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ARCHIVED DISCUSSION FROM 1/9/2006 All times are U.S. Mountain Time (Yesterday's Discussion.) Rook (1/9/06; 22:55:47MT - usagold.com msg#: 140317) .,. Greetings Druid, The usagold forum no longer has open topics. Linking to commentary is probably ok. Goldilox (1/9/06; 21:22:59MT - usagold.com msg#: 140316) China gold acquisitions @ Smeagol,As we saw in Another's theories on the gold-oil trade in the ME, that depends very much on who they obtain it from and how public the sale information is.I would not put it past TPTB to arrange for them to get more than announced, IAOF (if, and only if) they publicly sell some on the open market to keep the price in check.Not a supportable hypothesis - pure speculation.-G Druid (1/9/06; 21:20:22MT - usagold.com msg#: 140315) Attack on Iran: A Looming Folly http://www.truthout.org/docs_2006/010906I.shtml Snip. Monday 09 January 2006 The wires have been humming since before the New Year with reports that the Bush administration is planning an attack on Iran. "The Bush administration is preparing its NATO allies for a possible military strike against suspected nuclear sites in Iran in the New Year, according to German media reports, reinforcing similar earlier suggestions in the Turkish media," reported UPI on December 30th. "The Berlin daily Der Tagesspiegel this week," continued UPI, "quoted 'NATO intelligence sources' who claimed that the NATO allies had been informed that the United States is currently investigating all possibilities of bringing the mullah-led regime into line, including military options. This 'all options are open' line has been President George W Bush's publicly stated policy throughout the past 18 months." An examination of the ramifications of such an attack is desperately in order. 1. Blowback in Iraq The recent elections in Iraq were dominated by an amalgam of religiously fundamentalist Shi'ite organizations, principally the Dawa Party and the Supreme Council for Islamic Revolution in Iraq (SCIRI). Both Dawa and SCIRI have umbilical connections to the fundamentalist Shi'ite leadership in Iran that go back decades. In essence, Iran now owns a significant portion of the Iraqi government. Should the United States undertake military action against Iran, the ramifications in Iraq would be immediate and extreme. In the first eight days of January, eighteen US troops have been killed in Iraq, compounded by another twelve deaths from a Black Hawk helicopter crash on Saturday. Much of the violence aimed at American forces is coming from disgruntled Sunni factions that have their own militias, believe the last elections were a sham, and hold little political power in the government. If the US attacks Iran, it is probable that American forces - already taxed by attacks from Sunni factions - will also face reprisal attacks in Iraq from Shi'ite factions loyal to Iran. The result will be a dramatic escalation in US and civilian casualties, US forces will be required to bunker themselves further into their bases, and US forces will find themselves required to fight the very government they just finished helping into power. Iraq, already a seething cauldron, will sink further into chaos. 2. Iran's Armaments Unlike Iraq, Iran has not spent the last fifteen years having its conventional forces worn down by grueling sanctions, repeated attacks, and two American-led wars. While Iran's conventional army is not what it was during the heyday of the Iran-Iraq war - their armaments have deteriorated and the veterans of that last war have retired - the nation enjoys substantial military strength nonetheless. According to a report issued by the Center for Strategic and International Studies in December of 2004, Iran "has some 540,000 men under arms and over 350,000 reserves. They include 120,000 Iranian Revolutionary Guards trained for land and naval asymmetrical warfare. Iran's military also includes holdings of 1,613 main battle tanks, 21,600 other armored fighting vehicles, 3,200 artillery weapons, 306 combat aircraft, 60 attack helicopters, 3 submarines, 59 surface combatants, and 10 amphibious ships." "Iran is now the only regional military power that poses a significant conventional military threat to Gulf stability," continued the CSIS report. "Iran has significant capabilities for asymmetric warfare, and poses the additional threat of proliferation. There is considerable evidence that it is developing both a long-range missile force and a range of weapons of mass destruction. It has never properly declared its holdings of chemical weapons, and the status of its biological