All times are U.S. Mountain Time
(Yesterday's Discussion.)
Druid (03/08/04; 23:52:56MT - usagold.com msg#: 118271)
Jacob Marley (03/08/04; 19:08:03MT - usagold.com msg#: 118246)
"... Would you consider that to the degree you and I choose to use the currency issue of a central bank, implicitly demonstrates the degree to which we take their word. It does not matter that law, or simply the result of where we were born imposes the currency upon us. We opt to use it, because it works. If it did not work or work well, we would not use it (except minimally, like day-to-day sundries or to pay taxes -- and if bad enough even the day-to-day usages would vanish)."
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Druid: Ohhh! Sir Jacob Marley, I somehow feel that I'm walking down a trail that I haven't traveled in sometime. Let me strap on the old hiking boots and try to catch up. You have constructed and interesting kennard in that you and I don't have a "choice" in using our modern day money. In the past I opted to use it out of shear ignorance of what it truly represented and lack of choice. And within that representation I was sold a "bill" of wonderful goods based on an implicit trust, some would refer to it as a "social contract." Fast forward too today and I can assure you that a lot of knowledge has been substituted for "belief" dear sir. I try to burn through these "magical constructs" as fast as I can by paying off debt (the intended use) and converting them to real money/wealth.
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"Why does a currency not work, or work less well than others? Its users harbor enough doubt about the issue's ability to fulfill monetary functions that they choose some other means to carry them out. Briefly, these functions can be defined at the highest level as serving a standard of value and means of payment. I.e., when presenting to another to buy or pay down debt, or to deploy it for a season elsewhere by lending or investing, or simply to not use it, we place into it a notion of worth. That worth is a sense of value that we individually calculate (mostly unconsciously). We do this largely on the basis of our impression of how others in the currency-using sphere evaluate the currency."
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Druid: From a central planning perspective the reason one currency might work better then another has more to do with the lack of integrity and discipline from that particular commissar relative to one another. Thus the faster burn rates in "third world countries" as opposed to our "first world country."
The monetary functions you speak of can work quite well outside the monopolist role of our current monetary framework.
Ahhh, therein lies the problem, my problem for quite sometime. The notion that we assign a value to paper dollars is correct indeed but it's a wrong notion born of ignorance. We can price/quantify/value dollars but over time the "value" component erodes and thus shatters the collective ignorance of what value really is and is not.
For centuries Ptolemy was right or was he??? OT: A few weeks ago I missed a day from work and on my return a colleague came up to me and asked what was wrong and jokingly I told him I called in ignorant and stupid and right away he quipped, "oh my, I better stay away because that might be very contagious" and I looked at him, smiled and said "you're exactly right, it's extremely contagious so be careful and get your shots." I then pointed out some salient points in history where ignorance ruled the day for centuries. He then fully understood my response. Have we really progressed that far???? Especially concerning these matters of "money?"
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"Having a collective sense of value and its ability to sustain a practical equilibrium, it can then serve as a means to pay. When presented the debt is settled in full. The fact that when we hand over cash, we no longer harbor the slightest guilt of debt, or fear further demands from the payee, demonstrates our confidence that THAT transaction served its monetary purpose. And the fact that we each day both can pay with and do receive as payment -- quite unconsciously -- the un-backed, irredeemable note of some central bank, proves our confidence in their word (and by extension their means) to satisfactorily sustain the economic environment for an acceptable future timeframe."
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Druid: I would argue that when your "word" is based on a combination of ignorance and confidence in these matters of "money", you are toying with a very delicate and fragile relationship.
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"A sign that a currency is losing its monetary capacity is to observe an overall societal portfolio restructuring, if you will, where cash holdings and securities denominated in the currency begin to shift to other currencies, securities denominated therewith, and/or commodities. This is done because of a confidence problem being perceived in the currency's ability to retain that sense of value – within a societally acceptable band.
In my opinion, it is healthy to hold a portion of our wealth in unencumbered property. And certain types of property bear certain advantages over others. And at certain times (when intolerable volatility is looming, for instance), it is wiser to hold more of one's holdings in unencumbered property, as it is less subject to unfavorable behavior beyond our control. And, if the property type selection is chosen wisely, one may even reap bountifully in these episodes. Banks do not like instability as their entire foundation and ultimately existence rests upon a society's confidence in the future. In an economic sense this is expressed in its faith in the monetary unit. There is no other rationale for exchanging the fruit of our labors, or encumbering our property as collateral, for a note that is not guaranteed by anything except the belief that others will also accept it for payment down the line at some acceptable exchange rate."
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Druid: I can't argue with you here good Sir. Thank you for your fine thoughts.
Black Blade (03/08/04; 23:14:05MT - usagold.com msg#: 118270)
European Central Banks Strike Gold Deal
http://story.news.yahoo.com/news?tmpl=story&ncid=1203&e=3&u=/nm/20040308/bs_nm/economy_g10_gold_dc&sid=95609869
BASEL, Switzerland (Reuters) - Europe's central banks said Monday they had reached a new deal that raises the limits on their annual gold sales in a further blow to bullion's role as a global monetary tool. They capped sales at 500 metric tons a year for the next five years -- a total that was broadly in line with expectations and slightly higher than the expiring pact's 400-tonlimit. The overall limit for the five-year accord is 2,500 tons, up from 2,000 under the 1999 agreement.
"It's not a surprise at all. The market had expected (between) 2,400 and 2,500 tons," Wolfgang Wrzensniok, sales director at Dresdner Kleinwort Wasserstein, said. Stephen Briggs, analyst with Societe General, said: "My guess is that there will not be a huge impact on the price."
The UK said it would not take part in the new program because Britain did not intend to sell any gold during the period covered by the deal. The Swiss National Bank said it had no plans to sell beyond 130 tons already planned. "Gold will remain an important element of global monetary reserves," the joint statement by 14 central banks and the European Central Bank said.
