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ARCHIVED DISCUSSION FROM 8/7/2005
All times are U.S. Mountain Time

(Yesterday's Discussion.)

mas (8/7/05; 21:21:31MT - usagold.com msg#: 134722)
UK Bankruptcies hit another record.
http://news.bbc.co.uk/2/hi/business/4748211.stm

Interesting that the trend is climbing faster and faster. Hence the cut in interest rates?

Who's next in line?



mas (8/7/05; 21:04:14MT - usagold.com msg#: 134721)
Mr Joker, from the Privateer.
SHOT ON SUSPICION
It is a tragedy that the one English-speaking nation which has always had the highest tolerance for
individual eccentricities, strange manners, speech, conduct and dress, should now find itself in the
situation where a law-abiding Brazilian man has been shot to death by the London metropolitan police
simply because he looked suspicious to them. The situation is not improved by what the Guardian
newspaper has reported. Up to seven other people have come within seconds or inches of also being shot
to death by the special teams of the British police. This IS a shoot to kill policy! It is also a failure on the
policy level. Regardless of Prime Minister Blair's protestations that it is not true, 85 percent of the
British public according to the latest polls have drawn a straight line connecting the British military
participation in the attack and occupation of Iraq and the attacks made in London. According to Prime
Minister Blair, that makes 85 percent of the British public supporters of terrorism!
Prime Minister Blair is blatantly ignoring the nearly two million people who peacefully marched past the
offices of the British Government in London, protesting against him joining with President Bush in an
attack upon Iraq even before that military attack had been made. Now, the British Armed Forces are in
Iraq and "others" have decided to bring the consequences of aggressive war back to Britain, so that the
people in England could themselves get a taste of what war is really like. At the policy level, Mr Blair
has clearly decided that a "shoot on suspicion" policy is the proper answer.
Here lies the ultimate failure of Mr Blair's policy. It has made the British civil police as dangerous to any
person who might attract attention as are the terrorists themselves. What is the difference between being
blown up in a terrorist bombing or being shot to death by the police because of a foreign policy which is
certain to bring about such terrorist bombings? Terrorism, so-called, is the militarily weak party's
response to being attacked because it does not have the Tornados or the F-16s with which to make a
"proper" military response to being attacked. The central policy question here is simple. Is Prime
Minister Blair prepared to accept that a full-scale air and ground attack would be made upon Britain
because of his own military attack upon Iraq? The answer to this nearly classical question is obvious. Of
course, Prime Minister Blair would NOT have made his attack if the response could have been a real, fullscale,
"proper" military war with the nation he had attacked. The attack upon Iraq was made by Prime
Minister Blair because he thought that it was "safe". He thought that there would be no direct "proper"
military response, because Iraq did not have military means with which to respond.
Now, a response has come. It is neither a "proper" nor an official response. Four bombs exploded in
London and another four might have gone off a few days later, if the detonators or home made explosives
had functioned. They did not and Londoners were saved from another massive number of dead and
wounded. Now, the political cry is out to the effect that the Blair government needs additional emergency
powers. When Parliament returns, it looks like these emergency laws will be passed very quickly. Then,
Britain too will be under emergency laws, with the only difference from martial law being that it is its
civil police doing the random killing instead of soldiers, as would have been the case under martial law.

Goldilox (8/7/05; 20:20:34MT - usagold.com msg#: 134720)
Infla/Defla and debt
@ Ned,

Isn't it interesting that debt seems so interwoven in both the problems and proposed solutions?

Leverage, when it works seems like a fantastic advantage. When it doesn't, it wipes out many participants..

I've been watching Animal Planet today to get away from politics and finance for a day. The feeding behavior of dolphins and sharks on the shoals of sardines and the predatory patterns of the african hunters (non-human) that track the wildebeast migrations could not help but remind me of the markets - OK, I am hopelessly entangled.

The interesting thing about the wildebeast migration is that more are trampled by their own herd's panic than fall prey to the predators themselves.

Will the Joe6'ers of the RE market and SMs be panicked into trampling each other if and when market volatility reaches more frightening proportions? This is obviously one factor the FED will find difficult to control, and I would submit their hedonistic BLS, CPI, and PPI data and rose-colored bubble vision is justified in their minds as anti-panic measures.

Over the long term. another anti-panic strategy has been the herding of investors into funds and other such groupings, to convey the illusion of safety in numbers. As program trading continues to dwarf individual trades, is their even greater danger of overloading one side of a trade?

