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ARCHIVED DISCUSSION FROM 9/9/2000
All times are U.S. Mountain Time

(Yesterday's Discussion.)

Black Blade (9/9/2000; 23:58:26MT - usagold.com msg#: 36351)
OK Peter, that's good!
A few surgeons were discussing the merits of working on different people. One said the best patient is an electrician; all of their organs are color-coded. "No." said the next. "Librarians insides are catalouged and indexed!" "You're both wrong!" said the next doctor. " Lawyers are the best. They are gutless, heartless, spineless and their heads and asses are interchangeable."

Sorry, but I've been working with a couple of those Canadian snakes for the last couple of days and it starts to rub off on ya ;-)

The Invisible Hand (9/9/2000; 23:57:04MT - usagold.com msg#: 36350)
Saturdays ...
... used to be prolific FOA-days during the weeks when he's teaching us.
This week seems to be different.
Is it then really true that something big is brewing for the upcoming days? An announcement today in Vienna, the capital of one of the 11 euro-countries?

The Invisible Hand (9/9/2000; 23:55:46MT - usagold.com msg#: 36349)
Saturdays ...
... used to be prolific FOA-days during the weeks when he's teaching us.
This week seems to be different.
Is it then really true that something big is brewing for the upcoming days? An announcement today in Vienna, the capital of one of the 11 euro-countries?

The Invisible Hand (9/9/2000; 23:55:22MT - usagold.com msg#: 36348)
Saturdays ...
... used to be prolific FOA-days during the weeks when he's teaching us.
This week seems to be different.
Is it then really true that something big is brewing for the upcoming days? An announcement today in Vienna, the capital of one of the 11 euro-countries?

The Invisible Hand (9/9/2000; 23:52:43MT - usagold.com msg#: 36347)
Saturdays ...
... used to be prolific FOA-days during the weeks when he's teaching us.
This week seems to be different.
Is it then really true that something big is brewing for the upcoming days? An announcement today in Vienna, the capital of one of the 11 euro-countries?

Peter Asher (9/9/2000; 23:38:17MT - usagold.com msg#: 36346)
Alright, Black Blade, since you opened up the subject.

A very successful lawyer parked his brand-new Lexus in
front of his office, ready to show it off to his
colleagues. As he got out, a truck passed too close and
completely tore off the door on the driver's side.
A poice officer ran over and the lawyer started
screaming hysterically. His Lexus, which he had just picked
up the day before, was now completely ruined and would
never be the same, no matter what the body shop did to it.

When the lawyer finally wound down from his ranting and
raving, the officer shook his head in disgust and disbelief.
"I can't believe how materialistic you lawyers are," he
said. "You are so focused on your possessions that you
don't notice anything else."

"How can you say such a thing?" asked the lawyer.

The cop replied, "Don't you know that your left arm is
missing from the elbow down? It must have been torn off
when the truck hit you."

"My God!" screamed the lawyer. "Where's my Rolex?"

Al Fulchino (9/9/2000; 23:18:01MT - usagold.com msg#: 36345)
Leigh
Leigh I couldn't post the pic so the end about the fireworks is out of place.

Al Fulchino (9/9/2000; 23:16:33MT - usagold.com msg#: 36344)
Leigh, some light reading while you stay off your legs/wriiten by my wife
Ode to General George P. Goose

At 3:00 a.m. I awoke to one startled squawk, and then silence. I heard Lassie get up with his stiff joints causing him to struggle to get to his feet. He didn't bark, I listened and I could hear him go down the sidewalk, but he came back and didn't make a commotion. In the past I had heard that kind of squawk and awoke to find everything fine. But this morning I awoke to the loud call of the Canadian Geese. Cousins to General George P. Goose, from a foreign country. In the past they would visit, but he remained segregated from them since they were not of his nationality. I watched as they did a fly by in V formation, dipping their wings in memory of the fine General. They already knew, what I would soon discover. A thief in the night had slipped in and abducted and murdered the "Lil General". That squawk I had heard was the final word from a war scarred hero! Neither rain, sleet, snow, nor dark of night, would keep the "Lil General" from his patrols! For years he had faithfully done his job, guarding "his" vehicles! No matter where he had to travel to get to them, you could always count on him to be faithfully marching around on watch. No one got past him, without him sounding his alarm! What a fine alarm he had, it could be heard for nearly a mile! And should you try to take one of "his vehicles" he would valiantly give chase, as fast as his little legs would go, till he just couldn't run anymore! After all the injuries his arthritis had slowed him down a bit, and his sight was mostly gone since the accident this summer where he got sideswiped by someone taking his truck! The "Lil General" did indeed have 9 lives, for he lived through 9 horrific accidents that would have done any normal Gander in. But not the General, he withstood being run over 8 times, survived an attempted abduction by a fox, stumbled around blind for weeks after his last accident. Where because he couldn't see he would wander off and end up 2 or 3 houses away� trying to follow the sound of his trucks so he could still do his job! Somehow some of his sight miraculously returned, if only partially, and there he was back on the job again. He had to keep turning his head as he could only see out of one eye. No matter how many times the man of the house would run around behind him swearing at the mess he was leaving all over his driveway, sidewalks, garage and porch! No sir, nothing kept him from doing his job. It has been rumored that the accident that caused the General to lose his sight might have been from one of those familiar tirades from the man of the house. But no one was ever able to prove it.

Labor Day, was the last Holiday the General celebrated. He came up on the porch with us to watch the fireworks that the neighbors put on. Al said he came up because he was afraid, but I think it was because he is so short he was not able to see the fireworks over the bushes. We have a picture of that and will keep that as our last memory of the "Lil General". Bruno won't have anyone to chase anymore, Lassie won't have anyone to guard. No one is blaming Lassie for not protecting the General last night, after all Lassie doesn't see or hear as good as he used to. Plus with his arthritis his reaction time is delayed. And Bruno, well, Bruno slept right through it, Bruno sleeps through everything!
No the old place won't be the same after 11 years of waking up to loud honking every morning, 11 years of making sure he was fed and watered and warm. Several years of trying to dodge Goose shit while maneuvering to the garage or the front door. Then there are the good memories, of the General attacking Marie's book bag when she was going to school, of watching Marie run when she was younger because she was afraid of him. Then seeing her mature and realize that she could indeed get away from him, and conquer her fear. The memories of watching a lovesick goose follow Jeffrey wherever he went, honking in unison with him as he beeped the horn on his truck. As the boys grew up it became hard for the General to discern between Jeff and David so he would run with great excitement whenever he would see either one of them, hoping to spend some time with them. And at the very least hoping they would leave their car or truck parked long enough for him to guard it for them. He never charged them a dime for all the hours he logged marching around those vehicles. In memory of the "Lil General" we will have a plaque made to put over his stall with his name:

General George P. Goose
(Little General)

Nine stars for his nine battles, done in red, for that was his favorite color. When the plaque is done we will hold a memorial service for him. Eleven years of fond memories and some not so fond. The Little General was special and deserves to be recognized. He will be missed.

Labor Day Fireworks, the Little General was trying to keep David from being scared!

Al's note: There will really not be any ceremony. <smile>

Black Blade (9/9/2000; 23:14:36MT - usagold.com msg#: 36343)
A short Darwin award nominee to lighten the mood.
Just back from my road-trip.
Police said a lawyer demonstrating the safety of windows in a downtown Toronto skyscraper crashed through a pane with his shoulder and plunged 24 floors to his death. A police spokesman said Garry Hoy, 39, fell into the courtyard of the Toronto Dominion Bank Tower early Friday evening as he was explaining the strength of the building's windows to visiting law students. Hoy previously had conducted demonstrations of window strength according to police reports. Peter Lauwers, managing partner of the firm Holden Day Wilson, told the Toronto Sun newspaper that Hoy was "one of the best and brightest" members of the 200-man association.

- I think this guy should win, not only because he removed some incredibly stupid genes from the pool, but he also eliminated a lawyer in the process... :] (best and brightest? whatever does that say about the rest of them?)

Al Fulchino (9/9/2000; 23:13:40MT - usagold.com msg#: 36342)
Re TedW's post
Boy some feathers got ruffled. But why? Oversensitivity, I would suggest. And if it isn't, then just let GATA answer the man and let the chips fall for all to see and read. Lets face it, how many times can one cry wolf, before people want to see one. I personally think GATA is a fair group and more than well intentioned. But surely Ted's question is a good one and airing out just why GATA hasn't sued, is good for all its supporters to know.

Peter Asher (09/09/00; 22:25:55MT - usagold.com msg#: 36341)
Euro Controversy
http://www.telegraph.co.uk:80/et?ac=000118613908976&rtmo=LlSx3lSd&atmo=rrrrrrvs&pg=/e t/00/9/10/nmag10.html

And while your at it Maggie, ask him about the Gold.

>>>> BARONESS THATCHER accused Tony Blair of seeking
to "abolish Britain" in a speech in which she also said that
Michael Heseltine was a "non-Labour fellow traveller" for
supporting a single European currency.

She said: "The Prime Minister and his Government know
that on this they must win. For unless they abolish sterling
they will never attain their wider goal of abolishing Britain
as a distinct, self-confident, independent nation. The Prime
Minister can claim until he is blue in the face that the
decision all depends on economic criteria for convergence
but this is nothing more than a cynical and ever more
transparent ploy."

Goldfly (09/09/00; 22:12:19MT - usagold.com msg#: 36340)
Hey Cannuk, this is from last year......
http://www.usagold.com/cpmforum/archives/2919999/default.html
USAGOLD (9/29/99; 15:23:28MDT - Msg ID:14902)
Question of the Day....
"This is really one of the most unhappy times for the market I have ever seen," Jessica Cross of Virtual Metals Research
and Consulting told Reuters.

Virtual Metals? What have we here? And what an odd comment. Care to elaborate, Ms. Cross?

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

I remember reading the article the quote was taken from and thinking along the same lines as MK...... But I cannot remember where I read it.

Virtual Metals! What a gas.

gf

JMB (09/09/00; 22:02:56MT - usagold.com msg#: 36339)
TownCrier and rudeness
TedW's question (attitude) irked me. I'm easily irked on Saturday night. Please see AUSPEC's msg # 36333, focus closely on the last two sentences.
Bill Murphy deserves our admiration and respect, not some cheap shot from afar, Sir.
P.S. So where's the answer to my question. Perhaps you would like to fill in for TedW, no?

CM (09/09/00; 21:54:58MT - usagold.com msg#: 36338)
Gold for Oil
Greetings to all the wise and insightful posters, from a long-time lurker.