Central banks have been shedding gold, once a mainstay of their reserve assets, in favor of hard currencies as gold's status as a store of value has declined.
Black Blade: Quite a comical spin by the "media" on the new WA agreement extension. I have to agree with MK here, that a couple hundred tons more per year would easily be absorbed. Of course this CB gold rarely makes it to market and is shuffled from one CB buying by another. Besides, much of the CB gold is simply gone and only kept on the books even though "loaned" out. The only way to rectify this for these CBs is to accept cash in return and marking it up as a "sale". In short - one way to clear the books of this non-existent gold. Still, the take from the article has a decidedly anti-gold bias and the "spin" is to make it appear that this currency is no longer viable. Nevertheless the gains in gold and other PMs have put global currencies to shame in recent years. On a side note - The UK's Gordie Brown will go down in history as one of the worst market timers of all time thanks to his selling the Brit peoples gold at the lowest price possible during the BOE auctions.
Black Blade (03/08/04; 22:59:20MT - usagold.com msg#: 118269)
Households rack up debt at fastest pace since 1987
http://www.azcentral.com/arizonarepublic/business/articles/0308debt08.html
Americans, it seems, are feeling optimistic, or maybe fatalistic, about their financial future. The Federal Reserve's latest reading of the nation's debt, including both household and government borrowing, grew last year at a pace not seen since the late 1980s. According to the quarterly federal funds report, the total national debt, excluding the obligations of banks and other financial institutions, grew by 8.1 percent last year, its fastest pace since 1988.
Households threw caution to the wind, mortgaging and remortgaging their homes and expanding their debt by 10.4 percent, the biggest percentage gain since 1987. Federal government borrowing expanded by 10.9 percent, the fastest rate since 1992. Only businesses pulled back. Still hobbled by credit overhangs from the late 1990s, corporate borrowing inched ahead by 3 percent.
Black Blade: Living on plastic and putting the family abode in hock to the banks. It has an eery similarity to the 1930's depression. Should get "interesting" to say the least. One reason I keep saying to "get outta debt and stay outta debt". The US savings rate is at all time lows. All I can say is that it's going to get rather ugly.
Black Blade (03/08/04; 22:50:46MT - usagold.com msg#: 118268)
Warren Buffett keeps out of the depreciating dollar
http://www.guardian.co.uk/business/story/0,3604,1164319,00.html
Snippit:
Warren Buffett, the second wealthiest man in the world, continued to bet against the dollar last year, increasing his company's ownership of foreign currencies to $12bn.
The figure was disclosed in the eagerly anticipated annual letter from the "Oracle of Omaha" to shareholders in his Berkshire Hathaway company, in which he routinely delivers nuggets of his own peculiar brand of homespun wisdom.
"As an American, I hope there is a benign ending to this problem," he said, though he warned that the situation was unlikely to improve. "Whether foreign investors like it or not, they will continue to be flooded with dollars. The consequences of this are anybody's guess. They could, however, be troublesome - and reach, in fact, well beyond currency markets."
Mr Buffett has taken to buying businesses outright as it became more difficult to find undervalued stocks. Equity holdings are now down to 50% of Berkshire Hathaway's net worth. Last year, the company again stayed away from the equities market. Mr Buffett said Berkshire had bought some shares in the bank Wells Fargo but otherwise had not changed its position in its top six holdings. "Brokers don't love us," he said. "We own pieces of excellent businesses but their current prices reflect their value."
Black Blade: I am not a fan of Buffett's or Soros's politics, but they are right about the US dollar. I don't know about Buffett's currency (or possible PM) holdings, but Soros and other high net worth individuals have "taken a shine" to PMs lately. The dollar is toast and with soaring budget and current account deficits it won't change anytime soon regardless of who is in the White House, controls Congress, or who runs the Fed. We are well beyond that now (have been for several years actually). Sort of "caught between a rock and a hard place". Yep - in a word - "grim".
Black Blade (03/08/04; 22:39:36MT - usagold.com msg#: 118267)
Why a growing economy refuses to create new jobs
http://www.csmonitor.com/2004/0308/p02s02-usec.html
Large inventories, high productivity, and 'outsourcing' mean businesses have added only 118,000 new positions since January. Over the past two months, the economy has added only 118,000 new positions - hardly enough to provide the growth that will keep the country on a roll in 2004. This is not what economists - from the White House to Wall Street - expected. Is it the weather? Employees working smarter and more productively? Or perhaps it has more to with some fundamental change, such as jobs drifting overseas. The culprit isn't clear.
Unless the missing jobs turn up soon, there are serious ramifications - from the presidential race to the economic prospects for later in the year. The consumer, still buoyant, could become more timid. And, business, which has put off hiring new workers to date, could continue to keep a tight lid on spending. "We've had six months in a row of piddling increases, there's not any joy," says Stuart Hoffman, chief economist at PNC Financial Services Group, Inc., in Pittsburgh.
Black Blade: The "Bone Pile" remains very high and the US economy is stagnant - stuck in the doldrums. Part of this is the higher costs of energy and another is the decline of the US dollar in a never ending "global competitive currency devaluation". It's cheaper to "outsource" jobs offshore or simpler yet - move industries offshore. No time like the present to preserve wealth with hard assets like PMs while prices are low.
Black Blade (03/08/04; 22:31:50MT - usagold.com msg#: 118266)
Long-Term Joblessness at 20-Year High
http://story.news.yahoo.com/news?tmpl=story&ncid=1203&e=10&u=/nm/20040306/bs_nm/economy_jobs_longterm_dc&sid=95609869
Snippit:
WASHINGTON (Reuters) - The average spell of joblessness was more than five months in February, the highest in two decades, raising the prospect it may be a factor in driving workers from the U.S. labor force. The February jobs report from the Labor Department was a disappointment for markets, which had expected much greater payroll growth than the 21,000 jobs created. The unemployment rate, however, held steady, at 5.6 percent. The details of the report, however, again showed that once a worker loses his job, it takes some time to get a new one. In February, the average length of joblessness rose to 20.3 weeks, the longest since January 1984, when it was 20.4 weeks. According to Labor Department data going back to 1948, the longest spell was 20.8 weeks in 1983.