One look at the NASDog in 2001-2 reminds us that when too many sailors line up on one side of the boat, they risk capsizing it.

Ned (8/7/05; 19:52:19MT - usagold.com msg#: 134718)
968/Goldilox
Thanks for your points. I'm really struggling with this deflation/inflation business, what seems to be clear is that one can be talking about a multitude of asset classes and monetary aspects that can undergo either or both simultaneously.

I did listen to Puplava's '3rd hour' today, it seemed to drag on about 'peak oil' and the Saudi ability to crank out more and more production. He did mention the very real ongoing debate about deflation vs. inflation. I think an argument can be made for either.

What I got out of Prector's book ("Conquer the Crash") was that debt cannot continue to expand on and on forever, as a matter of fact it is approaching it's theoretical peak. As Prector maintains, the expansion of debt is the defacto increasing of money supply. When debt expansion ceases, money supply will shrink, there will be less money chasing alloted goods, thus deflation. Prector is most concerned about asset deflation; stock markets, bonds, housing market, commodities.

On a personal level I look at it this way. I have borowed money, lots of it to finance stock purchases (PM's) and also for physical metal. Lines of credit have been maxed. I moved into a large house (2) years ago to try to leverage what's left of the RE bubble. I am told I am J6Pack. So although oil is going mental (definitely inflation in the oil patch) this will eventually stonewall, if not sink, the global economy. As the economy slows, my employer slows, I slow. I get nervous, very nervous because I am in over my head. Now if everyone stops borrowing, the banks cannot write new loans. If things get even remotely ugly and a pinch of debt is defaulted, money supply goes to heaven, lenders get nervous, IR rise, J6P is now panicing with his variable rate zillion dollar mortgage. On it goes....

The deflation cycle can get nasty very quickly, at least according to Prector and deflation experts.

Back to the inflation argument. Yes, a declining dollar will import inflation.....quickly. One must wonder if oil is discounting a large dollar deval. soon? If the 'peak oil' business is true and somewhat accurate we don't need to talk anymore, the entire planet and put its head between its legs and kiss its sorry butt good-bye !

So maybe the dollar will drop against the Euro or Yuan. This will only happen if the economic backdrop is seen to be better elsewhere. Is it? The dollar has had a wicked rebound from Christmas, is this merely the result of the FED defending it w/ IR increases? I see the BOE lowered rates last week, are they seeing 'deflation', quick lower rates, beat up the 'pound' and get inflation back? Will the FED increase again this week?

Interesting that all CB's were lowering rates as fast as they could a couple years ago to multi-decade lows to ward off deflation, have they licked it? Did they go too far for too long, the ensuing credit expansion, mortgage expansion, etc. has set monstrous records. So now the FED is heading off an apparent inflation scare only to open the doors of hell.

Deflationary hell.....and oil will see to that. Couple that with baby-boomers beginning to liquidate stock in 2 years time along with the huge McMansions. Its over. One of the biggest clues is GM and Ford. They can't expand any more, even with 0% for the last few years. No new stream of revenues means no servicing bond payments and pension obligations. Watch this nightmare unfold, day by day it will get uglier. The oil issue and the rolling over economy only makes their problem 'worser', less revenues.

Deflation.

Everything will get smaller boys and girls, stock market, real estate market, bond market, your job, my job, corporations, governments.

The only red herring Prector leaves in his book is the chance of hyperinflation. Default the whole show and let chaos rip it all apart for a while. Reset all the counters and start over.

I don't know, gotta absorb more info, its getting late in the game, 4th quarter down by 2 scores, gotta move the ball.

Thanks for the info. Best of luck to you. We're going to need it.

Have a golden day.

MK (8/7/05; 19:48:14MT - usagold.com msg#: 134717)
Cobra and Goldendome. . . .South African strike
If I can offer a slightly different reading on the South Africa situation. . . . .

Africa is a continent in economic and social turmoil. South Africa, though probably the richest African nation, has not escaped the turmoil as both of you are well aware.

I do not see this, at the outset, as simply a 'labor strike'. I see it as symptomatic of deep-seated socio-economic problems of which this is simply the most egregious, symbolic and perhaps final eruption. In short this could develop as far more than your run of the mill, average labor strike. It is dangerous in that it could precipitate something much deeper. It could unleash latent aggressions of which most of us in Europe and the United States are tangentially aware. People's lives are at stake and there is much on the table.

