I have seen with respect to the gold price (and an apt analogy) is the one erected
by the bullion banks to keep the financial world from discovering what is now becoming all
too clear in this past week's revelations with respect to the mining industry. Talking gold
down with the threat of central bank gold sales was a necessary ingredient in keeping the
gold carry trade from imploding. Now the European central banks in one fell swoop have
eliminated those sales and leases as a deterrent to higher prices, ignited worldwide physical
demand and threatened the massive short position built up over the past several
years................Gold has responded with a nearly $75 increase in value from 20 year
lows as many short the market have scrambled to cover..............That's it for now, fellow
goldmeisters. Have a good day. MK

The October edition of News & Views will be ready early next week and we invite all
our visitors to take advantage of a free trial subscription to one of the most popular, widely
read and quoted gold newsletters. Last month we predicted an explosion in the gold price.
This month we deal with the nettlesome subject of paper assets in this tenth month of the
penultimate year. And we all know what that means. October brings with it our annual
Halloween issue. Here's an excerpt: "And this October could very well foreshadow a most
fateful stroke of midnight only two months away. October. When markets crash and assets
go bump in the night........." We think you will gain by taking advantage of our
offer...........

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

Cavan Man (10/07/99; 09:24:38MDT - Msg ID:15758)
FOA
Darn. I missed you. Cavan Man here. I am not interested in "timing" but, time frame or range of time would be helpful. Thanks.

Goldspoon (10/07/99; 09:05:34MDT - Msg ID:15757)
Hippleback
Understood....(me too) just don't sell before the dollar is as toilet paper.... or you may have sold to soon...that was what i was trying to say...love ya man...

Hipplebeck (10/07/99; 08:55:45MDT - Msg ID:15756)
Goldspoon
What's the point of having real money if you never spend it?
When gold reaches a high enough level, I will sell it and pay off my house. I may never sell it all, but for everyone there will reach a price.

Goldspoon (10/07/99; 08:55:04MDT - Msg ID:15755)
FOA.....
OK..i get ya..(wink) {;-)

FOA (10/07/99; 08:53:37MDT - Msg ID:15754)
(No Subject)
Hipplebeck (10/07/99; 08:42:20MDT - Msg ID:15750)
FOA,
What if they offer you $30,000 for an ounce? Will they then get your gold? They will get mine.

Hipplebeck,
You will do this because of your great wealth. Myself? As a poor man, I can afford either gold or currency. A dollar will always be as affordable as one dollar's worth of gold! Yes?

Thank you all,,,,,,,,,,,,,,must go now FOA

RossL (10/07/99; 08:53:20MDT - Msg ID:15753)
Dollar monetary crisis
Will the USA go down without a fight? Who is "the USA" ? Is it mom and pop on Main Street or Greenspan and Wall Street? I agree with some of what is said in the Batra-Taylor interview, and I disagree with some of it too. Batra calls "crony capitalism" as going down, and I will be glad to see that. I believe "crony capitalism" is a misnomer, as it is really a political system that has been corrupted my fiat money. I believe mom and pop on Main Street will survive as they always have.

Goldspoon (10/07/99; 08:49:49MDT - Msg ID:15752)
Hippleback... think just a minute....
Which will be of more value at that time? $30,000 or 30,000 peices of tolit paper... answer that and you've answered your question...Gold will be dollars... not the paper dollars we think of now...

FOA (10/07/99; 08:47:31MDT - Msg ID:15751)
(No Subject)
Goldspoon (10/07/99; 08:33:19MDT - Msg ID:15748)
****FOA............Hippleback...******.
FOA is very close to this thing...Another is on the inside..

Goldspoon,
I'm just a dog on an Alaska sled team. Look closely and you'll see me close to the back. I'm so small that my barking is all most people notice. The "big huskies" are up front, in the lead. As such I am Truly "on the road",,,,"in the footsteps of giants"!

Can say no more.......FOA

Hipplebeck (10/07/99; 08:42:20MDT - Msg ID:15750)
FOA,
What if they offer you $30,000 for an ounce? Will they then get your gold? They will get mine.

