ARCHIVED DISCUSSION FROM 11/9/2001
All times are U.S. Mountain Time
(Yesterday's Discussion.)
Waverider
(11/9/01; 23:49:16MT - usagold.com msg#: 65054)
Inquisitive
FOA: Taking only baby steps on the "Trail" at the moment, I need your wisdom, guidance, and experience to help me assimilate that which presents around unexpected corners, to help me up again when I stumble, and to warn of caution when I'm too close to the edge of the cliff. Thank you for being there as trail guide in the days to come.
At the risk of subjecting Mr. Gresham and Henri to further inquisition (and you thought the Trail was your refuge),I have a question I'd like to toss out. BR549: Derivatives and CB's (#65007) and I quote, " The only sure way to hedge yourself against the gambling of the CB's is to buy physical Gold. You can't lose". Now, my immediate thought was, "Yes, that sounds fairly absolute, but what about gold shares?" Lo and behold, as I scolled to Brett Woods (#65029) I find, "But Dines strongly favors gold shares instead of bullion, because gold shares pay dividends and tend to move ahead of the price of the metal itself...So what role, if any, should gold play in your financial portfolio?...Gold bullion doesn't have much of a place, in my opinion." My baby question: What are the comparitive merits/risks/advantages/disadvantages/of these two perspectives?
Cheers,
Waverider
Black Blade
(11/9/01; 21:29:37MT - usagold.com msg#: 65053)
Saudis fear region-wide uprisings during Ramadan and at Mecca
http://www.worldtribune.com/worldtribune/breaking_8.html
Snippit:
ABU DHABI - Saudi Arabia has sounded the alarm over projections of massive Islamic unrest in the kingdom connected to the U.S.-led war in Afghanistan. Authorities fear a repeat of the 1979 Islamic takeover of the Grand Mosque Mecca - a development that rocked the kingdom for years. Arab diplomatic sources said Saudi Arabia has warned the U.S. and its allies of huge Islamic protests against the war throughout the Middle East and the Persian Gulf. The rallies could then sweep the Saudi kingdom, several of whose leading clerics have condemned the war.
On Nov. 20, 1979, Mecca's Grand Mosque was taken over by Islamic insurgents led by Juhaiman Ibn Mohammed Ibn Saif Al Utaiba. Utaibi led about 300-armed men - backed by elements within the National Guard - in capturing the mosque and sealing it off to authorities. In a speech given to 50,000 worshippers in the mosque, Al Utaibi denounced the Saudi royal family as infidels and demanded an end to Westernization. The address sparked massive riots in Pakistan. Saudi troops took a week to retake the mosque. The move was followed by the execution of 63 Saudis suspected of participating in the uprising.
Black Blade: The current situation is quite tense as the Wahabi sect has been making similar noises now against the "infidels" who are attacking the Afghanis (Taliban). This could spark similar events at Mecca and put pressure on the Saudi Royals. This could lead to serious consequences for western oil supply. The House of Saud is ripe for overthrow. "Interesting Times"
Netking
(11/9/01; 21:26:05MT - usagold.com msg#: 65052)
Bin Laden Claims He Has Nuclear Weapons
http://dailynews.yahoo.com/h/nm/20011109/wl/attack_binladen_dc_4.html
In tales from "The dark side of the force" . . . Bin Laden in an interview with the Dawn Newspaper confirms his strategy of "how to win friends and influence people";
Snippet:
"Pakistan's Dawn newspaper said on Saturday that in an interview from inside Afghanistan, Osama bin Laden said he had nuclear and chemical weapons and might use them to respond to U.S. attacks.
``I wish to declare that if America used chemical or nuclear weapons against us, then we may retort with chemical and nuclear weapons. We have the weapons as deterrent,'' the newspaper quoted bin Laden as telling a well-known Pakistani journalist in Afghanistan on Wednesday night.
The paper said that when asked where he got the weapons from, bin Laden replied: ``Go to the next question.'' . . . "
Black Blade
(11/9/01; 21:19:46MT - usagold.com msg#: 65051)
A war for the pipelines?
http://news.bbc.co.uk/hi/english/world/americas/newsid_1644000/1644813.stm
Snippit:
Just four years ago Taleban officials were at the Texas headquarters of the US energy company Unocal to discuss building a gas pipeline across Afghanistan to Pakistan.
In the home of Islam's two holiest places, there is widespread sympathy for Osama bin Laden's aims as well as opposition to the US strikes, and that has left the traditionally pro-western royal family exposed. But the crisis means Saudi Arabia is more important than ever for the stability of world oil supplies.
"We're hostage to oil, that's as simple as you can put it. We have let the economic considerations take precedence," said Larry Johnson, a former CIA officer with close links to serving intelligence officials. Some say this crisis should be the spur for the US and other Western nations to make more use of renewable and other energy sources, to reduce their reliance on oil. But that will not happen overnight and in the meantime, the more pessimistic say the US has to be ready for the possibility of serious disruption to oil supplies because of instability in Saudi Arabia. One senior military figure who has served in top posts in previous administrations told the BBC that if this were to happen, the US would be prepared to send in its forces to take control of the oil fields.
Black Blade: I do not think that the House of Saud will last more than 2 or 3 more years without a serious overthrow attempt. The standard of living for Saudis has fallen by half and the Royal Family just gets wealthier and corruption is rampant. This cannot go on. The US and the Western allies may have to step in militarily to secure ME oil unless western energy independence is achieved. That won't happen. The future is even more uncertain. The Arab ME populations will observe such a move by the western powers as an affront to Islam and the new "Crusades" shall begin. Get prepared for the worst possible scenarios and hope for the best. Gold and Silver portfolio insurance is rather cheap right now.