I could be wrong about this as I am not an expert on the situation in that country. From essentially a layman's perpective, though, I see this as a major negative for South Africa which has been brewing for a very long time. The last time strikes were threatened, the situation settled quickly, and that is likely what you are thinking.

I am not ready to dismiss the strike in the gold mines as an addendum to previous labor/management conflicts. I see it as something new and perhaps more far-reaching.

There is an additional factor which I have yet to see addressed. Much of the short position in London stems from the South African mines. With production down, these shorts will have to be satisfied by other means. This amounts to another stress on an already stressed-to-the-max situation in the lending market -- evidenced by the ECB and BIS entrance in the market as sellers. I don't think they would be there if they didn't have to be.

These developments, in my view, amount to major bullish for physical gold and you wil likelyl others picking up on this line of thinking in the days and weeks ahead -- assuming of course a quick settlement is elusive. On the other hand, pressures resulting from that short position could force management to settle quickly.

Your comments? I have not seen specifics on labor's demands and management's ability to meet them. If anyone has some background, I think we would all benefit.


Goldendome (8/7/05; 17:30:25MT - usagold.com msg#: 134714)
The miner's strike should not effect gold prices.

I wouldn't expect too much change for the gold price, from the gold miners strike. Maybe a little bump up on excitement, then back to the normal see-saw battle, hopefully inching upward.

Recall that there is plenty of gold in the vaults. The stocks to flows ratio for the Monetary metal--Gold, is estimated at over 50 to 1. In comparison, the same ratio for the industrial metal copper is closer to .25 to 1. My conclusion is that a strike by copper miners would have a much greater effect on the copper price than a gold miners strike will have on the gold price.

POG depends on the other factors we discuss here: economics, political unrest, dollar disgust, etc. ---IMO

CoBra(too) (8/7/05; 15:29:50MT - usagold.com msg#: 134713)
Buy on Strike News -
As the old adage goes - Goldi -

In this case it may become more than true as Sa is still the # 1 gold producer ... though now closely followed by Nevada, as Ralph Roberts (USGS) has predicted some 40 years ago.

I can see some shorts having trouble to keep same clean as they might be cleaned out anyway.

Looks like the spooks haven't turned the curve and are still playing yesterdays game, chasing financial assets to Nirvana and never get the idea that hard assets may already be the game - for a long time to come - sez who?

Your humble cb2


Goldilox (8/7/05; 14:22:02MT - usagold.com msg#: 134711)
Investors Not Put Off by S. Africa Strikes
http://english.epochtimes.com/news/5-8-5/30982.html
snip:

CAPE TOWN - South Africa is reeling from a wave of strikes that grounded the national airline and now threatens to cripple gold mines, but the stoppages will not damage investor perceptions of a country pushing to lift growth.
Strikes are common in Africa's largest economy as the annual wage talks season draws to a close but this year's union actions have been more hostile than in recent years as workers battle to share in the fruits of a growing economy.

Police fired tear gas at protesting shop assistants last week and passengers were left stranded across the world during a bitter six-day strike at South African Airways.

Now the mine sector -- which contributes around 8 percent of gross domestic product -- is battling to avert the first industry-wide gold mining strike in 18 years, which unions threaten to start on Sunday.

Frustration among miners who say they are not sharing in a booming economy would paralyse the South African mines of some of the world's top gold producers -- AngloGold Ashanti, Gold Fields and Harmony Gold.

If the miners' strike goes ahead, gold companies stand to lose around 28,000 ounces of gold production and 79 million rand ($12.21 million) in lost revenue per day, a Deutsche Securities analyst has said.

Sasfin chief investment strategist Craig Pheiffer said any strike could hit mine earnings hard. "Most of them (mines) are making losses and any extra day without production could be critical".

But analysts say the stoppages will not significantly dent investor and market perceptions so long as they have no knock-on effect on monetary policy.

"I would downplay the impact of the strikes, I don't think they have been on the radar screen (of dealers)," analyst Koon Chow of CS First Boston told Reuters from London.

South Africa's capital markets have shrugged off the strikes and the rand currency jumped to a 2-month high this week after Standard & Poor's upped its rating -- which was already investment grade.

"The only way it would really impact on the market is if people thought that wage increases would accelerate, inflation rises quickly and monetary policy would be forced to respond," Chow said.

