The Gold Trail:
The Message
of an Evolving Market
"Understanding
the events that got us here
and how they will unfold before us
is what this GoldTrail is all about."
--FOA (5/6/01)
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Two roads diverged in a
yellow wood,
And sorry I could not travel both
And be one traveler, long I stood
And looked down one as far as I could
To where it bent in the undergrowth;
[...]
I shall be telling this
with a sigh
Somewhere ages and ages hence:
Two roads diverged in a wood, and I--
I took the one less traveled by,
And that has made all the difference.
--Robert Frost
(1874-1963)
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"Think now, if you are
a person of "great worth" is it not better to acquire
gold over years, at better prices? If you are one of "small
worth", can you not follow in the footsteps of giants? I
tell you, it is an easy path to follow!" --ANOTHER (THOUGHTS!) 1/10/98
[View early writings of ANOTHER and FOA at USAGOLD (5/1/98
- 9/3/98)]
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WELCOME to The Gold Trail: The Message of an Evolving Market...
USAGOLD is pleased to offer
these special pages of unfolding commentary (and archives) that
are sure to challenge conventional perceptions of the gold market
and international monetary affairs. As we turn over posting access
to this web page to our anonymous author, FOA, we no more know
in advance the schedule or direction of the forthcoming commentary
than do our fellow readers. However, based on our past association
with this gentleman, we are confident that the messages will
continue to be as fascinating and as worthy of careful study
as anything you will find on the web today.
Through these
special pages we can now follow "The Gold Trail" of
current events; anticipating the road ahead while leaving this
easy-to-follow trail of commentary behind.
For your further convenience,
an alert message is automatically posted to the USAGOLD Forum
whenever there has been an update to this Gold Trail page. We
encourage you to follow along and to join your friends at the
USAGOLD Forum to share in the discussion.
It should be noted that we
do not edit or seek to alter these presentations; they appear
here as submitted by the author. With that, we have finished
lacing on our own hiking boots, and stand ready to enter the
yellow wood, taking the path less traveled by...
Click
here for convenient access to the USAGOLD Discussion Forum
Archives for referenced posts
(Archive I) The Trail Head
-- Start here for earliest archived Gold Trail posts
from February
2000 - June 2000
(Archive II) The Long and Winding Road -- Gold Trail posts from June 2000 - January
2001
(Archive III) The Scenic Overview -- Gold Trail posts from January 2001 - April
2001
(Archive IV) Nearing the Great Divide -- Gold Trail posts from May 2001 - June 2001
(Archive V) The Trail Widens
-- Gold Trail posts from July 2001 - September 2001
This periodically updating Gold
Trail commentary page is presented in a bottom-up order, with
the most recent text posted atop the prior commentary. (Scroll
To Bottom of Text) to read the earlier posts.
FOA (12/16/01; 15:27:34MT - usagold.com msg#133)
(No Subject)
Seasons Greetings and a Happy New Year to the entire USAGOLD GROUP.
Certainly, this includes every reader / lurker at the forum, hikers
on the Gold Trail and the staff at CPM!
Of course, the largest thanks must go to Mr. Michael Kosares;
as this media would not exist without his enormous efforts. Thank
you Michael (smile)!
We rest from discussion during this holiday season; a season that
also happens to be ushering in one of the most dramatic financial
changes the world has seen in our time. As the rains arrive and
our crops begin to grow :
---- "We watch this new gold market together, yes?"
-----
A happy (smile) to all!
TrailGuide
FOA (11/12/01; 16:31:28MT - usagold.com msg#132)
There comes a time
There comes a time in all things when one must do nothing and
simply wait. This is an ages old truth that crosses all the boundaries
of life's endeavors; for everything is not always in the doing,
but also in the watching. Any good farmer knows that he does not
grow a crop; he only prepares his field so the growing, he knows
is coming, can take nature's course.
My friends, we have crossed time and space, while plowing these
fields of understanding, and the unfolding drama before us must
now sprout it's own life. For now, it is my time to watch the
trail and let the crop develop. Indeed, it will and it will do
so for all to see.
Enough has been said to prove our reasoning is true, especially
when the fields become full and in a shade of physical green only
our seeds will produce. And planted them, we did, by hand, one
at a time, over many years.
Enough has also been said about myself as this story was never
about me; perhaps too much untruth was also said by others?
I am going to travel for a while and watch the trail from a distance.
It won't be long before the rains come and the ground begins to
open; in that time I will return. Until then; this farmer will
rest from this work.
Thank you USAGOLD and all the fine people that make this media
the best gold site in the world! Another time, we WILL hike again.
Sir Douglas
Your Trail Guide
FOA (11/8/01; 15:10:35MT - usagold.com msg#131)
Words of a fool!
These are parts of several posts presented today
on the main forum. This person does not know me or my associates.
Indeed, most of us let blood for this country in a war long gone.
I will say this for the record: Another is English and not Islamic!
But you have no trouble at all casting me in with the same evil
that crashed into our nation on the 11th., do you? . Sir, you
have spit upon the "flag" that waves outside my window.
I do so now spit upon your name. You are not part of the same
country I served!
I have spent years teaching and debating with men great and small.
And have learned that only the mean ego of a useless fool uses
such tactics. I am ashamed to have read your words at all and
will do so no more. You are but a reflection of the very political
hatred you condemn. It is a sad, sad day when someone wants your
story silenced, so badly, that they resort to such comments. My
spirit is low, I will walk this trail in silence.
-------------
-------However, I do not say "all paper will burn",
and I definitely don't send demented religious fanatics to crash
into the paper trading house and burn it down. -----
------ Finally, when FOA started putting forward his economic
theories, I realized that he had spent too much time listening
to an Islamic cleric who had not a clue as to economics.----------
------ So, from my vantage point of budding economist, FOA's explanations
come down to being non-arguments and economic gibberish that would
even shame Marx and Keynes. ----------
------ The motives of these people complaining of US defaults
and monetary imperialism are simple: the greed for the unearned,
envy grown of a zero sum view of social life that is characteristic
of feudal societies such as Arabs still live in and Europe has
barely made one step out of, and fear of their economic and financial
future as a result of their stealing and wasting of their people's
wealth. -------------
FOA (11/5/01; 18:31:01MT - usagold.com msg#130)
A quick note from the
"TrailHouse"! (smile)
http://www.forbes.com/work/managementtrends/newswire/2001/11/05/rtr415069.html
----------------
You just have to give the devil his due,,,,,, Wim Duisenberg gave
a clear signal today and his timing
allowed him to hit two birds with one rock.
First target: He has all of Political officialdom now holding
their tongues because they learned that
the ECB is not the same animal as our Fed. From the link:
---- "Politicians have been scared of publicly pressing the
independent ECB to act for fear it may
dig in its heels and remained cautious Monday" ----
Ha. Ha. They now know that these guys (ECB) are looking out for
not only the money of a large
diverse group of nations, but perhaps a new bench mark currency
a good portion of the rest of the
world may use. Their stance, recently, states that a currency
should be valuable too and even offer
a real return for those that hold it for a while.
Don't expect Western dollar investors to fully taste this flavor
just yet. But, they will as their local
economic structure begins to hold complete sway over the Feds
actions. And all those deflation
boys thought our Fed would not inflate? Shoot, even our treasury
in manning the guns now!
Second Target: Wait long enough for the US to have to drop dollar
rates even lower before you move. "Watch him Alan,,,,,, Old
Wim keeps his Euro biding a little higher than your dollar! I
got a bad feeling about
this trend!"
---------------
Leigh,,, thanks for reading and thinking. I also want to thank
everyone for using the fine services of
USAGOLD. Because then they further offer this entire forum library
to further expand your understandings of gold. It takes a lot
of effort by
everyone, who thinks and writes here, to offer such a broad spectrum
of Gold thought.
---------
Gold has always been the most political metal our world has ever
known; political because it offers
so much power to those that hold it in their hand. Many of the
downtrodden look at government
policies and say:
-----"they dictate our wealth and put us in debt so as to
control us"! -------
Conversely; A simple person can control his controllers by staying
out of debt and owning a wealth
no government can dictate the value of: Gold Bullion!
GOLD:
-- value it with official contracts and currencies and your wealth
is their power ,,,,,,,,,, keep it as your savings of ages,,, and
your wealth becomes their master!
TrailGuide
FOA (11/3/01; 14:39:16MT - usagold.com msg#129)
An "inflationary
depression" is in the cards -- a "price deflation"
doesn't have a chance!
----------------------
Back in the mid to late 70s Sir John Templeton always drove his
point home for investors watching Luis Rukiser's show. (how does
one spell his name,,,,, we always called him Lou Baby (smile))
Sir John, living here on Layford Cay, kept saying that the Dow
of the 70s was very under priced and would soar. He was the most
absolutely correct person stating that then! But more into the
mechanics of his perception: he knew that anyone buying the Dow
and waiting a decade or more, would gain way beyond mere price
inflation. Monetary inflation would eventually drive the perceived
virtual wealth of US stocks ever higher. So high, in fact, that
their percentage gains over price inflationary gains would be
incredible. They were!
Truly, what John was referring to was the effects that simple
"passive inflation" has on paper assets; especially
in a "reserve currency's" domestic market. In this;
real price inflation is mostly exported by importing "real
goods" competition. This happens as we export excess credit
dollars to buy things. It also has another effect; some of that
same exported printed money flows in a circle and joins native
investor's buying of local paper assets. When this process first
starts, "passive inflation", in the form of massive
money creation that's far beyond real price inflation, allows
one to gain "virtual paper wealth" even before the markets
price out the gains. That is; the Dow stays cheap at first then
eventually rises to absorb the money inflation! As long as prices
don't rise too much.
People that followed his advise, accumulated the Dow over a decade
or more; buying "virtual wealth" before the fact! Stock
investors made a killing by positioning their assets where this
created "passive monetary inflation" would eventually
end up. Even though hard money players laughed at them all thru
out the 70s, 80s and early 90s! Look who is laughing now? Stocks
tromped hard money plays hands down for over 20+ years! Even considering
the latest fall on wall street.
My friends:
Today, this same "virtual wealth" effect has been created
again and is located in physical gold bullion. I believe Sir John
has already made part of my point but I will repeat.
When a currency system comes to the end of it's reserve use, I'm
speaking politically, it's domestic market will come to a point
where it can no longer export "real price inflation"
in the format of; "shipping it's excess currency outside
it's borders". This happens because internal money inflation,
that is super currency printing, is increased so much that it
overwhelms even it's export flow. Worse, even that export flow
later tumbles as the fiat falls on exchange markets.
The effect is that local "passive inflation" , built
up over decades and fully reflected in "Sir John's"
paper assets, spreads out as "aggressive inflation"
and hyper price rises begin. In this action, the very same wealth
effect that was eventually priced into "John's" Dow
stocks and other assets, begins a long march of being priced into
real gold.
Anyone that has accumulated physical gold over this past long
period was doing the exact same thing Dow buyers of the late 60s
and early 70s were doing: ------ saving "wealth" as
unpriced "virtual wealth" stored up over that "passive
inflation" period. ---
----------------------
As "political will" begins to impact the economies of
the US,
our old "virtual wealth" that is no longer in the form
of "passive inflation" nor limited to the currency,
and is openly displayed in our vast sea of paper assets values
including stocks, bonds--------
must now be defended in the open with official printed money flow.
---------------
The "virtual wealth" in gold, saved over years by patient
investors, will also be priced to market in this process.
Never mind that during the Dow years paper gold markets could
not work in parallel with all the other asset gains; it couldn't.
Hard money players, trying to somehow play the Dow's game, never
caught on to what was happening. Instead of buying "virtual
wealth" by saving real gold; they brought
leveraged bets that gold would be priced correctly during the
"paper asset" years.
Obviously, this "trade" failed hard money players as
the waves of value from other paper gains and derivatives leverage
were employed to match against their every long bet on gold. Not
only that; the "virtual wealth" in gold was never opened
for them with the super price inflation they all thought was coming
during that era!
Now that the paper game is about to stop for the dow, it will
also cut off the leverage of gold bets. Just as the real game
begins.
The reason for this is that our massive, decades long gains in
our stock markets did not bankrupt the leverage in the money system.
Where as any massive rise in physical gold values cannot be priced
into "derivative gold" without crashing the system.
Remember; in political inflation's, money is printed
to save the assets as they are currently priced; not create new
loses by saving the liquifying the leverage that's countering
your play!
This paper gold market will be cashed out at prices far below
real bullion trading so as to inflate further the books of the
Bullion Banks,,,,,, not destroy them. At least this is how the
US side will proceed.
------
Michael Kosares-- A thru Z
In this perception USAGOLD has been guiding it's clients, and
now the world, in much the same way Sir John did decades ago.
"Buy what has value at the greatest discount and wait for
the politics of money to price your new savings correctly"!
The politics of wealth today is centered around gold bullion and
only gold bullion: that is where the wealth and power will be
manifest: this is where the gains will be! To bet on the rest
of the hard market ; is to bet against the coming inflation making
your asset whole!
Place as much of your wealth in physical gold as your understanding
allows and save this "virtual wealth" of the ages today:
waiting for it to become real wealth, priced correctly in the
market place, tomorrow.
Make no mistake, the wealth is there "but only there in bullion"!
Because a free bullion market cannot be denied or controlled
----- when it stands between the opposite goals of political powers!
---
In this: it will separate from the politically crushing reality
the current dollar based paper gold markets represents. The premium
on bullion will soar!
The "Political will" of old world Europe is about to
help make our investment real. For myself, a large percentage
of my wealth is being saved by going with the evolution of paper
moneys: not against!
This trend is visible now and based on the forward flow of human
affairs, not the backward rules of money theory!
Our future is today; if not just around the trail!
Sir Douglas; aka FOA
your: Gold - Trail - Guide
FOA (11/2/01; 12:35:27MT - usagold.com msg#128)
Gold,,,,,, Gold,,,,,
Who has the Gold?
Let's take a walk and think about the big picture for a minute.
Then we can get back to that question.
-----------
If you followed most of Another's Thoughts over the years the
line of reasoning below will fall easily into place.
Somewhere during the late 90s, when events made it more certain
that the Euro would be formed, the threat to use real gold as
a partial pricing unit for oil was moved to the back burner.
By including an extremely small amount of delivered gold in trade
for oil, along with digital dollar settlement, gold would once
again be returning to it's ancient roots as a world class wealth
used in barter. Instead of allowing it to be controlled by bankers
and governments, gold's socialist tie in with official money use
would be all the further distanced.
So, if swapping oil with third world nations, for grains, finished
goods and other commodities, offered lesser countries another
way to circumvent their lack of hard currencies while using the
dollar system; then using gold to partially settle world wide
oil trades would bring more balance into this one-sided dollar
economic world. Trade alignments, such as gold for grain, grain
for copper, copper for oil, then oil for gold would easily be
adapted into our current solo dollar realm; forcing the dollar
to share it's fiat use demand with real barter trade for real
goods. In this, allowing international trade to abrogate the dollar's
iron clad pricing of goods and services to the singular benefit
of American lifestyles.
Where official dollar supporters have structured our paper gold
market in a way that values gold only upon it's money backing
merits; a returning of gold into it's barter trade realm would
force a realignment of values between physical and paper. Once
again allowing gold's value to soar and creating a large enough
liquidity mass to serve not only as an oil trading medium, but
wealth savings for all.
---------------------------
On the back burner, perhaps, but not out of the picture.
In this premier position of barter trade for oil, gold itself
would have been backed with a demand component, the demand for
oil, that would last as long as the world remained advanced. As
dollars and Pounds were once backed with delivery of gold, in
a turn of events, modern physical gold would be backed with delivery
of oil.
Even matching a barrel of oil to just 1/100 of a gram, the long
term demand for oil would have brought physical gold trading back
into the forefront and shown the true worth of gold in it's non
money barter roll. Such a price valuation that has not been seen
in, perhaps, a thousands years.
With physical pricing again setting the level for derivatives
pricing, the dollar reserve system's evolution from gold standard
to derivative standard would permanently dissolve. Not only would
our current form of paper gold would lose it's effective control
in price discovery; in a repeat of 1971, our paper gold game failure
would once again costing paper leveraged investors many fortunes.