I would like to add my two cents worth to the "Gold for Oil" discussion. In order to invest in gold, don't you need to have a "surplus" of income over expenditures? I believe that most of the OPEC members need all their income for current expenditures (defense costs, government expenses, welfare programs, payments on existing debts, and so on).

If they don't have any surplus funds to invest, then they aren't going to be buying much gold are they?

Just a thought.

Canuck (09/09/00; 21:52:19MT - usagold.com msg#: 36337)
(No Subject)
Just read the latest article from Gata.

I was a little sceptical last week regarding the new NEWS from an unknown named Jessica Cross. If Ms. Cross is /was an expert in the gold industry before 'yesterday' why have we not heard from her before?

Now , Mr. Howe, Bill, Chris, Frank and a host of knowledgeables have kept us up to date for a couple of years now. Where would one place there bets?

Now, I'd like to hear from Ms. Hauroka (sp?, sorry; chairperson/WGC) to verify/elaborate Ms. Cross's findings?
A little over a year ago Ms. Hauroka was appointed chairperson of the WGC and gold advocates were hopeing/anticipating good things from the World Gold Council but it did not materialize. Perhaps Ms. Hauroka (I again apologize for the spelling) should clarify the gold 'short' position or resign.

The gold 'short' position, as I stated within the last week, can be any number depending on whom one asks. Allegations of bias now run rampant. The recent gold 'wing-ding' in Paris brought out figures of a 'universally' accepted number of 4,750 tonnes short. The pro-gold world had, up until that point, been talking of 14,000 tonnes short.

Now, it is very evident that one of two things exist.
a) Some of the gold 'analysts' don't have a clue what they are talking about or
b) Some of the gold 'analysts' are crooked and have been 'bought'.
The statistical variance of 4,750 tonnes short and 14,000 is nearly 300%.

Now, I am John Doe with a couple hundred dollars invested in gold and I can see that all of you clowns are beyond belief. Your stories swing 180 degrees nearly day to day.
Get your act together, it is almost amusing, no wonder no one invests in gold.

When I was 19 years old I sweated my butt in Red Lake Ontario mining gold for a couple years watching fellow buddies toil and bleed. I saw a boulder the size of a tractor-trailer fall on a man, he was carried out in a pail so don't tell me that gold is worth $275 an ounce.

I respect the fact that mining is a business and profits dictate viability and future endeavors but for the sake of intestinal fortitude go under the earth several miles and ask a South African miner why there isn't enough 'margin' to solidify thousands of tonnes of granite above his head with rockbolts. Walk a mile in his shoes and then change your undergarments.

Now, I don't really understand gold 'shorts' and Central Bank sales and leasing but I do understand a simple fact. Guys like Reg Howe and Bill Murphy aren't chasing this gold issue because they are bored. There is an issue. Are The World Gold Council and Gold Field Mineral Services providing accurate information? Who are funding these organizations? I am not accusing, I am asking questions.
Why is these a 300% discrepancy in the numbers?

Who is right, who is wrong and who is a damn crook?

World tensions are escalating, monetary policy is becoming more clouded and the BIAS is becoming more evident each day.

I urge responsible citizens, politicians, corporations, and lawmakers to end this facade, this orgy of blatant and obvious 'fiat' management and bring this world to order.

Your children are going to die and you will be blamed, tried and convicted in a court far beyond your wildest imaginations.

Chris Powell (09/09/00; 21:50:25MT - usagold.com msg#: 36336)
A lawsuit by GATA
To reply to Ted's question about why GATA
has not yet filed a lawsuit against the
manipulation of the price of gold....

Money is probably the biggest part of it.

While we have raised about $200,000, most
of that has been spent on our law firm's
retainer, advertising, publicity, research,
and travel expenses over the last 20 months.
GATA's officers receive no salary or
director's fees. We do everything for free.
But the rest of the world doesn't work that
way.

I make no apology for this; it is what had
to be done and it is what has brought us to
where we are now: The only organization in
the world fighting every day for the gold
cause and bringing that cause to the
forefront. Without GATA, the world would
know much less about the gold market than
it knows now.

We increasingly believe that the U.S.
government is behind the manipulation,
and that complicates the legal options.

In any case, whether we're suing the U.S.
government or an investment house, we're
going to need a good deal more than what
we've raised. I think that maybe a million
dollars would be necessary to get started.
I also think that the industry itself could
raise that money and a little more for
political lobbying and, with that much
money, probably put an end to the scheme
against gold in a few months. But
increasingly I think that the industry
doesn't WANT to challenge the powers against
it; I think the bigger gold mining companies
are either in on the scheme, short more
gold than they're letting on, or just too
damned scared of the government and
financial powers aligned against them.

I hope that all people who have advice for
GATA also have contributions for us or at
least some advice for the mining industry
and the companies in which they are
invested. We've done a lot but we need
help; we're doing what should be the job
of others, and we're doing it for free.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Rockgrabber (09/09/00; 21:43:05MT - usagold.com msg#: 36335)
(No Subject)
Galearis there is enough Gold to be traded for oil no matter what it goes to in realtion to dollars, if the price of gold was worth way more dollars. All it is is Gold is just mispriced. Its just funny the dollar has been able to buy this much gold for these few dollars. I wonder if it is over? NOT YET PLEASE... I need more time to get more gold at this price.

ET (09/09/00; 21:39:36MT - usagold.com msg#: 36334)
Journeyman

Hey Journeyman - thanks for the series. Keep em comin! Here is a story illustrating several of your your points.

Wal-Mart told to raise prices

German officials also call end to below-cost sales of Aldi, Lidl

The Associated Press
SATURDAY, SEPTEMBER 9, 2000
Berlin - Wal-Mart's "Always Low Prices" were too low for strict German regulators, who ordered
the U.S. giant and two German rivals Friday to call off their price war on groceries because it could drive
mom-and-pop shops out of business.
The German Cartel Office found that Wal-Mart and the Aldi and Lidl
discount supermarket chains were selling staples such as milk,
butter, flour and cooking oil below cost on a regular basis. That
practice is illegal in the highly regulated world of German retailing.
If allowed to continue, office president Ulf Boege said, such a policy
could push smaller stores out of business, clearing the way for the
big guys to raise prices in the future.
"The material benefit (of below-cost pricing) to consumers is marginal and temporary, but the restriction
of competition by placing unfair obstacles before medium-sized retailers is clear and lasting," he said.
Not everyone shopping at Berlin's freshly remodeled Wal-Mart superstore was happy to have the
government looking out for their long-term interests, though.
"Life in Germany is expensive enough as it is," said Franz Roth, a 52-year-old locksmith buying the
weekly groceries with his wife, Gabi. "When the likes of Wal-Mart come along and force the others to
pull down their prices, that's a good thing."
Smaller shops have it tough, they conceded, but they blamed the tax man for forcing them to pinch
pennies.
"It's the government's own fault," Gabi Roth said. "They take so much from us in things like gas tax that
everyone has to look out for themselves."
Wal-Mart, which has been working to establish a foothold in Europe's largest market, said in a
statement from its German headquarters that it would "orient" its pricing to comply with the law.
"However, we still remain committed to lowering the cost of living in Germany by offering our customers
the best quality products at the lowest possible prices," it said.
Aldi and Lidl had no immediate comment.
At a news conference in Bonn, Boege said he had given notice to the three companies Thursday and had
threatened them with fines of up to $445,000 for noncompliance.
He said he was not interested in setting up "protective fences" for small stores.
"To me it's more about seeing that independent companies are not pushed out through the unjust pricing
strategy of big companies with superior market strength," he said.
The German Retail Trade Assn. greeted the decision as a "hopeful signal for the end of the ruinous
cutthroat competition."
Wal-Mart, the world's largest retailer, has shaken up German retailing since it acquired its first small
chain of stores in December 1997. It has invested heavily in remodeling the stores to make them more
"consumer-friendly," hiring more personnel to improve in-store service and upgrading inventory tracking
systems.
Wal-Mart, which has more than 2,500 stores and supercenters in the United States, has built a network
of 95 stores in Germany and has 240 outlets in Britain following last year's takeover of supermarket
chain ASDA Group.

auspec (09/09/00; 21:26:28MT - usagold.com msg#: 36333)
tedw & GATA
YO Ted,
Slow down man, all is not quite as simple as it appears. First of all GATA is a tax exempt entity and a law suit from them is not a straight forward matter. The legal wheels ARE turning, but it will take some time. The parties that have been wronged are the ones that will have to sue and they will have to go after the mining companies & possibly a bullion bank or so that defrauded individuals. You are welcome to initiate a suit yourself and we will all be happy to reimburse you when you win. The Midas man is giving his all and we owe him our gratitude and support in any way possible. He is not holding anything back!

AUSPEC

Galearis (09/09/00; 21:07:16MT - usagold.com msg#: 36332)
@ 714 Oil for gold?
There has been quite a lot of discussion about the Arab preferences for the form of payment for their oil exports. Has anyone actually dragged out their calculator to work out what this would actually mean for gold demand/supply? The Jamaican Accord notwithstanding (and we don't really know the details of the agreement, but suspect that it was linked to the US $ default in the early '70s and a necessary new $/gold/oil relationship). I am constantly reminded while reading these discussions of that fine David Lean movie, Laurence of Arabia, wherein Anthony Quinn playing the role of that bedouin bandit raided the "cash" box and in a rage began throwing the fiat into the air shouting, " Where is the gold!"

Let us assume that 25% of the 27,000,000 barrels of oil consumed by the world each day is paid to the Arabs (I know, OPEC is not composed of just Arab countries, but let us assume 25% for argument sake). The total world's fuel bill to OPEC would amount to $17,100,000,000 each day. There simply is not nearly enough gold for the oil market, yes? Perhaps they accept paper gold?

RS (09/09/00; 20:48:27MT - usagold.com msg#: 36331)
Leigh........ very sorry to hear of your injury.
Wishing you a rapid complete recovery.

" ... gold is good" Another (Thoughts!)

TownCrier (9/9/2000; 20:17:31MT - usagold.com msg#: 36330)
Sir JMB,
Not very long ago, you were concerned with even the smallest hint of rudeness occurring on the forum (claiming Aristotle had been rude to Goldhunter in an event that my own scrutiny could only fail to detect), but not only have you fallen silent on championing that cause during subsequent flare-ups, we now see you lighting your own matches. What's up with that?

Chris Powell (9/9/2000; 20:10:05MT - usagold.com msg#: 36329)
World Gold Council double-Crosses its own industry
http://www.egroups.com/message/gata/523
Reg Howe analyzes Jessica Cross' report
on the gold loans for the World Gold
Council and finds it worse than mistaken
-- dishonest.