-Goldilox

How could such a "barbarous relic" with no monetary value evoke such worldly concern? Monetary policy? Who uses gold in their monetary policy?

mikal (8/7/05; 14:05:33MT - usagold.com msg#: 134709)
@Topaz
Re: Possible gold shortages from mining strike, India demand Europeans close to limit on Washington Agreement, etc. Very interesting.
I saw that the latest stats on gold sales included 60+ tons from the BIS and the Phillipines in May and June. Clearly there is more where that came from amidst the Japanese WW2 hoards recovered by Marcos et al.
If gold is to rise in price, it will not be without the consent of the banking cartel and the shadow nobility.
I'm banking on it happening either slow or fast for all the reasons you cited and others, like derivatves, hedge books, debt, multiple economic exhaustions, imbalances and deficits, safe haven flows, and more!

Goldilox (8/7/05; 13:51:41MT - usagold.com msg#: 134708)
Shiney for gadgets
@ Topaz,

If my 4 ounces will rock the boat, we're in more trouble than I imagine.

Actually, I probably won't sell any shiney, but I make a habit of calculating most major purchases in those units since they comprise the vast majority of my assets.

It makes the transaction much more graphic when I calculate the trade-off in units of measurement that mean something to me.

Topaz (8/7/05; 12:57:59MT - usagold.com msg#: 134706)
@Randy ...Perfect Storm?
80K Miners could sure slow down the flow of Bullion to Market "just when" it's needed most!

Our fellow Gold watcher Mr Phillips (via a neighbouring site) has alerted us to the fact that pre-season Indian buying is MIA at present ...and still to impact the Bullion market. He anticipates a mid-late Aug timeframe.

We also have Comex Aug to work through ...imo this "could" require upwards of 30K contract equivalents.

The Euro-Zone WAG commitments have all but been done now 'till Sept ...again indicating a "reduced" short-term supply outlook ...

...now if we can just convince G'Lox to hold off trading his shiny for gadgets ...;-)


Max Rabbitz (8/7/05; 12:30:19MT - usagold.com msg#: 134705)
9/11 Pentagon
http://www.abovetopsecret.com/forum/thread79655/pg1
I've seen and investigated many of the claims and feel I've wasted much time. People can and do say anything. "Hijackers" still in Paris? Who says? Where is the evidence? There are many "mid-easterners" with the same name as the hijackers. In their culture they have long strings of names as far back as Adam (in theory), all of which are their proper names. Disinformation is common, especially in a war. Look at the many photos of 9/11 Pentagon strike and see for yourself. There are turbine engine parts lying right near the hole that exactly matches the size of the plane cross section. There are other large plane parts lying in the field (see link for pictures and debunking). Plus dozens of eye witnesses and funerals of people on the plane. Some well known. Yes, I suppose in theory this could all have been contrived in vast conspiracy of the illuminati to gain total power. I'll go with the odds and Occam's razor.

Listen to Puplava's third hour for this week, about a half hour in to get another viewpoint of the mid-east and what is coming at us as we sleep. Failure to clearly see a threat usually means an organism is doomed to extinction. I rather think the west is toast…Europe included. This is a major reason why I buy gold (more than silver)…..not just a corrupt and manipulated financial system.

I watched the History Channel CD of the War of 1812 last night. The American Secretary of War refused to believe the British were really going to attack Washington, and prevented mounting a useful defense until too late. He thought the Brits would go to Baltimore, the source of the privateers raiding British commerce. Why bother with Washington, of no military consequence. Wrong. Washington burned. Not just the Whitehouse and capital, but all public buildings except the customs house. The fire could be seen for 50 miles. The empire got revenge.

But then a funny thing happened. That night as the city burned, a hurricane hit and massive amounts of water put out the fires. Winds threw soldiers and cannon alike. A tornado touched down. What was left of the 4000 invading soldiers left the next morning. Perhaps a divine wind will save us from those who have plans to slaughter us. There is hope.






TownCrier (8/7/05; 11:03:44MT - usagold.com msg#: 134703)
South African gold miners to go ahead with strike Sunday
http://today.reuters.co.uk/news/newsarticle.aspx?type=businessNews&summit=&storyid=2005-08-07T132332Z_01_KWA737750_RTRUKOC_0_MINERALS-SAFRICA-STRIKE.xml
JOHANNESBURG (Reuters) - Around 100,000 South African gold miners will launch the first industry-wide strike in 18 years later on Sunday to press demands for better wages, the country's biggest mining union said.