-----------
For now the Euro: the vision held together
Once again the choice would be clear for both common man and international
trader; use fiat if it's economy of use is efficient and controlled
or use taxable barter to help control your controllers. Within
the confines of the US, this may not become a reality (I think
it will), but internationally, with European support, it cannot
be avoided. All nations will use gold as nature intended and do
so for the betterment of mankind.
At this point in time, there is no longer a concern that the Dollar's
timeline might have no end in sight. With the world's more favorite
form of trade settlement, digital currency, about to be represented
by the moneys of a group of nations; the dollar's singular drive
to enhance the lives of only one people is about to end with the
currency's credibility.
First and foremost in the ECBs political will to establish a credible
fiat, gold was and is set free to be valued at whatever level
free physical trading would allow. We know now that the dollar
marketplace for gold paper is coming to an end with this process.
Not only will they be allowing limited, taxable gold barter to
accelerate, but to also encourage it's bilateral barter use within
international trade settlement. Something the IMF has fought so
hard to contain.
Therefore, by the end of the 90s, the need to employ gold for
partial payment in oil settlement, as a means to block our dollar
faction, was removed from the table. With that the threat that
buyers, traders and hard money players would join oil sellers
in flocking into the physical gold markets, also disappeared.
The thought that driving this suddenly new oil pricing tool thru
the roof, was simply restructured. For the time being, the complete
burning of our paper gold markets was put on hold; along with
the 280 floor big trader and other official gold holders said
"must stand" at that
time.
Indeed, from hindsight, the often repeated remark that "all
paper would burn" was not invalidated; rather expanded in
scope beyond just our dollar paper gold markets. It now seemed
that this paper burning would also include the entirety of dollar
assets, both debt and equity. With the
acceptance of a Euro based trade protocol, our dollar system would
now be forced into a super inflationary fire. Truly, this day
has arrived with current events literally shouting "monetary
inflation" as we have never seen it before!
Not only Euros, but some form of freely priced barter gold is
now firmly on the road to becoming a real competition for use
in world wide trade. Within this evolution, the currency trade
settlement game is being slowly switched from virtual to real
time as the act of slowly accumulating gold over
a long transition period is drawing to a close. Over several past
years and for the remaining time ahead, selling the illusion of
paper gold short while buying free gold will come more into open
view and no longer be the sport of kings. The coming premium price,
paid for physical delivery, will develop for all to see. Something
I will personally welcome as an open confirmation of our views.
The events begin to unfold:
To the bane of Western thinking hard money gold bugs, who craved
the leverage illusion our gold markets seemed to create, the death
watch for their favorite game is about to begin. As if out of
a fog, an end to our gold pricing illusion will march, hand in
hand, with an end of our economic prosperity. The coming inflationary
fire will now sever the wealth our reserve dollar system created
for all of us Americans. In the same scope of time a, Euro based,
free gold price will evolve out of these inflation fires. I for
one do not relish this outcome, but welcome the good such a staunch
reality will infuse into our national values.
We pointed out earlier this year that our Fed would begin it's
inflationary march "now" and never turn back again.
They did "then" and we are well into it now! Our point
was made in spite of all the past decades of similar "dollar
inflation" calls other hard money people declared were coming.
Our dollar's decline never arrived for these people because they
based their calls on economic theory; instead of "political
will". "Political will" won then and will so now
as we point correctly in the next direction.
Many said that the "bond vigilantes" would hamstring
any effort to price inflate a credit driven money like the dollar
reserve. Perhaps causing our Fed to eventually lose the war as
it "pushes on a string"? Many of you have read countless
opinions as to why our credit markets would implode into deflation
as a "mise" style economic theory surfaced to control
the controllers. Truly, these people confuse theory with human
action as much as they do not understand real physics! Indeed,
strings that cannot be pushed are either thrown or cast aside
in the real world.
Reference today; we see where the "political will",
trumps economic theory hands down, as the dollar people remove
30 year bonds from the system. In the process, forcing rates all
the lower. The next time someone reads to you reams of hard money
theory; ask they why they said the same thing 30 years ago about
the dollar and the US economy? But it kept right on running; proving
them repeatedly wrong? Now, for the hundredth time they say: "mise
is correct, the markets cannot be faked, so a little deflation
will follow this inflation!"
Baloney! The evolution of Political will is now driving the dollar
into an end time hyper inflation from where we will not return.
That is our call. Bet your wealth on the other theorist's call
if you want more of Their last 30 years of hard money success.
More is to come!
Are you worried about South America? Don't! We will print all
the money it takes to save any and all US financial interest in
that sector.
Are you worried that we will enter an Japan like economic environment
with rates at zero, economic stagnation and falling real asset
values? Don't! They do not use an out going world reserve currency
and we do! We will print what ever amounts needed to keep real
Estate up, the Dow up and our economy purring: no matter what
the value of the dollar on foreign exchange becomes. Or our eventual
price inflation.
Our local economy will soar in dollar terms; no matter what our
dollar is worth.
Are you worried that our 10 year bond, the new bench mark, will
soar and squeeze off any recovery? Don't! We will just remove
it from use and move to the 5 year,,,,,,,, to be replaced later
by the 2 year,,,,,,,, to be replaced later by the 6 month,,,,,,
1 month,,,,,, 1 week,,,,, 1 day,,,,,, then
CASH!
-----------------
Who has the gold?
I do and so should anyone that wishes to participate in the next
currency system. Only, don't expect your gold to become money,
it won't! It will become the most valuable wealth asset in your
portfolio,,,,, by a long shot. For the simple thinker; gold is
good. That's all we need to know. For the man with a question:
Gold must vise in value many many times just to regain it's wealth
barter asset value. Perhaps $10,000 to start. Then, it will run
with any and all dollar inflation,,,,, even Euro inflation that
ECB people openly admit must be a part of a dollar to Euro transition.
The EuroLand Central Banks have every bit of gold in their vaults
their accounts say they do. For that matter, so does the USA (for
now!). So what if they or we swapped it out on paper? It means
nothing because the gold never moved. Remember, EuroLand is playing
a dollar gold market game
for now. If we walk, and they know we must will walk first, they
will simply opt out of the dollar bullion paper system. Period!
Why do you think England it trying so hard to enter the Euro fold?
Think: saving their bullion liabilities by opting onto the other
side!
Hell, pre 1971 the US swapped it's entire vault of gold to foreign
interest by issuing dollars overseas. In a news flash, some seemed
to have missed, we killed that arrangement by simply keeping the
gold! Today, because the ECB would love to see the entire dollar
gold market fail, I cannot imagine them shipping gold to support
it if we default on shipments. Well, perhaps gold bugs would think
this appropriate because it saves their leveraged futures, options
and mine investments?
No,,,, most of these theories about missing gold are extrapolations
that attempt to explain how the industrial / physical gold market
is meeting demand. Hard money thinkers simply cannot believe that
private Western gold holders have been unloading real gold for
the paper variety and filling the physical demand void in the
process.
If this paper buying is true, it goes a long way in explaining
how fractional gold paper has filled the real demand for gold.
It also ruins the dreams of investors in "illusion gold"
because it points to a colossal default and asset seizure (via
windfall taxes) is coming to a mine near you. Events march on
and will soon begin to prove "who knows what" about
our political world. Watch carefully, the
show is beginning.
In a final note: I see that in spite of world shaking events,
the downfall of our paper gold markets is keeping the "virtual"
price of paper gold very low. Just remember; inflation in the
paper gold markets works the very same as inflation in currency
markets: it cheapens the value of the paper holding and works
against allowing leverage to return real gains. Conversely, physical
gold will gain as leveraged gold assets fail.
Once again, I see where Big Trader is selling silver to buy real
gold. Some people just know where "political Will" is
going. (smile) Others don't.
Thanks
TrailGuide
FOA (10/26/01; 21:21:33MT - usagold.com msg#127)
A few comments on comments!
----- The Euro is a mere convenience for trade among the group
of user nations if it cannot buy a bbl of oil in international
markets. That's a fact.----
I hear that some French buys are already being invoiced and settled
in Euros. But, then again, they don't like to admit that they
even use the awful stuff. (grin) Actually, with so much of their
electric needs provided by Nuclear,,,,,, what doooo they need
oil for?
------ Could it be that some dollar holders are buying up US stocks
at what will later seem to be bargain prices? What better place
is there to dump dollars without upsetting prices?-------
Well,,,,,,,, some small players may be doing this. But, big holders
of overseas dollars have to ask: "what would foreign exchange
controls do to my big stock gains"? Besides, if they can
only get 5 or 10% of their dollar wealth into physical holdings,,,,,
the rest of the cash could evaporate later and they would still
be light years ahead. Considering the coming gold / dollar free
market revaluation. Only, the problem has been for a number of
years; how do all of these old Euro Dollar accounts get into even
1% physical when the whole market has such a waiting list. But,
ask about paper gold? Sure,,,, all you want. Has anyone ever figured
how much gold 1% of the whole Euro Dollar float would buy? Even
at $1,000 US per ounce?
----------Europe has not matched US efforts to stimulate growth
since the September 11 attacks, Breuer said, because "we
have no common, defined, decided economic and financial policy
in Europe".-------
(comment by USAGOLD site steward) More importantly, it does have
a single independent authority steering monetary policy down the
middle of the road so as to be neutrally suitable for a wide coalition
of interests. ------
You have that right Randy! Rolf Breuer sounds like all the late
model financial planers in Europe that still don't know where
EuroLand is headed. These guys got their economic stars while
studying at the socialist feet of our political Federal Reserve.
Only trouble is that they never understood that fiat inflation
using a world reserve currency, like our dollar, is different
from other systems. We buy cheap social policy and economic expansion
with the blood and sweat of foreign productivity. I bet Old Breuer
thinks its ok for a business to buy $1.00 running shoes from asia
and sell them in Dollar land for $120.00. Then he would point
out that shoe inflation is only running at a few percent
because those shoes went up $3.00 last year. Oh well.
The Euroland Germans, and the ECB studied our ways for a long
time and now fully understand how to attract other nations into
a fair game. The Euro will become a "world standard"
more so than a reserve because they want it to be a fair currency
that's accepted for it's value. For the Euro to gain American
financial acceptability later, it will do so because it will be
the "last man standing" when this inflation storm resides.
------ Government gets "tennis elbow" from throwing
the ball of string --------
I know where that one came from (smile). All of us concentrated
much too long on when the Fed would eventually fail to push our
monetary string. Did we ask this question as if the US was about
to become "suddenly dollar responsible"? Or was it because
the markets would over rule the fed's hand? I bet we asked because
"fiat credit theory" said the fed would eventually meet
such a fate.
Double baloney! Our fiat world would and did evolve around this
problem. Once the dollar inflated itself to the end of its "gang
plank", it was into the inflationary drink sailor! The Euro
will take over and we will become like any other national currency;
subject to pay as you go politics and social policy. Can't push
that string? Pick it up and heave it in a third world like inflationary
pitch. That ball will fly, brother,,,,,, oh will it fly!
--------Putting these two together, I observe the following --
So, really, the Euro Banks don't mind selling gold short, because
when the big blowup comes, they suddenly have a use for the the
dollar reserves they have piled up. Is this a fair conclusion?
---------
Well sir,,,,,,,, we should all think about this for a bit? It's
awful clear, to anyone that has just a little of the facts, that
the paper gold markets cannot ever be converted into physical
gold. The numbers would be????,,,,,, That's just a rhetorical,
don't even try to put a real number on it.
You see, all the armchair gold bugs hold onto their paper leverage
and cheer for some big paper short covering blow up. A paper squeeze
that forces the "virtual" price of gold way up. But,
who exactly is it that is going to be a threat to the paper Bullion
bank market? You,,,,, me,,,,,, that man
behind the tree?
What if me and a thousand others came up with a 1 trillion in
cash and used it to lock down paper contracts to deliver us 1
billion ounces of gold. The paper gold market has the means to
match our commitments dollar for dollar. I mean, they could put
the money up, not gold ina a vault, and get
on the other side of us,,,,, margin to margin.
OK, now we stand face to face. Even if we had enough free cash
to pay for delivery,,,,,, what jurisdiction would let us settle;
England, US, South Africa, Canada,,,, who? No, we would be told
to cash out and buy our gold on the tiny physical markets. In
a Hunt like joke,,,,,close out would come and we would eat it,
big time. Even if we broke even, how exactly would we exchange
our cash for metal in the tiny bullion markets without driving
the price to the moon?
The reason I play this out, in text, is for others to understand
that there ain't gona be a run up in paper gold. That market is
a derivative style currency support and it was never set up to
be a big time deliver machine. Its control will end when the currency
system, it's built on, fails and takes the "virtual"
gold market price with it,,,, to the floor! But, long before that
plays out, the real bullion markets will get extremely thin and
build up a huge premium to contract settlement. It will do this
because some financial disorder will invalidate, and most likely,
force an official deferral in physical delivery; indefinitely.
From there the show will proceed.
The big dollar gold shorts in Euroland have real market exposure
but no political exposure. Their political house would just as
soon settle this at whatever level the paper prices sink to; this
is their real market exposure and it will most likely be profitable.
There will be no political exposure, forcing them to settle in
physical delivery; because the US system will opt out first because
of inflationary preasures! Very simple political logic, right?
Try asking someone that is hip deep in gold stocks or futures
if they grasp it? Hard thing, that political perception is,,,,,
especially when your pocket book controls your brains. (smile)
Again; this all mostly covers the bulk of the markets. Paper gold
owners that have oil to trade will get their ticket clicked,,,,,,
believe it. However, I bet that by then most of them will be asking
to settle their gold in Euros.
----- So, Japan has excess fiat they don't know what to do with.------
Japan is a different problem. They have been locked into the US
dollar economy for so long that they cannot escape. There is simply
no way that China will let them into the Euro house. The HK /
China central bank system, also known as Big Trader, simply wields
too much economic sway between Asia and Europe. In historical
precedent, the orient express always headed to Europe and never
saw "The Japans".
Actually, Japan doesn't want to go there and has risked a decade
of time waiting for some economic change in the US. I have said
from way back, that Japan will go down with our (US) inflationary
tide. They will waste away their dollar assets following our lead.
Those that think that these peoples want to be part of a third
world currency block do not know them. I do,,,, but that is another
story.
--------- A Trail house? A Trail office?! Life on the Trail is
growing much more comfortable than before, when we all "pitched
camp" and ate pork 'n' beans around the fire! ----------
Believe it or not,,,,, I was in a real tent on my last vacation.
Tell this forum the truth,,,, my-Lady,,, when was the last time
you went for a wilderness experience,,,,,, slept in a tent and
watched the stars while around a fire? On the GoldTrail such an
expierence is valuable beyond all things, no?
Pork-n-beans??????? I should not have saw that,,,,,, I'm off to
eat! (smile)
thanks
TrailGuide
FOA (10/26/01; 09:01:38MT - usagold.com msg#126)
Still at the Trail House
Ok!
Check out those new home numbers? How can this be; people are
financing and buying homes in the middle of massive layoffs and
cutbacks. It just goes to prove that if you expand a fiat enough,
the physical market for anything real will be brought. The secret
is in "expanding enough" and using the right kind of
fiat to expand with.
----- New Homes Sales for September were just released and came
down 1.4% at an 864K pace. This was slightly stronger than the
consensus estimate for 860K though softer than August's reading
of 898K. ----------------
Well, our fed isn't shy at all. They don't hide behind some hard
dollar theory when it comes to giving out free money; especially
when the currently they are giving away is the world's reserve.
No sir, our American home buyer has the right to buy himself a
roof no matter what his economic fate.
This is the game plan that works,,,,,, has worked,,,, for decades.
As long as your local economic structure is based on a "fractional
credit reserve banking" that is not affected by price inflation:
then the people using your internal dollar market will buy goods
using whetever "almost free credit" that's avaliable.
Americans exploit the system because they use credit created buying
power to buy real "non inflationary priced goods". No
matter the debt load as long as the fed will cover their cost
by refinancing said debt at ever lower rates. And the Fed can
do this as long as the world has to support the "only currency
game in town" by delivering their real goods for our dollars.