To subscribe to GATA's dispatches
by email and get them immediately so
you don't have to go look for them,
send an email to:

gata-subscribe@eGroups.com

CoBra(too) (9/9/2000; 20:08:36MT - usagold.com msg#: 36328)
Re- tedw -
Hello tedw.,
200 grand won't even cover the intial retainer for a law firm taking on FTC - though GATA is expecting your contribution - to try ... to re-establish fair and equal
markets!

Can't Sue ... cb2

JMB (9/9/2000; 20:00:22MT - usagold.com msg#: 36327)
"What are you waiting for Bill?" by tedw on 9 Sept 00
I hereby proclaim that tedw has been awarded the not so coveted "Asinine Question of the Month" award.
Way to go tedw! When you have a minute, could you expain the structure of the Exchange Stabilization Fund to all of your fans? If Mr. Murphy is to sue the culprits, he needs to have a firm understanding of just what he's up against.
I'm going to be glued to this screen awaiting your response.

TownCrier (9/9/2000; 19:38:35MT - usagold.com msg#: 36326)
Does anyone buy into this?
From the concluding paragraph of the Frankfurter Allgemeine article; Thursday, September 7, 2000

"It seems that to support the conspiracy theory of GATA,
statistical data are intentionally misinterpreted.
There are many good reasons that give sufficient
explanation of the low gold price, with the strong
dollar being first. The greater the value of the
dollar, the lower the price of gold."

If we recall the heights of valuation attained by gold during 1979-1980 when the international support of the dollar system was nearly collapsing (but was subsequently forestalled through sheer political will), are we to believe that the dollar has increased in strength such that gold prices could be reduced to only a third of those levels? If the dollar has gained such strength, then why have we seen the prices of everything else rise during these following 20 years?

tedw (9/9/2000; 19:16:28MT - usagold.com msg#: 36325)
Why has no one filed a lawsuit againstGATA?
http://www.usagold.com

I read David Cohens article about GATA, and I dont find it a good defense for GATA's failure to file suit.

$200000 is plenty of money to get a lawsuit going. Lawsuits take many years and there will be plenty of time for fund raising later on if more money were needed.

If GATA really has evidence of illegal actions, they ought to take action. It hurts their credibility not to do so.

What are you waiting for Bill?

Journeyman (9/9/2000; 18:52:52MT - usagold.com msg#: 36324)
No amateurs here @Ragador (9/9/2000; 6:48:55MT - usagold.com msg#: 36297)

"Here is an idea. I'm just an amateur at this and the idea might be naive, but here goes...
+
"If one could make the comparaison, it would mean that the fact that the $US always comes up on
top of other currencies does not indicate confidence in the $US, but rather an indication of a lack of
confidence in the system, that there is a problem and the $US will be the last to go." -Ragador (9/9/2000; 6:48:55MT - usagold.com msg#: 36297 & 36298)
Dollar\Euro again

Sounds like a useful perspective to me! The only amateures are the bozos running this show -- and I don't mean USAGOLD.

Regards,
Journeyman

CoBra(too) (9/9/2000; 18:30:49MT - usagold.com msg#: 36323)
P.A. - Or a chain is as strong as its weakest link -
Well, here we go again - as we on this forum may perceive financial assets are way ahead of themselves - to the detriment of tangible (excluded is Silly-Con! RE et al) a/o hard assets - and we know a correction in this regard is overdue - and while this correction is already underway, we are mesmerized by artificial $-strenght - and so am I -
and don't accept reality. US vs EU - or better $ - supremacy vs all other fiat paper!
Picking only one aspect out of a multitude may be the fact that low oil or energy prices of late benefitted the relative, though rapid growth of (virtual) post industrial service economies, not levying up to 80% taxation on the most effective pollutant`in history, as Europe was and is ... financing their oversocialistic burden.
The US of A.,while on the old continent the sting of a tripling in the crude price is felt marginally-because of the huge tax buffer-, is having severe effects. In the US,
the land virtual credit to foreign labor, the high rise $
overshadows the inherent instability of an upside-down paper pyramid. - taake caare -cb2

Leigh (9/9/2000; 17:54:00MT - usagold.com msg#: 36322)
An Artificial Fuel Shortage?
Does anyone remember that speech by some UN lady in which she said, "We will control people by food and fuel. We make no apologies." Looks like the fuel part could be starting.

I have the quote in a book downstairs in the basement, but my foot's broken and I can't get it.

Peter Asher (9/9/2000; 17:07:49MT - usagold.com msg#: 36321)
CoBra(too) (9/9/2000; 16:39:30MT - usagold.com msg#: 36319)
http://news.excite.com/news/r/000909/11/energy-germany

Looks like your Northen brethren are jumping into the "Kicking and screaming" act also and taking a further cue from the history of the French Revolution. In the last paragraph of the below article, we see the Environment Ministry saying: "Let Them Eat Cake"
.
BERLIN, Sept 9 (Reuters) - German truck drivers and farmers
brought traffic to standstill in the northern town of Hildesheim
on Saturday in a protest against rising fuel prices.

Police said some 100 trucks had blocked streets in the town for
about three hours following a protest on Friday evening in the
northern town of Uelzen where 40 trucks, five tractors and five
buses had massed to mark a visit by Transport Minister
Reinhard Klimmt.

Protesters in Hildesheim had fastened placards to their trucks
with slogans such as: "Nowhere are drivers so squeezed as in
Germany" and "Oil prices are ruining us."

Klimmt, who on Friday said the government would not reduce
controversial "ecology taxes" on fuel and noted petrol was still
considerably cheaper in Germany than elsewhere in Europe,
later addressed some 100 demonstrators in Uelzen.

Opposition parties and motorists organizations have been
turning up the pressure on the Berlin government to ease energy
taxes since mass action by French protesters this week won
concessions from Paris. -----

---- Chancellor Gerhard Schroeder's centre-left government, which
rules in coalition with the Greens, plans to increase petrol taxes
by six pfennigs (2.6 U.S. cents) per litre each year through 2002
to fund reductions in state pensions contributions.

The conservative opposition warned that Germans would copy
their French neighbors and take to the streets if the government
did not cut fuel taxes.

"The government must at least forego the next step of the
ecology tax to counteract the weakness of the euro," said Dirk
Fischer, transport spokesman for the Christian Democrats.

The Environment Ministry said it understood consumers' anger,
but said the best thing drivers could do was save petrol by
driving more slowly or switching off their engines when
stopped at traffic lights or held up in traffic jams.

>>>>>

In addition to the factors I posted this morning there is the Welfare aspect on the continent that far surpasses the exploitation foisted upon the producers in the USA economy. Another reason for investors to be concerned with the long term purchasing power of the Euro.

"Strength in numbers" may have been the premise of creating a common currency but what I see as the operational phrase is "The whole is equal to the sum of it's parts."

Mor later, P.

CoBra(too) (9/9/2000; 16:51:24MT - usagold.com msg#: 36320)
TC - on Wim D. -
"Worked" on my take, take your work into sincere consideration. Remain the skeptic - ...
Rumour from OPEC meeting - starting tomorrow - "let's throw 'em another bone" - while we'll enjoy the opera - though don't kill the pianist - give him a beer - not a barrel - take two - cb2

CoBra(too) (9/9/2000; 16:39:30MT - usagold.com msg#: 36319)
Wim Duisenberg's Speech in Calgary - and commentary by Usagold, PA and CM -
- The home of the "blue eyed Sheik's" is interesting in itself (smile), though skeptic that I am, I feel after all valid and well put arguments aare to little avail. It still show's the extent of Wim D's. frustration, as he talks about the ECB's mandate of independence (amongst other wishful claims), as political motives of euro zone members gain momentum in view of the rapidly dwindling "public" acceptance (of the euro), due to the "neutral" stance to a market drive(-l)n process - not steered by CB's or political bodies(?).

- A vehicle currency for trade and commodity pricing ... IMHO- the most important message, though degenerated by the
following sentence that the euro's size will foster risk hedges in the private use of investors (after more than 25% decline since inception it may foster, or rather some contrarians using this currency as carry trade currency, like gold or formerly the yen) through diversification - ha - here's a thought - though let's sell it down some more - hey, it's only paper with a token gold money - 15% - of what?
In any case it's price stability before the long term stability of the currency Wim D. claims as his goals - as stated in his last two paragraphs - "exchange rate and conclusions."
My conclusion is - and probably we should wait for the outcome of Denmarks euro-referendum - that the EU political
aspects of today hurt the euro much more than its intrinsic, economic and buying power valuation - and that means only vis a vis the US$.
Personally I feel Europe tried to put together more than a loosely knitted economic club since soon after WWII, though the differences in all other aspects - simply said a common constitution in the sense of the french revolution, liberte', egalite' and fraternite' are what the founders of the US may have had in mind (without some of the applied atrocities) - alas as badly missed today, here and in the US of A.
As we europeans never even achieved supra-nationality, as nationalism seeps back into the system - the ECB needs political help, not meddling. So does the euro, otherwise forget the EU as a political entity, with a common currency based on DM's and/or Pesos -take your pick - I'd go for money - go gold - cb2

PS: Chrusos- Thanks for the trillion $ bet (or gamble) by LTCM - time some-one reminded us of the mathematical efficiency of Nobel Price winning scholars of leveraged gaming, where it's impossible to lose in "normal" markets.

PPS: Rigged? Manipulated? Never, anybody can do it. Providing you control the right kind of printing press!

TownCrier (9/9/2000; 16:38:09MT - usagold.com msg#: 36318)
This is the big stick being carried by the soft-spoken euro
From The Tower's vantage point, these comments by ECB president Willem F. Duisenberg are wherein lie the strength to set the euro currency apart from all others before it.

"The primary objective of the ECB is to maintain price stability in the euro area.

"Second, the international use of the euro is, first and foremost, the outcome of a market-driven process, not to be steered by central banks or by political bodies. The ECB has adopted a neutral stance on the internationalisation of the euro. The ECB intends neither to foster nor to hinder the use of the euro. In the past, major countries have, at times, tended to promote the international use of their currency, primarily with a view to potential benefits for their national financial sectors. There have also been cases in which major countries have resisted the internationalisation of their currency, owing to the uncertainties that this process may imply for the conduct of monetary policy. However, by maintaining price stability, the ECB almost automatically fosters the attractiveness of the euro as an international currency.

"...Although the euro is also used by the public sector as a nominal peg and reserve currency, the behaviour of the private sector dominates the internationalisation of the euro [and ALL currencies--T.C.]. The amount of financial assets managed by the private sector is many times larger than official reserve holdings. In addition, private agents usually adjust their asset management strategies more rapidly than most public sector institutions." [Given the vastness of dollar holdings, the dollar must take note of this regarding possibility of negative movements of its own--T.C.]