BR549
(11/9/01; 21:14:44MT - usagold.com msg#: 65050)
The assassination of "paper" by the Fed-Why the 30 year T-Bond bit the dust
http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=ad_right1_topfin&bt=ad_position1_topfin&middle=ad_frame2_topfin&s=AO_xSLBTcTmV3IGBP
"11/09 17:01 New `Operation Twist' Discards 30-Year Bond: Rates of Return By Al Yoon
New York, Nov. 9 (Bloomberg) -- In the early 1960s, government officials sought to nudge interest rates lower in a maneuver dubbed ``Operation Twist.''
Some investors say the Treasury is doing something similar now, with undersecretary Peter Fisher's announcement last week that 30-year bond sales would be halted. Since then, bond yields have declined to 4.87 percent from 5.2 percent the day before.
``Washington has been somewhat annoyed'' that long-term rates haven't declined as much as the federal funds rates set by the Federal Reserve, said Paul McCulley, a managing director who helps oversee $220 billion for Pacific Investment Management Co. "
BR-The twisting of interest rates didn't work in the 60's; it didn't work for Clinton, and it may not work today.
BR549
Black Blade
(11/9/01; 21:01:36MT - usagold.com msg#: 65049)
Energy prices jump with Russian support of OPEC
http://ogj.pennnet.com/articles/web_article_display.cfm?ARTICLE_CATEGORY=TOPST&ARTICLE_ID=126239
Snippit:
HOUSTON, Nov. 9 -- International energy prices shot up Thursday with growing evidence of determination among members of the Organization of Petroleum Exporting Countries to curb production at their ministerial meeting next Wednesday. Markets got another boost early Friday when Russian Prime Minister Mikhail Kasyanov said. Russian oil companies also are prepared to cut crude exports.
Black Blade: OPEC will likely agree to a 1.5 million bbl/dat production cut and now Russia could cut as much as 500,000 bbl/day. If other producers follow suit, them inventories will fall quickly in spite of a severe Global Recession/Depression.
Max Rabbitz
(11/9/01; 20:21:08MT - usagold.com msg#: 65048)
Ollie North Story Untrue
http://www.snopes2.com/rumors/north.htm
Sorry. Bill Fleckenstein reported tonight that the e-mail story I posted earlier was a fraud. See the site above to debunk this and other stories. It's so easy to get information these days and so little time to check out their truth. The story played to my prejudices. How could I have believed our Senators to be so irresponsible?
Zenidea
(11/9/01; 20:09:12MT - usagold.com msg#: 65047)
uponroof. wallpaper.
I have been looking for a decent digital wallpaper print for sometime just quietly. Thanks for the gift. Looks stellar!.
sector
(11/9/01; 19:58:33MT - usagold.com msg#: 65046)
@uponroof China's Inaugural Gold Market
Will the new Chinese deregulated gold market require US intervention to keep the gold price in check? Most likely.
The US gold manipulators will be forced to intervene in Shanghai so as to avert a runaway situation when affluent Chinese entrepreneurs place their financial bets on gold. This action will in turn require even greater dishoarding of US gold reserve assets, hastening the day of final accounting. A single day of stupendous import.
How much is left? Maybe the SDR draw down is a clue. An unprecedented 87% reduction in the ESF's SDR account. What seems sure is that Treasury wouldn't be begging tiny nations including Bangladesh for their puny 3 tonnes [as they did in 2000] if there were an ample gold supply. The scheme of selling US reserve assets is a one way, dead end street. Other games are unrevelling too.
The game of IMF double counting of World gold reserves is now in the open and festering...eating away at the credibility of the IMF (who denies it in the face of written validations from many IMF menber central banks), US Treasury and European financial minions. The IMF's own statistical accountants warned them at the IMF Santiago 1999 conference about double counting gold swaps and "loans". Even THEY refused to make recommendations on the gold loan double counting issues.
Like a panicked embezzler, the Master of the Universe keeps shuffling the books.
Now the long bond has fallen but gold still stands...ready for a counterattack in the Far East. Ready to devour the pretenders as well as the circus ringmaster...Greenspan.
CoBra(too)
(11/9/01; 19:32:02MT - usagold.com msg#: 65045)
CM - Post Haste
- No Way - a very valid Qu. - and one no one will answer -
post haste - nor truthfully, or is it folly ... looking forward to N.O.
cb2
PS - more at E-M.
auspec
(11/9/01; 18:51:57MT - usagold.com msg#: 65044)
Hamilton Snippet/Cafe
From Greenspan's Fine mess:
"If you are disciplined and consume less than you produce to save the difference to try and build a better future, Greenspan has targeted a laser-dot on your forehead and is tightening his finger around the trigger that will blast a .50 caliber bullet through your financial dreams."
"Savers, investors, and creditors have been declared second-class citizens by the Greenspan Fed. If you believe that equities are overvalued or you have worked hard all your life to save capital and now you need fixed-income for retirement, outright war has been declared on your hard-earned savings and bond investments. Alan Greenspan, in his desperate bid to bailout equity speculators and debtors, has destroyed all incentives for savers to lend their money as real interest rates (one-year Treasury interest rates less inflation as measured by the watered-down CPI) have plunged negative for the first time in two decades."
"No nation was ever made great and no individual ever achieves grand wealth through debt-financed spending binges. Only by sacrificing now and consuming less and saving for the future can capital accumulate and fortunes grow. By deliberately torpedoing the massive debt market and making lending a losing proposition for savers, Greenspan is forcibly shutting-down the single biggest engine of innovation and capitalism on the entire planet."
"If savers are by decree not allowed a fair return, and they cannot consummate mutually beneficial transactions and earn real income from their valuable savings, they will hoard their capital and innovation and economic growth in the United States will slow to a trickle and then painfully grind lower and lower. By forcing real returns for savers negative, Greenspan has declared unrestricted warfare on the hard-working savers in the United States and abroad and he is unleashing forces that will ultimately have dreadful consequences for America." END
Coming to a site near you soon.