Again; this all works as long as the world "buys into"
using our dollars. As I said; an expanding fiat works to grow
the economy thru expanding credit buying power because the fed
can support the system with credit creation that has no "inflation
premium". That lack of premium only exists as long as Americans
can exchange free credit for real physical goods. Once this perception
changes its over. Once the world understands that it's not local
US goods that stands behind dollar growth, but less expensive
foreign goods,,,,,,,,,, the stage is set for our "supporters"
to sell to themselves!
Making themselves "lifestyle rich". All they need is
Another currency unit.
Today, the ECB said that their M3 was rising at a 7.6 rate and
doing so because people were moving more wealth into savings.
Can anyone figure that one out? Hello,,,,, they keep their short
rates well above inflation (or at least above the US dollar rates)
and international people are saving the currency. In the face
of this our fed is expected to lower rates again to around 2%?
Somewhere in the middle of all this; real savers will supply Euroland
with a solid base of credit wealth that can be borrowed without
driving their local price inflation thru the roof. Then: other
national economies will have a market that shares realistic price
levels for all goods. Then; all economic systems will begin a
non inflationary expansion that centers around Euro use! All of
this period will mirror our (US) internal coming inflationary
expansion that limits our ability to import or export. Think about
it.
-------
There is a lot going on now,,,, so: Later today I'm going to address
some posted items made on the Main forum in an effort to expand
on the political game in process. Will be back later.
TrailGuide
FOA (10/25/01; 17:19:54MT - usagold.com msg#125)
More Thoughts and Comments
from the Trail House
http://money.iwon.com/jsp/nw/nwdt_ge.jsp?section=news&news_id=reu-l2510670&feed=reu&date=20011025&cat=USMARKET
Somewhere in the 1970s era I was exposed to the thinking of several
different deflationist. It seemed that all of their conclusions
came to the same end: that dollar deflation would rule the day,
no matter what. Mind you now,,,,,, most of them were split on
the finer points of the issue, but for all of them; inflation
would have its day even if prices would rise somewhat. Deflation
was always the final outcome.
One of the central themes, in these thoughts, was concerning how
this coming deflation would impact plain old residential real
estate. You see, most of these guys advocates selling excess residential
property because it was, sooner or later, going down for the count.
Mostly because the mortgage markets would be destroyed in the
deflation and nobody could buy.
-- Note: The reader has to understand that these discussions were
directed towards people and investors that had plenty of net worth.
And I do mean Plenty! The argument wasn't about how to survive;
rather how to balance a truly conservative estate portfolio. --
As time has passed we can see several major flaws in their thinking.
Flaws that cost them a bunch of credibility, if not personal money.
One point, that I have touched on here several times, was in understanding
just how much ourselves and our economic structure would and did
evolve into accepting fiat money use. Even though it was, "god
forbid", separated from gold.
In one area alone, the bond markets, investors reacted far different
than deflationist thought they would. Twenty ++ years ago, it
was expected that just gross increases in money printing alone
would be enough to crash the bond markets. Not talking about price
inflation here, but money inflation and that should have started
a deflationary fall in our credit markets. It almost happened,
several times, but never followed thru. It seemed that the market
function had evolved to accept fiat inflation as a prerequisite
to modern economic function. In a like comparison to today's thinking;
investors assumed that as long as we had an expanding economic
stance, sourced by inflating fiat supply, price inflation would
not impact long bond credibility. We saw confirmation of this
over many years. We saw that our credit markets, especially long
bonds, were used in spite of
the price inflation threat. Indeed, there was a ready market demand
for bond purchases.
In hind sight, long term holders of bonds did do very well if
their position was part of a balanced holding and they didn't
need to sell at bad times. Even now, dollar bonds have gained
as rates are pushed lower.
Back to the thought:
This whole IMF dollar system has always been based on an expanding
fiat theory that swells GDP over time. Investors that bet on deflation
coming along, after each of our bouts of inflation, were badly
burned as deflation was overcome. Economic function returned,
essentially because price inflation could not rout the overall
market for long credit.
The flaw in all of this was in the reserve structure of our Dollar
IMF money system. The fact that the world had to walk, lock step,
with our money policy meant that their goods production would
almost always be cheaper than ours; keeping local US price inflation
under control. In other words; local US based price inflation
could not get out of hand as long as the rest of the world was
willing to use their economic production to control it by selling
into our expanding fiat system.
In this, the dollar could be inflated without end while our credit
markets functioned in a non inflationary environment.
But there is an end.
A money system like this has a definite timeline and that point
is reached when the world can move away from keeping price inflation
low in the US. That point is reached when Another money system
comes along to challenge the dollar and, in the process, offer
these other goods producing countries a chance to buy some "lifestyle"
for themselves.
At first, the show is dull as investors keep right on buying into
the dollar argument above: that an expanding fiat base builds
non inflationary growth. This is one reason traders still buy
US long credit, not to mention chasing rising dollar exchange
rates; they expect more of the last several decades of economic
theory to keep right on going. It won't.
The dollar faction saw its match early in the 90s as the Euro
was taking shape. To counter this threat, as I have outlined here
in several ways, they promoted derivative hedges as a way of insuring
dollar dominance. These hedges, including gold derivatives, only
served to leverage the entire dollar / IMF system beyond its ability
to serve as a real fiat money system, today.
I mean; that our whole dollar landscape has now become just a
trading asset arena: its now evolving away from any meaningful
currency use to trade for real goods. It can head in no other
direction because our local economic structure, the USA economic
base, cannot possible service even a tiny fraction of the buying
power currently held in dollars worldwide.
So what does this have to do with Real estate?
Take a look at any broad section of the US; Northeast, SouthWest,
etc.. If any of the deflationist were correct, their reasoning
back in the late 70s and early 80s should have produced at least
an average fall in Residential real estate. Can any of you find
an "average" of property today, that is lower than early
80s prices?
Of course I'm not talking about the spikes in Hawaii, New York
, Denver or San Francisco; those are just blips on an ever rising
inflation scale. Even if they fall some from here, it isn't part
of a deflationary act playing out. Average home prices will rise
all across this country no matter what the future economic holds.
A super inflationary stance by the Fed means that even unemployed
workers can buy a house and pay for it! Watch how this all comes
about. The dow will not be much different when seen ten years
from now; a drop to 5,000 then off again, is a real possibility!
The same is true for anything perceived as something real: "even
silver" (grin).
The difference is in the drastic ups and downs derivatives will
place on all asset markets. Silver may hit my .50 before taking
off and so will many other real assets. My point is that we are
on an "end time run" in fiat dollar production that
will soon produce a spike in real price inflation that crushes
hedge vehicles. One item alone, physical gold, because it is the
main wealth asset behing the next currency system, will outrun
everything by a wide margin. No matter the derivative's hold on
it!
As the Euro builds a base, it will drive an inflationary recognition
into our credit markets, then freezing up our derivative markets.
That perception will fuel a complete failure of our bond markets
and force the fed to buy up any and all credit; paying in full.
If needed, Bush and congress will see to it that enough money
is printed so we are paid in cash for everything! Don't laugh,
this is where we are headed. In the mean time, whether or not
our economy is growing, stalling or failing, will have little
or no impact on price inflation.
You see, living with real serious price inflation goes something
like this:
---- "Honey, I talked to Fred again, he can't sell his house!
Poor guy, he has had it up for two years now and has to raise
his asking price again. No takers, yet. The last couple was just
about to close but took a month too long; they almost got the
cash together, too. He backed out to raise the asking price, again.
Oh well, that's not so bad, we had to jump ours up three times
before selling."
----------
Inflation runs crazy when a money system is forced to "print
out". We will "print out" our dollar, too. Getting
there just takes time and an alternative system to cause it.
In the mean time look for the premiums on cash bullion and cash
coins to begin rising well above contract and futures prices.
I have been watching for this confirmation for some time. This
one signal is all we need to confirm that a breakdown and total
failure of dollar based bullion markets is near. I expect we will
hear and excuse like this:
-- The settlement price on future contracts is really a wholesale
price. Besides, because we are moving into full cash settlement
of gold, without physical delivery, you can take this wholesale
price and add whatever premium is necessary to buy your physical
gold. No matter that our wholesale settlement cannot match a payment
for bullion cost plus premium; just use more leverage to buy more
contracts than you need for outright physical. See,,,,, it all
plays out! (BIG BROKER SMILE with little horns sticking out of
his head) ----------
------------
People, take a hard look at Randy's post on the main forum. His
----# 64186 Monetary choices -- ECB holds rates solid, dumps dollars-------
goes a long way to showing the mindset of the Euro system. (thanks
for sharing, Randy) This stance is very appealing to a whole host
of nations outside our dollar faction world. We have but to look
no further than Britain to see that this is true.
------Blair says 2002 EU summit key for euro, economy -----
Thursday October 25, 2:41 PM EDT --
LONDON, Oct 25 (Reuters) - British Prime Minister Tony Blair said
on Thursday the success of the euro and the wider European economy
hinged on the EU's ability to push through
long-discussed economic reforms next year.
Blair, launching a Belgo-British conference in London, earmarked
the European Union's Barcelona summit next year as a key staging
post and said the success of the launch of euro notes and coins
was crucial not just for the 12 euro zone members but for Britain
too.
"We have an interest in this," he said, stating his
policy that in principle his government wanted to join a successful
single currency.
"Barcelona will be critical in how the world views the development
of the European economy," Blair said.
If the summit is a success, it will help make the euro a success,
he said.-----------------
------------
Another thing we can count on and I mentioned this before:
The moment England is seen as even a "virtual" member
of the Euro club; the world will jump on every physical ounce
of gold available at whatever dollar amounts anyone will part
with it,,,,,,,,,,,,,,,,, and sell every paper gold play into the
dirt in the process!!
I say, know your dealer, buy your bullion early and watch for
this act to begin. It's closer than you think!
------------
Thanks for hearing my thoughts
TrailGuide
PS: I'm going to stay on this track for a while because I think
something may be in the works. I'll post as able (smile)
FOA (10/25/01; 09:30:26MT - usagold.com msg#124)
A quick report and comment
from my office on the trail.
Once again the ECB is acting in a way that lends credibility to
it being a true hard backer behind the Euro currency system. The
ECB is taking an international, long term stance to managing their
money and the dollar faction hates it. They hate it, because such
a policy position is no longer open to them as we are forced into
a super inflationary direction from which there is no turning
back.
It won't be long until this downturn in the US drives the dollar
into the toilet and leaves the Euro as the "last man standing".
As the gap between inflation rates and returns on Euros grows,
that currency will be seen more and more like a world class money.
World class; in that the Central Bank is more driven to keep the
money strong and not base its policy on local politics the way
the US does.
---- Remember: Unlike the Fed, which has a mandate to boost jobs,
the ECB's main task is to combat inflation.------
----- Over the last decade or so, my nation (the USA) has always
played it's economy and financial arena as a free market driven
system. Well, it always looked that way as long as the dollar's
reserve function helped deliver those free trade benefits. But,
low and behold, let us turn down a little, come under a little
preassure and our socialist printing pressed go into overdrive.
The call goes out to bail out the Airlines, banks, brokers, insurers,
post office and anyone else that's in trouble. Protect our Steel
industry and to heck with the world: this free market idea can
take a hike, boys. --------
The media concentrates on treating the dollar more like a stock
investment than a major international reserve. Considering the
way our Fed is socializing our money policy now; perhaps the dollar
has embarked down that road and is becoming " just a quick
trade investment"! Perhaps a Hyper Trade investment, at that.
I think the majority of Western money theorist want this perception
in place:
--"lower rates build the economy and therefore the currency,
too!"--
Never mind that this flys in the face of everything we and the
IMF taught the third world about money policy over decades! A
policy that says: your country is going down the drain because
your money policy is not free trade structured like ours is! Now,
we suddenly cheer any policy that trends to support us and try
to explain it in a "dollar supporting" slant.
We do this, because we want the dollar market to deliver our investments
out of the current US fire storm; it has nothing to do with the
strength or hardness of the dollar. In this respect, media cheer
leading has little to do with the dollar being a sanctuary for
foreign holders during troubled times, either. It has everything
to do with local internal US investments going bad. To hell with
the hard currency policy we taught you: -- a return on money that's
above inflation or free market competition to weed out the week:
-- We want my money back and hang the world!
This is a repeat of the same message sent in 1971 when we dropped
gold.
I think the ECB and the BIS have known, for some time, that this
would be the typical US reaction whenever some trouble really
came along. They just waited untill the world twistes the wrong
way and sure enough, the US dove for the bait! This is why Europe
and the BIS structured the Euro system so it could completely
discard all dollar reserve function if needed.
Truly, if the dollar IMF system can be the reserve for all internal
US banking assets; then the Euro could easily do the same in Europe.
Especially as US inflationary money printing eventually drives
our price inflation rate to a level that makes dollars and dollar
debts, outside the US, valueless assets! Paying back those debts
will be like tossing a nickel where one once launched a bill to
settle a debt.
Today, many dollar investors have a terrible flaw in their view
of Euros; not unlike Western thinking gold investors. They curse
the Euro as it strives to reverse the very trend that dollar lovers
say is taking down their own currency. Standing next to them,
gold players curse the dollar and buy illusions of gold assets;
but at the slightest move up can's wait to sell their gold paper
for more dollars. Then they tell everyone that they are making
wealth by building up their holdings of a failing currency. I
tell you this simple minded human game has bankrupted more than
one nation of
peoples.
I buy Euros because that's the currency I intend to keep through
out this transition era. Of course I own dollars and will likely
keep using them right thru any super inflation. I never expect
the dollar to disappear. Most hard money investors, with extra
funds to hold, also have that same view. They are simply wanting
some of their wealth in the next international currency trend.
A trend who's management policy is based on creating a real return;
not socializing the currency holder wealth thru US and Japan like
give-a-way interest rates.
Apart from our Western trading crowd, who consistently lose their
money, Euro owners and Physical Gold Advocates own these items
with no intentions of selling these to make more dollars. They
hold them because the world financial system is changing faster
than trading can compensate; and this trend will accelerate to
run right over traders as their markets shut down around them.
Believe it.
So, I say, good for the ECB and more so, good for gold. I'm playing
the leverage that modern dollar derivatives are delivering to
my door step; buying cheaper gold and cheaper Euros. The leverage
in gold mines is delivered to us; in that derivatives markets
force them and stale physical longs to supply the world with gold
at almost free prices. At least until the dollar crashes this
illusion gold market price. The leverage in dollars is delivered
to us; in that the US must super inflate their currency to support
its derivative hedges, in the process creating Euro exchange rates
at low levels.
The game goes on and Physical Gold Advocates keep right winning
while leverage hard money types pour their wealth on the ground.
In this day, at this time, investments in most dollar assets and
any other "gold want to be" metals is to be doing little
more than to play the leverage side of a
failing derivative.
Physical gold is the only wealth to hold and the only wealth that
can and will stand beside to the next reserve currency system;
the Euro. The history we are writing will further prove this to
be so. Events are moving our way. I say; find yourself a coin
and bullion dealer that has a grasp of these
events and stay with them thru it all. The world is moving towards
high priced gold on a free physical only market and physical shops
will find themselves at the center of this evolution.
USAGOLD: get you one
(smile)
Thanks
TrailGuide
FOA (10/23/01; 10:30:12MT - usagold.com msg#123)
The real world
No backpacks today. Lets just stroll over to that clearing where
I'll be giving the talk. In reality, I'm just sharing with everyone
the thoughts and views of a like minded gold advocate. Someone
we rarely understand but somehow always knew.
-------------------------
Hello again and I welcome everyone to these ongoing talks on gold.
Talks that focus on where gold and its market is taking us: --
an evolving message from an ancient metal.
It's wonderful to be with you, here in the American West, with
its clear skies and cool dry air. Meeting here on the gold trail
speaks to our senses in ways no city location can; imploring our
minds to hearken back to what is real and alive in our world.
While standing here among the mountains and trees, our financial
perceptions begin a change; recasting our thoughts of accounts
and credits into hazy feelings of virtual wealth we never really
knew. Suddenly, bonds, stocks and paper investments descend to
lower levels of importance.