[Here's a nod to one of FOA's core messages--T.C.] "...a broad, deep and liquid euro area capital market may lead to a greater use of the euro through lower transaction costs. This may, in turn, facilitate the development of the euro as a vehicle currency for trade and commodity pricing."

Journeyman (9/9/2000; 15:08:05MT - usagold.com msg#: 36317)
Free-Trade V, Part 1: A Fist Full Of Dollars @ALL
http://www.usagold.com/gildedopinion/bigfloat.html

PREVIOUS INSTALLMENTS: Journeyman (09/05/00; msg#: 36076)
---------------------- Journeyman (09/06/00; msg#: 36133)
---------------------- Journeyman (09/07/00; msg#: 36204)
---------------------- Journeyman (09/08/00; msg#: 36268)

So far we've discovered in previous installments that almost no-
one likes free-trade except our schizophrenic "consumer-half".
We've also learned that the logic of "comparative advantage"
suggests we'd almost have to be crazy _NOT_ to trade - - - and
that interfering with trade is generally _not_ "in the common
interest."

Further we've learned that free markets don't exist because they
are supressed largely by a traditional alliance between "vested
interests of entrepreneurs, capitalists, land-owners, and
workers" in cahoots with governments, and that since these
supressions are administered by governments, they end up doing
very little protecting but a lot of taxing.

Additonally we found out that jobs aren't really lost, but
instead, as a result of increasing efficiencies (including better
"capital equipment"), people are just freed-up from older types
of employment and find new jobs. These gains in efficiency
result in more "stuff" produced per man hour, which is commonly
called "productivity." Increasing productivity is important, as
Alan Greenspan suggests, because "ultimately the standard of
living of human beings is determined by the output per worker."

We also saw that there are at least three logical problems with
free trade, which we labeled for convenience, "sociological"
problems, "dependency" problems, and "(fiat) currency" problems.

I'm sure by now you've probably begun taking sleeping pills just
so you can dull your insatiable curiosity, as to what's going to
happen in the next installment of this saga. Well, here's just
what you've been waiting for!!

_Free-trade and the money problem_

The essence of the free-trade money problem is that history
proves the trade value of any "fiat" (i.e. paper/megabyte)
dollar, yen, pound, etc. note, no matter what numbers and symbols
are printed on it, can and usually does go to effectively zero at
some unpredictable point, usually quite rapidly. This is what
FOA/TrailGuide means when he talks about the dollar being near
the end of it's "timeline." Additionally history proves that the
value of these fiat certificates always, _always_, *always*,
_*always,*_ *ALWAYS* *_ALWAYS*_ depreciates, that is loses buying
power year after year after year. _*EVERY*_ year. These days,
the result of this depreciation -- over-all higher prices -- is
called "inflation."

There is a common cause for both these defects in paper/megabyte
money: governments, usually these days in cahoots with so-called
"central banks," endlessly increase the fiat supply. The Law of
Supply and Demand says this increased supply will cause the
fiat's value to drop --- and it does. _*EVERY*_ year. Yearly
inflation is the incontrovertible evidence of this excessive
money creation.

When "they" increase the money supply _too much_, eventually the
value drops as everyone tries to unload the currency at once and
you get sudden hyper-inflation, what Austrian economists call the
"katastrophenhausse" or "crack-up boom." Theoretically
governments and/or central banks could control themselves and
stop issuing excess currency. But they never have.

It's the fact that these paper/megabyte notes can go to
essentially zero value that distinguishes modern "fiat" money
from "hard" money, that is, from gold and silver. Because of
gold's history and since its value is directly proportional to
its mass (weight), people inherently believe gold won't lose much
of its value -- after all, even if gold's "price" drops a little,
its _weight_ doesn't change does it?

On the other hand, modern paper-backed currency notes count
instead on symbols and government "fiats" or "proclamations"
("THIS NOTE IS LEGAL TENDER FOR ALL DEBTS PUBLIC AND PRIVATE" --
whether you like it or not, sucker) to convince people of the
paper certificates' worth and to accept them in trade. It is the
"fiat" or "proclamation" part of the package that causes those in
the know to refer to all modern currencies as "fiat currencies,"
"fiat" for short.

"Well, I think you have to define what you mean by a
free market. If you have a fiat currency, which is what
everyone has in the world --- ..." -Alan Greenspan

"That's not a free market." -Congressman Ron Paul

"That is not a free market." -Federal Reserve Chairman
Alan Greenspan, Semi-annual Humphrey-Hawkins Testimony to US
House, July 22, 1998

A five dollar gold piece weighs only about a forth as much as a
$20 dollar gold piece. A five-dollar bill on the other hand
weighs exactly the same as a twenty-dollar bill, or for that
matter, a one-dollar bill or a one-hundred dollar bill. Only the
different symbols and numbers printed on paper money convince
people they have different values -- or any value at all.

Once people lose faith in those symbols and numbers, fiat has no
weight to back it up and, government proclamation or not, people
become increasingly reluctant to accept it. An ounce of gold is
an ounce of gold, with or without symbols, with or without a
government fiat. It's a psychological thing -- but a very
powerful and important one indeed.

With gold, "the buck stops here." People have always accepted
gold as payment in full and always accepted it in trade. In
practice gold has _never_ acted like an IOU that might not be
good anymore. Fiat eventually always has. And additionally, if
history is any guide at all, because of "inflation" you can be
absolutely certain those fiat certificates -- unlike the gold --
you've been stashing under the mattress will buy less at year's
end than they do today. Fiat virtually NEVER goes up in terms of
what it can buy -- except in rare cases when productivity in
isolated products temporarily out-runs money-supply inflation.

You can see why accepting fiat IOUs for your savings in lieu of
gold, like accepting a promise to deliver food later instead of
taking delivery and storing it yourself, can be risky. The real
essence of the situation is that as long as all the links in the
supply chain from producer to your dinner table are sound,
everything's OK. But what if the IOUs go bad?

There is indeed a potential problem with free trade directly
related to the above considerations - - - especially if you're
using what amounts to fiat IOUs which are very widely accepted in
trade outside the country of orgin. Like the dollar is.
Remember, these megabyte IOUs have no floor value. Unlike gold,
they can drop to zero value in a crack-up boom. And once
attuned, _everyone_ can see that zero-value potential, especially
once a crack-up boom actually starts.

If "foreigners" were holding hard money -- gold or silver
remember -- they wouldn't be likely to believe it's value could
go to zero and so suddenly try to unload it, thus causing the
fabled "crack-up boom." But if they're holding paper/megabyte
fiat money and realizing its value is based only on the symbols
printed on it and thus _could_ drop to zero, they easily might
decide to unload it.

Thus free trade -- using gold -- poses no threat to your domestic
money system. A so-called "trade imbalance" or "current account
deficit" won't lead to the sudden loss of value in your gold
denominated savings and buying power. And a "current account
deficit" is much more easily understood as "gold shipped
overseas."

On the other hand, if you've been sending those megabyte-paper-
fiat symbolic IOUs overseas in return for imported goods (instead
of sending gold), the "foreigners" holding these IOUs could very
logically decide to suddenly repatriate them. This would cause a
sudden drastic depreciation in the trade value of the actual
paper currency (or accounts of any kind denominated in that
currency) that you hold. The value of these accounts _could_ go
to virtually zero remember, creating major havoc in your life and
your country -- and in the case of the "dollar," in the whole
world. THUS A MAIN PROBLEM ASSOCIATED WITH "FREE TRADE" ISN'T
REALLY A PROBLEM WITH FREE TRADE AT ALL: IT'S A PROBLEM WITH FIAT
CURRENCY INSTEAD.

Large numbers of people recognizing that there is an over-supply
of fiat money and recognizing that the currency is over-valued
and a crack-up boom _could_ start is often enough to start one.
This is the condition, like a supersaturated solution, when a
single event, a single crystal, dropped into the mix can start
the sudden percipitation of the fiat to the bottom of the beaker.
This is the current situation with the "dollar."

If you want to understand the implications of this huge overseas
build-up of paper/megabyte dollars (and it is huge) as a result
of record "trade imbalances" check out "BIG-FLOAT: The American
Damocles," by L. Reichard White, available at:

http://www.usagold.com/gildedopinion/bigfloat.html

Or alternatively click on the (same) link in the header to this
message.

There's another fiat money related trade problem we already know
about: If you've gotten addicted to trading with either your
shoemaker, or your friendly mechanized mid-west mega-farm, and
haven't been making shoes or growing food yourself - - - and
anything disrupts trade, especially all of a sudden, you've got
the dependency problem. And if your neighbors depend on trade
for their income, you've all got "sociological" problems!

Usually this doesn't happen, but there is one thing that can very
severely disrupt both shoe trading and wheat trading, not to
mention every other kind of trading all at once and all-of-a-
sudden. Yep, katastrophenhausse! This is particularly true if
the trade is cross-border trade with folks using different
national brands of money. If everyone were using gold-backed
currency, of course, crack-up booms simply wouldn't ever happen.
And any remaining trade disruptions that DID happen would not be
related directly to the value of the money. Nor would they be
"systemic."

COMING NEXT: Free-Trade V, Part 2: A Few Dollars More - _Micro-
economic trade effects of California's secession_

Regards,
Journeyman

Cavan Man (9/9/2000; 13:44:55MT - usagold.com msg#: 36316)
USAGOLD
I'm surprised there is not more action at the forum today. Must be the tee times were too good to pass up. This speech by Duisenberg is another step for the Euro. Taken in combination with the oil settlement rumors--whew!

POG will rise $10 on Monday.

Was listening to a recent effort of the Nashville Chamber Orchestra yesterday; a rendition of "Ashokan Farewell" (theme from Burn's "Civil War"). This tune, for me, evokes many strong emotions of patriotism and for deep love of this country however much we've erred (IMHO). God Bless the USA.

USAGOLD (9/9/2000; 12:34:59MT - usagold.com msg#: 36315)
Peter, Re: We will see if anything substantial comes of it.
Act and Europe moves on. Fail to act and Europe could quickly become the largest market for gold in the world.

Cavan Man (9/9/2000; 12:19:26MT - usagold.com msg#: 36314)
Peter Asher
A tip of the cap to you Sir Peter of Asher.......

