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

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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.

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Archives date back to September 22, 1998

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ARCHIVED DISCUSSION FROM 10/8/1999
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gidsek (10/08/99; 23:01:13MDT - Msg ID:15913)
Kitco Repost
I posted this on another site but I'd like all of you to see it too, and the message at the top applies here as well.

nite all..

gidsek

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

Date: Sat Oct 09 1999 00:31
gidsek (From an Ashanti chat thread) ID#423377:
Copyright � 1999 gidsek/Kitco Inc. All rights reserved
Poor buggers didn't do their homework. It's very sad, and makes me appreciate you lot very much.

http://www.ragingbull.com/mboard/boards.cgi?board=ASL

------------------------------------------------------------------------
By: jackokomo
Reply To: None Monday, 28 Sep 1998 at 1:50 PM EDT
Post # of 36

Testing the water;

I just bought into Ashanti Goldfields today.

Why gold?---It's a no-brainer, really, when you think about Willie,
Wall street, Asia, etc.

Why Ashanti?---PE ratio is 16, book is $4.78, profit margin @10%,
float is only 9.80 million, shares out is 109 million.
AND the price is @8-1/2.

Asian's could be returning to their old habit ( pretty good )
of keeping gold at home. If I were living in ###an, I know for
sure that I wouldn't trust any bank!.

Come aboard, let's all have fun.

LOL---Jack

( Voluntary Disclosure: Position- long; ST Rating- strong buy; LT Rating- strong buy )
-------------------------------------------------------------------------By: reggiehammond
Reply To: None Tuesday, 5 Oct 1999 at 11:28 AM EDT
Post # of 36

Why is ASL going south today?
It has dropped 3 full points ( 33% ) since the open.

( Voluntary Disclosure: Position- Long; ST Rating- Hold; LT Rating- Strong Buy )
-----------------------------------------------------------------------
By: billou
Reply To: None Wednesday, 6 Oct 1999 at 3:12 PM EDT
Post # of 36

Trading halted!!!!I bought in 5 minutes before halt. I guess I just burned my money. Talk of bankrupt. Anyone know
the latest news?

( Voluntary Disclosure: Position- Long; ST Rating- Hold; LT Rating- Strong Buy
-------------------------------------------------------------------------
By: Realityman
Reply To: 24 by Handpicker Tuesday, 5 Oct 1999 at 2:16 PM EDT
Post # of 37

I read the news on Yahoo, and I can't make heads or tails out of it. What's it mean?!

( Voluntary Disclosure: Position- Long; ST Rating- Hold; LT Rating- Strong Buy
------------------------------------------------------------------------
By: workoutman
Reply To: None Tuesday, 5 Oct 1999 at 8:04 PM EDT
Post # of 36

Goldman Sachs biggest shortsellers of Gold in the world advising Ashanti! We're dirt!

( Voluntary Disclosure: Position- Long; ST Rating- Hold; LT Rating- Strong Buy
-----------------------------------------------------------------------

stay in school..

gidsek

ET (10/08/99; 22:24:44MDT - Msg ID:15912)
AREM

Hey Arem - sorry about the tardy response. I was going to reply last weekend but ran out of time. Regarding Ron Paul and the Libertarian party; I used to follow the party activities quite closely but haven't done so much in the last several years. I think I've just gotten burned out on politics in general. It seems the libertarians will have to wait for the implosion before anyone pays any attention to them. It's remarkable to me that people are now running off to the Reform party as if their protectionist agenda hadn't been tried in the past. Wasn't that what went down during the last depression? People never learn, or maybe they only learn the hard way. At any rate, the libertarians have the right idea as far as I'm concerned but they'll never be a potent force until the money is taken out of government. As long as special interests have something to go after, they will. Maybe a return to sound money will dissolve much of the current focus on special interest politics as practiced around the world.

It is nice however to follow Ron Paul's quixotic journey through Washington's political sewer. He is definitely a one-of-a-kind. I wish I could vote for someone like him here in Kansas but we seem to be stuck with nothing but socialists disguised as Republicans. Voting here is a useless exercise. When some candidate actually stands up and claims a desire for sound money and free markets I might get excited again, but we seem to be going the other way at the moment. Thanks for your thoughts Arem.

ET

Black Blade (10/08/99; 22:06:10MDT - Msg ID:15911)
PH and Beesting
I've followed Ron Paul for some time. It refreshing to acutally find an "honest" politician. Let's face it...most politicians are "crooked as a dog's hind leg" I find that it should be no coincidence then that he ran as the Libertarian presidential candidate a few years ago. Harry Browne who is another friend of Au, also ran as a Libertarian presidential candidate. Is there a Au relationship here? hmmm....

Black Blade (10/08/99; 21:59:37MDT - Msg ID:15910)
Whining little shorts!
Interesting to read that the bankers, investment houses, etc. are now whining that people are being hurt because of the sudden rise in POG. Considering that many more in the mining industry and PM investors were hurt with the manipulated decline in POG, I feel no sympathy for them. "What goes around, comes around". I see families in this mining business every day who have suffered. I've seen those who put their faith in PM's. So let the sheeple and manipulators suffer now, because I don't really care what happens to them and their families. They brought this day of reckoning on themselves. The cap on POG is coming off, and the POG still has plenty of upside yet. Maybe I'm a little harsh, but "business is business" as the manipulators would say.

Journeyman (10/08/99; 20:21:10MDT - Msg ID:15909)
INFLATION FOR DUMMIES
For any of you that don't know, the law of supply and demand applies to currency, and an increase in it's supply is what causes intentionally mis-named "inflation." "Currency depreciation" is a much more honest term. Anyway, in light of increasing supplies causing so-called "inflation," the following clip is particularly ironic. Clearly CNN doesn't understand what causes inflation. Jimmy Carter didn't know what caused inflation either. So don't completely rule out stupidity as a major cause of the world's intersting economic state. Brazil is exchanging its current currency for the "real" supposedly pegged one to the dollar. This is the biggest currency exchange in history and will take two weeks. Current Brazilian inflation is running at 50% per month. This will be the sixth new Brazilian currency in a decade, but nothing can seem to get the inflation under control. The shop keepers just seem to keep raising prices. Buyers are urged by the president to report any price increases to store inspectors in an effort to stop prices from increasing. -CNN HEADLINE NEWS, 07-04-94 12:40am EST Regards (and apologies for print density), Journeyman

Journeyman (10/08/99; 19:51:08MDT - Msg ID:15908)
Thanx Goldfly!
I'm running an "off brand" browser called Arachne, coded by a Checzh fellow. It has it's faults, & I'm afraid you may have nailed the problem. I guess I should have asked if anyone else has to do anything special to get whitespace. No? Ah oh! Regards, Journeyman

gidsek (10/08/99; 19:44:40MDT - Msg ID:15907)
Trader Vic
http://www.bog.frb.fed.us/releases/H41/Current/
glenn, on Kitco noticed the the Feds' holdings of gold certs has jumped markedly lately. Perhaps if certain banks are catching cold the Fed is relieving them of gold certs of dubious worth.

gidsek

TownCrier (10/08/99; 19:41:02MDT - Msg ID:15906)
K Golden...great name!
http://www.usagold.com/AllWorkandNoPay.html
A pair of eyes in The Tower gave your post a quick scan to the extent that time allowed at the moment (we'll give it a better read later,) and the first cut impression is that it is accurate. Believe It Or Not.

There are many new readers that may not have yet discovered the treasure trove of information available at The Gilded Opinion which can be accessed from the HomePage.

The link above is to one of the commentaries found within the Gilded Opinion wing of this Castle, and is recommended reading for anyone trying to gain a more complete understanding of the nature of modern money, where it comes from, and where it goes. A very enjoyable bit of reading if you have time for a light weekend project.

TownCrier (10/08/99; 19:29:28MDT - Msg ID:15905)
After the Close: the GOLDEN VIEW from The Tower
As they would say in Europe, "psychopaths" ruled the day on Wall Street, so we won't even go there...there's too much other news to be covered in its place anyway.

The People's Bank of China raised its price for selling gold today in accordance with the overseas price of gold. This is a recent (but ongoing now) operation under a pilot plan for the reform China's domestic gold market--with imports purchased through Hong Kong. This reform plan is surely unrelated to the recently opened BIS branch office in Hong Kong, wouldn't you agree?

Here are some interesting comments from a Merrill Lynch economist...excerpt taken from a Bridge report from Johannesburg today:
The Bank of England threw the trend and sent the gold price
plummeting when it announced it would sell its gold reserves to finance
debt relief for poorer countries.
It was put back on track when 15 European central banks, including
the Bank of England, announced a surprise five-year moratorium on all new
sales of gold held in official reserves. Gold rose to a high of US $338
per ounce.

[By the way, Greece announced today that they have no plans to change their policy on gold reserves--they were not a signatory to the moratorium because they were not invited to play along.]

"Is it a flash in the pan? No, not in the immediate future. As long
as commodities rise, gold will rise and we could see it up to $400 next
year," Jos Gerson, an economist with Merrill Lynch, told a seminar on the
economic outlook in Johannesburg today.
He said gold has always moved with, and sometimes led, commodities.
"Commodities are doing well because the world is waking up. Asia and
Europe are running again and the US is showing no sign of cooling. The
world is suddenly firing on all four pistons."

Gerson predicted, however, that the Dow Jones industrial average will
crack next year.
"This is the major problem we face next year. What we have is one of
the most classic bubbles of the century," he said, although he believes
there isn't the remotest chance of a 1930s type crisis.

[That's right, where deflation was the problem. Can you say INFLATION? I knew that you could.--TCrier]

Central banks have the ability to react to a crunch in ways that they
did not before.
He says it's difficult to predict the timing of a bubble bursting,
but believes it may happen before the middle of next year.
"When the Dow goes, all markets will correct," he says. "We must
expect a roller coaster ride, but ride the curve for the time being."
***
Reprinted at USAGOLD with permission. For details please go to:
http://www.crbindex.com/
No further reproduction without written permission
---
Gold contracts were sold down today in some pre-holiday paper(profit)-taking action by those licking their chops over these recent and rapid gains...the December contract price losing $2.60. The spot market took notice, but lost only $2.30 to end with a $320.00 quote in NY.

The already high short-term gold lease rates rose today by over half a percent, demonstrating the continuing difficulty among bullion banks in striking a balance between those willing to lend gold and those engaged in desperation borrowing. Today's numbers:
1-month 4.4375% +0.5215
2-month 4.5313% +0.4193
3-month 5.1875% +0.0115
6-month 4.8938% -0.0422
12-mnth 4.5000% -0.3188

The Tower cautions everyone to the writing on the wall. Look at it this way...if a standard bank suddenly started offering you interest rates on cash savings accounts that were many multiples higher than the norm of only a few months ago, would you risk your cash for that investment return (not to mention the return of the principle, too), even as the exchange rate markets revealed your cash's value to be climbing on its own? That is to say, your net value increases without the risk of depositing it for lending to others. Such a high interest rate as an enticement should be seen as the warning sign that it is...that something is terribly amiss. An asset that will grow while in your own hand is worth much more than the promises of others to make it grow for you if you'd only be willing to let them try.

Russia apparantly agrees with this "bird in the hand" assessment of value, or else they are putting on a world-scale demonstration of Gresham's law. From Bridge we learn that the foreign exchange and gold reserves of the Central Bank of Russia as of Oct 1 totaled $11.212 billion. Looking closer at the breakdown of assets, the foreign exchange reserves ($6.634 billion) were dropped by $190 million, while the gold reserves were up $172 million ($4.579 billion). Spend the junk and hold the good stuff. It's that easy.