The number of workers out of a job for 27 or more weeks fell slightly but was still high, at 1.871 million in February. Lawrence Mishel, president of the liberal-leaning Economic Policy Institute, said the length of unemployment showed the labor market is still tough. The last time it was so high, he said, joblessness was close to 8 percent. Mishel said the difficulty in finding jobs has likely led some long-time job seekers to simply "bail out," and become discouraged. Individuals who don't seek work because they are discouraged about the prospects of finding a job are not counted as part of work force. "I think there is a connection," he said.
Black Blade: No kidding! Of course we have discussed this before and only now some are beginning to take notice. It's not going to get any better either.
Black Blade (03/08/04; 22:23:17MT - usagold.com msg#: 118265)
Market Wrap Up - Puplava and King
http://www.financialsense.com/Market/wrapup.htm
Open The Checkbook and Buy the Ounces
Snippit:
The bull market in gold and silver has barely begun. It is still in its infancy as gold and silver move into their rightful role as real money. Unlike the last bull market of the 1970s where gold and silver were plentiful, this bull market is being driven by scarcity and the debasement of currencies around the globe.
Gold and silver have been running supply deficits for well over a decade. According to the work done by GATA the gold vaults at central banks are now half empty. Over the last decade, through gold sales, gold loans and gold swaps, gold has flowed steadily out of the vaults of central banks reducing large stockpiles of gold.
In the case of silver, supply is now at critical levels. Just as central banks have dishoarded over half of their gold inventory, aboveground stockpiles of silver have been eroded to critical levels as a result of 14 years of supply deficits. Those 14 years of supply deficits are now starting to impact the markets as the price of silver goes parabolic.
Black Blade: A good rundown on te PM markets. Both authors cover the FA and TA side and present a case for PMs. Two major developments occurred this last couple of weeks but were not even noticed or given coverage by the financial media. 1) the new WA accord renewel; 2) 10 out of the top 12 employment gains are in low wage service sectors (the top two higher education employment sectors are in medical assistance and education); and 3) acknowledgement that Saudi oil reserves have "peaked". We are entering new and uncharted waters and the financial media didn't even bat an eye. As always, get outta debt and stay outta debt, stash enough emergency cash for several months expenses, accumulate Gold and Silver for portfolio insurance, and start a storage program of nonperishable food and basic necessities.
Great Albino Bat (03/08/04; 22:22:53MT - usagold.com msg#: 118264)
Mr. Jacob Marley: thanks for your balanced comments!
I thank you for your courteous reply! In some things we agree, in others we don't. At least, we can have a civilized discourse on the subject, avoiding as much as possible the involvement of emotions - which do tend to invade monetary discussions.
You are right, the use of gold did not prevent gross monetary expansion. I don't have a textbook handy, but I think I am probably correct in saying that this expansion of credit (and of and money substitutes (bills)) began well before WWI.
But that does not prove a case against the monetary use of gold (which was never perfectly applied) but only shows that Modern Civilization wants to be lied to, wants to be deceived by Governments, and Governments - since "Democracy" became the fashion (or let us say, the ostensible purpose of Governments became to "improve" the lot of the people under their rule)- are more than happy to apply "Managing Money" i.e. debauching the currency, beginning by little and going on with ever greater increments, to obtain votes and stay in power as long as possible.
Gold stood in the way of lying as a means of retaining power, and so gold was banished - insulted as a "barbarous relic" in fact. That is certainly not a defect of gold as a monetary metal!
The problem is not really Governments, but the whole attitude of our times, where humanity is under the delusion that Governments can "improve" their lot by all sorts of plans, schemes and programs. To fund these projects which people expect, or should I say, DEMAND, well - credit MUST be expanded, the value of money (what we call money, at any rate) must go down and down until it reaches zero value.
Under these circumstances, the monetary use of gold is totally impossible. All that we can do - we who see where things must end up, inevitably - is set aside some gold as a refuge against the certainty that all this distortion of the markets, all the world malinvestment, is getting worse and worse the longer it goes on, and all will end badly, to put it mildly.
When will the world economy crash? We don't know exactly, of course, but I think we at this Forum sense that things have gotten out of hand, terribly, and the "denouement" cannot be too far off.
I say, "money is money", and by that I try to convey the idea that it must not be toyed with or made to carry out functions which are not proper to it. In a word, it must NOT be managed. You can't "manage" gold, and that is why it is banned from the monetary system of the world. You either have gold, or you don't; it cannot be "managed" that is to say, it can't be printed up.
Of course, governments are diddling with schemes to keep the gold market off balance as much as possible, because finally, gold will have its way and show up the all the fraudulent schemes of our Governments, drawn up to deceive the willing voters. Government dread this nemesis.
I cannot imagine a world where people will be willing to once again, work and wait a generation to have the money to build a house, or pay for a car, or slave so that their chldren can be clothed and go to school. Unfortunately, Mr. Marley, that is the way a STABLE WORLD would function. It would be a world of monetary stability, where money (gold) is respected and not, one might say, "prostituted" to serve aims that cannot be borne by money, because - it is what it is, and cannot be forced into other functions by means of "management". Obviously, the world's masses will not stand for such a return to realism, at all, at all!
On the other hand, such a world of monetary stability would be a world where prices are continually declining, as additional production, enabled by savings (capitalization) would be available for purchase by a monetary medium which grows only very, very slowly, as gold does - 2% per annum?
Who can, today, visualize declining prices as associated with growing prosperity? Perhaps one person in 100,000!