JMB (9/9/2000; 12:10:20MT - usagold.com msg#: 36313)
Chrusos' msg #36305
The 'Riskless Portfolio' And The Collapse of Long Term Capital Management
Sir, I have but one word for you...WOW
Make that two words...THANKS

Peter Asher (9/9/2000; 12:02:42MT - usagold.com msg#: 36312)
Cavenman & Michael
>>> We will see if anything substantial comes
of it.<<<

Yes, Michael, these are words, not deeds.

Cavenman: Re the USA Economic juggernaut, I go with Mark Twain's famous line: Announcements of my death have been grossly exaggerated."

Be back after dark or if the rain arrives. P.

USAGOLD (9/9/2000; 11:49:16MT - usagold.com msg#: 36311)
Cavan Man. . .
You are absolutely right. There is much written between the lines. Europe is reeling under the oil shock and it appears that Duisenberg is saying that the euro is now ready beyond premliminary theoretical considerations for taking its place in international commerce -- if the political sector and private interests are up to the task. He is basically saying that the ECB is ready to play its role as long term defender of the currency. The inflation rate in Europe has been exacerbated by their having to purchase the dollar and then oil. A deadly secondary effect has been the undermining of their own currency just to buy oil. He also assures international holders of the currency that though the value can be undermined in the short run by speculators and the like, it won't be undermined by the ECB itself -- an important assurance. The "peg" reference is also important -- possibly a subtle invitation to the Gulf to consider including the euro in its peg. All of this ties together in a carefully crafted sales pitch for the euro. Very interesting and in my view very important. We will see if anything substantial comes of it.

Just as an exercise though, let's consider some of the things that might happen if the Gulf actually did take the euro in payment and the dollar became the currency under attack.

*******U.S. equity markets would likely plummet as stocks have become little more than another currency play. When the currency goes, they go.

*******U.S. oil prices (in dollars) would likely skyrocket, and along with it the inflation rate, as confidence in the dollar worldwide dwindles

*******A mass of dollars would be looking worldwide for a place to land that would further exacerbate the inflation problem domestically

*******Gold would likely skyrocket as uncertainty would become the byword for all the world's investors as we go through a period of financial dislocation

And that's just for starters. I'm sure others here could add to this list that comes quickly off the top of the head. . .

I guess the real question is whether or not the Gulf will actually take the euro in payment. The conditions seem right and perhaps even essential to that end. And the Duisenberg speech seems to be signalling something. It would be hard to imagine European political and financial leaders just standing around waiting for the U.S. or the Gulf to do something about their energy problem, but I've been surprised by their lack of action in the past. It appears that Mr. Duisenberg has just "goosed" them -- we'll see if anything substantial comes of it.

Gold would seem a prudent move for investors on both sides of the Atlantic given the situation. Uncertainty will be the watchword going into Fall and through the rest of the year.

Cavan Man (9/9/2000; 11:18:01MT - usagold.com msg#: 36310)
Peter Asher
Peter, what does the current "economy" of the US as it is discussed by contrarians at this site portend do you think?

My take on the speech: "The Euro is a horse of a different color. We aim for this horse to run a long, long race. Right now, we see trouble ahead. We're gonna be stable and sustainable at all costs and we're here if and when needed in the event of instability. Also, we're looking out for #1 over here and for those who join us."

Peter Asher (9/9/2000; 10:37:03MT - usagold.com msg#: 36309)
Duisenberg's speech
I think it's just fine to post significant major pieces on the main site, it is much easier when one need only scroll up and down to follow the ongoing discussion.

The most pertinent sentence in this speech is:

>>>>Only if investors outside the euro area are confident that their purchasing power will be preserved over time, will they engage in euro-denominated financial activities.<<<

This is, of course the crux of all fiat currencies and why it was thought, before the launch date, that "Gold Backing" would create a powerful product. True Gold backing preserves purchasing power.

Back in December �99, I pointed out that mixing an internationally strong Mark and Swiss Franc with the unsought after Lire and Peso would empirically result in a currency that was less desirable then when the Mark and Franc stood alone. Now there is the future event of ---

>>> In Europe, EMU represents a powerful magnet for many central and eastern European countries. For these countries, accession to the EU will mark the completion of the transition from the former centrally planned economies to fully-fledged market economies. The prospect of EU membership is an incentive for transition efforts of accession countries and the ultimate adoption of the euro is already taken into account in countries and the ultimate adoption of the euro is already taken into account in their monetary and exchange rate policy strategies.<<<

Behind the curtain of currency trading, what ultimately pulls the strings is the productive capability of the labor and resources of the nation (s) represented by that currency. The purchasing power of the individual nations to acquire the product of the EU at large will be weighed against their ability to deliver in kind and the currency ultimately adjusted to compensate. Politics, specifically regarding labor: the education, skills and work ethic of that labor force and the ownership or foreign dependency of natural resources, all effect the "Purchasing power being preserved over time".

I believe that the prospect of "Giving a piece of the action" to these "many central and eastern European countries" by their "accession to the EU" will hold back the Euro as the expanding European union goes through it's growing pains. Some of these former Iron Curtain countries are the "Rust Belt" of greater Europe. Romania, I believe, is the most industrial polluted nation in the world.

Eventually, when it all comes together, it will be an economic giant; but for now, the economy of the USA is the more �Predictable' entity.

Cavan Man (9/9/2000; 10:15:38MT - usagold.com msg#: 36308)
USAGOLD
Duisenberg's speech
A lot was said that wasn't said. Sounds a lot like FOA.

USAGOLD (9/9/2000; 9:32:03MT - usagold.com msg#: 36307)
The rest of Duisenberg's speech
Note: You've no doubt picked up on the fact that I consider this speech important. I didn't realize it would be this long on the Forum. Now that I've gone this far, I might as well give you the rest. Next time we'll just make one of these a Gilded Opinion piece. My apologies.

should not be surprised by the number of countries that regard EMU as a
relevant example of regional co-operation. In Europe, EMU represents a
powerful magnet for many central and eastern European countries. For these
countries, accession to the EU will mark the completion of the transition from the
former centrally planned economies to fully-fledged market economies. The
prospect of EU membership is an incentive for transition efforts of accession
countries and the ultimate adoption of the euro is already taken into account in
their monetary and exchange rate policy strategies. However, the countries
concerned will not adopt the euro by the date of their entry into the EU and the
timing for this step might be quite different from country to country. The path
towards full euro area participation implies progress towards nominal and real
convergence. Ultimately, these countries are required to observe the same
convergence criteria with regard to public finance, long-term interest rates,
exchange rate stability and inflation as the current euro area countries. In the legal
area, accession countries will be required to provide their central banks with the
same degree of independence as today in the euro area. In the technical area,
preparations will require long lead times, and the ECB has already established a
dialogue with them, to assist when requested.

Outside the euro area, an ongoing debate on deepening regional integration
beyond trade liberalisation is taking place among Mercosur countries. The
relative economic conditions of these countries appeared even more differentiated
than those of European countries when the integration process started more than
fifty years ago. However, this seems to reinforce their conviction that regional
co-operation is necessary to achieve stable and non-inflationary growth and to
overcome latent economic conflicts with their trading partners. As in the case of
the regional process of integration in Europe, it may well be that the final
objective of the Mercosur regional agreement goes beyond that of trade
co-operation.

The international community should support regional co-operation efforts among
countries that have strong trade relationships and are willing to achieve progress
in economic convergence. These efforts have significant positive externalities
and could contribute to greater effectiveness of multilateral and bilateral
surveillance.

The exchange rate of the euro

To complete the picture of the international role of the euro, let me finally refer to
the exchange rate of the euro vis-�-vis other major currencies, namely the US
dollar and the Japanese yen. I should like to take the opportunity to reaffirm that
the ECB does not pursue any exchange rate target in its stability-oriented
monetary policy strategy. Our objective is to maintain stable prices in the euro
area and not a specific level of the euro's exchange rate. According to our
strategy, the exchange rate of the euro is the outcome of current and expected
economic policies pursued in the euro area, and economic developments in both
the euro area and abroad.

Conclusions

To summarise, the new institutional monetary setting in Europe has
consequential implications for international capital markets and international
policy co-operation. The pace at which the role of the euro as an international
currency will develop is hard to predict. But what can be said is that the global
acceptance of the euro in the international financial markets depends first and
foremost on market confidence in the stability of the euro. In this context, the
ECB's monetary policy committed to the pursuit of price stability provides an
important contribution. In the same vein, by participating in international policy
co-operation, the ECB contributes to reducing the risks of negative externalities
and to fostering the adoption of best policy practices at the international level.
This is an important contribution of Europe to a more stable international
financial system.

* * *

European Central Bank
Press Division
Kaiserstrasse 29, D-60311 Frankfurt am Main
Tel.: +49 69 1344 7455, Fax: +49 69 1344 7404
Internet: http://www.ecb.int
Reproduction is permitted provided that the source is acknowledged

USAGOLD (9/9/2000; 9:24:18MT - usagold.com msg#: 36306)
At the end of the first week of an important month for the world economy, the ECB's Wim Duisenberg delivers an important policy statement in Calgary 9/8/00
FOR THE RECORD. . .
The international role of the euro

Speech by Dr. Willem F. Duisenberg,
President of the European Central Bank,
on the occasion of the 2000 Spruce Meadows Round Table,
Calgary, 8 September 2000

Let me first thank the organisers of this conference for having invited me to share
some thoughts with you on the international role of the euro. The euro was
successfully launched 20 months ago as the single currency of 11 Member States
of the European Union (EU) - known as the 'euro area'. On 1�January 1999
these Member States transferred their monetary sovereignty to a new
supranational institution, the European Central Bank (ECB). Since then, the
Eurosystem - composed of the ECB and the national central banks (NCBs) of the
11 countries that have adopted the euro - has been in charge of the euro area
single monetary policy and related functions, such as foreign reserve
management and operations and payment systems oversight.

The euro has brought about fundamental changes to the economic and financial
environment in the euro area and beyond. By lowering transaction costs and
enhancing price transparency, the single currency represents a major contribution
to fostering competition and efficiency in goods and financial markets across the
euro area. As such, the introduction of the euro represents a quantum leap
towards completing a fully integrated Single Market in the EU and lays a solid
basis for the improvement in the living standards of European citizens. Besides
these welfare-enhancing effects on the "domestic" economy of the euro area, the
new setting also has far-reaching consequences for the world economy and the
international community.

Let me shed some light on the international ramifications of Monetary Union by
highlighting three interrelated aspects. First, the use of the euro as an
international currency in the global financial system; second, the growing role
played by the Eurosystem in international policy co-operation; and, third,
relevant aspects of the exchange rate of the euro. Before dealing with these
points in turn, I should like to recall some key economic features of the euro
area.