It was as true yesterday as it is today, and will again be so
tomorrow; that the touchable things in life are what make us whole
as much as they make us wealthy. Our bodies are real, so too is
the earth and all upon it: is it such an unreason that our wealth
should not be real also?
For myself and many others that hear our message, the answer is
no. No, it is not unreasonable to clearly own and touch what our
efforts in life have brought us. I suspect that during this era,
within this moment in time, events will eventually define such
logic more clearly and prove it to be sound beyond any doubt.
Times change, my friends, history moves on and so too will mankind's
perception of wealth. Once our perceptions will evolve, not in
a forward matter, but rather in an ages old oscillation that returns
us back to saving wealth itself; instead of a paper promise of
wealth. With a regularity of seasons, as sure as the phases of
moons, a changing of "political will" is once again
about to redefine what our virtual written worth really is. In
response to these changes, often made with little more than the
stroke of a pen, mankind will seek a secure position. A position
that will more so value an ancient wealth: a golden savings that
no politicians could ever write the value of.
- As my friend would say out here: onward we move
Once again we hear the voices of shock and dismay among modern
gold bulls. Followers of paper values who, ironically, display
the same emotions each time their gold strategy fails them. In
cycles that seem to repeat on regular schedules these investors
wager on the price of gold instead of investing in the physical
attributes of the real thing. In doing so they fall victim to
their own misunderstandings: -- falsehoods represented by their
own perceptions of what our Western gold market does and does
not do.
Somewhere over the course of these last decades, Western Gold
Bugs learned that it was very easy to wager on the price of gold.
During this time a market evolved that made it far more convenient
to bet on gold that to own it. But as this market expanded to
include retail gold buyers, even simple reasoning seemed to be
cast aside and all logic was lost. Truly, these were becoming
markets that traded opinions and failed to produce wealth.
---- Did we Consider that: if it was easy for me to buy a gold
wager, is it not just as easy for one to sell a wager?
Throughout this period, Gold Bugs seemed to reach conclusions
about their paper markets that were never real. They understood
how rare and valuable gold was. Yet, they fully well expected
these same attributes to be reflected, not only in physical gold,
but also in the price of their paper wagers. The reasoning was
presented as such: -- investors that wanted to bet on the price
of gold going up were unlimited in number and their demand could
easily overwhelm the supply side that created these paper wagers.
-- Conversely; investors that wanted to bet on the price of gold
going down were limited in number and their supply of these paper
wagers could never keep up with demand. You have got to be kidding?
But why would this be the case?.
They looked at this paper market and tried to think of it as a
physical market. They figured that any investor that sold a wager,
had to have his hands in the actual gold market, so as to supply
the physical gold his wager was created against. Somehow, in our
gold bull logic, we never grasped that perhaps 99%+ of the "world's"
paper gold game always settled in cash. With the wager / seller
simply losing his currency if he is wrong.
In a further convolution of logic, paper gold bulls never thought
real world reasoning applied to them. If our paper gold bears
didn't have the gold or the cash to buy the physical item, if
they were demanded to do so; -- neither did our paper gold bulls
ever want the physically delivered gold either! Nor did they have
their hand in a cash bin deep enough to to do the deal.
---- The purpose and structure of these markets was always ignored.
The reality that confronts gold players today is that their perception
of this paper market is flawed. The entirety of the world's paper
gold markets are structured to capture the currency price of the
metal; not actually deal in a majority of the physical aspects
of it. Lost in this reality is the understanding that these markets
do not impact the supply and demand for gold as much as they make
a "virtual" price for gold.
Those in the business of selling paper leveraged gold to investors
love to point out that long buyers can and do demand from the
shorts to deliver bullion. But these same sales clerks quietly
ignore the fact that short sellers can and do demand delivered
cash from the bulls! When we have a market where both sides run
from the other's physical demands; you are left with a paper arena
that makes a "virtual" market price; not a fundamental
supply and demand price.
-----Supply and demand
Also lost is the very real perception that the sum total of dollar
based paper gold wagers, that can be created on both sides, is
only limited by the sum of dollar liquidity floating in the world.
In this logic; the number of bets on where the price of gold is
going is unlimited on both sides and has no corresponding connection
to the actual physical supply of gold bullion.
What "IS" firmly grasped by every major player in this
market is: -- If at any time a majority in the market were to
attempt to use these paper markets to extract a gross amount of
physical product, the rules would not be changed! Rather, the
rules would be enforced and the players would be cashed out and
sent into the real physical markets to do their deals. Only then
would fundamental supply and demand, based on gross dollar liquidity,
create a "non virtual" real price for the product.
-- Disappointment rules the day!
Time and time again Western gold players are finding out that
as dollar inflation creates more liquidity, the same of which
will eventually drive price inflation, it also creates more liquidity
that paper wagers can use to sell against our "virtual"
gold price. While this is truly a fundamental fact of currency
supply, Western paper gold bulls want to use this liquidity to
leverage and effect their long side only. So as to capture a gold
price moves on the upside. But they don't want others to use an
equal amount of this liquidity driven leverage to supply the other
side of these wagers to send gold's prices downward.
We wanted a free market and a free market is what we got: -- but
it doesn't move the virtual price toward the gold bull's favor.
Now they are mad because their bets are countered while physical
gold advocates scoop up an almost free metal: -- using the liquidity
that dollar inflation is producing. Truly, if ever there was a
way to profit from gold mining, today, it's by buying this almost
free physical gold the mines are producing; while mine players
and paper gamblers pound their wealth into the dirt. This is what
PGAs call benefiting from the leverage in mining (smile).
--- Supply and Demand: one more time
In a convoluted stretch of reason, "virtual" gold bulls
wanted these markets to be regulated so the supply side of these
paper creations would pay off on their bets. The bulls wanted
to be able to create all the buying leverage they wanted while
the bears would be locked into delivering a metal who's total
world amounts are fixed. The bulls wanted free leverage without
the using full amounts of real cash but wanted the bears to mark
to the market with real gold buying power for every wager they
made. If there is manipulation in our paper gold arena, it's in
this area of investor understanding. What these markets "truly
represent" is the misconception about gold in our time.
If the gold industry is unhappy with the prices their product
if bringing from this paper market's leverage; they should be
pushing for a change in the rules so as to force physical delivery
upon everyone in these markets. That is; force delivery upon both
sides! They don't, because their
financial structure is so completely immersed into the current
function of these markets. Many of them and their banks could
not handle a real gold price that runs out of their derivative's
trading ranges.
Western paper gold bulls fueled the creation of these markets
by supplying the demand for such gold vehicles and governments
helped their currencies by using these same as FDIC like stickers
on their reserve positions. They all wanted a place where they
could bet on gold, using maximum
leverage, and not have to fully fund the physical delivery of
bullion if it came to that.
Somehow in the process, everyone was thinking they were doing
an end run around the slow thinking, stupid gold advocates the
world over. Hoping that coin and bullion buyers, who were creating
the physical demand, would one day feed the leveraged paper profits
of paper players. Hoping that the rules would be changed just
enough so gold could be kept in a nice tight range (300- 500).
We are seeing the results today as this fraud of a paper game
as it comes to an end. It's not nice to watch. Busting, not only
the dollar factions that played this sector for their best interest,
but also denying any profits to the whole gold industry that chose
to ignore the long term best interest of gold's market value.
The same industry that decided to cater to the singular greed
of a small group
by sacrificing high gold prices so leverage plays would work.
In the process they played a political game to limit gold prices
from getting too high and will now suffer on the altar of a "gold
price without a range".
They can call the outcome anything they want: "bullion at
a premium to comex" or " comex at a discount to bullion".
Either way the whole system is destine to split and leave the
paper players holding an incredible bag as bullion runs away with
the help of fundamental gold factions in Europe.
So the message to paper players, gold mine owners and the gold
industry is clear:
--we are in a world where free markets rule and political games
bite the hand that feeds them
-- if you don't like your profit margins on the market you are
forced to sell into, close your mines like the rest of the world's
business is told to do,, if you can!
-- if paper players don't like their investment returns because
the leverage is eating their lunch, move to another area,, you
are free to choose -- or better yet
-- go control your controllers if you don't like the way it is
in this evolving political world
-- in the mean time we PGAs are and continue to exercise our free
market rights
-- we will keep doing something to advance our wealth: buying
physical gold!
---------------------------
Next talk is about inflation, titled:
---- "Forget deflation! The deflation theorist are losing
their wealth fast enough for all of us!" --
------------
OK: lets head back and rest up for the next round
Thanks
TrailGuide
FOA (10/20/01; 08:50:20MT - usagold.com msg#122)
Taking broader steps:
heading towards a clearing
Onward
I'll repeat a remark made here on the trail before:
-----[One day the ECB will be] Moving their quarterly "marking
to the market" of gold assets to using a local Euro Zone
spot physical price; a price that will prove to out run the dollar
"paper gold" market's ability to keep up. Such a play
will emphasize "physical gold" positions for hedging
as opposed to "paper gold" positions.-------------
Follow my steps
The coming dollar currency crisis will be, very much so, driven
by an across the board failure of all derivative market function,
not just in our gold derivative markets alone. As these risk dispersal
markets built up over the years, that system allowed the dollar
to continue in its reserve roll. The very failure of this hedge
system is what will begin to transition the world away from dollar
holdings. Not to mention settlement use and retention in CB reserve
function.
Truly, our dollar's value would have never arrived at or retained
its current level, for so long, had foreign CBs not supported
it by making a background market for derivative exchange management
and low rate gold loan commitments for major world investors to
use. Within this tremendous mass of paper risk assets, our modern
paper gold markets find their home.
When this whole quagmire of dollar support is allowed to fall
away, the true nature and worth of paper gold derivatives will
truly come to light. Prompting a trading recognition of their
real value and their quick disposal. The ensuing price action
will sever investor's faith that there is an equal connection
between the owning of; what is the fundamental value and leverage
of physical gold assets and simply capturing gold's currency price
changes in paper asset form.
This change in market pricing dynamics will shift investor perception
and force private and public wealth hedgers to see physical gold
as having a far greater leverage over paper positions. An image
and position the dollar gold faction and the entire gold industry
have fought against for years.
This transition in hedge book policy will set off a new dynamic
trend in our gold markets where physical gold soars to find a
fundamental value modern gold thinkers knew existed. A value steeped
in gold's rich history of being the very best barter wealth savings
in the world. A value that gold could never find when tied into
official money systems.
Our evolution of thought will find its roots in an inflationary
financial crisis that is now beginning to unfold in dollarland.
In fact, "all" dollar hedging systems will most likely
meet the same fate as the effects of a real, serious price inflation
in local US markets escalates. In the final overview, physical
gold will be seen as the only real risk hedge; in fact; the only
world class asset "that can perform such a task"!
Onward further
In simple political terms; the very leverage that all modern currency
supporting derivatives represent, never could be allowed to perform;
in large outright quantities! Once real inflation begins to demand
that these hedges truly spread financial risk with real performance,
resulting in a pile
up of loses, the political solution used time and again will return
as the time honored utility that saves the day:
------change the rules------!
You see, just as there wasn't enough real gold stored in official
US vaults to match pre 1971 dollars at the then existing exchange
rate, there isn't enough "tradable gold" to match the
inflated paper gold markets today. Both then and now, the paper
derivative's function to relate and capture the value of gold
was blocked from functioning.
Pre 1971; people held dollars because the physical gold that those
dollars should have represented and could be traded for, hedged
the risk of government sponsored price inflation. But, people
found out, too late, that those gold derivatives; those pre 1971
dollars; would never be allow to function as risk hedges. We found
once again that man's ability to maintain a constant link, a constant
derivative value, between official money and gold,,,,,, was always
an evolutionary failing trait.
The response will be exactly the same for our problems now as
it was then.
-- Then --:
The dollar faction universally abrogated all gold delivery options
against dollar currency and implemented cash settlement against
all claims for gold. In other words; implement a pure fiat floating
exchange rate and close out all gold claims by saying that investor
holdings in dollars were equal to gold. In hindsight this was
just another illusion; dollars were only ablr to capture the gold
price if that relationship was controlled thru paper market valuations.
Then -- to -- Now:
By saying that dollar cash, using the old 35 dollar controlled
rate, was the same as owning gold; the Western world embarked
down the same paper road we travel today.
Modern "Western Thought" is convinced of an illusion;
that capturing the price of gold is as good as capturing physical
gold. Indeed, this thought was further extended to include capturing
a leveraged price of gold.
--Now--:
A process is in the works to change our dollar / gold relationship
again, after derivatives were inflated beyond use. Now, even the
price of gold can no longer be captured on a par basis between
derivative gold paper and real physical gold as the preceived
value of gold is soaring. Once a super currency inflation breeds
super price inflation; the derivative markets will begin to fail
their hedge purpose and their trading value. These asset themselves
will become the real risk.
Dollar supporters have no choice but to "NET OUT" at
even any derivative hedge that may risk the system. That is, "Net
Out" in a way that completely voids their risk transferring
purpose as they are settled in dollar cash "no matter what
effect inflation is having on the currency's value or your other
dollar assets! Remember, the financial world today turns on dollar
assets that are hedged; not just pure bare holdings! Block the
hedge markets from performing and the dollar itself is unseated.
Make no mistake, every official rule and regulation ever written
for currency crisis management involves not only currency profile
assets, but also gold profile assets. With this concept in grasp;
it's easy to see, with gold derivatives so widely used in current
dollar support functions today, why they will be impacted as part
of the paper mass.
Modern derivative usage involves gold derivatives and a new evolving
crisis policy management will function somewhat the same as in
1971. It will arrive as some "net out" policy directive
and universally abrogate all gold delivery options as part of
the package. Any gold derivative that is used to support dollar
currency exchange rates will be reworked to implement cash settlement
against all claims for international currency derivatives written
for gold.
Further
Is it no wonder that Euro Banks have no fear from writing short
gold paper. Because the entire Euro money profile is in the background
for them. Running in parallel to and not in conjunction with the
current dollar system. Any Fed policy that must break the risk
transferring dynamic of derivatives, to protect our US banks,
will open the door to the ECB's dumping IMF protocols and using
the Euro alone as their sole reserve currency. This will immediately
shift all dollar derivative plays onto the market, dynamically
devaluing our dollar in the process. The ECB would then be cashing
out holders of their gold loans in Euros as dollar physical gold
prices spike and paper gold prices plunge.
Higher still; we climb
Of course, the big difference is that Euroland will encourage
a physical only market price that, in turn, also floats Euro gold
values to the sky. All in an well balanced effort to replace the
massive dollar asset base it lost. In this; the Euro will become
the first currency block that functions as a local reserve, yet
under scores its image with huge non- monetary gold assets. Is
it no wonder that EuroLand citizens will be buying gold as much
for its prospects to rise as for its ability to be a wealth savings.
In this it will hedge the future remains of a dollar failure and
its impact on the world system.
If Mr. Huge EuroLand bank owes the ECB system gold worth 100 million
in current gold deals; with each 1,000 euro rise in gold he finds
himself able to settle in less received physical gold. In a true
"cashed out" transition of currency reserve hedges,
each ounce of contracted gold owed could be
reduced many times. Every player in the gold system, that is caught
with their pants down, will rush to be a part of any Euro workout.
Indeed, for every major player that was long the gold loan system,
for the purpose of buying gold, cash outs in Euros will offer
the only return. Official players in the oil sector would eventually
be receiving American gold (but that is Another story).
Pause here
Remember; we have presented, for some time, that official gold
stocks were never physically "in play" to the degree
the gold industry suspected. It has always been our position that
it is and was "gold commitments" that were behind the
market, while official physical gold was traded mostly within
the CB system or delivered to the most pertinent oil players.
The Swiss operation points to an end time settlement of these
for the Euro side of things.
ECBMBs (European Central Bank Member Banks) never really sent
out very much real gold; they just lent their good name to the
BBs. That means cash pooling for the loans also. So, when a new
currency transition workout proceeds, the members of the ECB are
receiving Euro cash in payment for gold loans. In hindsight; it
will be seen that they lent the commitment to sell gold only long
enough for US inflation to end the dollar's timeline and bust
its dollar system. Around ten or fifteen years over this recent
concluding period?