Cavan Man
(11/9/01; 18:44:08MT - usagold.com msg#: 65043)
@CB2
I cry foul good Sir Knight as I typed that in (post) haste, made waste and appear the fool (alas, yet again). You busteth my chops!
uponroof
(11/9/01; 18:35:37MT - usagold.com msg#: 65042)
OK....who bought the 80 lb. doorstop?
http://www.shipofgoldinfo.com/wallpaper.html
Referring to Blackblade's earlier post(11/9/01; 00:43:06MT -usagold.com msg#: 64992) of the loaf sized bar from the 1857 Calif. goldrush which sold for $8 mil.
The link above providing very impressive (bordering on magnificent) desktop wallpaper of these bars...It's the big one there in the middle. Thanks to BIGGY (who just became a grandpa for the second time) for this link.
uponroof
(11/9/01; 18:22:41MT - usagold.com msg#: 65041)
Russell sees the light!
Last night he walked up to the threshold, tonight he went through the door
From the 'Dow Theory Letter' tonight:
"...Dec. gold up .60 to 277.70. E-mailer tells me that every time gold is ready to break out, Goldman Sachs dumps on the yellow metal. I don't doubt it. What is it -- Gold-man sacks gold? Ah hah, the secret is out. <Seriously, I'm beginning to believe that there's hanky-panky going on in the world of gold>...'
*********************
Judge Lindsay, are you listening?
auspec
(11/9/01; 18:10:06MT - usagold.com msg#: 65040)
Chapman Snippet/Help From Japanese?
"Chinese gold buying continues unabated. Soon a gold market will open in Shanghi and that could mean off take of 600 tons of gold a year equal to India's purchases and the Chinese market could be four times as large due to higher GDP."
"Japanese purchases of gold investment products, such as bars and coins, were 10-15 tons in September, nearly four times the monthly average for the first eight months of the year. Merchants see even higher purchases in the months ahead as demand for safe assets continues. As the yen weakens the flight to quality will pick up speed. Japanese savings protection by the government, like our FDIC, goes from full coverage to a maximum of $82,638 starting in April. We see a deluge of funds going into gold. What sane Japanese wouldn't switch funds over that limit to gold with most of the banks already insolvent? Average household savings is $115,700."
Comment: Which CB will provide the gold to these Japanese diversifiers?
CoBra(too)
(11/9/01; 17:35:23MT - usagold.com msg#: 65039)
@Cm , auspec &BR549
... Sorry, I might be too dumb to answer CM's exact and current question re the euro - though I (personally) feel that it will have to work.
- Not so much as a $ -Imposter, though as a valid "currency" for a united EU and its neighbors - an economy, which may become more important in size than a globalised $'-rized hegemony with too much antipathy, due to its inherent imperialistic tendency.
Not talking about values, nor valuation or even concepts ... only conceptions ... unfair enough?! - cb2
lamprey_65
(11/9/01; 17:16:31MT - usagold.com msg#: 65038)
Galearis
Agree - know your mint.
auspec
(11/09/01; 16:54:00MT - usagold.com msg#: 65037)
cb2
FWIW: I'm going to take the 5th ammendment if KFT asks me any pointed questions in the days ahead {smile}!
Best to you both.
Max Rabbitz
(11/9/01; 16:14:03MT - usagold.com msg#: 65036)
Ollie North and Bin Laden
Below is a clip from William Fleckenstein over at Grant's Investor. Registration is required but well worth it. I don't think he would mind my sharing the following from his column yesterday.......
I recently received a rather stunning e-mail on the subject of how Ollie North viewed Osama bin Laden 15 years or so ago: "At a UNC lecture the other day, they played a video of Oliver North during the Iran-Contra deals during the Reagan administration. There was Ollie in front of God and country getting the third degree, grilled by some senator who asked him, 'Did you not recently spend close to $60,000 for a home security system?' Oliver replied, 'Yes I did, sir.' The senator continued, trying to get a laugh out of the audience: 'Isn't this just a little excessive?' 'No, sir,' continued Oliver. 'No? And why not?' 'Because the life of my family and I were threatened.' 'Threatened? By whom?' 'By a terrorist, sir.' 'Terrorist? What terrorist could possibly scare you that much?' 'His name is Osama bin Laden.' At this point, the senator tried to repeat the name, but couldn't pronounce it. A couple of people laughed at the attempt. Then the senator continued: 'Why are you so afraid of this man?' 'Because, sir, he is the most evil person alive that I know of.' 'And what do you recommend we do about him?' 'If it were me, I would recommend an assassin team be formed to eliminate him and his men from the face of the earth.' The senator disagreed with this approach, and that was all they showed of the clip. Fifteen years ago, the government was aware of bin Laden and his potential threat to the security of the world."
Max: Par for the course. Congress often seems more interested in posturing for votes than getting involved with anything sticky. Good to see them called on it now and then. The moral here is to not rely on the government to protect or take care of you. They are not up to it. They don't even have a stock of potassium idodine! I like Black Blades advice. Get out of debt and have the essentials at hand, including the physical.
Cavan Man
(11/9/01; 15:04:01MT - usagold.com msg#: 65035)
@CB (too)
Hi. What are your current and exact opinions of the Euro if you would share them from a European perspective. Thanks..KFT
Zenidea
(11/9/01; 14:59:36MT - usagold.com msg#: 65034)
Some basic Gold facts.
