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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)] |
WELCOME to the Trail Widens...the Fifth Archive for "Walking the Gold Trail"
USAGOLD is pleased to offer these special pages of unfolding commentary that are sure to challenge conventional perceptions of the gold market and international monetary affairs. Content for these Gold Trail pages is in the hands our two anonymous authors, "ANOTHER" and "Friend of ANOTHER" (FOA); and based on our past association with these popular commentators, we are confident that the message 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 "Walk the Gold Trail" of current events; anticipating the road ahead while leaving this easy-to-follow trail of commentary behind.
We encourage you to follow along (or to catch up), and then 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 ANOTHER and FOA's presentations; they appear here as submitted by the authors. 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...
(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
July 2001 to September 2001 (Archive V) This archived commentary has been re-arranged and presented in chronological order so that you may begin reading, naturally, at the top. However, you may click here (Scroll To Bottom of Text) for the later commentary.
FOA (07/12/01; 21:16:43MT - usagold.com
msg#81)
On the trail.
Has everyone seen West Side Story? Or for that matter any story
that portrayed human group loyalties and commitment. How about
the Three Musketeers? These stories and plays reflect our involvement
in groups and often depict how we stand together as a team. In
the first case a gang, in the second as "all for one and
one for all". In the second, if one member is insulted it's
a reflection on the whole group. If that hurt one walks away then
the whole bunch is suppose to walk together?
Well, it's no different in political circles, too. My interaction
here at USAGOLD is similar to a tiny part of our political world.
A world some of my friends call home, no less. It's very clear
to most of them that I'm not actually political here, just calling
plays as I see them on the field. All done for the benefit of
whomever has tuned into this station and wishes to hear.
It should also be clear that I have walked away this time, just
enough to still honor the cause. Far enough to make a point,,,
yet close enough that my private thoughts and discussions can
still be heard. Thoughts and discussion with a message of gold's
evolving place in the world.
So, on this Trail only, I now must remain.
Onward
As we begin today, I noticed a side path that lead away from the
GoldTrail. At it's end I see a group of people listening to some
person standing on a tiny stage. Let's ease over there and see
what this funny looking guy is saying.
Onward now,,, quietly:
================
Gentlemen, thank you for coming here today. Once again I'll be
offering up some of my views pertaining to gold's new place in
the world. For those new here we are covering the subject, today,
in a somewhat broader manner. Again, thank
you for your time and consideration.
I see we have several Americans here tonight. Good! You can help
explain to anyone seated next to you, what "a roadrunner"
is. That little ground running bird is native to a good portion
of the southwestern United States: the object of a children's
cartoon years ago. It seemed he was always running around some
mountain curve at incredible speeds! I always liked the part when
he would chase other characters so fast that he sometimes ran
right off the cliff side road! Then ended up suspended in mid
air; his little legs going full speed as if he never knew he left
the road.
Ha! Ha! You know, I always think of that image when listening
to modern Western Gold Bugs. Especially over the last ten years
or so. Like our "roadrunner" cartoons, they carried
their hard metal message so long and so fast that they ran right
off the Trail, too. Not knowing that our Gold path would one day
curve and follow it's natural way back to it's beginnings.
Over this time a lot of hard money thinkers stayed suspended in
that same position. Right up there in the open for all to see.
Over and over they would look over at us "new thinkers",
standing on the mountain and yell:
---"you fells are on soft economic ground and it's all gona
slide out from under ya"!-----
Hearing that we would lean over the edge and just yell back;
------"we know that, but mind your legs guys and keep um
moving"! It's a long way down if you stop out there!"
----------
Ho! Ho! Ok, all of you can see where I am going with this.
=============================
For years we had this image in our heads that gold was a hedge.
A hedge against what? You name it: war, disease, bankruptcy, inflation,
bank failure, money failure! If something caused a problem in
mankind's world, then gold was a good thing to perform as a hedge
against it.
It didn't take much leg work to research why so many thought that
way. We had a whole world of history to reference this and the
last couple of centuries produced copious works by noted economic
thinkers on the subject. Most all of their work could be boiled
down into a few simple concepts for us lesser minds to understand.
Let's see...... gold is money...... gold was used as money.......
and gold circulated as official government money not too many
decades ago. And one more........ no currency could live without
gold money backing it.
So, it seemed that if for any good reason we had a disturbance
in "the economic force" then all roads must eventually
lead back to gold use in it's well known money context. It's demand
would surge while it's price rose and that price action would
hedge our other loses. That is loses we incurred to our net worth
because of any of these mentioned problems. Fair enough. I can
understand that. In fact, I think most everyone did.
--------------------------------------------
But what happened? Over the last 30 years or so, something seemed
to be changing in the way all of us perceived our need for gold.
Indeed, was it perhaps that this new world was ignorant of the
fact that a fiat currency could never last as money? Was mankind
now blind to the known fact that a fiat currency, once removed
from it's association with real gold money, was dead on arrival?
From 1971 thru 1980, we had every form of the above mentioned
problems. In triplicate! Our dollar, stripped of gold backing,
was surely on it's last legs and slowly sliding into failure.
It was officially a fiat currency that we all were taught would
burn from inflation in a short time. Yes, gold went to $800 but
it should have kept on going if it was this historic money? There
were enough
dollar assets in the world to buy up every ounce and then some!
Thereby replacing all that fiat wealth with gold wealth! Still,
the real demand for actual physical gold failed to drive the price
higher or sop up any and all gold offered. Something just didn't
add up.
We were not without teachings on this! Anyone, with any understanding
of economic function or hard money theory, knew that super price
inflation was coming and that action would drive the real demand
for gold to the moon. Still, it didn't happen. Our dollar price
inflation was mild by failing fiat standards and gold never left
the launch site.
---------------------
Another fifteen years went by. A period of time that should have
vaporized any circulating fiat currency, unattached to gold. Especially
as the world's reserve currency was printed in numbers that only
a computer could add up. It seemed the general public was not
as lost as hard money thought predicted. They kept right on dealing
and saving in dollars, leaving physical gold to drift.
Looking closer at the big picture:
It further seemed that through out our recent decades of changing
economic function, the use and need for currency fiat was being
impacted by a new demand use. Something not fully understood,
but there never the less. This market action was not lost to some
planners. Planners in big political systems that had opposite
game plans from each other. Both trying to use fiat's and gold's
changing function for their own advantage. On one side their designs
would eventually rework everything, including removing our dollar
system. On the other their reasoning was to just survive... gold
or no.
Truly, over this time, we experienced every form of financial
dislocation. Some inflation with some deflation,,, wars and political
failure,,, 3rd world economic failures and even swings between
small storms and perfect storms! Still, underneath it all, riding
just beneath the surface, this "new demand" force was
affecting the use of what most thought was a worthless currency.
Helping to keeping fiat use in tact, even without it's needed
gold money backing. Something different was happening. Something
as unique and impossible to hard money thought as "computer
bytes" were once unique and impossible to the function of
a new economic world.
=========================
To be sure, this whole fiat system was engaged for political motivations.
Governments waged war against gold and other fiats for various
reasons. Some factions fought gold to protect the image of their
currency. This was a throwback to 30 years ago and was still important
to certain big players.
Until a few years ago, a currencies gold price still indicated
said currencies value. Some also waged war to keep gold in a range
so others could accumulate real physical cheaper. Almost like
an economic bribe?
In these and other functions, credit gold was employed to shape
a lower trading price for physical gold. As long as the currency
using public or the gold using industry didn't demand too much
gold to settle expiring credit gold contracts,,,,, the unlimited
nature of fiat based gold trading allowed as much paper gold to
be sold to as many that wanted to buy. While all of this was but
simple political maneuvering, it could not have been pulled off
without the help of that mentioned above; a "new currency
demand".
Political forces noticed that the public was well attached to
using fiat without gold backing. Most were more engaged to bet
on gold's price, as a hedge, instead of owning gold outright,
as a hedge. With such a setup in play, the paper gold market could
be expanded without physical settlement
fear. All the more so if traders, betting mostly on gold's price,
feared a currency loss as much as physical delivery. In this,
they always dumped their dropping contracts to settle in cash
before the dreaded delivery ever came.