Today, declining prices are anathema! Our world is truly upside down! Declining prices - why that's almost as bad as the end of the world itself!
Enough for this evening! Thanks for reading!
The GAB
Goldendome (03/08/04; 22:01:12MT - usagold.com msg#: 118263)
Presure building
Gold also putting on a nice little steady application of upward presure into the night at 402. Some have noted silver now at 7.01; the silver/gold ratio is now down to 57.4; last May it was over 80!
Some have noted here and else where that Silver may now be the weak point in the precious metals short games and being attacked accordingly. All we know for sure is that Silver has quickly become a lot more precious in the past few months. Big players are said by Murphey, Puplava, and King to be heading for the long side as they can sense a good short squeeze when they see one developing.
Sundeck (03/08/04; 22:00:42MT - usagold.com msg#: 118262)
SDG Haiku
Silver at seven.
Debt-laden dollar descends...
Gold dreams "To da Moon".
:-)
mikal (03/08/04; 21:45:17MT - usagold.com msg#: 118261)
@Gandalf
http://stats.bls.gov/ppi/delaynotice.htm
Speaking of words ending in -ium, rhodium must be getting some spotted dog's attention again tonight.
Do you think there's a dog out there capable of digging up the REAL PPI numbers? Better yet, one willing to bury the bloated bureau of laboriously stilted statistics?
Wouldn't we have it made if we could all work for the government? What did I just say? ;)
U.S. Department of Labor
Bureau of Labor Statistics
www.bls.gov
Delay of Release of PPI for January 2004 and February 2004
As announced on February 17, the release of the Producer Price Index (PPI) for January 2004 has been delayed from the originally scheduled date of February 19, 2004. The length of that delay now means that the release of February data originally scheduled for Friday, March 12, must also be postponed.
The delays have been caused by unexpected difficulties in the conversion of PPI data from the Standard Industrial Classification system to the North American Industry Classification System. These difficulties have taken far longer to resolve than we originally expected.
We will continue to work diligently to resolve the remaining issues holding up the calculation of the PPI. When revised release dates for the January and for the February 2004 Producer Price Indexes have been determined, we plan to announce them at least one day ahead of time on this web page and through news advisories.
The Bureau of Labor Statistics expresses its sincere apologies to those who have experienced any problems as a result of this delay.
Gandalf the White (03/08/04; 21:32:03MT - usagold.com msg#: 118260)
The US$ chart looks like it has returned to the REAL WORLD !
http://charts-d.quote.com:443/1002980432830?User=demo&Pswd=demo&DataType=GIF&Symbol=DX00Y&Interval=10&Ht=600&Wd=800&Display=2&Study=MA&Param1=13&Param2=0&Param3=&FontSize=10
DIVE, DIVE, DIVE !!
The GOLDEN Rocket's breach of the $404. level is getting VERY CLOSE and then --- IT's TO THE MOON, Alice !!!
Thanks for the warning Sir Sundeck --
---Oxide of Strombolium--- WOWSERS !
<;-)
Truthcaster (03/08/04; 21:19:37MT - usagold.com msg#: 118259)
Seven Dollar Silver!!
Well it's been a long wait and yet here we are March 8th
2004 and we have 7.00 dollar silver across the board. Rejoice!
It's be a ride now on to 10 bucks!!
Truthcaster
mikal (03/08/04; 21:16:05MT - usagold.com msg#: 118258)
@MK
Thanks for the excellent overview and analysis.
gata@yahoogroups.com Subject: [GATA] Why the new central bank agreement is bullish for gold
The New Gold Accord
By Michael Kosares
Centennial Precious Metals, Denver
http://www.USAGold.com
Monday, March 8, 2004
I see the renewal of the European central banks' gold sales agreement as a positive for the gold market. Here's why.
When you look a the supply demand tables, the one thing that stands out clearly is that mine production is static in the 2,200-2,600-tonne range and has been for almost a decade. Given the statements of industry stalwarts, it doesn't appear that the production is going to improve any time soon.
Exploration budgets were cut to the bone during the quiet
years, and it takes upwards of seven years to bring a known deposit to production. Scrap is another constant in the
600-tonnes-per-year range.
Meanwhile gold usage is on a steady growth curve from
3,400 tonnes in 1994 to 4,000 tonnes per year now. That
gap between mine-plus-scrap production and usage must be
filled. But how?
In years past most of that gap has been made up through
mining company forward sales programs, central bank sales,
and net disinvestment. Now forward sales programs have
gone to the other side of the ledger with the advent of
dehedging.
For example, in 1997 hedgers were responsible for bringing
an extra 470 tonnes "supply" to the table. In 2002 they
bought back 420 tonnes and showed up on the "demand"
side of the ledger. That's a 890-tonne turnaround!
I disagree with the analysts who are saying that producer
buy-backs will slow down or even disappear. This doesn't
square with the hefty hedge books some of these mining
companies will be burdened with as the price rises.
If anything, I see even more de-hedging in the offing -- and
the tonnages, I believe, will come as a surprise.
Today's announcement is important from another perspective. Let's keep in mind that all this started many years with a plea from N.M. Rothschild for more "transparency" in the gold business. The representative of Rothschild might well have used the word "predicablility" because that's what they were after. We now know that 500 tonnes will be coming on the market annually over the next five years and from the lease pool emanating from these central banks and NO MORE.
Central bank gold sales will remain the same as they were
five years ago for the next five years.
With investment demand -- the big X factor heating up globally in the face of a dollar problem -- appearing increasing intractable, this cap on the supply side of the chart will figure mightily in the thinking of both long-term hedgers as well as
speculators in the hedge funds and big bank trading
departments. One London trader was quoted a few days ago
as saying that he wasn't concerned about the rise in sales
from 400 tonnes per year to 500 because the market needed
the supply.