Melting point...........C......................1063
Boiling point...........C......................2808
Density.................g/cm3..................19.3
Thermal Condictivity@0degC......cal/(s.cm.C)...0.743
Specific Heat@25C.......cal/g..................0.0312
Heat of fusion........k-cal/g-atom.............3.03
Heat of vaporization..k-cal/g-atom.............81.8
Atomic volume...........W/D....................10.2
First Ionization energy.K-cal/g-mole...........213
Electronegativity.......Pauling's..............2.4
Covalent Radius.........Angstroms..............1.34
Vickers hardness...............................25
Thermal expansivity@0-100C.....................14.16x10/-6
Electrical Resistivity@0C..microhm-cm..........2.125
Crystal Structure.................Cubic Faced Centered
Yeild point.............psi....................500
Poisson Ratio..................................0.42
Youngs Modulus..........psi 60% cold worked....11.2x10/6
Tensile Strength........psi annealed...........18,000
Hall Constant...........ohm-cm/gauss...........6.87x10/-13
Magnetic Susceptibility...CGS..................-0.15x10/-6
Ionization Potential....cV.....................9.18
Thermal Neutron Cross Section..Gauss/atom......98.8
Galearis
(11/9/01; 13:44:31MT - usagold.com msg#: 65033)
@Lamprey-65
blow-pipe that bullion
In my opinion product from small refineries should be purchased last - in preference to "name" bars like Engelhard and J/M's. They may be stamped 99 fine, but I have found some of this to be sterling grade -or less(!) (on a blow-pipe test for copper). Especially novelty rounds. I have been burned before on this stuff and one can often see this suspicion reflected in prices now on ebay for these items. The "names" go for the higher prices....
Be careful of the sleaze, my friend.
If this message gets around we will all be burdened by assay costs subtracted from the profits. Suggest you buy these at a discount (they often are) as a hedge as you would with junk silver coin, collectibles or direct barter.
G.
Netking
(11/9/01; 13:15:10MT - usagold.com msg#: 65032)
Operation Enduring Inflation
http://www.321gold.com/editorials/rockwell/rockwell110901.html
Interesting article from Llewellyn H. Rockwell, Jr.
"In a little-noticed announcement, the Center for Strategic and Budgetary Assessments has made a stab at estimating the direct costs of this splendid little war against Afghanistan. In the past this group has provided a very useful service in telling us exactly what the Pentagon is loath to talk about: how many taxpayer dollars our military central planners are plowing through on any given day. The Center has an excellent track record. This time they have come up with a pretty scary figure: $1 billion per month.
That number is based on past costs of deployments of warships, aircraft, and special forces in the Gulf War and the War in Kosovo, relative to the number of sorties flown and the number of troops actively deployed. They cross-checked their estimates with a bottom-up and a top-down method of calculation, while freely admitting that the estimate could be off by a few hundred million here and there (and government is always more expensive now than in the past). . . .
. . . . In the the weeks since September 11, the Federal Reserve has zoomed the money supply (as measured by MZM) at an astounding rate of 35 percent (annualized)--an amazing fact when you consider that the economy has actually shrunk during this time. The demand for dollars has gone up due to higher savings, but not enough to permanently sop up all that extra cash sloshing around the world today, thanks to an incredibly irresponsible policy.
So, yes, you will pay for this war, and you will pay through the arteries. Wave your flag and whoop it up while the party lasts, but never believe that the only thing being destroyed are mud huts and their inhabitants. The hangover will arrive right here at home, and the destruction will be all too evident for everyone to see.
site steward
(11/9/01; 12:49:51MT - usagold.com msg#: 65031)
New Stein... When paper is more than paper
http://www.usagold.com/THEGILDEDOPINION.html
Be sure to check out the latest commentaries while you're there.
R.
Mr Gresham
(11/9/01; 12:45:23MT - usagold.com msg#: 65030)
Anger & assorted bits
http://www.lollie.com/anger2.html
Just trolling the 'Net for things I can use for my own perspective. Lots of shrink sites, one of which offers:
"I refuse to use hateful words that escalate anger. We never know who is near an important edge in their lives, especially not on posting boards and in chat rooms. For all I know, someone I yell at might have just lost their dog, their job and their wife and they're on the verge of suicide or murder - I refuse to add one hateful word because when someone is on an edge like that sometimes all it takes is one more hateful word. Or maybe they're not near an edge but they're important in the life of someone who is... it all ripples."
Thanks, Henri. I sometimes think I tend to play the role of "peacemaker", which is usually the approach adopted by one of the children in an alcoholic household, though my family was as far from that as possible. (However, the resulting naivete led me in my 20s to walk blindly into relationships with other practicing alcoholics which tagged me pretty good.)
Goldfan: You described Oro's impact on me pretty well, too. The "detective thriller" especially. Between him and FOA, my consumption of financial newsletters has dropped radically. I was thinking last night after I posted how I can enjoy the challenge of reading and learning from someone whose studies and knowledge surpass my own, but not necessarily accept their conclusions, until I have digested all the links that got them there. Suspending judgment, while acting judiciously (I hope).
In the case of all this worldwide financial skulduggery (smile), perhaps "asking good questions" is the best we can hope to do for quite awhile? Of course, anyone offering firm-sounding answers in such an environment exposes themselves to challenge, but it should be the challenge of fielding good questions, and responding with quality answers. That's what both of them have done here, and which earns them the appreciation we voice in a time of conflict.
Maybe our "detective thriller" is to explore the areas of their disagreement with our own growing understanding and questioning?
The challenge for the teacher/leader is to help the others follow a pathway that lets them see the conclusions for themselves, not by a blind acceptance. This is the essence of the scientific method, of education, and, if I'm not mistaken, of democracy. And this is what I'm sure our two esteemed posters believe in, too.
Brett Woods
(11/9/01; 12:43:52MT - usagold.com msg#: 65029)
nice ballanced summary article
From CNBC
By Terry Savage
Oct. 4, 01
...So, now, with uncertainty raging, why hasn't gold taken off again?
The obvious answer: Unlike the 1970s, when inflation hit nearly 13%, the dollar remains the world's strongest and most sought-after currency in spite of economic slowdown, lower interest rates and even terrorist attacks.
Even though the Federal Reserve has pumped billions of dollars in liquidity into the economy, starting last January, we haven't seen a whiff of inflation. One reason we haven't seen inflation this year is that much of that newly created money merely offset the trillions of dollars that melted away in the stock market decline of the past 18 months.