Once again, we'll let Bridge News walk us through the thoughts of traders.

NY Precious Metals Review: Dec gold down $2.6 on profit-taking
By Tina Petersen, Bridge News
Washington--Oct 8--COMEX Dec gold futures settled down $2.60 at
$321.70 per ounce on profit-taking amid choppy, range-bound trading.
Traders said the gold market also was pressured lower on a stronger stock
market and a firmer dollar versus the euro.
Traders and analysts said the precious metals markets are seeing
typical profit-taking ahead of the weekend. They said there is little new
news moving the markets. An analyst said the fact that the markets eased
off from their highs "gave everyone reason to take their profits before
the weekend."

Dec gold continues to range trade amid choppy conditions. Dec moved
lower at the opening to a low of $317.5 following overnight Chinese
selling, then moved up to a high of $326.5 in the mid-morning session on
fund buying. It then continued to drift lower throughout the afternoon
session on profit-taking.
Traders said the market saw good 2-way business.

"It continues to be stuck in a range of $315-330," said a trader.
"People are buying at the lower end and selling at the upper end. It seems
to have good support at the lows and resistance at the highs." He said
that "if Dec breaks higher, the shorts will cover and if it breaks lower,
the longs will sell off."
Traders said they continue to see support at the $315 level and
near-term resistance at $330.
Many said they viewed today's downward pressure as a consolidation
before the next move higher on continued short covering over the next
couple of weeks.

"There's still a lot of short covering left to be done," one trader said.
Traders and analysts said pressuring the market lower was the fact
that the unemployment rate remained unchanged. "It confirmed
that the Fed might have been right in leaving interest rates unchanged,"
said an analyst.
"It's good for the stock market and good for the dollar, but bad for
precious metals."
Dec silver continues to follow gold, but without the underlying
bullish fundamentals that gold has. Dec settled down 4.5 cents at $5.55
per ounce.

[there was this report also by Bridge:]

New York--Oct 8--The New York Mercantile Exchange said today it will
increase the margins on its gold futures contracts to $2,000 from $1,600 for
clearing members, members and hedgers; and to $2,700 from $2,160 for
speculators. The changes are effective as of the close of business Monday.
***
(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
---
One month gold lease

The commitments of traders in COMEX gold futures was released today for postions as of Oct 5, 1999. (Changes given are from Sept 28)
Among the non-commercial traders with only long or short positions (no spreads), 20,646 new long postions were added for a total of 47,881. On the short side, only 2,881 short postions were closed, leaving 62,196 contracts held short among this same classification of traders.

Due to Monday's bank holiday (Columbus Day...can you believe anyone gets that off??) the COMEX delivery intentions notices were not available today.
The results of yesterday's trading gave us the following changes to open interest in these notable futures contracts.
Oct . . . . 110 . . dn . . 30 (as of yesterday, delivery intentions for Oct totaled 2,504 contracts)
Nov . . . . .12 . . dn . . 350
Dec . . 124,308 . . up . . 8626
ttl . . 217,896 . . up . . 13361

There was modest movement again today in the ScotiaMocatta vault, one of COMEX's two active gold depositories (Republic National Bank of New York being the other.) Nearly 1/8 tonne of gold was withdrawn from Scotia's guardianship...3,997 troy ounces, to be exact. Of that total, 2,187 ounces were taken from the Eligible stock (of which 86,404 oz remain), and 1,810 ounces were withdrawn from Registered stock (leaving 834,233 oz.)

As news made wider rounds today of the survey we reported yesterday showing that OPEC compliance with production cuts had slipped in September, yesterday's loss of 82c was extended today by another $1.55. The November crude contract closed at $20.90 by the time the dust cleared on a flurry of fund liquidations. Adding weakness to the price was comments by America's Chief Executive regarding the possibility of selling off some crude oil stored in the Strategic Petroleum Reserve to help keep oil prices from rising too much as the winter heating season arrives. (And to think that you thought only gold suffered these bouts of "official interference" in the marketplace!) One broker said of the prices, "Basically we got a little overdone and funds wanted to take some profits so right now we're at a nice medium compromise. But I think that in the long term, we will go back up."

Well, it all depends...on what the dollar will buy. Oil is oil. Gold is gold. A dollar is a concept wrapped in shifting confidence.

So, did the King chew bubble-gum on the plane yesterday, and was he "guilty" of passing love letters back and forth between the leaders of Iraq and the U.S? Well, we don't have any reports about the gum, but King Abdullah II of Jordan arrived in Washington and confirmed he had a message from Baghdad for Washington but refused to discuss the contents. Whatever the contents, the King assured that he would not be arguing Iraq's case in planned meetings with President and Secretary of State, that the message would have to speak for itself.
+
The message is reportedly from Saddam Hussein to Bill Clinton offering proposals to end sanctions against Baghdad, promising major political reform based on a multi-party system and respect for human rights, and providing help in advancing the Middle East peace process.
+
Those of us gathered in The Tower exchanged glances upon receiving this news, and drew the same conclusion...he saw the movie "Three Kings" and then recognized the error of his ways.
+
President Saddam has ruled Iraq for the latest 20 years in a 30 year reign of the Ba'ath Party. The London-based Al-Hayat newspaper reported that the Iraqi leadership was ready to begin political reforms, which would include adopting a new constitution based on a democratic multi-party system. Ever since the Gulf War Iraq has faced sanctions and two no-fly zones (one north and one south) which are reportedly intended to protect Iraq's Kurdish and Shi'ite Muslim populations. These groups attempted to rebel against the regime amidst the Gulf War and then suffered greatly at the hands of Baghdad. (If you see "Three Kings" you will have a better grasp on that affair.)
+
This latest offer by Baghdad to break the deadlock would seem to be a result of the UN sanctions taking their toll. Hah! What kind of "sanction" is an oil embargo that occurs under an oil-for-food program? The real sanction would be if they had to settle for our paper bills of credit in exchange for as much oil as they can pump. While the rest of OPEC is in agreement to limit production, Iraq says "Nuts to that!" It was no big surprise, then, earlier this week when the UN Security Council decided to increase the amount of oil Iraq can sell during the current 6-month phase of the deal. Still on track to become the 51st state. And if you find that hard to swallow, maybe a plastic CD case would help (a reference to the movie that will mean nothing until you see it.)

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

Goldfly (10/08/99; 19:04:37MDT - Msg ID:15904)
Journeyman

What verion of your browser are you running?

Maybe you need to upgrade?

YGM (10/08/99; 19:01:25MDT - Msg ID:15903)
Conversion To Euro Dollars.
Would someone enlighten me as to whether or not one of the present 11 member Nations currencies would be better to hold for later (Jan?) conversion to the Euro? If so which one. Thanks--YGM.

**I'd just like to think I had a head start in the race coming
soon- IMHO.

Journeyman (10/08/99; 18:47:05MDT - Msg ID:15902)
Help!!
Sorry, but I can't get any whitespace (empty lines) to separate my posts into paragraphs, etc. They all get run together, which is even confusing to me. For example, when I sent this, this line had two empty lines above & two below! Any suggestions?

Journeyman (10/08/99; 18:42:26MDT - Msg ID:15901)
KEYNES WAS AN INFLATION WIMP!
I mentioned in an earlier post that I'd provide evidence that Keynes was conservative in his estimate of "only" 100% inflation every three months -- or perhaps Brazillian & Russian policy makers simply aren't familiar with the man. More examples later. "Inflation last year [1992] was 1,202% in Russia and 1,038% in Brazil." -CNN Factoid, 20 Aug. 1993 - The Russian government is re-valuing the ruble. They're going to knock two zeros off the paper ruble. Starting next year, for example, 50,000 Ruble bills will read 500 rubles. This is merely a psychological move, says an expert in Russian investing. -CNBC Inside Opinion, 25 Aug 1997, ~12:26:30 PM EST - Russians try to pull their savings out of the Russian banks. The ruble lost 5% of its value yesterday and 10% today. It has lost 41% of its value over the last week, and 83% of its value over the last year. -CNBC, 08-26-98, 9:08am EST Regards, Journeyman

Leigh (10/08/99; 18:34:54MDT - Msg ID:15900)
Trader-vic/FOA
This morning I was going through some papers and found FOA's post #13085 of September 8th. In it he said, "Y2K will be something to behold, but it will be a side-show when the modern gold market breaks!" That sentence has always stuck in my mind, and I've always assumed he meant approximately what you said, about banks failing. FOA, is that indeed what you meant?

Leigh (10/08/99; 18:25:55MDT - Msg ID:15899)
Farfel
Dear Farfel: Thanks for the balanced news report of Andy Smith's remarks. I'm very glad you post here now - I like reading your stuff! Do you plan to visit Mr. Armstrong in prison? He might enjoy getting some company!

RossL (10/08/99; 18:17:54MDT - Msg ID:15898)
The Federal Reserve
The fractional reserve system is inherently unstable. Instability in systems (in general) are a exponential result of positive feedback.

PH in LA (10/08/99; 18:17:30MDT - Msg ID:15897)
Typo!! Reader Beware!
Beestings quotation from Rep. Ron Paul's remarks should read: "would have to be rather an incompetent criminal to conduct their affairs in such a way that it could be traced."
Note: "that it could be traced" instead of "NOT be traced".

Trader_vic (10/08/99; 18:14:00MDT - Msg ID:15896)
The Second Shoe to drop is being hidden from the public!
Isn't it strange that NO ONE has talked about the BANKS that are going to be effected by the fallout in defaults from the bullion dealers and defaulting mining companies....As I see it, we are going to start to see bailouts of major banks because of 1) their own hedge (derivative) book and 2) from those mining companies that are on margin call and could default to the toon of Billions of dollars!!! What do you think that that will do to THEIR balance sheets!!! I see the next disaster in the banking system to happen before the end of the year right in time for Y2K!...even though it won't come from a Y2K accident!!! If you watched the bank stocks today they traded as if nothing was wrong.......and the gold stocks got smashed, when in reality, it should, and will be, the other way around!!! IMHO, my suggestion to you is either get rid of your bank stocks that are involved in the mining sector or buy put options on the BKX (philadelphia Bank Index)to protect your position... When the story comes out, it has to create a panic in the banking sector....

K Golden (10/08/99; 17:42:28MDT - Msg ID:15895)
The Federal Reserve
Greetings and Help! I am under the impression that the following is incorrect, but anyone with knowledge who is willing to comment and post corrections on the details of the following post (by a former Federal reserve employee)
are appreciated, as I am new at this. (thank you!)

The Federal Reserve was chartered in 1913 by an act of the U.S. Congress in order to replace J.P. Morgan as the lender of last resort for the U.S. economy. It set up shop in 1914 and is "owned" by its member banks in the U.S. (not all U.S. banks are members) who are required to keep a minimum percentage of their reserves on account with the Fed. The reserves usually take the form of U.S. government bonds, but there are other assets like U.S. and foreign currency and gold which are acceptable as reserves as well.

The reserves are the primary means through which the Fed "makes" money. No the Fed does not print money. This is done through the Treasury department which works VERY closely with the Fed and causes it to be "quasi-governmental". For example, I had to have an FBI background check to work there, my fingerprints are on file as a result, etc.