Truly, the gold that is filling the fundamental demand deficit
never was the gold coming out of CB ranks; this position was and
is the gold industry just looking for an answer to explain what
was truly an paper market problem impacted by official currency
games!
Besides, if your business is financially structured within an
ongoing paper gold market and needs said paper to trade at par
with physical gold; you don't want to consider an outcome where
you may be trapped selling your product at a discount! Better
to fight for a rework of the same markets. A process that robs
physical gold owners of fundamental value by reinforcing the paper
market illusion for the benifit of a relatively small group of
gold players.
That will not happen this time; believe it!
In a final thought that explains the fundamentals that tarnished
gold:
The gold that filled "the supply demand gap" came from
tired Western thinking gold bulls the world over. Over the last
years of our dollar's timeline, they transitioned their portfolios
from holding physical to holding essentially unallocated forms
of leveraged paper gold. This took place in both public and big
trading firms.
To the thinking of these smaller world players, who made up this
mass of original physical gold ownership; future gold, options,
gold stocks and long gold loans, all captured the price of gold
in this modern era. Indeed, for them it was all the same and suddenly
so logical and simple. But, they did and are losing their wealth
to the paper monster and now,,,,, just when they thing gains are
in their grasp,,,,, the rules were changed again.
let's rest here; that clearing is in sight; where some speaker
if giving a talk
Packs off for now
thanks
TrailGuide
FOA (10/18/01; 08:22:07MT - usagold.com msg#121)
There they go!
(At the trail head, loading the packs)
Quick, use your binoculars, watch the action on the other side;
across the paper gold valley.
Do you see them? Right over there, follow my point? Just under
those low bushes; next to that big bolder; making their way out
of the paper valley. Yep, that's a big paper gold trader, going
over the top. Ya see em? Ha1 Ha! Sure sign the seasons are changing!
These guys, and others like them, are trying to run ahead of a
trend we already knew was in process. They are going over to the
other side of the paper gold mountain. If only they knew about
USAGOLD a long time ago?
Yep, us PGAs beat um to the punch and those pikers
(slang for hikers on some peak in Colorado [smile])
will pay a big premium to be in our dust! Indeed, they are headed
where our very own gold trail has been: in the middle of a physical
gold market transition that finds its roots in
Europe.
Yup,,,,,, silver is back into the 4.20s as China sells it to buy
gold; while the question of what to do about gold paper gets more
official consideration every day! The dynamics of money is in
flux, for sure!
Keep loading your packs, people, take lots of stores for a true
wilderness experience under a starlit night; a big hike is coming.
TrailGuide
(thanks Randy)
FOA (10/15/01; 07:49:09MT - usagold.com msg#120)
Continuing from my last
talk:
(returning to the trailhead parking lot: walking along the road
with a few Gold Trail hikers I ran into along the way)
Boy, I wish those other day hikers would have returned from their
walk before I had to leave. Sure could have used a ride to the
auto store. Who would have thought I couldn't get my oil filter
off? It seems the more we advance our so-called "modern lifestyle",
the more complicated simple things become. Now it takes a $10,
special angled grip wrench just to undo a simple filter and the
darn thing broke just when I needed it!!!!!
You guys probably think this is all normal? But, I tell ya, all
this complicated engineering only works when nothing goes wrong;
the fella that designed that oil filter never thought somebody
(me) would accidentally push a little more than needed; breaking
the wrench and causing a problem that
stopped the whole car from running.
(now done with the car, sitting on a log with the guys)
You know, the gold market was put together the same way as my
car: over the decades, a whole bunch of financial engineers each
designed their own little part of the mechanics. Each one of them
structured their little part to work perfectly as it functioned
in the overall operation of the engine.
These fellas did exactly what their boss told them to do; make
your part work and don't worry about all the rest. In truth, this
dynamic works fantastically in a mechanical environment; devoid
of organic imperfections. But, apply this kind of design into
an economic function and sooner or later you're asking for all
hell to break lose!
You see, a fuel pump won't look over its shoulder to see if the
gas tank really has all the liquid the dash board fuel gauge say
it has. Such a mechanical system, as an overall part of the engine
function, will keep right on running until the very end! Now understand
that..... if a person, emotions and all, was running that pump,
he would eventually see what's what and go running down the hall
screaming "we're almost out of gold,,,,, errr, I mean gas!
Let's take a hike:
You know, modern financial engineering incorporates all the physical
factors of "just in time delivery" management and labels
it "just in time dispersion of risk". In other words:
they try to take all the perfect workings of a mechanical operation
and replicate it into financial dealings. But, financial instruments,
while understood by us as being paper bonds, stocks and bank accounts,
are actually completely organic! They are, like money, really
concepts of value we hold in our head; not oil filters or fuel
pumps we hold in our hands. The "worth" of things is
a "value" we mentally
create thru countless interactions with each other as we go thru
the day: interactions we call "the markets".
Onward
It's no accident of nature that our world monetary structure embraced
derivative expansion as it has over the last ten or twelve years.
I think we can say that this modern creation of risk management
began around 1988 or so. ( It's funny, but I remember living in
San Diego and reading a paper about a gold company called Barrick
that just started only a few years earlier?)
The record of derivative evolution meshes seamlessly with the
recent need for supportive dollar currency measures; a strategy
of maintaining a failing system that was ending earlier than expected.
Truly, a decade ago, noone was going to carry the dollar any further,
waiting on the endless delays of Euro creation, without some way
to hedge risk. We had hit the end of the dollar's timeline to
early; we had missed the mark.
The US could not physically save the dollar, then, with gold backing
or the production and sale of real goods. In the course of all
the previous dollar expansion, the gross liabilities of taking
dollar asset conversion into anything real, and originated locally
in the US, would have made us economic slaves to the world for
decades. The only answer was to let the dollar kill itself while
you create an illusion of risk dispersion in the form of derivative
protection; a form of backing if you will. With this "illusion
of risk dispersion" in hand, called a derivative hedge, the
world currency system and its denominated assets, continued on.
This "just in time risk management" was and is adopted
into every present day currency that carried the dollar as reserve
backing. This includes all the old Euro moneys and the Swiss and
British etc.. Thus, in time, derivative use supplanted IMF protocols
and SDR functions; sidestepping the whole basic structure of controls
built upon the old dollar based system.
This derivative buildup has effectively removed US fed policy
from being a controlling factor in dollar use and expansion. Gone
were the days when the Fed could force everyone to disinflate
with us. Today, if we slow our money printing, the outside liabilities
would crush our banking and ,therefore, our economic way of life.
It's no wonder that Alan Greenspan has commented so often on the
need to control derivatives yet has no workable plan to counter
their function. Truly this dynamic was created to counter his
function and few can understand this! In effect, the dollar was
placed on a one way street that required it to be inflated into
infinity. All as a means of protecting dollar originators; the
US banking system. Dollar leverage, that is actually US liabilities,
is now built up endlessly. This all points to a nonstop, end time
need for an uncontrollable inflationary expansion by our fed.
Randy S, over in the tower at USAGOLD, has shown us a complete
record of this current era of dollar creation. While others were
waiting for a "little bit of 6%, 7% or 8% inflation"
to show its head, are given a weekly guide of this new Fed policy
agenda and its dilemma. An almost endless acceleration of reserve
creation that, strangely enough, coincided with each increase
in the confidence that the Euro was for real.
Today, our fed is confronted with a daunting task. The Sept. tragedy
served to force its hand and show its true policy in the open
and the risk that is driving it. We as consumers welcomed a derivative
driven dollar expansion, the stock market assets it produced and
the better lifestyle it brought us. We even thanked the political
will that made this so; not knowing that the seeds of leverage
that produced our illusionary gains were handcuffing our ability
to ever stop the process. We are now learning that managing a
dollar economy and the "derivative risk" that brought
it, all works very well. In our first real test of "just
in time risk management" our Fed is and will provide buying
power to gobble up any and all risk, "just in time"
and without end.
With this the decade long cries for comparison of our "US
free market driven economy" and "Europe's terrible socialist
polices" fall silent. It seems that when our "free market"
created assets are threatened to be exposed as an illusion of
value, Americans embrace any and every form of government socialistic
bailout known to man. Perhaps, our much exampled form of a "free
market driven economy" was little more than "free as
long as derivative risk is covered with social money" "just
in time".
Now, we will follow this trend in an accelerated fashion, until
all derivative process is exposed as nonfunctional outside a massive
hyperinflationary policy. Our wealth is and was nothing but an
illusion of safety and created in our own minds. Within this mix
is contained all the various gold derivatives we have come to
love so well. The future failure of a gold contract does not mean
that the long holder gets his price or his underlying good; it
means his derivative fails to shelter his exposure by matching
his other loses. In terms closer to a gold bug's heart; paper
gold in any form will not match up anywhere near the price of
free traded physical gold.
We are on the road to high priced gold and under priced derivatives.
The same thrust will be apparent in all financial derivatives.
Further, we are on the road to a fully "cash settled"
contract market for gold; here in the US and abroad. In the time
ahead, just before serious real price inflation rears its head,
look for most all dollar based contract commodities markets to
be restructured into pure "undeliverable" cash settlement
markets. Markets that, also, many gold producers will be forced
to use. The day of big premiums on gold coins and bullion is coming
and
coming fast.
Let's head back to the parking lot and home and get ready for
another day. A real hike is coming.
TrailGuide
Randy, please rework the recent mistakes on the trail, in your
time(big smile). thanks
FOA (10/10/01; 07:07:06MT - usagold.com msg#119)
At the Trail Head parking
lot
I'm here to post a notice that another guest speaker will soon
be talking somewhere on the trail. I think this one will be covering
fiats or moneys, not completely sure?
(leaning against my car, while talking to a few day hikers)
After yesterday's awful writing I went into my back property to
hide and do some gardening. Some of the guys that help me out
came over and dug in. It wasn't long before they, once again,
started telling me what to do and, in a weekly ritual, I fired
the whole bunch! By now they know this is my usual banter and
just kept right on working,,,, and still telling me where and
how things should be planted! The truth is, after all these years
I'm still learning from them. Looking at the whole situation;
I know I can talk better than they can garden, but I also know
they can garden better than I can write! So, there is a certain
symmetry ,,,,,, somewhere in this scheme of human affairs. It
requires us all to put up with the other's weakness; especially
if we want the other's understandings.
(pulling a cloth from my pocket and cleaning my glasses while
talking)
On most parts of this Trail, I could walk with my eyes closed;
while in other areas I would need six maps and two GPSs units
just to know north! Right now, I can tell ya what's most likely
out there, but in those strange areas; not really sure?
Take this Euroland gold coin thing? My guess is we won't see this
anytime soon. I suspect it will be something like a K-Rand, with
no marked currency denomination, but different in that it will
be a hybrid legal tender. If you look here in the US, gold coins
are somewhat a currency as they stand.
Just like IBM stock, real estate and most any other asset, we
just have to sell it for currency first; pay our taxes and then
use the money to buy something. The process only becomes illegal
if you use the stock, land or gold to trade directly for something
and don't pay your taxes.
Mr. Strauss pointed out that the current trend in motion is that
all VAT taxes are being lifted or phased out on gold trading.
Eventually, most of the world will have only some form of capital
gains taxes on gold. This is fine and is bringing gold into focus
as the one and only metal asset the official sector is trying
to work with. But I think there is more to it than this.
As I said many times; Europe it looking to bring gold back into
use as a very tradable asset. Perhaps "the most very tradable
asset" but still outside the fiat money context. They want
to keep the government's and socialist's hands off gold and its
market function so it will serve everyone as a
savings medium. But, they also want it to gain as a trading medium
so the combination of the two will create immense demand.
To gain in the "use department" I suspect we will see
some push to drop all gains taxes on gold used in official coin
(Euroland) form. In place of that, there will be some form of
excise tax charged on payments / trades done using these gold
coins. Most likely, you will have a choice of paying
completely in gold or Euros but not a combination of both. Probably,
gold will be used for large purchases because gold will carry
a very high price by then. And too, 1 gram coins will be the norm;
being the size of our one ounce now, but with alloys. I doubt
gold will ever be used in regular store / retail sales. In other
words, I could go into my bank and use 50 Eurolands containing,
say one ounce fine gold each, and pay off my $200,000 mortgage;
minus some 15% excise tax on the deal? I could probably do the
same thing with regular bullion, too, but would pay a somewhat
higher gains tax rate; instead of the lower excise tax.
Anyway, this is all in the "for what it's worth area".
Go ahead and take your hike,,,, I will be here giving the car
a tune-up and changing the oil when you return. Then I want to
talk some more about the words of Mr. Strauss (smile).
TrailGuide
FOA (10/9/01; 14:55:32MT - usagold.com msg#118)
Patching the trail!
Well. I read thru my last post and thought it was ok. Then I returned,
pulled a copy off the printer and gulped. Don't we wish we could
change these things? Here are some corrections and expansions.
[Sitemaster note: msg#117 has been properly amended to incorporate
the corrections FOA indicated in this post, #118.].
sorry about this,,,,, I think I'll go hide for a while.
Just a TrailGuide
FOA (10/9/01; 10:05:48MT - usagold.com msg#117)
PIZZA,,,, Bronco's,,,,,,
Tonne of Yellow Metal,,,, and USAGOLD: Ha Ha,,, a gold advocates
dream come true (ssssmile)
Background for everyone
All through out this period bullish gold traders have lost their
shirts trying to bet on the price of gold. It wasn't until around
1995? or 1996? that these same traders even began suspecting that
the price of gold was manipulated. As years turned into decades,
hard money traders plunged theirsavings into our gold markets
as up and down cycles drained their leveraged gold wealth. All
the while thinking that the highs and lows, that were killing
them, were just the ebb and flow of paper prices representing
the fundamental demand and supply of physical gold. With Mises
like faith they knew, someday, the currency inflation that has
driven our financial markets and economies upward, would meet
its end; finally taking their leveraged gold position to the top.
It didn't happen then and it won't happen now; not as they are
playing it! Period.
Remember, this writing is coming from one of the longest running
(now ex.) "Hard Money Socialist" anyone has ever seen!
Without mentioning any names, I can remember when some of today's
most avid supporters of the manipulation cause were shouting down,
not only Another's voice of reason to buy physical, but anyone
else that suggested manipulation or a "political thrust"
was controlling the paper price.
Today, countless gold people around the world point out that gold
is a manipulated item. While being on the right track, they are
still using the wrong perception to grasp the dynamics of these
markets. This lack of perception is what keeps them from positioning
themselves and other gold
people correctly: positioned to gain wealth when a stake is finally
driven in the heart of this paper monster.
The efforts by most are focused in one direction; to once again
make our paper gold markets reflect the real rarity and actual
fundamental value of physical gold bullion. While my heart, support
and courage goes out to all gold bulls that strive for this end,
it's chances of happening are the same as having government moneys
return to being backed with gold: zero chance!
This grip on physical prices, that paper trading has, is only
going to be changed because dollar gold derivatives no longer
work. Not because some form of private lawsuit, world disaster
or private coin buying is going to redirect investment flows.
Only an official government change away from supporting their
currency with paper pricing will do it,,,,, and don't expect the
USA to be at the forefront of this move.
---------------
Lost in all the confusion is the distinction between investing
in the price of gold and investing in gold itself. Perhaps 90%
of all the investing in today's worldwide, dollar settled, gold
market is done in this first way mentioned. Yes, the market is
structured, contractually, to settle in gold. However, in practice,
in norm, and in past legal precedent, it is accepted that paper
gold trading is meant to only capture the price movements in gold
while ceding, what could be, controlling physical trades and
their price setting function to other market areas.
Obviously, this is the way it all started, years ago, with the
physical trading and its fundamentals dominating the lesser paper
trading. But the market evolved with the paper contractual trading
becoming 100 or more times the size of the physical side. But
everyone already knows all this,
right?
What doesn't seem to be obvious is the "why for" the
paper market grew so large. It grew to dominate because world
wide dollar expansion reached its "non hedged" peak.