I concur. In fact, I believe the market could have withstood 700-800 tonnes per year without a blink in the current environment, and there is a possibility that the market will come up woefully short under these circumstances -- a prospect likely to be reflected in the price.
Watch out for a delayed positive reaction or a protracted
upturn in the gold price as a direct result from today's
announcement.
The losing position will continue to be on the short side of this
market and I think the players know it. The next phase of this
secular bull market will display a strong and incessant
undercurrent of physical demand with some nations seeking
to bolster their official-sector holdings and some of the smaller
central banks pressuring the bullion banks to have their gold
deposits returned.
----------------------------------------------------
Sundeck (03/08/04; 21:09:38MT - usagold.com msg#: 118257)
The Unrecognizable Recovery - Jobless Gloom
http://www.nytimes.com/2004/03/08/opinion/08HERB.html?th
Bob Herbert at the NYT discusses the job prob...worth a read if you don't mind gloomy news...in a word "grim" (now where have I heard that before ....mmmm?)
;-)
Buena Fe (03/08/04; 21:00:14MT - usagold.com msg#: 118256)
boe and wa2 spec
boe didn't sign on because they weren't invited to ...
OUT IN THE COLD WITH THE SHORT "SPAN"
mikal (03/08/04; 20:53:22MT - usagold.com msg#: 118255)
@Chris Powell
Nice work you're doing at Gata and Gata Groups. The following message I'd like to share with everyone:
gata@yahoogroups.com Subject: [GATA] Fundamental and technical analysis by Jim Puplava and Eric King
10:30p ET Monday, March 8, 2004
Dear Friend of GATA and Gold:
Jim Puplava and Eric King provide wonderful fundamental
analysis and technical analysis of the precious metals
markets tonight at FinancialSense.com here:
http://www.financialsense.com/Market/wrapup.htm
Excellent commentary and charts. Hang on and don't
be bluffed out by the central banks and their
investment house agents.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
----------------------------------------------------
Goldilox (03/08/04; 20:49:30MT - usagold.com msg#: 118254)
thspanking
@ steady:
I don want no atturney genral th_spanking me!
(:^) -G
Chris Powell (03/08/04; 20:48:11MT - usagold.com msg#: 118253)
Why didn't the Bank of England sign the new central bank gold sales agreement?
John Brimelow speculated today in his part of Bill Murphy's "Midas" commentary at LeMetropoleCafe.com that the Bank of England didn't join the new central bank gold sales agreement because the bank is ALREADY committed, if the gold price rises, to selling a lot more gold than the new agreement would allow. That is, Brimelow wrote, the Bank of England may already have sold a lot of gold calls above the market. Does this mean that the central banks have got gold under control -- or that they are desperate to get it under control?
Cavan Man (03/08/04; 19:43:11MT - usagold.com msg#: 118252)
Town Crier
Sorry. I am too immersed in coaching kids and oiling the wheels of commerce down here in the trenches with the barbed wire and mustard gas to provide a smoother runway for takeoff. I'll refrain from further comment on "freegold". The proof is in the pudding and I am ready (after six years) for dessert.
steady (03/08/04; 19:33:12MT - usagold.com msg#: 118251)
thats it!
want sptzer to reply to you r silver enquires. send him an silver eagle , he cant accept it as he as ny attrny genral cnt accepts gifts , he retunnn mrphs so he will send it back thspanking you , reciept of letter proved, uh um your move! psssst mate soon! heheheheh
admin (03/08/04; 19:33:05MT - usagold.com msg#: 118250)
Mermaid - 50 coins left
http://www.usagold.com/buy-gold-coins.html
We would like to thank USAGOLDers for the strong response to the Mermaid offer. We are nearly sold out. About 50 coins left. If you have an interest, we invite you to visit the link above and place your order.
First come, first served. By dawn, they're likely to be gone.
Thank you.
The management
Sundeck (03/08/04; 19:17:37MT - usagold.com msg#: 118249)
Socrates964 Buffett
Agree, Buffett appears to be taking a more open role in politics in the last few years, whereas in the past my impression was that he tended to focus on "growing Berkshire" and treating the political landscape as just another part of the environment in which "one has to conduct ones affairs".
Why the change? One could speculate quite a bit, but I don't necessarily find it strange or directly linked one way or another with the present administration...
Only my opinion...
Cheers
Dollar Bill (03/08/04; 19:15:26MT - usagold.com msg#: 118248)
.,.
True fact: Just recently, Iowa Sen. Charles ''Chuck'' Grassley got the government to toss in $50 million for a project to build a tropical rainforest under a giant dome in Coralville, Iowa.
Well, I guess it is peanuts compared to the big dig in boston which came in at about 10+ billion. By the way, they "lost" a billion! Vanished!
Jacob Marley (03/08/04; 19:09:16MT - usagold.com msg#: 118247)
Mr. GAB. - 118115 - A few comments on comments...
-- You: "the central problem of our age: how politicians can handle increasing numbers of individuals, who expect from their governments, progressively better economic conditions, by "managing their currencies" and their interest rates to produce "growth" and employment."
-- Me: Yes, people ask a lot. This is exactly the test for the euro. Will the ECB succumb to the politics of short term remedies to provide short term G & E, or will they adhere to a chartered objective of providing favorable investment conditions for the currency INSOFAR as central banks can effect this -- i.e., by not trying to manage the incalculable variables of micro-economic factors, but by maintaining integrity in the currency. They endeavor to do this, among other things, by remaining detached from domestic affairs. Their hope is that the forces that do have the duty of either regulating micro-economic factors (and preferably just getting out of the way) -- the governments -- will act prudently, with the result being capital inflows for real investment's sake -- and not simply the whim of speculation.
-- You: "...that for all currencies in the world, at present, reserves matter not one bit."