The Fed makes money in two different ways and for two different purposes. The first way for it to make money is by using the reserves of its member banks without having to pay interest on the reserves. That's right, it's like an interest-free loan to the Fed by you, or me, or anybody who is a depositer at a bank which is charted through the Fed. The Fed can use the reserves as collateral to purchase or in exchange for government bonds or foreign currency. Whatever money the Fed makes while making these trades goes to cover their operating expenses (except for the check-clearing they do in NY which I think still pays for itself). Typically, there are several million dollars left over every year, and the remainder is paid to the Treasury and "reduces" the government debt.

What happens when the Fed buys and sells these assets? Well, this is the other way that the Fed "makes" money. Because our banking system is based on fractional reserves (and no this is not inherently evil), when the Fed buys government bonds on the open market, it injects cash into the banking system. This either allows the economy to grow at the same price levels or leads to inflation depending upon how much they buy and how much the banks loan out. Selling bonds has the opposite effect.

Why do we have government bonds? Because the federal government for years has run deficits which means they have to borrow money so that they can run the bureaucracy which oppresses the people, pays the military, and hands out the entitlements. Every 10 or so weeks the Treasury has an auction and the big banks and bond brokers line up to see which of their clients want to lend how much to Uncle Sam in exchange for those interest payments. It's actually pretty easy to do this directly through the Treasury now, although you have no influence on the interest rate you get.

Now, to your question. Where does the interest on the government debt go? Well, since the Fed owns some government bonds, they get some of the interest, but not much. Many foreign countries own government bonds, and they like to get paid. Many pension funds (perhaps yours) own the bonds and receive interest payments. And of course the banks still hold them, just like they hold your mortgage. You pay your mortgage, the taxpayers pay the interest and everyone is happy, right?

Well, the Fed is supposed to be able to set interest rates, but they cannot do this in a vacuum. They have to respond to market forces as we all do. Whatever they do to interest rates can have an effect on inflation. They're not quite as powerful as some would have you believe.

What do we get for all the money the Fed makes? Well, we are supposed to get a lender of last resort which will prevent another Great Depression from happening. Wait, didn't the Fed exist then too? Yes, and they unfortunately made matters worse because they didn't understand the economy very well. Personally, I think they made a HUGE mistake in bailing out LTCM. They have contributed more to the current stock bubble than most people realize. When the bubble bursts, it will be ugly, and some of the ugliness can be laid at Greenspan's feet. He learned the wrong lesson from 1987.

AEL (10/08/99; 17:34:20MDT - Msg ID:15894)
irving fisher and etc.
phaedrus (10/08/99; 15:34:22MDT - Msg ID:15882)
words of wisdom
"Stocks have reached a high and permanent plateau."
-Irving Fisher, noted Yale economist, 1929

..... hahaha! Right! We'll all keep that in mind, Irving.
For an array of goodies like that one, see the new section on my Golden Bear page:

http://www.provide.net/~aelewis/gold/goldbear.htm#BlastsPast

Generally, you might want to check out my (newly-refreshed/updated) Golden Bear page -- as irreverent and sassy as ever... something to offend everyone:

http://www.provide.net/~aelewis/gold/goldbear.htm

PH in LA (10/08/99; 17:23:40MDT - Msg ID:15893)
Reply
Tomcat: No! Not exactly, but thanks for asking.

RossL (10/08/99; 17:20:35MDT - Msg ID:15892)
Durban Roodeport Deep (DROOY) hedge-lite
We will see... The hedge-lite statement has the familiar ring of the Ashanti Goldfields statement just before the truth came out. However, DRD does have something like 80 million ounces reserves in the South African soil that will keep their stock attractive. My gut feeling is that they now are an even higher leverage play. They may under perform the un-hedged gold stocks until POG gets to $450 or $500 and then they may outperform the crowd. Anyone making investment decisions based on my gut instincts deserves what they get !

mx6764 (10/08/99; 17:12:58MDT - Msg ID:15891)
DROOY only hedges 7% of 3 year production
Excluding Australian gold production, DROOY hedges 25% gold production for 3 years. If taking into account of the purchases of Hargraves etc. and call options, DROOY hedges less than 10% of production. An expert in South African gold stock said in an interview that DROOY only hedges 7% of gold production.

Tomcat (10/08/99; 16:53:55MDT - Msg ID:15890)
Cobra(too), TC, Journeyman, DD, AEL, PH, Simply Me, Diewarzu, FOA, ORO, Al, Yellin

Cobra(too): Eye of the hurricane it is! For the shorter that is.

TC: If McConnell is right then we're headed for some really rough times.

Journeyman: You can see why some bankers just love ole John Maynard.

DD: Very touching communication. I hope you know that in the future all zero sum games will be outlawed. Thus, gold will have to go to the black market. ;).

Yellin' of troy: Bankers and criminals have proven that is possible to only have one, but not both, at the same time of conscience and consciousness. If they were conscious and aware of what they were doing they could not have a conscience. If the had a conscience the would have to eliminate the consciousness to block out what they were doing.

AEL and PH: I believe La Rouche is claiming that the CBs and the PTB are literally making a transfer of gold from the people to themselves. In the seventies he exposed the drug trade of governments. He was later proven correct. He People thought he was nuts and he was thrown in jail on, what I understand, were trumped up charges.

Simply Me: I agree with your insights about the middle class and gold. I think my comments about the street were a bit extreme and I did not want to give the impression that all folks from the street are like that.

PH in LA: Great analogy with a the suite and the modern day auto. BTW, are you a professional writer?

Al Fulchino: Thanks for getting that discussion going on what $30K will buy.

FOA: If the general public understood what you wrote about the purchasing power of gold we would be at $30,000 in no time at all.

Diewarzu: Thanks for posting the info on DROOY. Hedge-lite. Great euphimism. Too bad it will only cover up the truth for a little while.

ORO: That earthquake post was something else. There is a parallel with what you said about productivity and what Batra is saying in is recent book. Somehow this nation has convinced itself that its productivity has gone through the roof. It will be an unpleasant surprise for many when they find out its actually crashing through the floor. When you use the word plunder it really woke me up to the truth of our parasitic exploitation of good folks on this planet doing the real work and creating the real wealth on this planet.

Al Fulchino (10/08/99; 16:52:53MDT - Msg ID:15889)
FOA/jinx/and PH in LA
Thanks to all for your comments and words to ponder. I see that I would be very happy to have a "STORE OF WEALTH". And that should be our primary goal. How many times have we seen elderly people in Russia who cannot pay their bills, or we remember when COLA's had to be instituted in the 70's to prevent inflation from eating up too much of the elderly's or the poor's benefits.

However, because of the way gold etc has been beaten down, I do believe that we also stand to gain new wealth beyond what the nornal "STORE OF WEALTH" would be. SO for the "ride" I do go. Warily! I also believe that a ROAD TO $30,000 is foaming with peril for those on the train and off the train, for those OFF the train may be throwing rocks up as we pass them by. I will just assume from all II have learned here, that any gold worth $30,000 will not buy me a $30k vehicle <current dollars> but it will still purchase a much better vehicle than what $325 <todays current dollars also> buys. MUCH BETTER!

Thanks to all for your comments.

beesting (10/08/99; 16:48:06MDT - Msg ID:15888)
SSHHEEEEEESHH!!
http://www.house.gov/paul/committeework/bankingtrans/99_9_22.htm
SORRY!!

beesting (10/08/99; 16:42:18MDT - Msg ID:15887)
Try this URL on previous message
http:www.house.gov/paul/committeework/bankingtrans/99_9_22.htm
Good news release by Congressman Ron Paul of Texas...beesting

beesting (10/08/99; 16:33:19MDT - Msg ID:15886)
Opening statement of Rep. Ron Paul on Russian money laundering.
http://www.house.gov/paul/committeework/bankingtrans/99 9 22.htm
2nd for Gandalf's nomination of Goldfly's version of 16 tonnes!

On Sept.28th my PC developed a case of," euphoric Golden overload" and crashed, this is my first post since,hope it works.

Click above for full news release:
When Allan Meltzer,head of the (U S)Congressional Commission on the IMF, asked recently weather the use of IMF funds could be traced,Joint Economics Staffer Chris Frenze replied that someone,"would have to be rather an incompetent criminal to cunduct their affairs in such a way that it could not be traced." We cannot justify taxpayer money going to an organization(I.M.F.)with such a lack of accountability.

The end of the IMF???....Bank of New York is also mentioned in article.......Go Go Gold.....beesting

Gandalf the White (10/08/99; 16:00:34MDT - Msg ID:15885)
Dumb Ol'e Wiz
That should end -- "Seconds ANYone ?"
<;-)

Gandalf the White (10/08/99; 15:58:53MDT - Msg ID:15884)
Welcome MT Hiker
The Hobbits love stories !! This looks as if you may fit right in with the other story tellers.
Attention PeterA -- Monday will be another one on the markets! -- My crystal ball is painted BLUE!!
Come on in you Lurkers, the TableRound has lots of chairs.
AND finally, I hereby nominate the Goldfly song "16 Tons" for inclusion into his music room in the HoF! Seconds onlyone?
<;-)

Montana Hiker (10/08/99; 15:45:03MDT - Msg ID:15883)
And that's the truth
http://www.usagold.com/cpmforum/tools/post.html
Hi guys, here's another first poster. Many times when my 6 kids were little, they would give me a subject and I would develop a story. The other day while hiking with my lovely wife this story appeared.
In the beginning God created the universe. In his creation he wanted many beautiful things,thus the Gold Bug was created. In time creatures followed by humans occupied the earth. The Gold Bug had a very special placed with the humans and was considered very beautiful with it's radiant glow. Humans greatly desired to possess this earth's treasure.
In time, humans decided to create their own Gold Bug but it turned out to be a Green Bug. But it also became very desirable to possess. The humans found that they could feed the Green Bug and it excrete beautiful green stools that were sweet smelling and very valuable to own. The more they feed the Bug the bigger it grew and also more abundant were the green stools. The stools allowed humans to buy anything they desired
Meantime, the Gold Bug was ignored and felt lonely. Gradual he became smaller and lost his glowing luster. However, there came a time when the Gold Bug started to regain the feeling that he was important and desirable and thus his luster was restored.
At the same time the Green Bug began to take on a slight brown color which was not noticed by his owners. Then one day a human noticed that the sweet smelling excetement had a foul smell to it not unlike the droppings of four legger animanls, however since the stool was valuable he didn't tell anyone. And that's how the bull sh-t got into the banks and monetary system. And that's the truth!

phaedrus (10/08/99; 15:34:22MDT - Msg ID:15882)
words of wisdom
"Stocks have reached a high and permanent plateau."

-Irving Fisher, noted Yale economist, 1929

fox (10/08/99; 15:27:35MDT - Msg ID:15881)
fox
http://news.24.com/English/Business/Companies/ENG_152129_709007_SEO.asp
Drooy and his hedging position

CoBra(too) (10/08/99; 15:22:40MDT - Msg ID:15880)
After all those great posts of today ...
Including some very wise "newbies", I'm at a loss to go into any other discussions, be it the Austrian School of economics - which never happened, because the guys have run off to Washington -at a time when they've conceived the old continent toast - and toast it was.