weapons programs is unknown." A MILNET brief issued in February 2005 reports, "Due to its position astride the Persian Gulf, Iran has constantly been a threat to the Gulf. The so called 'Tanker' wars in the late 1980s put Iran squarely in the bullseye of all nations seeking to transport oil out of the region. Even the small navy that Iran puts to sea is capable enough to harass shipping, and several cases of small boat operations against oil well heads in the Gulf during that period made it clear small asymmetrical tactics of the Iranian Navy could be quite effective." "More concerning," continued the MILNET brief, "is the priority placed on expanding and modernizing its Navy. The CSIS report cites numerous areas where Iran has funded modernization including the most troublesome aspect, anti-shipping cruise missiles: 'Iran has obtained new anti-ship missiles and missile patrol craft from China, midget submarines from North Korea, submarines from Russia, and modern mines.'" It is Iran's missile armaments that pose the greatest concern for American forces in the Gulf, especially for the US Navy. Iran's coast facing the Persian Gulf is a looming wall of mountains that look down upon any naval forces arrayed in those waters. The Gulf itself only has one exit, the Strait of Hormuz, which is also dominated by the mountainous Iranian coastline. In essence, Iran holds the high ground in the Gulf. Missile batteries arrayed in those mountains could raise bloody havoc with any fleet deployed below. Of all the missiles in Iran's armament, the most dangerous is the Russian-made SS-N-22 Sunburn. These missiles are, simply, the fastest anti-ship weapons on the planet. The Sunburn can reach Mach 3 at high altitude. Its maximum low-altitude speed is Mach 2.2, some three times faster than the American-made Harpoon. The Sunburn takes two short minutes to cover its full range. The missile's manufacturers state that one or two missiles could cripple a destroyer, and five missiles could sink a 20,000 ton ship. The Sunburn is also superior to the Exocet missile. Recall that it was two Exocets that ripped the USS Stark to shreds in 1987, killing 37 sailors. The Stark could not see them to stop them. The US aircraft carrier Theodore Roosevelt is currently deployed in the Persian Gulf, with some 7,000 souls aboard. Sailing with the Roosevelt is the Tarawa Expeditionary Strike Force, which includes the USS Tarawa, the USS Austin, and the USS Pearl Harbor. The USS Austin is likewise deployed in the Gulf. The Sunburn missile, with its incredible speed and ability to avoid radar detection, would do terrible damage these ships if Iran chooses to retaliate in the Gulf after an American attack within its borders. Beyond the naval threat is the possibility of Iran throwing its military muscle into the ongoing struggle in Iraq. Currently, the US is facing an asymmetrical attack from groups wielding small arms, shoulder-fired grenades and roadside bombs. The vaunted American military has suffered 2,210 deaths and tens of thousands of wounded from this form of warfare. The occupation of Iraq has become a guerrilla war, a siege that has lasted more than a thousand days. If Iran decides to throw any or all of its 23,000 armored fighting vehicles, along with any or all of its nearly million-strong army, into the Iraq fray, the situation in the Middle East could become unspeakably dire.Druid: March, shaping up to be one hell of a month. Goldilox (1/9/06; 21:17:20MT - usagold.com msg#: 140314) EQ map http://earthquake.usgs.gov/recenteqsww/ Somewhat tangential, but interesting that there is a large cluster of late in Alaska and the Andes, both resource rich regions. Not meant to propound any conspiracy theories, as resources do tend to surface in tectonically active regions.If EQ activity is in a rising cycle, the mining industry may experience indications of it earlier than others. Goldilox (1/9/06; 21:08:55MT - usagold.com msg#: 140313) Gold for resources @ Flatliner,Sort of amounts to an evolution from paper swaps to resource swaps.The spinsters can call it what they will, but "backing" is in, even if it doesn't manifest itself as "currency backing".Still hoping TC has the time and inclination to explain "debt swaps" to those of us (me, in particular) not familiar with that terminology. Smeagol (1/9/06; 21:03:57MT - usagold.com msg#: 140312) Of state secrets... "If China paid some multiple above the market price for gold, that would immediately BECOME the market price for gold." - HectorBut how could that happen - IF they, and those private ones whom they purchase It from, agree to keep silence, precious? One