If you define inflation as a phenomenon of too much money creation or too much money chasing too few goods, you're faced with this reality. The world is more awash in goods than in dollars and consumers who are badly shaken by terrorist attacks and anthrax scares. With little fear that the dollar may tumble badly, there's no reason to turn to gold as a safe haven.
Some 30 years ago, when inflation was high, gold's enthusiasts could generate plenty of excitement. And two of the most prominent gold bugs of the time, while not roaringly bullish today, still advise keeping a small position in gold stocks. James Dines and Howard Ruff are two legendary names in the world of gold investing. Each made a fortune for himself and his subscribers in the 1970s by predicting soaring gold prices. But when the bull market in stocks erupted in the 1980s, gold was crushed. Each says he led his followers out of the gold market in time to preserve those gains, though some challenge that assertion.
How do they view today's situation?
Dines: Take advantage of the uptrend
James Dines has been editor and publisher of The Dines Letter since 1960, one of the longest-lived advisory services around. Dines, who proclaimed himself The Original Gold Bug back in the 1960s, made his reputation as among the first to predict that gold would be freed its then government-fixed price of $35 an ounce and move substantially higher. Then, he predicted the price of gold and the Dow Jones Industrial Average would cross. They did. Gold soared to $850 in early 1980 as the Dow was tumbling down to nearly 750.
Dines got off the gold bandwagon and bet on stocks in the ‘80s and became a big Internet proponent in the mid-1990s. But he guided subscribers out of most Internet stocks in 2000.
In the meantime, he's had longstanding "buy" recommendations for gold stocks, including Agnico-Eagle Mines (AEM, news, msgs), Franco-Nevada (CA:FN, news, msgs), ASA and Barrick Gold (ABX, news, msgs), as well as Battle Mountain convertible bonds. Today Dines says: Gold mining shares have remained in surprisingly determined and unnoticed uptrends for the last year, just as the tech sector has been crashing. But few people have noticed gold.
Indeed, even if bullion prices haven't gone anywhere, the stocks and stock funds have. Precious metals funds have been among the top performers in 2001 -- a year where investing in stocks generally has been awful.
Dines sees a major recovery in gold prices during the next big currency crisis. He see it erupting first in Argentina or Brazil some time next year and affecting all of Latin America, including Mexico. He expects that the response to a currency problem will be similar to the 1997 flight to gold when Asian investors turned to the precious metal as their economies and markets collapsed around them. But Dines strongly favors gold shares instead of bullion, because gold shares pay dividends and tend to move ahead of the price of the metal itself.
What's holding the price of gold flat is the relative strength of the dollar itself, Dines says, and that precludes a major rise in gold in this country. But his newsletter shows charts of gold prices denominated in Canadian dollars, Australian dollars, South African Rands and Indian rupees. In all of those those currencies, gold clearly has been rising -- but so has the U.S. dollar. And you can earn interest, albeit low, on dollar deposits.
Ruff: Prepare for the worst
Howard Ruff became a regular on talk shows and in newspapers thanks to his 1977 best seller, "How to Prosper During the Coming Bad Years," which sold more than 3 million copies. Ruff's centerpiece advice was to buy gold at $125 an ounce, which was great advice because gold was about to take off.
Ruff continues to have a following for his newsletter, Ruff Times, which appeals, he says, to salt-of-the-earth, God-loving and God-fearing people who love their country, but fear and distrust their government.
But he says the markets have humbled him. After gold peaked at $850 an ounce, it has trended downward -- with the occasional uptick -- ever since.
Nonetheless, he's willing to predict that in the long run, gold bought at today's prices is going to be worth a lot of money at some time in the future. When pressed about how far away that future might be, he said, "Not tomorrow, or next week, but perhaps one, two or three years from now, it has the potential to be worth $2,000 an ounce."
In the meantime, Ruff has been telling subscribers to buy Treasurys, even at today's low yields, because he expects rates will fall further. And he still advises his followers to store non-perishable food supplies as a precaution against a worst case.
Other alternatives
Gold is not the only alternative if you're worried about the value of the dollar, of course. The euro will become the only currency of Western Europe in two months. Gone will be the opportunity to speculate in French francs, German marks or Italian lira. Close cooperation between European nations will be required, a process that has already started. But do you want to bet your life savings on the euro?
Asian and Latin American currencies have their own well-advertised problems. In fact, many of those countries see pegging their currencies to the dollar as the ultimate solution to their economic woes.
Still, there could be alternatives other than gold or foreign currencies, if speculators turn bearish on the dollar: soybeans, possibly, real estate or crude oil again.
Gold's glory gone?
It could well be that the world that sought refuge in gold no longer exists. Today's global speculators can move hundreds of millions of dollars with the click of a computer mouse. Since gold has to be stored and insured and guarded, it is costly to own, making its portability less of an allure. The tons of gold reputed to be stored in Comex vaults in the lower levels of the World Trade Center are, for now, inaccessible. [some now recovered, not reported how much]
At the same time, the financial markets were up and running in a week.
So what role, if any, should gold play in your investment portfolio? Gold bullion doesn't have much of a place, in my opinion, though I am partial to gold jewelry. But dividend-paying gold stocks or precious metals might be worth another small look in a diversified stock portfolio. They certainly provide a hedge against other positions. And most have been moving up. You can purchase shares of individual gold mining companies, or there are many mutual funds that specialize in gold shares.
But the best reason for owning at least some gold stocks is the fact that you're laughing at the very idea. My editor did, too. Nobody's out there writing about gold stocks, or publicly recommending them. Just as nobody wanted to be laughed at for recommending the sale of dot-com and technology stocks two years ago. Experience has taught me that just when everyone thinks an investment idea is absolutely ridiculous, it's time to take that idea seriously. The only problem is, you'll never know how much time it will take before people catch on.
site steward
(11/9/01; 12:32:12MT - usagold.com msg#: 65028)
Ample liquidity, Fed adds funds anyway
With the market in overnight fed funds trading soft at 1.94 percent, the Fed's trading desk entered the open market anyway to add $6.005 billion to the reserves of the nation's banking system through six-day repurchase agreements accepted at a stop out rate below the new FOMC target of 2 percent.