I would only like to stress - and stress is where the shorts are now - that PoG is in the eye of the hurricane. The real devastion is to be expected after the lull. As a BIS official stated some time ago, this coming gold (bull) market won't take any prisoners.
Amen CB2

TownCrier (10/08/99; 15:12:06MDT - Msg ID:15879)
Y2K to be chronic but not acute - key expert
http://biz.yahoo.com/rf/991008/s6.html
Bruce McConnell, director of the International Y2K Cooperation Center suggested "Y2K-caused effects on daily life will be complex and more chronic than acute." He further predicted, "a growing slowdown in commerce as capacity is reduced by a confluence of degraded infrastructure performance and shaky consumer confidence. Performance degradation, potentially exacerbated by non-Y2K factors, may cascade from one infrastructure to another."

When confidence is low, fiat money suffers because it is built on confidence and very little else. Gold is the only money on earth that will be immune, and will actually thrive in an atmoshere of shaken confidences. Get real. Get gold. Get going.

Journeyman (10/08/99; 14:49:27MDT - Msg ID:15878)
ORO, Yellin' -- MONEY
Lord John Maynard Keynes, archetect of "Keynsian Economics," explains just how badly he thinks paper (or megabyte) currency, whether marks, yen, dollars --- or even "thallers" can "safely" be abused: "It is evident that so long as the public use money at all, the Government can continue to raise resources by inflation. Moreover, the conveniences of using money in daily life are so great that the public is prepared, rather than forego them, to pay the inflationary tax, provided it is not raised to a prohibitive level . . . Recent experience everywhere seems to show that it is possible to inflate 100% every three months without entirely killing the use of money in retail transactions, but that a greater rate of inflation than this can only be indulged in at the peril of total collapse." He's WAY too conservative -- evidence in a later post. Regards, Journeyman

DD (10/08/99; 14:23:24MDT - Msg ID:15877)
ORO/Laffer
ORO - I think Laffer probably said it as well as any of us. Makes one wonder about the definations of "work" and "productivity". I'm particularly facinated by zero sum games. If I make a mint driving the price of gold down while the miners and LDCs losing their shirts, is that productive? The "good o'l boys" would say sure. It's a free market and if the miners can't compete, the market will weed them out. Tough luck. I'm not sure exactly how a miner and his family compete with GS big shots who never factor in the misery caused to others in their never ending quest for more. However, I think what goes around comes around, many times in ways that seem worlds apart and mostly invisible. Karma? I don't know, but something like that. Best, DD

Yellin' of troy (10/08/99; 14:20:52MDT - Msg ID:15876)
oops
Sorry for the double post -- I went back to erase my pass-
word, for security, and hit the post button by accident.

Yellin' of troy (10/08/99; 14:17:57MDT - Msg ID:15875)
ORO -- money
Ned Block once criticised Julian Jaynes for making an ele-
mentary use/mention error, confusing the concept of consci-
ousness with consciousness itself. Daniel Dennett replied
that some phenomena and institutions are so dependent upon a
concept that you can't have one without the other; e.g., you
can't have baseball without the concept of baseball. And
you can't have money without the concept of money. All full
fledged money *is* "concept money." True, there is a cont-
inuum from no-money (a pure barter economy) to full fledged
money, running through popular, widely acceptable items, and
you also need to develop the ideas of multi-party deals and
asynchronous deals. Money and the concept of it develop
gradually. But once they are here, the value of money comes
in large part from the concept; the value of particular mo-
ney comes largely from the fact that it *is* money. This is
just as true of gold as of dollars: Gold is as valuable as
it is because, while it is not at present actually currency,
it is intrinsically *good* money, suitable for use as money,
and hence retains a value as secondary money and a potential
for restoration to primary status.

A reliable receipt/note for something valuable, like gold or
gasoline, has a derived value, and since paper is much more
suitable as money than something heavy or explosive, it can
serve as money, in effect combining the intrinsic usefulness
of gasoline and paper. But once it is money, it gets addi-
tional value from that use; and in fact actual, physical gas
will acquire *derived* value from the fact that it is used
(indirectly, through its paper representation) as money. If
the system of receipts is managed fraudulently, if the sup-
ply of paper-gas is (even openly) inflated, knowledge of the
fact will affect the value and perhaps even destroy the use
of paper-gas as money, if there are decent substitutes at
hand. But this is merely the fact that prices change with
changes in knowledge, or that the discovery of fraud is a
*big* change in knowledge. The inflated, or even easily-
inflatable paper-gas money isn't such *good* money as was
thought, and certainly isn't as scarce as was thought, or as
it used to be, so it loses value. This is an argument a-
gainst fraud or inflation; it is not an argument against
"concept money."

The receipt system is a good way to introduce a new form of
money, as you say, and historically it has been much abused,
as you say, and becomes worthless, *eventually*. But only
eventually. When the receipts

Yellin' of troy (10/08/99; 14:17:55MDT - Msg ID:15874)
ORO -- money
Ned Block once criticised Julian Jaynes for making an ele-
mentary use/mention error, confusing the concept of consci-
ousness with consciousness itself. Daniel Dennett replied
that some phenomena and institutions are so dependent upon a
concept that you can't have one without the other; e.g., you
can't have baseball without the concept of baseball. And
you can't have money without the concept of money. All full
fledged money *is* "concept money." True, there is a cont-
inuum from no-money (a pure barter economy) to full fledged
money, running through popular, widely acceptable items, and
you also need to develop the ideas of multi-party deals and
asynchronous deals. Money and the concept of it develop
gradually. But once they are here, the value of money comes
in large part from the concept; the value of particular mo-
ney comes largely from the fact that it *is* money. This is
just as true of gold as of dollars: Gold is as valuable as
it is because, while it is not at present actually currency,
it is intrinsically *good* money, suitable for use as money,
and hence retains a value as secondary money and a potential
for restoration to primary status.

A reliable receipt/note for something valuable, like gold or
gasoline, has a derived value, and since paper is much more
suitable as money than something heavy or explosive, it can
serve as money, in effect combining the intrinsic usefulness
of gasoline and paper. But once it is money, it gets addi-
tional value from that use; and in fact actual, physical gas
will acquire *derived* value from the fact that it is used
(indirectly, through its paper representation) as money. If
the system of receipts is managed fraudulently, if the sup-
ply of paper-gas is (even openly) inflated, knowledge of the
fact will affect the value and perhaps even destroy the use
of paper-gas as money, if there are decent substitutes at
hand. But this is merely the fact that prices change with
changes in knowledge, or that the discovery of fraud is a
*big* change in knowledge. The inflated, or even easily-
inflatable paper-gas money isn't such *good* money as was
thought, and certainly isn't as scarce as was thought, or as
it used to be, so it loses value. This is an argument a-
gainst fraud or inflation; it is not an argument against
"concept money."

The receipt system is a good way to introduce a new form of
money, as you say, and historically it has been much abused,
as you say, and becomes worthless, *eventually*. But only
eventually. When the receipts

Yellin' of troy (10/08/99; 14:15:47MDT - Msg ID:15873)
ORO -- money
Ned Block once criticised Julian Jaynes for making an ele-
mentary use/mention error, confusing the concept of consci-
ousness with consciousness itself. Daniel Dennett replied
that some phenomena and institutions are so dependent upon a
concept that you can't have one without the other; e.g., you
can't have baseball without the concept of baseball. And
you can't have money without the concept of money. All full
fledged money *is* "concept money." True, there is a cont-
inuum from no-money (a pure barter economy) to full fledged
money, running through popular, widely acceptable items, and
you also need to develop the ideas of multi-party deals and
asynchronous deals. Money and the concept of it develop
gradually. But once they are here, the value of money comes
in large part from the concept; the value of particular mo-
ney comes largely from the fact that it *is* money. This is
just as true of gold as of dollars: Gold is as valuable as
it is because, while it is not at present actually currency,
it is intrinsically *good* money, suitable for use as money,
and hence retains a value as secondary money and a potential
for restoration to primary status.

A reliable receipt/note for something valuable, like gold or
gasoline, has a derived value, and since paper is much more
suitable as money than something heavy or explosive, it can
serve as money, in effect combining the intrinsic usefulness
of gasoline and paper. But once it is money, it gets addi-
tional value from that use; and in fact actual, physical gas
will acquire *derived* value from the fact that it is used
(indirectly, through its paper representation) as money. If
the system of receipts is managed fraudulently, if the sup-
ply of paper-gas is (even openly) inflated, knowledge of the
fact will affect the value and perhaps even destroy the use
of paper-gas as money, if there are decent substitutes at
hand. But this is merely the fact that prices change with
changes in knowledge, or that the discovery of fraud is a
*big* change in knowledge. The inflated, or even easily-
inflatable paper-gas money isn't such *good* money as was
thought, and certainly isn't as scarce as was thought, or as
it used to be, so it loses value. This is an argument a-
gainst fraud or inflation; it is not an argument against
"concept money."

The receipt system is a good way to introduce a new form of
money, as you say, and historically it has been much abused,
as you say, and becomes worthless, *eventually*. But only
eventually. When the receipts cease to be receipts and turn
into mere paper, they do not on that account become worth-
less, because by then their value is in part their value as
money rather than their derived, physical-commodity value.
When the dollar was severed from gold, people did not stop
using dollars, and dollars did not become worthless. I'm
not arguing in favor of inflation or excusing governments
that renege on their obligations or defraud people. But my
point was that in figuring out how much a dollar is worth,
or should be, one has to realize that the value of a dollar
lies in the fact that it is a dollar, the standard American
money, rather than in the fact that it used to be redeemable
for gold, or that it no longer is.

AEL (10/08/99; 13:06:28MDT - Msg ID:15872)
larouche
Right, ORO, he is NOT simply a crank; a very complex guy, nothing simple about him. Here are a few relevant URLs, for your reading pleasure:

LaRouche on Post-Collapse Reconstruction & Global Development
http://www.larouchepub.com/lar_oberwesel_2631.html

Lyndon LaRouche: Christian Humanist Intellectual, Philosopher, Economist
http://www.larouchepub.com

Against Oligarchy (Webster Tarpley, Christian Humanist; LaRouche compadre)
http://www.tarpley.net/

Readings from The American Almanac (Christian Humanism; LaRouche et al)
http://members.tripod.com/~american_almanac/

The Schiller Institute in Denmark
http://inet.uni-c.dk/~sch-inst/

TownCrier (10/08/99; 12:45:39MDT - Msg ID:15871)
headline: Will Roaring 2000s jazz up Dow to 41,000?
http://biz.yahoo.com/rf/991008/n3.html
This fantasy-land scenario is what is currently being priced into the market. Brokers have been sold the story that the baby boomers will be passing through their most productive years over the next decade and it is their economic influence that will drive up the DOW. The often overlooked downside to this same fantasy is that it would be followed by a bear market lasting over a decade.

If the dollar were devalued against all things by only 75% (to begin to adjust for the current trade deficit and overhang of dollars in foreign accounts), then the DOW would be priced at over 40,000 today. Or for that matter, they could tweak the formula a bit and make the DOW index whatever number they choose...be it 10 or 10 million. That doesn't exactly help you pay the rent, though, does it?

Real people will come back to their senses and see the value in real things when the purchasing power of the dollar begins to fall against real goods. Real money for real people to meet their real purchasing and savings needs...Got gold?

ORO (10/08/99; 12:34:24MDT - Msg ID:15870)
DD
Aug 1971
Laffer comes out of the oval office, having discussed with Nixon the closure of the gold window, and Nixon's mind was made up, is heard to say "The conection between effort and reward has been severed".