FOA (10/07/99; 08:38:17MDT - Msg ID:15749)
Comment
Hello Hipplebeck,
Each of us will follow our spirit as this unfolds. If you hold gold in your hand, count it as one ounce they will not posses. Come what may, their contracts are only good if someone delivers gold against them. In like view, Libya never delivered oil to the Hunts. Even though the Texas boys had a contract for it. We shall see! FOA

Goldspoon (10/07/99; 08:33:19MDT - Msg ID:15748)
****FOA............Hippleback...******.
FOA is very close to this thing...Another is on the inside..
Listen to the man....yes, as i've said before USA won't go down without a fight and has known about this slow evolving process.... a deal may already have been struck as to how the USA will play their hand and the outcome assured.... Remember, the financial ties to the UK the US has....

FOA may know what the compromise the US and Europe have come to agree upon.... lets ask him....FOA?

FOA (10/07/99; 08:28:36MDT - Msg ID:15747)
(No Subject)
If that "horse with no name" passes me, I'll lose all credibility! I can see it now, my head in a chock in town square with the villagers throwing stones and melons (especially Koan). Don't worry for old FOA, he will just smile through it all. A little later others will spend time on display and I have kept some eggs on the back porch for the occasion. (big smile).

Hipplebeck (10/07/99; 08:18:33MDT - Msg ID:15746)
FOA, Oro etc.
I think some of you are missing the point of what is really happening here.
The leasing from central banks creates an obligation that must be repaid.
There is no way that the Fed is going to let the system crash. They will flood with liquidity until all the arrangements are made. The gold + will return from whence it came eventually. Leasing is a win/win situation for the lenders. The gold vacuum will suck up all the gold eventually, because they can give any amount of paper for it that they want. Believe me, these big bankers are going to someday have it all in their vaults. It may take a long time, but it is the way to complete control. (something they would have had anyway if they could have decoupled the idea of gold as money)

FOA (10/07/99; 08:13:47MDT - Msg ID:15745)
Reply
ORO,
Like this: "The time has come to support our own currency system. Let any other CB that wants to work with us, also announce this agreement. (I think Japan did also?? Were they hoping against hope??) We are going to stop this thing before it infects our economic system. Tell everyone we will now limit our lending and allow it to shrink through payment liquidation. In addition, we must offer this supply to keep it from burning out of control."

I would have added: "it all over people"! Somehow that would have been seen as gasoline on the fire. No?

Goldspoon (10/07/99; 08:06:04MDT - Msg ID:15744)
Platinum market corner.....
Very good ORO...his observation on Platinum is a development i've been watching for a while...as everyone is so preocupied with gold, a corner is being set up in platinum...gold is a natural diversion (smoke screen for this event).... Had this been tried without the furror going on in gold it would have been easily spotted.... Where did i hear this from?.....why,..from "horse with no name's mouth of course".....we've developed quite a frienship....

Look for a similar thing in silver...it's just farther along in platinum....

FOA's Gold Truth is real....thanks ole buddy, that sure is a fine horse you ride...feels good don't it?

These corners were set up by those in the know about gold and were waiting for this to develop to take advantage of the situation.....WB..for one....

ORO (10/07/99; 08:00:34MDT - Msg ID:15743)
FOA $ Death spiral control
So you are saying the ECB expected the opposite reaction?
They were saying "here is the fire extinguisher, only one" in the crowded theater? Why the emphasis on refraining from further action on the paper side?
The statement came across as we will stop this dangerous game before the whole thing blows. We don't want everything to get blown to smithereens, we want to keep stability by blowing it now, when we can still handle the consequences.
I do believe they want a slow transition so as not to kill the financial markets and get a chance to cash in some $ for something, or at least in return for creation of EM obligations in Euro denomenation.

Hipplebeck (10/07/99; 07:57:20MDT - Msg ID:15742)
FOA
You're right.
If humanity is going to insist on seeing gold as money, the solution is to get it all

FOA (10/07/99; 07:40:11MDT - Msg ID:15741)
Comment
Central Bank Cheating!

Central bank policy is never offered to the public in it's true context. They can't afford to! Open directives that involve "historic" changes are usually never interpreted successfully until their "real life" effect is truly seen.

When the ECB, Swiss and BOE all made their announcement, it was publicly taken in the current context of falling gold prices. When I posted "it's all over people", my response was in reply to the future. A future that evolves an escalating gold price environment, the very conditions that the ECB statement would create and was aimed at controlling.