Key economic features of the euro area

Let me begin by putting the euro area into an international perspective. The euro
area represents a large and relatively closed economy. Given its population of
almost 300 million people and its significant weight in the global economy, the
euro area is broadly comparable with the United States. As regards its size and
structure, the most striking fact is that the euro area economy has a share of
world output of around 16%. This is more than three times that of its largest
national component (namely Germany, which accounts for 4.7%), significantly
higher than that of Japan (which accounts for about 8%), while being lower than
that of the United States (which stands at 21%).

Being a large economy, the degree of trade openness of the euro area is much
smaller than that of its constituent countries, even though it is still higher than in
the United States and Japan. Measured by the average of exports and imports as
a share of euro area output, the degree of openness is 16% in the euro area. By
contrast, prior to Monetary Union, the average export ratio of all Member States
including intra-euro area trade stood at around 35% in 1997, ranging from 20 to
60%. At the same time, the euro area remains more open than the United States
and Japan, with ratios of 12% and 11% respectively. Another factor highlighting
the role of the euro area in world trade is its share in world exports. With almost
20%, the euro area is the world's largest exporter, compared with 15% and 9%
in the United States and Japan respectively.

As regards the structure of the euro area economy, the patterns of production are
broadly similar to those of the United States and Japan. While primary
production is rather negligible (around 2% of total output), the bulk lies with the
euro area's services sector, accounting for almost 70% of total production,
which is roughly equal to that of the United States (72%) and higher than that of
Japan (60%). The industrial sector accounts for around 30%, which is higher
than in the United States but somewhat lower than in Japan.

Finally, if you look at the structure of financial markets on both sides of the
Atlantic, you may note the difference between the "bank-based" system of
finance on the European continent and the "market-based" system in the United
States. Although there seems to be a trend away from banks towards non-bank
financing in the euro area, reinforced by the introduction of the euro, banks still
play a dominant role in providing financial services in the euro area. Domestic
credit as a share of domestic output accounts for 130% in the euro area,
compared with 80% in the United States. Correspondingly, stock and debt
markets are much smaller in the euro area than in the United States. While the
shares of euro area debt securities and stock market capitalisation relative to GDP
remain clearly below 100% (91% and 63% respectively), the figures for the
United States are in both cases well above 150% (155% and 172% respectively).
This brings me to the use of the euro as an international currency in the global
financial system.

The role of the euro as an international currency

Given the weight of the euro area in the world economy and the legacy of the
former national currencies, which have been replaced by the euro, it is no
surprise that the euro is the second most widely used currency behind the US
dollar. A number of observers have argued that one of the main motivations
behind Economic and Monetary Union (EMU) was the development of the euro
as a major international currency. This perception, however, is incorrect for a
number of reasons.

First, the "euro project" is to be seen as a further logical step in the European
integration process, which started more than half a century ago, immediately
after the Second World War. Its objectives were not - and are still not - purely
economic, as European integration aims not only at the creation of a prosperous
but also a stable and peaceful Europe. For a large part, trade, economic and
financial integration aimed at the removal of all barriers to free competition has
been the engine of this process. In this context, the euro is to be seen as a major
contribution to the completion of the Single Market in Europe. The primary
objective of the ECB is to maintain price stability in the euro area.

Second, the international use of the euro is, first and foremost, the outcome of a
market-driven process, not to be steered by central banks or by political bodies.
The ECB has adopted a neutral stance on the internationalisation of the euro. The
ECB intends neither to foster nor to hinder the use of the euro. In the past, major
countries have, at times, tended to promote the international use of their
currency, primarily with a view to potential benefits for their national financial
sectors. There have also been cases in which major countries have resisted the
internationalisation of their currency, owing to the uncertainties that this process
may imply for the conduct of monetary policy. However, by maintaining price
stability, the ECB almost automatically fosters the attractiveness of the euro as an
international currency.

Third, the international use of a currency is a complex phenomenon that does not
lend itself to ad hoc promotion measures. A currency can be used not only for
different functions, but also by different groups of economic agents. In this
context, the use of the euro by private agents as an investment and financing
currency, as well as a payment and vehicle currency, plays a prominent role.
Although the euro is also used by the public sector as a nominal peg and reserve
currency, the behaviour of the private sector dominates the internationalisation of
the euro. The amount of financial assets managed by the private sector is many
times larger than official reserve holdings. In addition, private agents usually
adjust their asset management strategies more rapidly than most public sector
institutions. But what are the factors behind the internationalisation of a
currency?

In principle, two basic factors might eventually determine the international role of
the euro - size and risk. With regard to the size factor, a broad, deep and liquid
euro area capital market may lead to a greater use of the euro through lower
transaction costs. This may, in turn, facilitate the development of the euro as a
vehicle currency for trade and commodity pricing. Already at this early stage, the
introduction of the euro has brought about fundamental structural changes in
euro area capital markets. Progress in the harmonisation of certain market
standards, practices and conventions across the euro area is reflected in a capital
market that is characterised by increased market liquidity, broader maturity
spectrum and wider range of financial products. In addition, following the
introduction of the euro, the euro area corporate bond market has grown
significantly. The activity of private issuers has become more important than that
of sovereign issuers, traditionally dominating the euro area bond markets.
Positive network externalities and economies of scale have provided incentives
for firms to issue their own securities instead of borrowing from banks.
However, this trend away from banks towards markets - the so-called
disintermediation process - will take time. The development of a broader
spectrum of euro-denominated financial instruments will be a gradual process.

In addition to the size factor, the international use of a currency is determined by
risk factors, since investors may use the euro to hedge their risks through
diversification across international currencies. If international investors and
issuers consider the euro to be a stable currency, they will hold euro assets to
minimise risk in their internationally diversified portfolios. In this context, I
should make clear that maintaining price stability not only makes a contribution
to improving economic prospects and raising living standards in the euro area,
but it is also a major precondition for a currency to play an international role.
Only if investors outside the euro area are confident that their purchasing power
will be preserved over time, will they engage in euro-denominated financial
activities. Therefore the commitment of the ECB to pursue price stability in the
medium term remains a key factor behind market confidence in the euro as a
stable currency. Besides price stability, the current and expected growth
performance of the euro area economy is an additional factor behind the
attractiveness of the euro. Sustained non-inflationary growth in the euro area
economy would have beneficial effects on market expectations and foster the
international use of the euro.

As regards the private use of the euro, recent trends show that it has mainly been
used as a financing currency. With regard to international debt securities, the
euro is more widely used than the former national currencies of the euro area
countries. The issuance of euro-denominated assets by residents outside the euro
area accounted in 1999 for almost 30% of total issues denominated in a currency
different from that of the borrowers' respective geographical residences. By
comparison, the combined share of all former national currencies of the euro area
countries and the ECU amounted to only 18% of total gross international
issuance in 1998. The growing use of the euro was mainly mirrored in a decline
in the share of US dollar-denominated issues from 58% to 48% between 1998
and 1999. These trends are even more striking if one focuses on the bonds and
notes segment of the market. Accounting for 33% of all announced international
bonds and notes issues in 1999, compared with 37% for the US dollar, the euro
nearly matched the dollar in that year. In the second half of 1999
euro-denominated bond issues even exceeded those in the US dollar.

As far as the euro's share in overall official reserves is concerned, the euro also
represents the second most widely used currency behind the US dollar.
According to the latest available data, at the end of 1999 the euro accounted for
around 13% of the official foreign currency holdings of the world. Apart from
some technical corrections on account of the conversion of the Eurosystem's
reserves into euro, which led to a slight decline in the euro's share in overall
reserves, there is no evidence of any reallocation of foreign reserves at this stage.
It should also be noted that more than 50 countries in the world are currently
using the euro as a nominal anchor.

International co-operation

Let me now turn to the institutional side. The introduction of the euro has
brought about a major change to the institutional framework in which
international co-operation takes place. In view of the rapid process of
globalisation and episodes of crises in a number of systemically important
emerging market economies, international co-operation should play a role in
strengthening the international financial architecture. In this respect, the new
institutional setting in Europe is to be taken into account.

By reducing the number of key players, the introduction of the euro will simplify
the international policy co-operation process between the major economies. In
particular, it should make this process more efficient by facilitating the reciprocal
exchange of information and views, as well as the formulation of common
understandings on economic and financial issues at the global level. Each of the
main partners - the United States, the euro area and Japan - is in a position to
speak for a comparatively large economic area. A more balanced relationship
between the major players might help to induce each of them to take on
responsibility for contributing to a stable global environment.

In many ways, the ECB - which as a rule represents the Eurosystem externally -
is already involved in the work of international institutions and fora in the area of
competencies of the Eurosystem. Formal and informal agreements have already
been reached with the International Monetary Fund (IMF), the Organisation for
Economic Co-operation and Development (OECD), the Bank for International
Settlements (BIS), the Financial Stability Forum (FSF), and the several
groupings of ministers and central bank governors (G7, G10 and G20).

The involvement of the ECB was relatively straightforward for groupings created
after the introduction of the euro, such as the FSF or G20. In the case of
pre-existing international fora and organisations, however, the arrangements to
be made were more complicated. The introduction of the euro heightened the
need for international financial institutions - such as the IMF and the OECD,
whose internal procedures are organised on the basis of the "one country, one
currency" principle - to accommodate in their bilateral and multilateral
surveillance exercises the existence of regional entities. In December 1998, for
example, the IMF granted observer status to the ECB. Since February 1999 the
ECB observer at the IMF has been involved in all relevant work of the Fund on
issues falling within the competence of the ECB and of mutual interest to both
institutions.

The fact that the ECB's overriding objective is the maintenance of price stability
has three main implications for its participation in international policy
co-operation.

First, a reciprocal exchange of information and views is a substantial component
of the Eurosystem's co-operation with the international organisations and fora.
Regular consultation on external economic developments enhances the ability of
the ECB to analyse the outlook for price developments in the euro area, which in
turn provides useful input into the effective implementation of its monetary
policy. By taking into account possible spillover effects from third countries'
policy actions, consultation contributes to reducing the likelihood of
misinterpreting the impact of foreign developments on domestic variables. Given
its voluntary nature, consultation does not compel the ECB to adopt a monetary
policy inconsistent with its objective of price stability.

Second, a reciprocal exchange of information and views is supplemented by
international surveillance. In this case, a third and independent party, such as the
IMF or OECD, regularly monitors and assesses the economic policies of its
members. The ECB participates in the surveillance process for policies falling
within its competence (e.g. monetary policy, payment systems oversight). This
means that, whenever monetary policy is under surveillance, the ECB is solely
responsible for its interaction with the IMF and OECD. Standards and codes
recently adopted by the IMF and other relevant international institutions are a
way of defining best policy practices and enhancing transparency in the field of
monetary and financial policy. In this respect, the ECB's involvement in regular
surveillance further strengthens its accountability through being transparent.