YGM (10/08/99; 12:32:23MDT - Msg ID:15869)
DD
Yours was a powerful message from a view w/ experience. I sincerely hope the Gold upswing will bring back some of those lost riches. Regards to you & thanks for your warning.--YGM

DD (10/08/99; 12:30:39MDT - Msg ID:15868)
FOA - Just a thought
FOA- I felt compelled to say something to you. There's something powerful in your posts. They seem to serve as reminders of the bigger picture. We, at least I, need that. It easy to get caught up in daily "noise". Thank you for all you do. Best, DD

Twice Discipled (10/08/99; 12:21:38MDT - Msg ID:15867)
DD
Amen! I will cut and paste your post on my cubicle wall.

DD (10/08/99; 12:10:47MDT - Msg ID:15866)
ORO/Earthquake
ORO - I think this post may be one of your most powerful. It's oh so true. I'm going to turn more than a little philosophical for just a moment. Please bare with me. I started and owned a manufacturing company for over 20 years. We had over 200 employees, most of them highly skilled. We were a leader in our industry in technology, quality and customer satisfaction before these terms became popular. At one point in my career I was sort'a rich, at least on paper (sounds like a lot'a people I know today). I hired a president and semi-retired. He ran the company into the dirt with me asleep at the switch. We lost millions. I came back into day-to-day management to attempt to save a company with a significat negative net worth. It wasn't pretty. We held off the banks that wanted to forclose and rallied our customers, suppliers and people. We were back to profitability within 10 months. Knowledgable people called it a small maracle. Over 3 years, we paid back everything we owed with interest. That's the good news. The bad news? we weren't able to invest in upgrades to the plant in a capitol intensive business. However, through the dedication and energy of our people, we were still able to build complex products to higher quality standards than most of our competitors. With the restructuring of the Aerospace Industry (our customers) in the late 1980s, it became a battle of the balance sheets as programs were cut and work dwindled. I closed the doors in 1990, losing everything both personally and professionally. So, what's the purpose of this sad story? I believe we've missed the boat big time on productivity because we've looked almost exclusively at technology as its source. We've forgotton about PEOPLE! Work, for the most part, is more like a prison sentence for most people than an experience of growth, contribution and adventure. In our chase for the almighty dollar, quarterly earnings and stock price, we've lost an important piece of ourselves, our humanity. This loss has translated into difficult to measure reductions in energy, creativity, responsibility and caring in the people who do the real WORK. People ARE business and they ARE the businesses in which they work. Technology, without well trained, motivated people may actually reduce productivity. OK, now for the point of this ramble. The main reason we're in this Y2k tar baby is that "leaders" have focused on the same short term factors that caused them to discount people as important to productivity. A potential wake up call is coming on 00. Nearly every Y2k contingency plan has many manual (people) elements. Are these people trained for manual workarounds? Do they care? Will they do whatever it takes to keep things going? All this for organizations that have shown little regard for their personal well being? I doubt it. People's alienation in the workplace maybe a show stopper in holding the fort and putting the peices back together when our globally interconnected systems of systems fails in the next year. A friend called me last night to inquire as to if I would be on a forum to address a large group on Y2k. I said no. I've been on a number of these things and nothing comes of them (except I piss off the establishment with hard questions). He asked if I would advise the moderator what questions to ask the panel or any advice I would give? I said sure. There's only one question that has any relevance now. ARE YOU PREPARED?? The advice? GET PREPARED!! Just like the gold bears, time is very short in this end game, too. Keep up the great work all. Best, DD

ORO (10/08/99; 12:08:03MDT - Msg ID:15865)
LaRouche
The guy is simply a hot head and he lets his anger get ahead of him.
Until a couple of months ago I only saw him on a couple of TV shows where he had some controvercial things to say, but the words got lost in an outburst. So he just behaved like a crackpot. Today, after reading 2 or 3 articles on education and banking, I came to the conclusion that the guy is not a crank and I should look at more of his stuff. Besides, his information gathering team seems very effective.

PH in LA (10/08/99; 12:07:55MDT - Msg ID:15864)
LaRouche
AEL:
Agree completely, except that the "kooky outbursts" are even more kooky when seen out of context. I remember the "certifiably insane" passage and seen from the point LaRouche was making at the time, it was almost valid. PS. He doesn't like A.Gore at all, either. Is he "talking his book" and seeing him as a rival? You know he does consider himself a presidential candidate. Another case of being way too far out in front of the curve? For a while his economic vision seemed very close to Another's. Hasn't had much to say lately, though. Probably afraid in light of his presidential fantasies. Almost believable, too, his version of how and why he was framed. What a shame!

Tomcat (10/08/99; 12:06:20MDT - Msg ID:15863)
Why hasn't the POG risen faster as of late?

In USGOLD's report today he quoted someone saying: "Everybody 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 crystallized yet so nobody really knows what the damage is going to be."

...so nobody really knows what the damage is going to be."

My take is that the bullion banks, the mines, and the hedge funds know very well what the damage is. They live with these numbers by the minute. This is arithmetic; not advanced calculus. These folks don't want to let out the truth! They're stalling.

The damage could be very deep and spread very far amongst many mining firms, bullion banks, and hedge funds. If the truth were let out and understood by the investment community then we might see many stock prices fall and the POG rise rapidly.

If 5,000 tons of gold have been sold short or forward then we still have 5000 tons of facts to be laid at the alter of truth.

If one holds physical gold, then you have tons of facts, about to be revealed, on your side. Every day more and more bits of truth (pieces of the puzzle) will come out. Soon the puzzle/picture of losses will be clear to all and the POG will rise accordingly.

Then, it will take even more time for a particular truth to sink in; that there is just not enough gold to fill the needs of the shorts. The price will then continue to rise as more and more see that their isn't enough gold to go around.

If all investors saw this immediately then the POG would rise immediately. But, but the revelation of facts and truth is a much slower process because it takes time for people to believe an "unbelievable" story that they about about to hear.

If you remember, it took many of us a long time to put the picture together. And we had time and many great teachers! Many investors don't have all the help we have had so it will take them more time. But as sure as the sun rises they will see the truth and the truth will drive the POG toward the stars.

Farfel (10/08/99; 11:58:41MDT - Msg ID:15862)
The Complete Text of Randy Andy Smith's Comments about GOLD
I am always amazed at how the mainstream media censors news items. Fortunately, I obtained a complete text of Mr. Smith's latest piece of propaganda and thought I would share it with USA Gold's visitors:

MITSUI ANALYST RANDY ANDY SMITH SAYS GOLD "WALL" WILL FALL DESPITE RECENT RALLY OR "I WILL HAVE TO SELL EVERYTHING I OWN AT A SWAP MEET, GODDAMMIT TO HELL!."
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 Randy Andy
Smith, renowned anti-gold storyteller at Mitsui Bussan Commodities.

Mr. Smith, relying heavily upon anecdotal evidence provided by his senior advisor, Marty "Cook the Books" Armstrong, shocked his Japanese audience with the virulence of his anti-gold statements, not to mention the gross stupidity of his various maleducated pronouncements.

The paper, titled "The Fall of the Golden Wall or These Blasted Golden Showers are Raining on My Parade", argues the philosophy behind holding gold, is doomed, like Marty Armstrong's whiny plea of innocence, to collapse "under the weight of its own contradictions."

"Let me assure you there will be even more negative news concering gold in the future," Randy Andy declared, "And I expect to provide you timely reports since Marty will be allowed visitors at his prison facility between 1:00 and 3:00 P.M. once a week...and I intend to be there, taking notes!!" ( Story .13436 ) :-)

Hill Billy Mitchell (10/08/99; 11:37:09MDT - Msg ID:15861)
flierdude # 15806
Your reasons for liking silver are worthy. IMO you are out of balance though. You should have less in silver and more in gold, physical that is.

What is your reason for having 55% of your holdings in paper. Seems a little risky. Why not move your gold stocks into physical and keep your calls.

You would greatly reduce the risk of paper destruction and put your gold into a better balance with your silver without having to reduce your physical holdings.

AEL (10/08/99; 11:06:31MDT - Msg ID:15860)
PH: LaRouche
"Too bad he has been so drastically discredited that the very mention of his name brings forth epithets as "far-out thinking in the fringes of sanity..." etc."

I agreee, it IS too bad. LaRouche -- if you really get down and read his stuff -- is a major intellectual force to contend with. But LaRouche really has only himself to blame for that "fringe/kook" perception. He can write the most outstanding, scholarly and incisive article (on whatever)... and then completely trash his own credibility by making some clearly ridiculous point, and hammering on it; e.g. such as that Alan Greenspan is certifiably, clinically insane. (Yes, he actually said that!) It is embarassing that a man of his intellect and erudition would sabotage himself in this way. Ah, well. I still enjoy reading his stuff. It is a treasure-trove of clear thinking and historical understanding and provocative ideas... if you can ignore those occasional(kooky/psycho) outbursts. :)

PH in LA (10/08/99; 11:05:19MDT - Msg ID:15859)
"No-Name" Horse
What's with the "Horse with no Name" today? Lease rates at 75% in the near month. Has anyone called his trainer this morning? Maybe he is about to escape. Was his stable door left open?

Hill Billy Mitchell (10/08/99; 10:58:20MDT - Msg ID:15858)
We the street people
Tomcat:

re: Something is changing on the streets. Any ideas as to what it might be?

We the "street people are not telling. You'll have to rub shoulders with us again to find out. (smile) only kidding

PH in LA (10/08/99; 10:51:08MDT - Msg ID:15857)
On The Street
Al Fulchino:
I was thinking about your question (10/07/99; 20:11:46MDT - Msg ID:15811) "What will a $30,000-ounce buy if...?" before arising this morning, and even though I would never hope to add much to FOA's answer (FOA -10/08/99; 08:37:15MDT - Msg ID:15847), please let me try to put an idea or two out there. This is a very fundamental question for all who hold gold (and even more for those who don't) and well worth considering even now.

We have already seen a tremendous and long-awaited initial wake-up call to our journey "on the road". POG literally exploded out of the blocks in a paroxysm that has caught the gold world's professionals flat-footed. From mine executives to bullion bank board rooms, many are suffering from "sticker-shock" and "reality-shock", as they reel in disbelief. At the same time, what has the greatest professional of them all, the great, all-knowing helmsman, A Greenspan seen fit to do to control the situation? Why, just this week he shifted to a "tightening bias", while refusing as "too radical?" the widely expected take-back of his final 1/4% interest rate reduction (one of three) that he had applied back when the international financial system was on the verge of collapse in the wake of LTCM. The world's financial system verges on collapse and interest rates go up .75% on the street! How ponderous and resistent to change the street economy can be! Gold explodes $75 in a few days and AG shifts to a "tightening bias".

Getting back to suits:

In Shakespeare's time, a suit of gentlemen's clothes was a marvelous thing. "The clothes make the man" they used to say. And rightly so. That suit was a hand-made creation, a masterpiece crafted from fabrics imported from far places (at great expense) by a master craftsman who labored over a considerable time to bring his creation into being. It was nothing to be taken lightly... and it wasn't! Not just anyone could afford one! You had to "deserve" such a thing. An ounce of gold was just about right.

Today, it is no longer the "clothes that make the man". No! Especially here in California, and all across America... "We are what we drive" we are told by Madison Avenue. Yes, the car we drive is now considered an expression of who we are. The American dream... The symbol of our personal freedom. And a marvelous creation it is! "Crafted from materials imported from far places (at great expense)", it is the result of the efforts of not just one, but many craftsmen, from the design engineer, to the factory worker, many of whom can't even afford to live in America and so are conscripted in every far corner of the world; it is a masterpiece. $30,000 is not considered too much to pay for such a thing. Not just anyone can afford one. You have to "deserve" such a thing. No, the clothes no longer "make the man". "We are what we drive!" And an ounce of gold ought to be just about right.