For sure, over all this time people brought and kept gold in large
amounts. But that demand and it's trading volume was a trifle
in the overall physical and paper trading volume.
================
The total demand for holding physical gold as a hedge was falling
away just as it was needed to force credibility upon a inflating
world dollar gold system. Without full physical demand, gold stores,
worldwide could circulate in an ever lower price spiral. Always
leading it's old disgruntled owners to sell, fulfilling just enough
settlement for the next real gold buyer. Only to be repeated again
and again as the paper system produced another lower value for
each new buyer/ owner. Eventually bringing gold to it's plateau
price today. Where it is trapped between the falling demand to
use physical ownership to hedge currency risk and digital currency's
new use demand that keeps economic players in the fiat game.
I suspect that if a tremendous dislocation event occurred today,,,
under the current dollar gold system,,,, our paper gold price
would indeed collapse! It would do this as investors committed
to hard money thought failed their own cause. Them and others
would continued to cycle real gold out of their portfolios,,,,
round and round the circuit,,,,,, as contract gold prices fell
away. Contract
owners would drive those prices ever lower in their rush to escape
even the illusion of delivery.
To the incredible shock of our modern "roadrunners"
their gold would slowly fall in almost any financial panic. Falling
in price as their neighbors traded each and every last ounce down
to the bottom. Only if a complete currency / banking washout occurred
would gold find demand as a real wealth trading vehicle again.
The only kind of demand in our modern world that will once again
return gold to it's ancient value ranges.
But this is not the end of the story. Nor is it how the final
act of this play will unfold. I expect the above wealth demand
to be politically reinstated. And timed to destroy the credibility
of our current dollar paper gold system.
This ongoing discussion will embrace and follow this political
reality as it unfolds in our time. Unfolding into what is about
to become the greatest bull market in gold our world has ever
seen. To fully understand how this will come about, we need to
understand how some political forces are using both gold's and
fiat's changing function in our modern economic structure. To
grasp that, we all must understand what money is today, yesterday
and tomorrow.
So keep those little feet going mr. roadrunner!
We will pull you back in long before gold hits $30,000.
Count on it! (smile)
===================================
===========
OK folks, this is more than one can stand for a day. Let's quietly
ease back to the trail and think about all that for a while.
Michael, Randy,,,,,, I hope this system has a lot of space because
I can tell that I (errrr,,I mean this fella) has a lot to say!
He also needs to address where others think his view is all wrong.
Who knows? I could be all wet! It's going to be an long discussion
for everyone reading, too!
Especially if you two guys join in?
Uhhhh,,,,, I didn't mean that the way it sounded (smile)
thanks
TrailGuide
================================
FOA (07/16/01; 12:42:07MT - usagold.com msg#82)
The evolving message
of gold
Hello everyone,
Once again, after walking only a short distance, we come to a
clearing where a speaker is beginning his talk. Let's just stand
here on the hillside and quietly listen!
==================================
Ladies and gentlemen, good evening an welcome to our ongoing traveling
talks on the changing world of gold. Thanks again for being here
and we will get started now.
Much thanks to the USAGOLD people for recording and reproducing
these discussions. Also a hardy appreciation to their Randy for
organizing all our thoughts as they were presented in the TrailGuide
context.
I begin tonight by reading an item from the very first TrailGuide
walk. Then proceeding on to expand in more detail from our points
in earlier talks. For the benefit of those who missed our last
discussion, this thought picks up that theme very well:
""""""""""""""""
Our most broad view, expressing our strongest position is this:
From ten or perhaps twenty years ago a political will, a concept,
was being formed that would today change the economic architecture
and power structure of the world. Within this change, gold would
undergo one of the most visible transformations since it was first
used as money. We expect that, starting three or four years ago,
the gold market itself has started responding to this sea change.
As such, in our time, physical gold will enter the greatest bull
phase in it's human use history. This my friends is the very trail
we walk today. During our hikes and fireside chats, we will point
out this political will, consider the logic and express our reasoning
for this position. All the while observing the "river current",
in the form of events, that will soon confirm our view."""""""""""""""""""""""""
=======================
First off, I want all of you to know that I was a hard money Gold
Bug for decades. Actually, I still am in many ways. Yes, in spirit
I am one of those little "roadrunners" mentioned in
our last talk. Still storming down the gold money trail. Fortunately
for me, and my portfolio position, I started looking at a realistic
human / political side of money thought. A side most of us never
grasped quickly enough to help us; because evolution was changing
it before our understanding could catch up. My slow learning curve
was speeded up with help from some very sharp people. Today I
still see things using a hard money position; but, just as the
world has turned and time passed by, my position has evolved quickly
enough to flow with our human tide.
==============
The major object of our discussion tonight is this thought:
--- the present state of affair in our gold market isn't just
the result of political motive alone. --
I'm carrying this over from our last talk; that mentioned a new
demand for fiat.
Yes, it's true; a simple political motive explanation would, indeed,
solve all our problems. For many Gold Bugs this explanation does
end their need to think much further on the subject, but their
continued financial loses in the gold arena says their problem
was never solved as such. Indeed, there is plenty of political
push and pull going on to overtly move the market and we will
later cover most of that in other talks. But, to underscore our
isolated point, tonight, we magnify a few thoughts.
==================
Had the dollar run it's inflationary course, in a manner and time
period that history records all fiats as doing, there would have
not been any contest for us to follow. From 1971, had dollar prices
of everything soared, as hard money theory said it should have,
every asset in the world would have seen hyper prices reflecting
our run from this inflating currency. Perhaps not all of the wealth
held in dollars would have went into real gold: some of it surely
would have competed against the politically contrived paper gold
markets. But, in spite of official thrusts, enough cash would
have went into physical to drive it's physical dollar price to
at least $1,000 or $3,000 over the last 30 years. It didn't.
The dollar did very much inflate from a printing press viewpoint
and did so without massive price inflation. A 30 year repudiation
of much hard money dictum. This tremendous rate of currency creation
could not have been contained in a way that held off price rises
with coordinated Central Bank support alone. The amounts of currency
created and the build up of official assets held in CB vaults,
to support the inflating currency, did not come close to matching
each other. Even in a reverse fractional banking context. This
one observation, simple to grasp as it is, points to another demand
for fiat currency that did not exist when hard money thought was
first built.
Over the last few decades a new demand use for digital money,
or fiat unbacked paper money, has helped absorb most of this extra
printing. The velocity of and gross increases of both private
and world trade gave a use to worthless digital transactions and
helped build a value that didn't exist in fiat currency before.
This effect had to be real, because the world took in every last
dollar that was printed and didn't dump them off to buy other
real assets. A process that would have matched printed money rates
to price inflation rates! I'm speaking of dollars alone, of course.
And there is more to observe that this alone.
======================
In recent society's demonstrated use of unbacked fiat currency,
they were advancing a trend to use currency in trade only; while
owning wealth assets outside the known money context. As society
advanced and trading volumes mushroomed, the need for more digital
units increased more so from their trading function than their
value retaining function.
This process was rendering the whole school of hard money thought
useless as a strategy to to defend one's savings from inflation:
as these inflating digital units failed to create a meaningful
price inflation. The expanding universe of fiat was best used
to gather real wealth, at stable fiat values, each time the fiat
cycled through your domain. The object became; to gain fixed value
wealth in quantity instead of gaining finite wealth and waiting
for it to gain in value.
This is all completely beside the point that all this action will
one day destroy the dollar unit as a saving / debt denominating
vehicle. We will get to that later. Right now we are gaining an
understanding about this money evolution in it's basic trade use
and how we should advance ourselves using it.
====================
Owning wealth aside from official money units is nothing new.
Building up one's storehouse of a wealth of things is the way
societies have advanced their kind from the beginning. What is
new is that this is the first time we have used a non wealth fiat
for so long without destroying it through price inflation. Again,
a process of using an unbacked fiat to function as money and building
up real assets on the side. Almost as if two forms of wealth were
circulating next to each other; one in the concept of money and
the other in the concept of real wealth.
This trend is intact today and I doubt mankind will ever pull
back from fiat use again. Fiat used solely in the function of
a money concept that I will explain of in a moment. If we inflate
this currency to it's death, and I expect we will, then the world
will just start a new one and the process goes on. Note the minor
examples of this process in various third world currencies as
they kill their own kind and advance to using the king fiat dollar.