-- Me: What is the purpose of having reserves, then? You are correct that they are not there in any sense to guarantee redemption. No one is pretending that. Even when the bank notes were convertible, no one really believed that a run en masse upon them would satisfy all claims. If reserves don't matter, why do banks have them? Window dressing? That is a VERY expensive and grossly inefficient use of available capital. In a sense you are correct though in that their presence is part of the overall demonstration of the banks' power (means) to support their objectives (their charter).
Why do you or I keep "reserves" on our own account? We keep reserves for emergencies. When unexpected demands stress our personal financial world, we use our reserves until stability is achieved. A bank's view of its reserves is no different. It isn't about convertibility today, since convertibility is not part of the program, and not expected.
-- You say this is impossible: "No country in the world, as it is today, has, or can possibly have, 'a stable macro-economic environment'..." You say it is for the "simple reason that ALL policy around the world, is oriented to policies that will placate the voting masses, through credit expansion, which produces as night follows day, the tendency in the markets (markets DO exist) to correct the malinvestment produced by credit expansion beyond real savings, by means of collapse of bad credit and liquidation of malinvestment."
-- Me: Did this same cycle not occur under the gold standard? Did gold backing the currency prevent reckless credit expansion?
-- You: "The fact and the truth: money is money and must be a tangible thing..."
-- Me: Why?
-- You: "[a]nd all human experience tells us, it must be gold..."
-- Me: That's a pretty stout claim. Can you really substantiate that "all" part?
-- You: "'Managed money' is a contradiction in terms."
-- Me: Why?
For all the imperfections of the currently evolving system, I don't think I find much more success to be had in a gold money system. I wish to state that it is not my purpose to be contrary or in any sense ill-intentioned in these responses. I spend a fair bit of time contemplating these things, and truly, if I am blinded by something, I hope I'm being honest with myself to say that I am teachable enough to alter my position. I have sat on the other side and been a precious metals money advocate. I am still ardently a precious metals advocate (gold especially) as a means of private wealth -- but divorced from its monetary role.
Jacob Marley (03/08/04; 19:08:03MT - usagold.com msg#: 118246)
Druid - 118120 - thoughts on your thoughts...
Good evening, Sir Druid. Read through your comments. If I may… where you say:
"I would have difficulty taking the 'word' of a central banker..." – Would you consider that to the degree you and I choose to use the currency issue of a central bank, implicitly demonstrates the degree to which we take their word. It does not matter that law, or simply the result of where we were born imposes the currency upon us. We opt to use it, because it works. If it did not work or work well, we would not use it (except minimally, like day-to-day sundries or to pay taxes -- and if bad enough even the day-to-day usages would vanish).
Why does a currency not work, or work less well than others? Its users harbor enough doubt about the issue's ability to fulfill monetary functions that they choose some other means to carry them out. Briefly, these functions can be defined at the highest level as serving a standard of value and means of payment. I.e., when presenting to another to buy or pay down debt, or to deploy it for a season elsewhere by lending or investing, or simply to not use it, we place into it a notion of worth. That worth is a sense of value that we individually calculate (mostly unconsciously). We do this largely on the basis of our impression of how others in the currency-using sphere evaluate the currency.
Having a collective sense of value and its ability to sustain a practical equilibrium, it can then serve as a means to pay. When presented the debt is settled in full. The fact that when we hand over cash, we no longer harbor the slightest guilt of debt, or fear further demands from the payee, demonstrates our confidence that THAT transaction served its monetary purpose. And the fact that we each day both can pay with and do receive as payment -- quite unconsciously -- the un-backed, irredeemable note of some central bank, proves our confidence in their word (and by extension their means) to satisfactorily sustain the economic environment for an acceptable future timeframe.
A sign that a currency is losing its monetary capacity is to observe an overall societal portfolio restructuring, if you will, where cash holdings and securities denominated in the currency begin to shift to other currencies, securities denominated therewith, and/or commodities. This is done because of a confidence problem being perceived in the currency's ability to retain that sense of value – within a societally acceptable band.
In my opinion, it is healthy to hold a portion of our wealth in unencumbered property. And certain types of property bear certain advantages over others. And at certain times (when intolerable volatility is looming, for instance), it is wiser to hold more of one's holdings in unencumbered property, as it is less subject to unfavorable behavior beyond our control. And, if the property type selection is chosen wisely, one may even reap bountifully in these episodes. Banks do not like instability as their entire foundation and ultimately existence rests upon a society's confidence in the future. In an economic sense this is expressed in its faith in the monetary unit. There is no other rationale for exchanging the fruit of our labors, or encumbering our property as collateral, for a note that is not guaranteed by anything except the belief that others will also accept it for payment down the line at some acceptable exchange rate.
Thank you for your thoughtful reading of what I wrote earlier.
Also – erratum… where I said, "the harder they pump the more air escapes through THEIR self-imposed but inescapable constraint of competitive devaluation of THEIR primary reserve holding: dollars." I should have proof read before posting. I thot my goughts wackbard. Should read more like: "…self-imposed but inescapable constraint of competitive devaluation of their home currencies against their primary reserve holding: dollars."
Paper Avalanche (03/08/04; 19:05:06MT - usagold.com msg#: 118245)
Silver is breaching the $7.00 barrier tonight
When I was a neophyte on this forum (in many ways I still am), I advanced the idea that silver will lead gold. My hunch may have been well founded based on the unfolding POG / POS relationship.
Methinks that Sir Soros sees silver as the achilles heel of the whole financial house of cards.
I may be wrong. I often am.
Take care.
PA
Socrates964 (03/08/04; 18:36:02MT - usagold.com msg#: 118244)
Sundeck/UK
Sundeck - wrt Buffett - I suppose I'm just an old cynic. I just don't remember Buffett getting so involved with the political process in the past and in support of such an ideologically charged government.
UK Gold - I can't remember if we ever got to the bottom of this, but there was a story doing the rounds a few months ago that the UK would actually have to repurchase all its sold gold in order to comply with EU reserve requirements.