"The main issue is that at 6 p.m. (5 p.m. British time) tonight, the strike is beginning," Gwede Mantashe, general secretary of the National Union of Mineworkers (NUM), told a news conference.

"Tonight there will be a strike, our forces are ready."

South Africa's gold industry is the biggest producer of bullion in the world, accounting for around 15 percent of total global output, and the mining sector contributes about 8 percent to the nation's gross domestic product.

A strike would lead to the loss of around 28,000 ounces of gold production and 79 million rand in lost revenue per day, a Deutsche Securities analyst has estimated.

...Unions are demanding a rise of between 10 and 12 percent.

Wages make up around half of total costs in the labour intensive sector, the biggest in terms of mining employment.

The strike would paralyse the South African mines of the world's No. 2 gold producer AngloGold Ashanti, fourth-ranked Gold Fields, sixth-placed Harmony Gold and South Deep, a joint venture of South Africa's Western Areas and Canada's Placer Dome.

...Mining firms, which gave workers a 10 percent wage rise two years ago, have taken a tough stand, saying they cannot afford rises much above inflation, which is running below 4 percent.

^----(from url)----^

Ditto previous remarks.

R.

TownCrier (8/7/05; 10:59:56MT - usagold.com msg#: 134702)
South African Gold Miners Set to Strike
http://www.forbes.com/business/healthcare/feeds/ap/2005/08/07/ap2174958.html
(AP) 08.07.2005 -- About 80,000 gold miners were set to stop work on Sunday evening for the first strike in the gold sector since 1987 after wage negotiations collapsed last week, the National Union of Mineworkers said.

...In a memorandum last week, Solidarity argued that employers can afford the pay hike, saying prospects for the gold mining industry for the year ahead were "looking rosy," with the gold price on an upward curve and international economic instability prompting investors to seek stability in gold.

^----(from url)----^

For investors seeking stability, times like this remind us that it is better to own the metal than to own (invest in) the firms trying to mine it. The yellow metal is always "good as gold", but a company has its ups and downs just like any other.

R.

TownCrier (8/7/05; 10:54:14MT - usagold.com msg#: 134701)
South Africa set to be hit by massive gold miners' strike
http://www.channelnewsasia.com/stories/afp_world_business/view/161999/1/.html
JOHANNESBURG : South Africa's leading mining union is set to hit the world's top gold producer with its largest strike in 18 years as workers prepare to walk off the job late Sunday.

...the strike would have a "serious impact on an industry that's already on its knees."

"At the moment the rand has weakened and the gold price has picked up by some seven percent, so mines are just breaking even, but there are no profits," he earlier told AFP.

Miners earn a minimum monthly wage of 2,200 rand (338 dollars, 277 euros) in South Africa.

The country is the world's largest gold producer, despite a nine percent decline in output in 2004, yielding a total of 342 tonnes, according to the Chamber of Mines.

^-----(from url)----^

Draw your conclusions as you see fit.

R.

968 (8/7/05; 09:46:06MT - usagold.com msg#: 134697)
@ Ned - deflation.
Forget Prechter's deflation theory. We are talking here about DEFLATION IN THE RESERVE CURRENCY.
- Can you name me a few items in which we can see a coming deflation, or can you name me a few items in which we can see a coming inflation ?
- What will happen if the greenback's status as reserve currency will be put in question openly, in favor of another currency, be it yuan, euro, ... ? Deflation ??????
- The US, as biggest debtor on Earth will, even in a crisis, pay all its debts, to the last penny. And will this create deflation ????
- If other nations dump their dollars, will that cause deflation ????

I may be very wrong on this, but I doubt a serious deflation in the dollar.

Max Rabbitz (8/7/05; 09:05:46MT - usagold.com msg#: 134696)
Who done it?
It's funny that during the Clinton era (1st ?) there were no mid-eastern connections found with any terrorist acts on U.S. soil. The Oklahoma City bombing was said to be just McVeigh and Nichols although neither could construct a workable pipe bomb. Read Jayna Davis's "The Third Terrorist" for a local TV reporters investigation. Then there was Flight 800 that was lost to a "fuel tank" explosion, but not terrorists. This is understandable, I guess. Failure to protect your citizens reflects very badly on leaders, so smart politicans try to put the blame where it provides the most political spin.