The local currency printers eventually fail their task, so the
next nation state's fiat comes into use. Currently, in the major
category, the dollar is giving way to the Euro. Ha! Ha! In logical
progression of this we will, one day three hundred years from
now, be using the new mighty Argentina whatever as the world's
next great fiat. (smile)
=======================================
Understanding all of this money evolution, in it's correct context,
is vital to grasping gold's eventual place in the world. A place
where it once proudly stood long ago. In the time before us, fiat
monetary policy, interest rates, appropriate debt levels and even
speculative stock market binges will all be regulated to how a
fiat does it's singular job of being just money; not functioning
as a long term savings vehicle. How well that job is performed
will depend on a free market trading value of gold wealth.
All of this transition is killing off our Gold Bug dream of official
governments declaring gold to be money again and reinstitution
some arbitrary gold price. Most of the death, on that hand, is
in the form of leveraged bets on gold's price as the evolution
of gold from official money to a wealth holding bleeds away any
credible currency pricing of gold's value in the short run.
To understand gold we must understand money in it's purest form;
apart from it's manmade convoluted function of being something
you save. Money in it's purest form is a mental association of
values in trade; a concept in memory not a real item. In proper
vernacular; a 1930s style US gold coin was stamped in the act
of applying the money concept to a real piece of tradable wealth.
Not the best way to use gold, considering our human nature.
=======================
Modern society thought, has taken a step beyond our schooled understanding
of money. Going beyond, by taking a step backwards and embracing
a practice more real. By accepting and using dollars today, that
have no inherent form of value, we are reverting to simple barter
by value association. Assigning value to dollar units that can
only have a worth in what we can complete a trade for. In effect,
refining modern man's sophisticated money thoughts back into the
plain money concept if first began as; a value stored in your
head! Sound like something that's way over your
head of understanding? I'll let you teach yourself.
==================
So, you think we have come a long way from the ancient barter
system; where uneducated peoples simply traded different items
of value for what they thought they were worth. Crude, slow and
demanding, these forms of commerce would never work today because
we are just too busy.
Think again?
Lean back and think of all the items you can remember the dollar
price for? Quite a few, yes? Now, run through your mind every
item in your house; wall pictures, clothes, pots and pans, furniture,
Tvs, etc.? Mechanics can think about all the things in the garage,
tools, oil, mowers. If one thinks hard enough they can remember
quite well what they paid for each of these. Even think of things
you used at work? Now try harder; think of every item you can
remember and try to guess the dollar value of it within, say,
30%. Wow, that is a bunch to remember, but we do do it!
I have seen studies where, on average, a person can associate
the value of over 1,000 items between unlike kinds by simply equating
the dollar price per unit. Some people could even do two or three
thousand items. The very best were some construction cost estimators
that could reach 10,000 or more price associations!
Still think we have come a long way from trading a gallon of milk
for two loves of bread? In function, yes; in thought no! Aside
from the saving / investing aspects of money, our process of buying
and selling daily use items hasn't changed all that much. You
use the currency as a unit to value associate the worth of everything.
Not far from rating everything between a value of one to ten;
only our currency numbers are infinite. Now, those numbers between
one and ten have no value, do they? That's right, the value is
in your association abilities. This is the money concept, my
friends.
Unlike the efficient market theory that was jammed down our throats
in schools, we all still use value associations to grasp what
things are worth to us. Yes, the market may dictate a different
price, but we use our own associations to judge whether something
is trading too high or too low for our terms. We then choose to
buy or sell at market anyway, if we want to.
In this, we have moved little from basic barter. In this, we are
understanding that an unbacked fiat works because we are returning
to mostly bartering with one another. A fiat trading unit works
today because we make it take on the associated value of what
we trade it for; it becomes the very money concept that always
resided in our brains from the beginnings of time.
In this, a controlled fiat unit works as a trading medium; even
as it fails miserably as a retainer of wealth the bankers and
lenders so want it to be.
================================
The American dollar has brought it's makers a lifestyle that is
at odds with this new thrust in money use. A reserve currency
today must allow it's value to be set solely upon it's money function,
not it's function of retaining wealth. Use trends today are forcing
money creation policy and money values to be determined by wealth
outside the official money realm. All the while the dollar holders
are fighting to stop this from happening. Free Gold markets would
today destroy the current dollar exchange rates and render it's
debt creation null and void as a proxy to buy us things for free.
Much is at risk to the lifestyle our old gold dollar relationships
brought us if gold trades free. Much is to be gained for wealth
savers, today, who buy gold for it's wealth function and forget
it's current dollar created price.
================
I'll go further into the other aspect of money titled; "Who
said we were suppose to save this stuff"!
Next time in our talks on the evolving message of gold. Good night
and thank you for being here.
=========================================
Ok, folks! I checked the schedule and there are several more of
these talks coming. After those are done, we can take a real good
hike and check out where the trail is going. The GoldTrail that
is!
Thanks all
TrailGuide
FOA (07/20/01; 09:57:51MT - usagold.com msg#83)
Why do we need to save
this stuff anyway?
Hello everyone.
Can't believe I brought folding chairs on the trail! (smile) I
guess I'll also take notes with the others here. Hey, lower in
the front, I can't see! OK, it's getting started. Let's hear what
that guy is getting into this time.
=======================
Good evening. I hope all of you rested well into the morning and
had time to consider our thoughts from last night. Today's talk
is, once again, a more detailed continuation of our theme: the
evolving message of gold. I'll begin now.
Again I'll read a small piece from the TrailGuide series and use
some slight editing to make it more clear. From that we can move
into our subject:
"""""""" Our modern gold
market and the price illusion it creates is little more than a
product of the fiat dollar system; a design that denominates the
trading of most gold credits in a contract form. Is it a free
market? Why yes, very free. But, really free, in the sense that
contract supply is unlimited. Investors and the gold industry,
in total, brought into this paper based gold; even though they
fully well knew 90% of the trading volume was represented by only
cash equity collateral on the other side. Some of it private and
some of it official. Knowing that, they somehow expected that
those contracts were limited in creation by the fixed amount of
gold in the world. Their mistake, not the markets.
Clearly, anyone schooled in classic hard money Thought should
have known that this was but another gold inflation; another version
of a typical fiat gold inflation and a transitory era between
money systems. This was a time to gather gold over years, not
invest in the leveraged aspects of gold's new fiat versions. Nor,
to buy into the gold industry that owed it's life and cash profits
to the
maintenance of such a system; transitory as it was."""""""
====================
To paraphrase that TrailGuide thought let's repeat what I said
last night:
""The expanding universe of fiat was best used to gather
real wealth, at stable fiat values, each time the fiat cycled
through your domain. The object became; to gain fixed value wealth
in quantity instead of gaining finite wealth and waiting for it
to gain in value.""
Anyone, that understood this new fiat era, knew that this is how
you handled the evolving process. For myself and others, knowing
that gold's inherent value could not change much and was historically
undervalued in it's comparative value to all things, we brought
gold in quantity. We tossed aside Western concerns about shifting
currency prices of gold. We did not try to paper leverage a finite
amount of it; as some were trying to do in betting for a higher
currency price to come. A price value, by the way, that would
never arrive in this era. That higher dollar currency price, so
many were leveraging for, would not be allowed to surface in paper
values while the present pricing system still functioned.
It was plain as day that the whole world could sell gold short;
with most financing deals and future deliveries predominantly
structured towards cash settlement. With little more than margin
money and no gold at all; you, me and that "man behind the
tree" could all help set the price of gold lower with little
thought of dealing in actual physical metal. With such a system
firmly ensconced in investor minds, as the one and only true gold
market, only a partial percentage of the coming price rise could
ever be reflected on paper; as gold's price discovery system was
and is eventually inflated until it fails it's purpose.
Such is the way our gold arena has evolved in our present financial
culture. This entire realm represents the conclusion of a convoluted,
decades long, attempt by mankind to tie his fiat money concepts
to physical gold. These centuries of gold / money tie-ins will
end in a colossal breakup of the entire fiat money plus gold concept;
leaving gold and fiat to trade independently of each other.
Unfortunately, it's the dollar's watch this will all end on as
this gold failure is running in parallel to the dollar ending
it's position as a world reserve currency.