has never had to pay market price for It...perhaps this is where the sseparation of It from the paper-market price begins? Or has begun?S. Flatliner (1/9/06; 20:22:31MT - usagold.com msg#: 140311) @Cavan Man Physical gold holders will be the only ones that will be able to afford to buy resources. Flatliner (1/9/06; 20:20:00MT - usagold.com msg#: 140310) Dollar Dazed? http://www.freemarketnews.com/Analysis/48/3393/2006-01-09.asp?wid=48&nid=3393 Could there be a Head and Shoulders in the daily chart? Seems to look that way. The weekly and monthly charts seem to express that the dollar will get support for a couple more months before the big squeeze hits it. But, that seems to go against the emotion that's stirring the world.All you paper pushers, keep in mind that it takes time to convert into physical. Figure out your timeline you may find that it's 2 or 3 weeks at the fastest. Cavan Man (1/9/06; 20:13:16MT - usagold.com msg#: 140309) USAG 14303 Anybody catch that one? China will buy resources with gold IMHO. Cavan Man (1/9/06; 20:12:17MT - usagold.com msg#: 140308) China/OIL/Gas http://www.thestandard.com.hk/news_detail.asp?we_cat=2&art_id=9495&sid=6178008&con_type=1&d_str=20060110 Beijing gets key ally in Bolivia's Morales Bolivian President-elect Evo Morales has declared China his ideological ally after inviting Beijing to help his country develop its vast gas reserves.These deals were exclusive domain of US industry giants. Competition on this scale likely means great conflict ahead. Hektor (1/9/06; 20:00:19MT - usagold.com msg#: 140307) China and the market price of gold "Would China be desperately wounded by paying 125% of the current market price to buy gold?? 150%?? 200%??"If China paid some multiple above the market price for gold, that would immediately BECOME the market price for gold. MK (1/9/06; 18:50:54MT - usagold.com msg#: 140306) Gold in perspective. . .Lest we lose sight of what has happened http://news.yahoo.com/s/nm/20060109/bs_nm/markets_precious_dc_4 Ran into this Reuters report in my early evening reading. Though it worthwhile to pass along. Apologies if someone else has already posted it.____________There seems to be some pretty good economic strength in the markets in general and that is giving rise, I would imagine, to some concerns over inflation."******At its peak, gold was up more than 5 percent from a week ago, 18 percent from some two months earlier and 30 percent from a year ago. The price has more than doubled in five years.******Market talk that China and other central banks in Asia -- which jointly have $2.6 trillion in foreign currency assets -- might be looking to diversify some of their reserves into gold had underpinned sentiment since late last year.China said on Thursday it planned to explore new ways of using the country's foreign exchange reserves and broadening their investment scope. It has 600 tonnes of gold in its reserves, accounting for only 1.2 percent of the total.Dealers said worries about rising energy costs and general security concerns in the Middle East had prompted funds and investors to diversify away from equities, currencies and bonds."The market overall does look strong," said Frank Aburto, a broker at Rosenthal-Collins Group in New York. "I don't think it is going to collapse. Setbacks are an excuse to go into the market and go long, which is what the funds are doing at this point."Analysts said speculative positions in the U.S. market were high but had been stable for the past four to five weeks and there was no pressure on market players to liquidate. TownCrier (1/9/06; 18:11:43MT - usagold.com msg#: 140305) Gold scales 25-year high http://www.bahraintribune.com/ArticleDetail.asp?ArticleId=92864&CategoryId=5 (Bahrain Tribune) January 10, 2006 -- ..."[Some] People have had for many years a very negative view of gold and that view is now changing."There is a lot of wealth creation in countries that have an affinity with gold," said Robin Edwards, president of UK-based Sabre Fund Management."People are allocating money to gold," he said.