Getting back to the ponderous street economy:

Those who foresee gold rising to $30,000/oz have warned that the US dollar will have to fall drastically in value. But the artificial nature of the dollar, built as it is, mostly on confidence, means that most of its value adjustment will have to take place on the street, where the confidence is held. Even as the populous has no hint of the explosion in gold that has already occurred (let alone that which comes), they will be "way behind the curve" with respect to their confidence in the dollar. Sure, goods imported from abroad will become immediately more expensive. Like, for example, oil. Oil has more than doubled lately yet there is virtually no sign of that on the street. Oh wait! That's right! I almost forgot! Gasoline went up over $.20/gallon for a while, there. On the street. (It's almost back to normal, now.) Maybe some of the things made abroad will be made here again. And maybe some corporate CEOs will have to forego their profit-sharing bonuses. Future generations will call this "a time of historical change".

And that's how much of this will play out. The dollar will adjust rapidly on the currency markets. Governments will drag their feet to keep the brakes on (currency controls, taxation, new laws... etc.) and things will change on the street. Slowly! Hopefully (from the governings' point of view) so slowly that hardly anyone even notices. "Too bad we doesn't haf enny of thet gold, Mabel," Billy Joe Sixpack will say over dinner. "Yeah! Fry mah hide!" Mabel will answer. "But mebbe we'll win th' lottery this hyar week. Shet mah mouth! How's yer dinner?" "Fine." Billy Joe will say.

And maybe Alan Greenspan will raise interest rates another 1/4%, too. Out here, on the street!

Simply Me (10/08/99; 10:32:59MDT - Msg ID:15856)
Gold Premiums
Tomcat and SteveH: The high premiums also reflect the high volatility of the market. In effect, the bullion dealers are hedging their prices against sudden rises in the POG. The store inventory is kept at a steady or (hopefully) growing dollar amount. As gold is sold, you pick up the phone and order more to replace it, locking in the "buy" price as close as possible to the "sell". Profits are very slim to begin with. If every time you pick up the phone to order, your dollars buy less and less inventory, your bullion business is going down the tubes.

Also, you may be porportionally right about the sentiments of "the man on the street" and gold ownership. And I'm sure, the meaner the streets, the less gold you would find there.
But you also might be surprised at the level of gold trade in lower-middle to middle class America. The farmers, the factory workers, the small business owner, and the retail salesperson....folks with a little income to put back, but not enough to play the stocks. Unfortunately, many of them are also not very knowledgeable about markets in general and have few other resources to fall back on...so when a financial set-back hits, they sell the gold first.

The gold coming out from under the mattresses these days is indicator that the economy is getting worse from the bottom up. No matter what the DOW says.

ORO (10/08/99; 10:06:21MDT - Msg ID:15855)
FOA - New Monetary System
Though a question of detail, I think the concept is flawed at its root. The structure itself is still as dangerous as any paper structure. The mispricing of gold as a result of the arbitrary decision to use it as money backing for an inflated currency with heavy interest in strength, has way too much economic damage and dislocation built into it.
Is it better than the current system? Yes, that's easy. But it will have its' own quirky ways to make sure the distortion is obvious.

I understand you don't think we can get far discussing this at this stage, as things are so much in the air.

Thanks again. You allways open my eyes to something new.

TownCrier (10/08/99; 09:37:20MDT - Msg ID:15854)
Y2K: Think Global, Stay Local
http://www.intellectualcapital.com/issues/issue308/item6731.asp
Official warnings about what will surely happen in their neighborhoods but not in ours.
Yeah, right. Do yourself a favor...'cause no one else is standing in line to help you.

goldnbones (10/08/99; 09:24:55MDT - Msg ID:15853)
Hegding and Ashanti
Good morning everyone. This morning I recieved an email from my broker (Canaccord), which discussed a conference call that Ashanti had held yesterday. They go into some detail discussing the hedges etc, but I have found it a little difficult to follow. I guess my understanding of how hedges work is way to simple. I have posted the relevent part of the email below and ask for any simple explanations you can give.

MESSAGE
Ashanti held a conference call last night to try to clarify its
position regarding the hedge book and margin calls. The result seemed
to give some further information, but still leaves many questions
unanswered. The major points from the call are summarised below.

* The company reached a standstill agreement with its counter-parties
on the hedge book;

There are apparently 17 counterparties to Ashanti's hedge book. The
standstill agreement means that these counterparties will not push for
payment of margin calls while the standstill is in place. The total
level of margin calls as at October 6, with gold at US$325/oz., was
US$250 million. This is considerably higher than we had estimated
yesterday and shows the liquidity problem facing Ashanti.

Mark Keatley, Ashanti's CFO, would not give an exact period for the
standstill agreement, but when asked whether it was days, weeks or
months he replied that "it is not days or months". This seems to
suggest several weeks, possibly to around the end of November?

In answer to a question, Mr. Keatley also stated that so long as the
standstill agreement is in place, there is no problem with possibly
breaking any covenants relating to the revolving credit facility. It
was also pointed out that 75% of the hedge book counter-parties were
also involved in the revolving credit facilities, and these
counter-parties would not want to see anything done to reduce
Ashanti's operational viability.

* The 'replacement cost' of Ashanti's hedge book has risen to US$572
million;

On Tuesday, Ashanti stated that the replacement cost of the hedge book
was US$450M with gold at US$317.50/oz. Yesterday, the company stated
that the replacement cost was US$572 million with gold at US$325/oz.

This suggests that a considerable level of gearing to the gold price
remains, despite the restructuring over the past few days. The total
net hedge book covers 10 million ounces of gold. A move of US$7.50/oz.
on 10 million ounces would give US$75 million-but the replacement cost
moved by US$122 million, suggesting gearing of approximately 1.5 times.
However, in further questions, it seemed that if gold ran to US$350/oz.
the replacement cost would be around US$800 million, which implies no
gearing (US$25/oz. on 10 million ounces equals US$250 million, added
to US$572 million replacement cost today equals US$822 million).

* The replacement cost is not a cash loss;

Mark Keatley stressed that the replacement cost of the hedge book is
not a cash loss, as it has not been crystallised. With the average
price of the hedge contracts at US$375/oz., Ashanti's intention is to
deliver physical gold into these contracts as it is produced.

The problem is one of liquidity-but now that a standstill agreement is
in place Ashanti has a breathing space which will allow it to arrange
a more permanent solution. The company is now valuing the hedge book
on a daily (possibly even hourly?) basis, helped by a team of
analysts, supplied by the counter-parties, that have built a highly
detailed model of the complete hedge position.

Mr. Keatley admitted that in 'stress tests' that Ashanti had
previously conducted on its hedge book, it had looked at a 'worst case'
scenario of a rise of US$50/oz. in the gold price over a "longer time"
Mr. Keatley did not define the time frame, but we would not be
surprised if it had been a month). The company was taken completely
by surprise, and had no time to react, when gold rose US$75/oz. in
just four days.

* The balance sheet remains okay for normal business;

Mark Keatley stated, in answer to a question that there had not been
much change in the balance sheet since the end of June, that it is
okay for normal business. Gross debt now stood at just over US$500
million (long-term borrowings were US$489 million in June), while net
debt was around US$440 million, implying cash on hand of just under
US$60 million (cash was US$109 million in June). The swing of around
US$70 million is accounted for by spending on capital projects, such
as Geita. For normal business purposes, therefore, Ashanti's balance
sheet is fine-but it cannot stand margin calls of US$250 million or
more.

* The value of the operations hasi with the higher gold price;

Mark Keatley stated that Ashanti has modelled the value of future cash
flows from its operations. Using a discount rate of 6%, the value of
these cash flows with spot gold at US$255/oz. (the level a couple of
weeks ago) was US$1.3 billion; with spot gold at US$325/oz. the value
has risen to US$2.5 billion. This is consistent with the gearing
effect on Ashanti's margins, as its cash costs are around US$215/oz.
giving a margin of US$40/oz. at US$255/oz. gold and US$110/oz. at
US$325/oz gold. Allowing for the higher revenues received from the
gold that is hedged, the discounted value has approximately doubled.

* The company has been in discussions with Lonmin for several months;

The company apparently began discussions with Lonmin regarding a
possible merger as long ago as October 1998. The current crisis has
accelerated the talks. Ashanti also stated that the Ghanaian
government, which holds 20% of the company, would vote in favour of
such a merger.

Overall, the conference call gave some comfort (mainly from the news
of the standstill agreement), but reinforces the fact that Ashanti's
liquidity problems are significant and will get worse if the gold
price rises.

Nonetheless, as we pointed out on Tuesday, the overall value of the
company should be higher today than it was 2 weeks ago when the shares
were trading at US$6.00. The discussions with Lonmin are likely to
lead to a bid, and if this is seen as too low/opportunistic by the
likes of Barrick Gold, Anglogold, Gold Fields, Normandy, etc., there
could well be one or more competing bids. We therefore consider that
at the current level, around US$4.25, Ashanti Goldfields is
undervalued. However, with the immediate liquidity problems still
hanging over the company, we can only recommend a SPECULATIVE BUY.
END MESSAGE

ok, so you may or may not want to ignore the buy/sell advice at the end, the message does come from a broker afterall!!!!!

TownCrier (10/08/99; 09:09:05MDT - Msg ID:15852)
Wallets likely will be loaded -- just in case for Y2K
http://orlandosentinel.com/news/100399_y2kcash03_19.htm
A financial planner/stockbroker in Orlando, Randall Deane said, "I've talked to some who say they'll accumulate large amounts of cash and consider serious liquidations. But I've never talked to someone who has actually done it. Of course, it's a natural tendency for people to procrastinate about making big decisions."

However, recent surveys reveal a quarter of the population planning to stash away significant cash reserves. It seems the risks are high under such an altered state of affairs among the collective consumer psyche that the dollar could easly go the way of the peso, with price inflation wiping out the purchasing power of this stashed cash. For each dollar held as cash, it would be prudent to put ten or twenty others into gold.

USAGOLD (10/08/99; 09:02:01MDT - Msg ID:15851)
Today's Gold Market Report: "Gold looks like winner...under a number of different scenarios," says financial guru
MARKET REPORT (10/8/99): Day Ten of the Big Breakout....Gold rebounds nicely in
New York after a rough night overseas........Gold lease rates consolidate at 4% level, then
head back up..................FWN says in its pre-opening report that it expected gold to
trade down $4 to $4.5.....instead it surprisingly moves up $1.80 in the early going--
another example of the market's extreme volatitility and uncertainty. FWN also reports that
the consensus opinion among traders is that we are going to $330 soon..........September
payrolls unexpectedly come in down 8000 jobs (instead of the predicted 218,000
gain)...................Reuters Alden Bentley writes: "The world gold industry is anticipating
huge losses after the long-depressed metal's recent price jump but it will take time to sift
through the damaged balance sheets of bullion bears to see if the worst fears are borne
out."..............One dealer is quoted as saying: "Everybody 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 crystallized yet
so nobody really knows what the damage is going to be.''.......................Please see
"Gold mart awaits industry fallout from price surge" for a detailed account of what's going
on behind the scenes in the gold market -- a situation described in the article as a "melee".
...............This articles offers some good reasons why traders have been aggressively
buying the dips for the past three days.....................Republic New York Corp. is being
sued by a shareholders who charges "the U.S. bank failed to disclose its brokerage's
dealings" with Princeton Economics' Martin Armstrong who is accused of a massive
securities fraud. The suit also claims that Republic is misrepresenting the liability exposure
that might arise from the case......................."Gold looks like being a winner under a
number of different scenarios for the world economy, including the bursting of the financial
bubble in the United States, according to Dr Marc Faber, markets guru and author of the
Gloom, Boom and Doom report.".............. So starts an article this article that makes for
interesting reading at AFR headlined "Gold shines through global
gloom"....................... Says Dr. Faber: "If there is a bust, the Americans will do what
they have done when there has been a problem in the past and that is let the dollar depreciate
by printing money."........... That's it for now, fellow goldmeisters. Have a good
weekend. This could be an interesting Friday............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.