====================================
The dollar faction's war on gold is now lost as their whole system
of fiat gold creaks under a load of failing credibility. That
failing credibility is being driven home as the Euro system pumps
far more dollar based paper gold sales into the system than their
actual physical gold sales. All the while structuring a stand
alone system, aside our present dollar gold world, that will later
identify gold's
pure value in traded physical only form. For all of Europe, London
sales included, the BIS sanctioned Washington Agreement was little
more than a settlement of some official accounts; taking their
CBs somewhat out of harm's way prior to an unimaginable rise in
gold values.
The US Treasury, coming a little late to this recognition, is
trying to get in the game by renaming some of it's gold stocks.
They are trying to show some involvement; but their political
motive, to actually deed over their gold, will only become powerful
enough after the real breakup begins. The great gold reserves,
so many Americans think they own, will leave our shores at prices
we will later think are sky high; only to watch those values double
and triple again! The US will be forced to use a good portion
of it's gold to just keep the dollar in the game; still, no amount
of gold will make it a reserve currency again.
=========================================
The incredible simple design, of using gold in the Euro political
thrust, is what has hidden it from our Western view. So far, have
we advanced, that few of us can fathom gold ownership having any
purpose outside using it for leverage gain and credit lending.
Four fifths of the rest of the world will later grasp the Euro
concept and embrace it completely.
While many in the gold industry note the harm this paper selling
is doing, we can hardly fault the Euro side's reasoning behind
the paper sales. It's no different than selling short a stock
you think is going to become worthless. Any investors that brought
these paper gold goodies, because they thought they represented
real gold, can just put up the cash and ask for delivery! The
trouble is that the ones that point to the Euro CB sales and yell
the loudest, never had the cash to buy or intended to buy gold
anyway. They played the game for more dollars, not gold! They
cannot see the different political gold reasoning behind Euro
faction thrust vs. dollar faction thrust and proclaim that these
are one in the same. Confusing the issue for all gold investors.
And the beat goes on!
===========================
Looking back, for a moment, at our last talk about the money concept;
we can see where most of our money failings originated from our
thinking that gold was, itself, money. Actually one writer, on
the USAGOLD forum, hit the nail on the head when he said that;
"money is just a book keeping accounting of real wealth".
Indeed, as we mentioned in our last talk, money is an associated
value in your memory and, for help, usually recorded on paper.
We were first alerted to the "gold is money" flaw years
ago. When considering the many references to gold being money,
in ancient texts, several things stood out. We began to suspect
that those translations were somewhat slanted. I saw many areas,
in old text, where gold was actually more in a context of; his
money was in account of gold or; the money account was gold or;
traded his money in gold. The more one searches the more one finds
that in ancient times gold was simply one item that could account
for your money values. To expand the reality of the thought; everything
we trade is in account of associated money values; nothing we
trade is money!
The original actual term of money was often in a different concept.
In those times barter, and their crude accounts of the same, were
marked down or remembered as so many pots, furs, corn, tools traded.
Gold became the best accepted tradable wealth of the lot and soon
many accountings used gold more than other items to denominate
those trades. Still, money was the account, the rating system
for value, the worth association in your head. Gold, itself, became
the main wealth object used in that bookkeeping.
This all worked well for hundreds and perhaps thousands of years
as fiat was never so well used or considered. Over time, society
became accustomed to speaking of gold in the context of money
accounting. Translations became all the more relaxed as gold and
money accounting terms were mingled as one in the same. It was
a subtle difference, then, but has become a major conflict in
the money affairs of modern mankind; as gold receipts became fiat
gold and bankers combined fiat money accounting with gold backing.
=================================
Last night we alluded that humans have not changed all that much
in their barter trade associations. We, today, use fiat record
keeping to associate trades for every thing we want. It's in the
same mental concept people used a thousand years ago. Our tendency
is to freely trade and value things up and down the association
scale; that flexibility in our association accounting means fiats
cannot remained fixed to any real wealth. In modern money terms
and concepts; that means the prices of all things must be free
to flow up and down in any amount. Our modern perceptions of inflation
and deflation upon debt values only serve to destroy the understanding
of this basic drive.
This need to change valuations is a human trait and is the main
force that keeps attempting to break gold free from modern money
attachments. We inherently wish to use gold as wealth and trade
it's changing value within the same universe of moving values
all other tradable things exist in. However, for credit banking
sake, we tried to fix gold's value into our fiat money accounting
so we could lend the "money concept itself"; lend money
in lieu of real things. As just said, gold could never be attached
rigidly in our accounting money concept because that requires
it's value to be fixed
============================
Our world has built fiat system after fiat system; and all upon
the notion that the money concept can be lent in lieu of lending
wealth. This debt, in money terms, requires said money values
to remain stable or the banking system fails it's purpose. In
this, governments, banks and political stylists always try to
entwine gold into the money system and control it's value for
the sake of money debt viability. Such is the conflict in our
gold money culture today. Our dollar is just one more fiat coming
to the end of it's timeline as it's basic flawed concept, again,
destroys the savers wealth.
The question stands in modern times: Why do we need to save this
stuff anyway? Indeed, fiat is only a trading medium that reflects
our 1 to 10 value rating of any good in trade; and that rating
is a just value for only a short time. Fiat purpose is maintained
for those that save it for later use over short terms, not long
term accumulation as wealth or for spending far in the future.
Real wealth is what humans save for the future and this is where
our basic instincts drive us.
The incredible explosion of fiat use, sense it became a non wealth
holding in 1971, bears this out. Fiat values, the world over,
reflect only our tradable values placed on all things. The dollar,
nor the Euro, have any value of themselves except for the denomination
of tradable goods. The mismatch that has occurred is in the massive
debt our world dollar use has developed. A debt that cannot be
traded back into the US economy to receive goods at anything close
to today's prices.
For years American lifestyles encouraged it's political system
to protect their banking /debt credibility at all costs; so we
could buy others real goods without sending real wealth to pay
for it. We did this in the only way we knew how; in body, mind
and spirit, our political economic purpose promoted the dollar
and it's debt to be as good as gold and a substitute for real
wealth holdings. Even a substitute for real wealth to be held
in reserve behind other currencies! Still, in parallel to this
US thrust; for thirty years fiat use evolved on it's own to embrace
the non wealth trading aspects of "the money concept".
Leaving in it's wake a world of worthless dollar debt as people
brought wealth outside the "money concept" anyway. We
are, today, in a transition away from that dollar mess and much
of our wealth illusion will passing from our grasp in the process.
In every way, society is trading it's way back to where it started.
In the process, gold will find a new value from it's history in
the past:
" a wealth of ages savings for your future of today."
Thank you for attending these workshops. We will continue these
discussions for a time and later envelop current events into our
thoughts. It's been my pleasure, good evening.
==================================
OK,,,,, I'm out of here,,,,,I think I'll just fold my chair,,,,,
hike over to the Trail restaurant for some
Tuscany vintage and good Italian food,,,,, not to mention a plate
full of political sauce. (smile)
Amazing how the GoldTrail connects to so many parts of life, society
and economics!
Thanks
TrailGuide
FOA (07/26/01; 18:08:48MT - usagold.com msg#84)
"The wind will blow"
Hello all!
I thought it was a good idea to tack this notice on a large tree.
It says that:
"another talk is to be given here tomorrow (fri) on the evolving
message of gold"...... The Wind Will Blow!
Ok,,,,, good enough for me,,,, I'll bring some coffee and snacks.
Unless a storm blows in and shuts down the presentation,,, we'll
see everyone then.
TrailGuide
FOA (07/27/01; 15:20:44MT - usagold.com msg#85)
"The Wind Will Blow"
Welcome to our next series of talks on the evolving message of
gold. Today's discussion is titled;
"The Wind Will Blow".
==========
As our modern society has evolved, we currently use fiat and own
wealth in a way that demonstrates exactly where both values stand
within our lifestyles. The examples abound everywhere in personal
finances. Fiat has, today, become both a trading medium and short
term savings asset. This long trend, in American money use, suggest
that an acceptable price inflation cost for both theses uses has
been evident for some time. Even though world use of our reserve
currency has made an illusion of most of our real costs structures.