^---(from url)---^ USAGOLD Daily Market Report (1/9/06; 18:02:38MT - usagold.com msg#: 140304) Page Update! http://www.usagold.com/DailyQuotes.htmlThe Daily Gold Market Report has been updated.If you are considering investments in gold we invite you to request our free introductory information packet detailing the products and services offered by USAGOLD ~ Centennial Precious Metals. We welcome your inquiry and look forward to working with you.MONDAY Market ExcerptsJanuary 9 (from Reuters) -- COMEX February gold contracts jumped$9.30 to $550.50, after trading between $536.50 and $551.40, the priciest for benchmark futures since March 1981.Gold raced higher after a flurry of profit taking at the open, as bullish traders pushed the market up to retest highs from Asian and European trading. (Investors in Japan were absent due to a holiday but dealers and analysts noted fund buying from elsewhere in the region.)"You saw fairly steady fund buying through most of the day, and you saw some dealer buying too," said Andy Montano, a director at ScotiaMocatta in Toronto. "It seemed to be more a sentiment move than anything else and there didn't seem to be any significant interest in selling, and so the buying just kept taking it upwards and upwards."The day's rally in gold, an alternative to more traditional investments, was unusual in that it coincided with a strong stock market and with a firmer dollar in the afternoon. The Dow Jones Industrial average rose above 11,000 for the first time in 4-1/2 years."There seems to be some pretty good economic strength in the markets in general and that is giving rise, I would imagine, to some concerns over inflation," Montano added.Market sentiment on gold is overwhelmingly bullish amid a positive supply/demand outlook for 2006 and as funds continue to diversify into commodities and away from currencies and the stock market to boost returns.(from MarketWatch) -- The dollar has come under pressure in the past week from expectations that the Federal Reserve is approaching the end of its rate-raising cycle. At the same time, high energy prices have stoked inflation fears, bolstering demand for gold."We expect continuing record U.S. budget and trade deficits to weigh on the greenback," said P. Mark Smith, analyst with Dundee. "The greenback could weaken further and faster if Greenspan's replacement takes the chair and eliminates rate hikes or reduces rates."Ben Bernanke is scheduled to take over as chairman of the Fed from Alan Greenspan at the end of January.---(see url for full news, 24-hr newswire, market quotes)--- Cavan Man (1/9/06; 17:10:32MT - usagold.com msg#: 140303) China Gold Discussion Procuring hard metal will enable China to pay for natural resources going forward which are denied to her today; e.g., Unocal. Having the gold enables the rules. If the price of gold is driven up to a relatively high (historical) level from Chinese buying and maintained there more/less, gold could be featured again and rightfully so in the forex showcase of sovereign nations. I am setting aside the Murphy/GATA argument as well as the freegold tautology. If China buys metal at (relatively) reasonable prices indefinitely with USD-good. If Chinese buying (current) precipitates are paradigm shift in global monetary dynamics-good. Either scenario sees China playing the trump card. Goldilox (1/9/06; 17:04:51MT - usagold.com msg#: 140302) "Currency swap" Sorry for the typos. Goldilox (1/9/06; 17:03:24MT - usagold.com msg#: 140301) Currency Swaps "SAO PAULO, Brazil, Jan 9 (Reuters) - Brazil's central bank said on Monday it sold 8,800 currency swap contracts linked to short-term interest rates, canceling out about $417 million in debt instruments indexed to the dollar."TC,Can you elaborate on this for the unititated? What is a "cuurenct swap", and how does it cancel out a debt?Thanks,-G TownCrier (1/9/06; 15:09:31MT - usagold.com msg#: 140300) Brazil's central bank sells $417 mln in swaps http://yahoo.reuters.com/financeQuoteCompanyNewsArticle.jhtml?duid=mtfh42801_2006-01-09_16-35-28_n09159502_newsml SAO PAULO, Brazil, Jan 9 (Reuters) - Brazil's central bank said on Monday it sold 8,800 currency swap contracts linked to short-term interest rates, canceling out about $417 million in debt instruments indexed to the dollar.The auction marked the 31st time since November that the bank has offered such swaps...^---(from url)----^Like Argentina, the Brazillian central bank appears to have thrown out the old rulebook and looks poised, ready to play a new game for the days ahead. Any guesses how long before 'gold' is mentioned in association with Brazil, too?R. Flatliner (1/9/06; 14:57:14MT - usagold.com msg#: 140299) @968 Smile! Hang on to your physical. Life will be good to you. And remember that once upon a time, the liquidity in the paper market drove the physical market price down.It seems that China might be in a difficult position when it comes to finding gold. As MK points out, the easiest most private way to acquire might be to contract with the source. Another avenue is to go on vacation and go jewelry shopping! Let's see 155,000 tonnes exist, 30,000 tonnes locked up in central banks. That means that 80% of the gold in the