FOA (10/08/99; 08:56:14MDT - Msg ID:15850)
(No Subject)
PH in LA (10/08/99; 04:41:43MDT - Msg ID:15834)
Earthquake

PH,
HA!! Very good, I love it:
"far-out thinking in the fringes of sanity..."

I'll be back a little later. FOA

TownCrier (10/08/99; 08:51:06MDT - Msg ID:15849)
Government Reports Two Y2K Failures
http://www.washingtonpost.com/wp-srv/aponline/19991004/aponline192529_000.htm
Small but real glitches that reared their ugly head and were fixed after the malfuntion. Simple annecdotal evidence that Y2K is potentially more than unwarranted "hype."

FOA (10/08/99; 08:47:06MDT - Msg ID:15848)
Reply
ORO (10/07/99; 22:31:54MDT - Msg ID:15823)
FOA the new Monetary order
Has there been any thinking in this regard?

ORO,
It's not as cut and dry as your post displays it. Yourself and Michael have just recently embarked us into the complicated world of "money management politics". I can take us very deep with this but fear we will all come up dry with "understanding". With so much happening now with the changing perceptions of the gold markets, I want to stay current in this area. Post your excellent works as you will, I read every thing sent to me. Yet, I hold back for now. Thank you so much for all you offer as your writings are the best wine before and after dinner. FOA

FOA (10/08/99; 08:37:15MDT - Msg ID:15847)
Reply
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/oz. of gold purchase?-------

AL,
Intrusion is the reason this forum exists. (smile)
The old concepts of "one ounce buys a suit" was never honest. It just so happened that during that timeline of "relatively" free markets the value worked that way. Today, gold's value in no way comes even close to reflecting all the technological advancements that have impacted our buying power. Yes, in currency terms a suit is priced well, but our buying power was robbed from currency inflation. Here is where the years of money "overproduction" have taken their toll. Because of manufacturing advances the cost of goods
should have been far less than today. In reverse terms, if the true dollar inflation was evident, a suit would cost several thousand. This is how we can see gold in the many thousands even before dollar price inflation impacts it's price. We will live to see gold gain value in "very real terms" against every form of wealth. Gains that will become evident well in advance of the dollar price inflation that is to come. Holding physical gold today is a "real value" asset, far in excess of what the current trading
proclaims it to be. You have but to walk this trail a little further to witness "nature in full bloom".

Thanks FOA

FOA (10/08/99; 08:32:54MDT - Msg ID:15846)
Comments
TownCrier (10/07/99; 19:15:20MDT - Msg ID:15804)
After the Close: the GOLDEN VIEW from The Tower
"ECB's Duisenberg rules out EU gold-selling agency."

Town,
You can bet they are well into creating a Euroland based gold market expressley denominated in Euros. The day will come that even MK will check the price of gold in Euros first before a sale is made. Believe it!

ALSO:

Leigh,
Good point about helping others learn. Most Americans have grown up with a Western viewpoint. They have little background of the true reasons for gold. Their knowledge comes from stock broker reasoning that sees the entire gold market as the 70s thru today. It will be a costly
mistake. You are right, MKs book would help many, if only they knew it was "out there". I thing the changing gold market (bullion way up as ALL gold paper falls behind) will make people curious. Even flierdude (10/07/99; 19:31:37MDT - Msg ID:15806) would benifit from a call to
MK.

Thanks FOA

TownCrier (10/08/99; 08:20:11MDT - Msg ID:15845)
Steps BOJ Policy Board may debate on Wed
http://biz.yahoo.com/rf/991008/by.html
The Japanese government is pressuring the Bank of Japan to print more money with the stated objective to keep long-term interest rates from rising. Is it just me, or does this defie logic? Shouldn't so much extra cash put more pressure on interest rates such as we see in various latin american countries?

Leigh (10/08/99; 08:10:59MDT - Msg ID:15844)
Tomcat
Thanks, Tomcat. Most of us used to be sheeple, and we have a duty to help pull other sheeple out of the pit before it's too late!

TownCrier (10/08/99; 08:10:12MDT - Msg ID:15843)
Sept. Unemployment Rate Unchanged at 4.2%, the Lowest in Nearly Three Decades
http://biz.yahoo.com/apf/991008/economy_4.html
Average hourly earnings grew by 0.5 percent (to $13.37), exceeding the 0.2 percent increase for the previous month.

Tomcat (10/08/99; 08:04:10MDT - Msg ID:15842)
Liegh

Great idea. With Thanksgiving and Xmas coming up and Y2k right on their coat-tails, gold will make a very appropriate gift. Your point about education is also well taken. MK's book on gold woudl also be a good gift.

FOA (10/08/99; 07:55:38MDT - Msg ID:15841)
Comment
http://www.fiendbear.com/guestpg1.htm
PH,
Have waited for the day when I could lean back and read these events in the words of others. We are all riding a new "bullish investment trend line" called "understanding"! It's great to see so many at this forum (and others) cutting through the fog and seeing a new world of "gold bullion".
Not just the trader world of paper profits.

Look at this new item: "The Debacle in the Gold Market" and it's link above. Here are a few pieces of it:

-----History has shown us that this type of activity always ends in a disaster of sorts for theplayers and indeed for most market participants. ---------

---We have stated before that in some ways there were two markets, one running on the back of the other. ------

----What was being created here was the mother of all debacles, simply because the paper market was deemed to be real, when, in fact it was as illusory ----------------

---------All the players in this paper market are at risk, and in fact were at risk the moment the made their first foray into it. The extent and ramifications of that risk will become clear over the next several months but it carries far greater implications than most commentators are awareof. ----------

-----Currently most aspects of the gold market (one notable exception being ownership to physical metal purchased prior to this latest rise in price) including gold stocks are at best a pool of very muddied waters and will remain so until this artificial paper gold market ceases to exist and we are some time away from that event. --------------

PH, ORO, ALL:

This along with all the other "finds" here tell us we are well into a "changing of the tide".

FOA

Diewarzu (10/08/99; 07:41:26MDT - Msg ID:15840)
Warning: DROOY's hedge-lite program could spell T-R-O-U-B-L-E
Comment from John Hathaway of Tocqueville Asset: "...even those companies that will soon be proudly proclaiming their "HEDGE-LITE" position stand to be shocked at the degree of risk they have undertaken. Officers and directors should understand the potential for shareholder suits from investors who bought shares as a play on higher gold prices..."

My comment: DROOY is 25%+ hedged (looks to me like they have nearly 1 million oz hedged at LOWER than market prices over the next year and a half!!!...sheesh) through both June 2000 AND June 2001. Will DROOY end up suffocating their profits as well and end up having their stock price TRASHED to a lesser degree than Ashanti? I don't mean to be overly pessimistic, but after having been personally burned on ASL in a big way just thought I might pass this info along so everyone can see the actual numbers (please repost as seems useful). Check out their official table of hedging under quarterly reports: " http://drd.co.za/". I have tried to recreate the
table for ease of reference as follows:

Through 06-30-99...based on approx 700,000 oz annual production:

Year Ending---Type of Contract---Oz of Gold---Price per Oz
----------------------------------------------------------
06-30-2000----Forward Sales------280,000------$299.30
--------------Forward Sales-------20,000------$290.00
---------Accreting frwd sales----200,000------$316.87
--------------Call Options--------79,200-----$303.10

06-30-2001----Forward Sales------244,000------$322.03
--------------Forward Sales-------11,000------$297.25
---------Accreting frwd sales----200,000------$316.87
--------------Call Options-------106,100------$319.50

06-30-2002----Forward Sales-------78,000------$335.21
--------------Forward Sales--------7,000------$304.65
---------Accreting frwd sales-----50,000------$316.87

06-30-2003----Forward Sales-------48,000------$410.00
and onwards---Forward Sales-------12,000------$316.20

Leigh (10/08/99; 07:37:35MDT - Msg ID:15839)
Tomcat
Dear Tomcat: That's where Farfel's and Golden Truth's messages about EDUCATING people come in. It would never have occurred to me to buy gold either, before I began reading about Y2K. I kept hearing advice to "buy gold, buy gold," and I had no idea of what that meant or how to go about it. One day I had an opportunity to buy a basic book on gold buying, and within a couple of hours it not only seemed a possibility, but a necessity.

The message needs to get out! We need to be talking up gold to our friends, neighbors, co-workers (in a discreet way - don't want them showing up for loans later on!). Give gold and silver coins to people as gifts. I recently bought a bunch of silver Eagles for my kids' allowances (when they're older), thank-you gifts, and so on. Buy up a bunch of copies of MK's book on gold buying and send them to people.

We've been blessed on this Forum to have the counsel of Another and FOA to guide us through troublesome times ahead. We ought to repay the favor by passing the word along.

Tomcat (10/08/99; 07:25:43MDT - Msg ID:15838)
The silver street premium

IMO, the rise in the silver premium is partially due to "street demand" rather than investor demand. It is the result of a less sophisticated buyer. Ask any "street coin dealer" about the difference between silver buyers and gold buyers.

I used to be a silver street buyer. It never once dawned on me to buy gold. Why?

Because I came from the streets, that's why?

Now, if that answer doesn't make sense to you it's because you weren't raised in the streets. When a street person looks at gold he doesn't see what you see. He sees something like a diamond. Something he can't have. It's not a conscious thing. It is something beyond his grasp; even if he has money.

Yes, even if he has the money! Many won't believe this but it is true. There are many people who have considerable wealth who live in run down neighborhoods and still live the street life. Why don't they move to a nicer location? It never enters their mind.

To a street person, gold and the suburbs are for those other folks who you'd rather not think about because to do so is going to cause you to feel a pain in your soul that you neither understand nor want to experience.

Being in business for yourself is not part of a workers paradigm. Making an honest living is not part of a thief's paradigm. And owning gold is not part of the street paradigm.

Despite the fact that I broke away from the street; despite the fact that I got more degrees than anyone needs; despite the fact that I became a business owner with plenty of money; despite the fact that I hob-nobbed with the very wealthy; despite all this, it took me years to break the street paradigm and own gold.

The silver street premium is rising because the silver street demand is rising. Something is changing on the streets. Any ideas as to what it migh be?

SteveH (10/08/99; 06:46:17MDT - Msg ID:15837)
Dec gold now...
http://www.kitcomm.com/comments/gold/1999q4/1999_10/991008.084606.gollumeee.htm
$320

Job report steady (see above).

ss of nep (10/08/99; 05:34:48MDT - Msg ID:15836)
GOLDGAL - - - MsgID# 15737
I hope you don't mide my having copied your post
from Kitco to other day.
IMO, you know the most I have seen about FN.