The concept that wealth is the long term savings asset that most
strive to attain has been evident also. Even with US taxes on
it's profits, real wealth assets still overcome that disadvantage
by providing far less risk in an increasingly hostile world. However,
in the background, behind the enormous, overshadowing expansion
of public and personal debt, this new meaning and usage's of wealth
and fiats are difficult to perceive. Most of what the general
public has come to believe as real wealth is simply forms of paper
ownership of wealth producing industries and paper claims on real
assets that can never be recovered at today's values. This is
true in most all items, not just gold.
Aside from Western cultures taking this debt expansion far beyond
their means, our trend of buying things and not saving fiat currency,
long term, should have sent a signal to money officials; but it
didn't. Dollar inflation was exploding to meet a new fiat use
demand and not creating a price inflation to match: a process
that should have encouraged our economic engines, the people,
to save the currency itself. In hindsight, they were spending
it; not to escape future run-a-way price rises, rather they were
doing what comes natural; trying to save real wealth by buying
it. Even if they were buying mostly a value illusion.
======================
After 1971, the entire dollar system was too far down the debt
road to change step; that is to allow all forms of real things
to fluctuate up and down in dollar value. This would have required
gold to rise into several thousands, even then! They were still
trying to maintain dollar value for the viability of expanding
dollar debt and that meant changing was not an option; especially
for a system built on debt that required the illusion of a stable
gold price. Still, the nature of fiat use was changing the world
over and would have grave consequences for our entire dollar support
system years later.
========
Contrary to Western thought, our use of money has not changed
since time began. It's true that "Gold is the only money
the world has ever known"; as long as one accepts that barter
is the only trade the world has ever known. In the context of
barter, gold has been our only money. Once we stamped gold with
official unit sizes, perhaps done a thousand years ago, money
became an associated value used as an intermediary between uncompleted
barter.
We barter goods and services, today and anytime money has been
used, using a bookkeeping system of value comparisons; all done
to better convey a sense of values between ourselves. All done
in the confines of what we call our world economy. The use of
fiat today involves half a barter trade; then keeping the currency
as an associated value and hoping it doesn't lose too much of
that value before we complete the other half of the transaction.
This works in a high speed trading environment where fiat is not
saved long term.
I'll read an item from our last talk:
"""" Fiat purpose is maintained for those
that save it for later use over short terms, not long term accumulation
as wealth or for spending far in the future. Real wealth is what
humans save for the future and this is where our basic instincts
drive us. The incredible explosion of fiat use, since it became
a non wealth holding in 1971, bears this out. Fiat values, the
world over, reflect only our tradable values placed on all things.
""""""""""
==================
The money concept, we have recently spoke of, did not suddenly
evolve! Nor did our dollars suddenly become unbacked credit items
after 1971. Well before the dollar's separation from gold all
money bookkeeping, and all it's forms of currency moneys, were
actually credit items.
Circulating cash dollars, official metal coinage and other previous
fiats, themselves thought of as a final hard payment, were never
anymore than a known tradable value. A trade credit owed to you
as long as one held the money unit. Even with gold backing the
dollar unit, money's value was always in it's exchange for something
else we wanted. Gold values behind these fiats was used to represent
some fixed tradable value the money unit stood for; not to be
the money unit itself.
Gold, in ancient trade, could not become the thought of money
as we know it today. It was the end of a barter transaction; two
pieces of gold for one cow demanded no other trade to complete
the deal. The use of money back then did not entail nearly as
much associated concept, it was the
use of outright barter. Today things are, indeed, different!
================
What purpose is there in understanding the descriptions and perceptions
in these last few talks?
Because there is a conflict between society's basic desire to
use our modern money; or "our modern concept of money as
it has evolved".
First:
Our natural drive to use money, in lieu of barter, is to use a
simple bookkeeping credit trading medium that keeps track of our
barter. This requires our embrace of the fact that every item
in our universe of wealth constantly changes in value. Even as
gold changes in value; both up and down.
Second:
The unnatural convoluted drive, of many, is to use this same "money
value concept" to borrow real wealth "use"; instead
of borrowing the actual wealth itself to gain said "use".
This second item comes under the heading of trying to get something
for nothing and is everywhere in Western Thought!
If we lend an item of real wealth, say a tractor or chair, it's
future value is unimportant to the lender as long as the real
item is returned. It is the "use" that is lent, not
the money concept in the form of a trading value. In this process
we recognize that, because the value of things change, the debt
to be repaid is the item of wealth, regardless of it's higher
or lower value. Only it's "use" changed hands during
the lending and repayment of debt. All is well.
However, lending the value contained in our modern money concept
exposes the lender to uncertain gain or loss of tradable value
because it's the value that's being lent, not the actual "use".
Without some way to lock down the value of money, over long periods
of time, the industry of money lending (banking) fails it's purpose
and risks it's profit if tradable money value falls.
This is the trend that is killing the dollar today.
It's not that price inflation may erupt; it hasn't done much in
30 years compared to the money printing volume. Our demand for
more fiat has absorbed most of what we issue.
It's not that the massive dollar debts won't be paid; they will
as long as it's in more cash. Payment in real wealth, such as
real goods and services from our local economy, was never an option.
We simply couldn't do it!
The risk is; that our money system requires dollar and debt stability
for lenders and said banking system must regain that lent tradable
wealth close to par. Further, the money system is backed by this
debt being stable; so without said stability the currency system
fails.
The contrast here is that modern fiat use trends are advancing
towards flexible fiat money. Not so much flexible against other
currencies; flexible against all other wealth, including gold.
The more a currency can adjust to commodity and industrial use
demands, the more in demand that currency reserve system will
be. The immovable past structure the dollar is built upon demands
it's values be defended with complete hyperinflation if necessary.
Prior to EMU, there was no other reserve currency that the world
could run to. Now, the dollar cannot deflate and take the rest
of the world into deflation with it. The tables are turned; deflationary
policy will not defend the dollar. Only inflationary policy will.
Make no mistake, we are not calling for price inflation to end
the dollar's reserve rein! We are calling for "inflationary
policy" to dethrone it while said hyperinflation follows.
So begins and ends our long march that attempted to steady the
value of modern money by firmly attaching it to the value of gold.
So ends man's march to fix the value of gold, even during short
term use, while we still naturally wish it to change.
========================================
To comment on the present
The very changes needed in our money universe, today, would kill
dollar demand by devaluing all dollar assets in super higher gold
prices. The debts and the dollars would remain; only 90% of their
current illusion of value would vanish. Hyperinflation in prices
of all wealth objects will be the workout result of this process.
As such, opposing dollar political motive will force the US to
give the markets what is needed; both gold and gold prices beyond
imagination.
As has been mentioned by others in several public meetings;
"The world is in the midst of what could well go down in
history as the first recession of this modern era of globalization".
We must point out that this is lacking some breath of perspective:
in reality this will be a dollar based recession and one that
the world will repulse from by advancing the use of a more flexible
currency unit; the Euro. A unit that will match modern needs for
fiat by marking the value of all debts as they change; by allowing
a free market in gold wealth to exist outside the "money
concept".
=====================
The captains of oil have not seen all of this in a vacuum. Selling
irreplaceable oil for a currency entering the end of it's trend
was not an option. Gold prices were lowered in exchange for a
short term wait; to see if Europe could do what was intended.
They did.
The next step will be an orderly exit from dollar use; a somewhat
destruction of all dollar gold pricing; and a super price inflation
for US dollar assets. We are not at the end my friends, we have
just come to the beginning. For physical gold advocates that understand
the difference between real wealth and leveraged real wealth,
the time arrives when values are reflected with the speed of the
wind. Truly, in our time,
"The Wind Will Blow".
At our next talk, we will move completely away from concept and
into current events.
Titled "Political Gold - how much of it is ours"
Ladies and Gentlemen, thank you so much for listening tonight.
I look forward to our next meeting.
Good day!
================================
Thanks all,
still hiking the path
TrailGuide
FOA (07/31/01; 21:14:43MT - usagold.com msg#86)
Political Gold
Hello All!
Looks like I'm here tonight to escort everyone to their seats,,,,,,,,the
guest speaker will be here in a min.,,,,,, Uhhh??,,,,, could I
see your tickets please?