world is free for them to buy. Don't you think the wife of the CB head in China would look nice in a 1 ounce 22k gold necklace from Tiffanys?Time will be our guide. TownCrier (1/9/06; 14:54:25MT - usagold.com msg#: 140298) Gold Buyers' Group -- Update http://www.usagold.com/gold/special/dutch.html The Uncirculated King Willem coins have sold out. XF Kings and Unc Queen Wilhelmina still available in this discount allotment -- while supplies last.R. 968 (1/9/06; 14:36:55MT - usagold.com msg#: 140297) @ Flatliner Can you please explain me how a papermarket, that has an UNLIMITED supply of paper, can fulfill delivery against a LIMITED amount of gold ? For your information : once upon a time in '71 there was a UNLIMITED supply of paper that could no longer be mathematically converted against an LIMITED supply of gold... MK (1/9/06; 14:34:41MT - usagold.com msg#: 140296) By the way, canamami Good point. Goldilox (1/9/06; 14:29:14MT - usagold.com msg#: 140295) CNBC Poll CNBC's Closing Bell Poll is:Would you buy a car made in China?Now see what we've done by shining a spotlight on all this China bruhaha! Goldilox (1/9/06; 14:26:16MT - usagold.com msg#: 140294) China yuan closes at 8.0641 to US dollar vs 8.0668 in exchange-traded market http://www.forbes.com/markets/feeds/afx/2006/01/09/afx2435889.html snip:ING (AFX) - The Chinese yuan closed on the exchange-traded market at 8.0641 to the US dollar, ending the day at a post-revaluation high, according to traders. The price rose from the close of 8.0668 on Friday, the previous trading day, as it strengthened against the dollar in the first day of its second week of trading under a new market-maker regime. Today's central parity rate was set at 8.0665 to the dollar. The central bank allows a trading band of 0.3 pct on either side of the midpoint. On Jan 4, China launched an over-the-counter system for the interbank foreign exchange market, allowing two market participants to make currency trades on credit without the intervention of a third party. -GoldiloxJust some more FAT for the fire. Clink! (1/9/06; 14:18:44MT - usagold.com msg#: 140293) @MK Would China be desperately wounded by paying 125% of the current market price to buy gold?? 150%?? 200%??Why, is that what they were offering you ?!! LOL !!C! MK (1/9/06; 14:10:29MT - usagold.com msg#: 140292) Goldilox, Canamami, Cytek, CP Watch for China to move in directions unforeseen -- or perhaps foreshadowed by its actions in the past.There is nothing to prevent China from contracting at the source. The pressure could come to the gold market from a different direction than the one anticipated.Would China be desperately wounded by paying 125% of the current market price to buy gold?? 150%?? 200%?? Flatliner (1/9/06; 14:01:07MT - usagold.com msg#: 140290) @ Mkt Too Small Why, this market is too small concept is just silly. It's huge! Millions of ounces trade on the NYMEX all the time. Dang, last time gold got tight and Oil wanted to acquire gold, exchanges popped up everywhere with a major surplus of gold. Back then, the price dropped and, it seems, everyone that wanted gold got it. Someone should inform that analyst that anyone can buy all the gold they want with a couple clicks of a mouse. Also, China would stand to make a little profit too. Just think, February contracts are really cheap and it doesn't take hardly any money to acquire them! I mean, really think about it, they could hedge the next trillion dollars of US deficit in all markets around the world for pennies on the dollar. Then, just sit back and let the gold roll in! Hey, the Chinese even have their own gold markets. Someone should tell them to just go shopping and get out of the headlines! I mean really… we've got a booming economy to think about and no one in their right mind would question that. ;) Ah ha ha ha ha ha ha ha… I hope everyone here has their own water rights. Chris Powell (1/9/06; 13:56:48MT - usagold.com msg#: 140289) GATA comment on Dow Jones story on Chinese FX diversification http://groups.yahoo.com/group/gata/message/3591 The bad guys are whistling in the dark.To subscribe to GATA's dispatches, send an e-mail to:gata-subscribe@yahoogroups.com canamami (1/9/06; 13:52:17MT - usagold.com msg#: 140288) China Gold Diversification MK,But what else is there, besides gold? If China buys other currencies, that action will drive those currencies up, affecting international trade and political relations. Moreover, other countries will become very leery if the Chinese bank/government tries to buy up national resources (commodities), or the companies which mine those resources. So, China has to put its trade