In other words, the dollar's timeline was ending as its ability
to produce non price inflationary economic gains came into
sight
In order to push dollar holdings further, international players
needed and purchased "paper financial hedges" to balance
their risk. Within their total mix of derivative hedges were found
"paper gold price hedges"; modern gold derivatives.
The important thing to remember is that these positions are not
and never will be used to demand physical gold. They are held
to buffer financial and currency risk associated with holding
any form of dollar based asset. To work these items don't need
to really perform "dollar price movements" in the holders
favor as much as they are present in the portfolio to act as insurance
stickers.
In that truth, these paper gold positions act like FDIC insurance
at our banks. It can and will manage only a small determined portion
of bank runs,,,,, not a full scale failure of the banking system.
In a real full banking failure we would all get, perhaps, 80%
of our covered $100,000 and 10% of the rest.
The same is true for these gold position's performance; real gold
delivery along with true price performance, matching real bullion
trading, would be only for the very few. For that matter, an actual
functioning paper gold marketplace would be for the very few,
too! But, in the same way a bank account owner understands the
credibility of FDIC insurance when times are good; the international
dollar asset owner will not grasp that modern paper gold hedges
cannot be allowed to work until after a real serious price inflationary
run begins.
For the first time in this portion of the dollar's timeline and
our lifetimes, such an inflation is about to show its face!
==================
While so many of our gold bulls salivate at the prospects of some
player calling for delivery and driving the gold derivatives market
to the moon; it ain't gona happen! Our world of dollar based gold
derivatives has grown so large and become so integrated into supporting
(hedging)
international dollar assets, the central banks will band together
to crush any delivery drive.
This is in the ECBs intrest as I will explain in a moment.
If some big player said he was going to take 100 million ozs out
of the paper gold market, the Central Bank systems would just
order him to trade out for liquidation only and go to the cash
market to buy his gold. Don't think I'm confusing Comex positions
and their rules as being different from the rest of the world
gold market. What works on comex works everywhere when the system
is at risk. The controlling governments, who's domain Bullion
Banks reside in, would, could and will force those holders of
bank busting positions to simply cash out for the good of their
system.
By the way; not only does a liquidation market send baby gold
bulls running to sell, also, the BBs would be selling enough additional
paper to temporally send gold down $100 bucks so our boy would
trade out with a little less cash (smile). Then he would find
an opposite "premium" spike in
the cash markets, waiting for his order.
I hope my little dose of reality drives some sense into our gold
community. This is the reason Another says only fools try to buy
their gold all at once on the paper markets. "NOONE"
is going to exercise their "corner" until the dollar
based gold system is changed.
-------------
OK, thanks for waiting, MK, I'm getting to your point. (smile)
Mike, while I'm writing this, I see gold selling off (silver more
so). Once again, we see where the paper based trading has plenty
of selling power and completely dominates the physical fundamental
markets. How may postulated, even just a few years ago, that with
the fed expanding the money
supply by a year to date "one trillion"; that paper
gold could not reflect this inflation? This only further confirms
that this form of market "hedge" is failing to function
for its owners. Changing are coming, my friend, changes are coming!
Back to the story:
==================
Paper gold derivatives became a major force in allowing this last,
end time, demand for dollars and subsequent surge in it's value.
This is why Another said it would run way up, even while being
inflated, before the end would come.
Only now are we coming to a point where theory meets practice
as Alan Greenspan now is and must hit the presses. This forced
printing inflation, currently happening, is the very precursor
to a lower dollar exchange rate, rising real price inflation and
the very first destructive test of paper gold derivative hedges.
As price inflation rises the US will protect its own banks and
the short paper gold portion of these positions they created.
They will sell all the paper gold they can in order to stop these
hedging positions from functioning and breaking their writers.
On the physical side, the US wants and needs a higher price as
they ship real gold commitments to help balance our sinking ship.
So, the dollar supporting paper gold position we have sold for
years will now block our ability to gain some ground with high
US gold reserve prices.
In turn, Euro factions will also sell into the paper gold dollar
system to help further discredit its hedging function in the face
of dollar price inflation. Now to the good part:
----------------
If you are a major international dollar asset holder, watching
this evolving transition, how would you act? Remember, not only
is paper gold not rising to reflect real dollar price inflation,
even physical gold cannot react because the dollar based market,
as it currently functions, keeps physical subject to paper discovered
prices.
With the world dollar gold markets completely locked from rising
and performing their portion of a hedge function for your portfolio,,,,,,,
because, if they rose trillions would be lost by the writers,,,,,,,
what asset based currency would you escape into.
How about a currency that wants you to redirect your fiat hedging
to using outright physical gold instead of paper gold leverage?
A currency, with a stated free gold pricing policy, that will
allow your physical hedge to function in place of that locked
dollar gold market; and function in a
currency supporting way.
They say:We understand that there will be an inflationary transition
form this dollar world because we, ourselves, must absorb a certain
portion of all the past created dollar inflation. A portion of
pain we and the world must all bear in order to economically get
pass this period. But, at least, we offer a position in the wealth
of ages to reflect this financial loss as it is manifest in price
inflation.
We will allow and support any physical gold Euro price rise to
balance this action.
--------------------------
Mike,
the leverage today will be in a physical gold position, not any
other form of gold ownership. By accumulating physical gold today,
we are truly walking in the footsteps of giants; advancing with
them as they work thru this singular, long term political move.
Truly, the oil producers also fully understand and appreciate
this position.
Yes, I think it is theoretically possible to see physical Euro
gold priced very high while traditional American paper gold markets
become cheap, non functioning, cash settlement shadows of world
spot gold values. In the near future, there will be no form of
arbitrage between physical gold and this failed , crushed dollar
gold market because it will only allow cash settlement. While
a
US physical gold free market will be locally encouraged, it will
most likely simply be a shadow function of Euro Gold prices. Besides,
politically, unless we once again stop all gold ownership and
or implement exchange controls,,,,,, all gold buying money would
head to europe. Besides again, politically, a Euro based free
market will end all fictions of gold's true value anyway. (This
is my private understanding or scoop, if you will) I also expect
a European gold coin to become real usable legal tender (not a
collector item) and be named the "EuroLand"". Again,
a barter asset that is taxed when used. Just as we have sales
taxes and excise taxes; gold coins used outside an investment
realm would be taxed. (again, this is but the shadow of an evolving
down the road position as I can best grasp it)
I also fully well expect that most world gold mine production
will be forced to ship gold into the leftovers of the dollar cash
settlement paper market until the Bullion Banking system is made
whole on their physical side. In adjunct to this, the ECB and
BIS will play a major roll in cashing out failed paper gold positions
for certain clients. Cashing out in Euros, that is.
A US workout to cover its failed paper gold position will most
likely be using gold industry profits. It could be done via "windfall
tax legislation", plain tax or part of any variety of emergency
financial arrangement. All built in order to allow our current
gold reserves to be repriced at higher world levels and help our
dollar stay somewhere in the next currency system. Considering
the size of the failure, real gold will outperform any and all
investments once this all gets started. However, we should not
be naive and not expect some serious taxes of our own on bullion
sales. Still, only just enough so as to keep currency tender protected
from being supplanted with illegal gold use. Illegal in that too
high a rate and everyone would use gold in barter and stopped
paying their capital gains taxes all together.
Dollar hyperinflation and super high gold prices are closer than
many think.
MK, while I think you have always understood our thrust, if this
post is sinking into the readers understanding,,,,, the words
should be jumping off the page at them. Let's hope so.
Now, I think I will do some gardening and also have a pizza later.
Sounded too good to pass up! (smile).
thanks
TrailGuide
I hope to later comment on the good words of Mr. Strauss.
MK (10/08/01; 18:28:05MT - usagold.com msg#115)
Question from Beneath
a Tonne of Yellow Metal:
FOA, with respect to your comment below (which fell on me like
a tonne of yellow metal), let me ask a question or two:
FOA: "The ECB will not only be forcing a higher return to
Euro holders, they will also be promoting a shift away from the
US method of hedging currency risk. Moving their quarterly marking
to the market of gold assets to using a local Euro Zone spot physical
price; a price that will prove to out run the dollar "paper
gold" market's ability to keep up. Such a play will emphasize
"physical gold" positions for hedging as opposed to
"paper gold" positions. The latter will become an obvious
useless play as investors ratio their exposure into physical and
glut the "paper gold" market with no longer needed,
unwanted dollar positions. An action that forces a discount upon
a market physically unprepared to match real gold against a decade
of super inflated paper supply."
MK: I think I might understand where you are going with this.
But let me ask you just to be sure: Do you foresee "using
a local Euro Zone spot physical price" as you put it, (and
I interpret that to mean Europe pricing gold in euros independent
of the dollar price) as a means to breaking the bullion banks'
grip on the price of gold? Let's just deal with that piece of
the puzzle before moving on. In such a scenario, what would happen
for example if natural supply and demand took the price to EU500),
while the bullion banks through derivative selling held the price
at US$290? Let me throw in one more ingredient: The exchange rate
between the dollar and euro remained within 90% of what it is
now. Is this even theoretically possible?
FOA (10/8/01; 08:04:08MT - usagold.com msg#113)
Gold on the trail.
Hello Again.
While we watch world events agrivate the markets, the GoldTrail
becomes an ever safer place to be.
With US bombs working overtime, we may as well get used to living,
talking and investing in a world of disorder. It seems this particular
period isn't going away any time soon. However, there is another
dislocation on the horizon; once we get past this war phase, by
then a real economic / currency transition may be well under way.
I wanted to further discuss a closing portion of MKs post, here
on the trail.
----- Since today the gold price is both an institutional fixture
and institutional fiction much the same process is in motion at
present -- only de facto and covert. Are you suggesting a similar
result? And with the euro present and accounted for, will it lead
to a new world order? ------- I think we may have come to a new
Trailhead -- perhaps one that looks vaguely familiar, but then
again perhaps something totally different. I am convinced you
are correct that the Europeans believe that there is a certain
historical inevitability to the dollar's demise and there is no
need to hasten the process. ---- The real controversy in the weeks
and months to come will revolve around what this
might mean to both European and American savers, equity investors
and gold owners. -----------
-------------------------------------------------
In MKs quote above, he was concluding a comparison to our early
seventies gold market and its predicted change as seen by Harry
Browne. He also considered the European perspective and what it
will mean for us. That "us" is you, me and our friends
in Europe.
My thoughts:
I made a point in my last talk that: ---- In time I came to understand
that there really was a long term, singular move, evolving along
as a political play at work. The last decade only served to underscore
it all. --------
Within this evolving political play, gold is but one portion of
the pie. For us gold advocates, "how this portion fits in",
is the most important segment of this economic transition in progress.
In time that question will become the most all consuming topic
on gold forums.
If you have spent any time at all with mine or my associates thoughts,
you may have come away with a perception that these past decades
did not contain gold cycles. Indeed, all of these fluctuations
could be understood as one long, determined, singular process;
a competitive political process of taking the world off the old
dollar standard. As in MKs thought above; most European planers
realized long ago that there had to be some inevitable "play
out" or "wear out" of the dollar's mechanics. Especially
when its whole linkage to gold was broken; making the dollar an
international medium that only expressed the political management
for one nation: the US!
Modern Euro Zone thinkers, today, are even more so aware of what
their new currency initiative will mean in the time ahead. As
much as we Americans turn a deaf ear to such logical discussion,
there is no avoiding the fact that every currency that lived had
an end. This fate is being hastened for our dollar even before
full Euro use is established. We have but to look and see that
"safe haven" currency buying has dramatically shifted
to favor the Euro in this present time of warfare; something that
was not recently the case for any other major national currency.
The historical fact, that fiat currencies end, is all the more
true as modern economies probe the useful limits of fiat currency
systems. We have pointed out many times that the dollar has a
definite timeline and the equation that controls that line is
linked to "political use". Where once hard metal backing
or at least "hard style money" management determined
a fiat's value, modern economics seem destine to morph even the
next "world money" into the same process. This is part
of the "why for" Europe's ECB built its gold policy
as it did. In addition to replacing the huge hole a fallen dollar
will create, their "non money" gold assets will establish
a world class commodity link that oil
producers and other natural resource rich nations can use to deflect
"new world order" building by the next zone of nations.
A return of gold back to it's ancient real purpose and use in
a value ratio that reflects the worth of the world's created and
owned wealth in something other than national paper currency.
This will send gold on a long term run over decades. Creating
an international asset that forces the comparison of all economic
orders, and the national currencies they use, against each other;
negating the need to reinstate a Western policy of artificially
controlling gold values for the currencies benefit.
-------------------
The US placed its money into this current equation in 1971. Then
it failed to accept the internal price inflation that over printing
its money demanded and a remarking of it's gold reserves would
expose to the world. Once off the last possible connection to
a gold exchange standard, the dollar became a modern political
tool. Little more than a derivative of value that depended upon
what it could buy within our American borders. While this will
be the fate of every new currency in our modern world, the US
was politically and structurally unprepared for this shift in
dynamics. We left our currency in this international pot, subject
to every bit of unknown economic evolution that would come along.
Because we could not walk away from the free lunch it brought
us, that evolution dynamic is now upon us. The price we will now
pay is the complete loss of dollar utility.
We managed this threat with help from our Euro friends; somehow
thinking they enjoyed and wanted our fleecing their lifestyle
to the same degree we did it to the rest of the world. Their cooperation,
we will find out, was but a structural policy that brought time;
time for a dollar
replacement to be made.
Our ability to print and ship ever larger numbers of dollars overseas,
against our local purchasing power alone, demanded a gold relationship
to prove the dollar derivative's value. While implementing this
policy, we morphed our internal goods production base so as to
further decrease its ability to match the flood of dollars we
were creating. From local manufacturing to services we moves,
all the while our leaders and economists told us; "don't
worry, noone is watching,,,, and if they are they are too stupid
to understand it all". Herein is where gold fit into the
pie. Herein our newly fiat currency became a tool with a timeline.
A currency with an end.
While hard money historians, to the man, clamor for a return to
honest government and a dollar backed with gold; they leave out
an important step in the process that history says will never
be skipped. Once a nation embarks down a road of inflating its
currency for local political use, the cast is set for a constant
redenominating of the money unit; that is "real bad"
price inflation. However, modern economic evolution has presented
an even more profound reply. Once a nation embarks down a road
of inflating its currency for international political use, the
cast is set for the world to find said fiats useful limits, then
drop it from use; that is super price inflation as a result of
fiat replacement. To this end we come.
--------------------
The gold market, today, is composed of a relatively tiny physical
sector with an all consuming paper component surrounding and dwarfing
the standing stocks. This relationship is fine and well as it
served the international community with a way to hedge dollar
positions with price rises in gold. It worked as long as this
"paper gold" float had credibility; not to be confused
with delivery credibility. In our modern dollar gold markets,
derivative gold investors need only have faith that their position
"could and would" deliver a gold "price matching"
quality. As long as the dollar remained the world settlement reserve
currency one need not have access to real gold to generate hedged
buying power, paper gold would do this for you. Whether the gold
price moved or no, a position and faith was all we needed to continue
dollar use.
This kind of position has grown in the final decade of dollar
use. In order to float ever larger numbers of international dollars,
the paper gold float had to expand with it. Our dollar was very
much hyper inflated as it was used in a final act of world economic
leverage; "political use" that drained the last bit
of "leverage value" from a failing currency system.
To this end, the "paper gold"
markets were matched, point to point, with international dollar
inflation.
-----------------------------
As we proceed with this act, the dollar will come to be seen more
and more as "just another currency" rather than the
world's reserve settlement money. We see today the makings of
this move as national blocks move in this direction. England,
Russia, China and South Africa are thinking more and more in terms
of using Another currency; in a percentage that more reflects
a realistic ratio of their trade flows. Soon oil, debt and all
world settlement will be done more so in this same ratio. Soon,
investors will match their fiat needs and savings plans so as
to be denominated in Euro positions; again equal to a more worldly
economic exposure.