Third, in the area of macroeconomic policies, consultation and surveillance are
the only forms of international co-operation that are relevant to the Eurosystem.
Any form of ex ante policy co-ordination of monetary with other macroeconomic
policies would neither be advisable for the Eurosystem nor be compatible with
the ECB's mandate and independence. Apart from the well-known recognition
and decision lags in policy-making, attempts to co-ordinate ex ante would not
only blur the specific responsibilities of individual policy-makers, but also
reduce their accountability. In determining its monetary policy stance, the ECB
should and does take into account all relevant information. It cannot let its policy
solely be determined by the current and future course of other policies. This
could easily compromise the maintenance of price stability.

The ECB's active participation in the ongoing process aimed at strengthening the
international financial architecture is to be seen against this background. The
Eurosystem supports such a process for two reasons: first, since the achievement
of its primary objective of safeguarding price stability in the euro area would be
facilitated by a sounder and more resilient international financial system; and,
second, because the Eurosystem is expected to contribute to the smooth conduct
of policies relating to the stability of the financial system.

Putting one's own house in order must be at the basis of the stability of the
"global village". In this context, I should like, if you would allow me, to draw
attention to the fact that the introduction of the euro also contributes to
international financial and economic stability in a more subtle way. The process
towards EMU is not only concerned with irrevocably merging 11 national
currencies. It also means building up a sound institutional framework based on
monetary stability and fiscal sustainability. The EMU process provides evidence
of how effective properly organised policy and institutional co-operation can be
in fostering economic stability in each individual country. In addition, EMU
shows that regional policy co-operation may go well beyond trade matters.

One should not be surprised by the number of countries that regard EMU as a
relevant example of regional co-operation. In Europe, EMU represents a
powerful magnet for many central and eastern European countries. For these
countries, accession to the EU will mark the completion of the transition from the
former centrally planned economies to fully-fledged market economies. The
prospect of EU membership is an incentive for transition efforts of accession
countries and the ultimate adoption of the euro is already taken into account in
their monetary and exchange rate policy strategies. However, the countries
concerned will not adopt the euro by the date of their entry into the EU and the
timing for this step might be quite different from country to country. The path
towards full euro area participation implies progress towards nominal and real
convergence. Ultimately, these countries are required to observe the same
convergence criteria with regard to public finance, long-term interest rates,
exchange rate stability and inflation as the current euro area countries. In the legal
area, accession countries will be required to provide their central banks with the
same degree of independence as today in the euro area. In the technical area�

Chrusos (9/9/2000; 9:12:40MT - usagold.com msg#: 36305)
The 'Riskless Portfolio' And The Collapse Of Long Term Capital Management
http://www.iii.co.za/editorial/?type=editorial&editorial_type=homesa&id=19807§ion_id=2761
The BBC produced a program about Myron Scholes and LTCM it was screened in SA the other evening - fascinating reading about the formula that eliminated risk (!) out of the markets and its breakthrough linking with continous capturing of position from a rocket trajectory formula.

A full script is at this site. Here is an excerpt:-

"MYRON SCHOLES: August 1998 after the Russian default, you know all the relations that tended to exist in a recent past seemed to disappear.

MERTON MILLER: Models that they were using not just Bachelier's models but all kinds of models, were based on normal behaviour in the markets and when the behaviour got wild no models were able to put up with it.

ROGER LOWENSTEIN: Although their models told them that they shouldn't expect to lose more than 50 million or so on any given day they began to lose 100 million and more day after day after day till finally there was one day 4 days after Russia defaulted when they dropped half a billion dollars, 500 million in a single day.

NARRATOR: In Greenwich LTCM faced bankruptcy, but if the company went down it would also take with it the total value of the positions it held across the globe. These were now staggering. For LTCM's models had led them to bet a total of a trillion dollars. The equivalent of a year's turnover of the American government was about to be wiped out. The world's top financial regulators met in crisis.

ROGER LOWENSTEIN: Suddenly they seemed to be staring at this nightmare where one firm linked up to every major firm on Wall Street was going to be seized up and markets might just stop working. That was the great fear.

NARRATOR: In order to prevent a global, economic collapse the American Central Bank, the Federal Reserve, had no choice but to organise a bail-out of LTCM. The terms were..."

At the iii site you will also see an old GE friend Daan Joubert under the section the chartist.

Best wishes to all the friends at USAGOLD

WAC (Wide Awake Club) (9/9/2000; 9:09:32MT - usagold.com msg#: 36304)
Opec crisis meeting looms
http://news.bbc.co.uk/hi/english/business/newsid_916000/916823.stm
The eleven members of the Opec oil cartel begin meeting in Vienna on Sunday to try and tackle the oil price issue.
Protests and concern have mounted around the world as the oil price has more than tripled in the last 20 months to well over $30 a barrel - pushing up the price of petrol and heating oil and threatening the global economic recovery.

Opec members, under pressure from the US and others, are expected to announce an increase in production of around 700,000 to 800,000 barrels per day, or 3% of their output of 25.4m barrels.

"There's no comfort factor anywhere," said John Toalster, an independent energy consultant in London.

"It's a severe situation, no doubt about it."

Oil prices eased slightly on Friday as traders took profits ahead of the Opec meeting.

The price of a barrel of benchmark Brent crude fell to just under $33, after touching a high of $34.55 on Thursday.

Saudis the key

The action by Saudi Arabia, Opec's largest producer, is the key to the situation.

US President Clinton met with Saudi Arabian leaders earlier in the week and urged them to boost production to prevent a world recession.

Opec says it wants oil prices of around $25 a barrel, with a target band of between $22 and $28.

"Opec is going to do its part to lower the crude price to within the target band," Saudi oil minister Ali al-Naimi, said as he arrived for the meeting.

Opec secretary general Rilwanu Lukman has already suggested that the group's members will agree in Vienna to increase their production of crude.

"If we're satisfied the market needs more crude oil, we will put more in if we are in a position to," he told the BBC.

Protests mounting

Meanwhile, worldwide protests over high petrol prices were gathering force.

In France and Spain, truckers and farmers have been blockading roads and oil refineries for the past week, demanding that the government cut fuel taxes.

In the UK, Welsh farmers tried to block access to an oil refinery on Merseyside, and the protests are spreading rapidly as the price of petrol looks set to top �4 ($6) a gallon.

In the United States, fears and complaints have been growing about gas prices in the Midwest and the availability of heating oil on the East Coast.

And UN Secretary General Kofi Annan said he hoped Opec "would be especially sensitive to the impact of their decisions on the world economy and particularly on the poorest countries," which could face inflationary pressures and balance of payments difficulties as the price of oil rises.

The blame game

Meanwhile, producers and oil users have also been trying to shift the blame for higher oil prices on each other.

Opec claimed that it is tax increases on petrol that are mainly responsible for motorists' complaints, and that Western countries had to act more responsibly to control economic growth.

Meanwhile, oil analysts say that Opec underestimated the effects of its price cuts last year, and was too slow to respond to the tightening of supply.

Differences among Opec members have also contributed to the stalemate, with some poorer Opec countries eager to receive the extra revenue.

WAC (Wide Awake Club) (9/9/2000; 9:07:33MT - usagold.com msg#: 36303)
French fuel blockade starts to crumble
http://news.bbc.co.uk/hi/english/world/europe/newsid_917000/917297.stm
Moves to lift the crippling fuel blockades in France are growing after a second truck owners' federation told its members to end the protest against diesel prices.

Following a similar statement from farmers' leaders overnight, the leaders of all the main lorry and farmers organisations in France now say the blockades should be lifted.

But if is unclear if the rank and file membership will follow their call to end the six-day protest, which has left 80% of petrol stations in France without fuel.

Blockades around fuel depots and refineries have been dismantled in some areas.

In the Rhone region, petrol supplies are beginning to filter back to the service stations. But elsewhere, such as in Brittany and Toulouse, the blockades are still in place.

Ambulance drivers said early on Saturday that they would continue their blockades after their talks with government officials broke down.

Serious fuel shortages have also developed at airports, and 39 flights, some of them international, were cancelled out of Nice and Lyon on Friday.

Change of mind

Unostra, which represents small haulage firms, made its decision after earlier refusing to follow the FNTR federation which called on Friday for an end to the protest.

Unostra President Daniel Chevallier "has given the order to lift the barricades", a spokesman for Unostra told Reuters.

Earlier, leaders of the two main agriculture unions said they obtained important concessions from the government during overnight talks, including a significant cut in fuel taxes.

WAC (Wide Awake Club) (9/9/2000; 9:05:16MT - usagold.com msg#: 36302)
Palestinians discuss statehood delay
http://news.bbc.co.uk/hi/english/world/middle_east/newsid_917000/917211.stm
Palestinian leader Yasser Arafat has opened a meeting of his Central Council in Gaza to discuss whether to issue a unilateral declaration of Palestinian statehood in six days' time.
Officials have repeatedly given 13 September as the date for proclaiming a state, but correspondents say a postponement is likely.

There has been intense international pressure on Mr Arafat to delay the declaration.

Unilaterally declaring statehood would in effect spell a cancellation of the peace process and supporters and opponents alike have warned of a descent into violence.

Israel has threatened to annex territory in the West Bank and Gaza in response to any declaration of Palestinian statehood.

Israel has threatened to annex territory in the West Bank and Gaza in response to any declaration of Palestinian statehood.

A permanent settlement between Israel and the Palestinians has remained out of reach, mainly over the question of Jerusalem.

Mr Arafat, with significant Arab and Islamic world backing, is refusing to cede sovereignty over the east of the city, which was occupied by Israel in 1967.