surplus into something, and presumably some of that surplus will find its way to gold. Parking the money in gold is arguably safer politically and economically than in non-$US currencies, even if it drives up the gold price.It may be that China will either have to import more, or export less, to put an end to accumulating dollars (and its trade surplus generally). India has developed without encountering the same problem, by keeping its international trade more in balance. One other point: Chinese private demand. If the housing boom has popped, then private Chinese money will find its way to gold. Goldilox (1/9/06; 13:46:58MT - usagold.com msg#: 140287) Barclays' China-Gold Article @ MK,Pretty weak, wasn't it.I agree that the most telling part of the article was public recognition that China wants out of the dollar investment corner it is painted into.The UnoCal offer was an interesting "test of the waters," but far be it from the largest country in the world to stop trying after that one political setback.If they should replace the US and Canadian banks as the financier of choice for the miners, the HUI/XAU would probably achieve liftoff. Cytek (1/9/06; 13:40:48MT - usagold.com msg#: 140286) USA GOLD Well i haven't posted for a while. But i was introduced to this site from a friend of mine back in 99'. Been reading it since faithfully. You guys still know what's really going on out there. THANKS for your continued input. I started buying physical at $280 and have been ever since. The best investment of a lifetime. Get it, it's still not too late to start. cytek MK (1/9/06; 13:39:43MT - usagold.com msg#: 140285) Sorry all For the scratches and reposts and then errors anyway. . .Very busy here today. MK (1/9/06; 13:37:33MT - usagold.com msg#: 140284) Goldilox: China can't get the gold it wants Quite an nteresting thought:Let me translate."China would like to add gold reserves, but it cannot because there is not enough supply." There's a hidden message there - in that attempt to throw cold water on this rally - worth contemplating. The private investor, I am happy to say, is not caught in such a quandary, nor is he or she forced to hold dollars because the market cannot accomodate the demand. Could Barclay's have argued more forcefully in favor of private gold ownership? We would be hard-pressed to come up with a more convincing argument than the one Barclays and Dow Jones makes while attempting raise the specter of the bear.The message in the article is straightforward: China would like to get out of the dollar at some level, but it can't. Now, what would you do if you were China? Commodities rising in an inflation induced price rally; shut out for the most part from acquiring commodity producing companies; and stuck with an ever-growing pile of fiat dollars to which history has consigned a dubious conclusion.Let's just say that the whole gold rally doesn't come to a quick conclusion simply because an analyat at Barclay's with an accomodative last name proclaims that there's not enough gold available fro China to craft a dollar escape.In fact, it persuasively argues the exact opposite.Thanks for bringing the article forward. Goldilox (1/9/06; 12:56:43MT - usagold.com msg#: 140281) FOCUS: Gold Mkt Too Small For Chinese Diversification http://sg.biz.yahoo.com/060109/15/3xr9z.html snip:LONDON (Dow Jones)--The world gold market is too small for China to achieve any meaningful diversification into the precious metal, leaving it likely the country will instead follow a more cautious, dollar-bound investment path, analysts said Monday.Sentiment towards gold has been boosted since Friday, when it was reported that China may start to diversify its foreign exchange reserves away from the U.S. dollar and government bonds.Hu Xiaolian, director OF China's State Administration of Foreign Exchange, said in a statement last week that the agency plans to "further improve the structure of currency assets in the foreign exchange reserve portfolio and continue to broaden foreign exchange reserves' investment channels."Taken by many market participants to be a plan to move into gold, the precious metal jumped from an intraday low of $523.15/oz to around $540/oz as the possibility was widely welcomed by gold traders. The metal reached a fresh 25-year high of $544.40/oz Monday.According to World Gold Council data, China has around 600 metric tons of gold in its holdings, about 1.1% of its total reserves. This ratio is tiny when compared with countries such as the Netherlands (722.4 tons or 51.3%) or the European Central Banks (719.9 tons or 20.6%), but closer to the gold reserves-holdings ratio