Easy money. How fast will international confidence wane? Diversify into gold and then sit back to watch with financial/emotional impartiality.
R.
USAGOLD
(11/9/01; 12:27:38MT - usagold.com msg#: 65027)
Galearis. . . .
Can's say I disagree with your #65013 particularly the second paragraph. I think you have the right mind set when you tie silver success to inflationary expectations.
Old Yeller
(11/9/01; 12:22:54MT - usagold.com msg#: 65026)
Interesting theory on money supply and inflation
http://www.chaos-onomics.com/function.htm
From Aburns at Prubear.
Great posts from Leigh,Mr.Gresham and Goldfan on the ORO/FOA disagreement.
Both of these gentleman completely enthrall me with their far-sighted outlooks of the future and re-examinations of historical events that have shaped our collective destinys.
They both contribute so much here and we are all much appreciative of their efforts.
May your differences be resolved quickly and amiably.
Netking
(11/9/01; 12:08:13MT - usagold.com msg#: 65025)
MK / Galearis WAC - Silver
Galearis/WAC(Wide Awake Club)#65006/65003 - We have(I mean "had")the 1kg size also here in Auckland with some 2kg's around. The brands were a mix of o'seas J & M, Deak etc and local NZ & Australian refiners brands also. 1kg orders can be filled by ordering through Australian sources with delivery around 2-3 weeks.(1kg approx 2.2 pounds)
Michael(65008)Thanks Sir for the research, appreciated. This will certainly be a market to watch in the days ahead with still a number of pieces of the jigsaw to be filled.
- Netking
goldfan
(11/9/01; 11:59:07MT - usagold.com msg#: 65024)
Thanks to ORO
I hope that ORO will never be discouraged from his postings on this forum. Or if he is, that somehow I will be privileged to read his writings elsewhere. In past years I have read USAGold to try to get an education in the realities behind the official smokescreen of our economic situation, and the potential for using physical gold ownership as an investment, and as I grew in understanding, insurance for my children's and my friends savings. The most consistently interesting and intelligent postings for me have been those of the gentleman and obvious scholar who calls himself ORO. Reading his postings and sometimes getting his reply to my questions, has been like following a supremely interesting detective thriller, chapter by chapter.
No one else who posts here or anywhere else that I know of brings the same breadth and depth of knowledge, and insight, and ongoing research to this subject. In fact, I owe it to his writings that I now find myself able to critically understand what I read in my daily paper, the woefully inadequate declarations of financial analysts, economists, government finance ministers, etc. etc. ORO has developed unique insights into the economic pollution which we all live in, totally unaware of its malign potential. It is as if the water were polluted, and we did not yet know it, and were blissfully accepting the assurances of the water board, and the government regulators, that all was well. ( a poisoned well!!). I too was trained as a chemical engineer. I understand the scientific attitude, and the methods of science. I can say with absolute certainty that ORO is an elegant practitioner of both. His postings, as often as they appear, are the only ones which bring to me new insights into the structure of he economic fabric of my world. Most everyone else I read is just repeating what they have already said, exclaiming one more time about the necessity to buy physical gold, talking excitedly about the rise and fall of various indicators, The DOW, The NASDAQ, The POG, The CPI, The NAPM, The MZM, The M3, The USDX. Of course, this is interesting, in the way watching a thunderstorm approach across the open sea, or the open Prairie, is interesting. I also want to hear serious and useful attempts to understand the forces at work of which these indicators are only a symptom. ORO relates his analysis to the daily life and work of people like me and you, to a consistent framework of necessary and sufficient conditions for a viable economic framework for our lives. I frequently don't understand him. I always find that my efforts to understand are well repaid.
FWIW
Goldfan
BR549
(11/9/01; 11:58:25MT - usagold.com msg#: 65023)
What? Nobody wants to SWAP their Argentina 14%+ bonds for 7% unilaterally restructured bonds
site steward (msg#: 65012)--
And look at the track record of a country which has already defaulted 10 times (make that 11 with a potential for many more). They must have not been able to wring out their citizens bank accounts to the last devalued peso.
I still smell BAILOUT. The only question is which entity will it come from--the IMF, BIS, Fed, or The World Bank.
Regards,
BR549
Henri
(11/9/01; 11:52:43MT - usagold.com msg#: 65022)
Mr. Gresham
Get well soon! I too find inquisition tiresome and essentially incompatible with digestion.
I am (to the extent possible on a forum) of "family" orientation as well and hope that my good wishes for your health find you already much recovered.
ORO appears to have magically transformed himself from a venerable voice with gravity to something resembling a prodigal son.
As time heals all (well almost all) wounds so will it reveal the course of our destiny. I look forward to the day when disagreement on matters of principle (and in particular concerning something as fleeting as the relative merits of systemic fiat administration) remain civil especially when conducted within a venue with such a long history of good and powerful messaging.
When I think of the current American governance (rep/demo one and the same), I am reminded of the passage by Benjamin Franklin from "The Way to Wealth"
(Frugality III)
"...But Ah! think what you do when you run into debt; you give to another power over your liberty. If you cannot pay on time, you will be ashamed to see your creditor; you will be in fear when you speak to him; you will make poor pitiful sneaking excuses, and by degrees, come to lose your veracity, and sink into base downright lying; for 'The second vice is lying the first is running in debt' as Poor Richard says; and again, to the same purpose, 'Lying rides upon Debt's back:'..."
end excerpt
The following...with apologies to Frank Herbert
Well resource management is now in full swing with the family houses of the "Landsraad" in mortal combat for control of the spices. It is the sale of the addictive spices to their own countrymen that funds their continued insanity and consolidation of power. It funds the interest payments on loans used to assemble incredible derivative positions each designed to trump the pre-positioning of the warring households before them.