All right, it's starting,,,,,,,,,,,,,,
============================================================
Good day to all our guests and thank you for arriving early. Our
talks are an ongoing progression on the subject; the evolving
message of gold. We will begin now.
=============
Starting off, I'll read an item or two from the TailGuide series:
A Tree In the Making. Please read again this portion of his series
for clarity.
"""" But, greatness is within those that know
life is dynamic,,,,, what we do is never certain and subject to
the leadership of nature. That person will spin the Bonsai on
a table for hours, days, and even years as he styles what will
work for that period of growth,,,, perhaps planning the timeline
in a currencies development. A cut here,,,,, a change there as
time grows the next limb. In the processcreating something we
all recognize, can use, understand and enjoy,,,,, yet,,,, different
in many ways from what we knew or saw before. """"""
-----
""""""Understanding the events that
got us here and how they will unfold before us is what this Gold
Trail is all about. Everyday our political world is pruned like
two Bonsai, in an effort to shape a more healthy future. The dollar
tree is failing because it needs so much dead wood cut off,,,,,,
but if it is pruned it will not resemble the mighty Bonsai it
once was! The Euro tree is growing as it is being styled,,,,,,
what it will look like we have an idea,,,, but not a complete
picture. It's hard to imagine that anyone can look at an early
Bonsai and shape it's future some 20 years out? But, that is exactly
what someone did with a tree on the roof of the Monkey Bar in
Hawaii; indeed, this is what has been in process for so long with
our changing money system.""""""""""
======================
My friends:
We are, today, at the very conclusion of a fiat architecture that
is straining to cope with our changing world. Neither the American
currency dollar, it's world reserve monetary system or the native
US structural economy it all currently represents will, in the
near future, look anything as it presently does. Trained from
birth, as all Western thinkers are, to read everything economic
in dollar system terms; we, too, are all straining to understand
the seemingly unexplainable dynamics that surround us today.
Western governments, the public and several schools of economic
thought are attempting to define and explain what extent these
changes will have within our financial and economic world. Most
are all striving to see this as the next plateau of dollar integration,
carrying us onto the next level; looking always higher for what
this next level will bring in social, financial and lifestyle
enhancements.
Governments look for a correct policy mix; one that will serve
their political motive when the next cycle moves higher. The public
looks for the next great investment or industry to be employed
in; to enhance their well-being all the further. Economic schools,
as represented by both the financial industry and the academic
areas, all want "their take" on the next cycle to be
seen as the correct one.
After all, this is just one more in a long line of up and down
economic cycles that are so common in American economic leadership.
However, all of this positioning has left out, this time, one
important, almost unthinkable question; what if current trends
are moving away from using our dollar reserve system? Even further,
let's ask; what if the last decade's efforts to prolong dollar
use, both internally and worldwide, have inflated it's worth to
such an extent that it's now vastly overvalued? Asking more; what
if the architects of a competing currency system and the major
players that helped guide it's internal construction, all took
a hand in promoting the dollar's extended life, it's overvaluation
and it's use; so as to buy time for this great transition in our
money world?
================================
Most average Western Citizens and dollar use nations have pined
everything on this ongoing dollar system. Their jobs, debts, investments,
retirement and lifestyle expectations all depend on the dollar
always being what it is; a world reserve money that buys them
more than one can create during a lifetime. As true as that thought
is, few understand the implication or even want to consider their
life without a supreme dollar. But, just as a large portion of
world inhabitants are accustomed to using more than one currency;
those of Western Thought would have trouble grasping the perception
behind this simple offering:
------ I once walked across the globe and brought two persons
together. I gave each $1,000 US dollars in cash. The first replied;
"You can't be serious? Is this as good as it gets?"
The second replied; "Oh my, thank you! In all my years of
life I never knew it could be this good!"------
One reply is the product of a life with unquestioned debt availability.
Where the majority of debt users cover their burden with an ever
growing supply of new credit money. In this economy, not to mention
this person's perception, almost free debt can purchase anything
and everything.
The other is the result of local money debt being built upon foreign
dollar debt reserves and covered with payments of real wealth
from the sweat of one's brow.
===============================
Within this theater of thought, we can begin to picture how Western
perceptions cannot grasp our on going curve on the money road;
much less a twist in the Gold Trail! Follow with me, if you will,
as we expand some thoughts from TrailGuide's last talk, a few
days ago.
"""""" As our modern society has
evolved, we currently use fiat and own wealth in a way that demonstrates
exactly where both values stand within our lifestyles. ----------
In hindsight, they were spending it; not to escape future run-a-way
price rises, rather they were doing what comes natural; trying
to save real wealth by buying it. Even if they were buying mostly
a value illusion.""""
The purpose of this portion was, I believe, to deliver food for
thought. The conflict, for investors and thinkers to discern,
was in the evolution of fiat dollar use. While practically every
historical evidence pointed to a devaluation of the dollar, within
US border use, dollar use demand expanded along side of very little
price inflationary pressures. Still, even with years of low inflation
numbers, a cause that traditionally drove money into long term
savers pockets, investors rushed to seek their perception of real
wealth. Fulfilling an ages old drive to own "something"
for the long term. As the final conclusion, partially phrased
above, pointed out; most everyone tends "to read everything
economic in dollar terms"; even buying into paper dollar
versions of a value illusion. To this end, Americans have continued
to save for serious consequences by buying every kind of dollar
dependent real asset they can; stocks, business, debt, farms,
industrial metals production, etc. and expecting it all to act
as real wealth. Some of it will, most of it will not!
Further on from "The Wind Will Blow":
""""" After 1971, the entire dollar system
was too far down the debt road -------- the nature of fiat use
was changing the world over and would have grave consequences
for our entire dollar support system years later."""""""""""""""
Having evolved a dollar reserve money system into a straight debt
fiat currency, without gold involvement, the entire dollar function
became locked into one basic premise: for the system to survive,
it's core reserves of debt values had to remain somewhat price
stable as the currency inflated relative to GDP. Over the next
30+ years their dollar controllers, the fed and treasury, thought
they had a fairly good handle on the system as they managed banking
reserve requirements. To their amazement, it turns out today,
that digital use demand was the best function that supported their
efforts all the while; by increasing the world's use and need
for currency. Had they understood this modern economic function
early on, they could have somewhat printed the currency outright
with almost the same result while arriving at today's destination.
They could have let gold float, not to mention they could have
skipped a large portion of the debt build up that will now end
the
dollars timeline.
Most, if not all, of this perspective is only now coming to light
as the Euro builds pressure on the dollar. The better architecture
of the Euro system is leaving little room to adjust as the US
fed must singularly act to inflate their local currency in a historically
new and unprecedented fashion. The actual debt machine that built
much of America's lifestyle is now going into reverse as it destroys
it's own currency; one built upon a stable debt system with locked
down gold prices.
Going further and paraphrasing what TrailGuide writes:
"""""""It's not that price
inflation may erupt --------- ------------It's not that the massive
dollar debts won't
be paid---------The risk is; that our money system requires dollar
(goods prices) and debt stability -------- so without said stability
the currency system fails""""""""""""
Without an international floating gold reserve pricing, to balance
against their devaluing debt reserve, the entire dollar banking
system can only rely upon extreme dollar inflation to float it's
accounts. Price inflation will have to be ignored. To this end
the group of dollar supporting countries, we refer to as the dollar
faction, has locked itself into a box. It must find a way to float
gold prices with a gold reserve that only drains away if world
gold price rise.
===================
Current events
===================
There once was a time when citizens owned their trading vehicles;
all wealth, including gold, was free to barber. Then ruling authorities
stamped most of those gold trading vehicles as "legal tender"
and made them money objects; dependent upon value associations
instead of barter. No doubt to collect taxes as running nations
was a costly affair.
Extending the point:
Around 1975 Americans were given the legal right to own gold again.
Many did not then, nor do they today, see any reason to own gold
as their treasury has gold with which to back their currency.
The logic of this perception is clear and simple to the casual
observer. However, take out one US legal tender dollar and read
it's cover carefully? Does it say it is your currency? Is your
name on it?