While, at first, not completely replacing the dollar on a world
trading scale, this initial shift will have a dramatic impact
on the use, need and overall function of our current paper gold
markets as expressed in dollar terms. In order to replace the
loss of our international dollar demand and its impact on domestic
economic and financial structure, the US fed has and will begin
a structural currency inflation that builds upon an already overextended
base of world dollar liquidity. This incredible currency expansion
will break out into the open with real price inflation as never
before witnessed in the US. In turn, foreign holders of dollar
based assets will, not only, demand price performance of their
"paper gold" hedges, even as they are compelled to shift
a larger portion of their asset bases into Euro positions.
The ECB will not only be forcing a higher return to Euro holders,
they will also be promoting a shift away from the US method of
hedging currency risk. Moving their quarterly marking to the market
of gold assets to using a local Euro Zone spot physical price;
a price that will prove to out run the dollar "paper gold"
market's ability to keep up. Such a play will emphasize "physical
gold" positions for hedging as opposed to "paper gold"
positions. The latter will become an obvious useless play as investors
ratio their exposure into physical and glut the "paper gold"
market with no longer needed, unwanted dollar positions. An action
that forces a discount upon a market physically unprepared to
match real gold against a decade of super inflated paper supply.
In the end analysis; the dollar will suffer an ever more negative
reallocation of assets in a snowball effect that trends investors
away from dollar use and settlement. As dollar price inflation
roars, and physical gold demand soars; the dollar gold markets
will completely fail their past hedging purpose as they become
locked into a political cash settlement mode. A mode that forces
an ever expanding discount against spot physical trading in Europe
and the world.
---------------
The new world order MK mentioned above will, in time, be seen
as simply a redefinition of currency use and values. As seen in
a historic scope of human affairs; the world has always been on
the brink of a new world order. Perhaps better said: the old world
order has never stopped
changing. (smile)
thanks all
TrailGuide
FOA (10/5/01; 10:55:19MT - usagold.com msg#112)
Discussing the World
with Michael Kosares
http://quote.bloomberg.com/fgcgi.cgi?mnu=news&ptitle=Currency%20Europe&tp=ad_uknews&T=news_storypage99.ht&ad=euro_currency&s=AO72iPxRDRG9sbGFy
Hello MK
I wanted to come back to your last stop here on the GoldTrail
to address your points and expose myself to the world. (smile)
I bet you and many hikers think I am tagging all Americans and
gold thinkers with this "Hard Money Socialist" label.
Ha Ha,,,,, let me slowly turn around so everyone can take a good
look what a HMS looks like. Yes, that's right,,,,, I fit the definition
completely.
Most of my life I thought gold should be locked into any official
currency system so to act as a gauge and controlling factor against
socialist tendencies in governments. I studied and in some cases
talked to all the prominent thinkers on the subject.
In the late 60s, when Harry B. was living in LA, his pre book
views took on quite a following. Me included! Oh, it all seemed
so natural then; the eventual breakdown of our misguided economic
policies had to, one day, kill the whole dollar printing game!
We all thought that "the coming big failure" would drive
every governments back to using gold as money; or at least in
some version of another gold exchange standard.
However, even then, I had some serious people pointing me in a
different direction. You mentioned how people saw Harry's thoughts
" " ----- considered him the lunatic fringe back then
simply because most people never heard of such a thing---- "
"! Ho Ho, you should have seen my reaction
to these other perceived, radical, foreign views I heard?
Truly, Harry's stuff seemed so much more real, so much more the
"American Way", that it just had to work. Well, it did
and we have whole libraries full of historical scrip and economic
writer's papers to chronicle his correctness. But, you know, I
also looked back at these other guys explanation of things and
they were every bit correct too,,,,, the effects were the same.
Then as the 70s ended and the 80s ran on, their much more longer
term understanding really took hold and left all other gold /
currency explanations in the dirt. True, all the rest of the hard
money crowd gained a little with each gold cycle high, but were
also shot down with each cycle drop. The trouble is that historic
process is a time consuming afair (smile) and most of the younger
boys and girls that come here don't have a full hands on perspective
to how we got here. Current dogma has a way of leaving out important
turning points that are really needed to be factored in. Hell,
a few decades of cycles became so regular in our mind set that
a whole industry was born, explaining why cycle investing works
(smile). In time I came to understand that there really was a
long term, singular move, evolving along as a political play at
work here. The last decade only served to underscore it all.
The early 90s Gulf war spike in gold should have been the final
revenge for us bugs. Can you imagine,,,,,, war in the middle eastern
oil fields,,,,,,, hundreds of well burning and gold gets shot
down?? I was already 80% in my associates camp of thinking by
then and that spike down pulled my other 20% right in. I knew
then that the whole story was changing on political grounds and
was not going to follow the Mise path.
My typical hard money shared long held belief, back then, was
always:
----"Gold is the only official money of the world and will
return to these roots one day"-------- and -----" some
world wide financial dislocation will drive all governments back
to this position"-----!!!!
It wasn't going to happen, no matter what, short of nuclear war.
All we had to do was look around and see how people the world
over were attached to using fiat currencies. The economic system
itself was morphing into new ground as world trade learned to
function very efficiently with fiat
digital settlement. And that's something the 70s crowd said could
never happen. That was how many years ago?
A lot of the Mise crowd tried to point out that ---- " hey,
this is all very good but if you were on a gold system this economic
game would be all the more better" ----! Ha Ha, no one cared,,,,,,
why risk what was already in process. Even the third world didn't
want to hear it. They figured that any return to a hard money
system would harked back to a time they remembered well. These
guys suffered during the early century and no one was going to
tell them that the gold standard wasn't the fault. The US, is
today and was then, robbing them blind but the situation seemed,
to them, that this new dollar standard was building them up. Looking
at it all,,,,, we robbed the Japan life style standards the most.
All to buy us an almost free standard and they loved it.
When it came to using fiat money in our modern era, it made little
difference what various inflation rates were in countries around
the world; 50%, 100% 1,000%,,,,,, they went right on playing with
the same pesos. There have been countless third world examples
of this dynamic, if only we look around. Mike, look at what happened
in Russia after they fell,,,, the Ruble stayed in use and function
with 6,000% inflation. My god they still use it now.
No,,,,,,, my guys are dead on the money with respect to the political
dynamic that's playing out. The world is heading towards a huge
financial / currency crack up, but it won't work out with gold
coming back into the money game. This very long term transition
is playing on a move away from
dollar domination with Europe preparing to suffer less than us
by pulling in as many other political trading blocks as they can.
When you look at who they are reaching for; every one of these
blocks wants gold moving higher to shelter their dollar trading
losses. None of them expect to unload dollar reserves because
our end time trade deficit won't permit it. They can't just send
the dollars to each other, buying their
own goods that would never exhaust the external dollar float.
Hell they now have their own money to do trade with, the Euro.
The game is to let the US economy suffer from its own bloated
expansion by moving slowly away from supporting foreign dollar
settlement with CB storage. This is more than enough to end the
dollars timeline as we are already stretched to the leverage limit.
They know that Greenspan has but one policy to use and that will
be super printing. He is doing it now, right on que!
The ensuing domestic price inflation will waste away all buying
power of dollars overseas. This is where they must install a free
market in gold that ends international confidence in the current
gold fractional reserve game. This is the "what for"
of Britain moving itself and it's gold operation into the Euro
arena. Once safely there, or there in initiative, the ECB and
BIS could cash out England's gold
liabilities without crashing London's banks.
Mind you, this is all happening while Western style "Hard
Money Socialists" are defending their stance by saying the
Euro is just another fiat. Ha! These are the same guys that, throught
the 90s, put every dine in expensive gold stocks and watched dollar
currency inflation drive the dow up a
trillion points while political actions killed their leveraged
gold plays. Now they will refuse to buy physical when political
will is about to impact this sector and they will most likely
stand by while a Euro based dynamic starts another economic surge
later.
Truly, reasoning and logic is all about your point below: "it
is", Mike.
Mk, you mentioned:
------
Europe will be no more aggressive than it needs to be. As a casual
political observer, I believe that this policy is a mistake that
forces Europe to play the inflation game along with the United
States, and that is not the way I would have played the game given
the opportunity. However, I'm not the
one calling the shots in Europe. I am an American businessman
and investor and in that capacity I am not so much interested
in the world as I'd "like it to be" but as "it
is." I'm sure my European counterparts feel the same way.-----------
Right Mike, your last part is like Another said about the forest
growing anyway. The fact that it worked with fiat is the way it
happened,,,,, "it is"!
To address your point: well, they are awfully dog gone aggressive
now. Note that they didn't make any attempt to match our post
crash rates with a larger drop in their own. That has placed then
in a very pro-active dollar warring position now. I'm sure Greenspan
is smoke-en over this break away. Its built a major carry proposition
against the dollar with it and the Euro has to gain on this. Here
is an item from your News feed:
--------------------
http://quote.bloomberg.com/fgcgi.cgi?mnu=news&ptitle=Currency%20Europe&tp=ad_uknews&T=news_storypage99.ht&ad=euro_currency&s=AO72iPxRDRG9sbGFy
Currency Europe
10/05 13:06 Dollar May Fall vs Euro, Yen; U.S. Unemployment Seen
Rising
By Chris Gothard
London, Oct. 5 (Bloomberg) -- The dollar, little changed, may
decline against the euro and the yen on expectations a report
will show U.S. unemployment climbed to the highest level in more
than four years, more evidence the nation is headed for a recession.
-------------------
``We expect unemployment to rise,'' said Rod Davidson, who helps
oversee about $1 billion as head of fixed-income securities at
Murray Johnstone Asset Management in Glasgow. ``Everyone is watching
for the slowdown in consumer spending.'' He expects the dollar
to decline to 96 cents per
euro by year-end, and recently sold U.S. Treasury bonds in favor
of European government debt. ----
Since Sept. 11, U.S. Treasuries maturing in one year and more
returned 2.05 percent in local currency terms, according to Bloomberg
indexes that take into account reinvested interest. For a European
investor, those returns are reduced to 1.79 percent because of
the dollar's drop against the euro in that period. ----------------
-------------------------------------------------
Add a,,,,,,, solid rate difference on top of these figures,,,,,,,,,
factor in a "beggar thy neighbor" who is going to survive
this economic war between Japan and US ,,,,,,,,; and europe's
thrust is major! I fully well expect Europe to sell into any dollar
gold market spikes,,,, now,,,,, so as to hold the level stedy,,,,,,,in
an effort to inflate paper and discredit our gold market. Eventually
they will move to create a rift between physical dollar gold prices
and dollar derivatives prices. The call will go out
that American gold does not reflect what's happening to our Greenspan
dollar policy,,,,, real US price inflation,,,,,,, and is a fraud.
You know, the US wants and needs a higher gold asset price now
and I bet they are confounded to find a way to achieve it. We
are stuck in a situation where we will ship a good portion a cheap
prices first. We spent a decade or so playing this gold game for
better oil pricing and economic
dominance; now a higher dollar price would hand our banks a trillion
dollar derivatives loss if it rises. It just kills them because
the Euro banking establishment would simply cash our all the dollar
based gold derivatives into euro settlement and gain as gold spikes
and builds an ever larger asset base for all the ECBMBs.
I have to laugh at all these jokers that keep trying to understand
the ECB gold policy as some sort of currency backing similar to
years past. It just flies right past them that the ECB wants gold
as an dollar replacing asset, not local money backing. For your
European clients, they would be in the best of all worlds it they
buy gold now. Their system is almost making rising gold a law
so as to buffer domestic dollar exchange rate loses.
Mk, you also wrote:
-------- Of course, this is precisely what happened in the 1970s.
Harry Browne made the same argument back then -- that the $35
gold price was both an institutional fixture and institutional
fiction. Europe took advantage of that situation by reclaiming
a substantial gold reserve. When the
London gold pool (both de jure and overt) broke down at the $35
price, the devaluation (both de jure and and overt) quickly followed.
Additional formal gold sales proceeded from there from both the
International Monetary Fund and the U.S. Treasury.
Since today the gold price is both an institutional fixture and
institutional fiction much the same process is in motion at present
-- only de facto and covert. Are you suggesting a similar result?
And with the euro present and accounted for, will it lead to a
new world order? -----------
The difference today is that the whole worldly financial, economic
and currency structure evolved to service a much more fast paced
dynamic. Simply put, we cannot go back to not using digital settlement
again. If we are to use our trading efficiencies we must embrace
fiat currency use,,,,,,,,, and all its evils. This is what was
recognized as we were placed on the road to high priced gold.
Kind of like high priced oil has been factored into our equation,,,,,,
so too will a rising gold price be seen as the price we pay for
modern operation. Of course, just as those that don't have oil
must pay to play, and gladly do so,,,,,, those that don't have
real gold when the tables turn will have to pay to keep up.
Back when Harry wrote his early views, gold was largely a physical
market. Let's see, were there futures in the late 60s. Nope, didn't
think so (smile). Gold was largely a government transfer thing
with private players outside the US moving a relatively tiny amount
of gold. The real story in the 70s was in how much gold the truly
big operators couldn't get, even at those oh so high prices. The
little American brought his K rands , gold stocks and post 1975
futures and thought he was doing something big. In retrospect,
gold was dead in the water compared to where it should have gone.
The dollar faction never really stopped controlling it.
Today, it's not the government pricing policy that in jeopardy,
it's the very market itself and this change will break not only
the price fiction but the institution also.
Ok, guess I went on enough here. I sure hope everyone can overlook
my english mistakes in those last two posts? More so in all my
posts? (smile) Talk later my friend
TrailGuide
FOA (10/4/01; 11:34:15MT - usagold.com msg#111)
Walking On Solid Ground
Hiking the Gold Trail: understanding the evolving message of gold.
-----------
Good morning to everyone!
Glad to see so many here. This is a more formal presentation and
one of our usual departures from my casual ramblings I brought
a few other friends with me to support my thoughts and help guide
the hike today. We'll bunch up close when we pause to talk, then
stretch out in a line to stay only on the trail. Don't worry,
you will all be able to hear me as we walk.
Let's go
My friends and I are Physical Gold Advocates. We own physical
outright and do so employing the same reasoning mankind used in
owning gold throughout most of history. However, there is a major
difference between our perceptions of this historic reasoning
and the current Western perceptions so many of you are attuned
to. Ours is not a mission to unseat the current academic culture,
concerning money teachings; rather it's to present the historic
and present day views of the majority of gold owners around the
world. Those of simple thought and not of Western education. Plain
people that, in bits and pieces, own and use the majority of above
ground gold. Whether or not our perception is correct will depend
on your ability to apply logic and reasoning.
As we stand here, examine this ancient formation to the left
Most contemporary Western thought is centered around gold being
money. That is; gold inherently has a money use or money function;
built into it as part of the original creation. This thought presents
a picture of ancient man grasping a nugget of gold, found on the
ground, and understanding immediately that this is a defined "medium
of exchange"; money to buy something with. This simple picture
and analysis mostly grew in concept during the banking renaissance
of the middle ages and is used to bastardize the gold story to
this day. Even the term "money", as it is
used in modern bible interruptions, is convoluted to fit our current
understandings.
Much in the same way we watch social understandings of music,
literature, culture and dress evolve to fit current lifestyles,
so too did gold have a money concept applied to it as it underwent
its own evolution in the minds of political men. This is indeed
the long running, background story of our Gold Trail; an evolution,
not of gold itself, but of our own perceptions of this wealth
of ages. A evolving message of gold that is destine to change
world commerce as it has never changed before.
Onward my friends
In ancient times there was no concept of money as we know it today.
Let me emphasize; "as we perceive money today". Back
then, anywhere and everywhere, all things known to people were
in physical form. All trade and commerce was physical and direct;
barter was how all trade was done.
If one brought a cart to market, loaded with 20 bowls and 20 gold
nuggets, he used those physical items to trade for other valued
goods. The bowls and gold had different tradable value; as did
every other thing at the market. Indeed, gold brought more in
trade than bowls. Also true; if a barrel of olive oil was in short
supply, it might bring even more in trade than all the gold in
the market square.
The understanding, we reach for here, is that nothing at the market
place was seen as a defined money value. All goods were seen simply
as tradable, barterable items. Gold included. Truly, in time,
some items found favor for their unique divisible value, greater
worth and ease of transport.
Gems, gold, silver and copper among others, all fit this description.
These items, especially and more so gold, became the most tradable,
barterable goods and began to exclusively fill that function.