This agreement was more of a commitment to "continue" a certain amount of gold supply "even as the prices rise". Understand that; When an important body states that they are ready to slow an approaching forest fire, every else immediately starts preparing for a fire. Even if it's not in view yet. It should have been obvious that during a surging price period, most (if not all) CBs would stop selling gold and call in lease guarantees! Such a move would lock "all" the markets instead of creating a "controlled burn" of the dollar.

Watch these events as they unfold. True, there will be cheating! However, that cheating will take the form of "CBs buying gold" (and hiding the transaction as well as able) to balance their sales. If the Swiss do sell, we can bet their selling will be delta neutral. Their most likely move will be to commit their gold into the EMCBs in exchange for Euro type derivatives (even if sold for dollars). If anything, the effect on the markets will be to cut physical supplies, in complete contradiction to the ECB / BIS directives.

Mosel, our problem today is not so much a rising price, rather the lack of physical to close outstanding contracts! You are right, dollar liquidity can and will be expanded to cover "bookkeeping defaults", but it will only "extreme" the physical defaults as private lenders demand their gold back! Your deep mind will burn in overdrive as this plays out. I'll keep the fire extinguisher ready to cool off the grey cells (smile).

FOA

elevator guy (10/07/99; 07:33:54MDT - Msg ID:15740)
@Chicken Man
Thank you for your response! I've been having fun ever since $262! But now we are going to unload our Dec and Feb 270 calls, God willing.
I appreciate the advice on this forum.
I grew up next to a farm, and baled hay in the summer. Twine used to cut my palms, and the hay dust would stick down inside my shirt. Made some money for school clothes, for the fall.

Chicken man (10/07/99; 07:28:00MDT - Msg ID:15739)
elevator guy...Options....
It all has to do with leverage....when options get in the money they are a "1 to 1" play.....no leverage....but as long as the buyer can "exercise" the option and make a buck,they will buy....only thing is sometimes the buyer wants to make more than a couple bucks.....but that is the way the "game" is played

Hope you have "buckets" of fun on this "leg"......teehee...chicken man is a farmboy....or should I say "was"....foreclosure in '81

Chicken man (10/07/99; 07:16:54MDT - Msg ID:15738)
ORO - 3 stars for platinum...!
First of all thx for sharing your "thoughts"....about the "3 stars"....I looked up the limit on platinum...$25 and "3 stars"....so I put on my specticals and started to read the fine print in the legend at the bottom of the page.....ooo-wheee....3 stars is "no limit" front month...charts look great for a breakout on the upside...

T-bonds are flirting with some unknown territory this a.m.....could Wall Street handle a "111" handle on bonds...?

goldgal (10/07/99; 07:08:22MDT - Msg ID:15737)
Media Corrections re:FN and Viceroy
All,
Further to the hubbub yesterday re:FN, please note that Globe & Mail has printed a correction in this a.m.'s edition. Franco Nevada does not hedge, nor does Viceroy.
goldgal (aka mointo)

elevator guy (10/07/99; 07:07:08MDT - Msg ID:15736)
Previous days total volume, signifigance?
Dear Knights,
It seems that as the price of an option goes up, there is less and less "Previous days total volume".
My take on this is that the more expensive it becomes, the harder it is to sell. (At least in the current conditions in paper gold)
And so, it may become impossible to sell, even when it has time value?
Am I correct on this? Any comments would be appreciated.

ORO (10/07/99; 06:35:50MDT - Msg ID:15735)
Plat lease rates
Ad absurdum
Some at 50%.
Either some expect platinum to magically appear out of the Russian blue, or SWC insiders buying their own stock like crazy for 3 months really do know something.

Plat has done as well as Au.

TownCrier (10/07/99; 05:15:43MDT - Msg ID:15734)
INTERVIEW-Suzuki sees �6-7 trillion stimulative spending, BOJ move
http://biz.yahoo.com/rf/991007/bg.html
When interest rates sit at zero and the population still won't borrow money into existence, you can't really push on that string any more effectively. So what do you do? You turn to the government itself to spend the money into circulation...an act the US government has already mastered.

TownCrier (10/07/99; 05:03:52MDT - Msg ID:15733)
BOJ's Yamaguchi cancels Paris conference trip
http://biz.yahoo.com/rf/991006/2v.html
The trip we mentioned yesterday...it's off. Wonder why?

el St.One (10/07/99; 04:53:22MDT - Msg ID:15732)
Agnico-Eagle Mines Ltd
agnico-eagle.com
No hedge here.......