The US dollar is a note, a security that specifies a value the
holder is owed. You may keep it or spend it or even trade it,
but it does not belong to you. It belongs to the US Treasury and
is created by the Federal Reserve; both political entities. What
a person owns, when holding a dollar, is the value that note is
tradable for; the value that is owed to you and said dollar note
represents. In
every way it is real money; in that it's value is in it's tradable
value association; not of itself. If the dollar itself had real
value, it's use would constitute barter; not the use of TrailGuide's
money concept.
If you think you own the currency of this country, understand
this one item: the political entity that the dollar is owned by,
can cancel it's legal tender status at any time. There by removing
your use of it's holdings!
Extending further:
The only gold Americans ever owned, prior to 1933, was the very
gold coins they carried. They owned it because it was a true barter
vehicle. Even if the Treasury removed it's legal tender, "money
aspect", from said gold coins, you could still barter the
value contained in the gold. By 1971, Americans owned no gold
and all gold held in the name of the US Treasury was "Political
Gold" owned by the government.
The perception, by some, that because the government owned the
gold, the citizens own it too. This flows from a similar convoluted
logic; that stock holders of publicly traded gold mines own the
underground gold. In reality, if the mine was dissolved, both
processed and reserve gold would be sold and "Legal Tender"
money would be distributed to it's owners. Not gold.
The same is true for Political Gold. All gold held by the state,
unless distributed first to it's citizens, is subject to world
wide "Legal Tender" political claims first. The precedent
for this is clearly revealed as the Swiss must ship their "Political
Gold" to others first; while sending currency to satisfy
gold claims against it.
As the IMF has recently extended this protocol, swapping gold
at different values, to settle political debts; this action further
justifies the US being able to use it's gold to defend it's currency's
settlement function. Aside from the US minting eagles for public
sale and it being against the law for gold reserves to be sold
outright to open bidders.
==================
To draw a conclusion from this "current event":
Deep Storage gold
Americans have the right to buy and own the "Wealth Of Ages".
As events draw to a close upon dollar use, we can expect outright
use of America's "Political Gold" in restraining the
speed of it's currency's burn. To compete in the new architecture
of a Euro System currency, unrestrained trading of gold will advance
it's dollar and Euro price significantly. With political pressures
to tax private physical gold trading as low as possible, expect
enormous taxing and windfall profits rules to impact all other
forms of gold ownership. Indeed, long before such changes are
in place investors will rush to be in the correct ownership place,
well ahead of the fact.
Of Fiats and Gold:
It is ironic that both roads have curved as time moved on. One
returns to it's roots, as a wealth value today, few have ever
know. The other becomes the money a modern future requires. Both
on a different path and building for our better future.
Next time I will discuss; what one should realy expect to see
when all paper burns; and how close political events are saying
we are to that fire!
Thank you for taking the time to come here and listen to these
talks. I wish you well and good night.
=======================================
Ok, everyone please leave the Trail as you found it,,,,,, no trash
or drinks. (smile) We will meet here for his next talk when it
comes. I'll comment in between.
Thanks
TrailGuide
FOA (8/2/01; 12:52:55MT - usagold.com msg#87)
Walking On Solid Ground
Walking On Solid Ground: Hiking the Gold Trail
Ok! We have quite a crowd here,,,,,,, this morning. This must
be an overflow from our recent Talks Series. There are more of
those scheduled next time; but today we will go for a hike. As
many of you already know, and some newer visitors are finding
out, there is a price to be paid to hear mine and others Thoughts.
Yes, you have to use your legs and mind, because most of the gain
here comes over time and distance. If one want's the whole story
you will have to walk with us and watch it unfold. Out here, there
is no waiting at the Trail Head for someone to return with a complete
report. The understanding is found within yourself, while completing
the trip, not just at the end.(smile) I'll speak loudly so those
in the back can hear. Packs on,,,, keep up, now! Let's hit the
trail!
====================================
It's a clear day, today, and easy to see how the world is changing.
Once we thought that everything in the name of "dollar money"
was an anchor of financial stability while our organic planet
changed; we now know that even our money systems have seasons,
too. Watching evolving events with a Physical Gold Advocate based
perspective, over this last decade, demonstrates this perfectly.
Indeed, from here on out our world now has two major fiats and
their competition is going to prove that anchors do not hold because
they are attached to the weight of gold; rather money is made
stable by moving it's value with gold.
Look to the left
The gold perspective, most people have employed, is little more
than a shadow of what the political gold world, in it's immensity,
is all about. Shallow Western perspectives and their view of gold,
being just it's dollar price, proved over and over how dangerous
such a narrow thought can be to one's wealth. Making the object
of one's gains to be "the inflating denominator of wealth",
fiat money, instead of "the real wealth itself", gold;
leaves us at the mercy of any political money evolution! When
seasons change, as gold trail hikers know they always do, the
risk becomes the "question" so many gold bugs have grappled
with this last decade; can my investment in the price of gold
keep up with and purchase an equal value of physical gold itself?
For most, it has not, as paper leverage hacked away at their wealth
held in paper gold assets! The future may be even less kind!
An investment in the gold industry, not just mining, can be nothing
more than an investment in a business that balances fiat production
cost against fiat market prices for it's product; gold. The return,
if any, is always in fiat and places this portion of one's wealth
smack on the tracks of more political manipulation. Today, we
can see this play out all over the world as fiat returns in the
gold business head towards and even sink below zero. The investor
watches this fiat illusion of his net worth drain away while the
opportunity to build a real wealth of "bullion ownership"
escapes yet again.
Playing the various paper gold investment games is no different.
When the time comes, when the dollar season really changes, dollar
denominated paper gold bets will do well if they can just break
even. The real wealth owner will stand aside this burning of paper
and watch his coins and bullion explode hundreds of percent ahead
of any fiat paper gains. This is what the real world of a gold
advocate is all about.
=====================
Onward the trail,,,,,, look off towards the end
I, myself, own gold for one purpose; to save a real wealth that's
in addition to all the other things I own. I save it this way
because it outmaneuvers, sidetracks and escapes all political
money evolution. It does this in such a way that I will later
have the same relative amount of real wealth for my future needs.
Or, in the very worst case, have close to the same as I have today.
Still, the upshot of this is an additional aspect that is good
for me and bad for so many players trying to leverage gold. Pause
and see this:
-----The very political motive that is moving our world away from
dollars has, for some time, changed the dynamics of straight bullion
values. In the long 20 or 30 year process of evolving our currency
world, the time span required to do the job has rendered gold
far below it's worth; "relative" to all other things.
When the seasons change, as mentioned before, bullion will first
have to find it's true "free from money involvement"
price in the world. From that point it will return to do it's
best job of marking the historic process of falling currency values;
unproductive political currency inflation. It will do this so
well because physical gold will return to it's roots. It will
again be recognized as the best,,,,, "lowest taxed",,,,,,"barter
wealth",,,,, the world has even known! Low gains taxes will
not allow it to replace digital money; as will it's inability
to duplicate fiat's efficiency.
Rather gold will accentuate fiat use by becoming a real wealth
reserve that compares fiats against each other thru a single arms
length medium. Unable to control this gold medium, because it
is no longer money and subject to credit entanglements, national
fiats will resort to competing against each other. The free markets
as we have always wanted them! First worlds, third worlds, all
worlds; trading for what they can do, not what they can control.------
Back walking again
During this short and slight moment in time, a decade of years
in the making by our human measurement, physical gold has become
an investment of a lifetime to persons like myself. A wealth of
ages that will not only transport my savings forward, during fiat
evolution, but will increase my total wealth many times over.
From there it will defend that value against all comers; all fiat
price inflations!
This is the opportunity paper traders forsake as they bet on a
train that's running away from them.
====================
Further we walk
I have tried to point out that the gold concept today is not one
of just matching dollar price inflation in the future. If that
was all we owned gold for, one could have covered that with several
stock market games years ago. If $500, $700 or $800 was the goal,
it becomes just another commodity bet and there have been plenty
of other leveraged "plays" that already beat that. No,
buying gold today is a political move; one that will add political
sized returns to this gold advocate's wealth.