READ THE REST AT THE ABOVE LINK

Bonedaddy (9/9/2000; 8:08:10MT - usagold.com msg#: 36301)
Journeyman: Dependency and Independence
Hello Journeyman, I have been enjoying your thought provoking posts immensely. You wrote:

" 2. _The Dependency argument,_ which amounts to, "If we buy
widgets, etc. from 'foreigners,' we'll lose the knowledge, expertise and facilities to produce our own widgets and will thus become dependent on 'foreigners' if we continue to decide we need or want widgets. Further, we could be black-mailed by these 'foreigners' if they decide to withhold widgets from us." [*1]
To one degree or another, the dependency argument applies to_anything_ we no longer "grow" in our own back yard, which includes those tomatoes I get from "The Horticultural Dudes," the ground-beef I get from my favorite neighborhood store -- and the e-forum you are reading this on.
An inherent problem with both these arguments is, "Where does 'foreign' begin? Does it begin at the borders to the neighborhood? The city limit? The state border? Or is it at the national border?" The standard answer, as long as we humans insist on grouping ourselves in such distorted and unrealistic ways, tends to be the national border. Why not the neighborhood instead? (Hint: This is a very good take-off point for further discussion!!) "
I agree, so time for take off....here we go...
I definition of the word "independence" is of course derived from "dependence". The dictionary has quite a few definitions of independence, I won't bore anyone with them, but they may be worth a glance just to help provide a frame of reference. The dependency argument you point out is faulted in another way also. "if we buy widgets, ect. from foreigners..." My dear friend, If "WE" do anything at all we are not acting independently, but are acting in concert with one another. Human beings as a general observation are frightened of standing alone in any endeavor. The man who is truly independent, with out being anti-social, walks the narrow path indeed. The majority of people are more comfortable in "being a majority". In a hundred thousand mice, will all the mice rise to the aid of that one mouse in need? Of course not. But there was one who faced every peril. He confronted the horror of the cross alone, not on behalf of ALL who would follow Him, but instead he faced it for EACH ONE who would follow. Now, who will forsake the crowd and follow him, alone? Looking forward to the cross, Abraham stood alone as he offered Issac. We are born alone and we die alone. Along the path between the two, we delude ourselves, sometimes by filling stadiums, or forming national boundaries, or belonging to religious denominations, that we are somehow not alone. We labor under this huge deception. Try as we might, we can never belong to each other, never to the crowd, because we were created to belong to HIM. As individuals. Stand alone units. Each one of us wonderfully and fearfully created, completely unique, by our adoring creator! Faith is the instrument that provides the courage to stand alone. How we despise His love when we seek to immerse ourselves in the crowd. How we seek to seperate ourselves from him. I have been charged to LOVE my neighbor, not to imitate him.
Yes, the U.S. Constitution was penned by men who believed as I do. But, years of revisionist history have succeeded in clouding the facts. Each citizen is responsible first, to provide for his own well being, then to promote the general welfare. (First remove the log from your own eye...)
Getting back to living together, if I do not know how to farm, or fight, I had best be willing to trade my labor to someone who does, and is willing do so on my behalf. The best way to store my labor is still GOLD. Other commodities will do, but GOLD is recognized by more individuals as the currency of independence.
Thank you, my friend, for prompting me to think.

714 (9/9/2000; 7:57:23MT - usagold.com msg#: 36300)
Goldhunter...
...that is my point. The Saudis are paid for their oil in dollars, not gold.

Even when they were paid in gold sovereigns in the 30's and 40's (before the trade got too big for gold alone), the oil-for-gold trade was indexed to the US$, as evidenced by what happened to the deal in 1947, when POG was twice as high in Jidda as in NY.

That the Saudis may be buying gold with their dollars would not surprise anyone, nor their leasing it also (yes, they lease gold...after all, they desire a ROR like any other investor). One is often left with the impression from reading FOA and Another that somehow a certain amount of gold trades for, or will trade for, a certain amount of oil, without the US$ in the mix. The reality is that in the oil-for-gold trade, even back in the 30's, was always pegged in one way or another to the US$, and always will be. I would not call that "straight up", but perhaps this is an issue of semantics.

You see my point? I will have more on "oil-for-gold" in the coming weeks.

****************************************************

...must go. Salaam.

Bascom Toadvine (9/9/2000; 7:20:19MT - usagold.com msg#: 36299)
Ragador
Have you considered that it is advantageous to those investors in the Eurozone that the euro is undervalued in US$ terms? If you were an investor in the eurozone with significant US$ denominated assets, and you knew the dollar was toast, wouldn't you favor the idea of a "strong" dollar while you converted all your dollar assets into euro's?

Have you considered that the "nifty fifty" are indexed and speculators are feeding on them via leveraged futures and options?

Bascom Toadvine (9/9/2000; 7:11:07MT - usagold.com msg#: 36298)
Trail Guide
If we do not include the somewhat recalcitrant US dollar in the perspective (it IS tenaceous, no?) and focus in on paper gold and physical gold alone, we can see that Gresham's Law is very much in effect. The bad vehicle (paper gold) representing degraded exchange value seems to be driving the good vehicle (physical gold) representing real value out of circulation.

Ragador (9/9/2000; 6:48:55MT - usagold.com msg#: 36297)
Dollar\Euro again
I forgot to mention the point...

In the stock market, the concentration of money into fewer and fewer prestige stocks is not an indication of confidence in those stocks, but rather of the decreasing confidence in the market, with the idea that the prestige stocks will be the last to go.

If one could make the comparaison, it would mean that the fact that the $US always comes up on top of other currencies does not indicate confidence in the $US, but rather an indication of a lack of confidence in the system, that there is a problem and the $US will be the last to go.

Ragador (9/9/2000; 6:41:03MT - usagold.com msg#: 36296)
Dollar\Euro
Here is an idea. I'm just an amateur at this and the idea might be naive, but here goes...

There is a tendency (in the North American stock markets a least) to shift toward fewer and fewer prestige stocks as uncertainty enters into the market. This has happened before as in the Nifty-Fifty and is seen today as well. The general senario is this continues till these prestige stocks fall, associated with the market collapse.

Can this idea be compared to what is happening in the currency markets? In other words, a drift toward the $US as the "Nifty fifty" of currencies? We see currencies being trashed one after another. It is no small deal that the Euro is being trashed by it seems investor interests. It is the $US that always seems to come out on top in any currency uncertainty.

I am fully aware that there is no exact correspondance between stocks and currencies. That is not the point. The point is the psychology of investors.

If one can make the comparaison, one could ask where will the money go if the $US starts to falter. To other currencies that have lately been subject to such gyrations? Perhaps not. That leaves only precious metals, it seems to me.

goldhunter (9/9/2000; 6:38:21MT - usagold.com msg#: 36295)
714's discussion...
I enjoyed your post Sir 714...particularly this:
"oil never traded for gold straight up"

I can imagine that OPEC is enjoying $28 to $32 per barrel, and that at 25 plus million barrels per day, they are flush with cash as you suggest...

I can also imagine that some of this stash of cash is being spent for gold (daily or weekly?)after all, we hear about alot of central bank sales, and little of who is buying...

Respectfully, Mr. Trail Guide/FOA, can this be part of the Bull puzzle, in that the World is "paying" for the gold, as it gets DELIVERED to the OPEC boys...

Sir 714, this may in fact be oil being traded for gold...straight up.

My opinion would be that the Saudi's having to build a new vault to fill would be a "nice problem to have"

Canuck (9/9/2000; 5:18:45MT - usagold.com msg#: 36294)
Important September dates
Sept.10 (tomorrow)

OPEC meeting; 4Q supply commitments, rumour mill says supply to increase 500,000 - 700,000 bbl/day. Could have huge impact on oil/gas pricing for winter. Less than 500,000
bbls/day will murder S.M.'s

Sept. 13 (Wednesday)

Please excuse my ignorance on this one; haven't followed this closely enough. Middle eastern decision/announcement re: Jeruselum (sp). Free state? Can someone please clarify this date/situation for me. Thanks.

Sept. 13 (Wednesday)

New rumour mill re: oil for Euro's. Our old time friend PH in LA researching. Good man PH!!

Sept. 19 (Next Tuesday; week and a half)

BOE gold auction. I personally am looking for bid ratio/coverage, may indicate demand and/or short covering information. Has anyone documented the auctions? I believe this is auction #7 (maybe 8). Does anyone have 'successful'
bidding prices and bid/cover ratio's? A sudden jump of ratio
would be very interesting, last couple of auctions have been less than 3; above 3 might indicate 'short' covering. Maybe producers ie: GOLD, AU, PDG may get involved again?

Have a nice week-end.

Canuck.

wolavka (9/9/2000; 5:15:38MT - usagold.com msg#: 36293)
Gold beads
Journal of science, northwestern U. reports genetic testing may take hours not days using new technique with gold beads and a modified photo developing solution to highlight the presence and density of dna in test specimen.

Stick that in your air-bag, more gold consumption.

Canuck (9/9/2000; 5:01:41MT - usagold.com msg#: 36292)
@ Topaz, All re:36277, 36274
Yes Topaz, and it blows me away the 'inside' scoop in the ESF.

Clearly this person is aware of financial 'management' within this group.

And not to downplay the Duck breaking 200 M.D.A. and support of 4,000.

Next week should be interesting.

wolavka (9/9/2000; 4:59:55MT - usagold.com msg#: 36291)
Check this out
Sharefins' post @ kitco sept 9 : 01:41

crb index / euro dollar.

Now if that's not inflation; why would any ecb sell gold????????????????????????

714 (9/9/2000; 4:15:30MT - usagold.com msg#: 36290)
Aristotle, Goldhunter, FOA, et al.
Mr. Aristotle, my apologies for not responding to your post sooner, but work takes me away sometimes. Aristotle, the vast majority of this vaunted "demand" for physical goes for jewelry, which might be considered an investment in India, but in the West is a luxury rather than an investment. Let gold's price rise, and the jewelry demand for gold will sink, as Western investors make their way back to gold.

Mr. Goldhunter, you do understand the "Western" mind. In the West, physical and paper will never be separate markets. As go futures, so goes physical. What bullion dealer will offer a premium over Comex spot? Has Mr. Kosares ever offered a premium over spot? What will happen will be that "paper" contracts will trade at a DISCOUNT to spot, as we saw during last September's gold spike when Comex customers had orders unfilled or ignored (all the more reason to buy bullion, imo).

Mr. FOA seems to finally understand a bit of the history of gold: "Just as in 71, when official dollar contracts for gold were frozen at $42?? while physical eventually soared overseas,,,,,,,". Yes, he affirms what 714 has been saying, that gold will trade much higher in some places than others, as it has in the past. We will see much higher prices in places like Jidda than in NY when the Comex/LBMA spot price is frozen after making new highs.

As for this oil-for-gold business, this is a tiny portion of the oil trade, the vast majority of which trades in "currencies" and always will. And it has ALWAYS been married to the dollar. Study your history and look at what happened in 1947 when Ibn Saud renegotiated his deal with Aramco. Oil never traded for gold straight up. It has always been so many thousands of US dollars worth of gold for so many thousands of US dollars worth of oil.

In fact, before gold ever trades straight up for oil (so many ounces for so many barrels), the West will be paying for oil with the blood of its sons. May we never see that day.

***************************************************************

I'll be gone for a few days. Salaam.

714 (9/9/2000; 4:14:48MT - usagold.com msg#: 36289)
test

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