But the main question is: was there money in that market place?
Sure, but it was not in physical form. Money, back then and today,
was a remembered value in the minds of men. Cumbersome it may
have been, but even back then primitive man had an awesome brain
and could retain the memory values of thousands of trades. In
every case, able to recall the approximate per item value of each
thing traded. That value, on the brain, was the money concept
we use today.
Eventually gold climbed to the top of in the most tradable good
category. Was gold a medium of exchange? Yes, but to their own
degree, so were the bowls. Was gold a store of value? Yes, but
to a degree, so were dinner plates. Was gold divisible into equal
lesser parts to define lesser barter
units? Yes, but to a degree one could make and trade smaller drinking
cups and lesser vessels of oil. Perhaps gold became the most favored
tradable good because the shear number of goods for good traded
made a better imprint on ones memory; the worth of a chunk of
gold in trade became the value money unit stored in the brain.
Seeing all of this in our modern basic applications of "money
concept", almost every physical item that naturally existed
or was produced then also held, to a lesser degree, gold's value
in market barter. But most of us would have a hard time remembering
a bowls value and thinking of a bowl
as money. The reason this is such a stretch for the modern imagination
is because bowls, like physical gold, never contained or were
used in our "concept of money". Back then, as also today,
all physical items are simple barterable, tradable goods; not
of the money concept itself. Their
remembered tradable value was the money.
Gather around
Money, or better said "the money concept", and all physical
goods occupy two distinct positions in our universe of commerce
and trade. They have an arms length relationship with each other,
but reside on different sides of the fence and in different portions
of the brain.
For example: say I take a bowl to the mint and place an official
government money stamp on the underside. The bowl now is stamped
at $1.00. Then I take one tiny piece of gold to the mint; one
290th of an ounce or at today's market a dollar's worth. They
stamp that gold as $1.00. Which
physical item would be money? Answer; neither.
Using ancient historic reasoning and the logic of a simple life;
the bowl could be taken to the market square and bartered for
another good. Perhaps a dinner plate. In that barter trade, we
would most likely reach an understanding; that the "bowl
for plate trade" imprinted our memory with what a digital,
numeric dollar concept is worth. Again, the 1.00 unit was only
stamped on the bottom for reference. While the dollar concept
is only a rate able unit number to compare value to; like saying
a painting is rated from one to ten when judging appearance.
We could do the exact same thing with out 1/ 290th ounce piece
of gold as with the bowl above. In the process we again would
walk away with the knowledge of what a $1.00 unit of money value
was worth in trade. The physical gold itself was not the money
in trade; the value of the barter itself created the actual money
value relationship. Again. the most important aspect for us to
grasp here is this:
----- The use of physical gold in trade is not the use of money
in trade. We do not spend or trade a money unit, like the dollar,
to define the value of gold and goods: we barter both goods and
gold to define the worth of that trade as a remembered association
to the dollar money unit. That
remembered worth, that value, is not an actual physical thing.
A dollar bill nor an ounce of legal tender gold represent money
in physical form. Money is a remembered value relationship we
assign to any usable money unit. The worth of a money unit is
an endless mental computation of countless barter trades done
around the world. Money is a remembered value, a concept, that
we use to judge physical trading value. ----------------
Onward
Naturally, for gold to advance as the leading tradable good it
had to have a numerical unit for us to associate tradable value
with. We needed a unit function to store our mental money value
in. In much the same way we use a simple paper dollar today to
represents a remembered value only. Dollars have no value at all
except for our associating remembered trading value with them.
A barrel of oil is worth $22.00, not because the twenty two bills
have value equal to that barrel of oil: rather we remember that
a barrel of oil will trade for the same amount of natural gas
that also relates to those same 22 units. Money is an associated
value in our heads. It's not a physical item.
The first numerical money was not paper. Nor was it gold or silver;
it was a relation of tradable value to weight. A one ounce unit
that we could associate the trading value to. It was in the middle
ages that bankers first started thinking that gold itself was
a "fixed" money unit. Just because it's
weight was fixed.
In reality, a one ounce weight of gold was remembered as tradable
for thousands of different value items at the market place. The
barter value of gold nor the gold itself was our money, it was
the tradable value of a weight unit of gold that we could associate
with that barter value. We do the very same thing today with our
paper money; how many dollar prices can you remember when you
think a minute?
This political process of fixing money value with the singular
weight of gold locked gold into a never ending money vs gold value
battle that has ruined more economies, governments and societies
than anything. This is where the very first "Hard Money Socialist"
began. Truly, to this day they think their ideas are the saving
grace of the money world. It isn't now and never was then.
Further along
When investors today speak of using gold coin as their money during
a full blown banking breakdown, what are they really speaking
of?
In essence, they would be bartering and trading real goods for
real goods. The mention of spend their gold money is a complete
misconception in Western minds. Many would bring their memories
of past buying with then and that is where the trading values
would begin. Still, it would take millions of trades before the
"market place" could associate a real trading value
to the various weight units of gold. It took mankind hundreds?
of years to balance the circulation of gold against its barterable
value. Only then could a unit weight value become a known money
concept. In that process, in ancient times, gold had a far higher
"lifestyle" value than it has seen in a thousand years.
This value, in the hands of private owners, is where gold is going
next.
If you are following closely, now, we can begin to see how easy
it is for the concepts of modern money to convolute our value
and understanding of gold. It is here that the thought of a free
market in physical was formed. Using the relationship of a free
physical market in gold, we will be able to relate gold values
to millions to goods and services that are currency traded the
world over. Instead of having governments control gold's value
to gauge currency creation; world opinion will be free to associate
the values of barter gold against barter currency. In this will
be born a free money concept in the minds of men and governments.
A better knowledge and understanding of the value of all things.
Next trip, we will hike the currency trail.
From an associate:
" Some men will stand on a stage, their backs to an economic
forest; growing tall and green from fiat dollar use. These men
will tell the audience before then that this forest does not exist
and they are really in a desert. They say only gold as money will
bring rain to this sand. To believe this, one has to accept that
30 years of American fiat dollar use had no part in making this
landscape. I say that if the dollar created only a part of this
desert, then the Euro and free gold will keep lumber mills employed
at least 20 years, no?"
Thanks all
TrailGuide
MK, I'll reply about your Harry Browne thought soon (smile).
FOA (10/3/01; 10:21:26MT - usagold.com msg#110)
The makings of a dust
storm
Hello Everyone,,,,, packs on,,,, there is ground to cover!
-------------------
That's not dust from our feet -------
As we walk along this Gold Trail we no longer have to look far
ahead to see results; real events are directly under our feet
now. True, many will point to this tragic attack on New York and
Washington as the catalyst for current woes. But I say that our
entire economic structure was already weak and failing from decades
of dollar expansion. If these recent events had not come along,
something else would have eventually triggered our economic cascade.
The effects are falling into place just as I said they would.
-------
As a note to hikers: I will begin using "I" while talking
and, from here on out, clearly indicate when I'm speaking the
thoughts of a friend or associate. Over the years I have very
often spoke the words from others, as they wanted it produced.
Often doing entire posts while stating other's positions or inserting
their views in my posts, mid stream, without saying I was doing
such. We have all come far enough, now, that our understanding
can grasp the changing tide without this. My planting seeds of
thought in such a way may no longer be needed, but your leg work
is far from over. This change is a result of the evolution of
our political and financial world just as much as your growing
in insight.
Onward
For decades hard money thinkers have been looking for "price
inflation" to show up at a level that accurately reflects
the dollar's "printing inflation". But it never happened!
Yes, we got our little 3, 4, 8 or 9% price inflation rates in
nice little predictable cycles. We gasped in horror at these numbers,
but these rates never came close to reflecting the total dollar
expansion if at that moment it could actually be represented in
total worldwide dollar debt. That creation of trillions and trillions
of dollar equivalents should have, long ago, been reflected in
a dollar goods "price inflation" that reached hyper
status. But it didn't.
That "price inflation" never showed up because the world
had to support it's only money system until something could replace
it. We as Americans came to think that our dollar, and it's illusion
of value, represented our special abilities; perhaps more pointedly
our military and economic power. We conceived that this wonderful
buying power, free of substantial goods price inflation, was our
god given right; and the rest of the world could have this life,
too, if they could only be as good as us! Oh boy,,,,,, do we have
some hard financial learning to do.
----------
Over the years, all this dollar creation has stored up a massive
"price inflation effect" that would be set free one
day. Hard money thinkers proceeded to expect this flood to arrive
every few years or so; the decades passed as those expectations
always failed. Gold naturally fell into this same cycle of failed
expectations, as the dollar never came into it's "price inflationary"
demise.
A number of years ago, "I" began to learn of some smart
people about the real political game at hand and how that would,
one day, produce the final play in our dollar's timeline. Indeed,
you are hiking that trail with us today; us meaning Euro / gold
/ and oil people. All of us Physical Gold Advocates that have
an understanding about gold few Americans have ever been exposed
to.
-----------------
Our recent American economic expansion has, all along, actually
been the result of a worldly political "will" that supported
dollar use and dollar credit expansion so as to buy time for Another
currency block to be formed. Without that international support,
this decades long dollar derivative expansion could not have taken
place. Further, nor would our long term dollar currency expansion
produce the incredible illusion of paper wealth that built up
within our recent internal American landscape.
-----
The relatively small goods "price inflation" so many
gold bugs looked for will be far surpassed and the "hyper
price inflation" "I" have been saying is coming
is now being "structurally" set free to run.
------
Why "structurally", why now?
For years now, "politically", the dollar system has
had no support! Once again, for effect,
"Politically NO", "Structurally Yes"!
For another currency block to be built, over years, the current
world economy had to be kept functioning. To this end the dollar
reserve system had to be structurally maintained; with its IMF
agenda intact, gold polices followed and foreign central bank
support all being part of that structure. Truly, the recent years
of dollar value was just an illusion. An illusion of currency
function and value, maintaining the purpose of holding the world
financial and economic system together for a definite timeline.
Politically, the world does not hate America; rather they hate
the free lifestyle our dollar's illusion value brought us yesterday
and today.
Now that the Euro block is passing a point where the Euro currency
is viable; this same past dollar support that built American's
illusion wealth will now fall away. In it's place we will see
the beginnings of a currency war like no other in our time.
-----------------
This very change in structural dollar support is the same change
that has been impacting our fed's actions for over a year now.
This change is the difference between "my" call for
super price inflation and the endless calls past hard money thinkers
have made. Their on again / off again goods "price inflation"
outlook is based on the same failed analysis that expects price
rises because the fed was into another "printing money faster"
cycle. I point out that that cycle has come and gone many times
without a price inflation anything close to our total, long term,
dollar creation.
Further
To this end, I have been calling for a hyer inflation that is
being set free to run as a completed Euro system alters Political
perceptions and support. That price inflation will be unending
and all encompassing. While others call, once again, for a little
bit of 5, 10, 15% price inflation, that lasts until the fed can
once again get it under control,,,,,,,,, I call for a complete,
currency killing, inflation process that runs until the dollar
resembles some South American Peso!
Understanding the Western View
Most current brand of American gold bugs all invest along the
"hard money socialist" line. They harp on the gold story
while placing their money in leveraged bets on gold. Perhaps 10%
of their hard money portfolio is in physical and even most of
that is in the falsely perceived leverage of lesser hard metals.
All the while 90% of their investment is in various leveraged
near gold games.
Their story sounds good, but their bets can only pay off if the
government statist are able to control the gold market they way
it has over the last 30 years. Indeed, if the dollar banking factions
were to win this round, we will get another little price inflation
cycle and paper gold will, once again, rise a few hundred dollars.
The payoff would serve the mines and leveraged paper players at
the expense
of long term wealth creation for physical gold advocates. In past
cycle form, the statist would send the paper gold price back to
the pits.
Fortunately for the majority of world physical gold owners, the
hard money socialist game has ended. In fact, it has been on track
to fail for a decade or more. To this end, I invest for a full
American economic and associated dollar currency breakdown that
is reflected in a total revaluation and function of all dollar
using business entities. Because governments do and must combat
these types of breakups, gold mines and the hard money socialist
that guide most of them will fail little better than other investors
or companies. They will cry for the government to again create
a stable, leveraged paper gold arena so their bets could return
to even. The creation of a Euro based World Free Gold physical
only market will bar all trading nations from again playing the
socialist Western gold game. Physical gold will be the very best
holding as all of this comes into play. Virtually all government
gold policy will gravitate towards sponsoring citizen gold ownership.
Essentially because Europe will have removed the entanglement
of modern fiat competition from
said gold markets.
Yes, late comers to this understanding will encounter a true free
market, but their buy in price will be at a much higher natural
trading level. Present hard money socialist decry this and invoke
a call for "official money gold" as the only way governments
can go. That will not ever be allowed again
and it guile's them because they need their leveraged gold investments
to get them back to even first. Remember, these are the same people
that hold free markets on a high plateau as the goal for everyone.
Yet, they talk a story of gold control for just a little while
longer so adjustments can be
made.
Won't happen! Plan on Americans using inflating dollars as their
local transactional currency and Euros as their second currency.
All the while calling CPM for their monthly purchase of a world
class savings asset; 1oz bid $8,324 - ask $8,388! (right MK,,,,,,smile)
--------------------------
Greenspan will not embark on a dollar building policy again! Even
if he changes his mind about leaving. Unlike our past inflation
cycles, he has only one act to follow because he must support
the internal economic dynamics of this country as its dollar falls
from reserve status. There will be no
inflation "cycle" on this go around. The creation of
a competing Euro currency block has changed his policy dynamic.
The fed has cut rates below perceived price inflation levels already
and will cut again and again; even in the face of real, published,
soaring, official statistical CPI. The die has been cast and the
game in in process.
--------------
Timing?
We, and I, as physical gold advocates, don't need timing for this
position! Timing is for poor, paper traders. We are neither and
our solid, long term, one call over several years to hold physical
gold will confirm our reasoning. There is no stress for me to
own this ancient asset as it is in a good proportion to all my
other wealth.
There is no trading an economic system who's currency is ending
its timeline. Smart, quick talking players will joke at our expense
until fast markets and locked down paper gold positions block
their "trading even" move into physical at any relative
cheap price. Mine owners will see any near term profits evaporate
into a government induced pricing contango that constrains stock
equity with forced selling at paper gold prices.
My personal view
They will, one day in the future, helplessly watch their investments
fall far behind a world free market price for physical gold. Further
into the future, one day, mines will make money on the last thousand
per ounce price for gold; only the first $XX,000.00 of price will
not be available to them.
-------------
Now that I have more defined mine and our position and views;
it's time for us to begin another
"Walk On Solid Ground".
I'll be back as able.
Thanks Michael, Randy,,,,,, all
TrailGuide
FOA (10/1/01; 04:54:25MT - usagold.com msg#109)
Still Clearing The Trail!
Good Day to Everyone!
Am still working thru a backlog. Yet, I wanted to say that my
next address will contain a pre-hike list of answers, points and
notes about our views. I'll also be shifting my writing and discussion
format so as to clearly separate my thoughts from thoughts from
friends and associates. This is something I always planned to
do as events came into sharper focus. This change of style should
help every person that hikes this path.
In conjunction with this first set of remarks I'll post the next
installment of "Walking on Solid Ground". If you thought
the first was worth a read, this one will also have value. Thanks
Michael, for including that piece in your wonderful quarterly
paper! (smile)
TrailGuide
(Scroll To Top of Text)
(Archive I) The Trail Head
-- Start here for earliest archived Gold Trail posts
from February
2000 - June 2000
(Archive II) The Long and Winding Road -- Gold Trail posts from June 2000 - January
2001
(Archive III) The Scenic Overview -- Gold Trail posts from January 2001 - April
2001
(Archive IV) Nearing the Great Divide -- Gold Trail posts from May 2001 - June 2001
(Archive V) The Trail Widens
-- Gold Trail posts from July 2001 - September 2001
| USAGOLD - Centennial
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Centennial Precious Metals
Gold
coins & bullion since 1973
P.O.
Box 460009
Denver, Colorado 80246-0009
We educate first-time investors!
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We
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for quotes and purchase information.
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