Growing reserves and production with excellent exploration potential;
Low-cost operations with sharply declining production costs;
Strong financial position with good access to additional capital;
Experienced, proven management and a committed work force; and
Excellent leverage to rising gold prices, as none of our future gold production has
been sold forward.

A low gold price environment can be a time of opportunity for those gold companies with
the desire and ability to grow. Our experience over the years has taught us to build when
gold prices are low so that we are well positioned to take advantage of higher gold
prices. Our former President, Paul Penna, was a great proponent of this strategy and, as a
result, his vision of the LaRonde Mine as a world-class gold deposit is now being
realized.

Agnico-Eagle has been fortunate to enjoy the tremendous confidence of a loyal
shareholder base over our long history. We thank you for this ongoing support. In this
progress report, we are pleased to update you on some of our recent successes and
outline our plans to continue to build Agnico-Eagle.

Sean Boyd
President and Chief Executive Officer

ss of nep (10/07/99; 04:35:57MDT - Msg ID:15731)
FRANCO NEVADA
FROM Kitco ..... yesterday

Date: Wed Oct 06 1999 08:41
Mo in To (PARDON THE CAPS!) ID#347205:
All,
Further to my last post re:FN, I just got off the telephone with the CFO of Franco Nevada, Mr. Ron Binns, to clarify the situation re: hedging. FRANCO NEVADA IS ABSOLUTELY NOT HEDGED. He also says I can quote him on that. I advised him of the Globe&Mail article and advised him he should demand a retraction, a news release would also probably help as the share price will fall due to this misinformation. So much for the accuracy of the press!!!!!
MoinTo

TownCrier (10/07/99; 04:35:02MDT - Msg ID:15730)
Hear ye! Hear ye! There is an update to The Gilded Opinion at USAGOLD!
http://www.usagold.com/TaylorBatraCrash.html
This is one you definately do not want to miss. In this excellent interview of Dr. Ravi Batra by Jay Taylor, they discuss how we are poised for The Crash of the Millennium in terms you will understand. Stocks, bonds, and currencies are crushed as the market and credit bubbles pop, with physical gold playing the role of Hero to help you through this turbulent financial transition into a brighter future for all of civilization.

This one is a must read.

SteveH (10/07/99; 04:00:14MDT - Msg ID:15729)
Dualing Kitcos
www.kitco.com
First,GT, we'ze just people like you. We just knows what makes sense 51% of the time whenze we see it. Thanks.

Over at kitco is a standup posting day. Here is a snippet from Mozel of a series of posts from the greats of kitco's discussing world finances and what an education:

Date: Thu Oct 07 1999 05:27
mozel (@Thoughts From Mozelland @RB) ID#153110:
Copyright � 1999 mozel/Kitco Inc. All rights reserved
What is the relationship between paper gold discounted to $6,000 per ounce and the exchange value of an ounce of gold in hand ?
None.
The first is a creditworthiness of the promise valuation. The second is not.
**********
A theory of the FOA & A Team is that the greenback "market" for gold must fail. Because there are more promises for gold delivery than can be delivered upon. Hmm. Well, let's look at it. First from the miner problem.
The Ashanti trouble is the kind of trouble farmers have gotten into when the farms finances don't look good to the banker on paper. Even if the farm is making money and the payments are up to date, if the collateral valuation falls below the loan exposure, the banker will foreclose. For the option writing miner the problem is not delivery of gold on the option, at the moment anyway, the problem is that volatility of the option price, which is his liability from the banker's on paper view of things, puts the miner's balance sheet underwater. Well, as was seen in the case of Ashanti, if the banker carries the miner's option price volatility liability, things go on. And if the Federal Reserve allows the banker to do so, things go on swimmingly so long as the miner has the gold in the ground and can mine and deliver the gold.
In the case of miners who have written options beyond their resources or reserves, it's curtains. The Big "B" as in Bankruptcy and Bre-X. Is that the end of the gold market in greenbacks ?
I don't see it yet. Maybe I'm not seeing something, but the gold market in greenbacks is, compared to say, the budget for Medicare, a mini-market. I just can't stop hearing those words of Greaseman in my head about how every two or three generations the taxpayers have to bail out the banking system. Because when you analyze the flow of consequneces from the gold loan debacle, they always end up back at the banking system, which as we all should know, was made Federal Reserve System, a.k.a. Lender of Last Resort, for just this sort of debacle.