Now all attention is focused on that area of the known universe with the demonstrated potential of cheaply producing 75% of the spice demand. A temporary supply glut of spice has opened this window of opportunity to establish spice production to north under the control of indulgent allies as the former growing fields under control of opposition families are pummelled to make way for a pipeline that will funnel the isolated fuel production resources of the new allies into markets able to be controlled by the dominant western regimes. They thereby cut out the middlemen who would otherwise control the end of an eventual alternate routes through the great eastern houses and then to the sea.
The fuel not only allows the transport of food and mercantile exchange but rapid transport the spice by air as well. Many camel caravans and mechants are therefore circumvented in the movement of spice for maximum profit. The control of the fuel production provides the illusion of ultimate power among the warring households. But it is the spice that fills their illicit coffers. The paradigm is clear...control the spice trade and the universe will align itself about you. Truth be known, the spice can be produced anywhere. Anywhere but in the midst of those who would buy it.
Do we not find it amazing that such battles congeal along the route of the old "silk" trail? Was it spice that was exchanged for silk back then. Did the silk traders start their own spice production to leverage their silk pricings?
Both silk and spice are much lighter than gold. Silk has become irrelavant. Spice has not. Has gold? I think not.
And then from the seat of civilization and colonization comes a call for sanity. A new medium of exchange. One not connected with a war machine or covert profits from the spice trade. One that simply exists to facilitate the exchange of value for value. Excess profit to be stored in the vehicle of that which does not diminish with time. Stored for use in lean times as the squirrel gathers nuts for the winter. The simple is often right when profit and the pursuit of power over others is not the end motive.
Belgian
(11/9/01; 11:24:10MT - usagold.com msg#: 65021)
Oil / Gold and SDR's
The sudden and steep decline in POG (-1%)(280,65$ > 276,65$)
and at the same moment a spike up of the POO (+ 10%-18,85$ > 21$) is a technicality or a politico move by the arbitrageur par excellence : Rothshield's ? This happened while CNBC-analyst's were trumpeting about a POO target of 15$. Russia was/is the uncooperative non-cartel spoiler .
At a time when the major taliban-reformists are crossing the globe for having talks between 4 eyes.
My point is that the POO in the current context(s) remains oh so very, very important.
Auspec/SDR : Creation of additionnal SDR's and renewed allocation, whilst replacing Gold-reserves, doesn't get the attention it deserves. What is or will be the proportion of the $/€ in the SDR's currency basket ? And does the IMF has an agenda of disposing off its 3.000 tonnes, as originally suggested before the WA ?
The IMF never produced a study on the POG explosion post 1971.
Do official organs, keep their Gold reserve, only, as a psychological confidence/trust keeper in fiat and SDR ?
Why is everything, but Gold, so well explained within these official bodies ? Any currency / interest rate / commodity or stockmarket, move is extensively argumented with possible reasons why it moved...but POG moves, receive no comment or justification at any dept.
Nobody is demanding some transparency on official Gold holdings (officials to officials).
There is no sign of reaction from the states who are negociating their SDR (re)allocation(s) and their Gold-reserves. Does that give us an indication on the allocated value of the yellow ?
Do you have any clue on this, good knight ?
lamprey_65
(11/9/01; 11:11:36MT - usagold.com msg#: 65020)
Silver Bars
Checked today...
Sunshine Minting still producing silver bars in sizes 1, 5, 10, 50 AND 100 oz. Rounds in 1, 5, 10 oz.
Hope this helps.
sourdough
(11/09/01; 11:07:28MT - usagold.com msg#: 65019)
I would like an opinion on "why not".
I believe I read that the average household savings in Japan is $115,000. A large part of the Japanese economic problem is fear on the part of the Japanese consumer to spend.
Japanese lending rates are near 0, yet no one wants to borrow.
What is keeping the Japanese people with savings from borrowing yen to buy physical gold with the physical as collateral for the loan? (if yen is exchanged for dollars to buy gold would this not fit into the Japanese government low yen/high dollar policy, at least until gold rises and the investor/consumer spending kicks in)
Individual investment in physical gold by the Japanese could result in large gains as the demand overwhelmed supply. I would think a windfall of 100,200% would result in consumer spending and help the economy. Some of the windfall would find it`s way into the market and help the banks holding stock assets.
What would it do to the Yen? increase in value? If 60% of their economy is home based would it not be better to have their own people spending rather than worrying about a low yen to aid exports? After all nobody is buying exports anyway. U.S. is tapped out.
Why would it not be "beneficial" to the economy and the banks to direct the Japanese consumer into physical gold and gold company investment?
Perhaps Jipangu and the "supposed whiz" who runs it is not just an individual. Perhaps he has many friends and investors in high places.
Someone please comment on what "would" happen if the Japanese consumer was gently directed by the government and banks into borrowing to buy physical gold.
Would it be worth it to the G8 to allow golds rise in the hands of the Japanese consumer if it meant the Japanese economy could get back on track ?
BR549
(11/09/01; 11:04:25MT - usagold.com msg#: 65018)
Inflation or Deflation?--One more time--Sorry
http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&refer=topfin&T=markets_bfgcgi_content99.ht&s2=blk&bt=ad_position1_topfin&middle=ad_frame2_topfin&s=AO_wMThKkVS5TLiBF
"Top Financial News
11/09 12:03
U.S. Economy: Producer Prices Fell a Record 1.6% (Update1)
By Carlos Torres
Washington, Nov. 9 (Bloomberg) -- Prices paid to U.S. factories, farmers and other producers fell a record 1.6 percent in October, government figures showed, as some companies charged less for their goods to spur sales in a slowing economy.
Declines for automobiles, food and gasoline paced the drop in the producer price index last month, the Labor Department said. The index had risen 0.4 percent in each of the previous two months. The core index, which excludes food and energy, fell 0.5 percent, the largest decline in eight years.
``We have seen some of the worst conditions'' in 30 years, Pedro Reinhard, chief financial officer of Dow Chemical Company, told investors this week. ``The good news is that this is likely as bad as it's going to get.''