of Japan (765.2 tons or 1.3%). But analysts remain skeptical over the likelihood of an aggressive move into gold."We view China's ability to raise gold holdings to a meaningful level for diversification as constrained, as the gold market is too small for this to happen without a serious price distortion," said Barclays Capital analyst Yingxi Yu."If it were to raise (its gold holdings from 1.1%) to 10%, it would absorb some 4,680 tons, or around two years of global mine production. Investing in other commodities like oil and base metals would be more possible, or the outcome could well be a combination of elements from different asset classes," she added.To bring China in line with other international standards is unlikely, said HSBC analyst Alan Williamson."For China to raise its gold in reserves to the international average of 8.9% would require the purchase of an additional 3,613 tons," said Williamson. "For China to raise its gold in reserves to the ECB benchmark of 15% would require the purchase of an additional 6,501 tons," he added. By comparison, most European national banks have agreed to limit their total gold sales to 2,500 tons in the five-year Central Bank Gold Agreement, signed in 2004."The bulls in the market would argue that at a sharply higher gold price - an inevitability if China and/or Japan did begin to buy gold on the open market - the volumes required would be commensurately lower. Nevertheless, liquidity remains a key consideration," Williamson said, adding that his statistics are based on a gold price of $528/oz.Williamson said it was more likely China would look at utilizing the gold reserves in a "more pro-active manner." "Rather than accumulating U.S. treasuries, for example, the Chinese government could use the reserves to secure energy and other commodity resources overseas."But he pointed out that such a strategy isn't without its problems, as last year's attempted purchase of U.S. independent oil producer Unocal by Chinese oil company CNOOC proved. The $18 billion deal ran into significant political pressure in the U.S. and was abandoned last August, with Unocal subsequently purchased by Chevron in November, Williamson said.A further problem comes from the fact that should China stop acquiring U.S. dollars with its reserves, the greenback would come under extreme pressure, something the Asian country has been keen to prevent in order to protect its export sector. For this reason, U.S. dollar-denominated treasuries and bonds look likely to remain the most desired assets for the Chinese, analysts believe.Also, it's still uncertain whether or not increased volumes of gold changing hands at the gold fix in recent weeks are anything to do with Asian central banks buying gold."We have no way of knowing if this is true," said UBS analyst John Reade. "We have no evidence that central banks in the region are adding to gold reserves, but we noted a lot more interest in the metal than we have seen in recent years," Reade added.Spot gold fixed in London Monday at $541.50/oz.-GoldiloxDenial isn't just a river in Egypt. Goldilox (1/9/06; 12:16:10MT - usagold.com msg#: 140280) Rich Man's Panic @ Federal_Reserves,I think the growth in Caribbean banking and their "investment" in US T's is already indicative of that. How many US contractors were in the CONgressional target sights for moving offshore to evade paying taxes to the trough they so willingly slop from? Federal_Reserves (1/9/06; 11:39:40MT - usagold.com msg#: 140279) The road to bankruptcy http://www.publicdebt.treas.gov/opd/opdpenny.htm FED - GUYNN: FEDERAL DEFICIT OUTLOOK 'VERY WORRISOME' Official US Treasury funded debt soared by $US 237.6 Billion in the last quarter of calendar year 2005. 12/30/2005 $8,17009/30/2005 $7,933Net Increase 237Annualized debt growth about 12% growth per year now compared to 3-4% GDP. Unsustainable.Going to have to raise taxes on the rich soon and/or drastically cut xfer payments to the poor. Should be an exciting election year.I'm still looking for a RICH MAN's panic similar to 1907, when they realize that ultimately, as US citizens they are the bagholders for this debt. Gandalf the White (1/9/06; 11:32:43MT - usagold.com msg#: 140278) GOOD Jumping, SPIKE !!! <;-) http://isht.comdirect.de/html/detail/main.html?sTab=chart&hist=1d&sSym=GLD.FX1 Note the now "classic" signature of the "COMIX" trading action.Today the US$ was "pumped", or it would have hit $555 !Sir Goldilox -- Please call me when the US$ breaks the 88.80 level and we shall celebrate !!GO SPOT (Yellow that is !!)