The banking system can defend itself. It can simply make a rule that the liability for delivery of gold will be a ) reported off balance sheet b ) reported at the original option valuation when issued. Or something even more creative. It doesn't matter then if gold goes to Big Number. The banking system has immunized itself.

Another exposure is through hedge funds that are short gold. Hmm. Well, who have the lenders been ? We are told 50% are private parties, like uptick's clients. Ooops. Lender's risk. The other 50%, the European central banks, have announced their five year work out plan. So, they get whole.

Well, won't these defaults sap liquidity from the system ? Yes, but won't a rise in the greenback exchange rate for gold add it back ?

Maybe, the IMF and the IMF greenback are toast. It wouldn't surprise me. But the USA is a different corporate going concern in bankruptcy altogether.

The only thing to hang your hat on at the moment is that unit of account in .0whatever ( where is SDRer ? ) grams of gold in the euro, which if there is no legal tender 100 euro coin doesn't mean a whole lot except at international transaction settlement time.

In gold terms, the Arabs have oil overpriced. It takes a whole lot more work to get gold out of Mother Nature than to get oil. The last time the Arabs OPECed the world ( and created HIPC of the oil poor who had to have greenbacks to get any oil ) , the problem soon became how to recyle "petro dollars" into productive use. Demand for oil is elastic. Maybe this time somebody will realize the better solution is really, really to increase gold production. Like with tax and enviro exemptions instead of punitive taxation and regulation of gold production.
People say $600 per oz. is the equilibrium greenback exchange rate for gold. Where do they get that figure ? It's not high enough to attract a rush of investment funds. But, it's too high for the Indian jewelry market. I don't think anybody has a clue about what a new international monetary agreement will finally be.

Farfel (10/07/99; 01:23:35MDT - Msg ID:15728)
Gold, Kaplan, and Radical Thoughts from a Contrary Indicator
Always interesting to read Kaplan's comments on gold.

First, let me state that, contrary to opinions I once expressed in the past, I will not truly believe we have entered a genuine bull market in gold until the metal breaks through 800. We are a long way from that figure yet that is the figure needed to convince non-goldbug/average American investors that gold is once again a performing asset that has a positive return rather than the negative return mainstream Wall Street gold critics consistently ridicule ("gold was 800 in 1981 and where is it today? Ha, ha, ha!")

Again, I believe that, with a slip of the wrist, Greenspan and Co. can throw the wrong lever and cause a huge deflationary spiral, resulting in a financial markets crash.

In such a scenario, gold might lead the crash or be a victim of it, although it will most likely be the first asset to rebound once the crisis is resolved.

However, assuming Greenspan is throwing the right lever, then it is conceivable gold is moving slowly into a bull market, to be confirmed by its break past 800.

So the major question is this: if gold is actually headed for a bull market, what will be the velocity of its upward thrust?

According to Kaplan, it is impossible for gold to move up quickly or too strongly since there are too many fearful goldbugs out there, victims of a lengthy gold bear market. Hence, Kaplan states they will be too quick to sell on the first decent, sizable rallies, thus preventing any dramatic, notable upspike in gold. In Kaplan's opinion, a new gold bull will be a lengthy, slow development.

As evidence, Kaplan cites the last notable gold bull culminating in the 1981 gold surge (to 800), and notes that it began around '76, thereby proving that any gold bull will be as slow to develop as the current equities bull.

I disagree quite strongly.

There is a huge difference between the events of the late Seventies and today. Fundamentals cannot be ignored, and in fact, the current upspike in gold is entirely based upon a fundamental development, namely the Duisenberg European gold announcements.

The most significant fundamental event lurking around the corner today that MIGHT create a most dramatic upspike in the short term is , of course, y2k.

The fear of a hi tech collapse leading to systemic financial crises can only accelerate as we enter the pre-y2k homestretch. If such fear bursts forth in all its fury, possibly triggered by some left-field, y2k engendered event, then gold could jump 300 dollars per week during the crisis.

In the late Seventies, an unexpected oil crisis, gas lines all across America, and rapidly increasing interest rates caused gold to surge dramatically.

Today, most Americans are expecting "little problems" -- relatively painless and easy to fix.