BR-The leaders of modern economic theory, the brilliant Austrian School, will tell you that INFLATION is on the horizon with the increase in money supply. The Milton Friedman's will tell you that declining prices lead by the PPI decline will indicate DEFLATION. Any opinions?
BR549
@cb2-Speaking of brilliant Austrian's, it is always good to see Dr. Kurt.
Mr Gresham
(11/09/01; 11:03:59MT - usagold.com msg#: 65017)
Leigh
Made my day, thanks! Why is it that gentlemen seem to need a lady around to remind them to be: gentlemen? "A little leaven..."
Galearis
(11/09/01; 11:02:50MT - usagold.com msg#: 65016)
@WAC
Silver
Thanks for the information about 2 kilo bars. If my understanding is accurate the other problem in silver supplies in Europe is that industrial demand favours granule product there.
This would further complicate the picture for bar production perhaps.
And the additional anecdotal evidence of supply problems is much appreciated. I also have a problem of choice, and although I buy more silver, I hedge with gold (smile).
Best regards,
G.
BR549
(11/09/01; 11:02:09MT - usagold.com msg#: 65015)
Inflation or Deflation?
http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&refer=topfin&T=markets_bfgcgi_content99.ht&s2=blk&bt=ad_position1_topfin&middle=ad_frame2_topfin&s=AO_wMThKkVS5TLiBF
Top Financial News
11/09 12:03
U.S. Economy: Producer Prices Fell a Record 1.6% (Update1)
By Carlos Torres
Washington, Nov. 9 (Bloomberg) -- Prices paid to U.S. factories, farmers and other producers fell a record 1.6 percent in October, government figures showed, as some companies charged less for their goods to spur sales in a slowing economy.
Declines for automobiles, food and gasoline paced the drop in the producer price index last month, the Labor Department said. The index had risen 0.4 percent in each of the previous two months. The core index, which excludes food and energy, fell 0.5 percent, the largest decline in eight years.
``We have seen some of the worst conditions'' in 30 years, Pedro Reinhard, chief financial officer of Dow Chemical Company, told investors this week. ``The good news is that this is likely as bad as it's going to get.''
The leaders of modern economic theory, the brilliant Austrian School, will tell you that inflation is on the horizon with the increase in money supply. The Milton Friedman's will tell you that declining prices lead by the PPI decline will indicate inflation. Any opinions?
BR549
@cb2-Speaking of brilliant Austrian's, it is always good to see Dr. Kurt.
John Doe
(11/9/01; 10:58:32MT - usagold.com msg#: 65014)
FOA & Oro
We gold advocates never had it so good. Too excellent minds with wide-ranging interpretations of economic theory, history, intrigue, and opinion. More than a few fundamental disagreements, yet, they both recommend gold!
To both, thank you & keep it coming.
Galearis
(11/9/01; 10:52:19MT - usagold.com msg#: 65013)
@ M.K. re silver 100 oz (etc.) bars
I do not disagree with yours (and W.B.'s) position for holding silver but have found some differences in our respective researchs with refineries. Two refineries contacted, one by myself and one by Rhody (J/M in the latter case), revealed that they do indeed still manufacture 100 oz bar sizes. Both Rhody and I did this because of a similar assertion that 100 oz bars of silver were no longer being produced. A Mr. Kaplan over there on Kitco made this assertion about a month ago.
The shortage that is just now being realized (most visibly, it seems) with 100 ozers could reflect the physical market place depletion in response to increasing (speculative and recent) demand beginning to be seen and reported. I presume the (larger) refiners will wait for an accumulating pile of orders whereupon a production run will be commenced. The business I contacted simply wanted to know how many I wished to order. However, this gentleman did not indicate when the orders would be filled - whether a back-order situation would be the case- and FWIW I got the impression that he had supply then and there.
In addition, and keeping W.B.s speculative statement in mind, speculators would indeed find 100 oz bars of interest. The industrial sizes would not be of speculative interest. I think the speculators are smelling hyperinflation in the future just as I am.
In the meantime I'll encourage Rhody to comment on this, but do not feel that his views would differ significantly from mine.
Thanks for the additional researches and comments. I found your statement about the possible shortage of ten ounce bars also very interesting. I too have noted this locally - but the 5's and 1's are still plentiful. A liquidity "backwardization" (smile) and a confusing one.
Regards,
G.
site steward
(11/9/01; 10:46:38MT - usagold.com msg#: 65012)
An old saw, inspired by the HEADLINE: Argentina's De la Rua meets Fed, bankers in NY
http://biz.yahoo.com/rf/011109/n09175645_1.html
If you fall into financial trouble and you owe the bank $1 million, you worry. If you owe the bank $132 billion, the bank worries.
---------
NEW YORK, Nov 9 (Reuters) - Argentine President Fernando de la Rua met Wall Street bankers and Federal Reserve officials on Friday in an uphill battle to win support for an emergency debt relief plan aimed at staving off financial collapse. ...[seeking a plan for] the nation's creditors to swap most of Argentina's $132 billion debt for loans paying lower interest rates.
...Failure to service its debt, many economists fear, could prompt Argentines to pull their money out of the banking system and force the country to scrap its currency peg to the U.S. dollar designed to ward off hyperinflation.
A meltdown in Latin America's third largest economy could sent shockwaves across the region, potentially drying up credit to other emerging market nations and threatening a global economy already at the brink of recession.
---------
Bottom Line: Too big to fail. Simply put. The "strong dollar" as you have known it is in its final stage. The wheels will fall off the legacy international use of the "dollar reserve" standard. Believe it.
Call Centennial today to get YOUR gold order in the pipeline for delivery.
Centennial Precious Metals, Inc. / USAGOLD
(11/9/01; 10:28:54MT - usagold.com msg#: 65011)
Hard assets... Easy access!
http://www.usagold.com/ProductsPage.html
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