SteveH (10/08/99; 05:00:57MDT - Msg ID:15835)
Dec. gold now $321.50
www.kitco.com
Interesting. Only problem is that the premium may be high now, Nor'wester believes the premium will drop. IMO, the premium may drop but the price will rise, and as the expression goes, "better a year early than a day late."

My buddy the coin dealer keeps talking about a rise in premiums. He is selling silver eagles at $11.00, but Silver maple leafs cheaper, but he says Canadians are raising their premiums as well. Could it be that the premium is owing to silver shortages and not press shortages?

Date: Fri Oct 08 1999 01:22
Nor'wester (themine. . . .concerning Silver Eagles. . . .) ID#335196:
Copyright � 1999 Nor'wester/Kitco Inc. All rights reserved

When the U.S. Mint announced about a month ago that they were going to cutback production in October and stop production by mid-November, premiums JUMPED from $1.38 over spot to $2.85 and now as high as Spot + $3.25 ( dealer to dealer ) .....Your local dealer may have taken the attitude we did -- why sell his customers overpriced Silver products which are likely to be much cheaper in January?...As it is now, it would take a $3.00+ rise in silver prices for a buyer to "break even" on his costs....By mid-January, there should again be quite a bit of Silver Eagle products on the market again -- at logical price levels!

PH in LA (10/08/99; 04:41:43MDT - Msg ID:15834)
Earthquake
ORO: Fantastic post!

Lynden LaRouche, who calls himself a trained professional economist has been making somewhat the same point for years. What you point to (with impressive documentation) as the sickness in American manufacturing he calls a turning away from the "American economic model built on innovation in the machine tool sector". Too bad he has been so drastically discredited that the very mention of his name brings forth epithets as "far-out thinking in the fringes of sanity..." etc.

Watch out! It can be dangerous out there, ahead of the curve.

PH in LA (10/08/99; 04:26:46MDT - Msg ID:15833)
Another View: "Through the Lens of the Golden Sextant"
http://www.goldensextant.com/commentary.html#anchor743240
"...if the Cambior and Ashanti examples are at all representative of current gold banking practices in general, the over-the-counter gold derivatives market is almost certainly in far more parlous (perilous?) condition than all but a very few imagined; and (4) by extension, all paper gold must now be deemed suspect...

...were I directing Cambior's affairs, I would have my lawyers hard at work. ...an international bullion bank dealing with a relatively small gold mining company owes it a fiduciary duty of full disclosure of all material facts relating to a proposed loan transaction and associated hedging. Does it (not) then follow that the bank, if it had any knowledge thereof, must disclose any facts relating to the manipulation of the gold market by itself or others? My lawyers would probably tell me that the arguments could be made, but that it would be hard to prove knowledge of manipulation. Smiling like the Cheshire cat, I would then suggest they talk to Bill Murphy at GATA. And... I would get ready to take off the gloves." REGINALD HOWE at the Gold Sextant. (Reginald Howe is a lawyer who has argued cases involving constitutional monetary issues in courtrooms including the US Supreme Court.)

FOA/Another have been so far out in front of the curve since their appearance in late 1996 that it is truly scary. So scary, in fact, that they have been properly villified and ridiculed for uttering the unthinkable. We have noted many examples in the past, but as events unfold, and "we watch this new gold market together" the coincidences between what they have postulated and what transpires keep accumulating. One of the latest trends towards fulfillment of their predictions can surely be seen above, at the Golden Sextant. Has FOA repeatedly stressed that the gold derivatives market is in "perilous condition"? And hasn't he said that lawyers for the bullion banks, the miners and investors will be fighting for years over whatever is left after "all paper gold (has been) deemed suspect"?

The signs are everywhere. These guys really do know what they are talking about!

ORO (10/08/99; 04:06:26MDT - Msg ID:15832)
Earthquake
Taiwan suffered an earthquake recently. As a result of the earthquake, such large high tech companies as Intel, HP, AMD, Apple etc. have announced delays in shipments and diminished earnings in the near future due to the shutting down of their supply chain. At this point I found the last piece of the puzzle of the illusion of a new economy projected from the thin LCD screen overlaying the decrepit bulk of the old economy, now doing worse than ever.
The great productivity increase of the last years is discussed in the Economist of 24th July 1999, "Work in progress" and there, the new economy skeptic economics Nobel laureate Robert Solow, is quoted "you can see the computer age everywhere these days except in the productivity statistics."
Indeed the sentiment is repeated in the work of Robert Gordon at Northwestern University, who is quoted : "the productivity performance of the manufacturing sector of the United States economy since 1995 has been abysmal rather than admirable. Not only has productivity growth in non-durable manufacturing decelerated in 1995-99 compared to 1972-95, but productivity growth in durable manufacturing stripped of computers has decelerated even more."
As I have argued before, the rise in apparent productivity is predominantly a result of imports of manufactured components and finished products. These are finished, assembled, marketed and retailed at a markup significantly greater than their cost upon entering the country. Thus Chen/Woods theory rises to the fore with the technology sector as well.
The key is the massive transfer of the bulk of high tech component manufacturing off shore, to Korea, Malaysia, Singapore, Taiwan, and elsewhere. Open up your PC, and check the components. You will find very quickly that the components are not made in the US. Yet the markup on these components through their made to order assembly at Gateway, Compaq and Dell is tremendously larger than the ocmponents themselves. I had my current computer assembled in a garage of a local computer whiz, who took the components and assembled them for a flat fee. The difference in costs for me was 30% not including software. Including the fact that I could keep some components of my previous machine and all the files and software, lowered the price paid by 60%. The computer assembler does not have access to bulk pricing, but he will soon enough. In that case, his savings for me would have come to 75%.
Thus the computer industry's 17% productivity growth and its contribution of 39% of the US economy's growth is simply another manifestation of the Chen Woods paradigm. It is simply that imports raise GDP per capita more so than do exports or local manufacturing. It is part of the gearing of the US towards imports. It is no more a new economy than any of the other new economies of the past. It is "fabless" chip foundaries, furniture makers without woodworking equipment, energy companies without energy production capacity.
This is the economy of Rome of the Ceasars. It is the economy of plunder. Our New Rome is as healthy as that of old. As we mortgage 125% of our future and bid for internet companies at 2500% of the net present value of their future income (if it ever shows up), we loose the last of manufacturing capacity and replace it with computers telling us where the plunder is on its' route to our house.
The Barbarians of finance are massed outside New Rome's borders, ready to cut the supplies from the provinces as they cut through our remaining $ forces. Soon the "high value added" operations will find that they are the product of insane-nomics. They have no more value than the manufacturers of the components in Korea or the Phillipines. As Old Rome grew insane on lead laced water, we in New Rome have grown insane on a foreign debt laced stream of money.

Note: An important number.
Weighting our imports on a Purchasing Power Parity bassis from where they come, our "actual" annual trade deficit can be estimated as almost $700 Billion if not greater, rather than the $250 billion everyone is sweating about. This contributes a large chunk of our merchandise economy.

Simply Me (10/08/99; 02:26:05MDT - Msg ID:15831)
The Peasant's View from the Edge of the Village
FOA to SteveH..Msg ID #15797..."With this crowd getting much larger it increases the chance we won't miss anything."

Thank you, again, Sir FOA, for showing me a way to contribute to this fine forum. Admittedly, the language of high finance and economics is a foreign tongue to me. (Thank you all for helping me to learn.) So, ordinarily, I'm silent. However, I can report on trends I'm seeing from the street level on a daily basis. And what I see makes me sad.
Joe Six-Pack hasn't the slightest idea of what's going on with gold/currency/markets. They walk in the door of coin shops every day to sell their gold and silver with only the foggiest notion of what it's worth. The last they heard, gold was at twenty year lows and it's not an investment that performs, so get rid of it. I know of only TWO people in this past MONTH who've been converting every dollar they could get their hands on into physical PMs. And it's no use talking to them; their minds are made up, one way or the other, before they walk in the door.

And to my surprise, the coin and bullion dealers of a size that I think should know better, are spouting the same "drivvel" as the media gold bears! If I bring up gold shorts..they bring up central bank sales. If I bring up the Euro...they bring up the Fed and look at me as though
I'm delusional. They're not stupid people, which leads me to two possibilities. Either they're not hooked up with the internet and are being fed this garbage by larger bullion dealers who are looking to pull some of that cheap "street level" gold up the pipeline.
(Sorry, MK...present company excepted from this tirade.
You are FAR above the folks I'm referring to, in both moral and business stature.)
OR...they DO know better and are lying through their teeth in the hopes of hooking themselves into the aforementioned pipeline. The latter being the most likely case.

To put it another way: This peasant from the edge of the village is seeing "gold" wolves come out of the woods to scavenge fallen Gold Eagles (they're weakened and easy game) in the streets. Though the tingling chill of Fall has barely touched our pleasant valley; it must be bleak and barren winter in the deep woods these wolves haunt, for them to come so close to town. Keep watch from the castle towers!
And tell the other villagers to guard their flocks well. If you only hold a piece of paper that says you are owed a "Golden Eagle", better claim it before the wolves do. There are bigger, smarter wolves in the deepest woods...and the worse the winter gets, the smaller the prey they will settle for.

At the risk of mixing metaphors: to paraphrase wise old Ben Franklin, "A golden bird in the hand is worth TWO in the paper bush."

Believe in holding only physical Gold?...I sure do!
Thanks All,
Simply Me

TownCrier (10/08/99; 00:38:37MDT - Msg ID:15830)
Mining Cos. Burned by Price Surge
http://www.washingtonpost.com/wp-srv/aponline/19991007/aponline170146_000.htm
A billion-dollar irony...

"I think clearly there will be a large number of companies whose hedge books are underwater."

ET (10/08/99; 00:11:42MDT - Msg ID:15829)
BB - y2k

Hey BB - I just returned from a trip to Michigan. The hardwoods are looking great and it is getting very crisp at night. I've spent the last few hours catching up and watching the ball game. I did run across Mike Hyatt's piece at World Net Daily and it's worth the read. As far as I can tell, the y2k situation is a done deal - baked in the cake - so to speak. Not much point in spending a great deal of time reading the latest opinion as the opinion hasn't changed in months now. A bunch of systems aren't going to come close to making the deadline and that's about it. As to what effect this is all going to have on the overall economy is still open to question but I'm still of the opinion it will be devastating. Of course we may not notice it much if the ongoing deflation picks up speed. I find it interesting that this monetary change is occuring at precisely the same time as the countdown to the rollover. I don't think it is any coincidence. The fear of illiquid markets come the end of the year because of y2k is likely precipitating the current move into hard assets. I think the realization is setting in amongst the big players that the 'lender of last resort' does not in fact actually exist and it's going to be every man for himself in the 'new' monetary system. It seems to me that y2k is just the trigger that is setting into motion the situation that A/FOA/Aragorn/ORO/Mozel and others have laid out. My thanks to all of them for the time they've spent filling us in.

Y2k is and will be the ultimate confidence killer. There still seems to be time to prepare both financially and personally but as the events of the last couple of weeks have shown, the exits are closing rapidly. Hope this finds you prepared partner.

ET

elevator guy (10/08/99; 00:06:07MDT - Msg ID:15828)
gidsek Msg ID #15817
Thank you for your response! One of my family members had posed the question, imitating my foppish mannerisms.

We can all learn from our mistakes, and need not be enshrined in our ignorance. I'm thankful for a forum where all feel welcome to ask questions of the more experienced, without fear of belittlement.

This is truly a forest of gracious giants.

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