Americans today are coming off a decade of tremendous calm, complacency, prosperity, and fun.

Therein lies the irony: back in the late Seventies, Americans were emerging from a lengthy recession. Despite the hardships suffered, still, they were not prepared psychologically for the gas crisis, and they panicked accordingly.

Today, things are quite different: most Americans are "expecting the expected." They know y2k is coming and are convinced it will be no big deal. Whatever tension exists is subconscious at best, hidden in the darkness of their minds.

Any truly left field event that causes first-hand hardship will likely result in a much more severe panic than the equivalent Carter Years scare.

Young Americans in particular are not psychologically prepared for hardship and not accustomed to experiencing it.

Therein lies the seeds of a truly severe panic: when the normalcy of America's most tranquil decade is suddenly upset, hysteria is bound to be the resultant human emotion.

So gold's jump could be much more intense than that experienced some 20 years ago, and it could take place in a much more compressed period of time.

In summary, people who have passed through hardship and troubles usually develop stronger constitutions such that they are better able to handle new problems as opposed to those who have never endured them. For those who are not used to crisis, their emotional reactions can be extreme, to say the least. A truly left-field crisis over the next 2-3 months could set off "the Mother of all Gold moon-shots."

If that happens, then Gold is truly in a New Paradigm.

Thanks

F*

gidsek (10/07/99; 01:23:07MDT - Msg ID:15727)
Canuck Franco? Hedge??
http://www.franco-nevada.com/
Well it seems I've chucked my last annual report. My link to Pierre Lasondes' denunciation of hedging doesn't work anymore (although it's buried in THESE pages somewhere) and though there's nothing in the financials indicating hedging they don't just out and claim they don't either!!!
So my friend, best get it from the horses mouth. These late nights are making me buggy.

20 Eglinton Avenue West
Suite 1900, Box 2005
Toronto, CANADA
M4R 1K8

Tel: (416) 480-6480
Fax: (416) 488-6598

gidsek

gidsek (10/07/99; 00:45:11MDT - Msg ID:15726)
Drooy Hedge for JCS
http://www.goldseek.com/wwwboard/drooy/index.html

Golden Truth (10/07/99; 00:26:10MDT - Msg ID:15725)
TO Elevator Guy
Very true words you speak! and sincerely humble, may God bless you all your life. :-)

elevator guy (10/07/99; 00:20:15MDT - Msg ID:15724)
Many Thanks are in order!
FOA, Another, Michael Kosares, Bill Murphy, ORO, SteveH, and so many others here, I would like to thank you all for your efforts at tipping me off to the truths behind our currency system.

How often during ones life does one have the priveledge of becoming the beneficiary of the wisdom and efforts of a mentor, whose insights profoundly enhance ones success and happiness.

Myself and others have benefited in the short term, and now, as we look to future, and can now see the events coming, I am sure that the works of the above gentlemen will benefit all who listen, for years to come.

This has been my greatest undeserved gift, second only to my salvation.

Gandalf the White (10/07/99; 00:16:54MDT - Msg ID:15723)
Goldspoon's second daily contest ! + PS: FOA's post
Comex close = $321.0 --- (same as last guess)
PS: THANKS FOA for dropping by and bringing us the view from the shoulders of the Giants. -- Twil be interesting!
<;-)

Click Here to view yesterday's discussion.

Permission to reprint is hereby granted where the USAGOLD name is cited along with our web address, mailing address and phone number. For electronic reproductions, citing the post heading and the http://www.usagold.com/cpmforum/ website address as the source is sufficient.

usagold logo
P.O. Box 460009
Denver, Colorado 80246-0009

1-800-869-5115 (US)
00-800-8720-8720 (EU)

303-399-6759 (Fax)

admin@usagold.com

Office Hours
6:00am - 5:00pm
(U.S. Mountain Time)
Monday - Friday

American Numismatic Association
Member since 1975

Industry Council for Tangible Assets

USAGOLD Centennial Precious Metals is a BBB Accredited Business. Click for the BBB Business Review of this Gold, Silver & Platinum Dealers in Denver CO

Zero Complaints

Thursday May 24
website support: sitemaster@usagold.com
Site Map - Privacy- Disclaimer
The USAGOLD logo and stylized gold coin pile are trademarks of Michael J. Kosares.
© 1997-2012 Michael J. Kosares / USAGOLD All Rights Reserved