<;-) Clink! (1/9/06; 11:07:39MT - usagold.com msg#: 140277) Congressman Paul sounds off on finance scandals http://www.house.gov/paul/tst/tst2006/tst010906.htm Snip:-When the federal government redistributes trillions of dollars from some Americans to others, countless special interests inevitably will fight for the money. The rise in corruption in Washington simply mirrors the rise in federal spending. The fundamental problem is not with campaigns or politicians primarily, but rather with popular support for the steady shift from a relatively limited, constitutional federal government to the huge leviathan of today.We need to get money out of government. Only then will money not be important in politics.End snip:-Forgive me for sounding jaded, but how many politicians even have the political incentive, let alone the will, to even think of cutting more than token sums ? By Parkinson's Law, the engine of bureacracy can't be slowed - it keeps on going faster and faster till it runs out gas, at which point it stops altogether. The best we can hope for is that it doesn't fly off a curve before that happens. Buongiorno! (1/9/06; 10:51:12MT - usagold.com msg#: 140276) glasses on now! @ YGM--mia culpa! Mis read my Atlas. You are correct--Buongiorno! YGM (1/9/06; 10:44:45MT - usagold.com msg#: 140275) Dollar Bills Just IOU's for future productivity. The (any) dollar is now only as good as what Joe Blow is going to produce next monday. IMHO YGM (1/9/06; 10:41:30MT - usagold.com msg#: 140274) Canada's Dollar IS a resource & mineral productivity based Currency. This is always a deciding factor in the strength of our dollar, even w/o Gold reserves in the CB. The list of known in ground natural resources is second only to Russia and we all know the nightmare associated with doing business or extracting resources in Russia. Now Canada is fast becoming a world factor in the production Diamonds as well. YGM (1/9/06; 10:35:30MT - usagold.com msg#: 140273) Buongiorno...Close but no Cigar :-) http://www.mongabay.com/igapo/world_statistics_by_area.htm Canada is actually bigger than the USA by a wee bit. Canada has the second largest land mass in the world. FWIW Ned (1/9/06; 10:35:01MT - usagold.com msg#: 140272) @ Goldilox I'm guessing. Reserves from an "access" point of view. Explain why Canada's currency is going up and is regarded as the "go to" currency of late while the greenback is a point of nervousness. Is lack of gold a function of this. Wondering out loud. U.S. has "deep storage" gold?Canada has "deep storage" oil? Buongiorno! (1/9/06; 10:31:37MT - usagold.com msg#: 140271) Ahhh--Canada! @ Ned and Goldilox Let me take a very humble swing at your good questions....Overview: Canada has about one-half the area of USA and (former) USSR, but only roughly ten per-cent of the population. Natural resources are abundant, running all the way from asbestos to zinc. People there are well-educated, energetic, and pretty much together. (Huge natural resources "owned" by a small population....think "rich".)Energy resources are substantial, but much of that is reflected in tar sands. (Think oil shale, think BTU's in and BTU's out...) Then think of the abundant other minerals in that treasure chest--and we have a start on an answer to your question about oil-or-gold. The function of their Central Bank, IMHO, should be to tweak the system of credit availability, interest rates, general governing policy, etc to see the temperature of the water is suitable for commerce and that lubrication is getting to the gear boxes. Oil and other assets in the ground must be harvested in order to have tangible value. Profits are realized by selling all of those wonderful raw materials to a world parched for such stocks--or (better still) in the manufacture finished goods that sell for many times that markup.Canada is doing both. Very well, IMO--and therein lies her greatest treasure of reserves. (Central Bank holdings are subject to being loaned, sold, etc (we all know the drill), and I am betting the true wealth of Canada will be reflected in the items I have mentioned. Much more can and should be said about this--a book, anyone?Bottom line, because of these factors, I think the Loonie will appreciate about eight per-cent against the Dollar during 2006. We shall see. Good luck to our "cousins" up north!Buongiorno! USAGOLD / Centennial Precious Metals, Inc. (1/9/06; 09:55:46MT - usagold.com msg#: 140270) Pre-1933 gold coins at better-than-bullion pricing! http://www.usagold.com/gold/special/dutch.html January Buyers' GroupSpecial discount pricing on Dutch 10 GuildersShop online or phone for addtional savings.Call today, save today!1-800-869-5115
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