Now in the Bush II era it's harder to deny the "mid-east" connection. Few yet dare to be politically incorrect and put a clear name to the source (hint...we need that oil). Instead, every scrap of hearsay or possibility is used to weave theories to blame ourselves and our institutions, or politcal foes. In science all available facts must fit the theory or the theory must be discarded, no matter how beloved. Not so in politics. With the facts presented so far with 9/11 and London I doubt the "we did it to ourselves" conspiracy theory would not make it past a 3rd rate science editor, although carefully selected items could be used to construct a best selling paperback or Michael Moore propaganda film. It is more likely that the truth is more drab, and perhaps more deadly.

I remember the 9/11 Pentagon conspiracy theories that made all sorts of claims. Each of these claims was later easily and clearly refuted from the pictures taken at the scene. The disturbing part was that all of this evidence was available to those who made (and make) the conspiracy claims....but was ignored!!! Not only did I waste a significant amount of my time investigating these claims but such a deliberate attempt to deceive in a time of war could be considered sedition (such a quaint concept nowdays). I wonder at the source.

We live in a complicated world where much is hidden. Thus,we often must make judgements based on limited information. For me, the Western world is in serious trouble in several ways. Economic empires are not the only ones being fought for.



Goldilox (8/7/05; 07:50:58MT - usagold.com msg#: 134695)
Thanks Caradoc
@ Caradoc,

With all my gum-flapping, I forgot to thank you for the kind thought!

It probably appears that I am totally "potatoed", but as I crashed my beloved Cruiser a few weeks back into a non-attentive soccer-mom's mini-cage, I am still awaiting delivery of my new ride. Thankfully, we experience perpetual summer here in Puplava-land, so I won't miss the "riding season".

Goldilox (8/7/05; 07:35:41MT - usagold.com msg#: 134694)
Second monitor
@ Caradoc,

As a reliability engineer at a major PC manufacturer, I actually tested those scenarios about 15 years ago, sothey don't scare me off. However, I think my 400MHz workhorse is probably ready to be recycled at this point. I've been playing with Garage Band SW, and my trusty "Blue and White" just lacks the required horsepower for all my needs - another case of SW overwhelming the HW capabilities.

My glass TV also hails from the precious century, so I want to kill two birds, so to speak.

Here's the scenario I am envisioning in my small, but adequate, beach apt.

1) New laptop - smaller screen to keep the costs down, but still enable faster networking, processing, and portability - one that supports DVDR, strong audio and fast DVI out - probably a PowerBook 12" (2-3 oz).

2) Wide screen HDTV as a desk monitor - Some of the PIP-capable screens are looking pretty good, and definitely beat the PC manufacturers by an ounce or two of shiny. Syntax Olevia (27" or 30") is getting good reviews as both monitor/TV for around 2-3 oz.

Using the PIP, I can monitor bubble vision, CPM forum, and my trading accounts simultaneously on split screen. When the business day is done, I can switch off the PIP, and use the full screen to watch DVD's, baseball, or Monster Garage while I kickback in the lounge chair. With bluetooth, I can also "lounge" while surfing - a sort of "remote" for the 'puter when I am totally "potatoed". Sometimes I tune in "Animal Planet", as Kitty likes to check out the "Big Cats" at play.

Hopefully, I can accomplish all of this at about a 5 oz. tarriff. Heck. if I can hold off another couple months, maybe even 4 oz or less - LOL. The screen prices are dropping like flies, and the shiney, well?

Caradoc (8/7/05; 06:35:27MT - usagold.com msg#: 134692)
Semi off topic for Goldilox
http://pcworld.about.com/magazine/2103p148id108738.htm
If you have an empty PCI slot, adding a cheap video card and a second monitor will give you twice the "radar screen" while saving enough for at least half an ounce of yellow metal.

Ask Google for "second monitor" and you'll get several links like this one.

Caradoc

Goldilox (8/7/05; 06:06:25MT - usagold.com msg#: 134691)
Prechtor's Defla crash
http://www.netcastdaily.com/fsnewshour.htm
@ Ned,

Prechtor makes pretty good case for his hypothesis, but I have heard what I consider a more likely scenario from Puplava, who regularly explains why he thinks the infla scenario makes more sense with this particular crowd pushing the buttons.

Monetary inflation coupled with asset deflation is a popular choice, as well.

It's a complex soup!