If this is the case, then one could make the alternative reading that they now have to flash signals to the EU that they will at least maintain their reserves at current levels. Don't know! Frankly, the whole thing is smoke and mirrors.
TownCrier (03/08/04; 18:16:04MT - usagold.com msg#: 118243)
Ooops!
I should have been clearer. My previous message was a reply to Cavan Man, msg#118239.
R.
TownCrier (03/08/04; 18:14:15MT - usagold.com msg#: 118242)
UK gold, whys and why nots
Sorry, but I can't quite follow your leap -- "Why didn't the CBs maintian the same quota? If gold were to be 'freegold' then NOT increasing the allocations would indeed set 'freegold' free."
Maybe you could narrow the gap for me or give me a little smoother groundwork in the run-up to the jumping off point.
Further, I don't see how the size (whether big OR small) of the announced sales matters at all.
I think the key distinction that needs to be grasped of a "free gold" market is that price-discovery is based on the supply and demand of the physical, not the supply and demand of the derivatives trading predominately in its stead.
To be sure, a "freegold" market environment is not conditional upon those with metal refraining from selling it as you seem to have implied to some degree.
I have heard it argued convincingly that, absent the vast supply of derivative surrogates rerouting demand away from the existing metal, under a "freegold" market regime the central banks could as an exercise sell their entire stock of metal and it would be snapped up immediately at many multiples of the current price. But obviously, that valuation regime (sans surrogates) is not currently in place. Such is the gradual nature of the dollar/euro transition.
So while the dollar-friendly UK did NOT sign the latest agreement, even as it hastens to add they do not intend to sell any gold during the period of this agreement, I encourage you to join me in noting that the UK has thereby effectively reclaimed its prerogative to intervene as heavily as it deems fitting in the gold derivatives market. A stance uniquely befitting such a dollar-ally, and befitting them also as an organization with some degree of responsibility for the potential misfortunes of the LBMA offspring, all of which represent so many loose cannons.
Sorry I didn't provide this elaboration in my earlier comments.
R.
Sundeck (03/08/04; 18:03:25MT - usagold.com msg#: 118241)
WAII - Gandalf and the Roo meat
Spot gold at $402...Silver "Knock, knock, knockin' on Seven's door!" (sorry Bob).
MK says: "Watch out for a delayed positive reaction, or a protracted upturn in the gold price as a direct result from today's announcement."
Suspect that statement will turn out to be prophetic.
Oh BTW, Gandalf. I am trialling a new preservative in that roo meat ... Oxide of Strombolium ... suggest you use moderation in feeding the hounds.
;-)
Sundeck
Goldilox (03/08/04; 17:30:10MT - usagold.com msg#: 118240)
Governator in the White House
@ Sundeck:
according to the CURRENT U.S> constitution, the Governator is not eligible for White House duty (at least, as the boss) since he was born in Austria. I have heard rumors (no substantiation) that Senator Hatch is heading the charge to change the native born requirement for him. Maybe that's the "rider" that GWB wants to attach to the heterosexual union amendment.
Cavan Man (03/08/04; 17:14:36MT - usagold.com msg#: 118239)
Dear Randy
Regarding UK gold: My take is they shot their load already. Why didn't the CBs maintian the same quota? If gold were to be "freegold" then NOT increasing the allocations would indeed set "freegold" free. The European CBs are ACTIVE managers of the gold price.
The Another/FOA monologues are bewitching but fast losing their allure in Missouri.
Sundeck (03/08/04; 17:01:49MT - usagold.com msg#: 118238)
Socates964 #118230 - Buffett
Soc,
"Why is his protegé now governor of California, if not to swing the state for Dubya?"
You may be correct, but I doubt if "swinging the state for Dubya" is Buffett's main interest in supporting Arnie.
Buffett, in the past, has described himself as a Republican on the (wealth) production side and a Democrat on the distribution side. I doubt if he has changed. I suspect Buffett has a genuine concern about the state of CA's finances and wants to help out by supporting a high-profile Republican in whome he has faith. But that is not to say that he necessarily wants to see Dubya returned. His comments re tax cuts for the rich could be seen as an attack on the Dubya regime, although probably not as direct as Soros' overt opinions.
As an aside, there is little doubt that Arnie is preparing the ground for a tilt at the White House down the track, and that is more likely to be what Buffett is keen on; although at least four years away, and more probably eight. Buffett will indeed be an old man by then (82 or 86, with little to gain personally one way or tother), but not one (I believe) who would happily wish for a further decline in American values and economic and social prosperity.
With regard to shorting the $US, I am sure that Buffett is as happy as anyone to take money off the table whenever he has the opportunity; but not at any consequence. Besides, it is not only Dubya who wants to see a weaker dollar...the structural problems confronting the US make it imperative for ALL future presidents (and the people at large), Rep or Dem, good or bad, to covet a fall in the dollar...
FWIW
:-)
Sundeck
TownCrier (03/08/04; 16:01:57MT - usagold.com msg#: 118237)
Cavan Man, the following is the precise text of the 1999 join statement on gold and its signatories
--26 September 1999--
In the interest of clarifying their intentions with respect to their gold holdings, the undersigned institutions make the following statement:
1. Gold will remain an important element of global monetary reserves.
2. The undersigned institutions will not enter the market as sellers, with the exception of already decided sales.
3. The gold sales already decided will be achieved through a concerted programme of sales over the next five years. Annual sales will not exceed approximately 400 tons and total sales over this period will not exceed 2,000 tons.
4. The signatories to this agreement have agreed not to expand their gold leasings and their use of gold futures and options over this period.