For a taste, listen to his third hour wrapup on today's FSN,

Topaz (8/7/05; 05:57:22MT - usagold.com msg#: 134690)
@spotlight
http://www.econoday.com/client-demos/demoweekly/2004/Resource_Center/treasmktcharts/3mtbill.html
The accompanying link (pity it's dated ;-( shows the relationship between FFR and relative IR's.
You'll notice the correlation in the short term Bills and FFR is close whilst Bonds are all over the shop.
I don't believe the Fed engineered the rates "down" ...au contraire, the run-up in FFR 97-2000 would appear to be an engineered attempt to get rates "UP!" ...which failed, and resulted in the quick retreat back down.

Are we again now seeing a (more resolute this time) Fed trying to eke the final few heart-beats out of a System long past it's use-by-date?

Ned (8/7/05; 05:34:37MT - usagold.com msg#: 134689)
Deflation anyone?
Just finished reading Prector's "Conquer the Crash". Outside of the first couple chapters which are heavy on 'Wave' principle, it is an awesome book.

Funny that many on this forum and others subscribe to the inflation theory while a sizeable portion look for deflation to rampage the global economy.

I don't understand the mechanisms or the triggers that will surely tip the pot but it seems to me that we are on the edge. Watching Greenspan 'engineer' 40 year record lows on short-term IR must have been a sign of impending (deflationary) panic by TPTB. As quickly as that wave came and passed, the next wave of inflationary panic is upon us and Greenspan is jacking rates as quick as he can. Others may disagree but I see rates moving straight down and then straight up, why can't they be 'flat' for a period of time?

Looks like continuous damage control to me. The BOE cut rates last week, all other CB have been holding, how can the FED keep raising? There was talk of 50 bp at next weeks meeting. How is that possible?

Looks like 'IT' is rolling over again, are we set for the final PANIC? The deflationary collapse? The last straw?

For all the 'hits' that Prector takes about predictions of $100 gold he does make at least half-a-dozen very, very positive points about physical gold ownership. I leave you with my 3 favorites:

"Precious metals are one day to become the most important asset class to own. From the mid-1970's to the mid-1980's, investors were dedicated to owning gold and silver for safety. Today, people are utterly disinterested in gold or silver, which is what sets the stage for an opportunity.

First, some brief background. Currencies today are utter fictions, but few realize it. Sometime during this century, people will question the validity of the fiat money system. The 1970's may prove to have been a warm-up in a world battle for real money. Governments may exercise their powers to keep the fiat money system afloat, defending their currencies with various schemes and legal restrictions, but in the end, gold will win. "

Prector has claimed that gold and silver might fall further in a deflationary depression but adds this:

"You might be surprised to find that I advocate holding a healthy amount of gold and silver anyway. There are several reasons for this stance:

First, it could be different this time, for some reason I cannot foresee. In a world of fiat currencies, prudence demands hedging against a rush to tangible money.

Second, these metals should perform well on a relative basis compared to most other investments.....These metals are downright inexpensive compared to their top values in 1980. Relative to home prices and stock prices, the metals have never been cheaper.

Third, the question of whether there will be further bear markets in the metals is really one for speculators and quibblers. Gold and silver have declined in dollar value for over 2 decades......it may not be prudent to try to finesse the final months.

Fourth, the metals should soar once the period of deflation is over.....silver rebounded ferociously after it bottomed in 1932, tripling in just two years....Given the likely political inflationary forces, it could be much stronger. So by all means, you want to own precious metals prior to the onset of the post-depression recovery.

Fifth and foremost, if you buy gold and silver now, you'll have it. If investors worldwide begin to panic into hard assets, locking up supplies, if governments ban gold sales, if gols and silver prices go through the roof, you won't be stuck entirely in paper currency. You will already own something that everyone else wants. "

Finally:

"I do not advocate buying gold and silver in paper form by way of futures contracts, gold-backed bonds from the Russian government or ownership certificates connected to commingled accounts at storage facilities. After all, which is better - owning actual gold or some entities promise to pay it? For maximum safety, you should own gold and silver in physical form, outright"

Don't you just love this guy !!

Have a golden day.





spotlight (8/7/05; 02:20:01MT - usagold.com msg#: 134688)
Greenspan/interest rates
Topaz
Thank you sir for your comments.

I believe Greenspan engineered the fed funds rate down to the 1% level which caused malinvestment on many levels, especially housing. I would be interested in concrete evidence supporting or refuting this assertion.

Input welcome.



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