5. This agreement will be reviewed after five years.
European Central Bank
Oesterreichische Nationalbank
Banque Nationale de Belgique
Suomen Pankki
Banque de France
Deutsche Bundesbank
Central Bank of Ireland
Banca d´Italia
Banque centrale du Luxembourg
De Nederlandsche Bank
Banco de Portugal
Banco de Espa--a
Sveriges Riksbank
Schweizerische Nationalbank
Bank of England
-------- ~fin~ --------
Randy's note on it all: My _personal_ belief as to the reason the UK did not join ranks this time is that they are doing a delicate balancing act, riding the fence between their old alliances with the mighty yet aging dollar regime and their practical interests in the up-and-coming euro regime.
At this stage I think the UK does not want to unnecessarily give appearances to their old dollar allies of being too cozy with Euroland, which signing this time around would do. In that same regard, the UK's signing of the first agreement could be soft-pedalled as more-or-less a superficial act on behalf of Team Euroland because, if you'll remember, the UK had already -- prior to the agreement -- publically committed itself to a bloc of gold sales.
Further, it is my opinion that, as the quasi-parent figure of the LBMA, the UK and Bank of England is currently wanting to maintain a footing of extreme flexibility with regard to gold at this time -- in the event that lifeboat operations and commitments of gold are needed should the LBMA face a bullion run crisis with growing likelihood sometime in the next five years. I think item #3 in the latest agreement, as a continuation of item #4 listed above, has become the primary source of consternation for the bullion bankers.
To that end I note, especially, that Andy Smith is out huffing and puffing again, but I also note, he's doing so without daring to say anything of real substance. Like any good bullion banker, he wouldn't dare overstep and precipitate a crisis of confidence.
R.
Boilermaker (03/08/04; 15:28:02MT - usagold.com msg#: 118236)
1999 WAG/ 2004 BAG
I should say that the US and Japan expressed their "intent" to follow the 1999 WAG but were not signatories. Perhaps like the UK in the 2004 Agreement they wanted to offer the illusion they were not in the gold market.
Federal_Reserves (03/08/04; 15:26:10MT - usagold.com msg#: 118235)
BOE still stinging
from the embarrassment of selling at the bottom?
From 99 to 01 they sold, and what an idiot move that was.
If they start buying, sell.
An agreement not to sell more than a certain amount is not the same as an agreement TO ACTUALLY SELL ANYTHING.
Boilermaker (03/08/04; 15:16:34MT - usagold.com msg#: 118234)
1999 WAG
http://www.iied.org/mmsd/mmsd_pdfs/030_orellana.pdf
Cavan Man,
The 1999 Agreement did not include the US or Japan. The only change in 2004 is adding Greece, dropping the UK.
Survivor (03/08/04; 15:14:46MT - usagold.com msg#: 118233)
Britan and WAII
Given Sir Ned's comment: "1) Leave it to the British CB to send a mixed message. If they are not selling any gold what's the harm in signing?"
Along with this announcement: "LONDON, March 8 (Reuters) - Britain has no plans to sell its holding of gold reserves and is therefore not participating in the renewal of the European central banks' Agreement on Gold, the Treasury said on Monday."
I guess we can assume that either the political announcement above is absolutely true (chuckle/smirk), or that Britan will sell as much gold as it wants, whenever it wants.
Cavan Man (03/08/04; 14:28:47MT - usagold.com msg#: 118232)
Towne Crier
Japan and US signatures are missing. I believe they signed in 1999
Socrates964 (03/08/04; 14:14:58MT - usagold.com msg#: 118231)
GAB/Ned
In addition, he's already got his silver corner in place.
Socrates964 (03/08/04; 14:11:54MT - usagold.com msg#: 118230)
GAB/Ned
Gentlemen, I wonder about your view of Mr. Buffett as an ivory tower investor. OF late, he's been doing some overtly political things like chaperoning Arnie the Bodybuilder around the world's economic watering holes. Why is his protegé now governor of California, if not to swing the state for Dubya?
We all know that the 'weak dollar' is pretty much US government policy. Even if the government doesn't like to admit it in public, you only have to read websites like the Heritage Foundation to realize that the Republican Right regards the weak dollar as a weapon to be used in bludgeoning the Euroeconomy to death in the export markets.
Hence, putting 2 and 2 together, going short of the $ and shouting about it is is exactly what you'd expect a fully paid-up Dubyaphile to do.
TownCrier (03/08/04; 13:53:23MT - usagold.com msg#: 118229)
Note to self
For future refence at this memorable time/location. Of those signatories, thus far Germany has acknowledged 600 tonnes at a rate of 120 per year, while Switzerland will sell 130 tonnes in the first year, concluding its previously announced program of 1,300 tonnes which began May 2000, during the time of the original agreement.
R.
TownCrier (03/08/04; 13:36:58MT - usagold.com msg#: 118228)
I guess we should call this one the "Basel Agreement"
Here is the precise text of the central bank agreement on gold which was announced by the participants at the latest meeting of the G10 central bankers hosted by the BIS in Basel, Switzerland.
--8 March 2004--
In the interest of clarifying their intentions with respect to their gold holdings, the undersigned institutions make the following statement:
1. Gold will remain an important element of global monetary reserves.
2. The gold sales already decided and to be decided by the undersigned institutions will be achieved through a concerted programme of sales over a period of five years, starting on 27 September 2004, just after the end of the previous agreement. Annual sales will not exceed 500 tons and total sales over this period will not exceed 2,500 tons.
3. Over this period, the signatories to this agreement have agreed that the total amount of their gold leasings and the total amount of their use of gold futures and options will not exceed the amounts prevailing at the date of the signature of the previous agreement.
4. This agreement will be reviewed after five years.
European Central Bank
Banca d'Italia
Banco de Espa--a
Banco de Portugal
Bank of Greece
Banque Centrale du Luxembourg
Banque de France
Banque Nationale de Belgique
Central Bank & Financial Services Authority of Ireland
De Nederlandsche Bank
Deutsche Bundesbank
Oesterreichische Nationalbank
Suomen Pankki
Schweizerische Nationalbank
Sveriges Riksbank
R.
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