For this reason we outline the political "fiat against fiat
money nature" of the battle more so that the gold to money
battle. In the future, for any currency to compete against the
Euro, native gold markets will have to trade at least in equilibrium
with a Euro based free gold price. This will further pressure
"political money posturing" to relinquish all fixed
gold relationships with their moneys; fixed legal tender gold
coinage included. This could become a very convoluted affair for
gold coin investors. Especially if Euroland eventually mints a
free floating gold coin; not dissimilar to the K- Rand! Not to
be confused with Robert Ms 100 Euro or Germany's new offering;
perhaps it will be
called the "Euroland" gold coin? In fact, I bet it will
(smile).
Coming to a nice clearing
While I am not unloading any of my various Eagles, maples, etc.,,,,,,,,,
I want my involvement with gold to be as free of fiat involvement
as possible. As an extension to this, all out of circulation,
old gold coins make an excellent contribution to this thought.
A powerful thinker once said that old gold coins will one day
be treasured as forms of antiques in addition to their gold values.
Few enough in circulation to carry extra value, but not rare enough
to dissuade one from selling or trading them in the future.
To this end that same gentleman made a statement that embellishes
the entire trail of Thought we walk today. It inspires countless
large and small private gold advocates with a warning for a future
we must prepare for and a call to stand guard!
I'll say the words again to end our hike.
--------
"when a thousand hungry lions fight over one scrap of food,
small dogs should hide with what's in their belly"
"we watch this new gold market together, yes?"
-------
The sun is going down and it's time to camp here for the next
speaker. Something about burning paper; I won't want to skip that
one. Thank you each and every one for walking with me on this
very fine day (smile).
TrailGuide
MK (08/02/01; 17:31:52MT - usagold.com msg#88)
Huff. . . .puff. . .
.huff. ... .puff
Hello, FOA. I've been climbing all day, and just when I think,
I'm not going to quite catch up, I round the bend back there and
see you sitting on that rock just beaming at me. It is good to
see you, my friend. Good to meet you here on the Trail.
I want to mention before all else that this hike we are on now
-- The Message of an Evolving Market -- is nothing short of phenomenal,
and would like to take this opportunity to ask your permission
to use a portion of it in the upcoming News & Views. We've
decided to go to a larger quarterly publication to augment all
that's going on here at USAGOLD. You might be interested to know
that Randy just informed me by e-mail that just today he has registered
several new posters including "gold-hearts" from Germany,
Paraguay and Sweden. Now if we can just get them to post! It used
to be that investors would call and say that they were inspired
to act on the basis of something they read in the newsletter.
More and more, their interest is piqued by something said or published
at USAGOLD. So, we change with the times my friend, and this too
is a message from an "Evolving Market."
Like some at the main forum, I took an interest in the Legal Tender
discussion from the Political Gold post and, it is something you
said in that essay, that brought me over here for my first post.
This I find very interesting:
". . .All gold held by the state, unless distributed first
to it's citizens, is subject to world wide "Legal Tender"
political claims first. The precedent for this is clearly revealed
as the Swiss must ship their "Political Gold" to others
first; while sending currency to satisfy gold claims against it.
As the IMF has recently extended this protocol, swapping gold
at different values, to settle political debts; this action further
justifies the US being able to use it's gold to defend it's currency's
settlement function. Aside from the US minting eagles for public
sale and it being against the law for gold reserves to be sold
outright to open bidders."
This idea of a gold drain from the U.S. to those countries holding
copious amounts of U.S. Treasury paper, as a form of settlement,
is something I, like you, see as a consequence of a potential
post-1971 U.S. dollar order breakdown. You are quite right to
imply that gold mobilizations are often related to settlement
issues including currency breakdowns and possibly even gold carry
trade settlements (wherein the central bank acts as a gold lender
of last resort). For the press and some economists to underplay
the role of gold in international settlements is to throw a cover
over the truth and maintain the fiction that gold's role is secondary,
when it is not. It is in fact primary and the cases just in the
last decade are legion. The Argentine treasury for example is
devoid of gold. So is Brazil's. So are a dozen other countries
which have experienced currency problems. (Leaving aside for a
moment, all the hapless third world countries who have entrusted
their gold to the gold carry trade.) In Q1, 1998 S. Korea -- a
country that uses 25 tonnes of gold a quarter -- exported 250
tonnes of gold in defense of its currency! The sure route to rebuilding
a currency is to somehow associate it with gold. So we have Russia
and the Chevronet, the Islamic Dinar movement, and gold reserves
in the ECB.
Along these lines, I think I probably speak for many when I say
I am intrigued by your statements about a future U.S. gold mobilization
in defense of the dollar. Somehow I think there's a great deal
more to your thinking than what is contained in that paragraph.
I guess my major question has to do with the settlement price
in such a situation. At the current price, I think the 8000 tonne
U.S. Treasury hoard would be sitting in Brussels, Tokyo and Beijing
within 30 days of the mobilization's announcement. With something
like $6 trillion floating around the globe, few would dismess
that concern. Could you give us some details on your thinking?
Well, I need to get back down the mountain, FOA. It's getting
close to dinner time and that cloud rolling over that mountain
to the West looks like it might spell trouble.
Good to be here, good sir. I always enjoy these discussions. MK
FOA (08/02/01; 21:35:33MT - usagold.com msg#89)
Few words can describe.....
Well,,,,,, my goodness,,,,,, just when I thought everyone had
gone home,,,,,, here comes MK!!
Ha! HA! I hope no one sees us right now because what a pair we
make up here. You are gasping for air and I'm lost for words??
Not to worry for long. After a rest your golf conditioning will
show up and good speech will overcome my surprise! (smile).
TrailGuide
FOA (08/04/01; 08:54:48MT - usagold.com msg#90)
Marker on the trail:
Does the game begin?
http://www.thetimes.co.uk/article/0,,5-2001243118,00.html
Hello all
While work is in progress to reply to MKs question; I thought
a few markers on the trail, from time to time would be helpful.
======================
From The Times WEDNESDAY JULY 18 2001 (see link above)
Misery deepens for US high-tech industry
BY LEA PATERSON, ECONOMICS EDITOR
-----A SHARP contraction in US manufacturing has pushed American
industry into its longest uninterrupted period of decline for
almost 20 years, figures revealed yesterday. -----------
------industrial output dropped a larger than expected 0.7 per
cent in June. This was the ninth month of contraction, the longest
unbroken period of decline since 1982.------------
--------- Capacity utilization fell to a 18-year low of 77 per
cent. -----------
-------- "Another sharp decline in output confirms the damaging
impact of a strong dollar, excessive inventories and weakening
sales," Matthew Wickens, at ABN Amro, said. -----------
==========================
Unlike past periods, when America rolled over the top of another
economic cycle, this fall away should begin to develop into a
permanent downhill slide! Never before in our post 1971 financial
cycles have we defended the dollar against a reserve rival while
trying to adjust world financial policy during a building recession.
This time the world may slow somewhat as we fall away; however,
they will not have to follow us into an inflationary money policy
that floats all ships in the same reserve currency ocean. America
is, for the first time, about to experience the impact of such
an arrangement.
As the "strong dollar" gives way, the effects mentioned
above by Mr. Wickens, will fold over time and again in a historically
new inflationary trend the likes of we have never seen. Each time
our output declines the resulting "excessive inventories
and weakening sales" will not overcome the effects of ever
rising prices.
Just as our dollar's exchange rate falls, placing us in a better
competitive position, localized price inflation will mute that
effect. One again producing the calls for lowering "the too
strong dollar" from that level. Over and over the game will
cycle; producing a kind of inflation we have never known! A kind
of price inflation that cannot be overcome with "typical
accepted" inflation investments of the
past.
This time, investing in "the industry" or "business"
that produces inflation hedging investments will not work enough
to do the hedging job. From oil companies to coal companies,,,,,,,,
home builders to lumber producers,,,,,,, carpet makers to gold
miners: costs will outrun their ability to create an after tax
profit.
Even leveraged games of paper will fall victim to political moves;
aimed to protect local currency use.
The world is changing and we are on the right "Trail"
to understand it all. The "burning of paper" wealth
is coming and one of our future talks here will describe it all
so well!
Thanks TrailGuide
FOA (08/06/01; 09:37:25MT - usagold.com msg#91)
Gold Mobilization
Hello again MK!
Glad you could meet me here in Denver and share this next presentation.
We can talk a bit before things get started. Yes, it was very
good to have seen you up there, on the trail, and thanks for complimenting
the first parts of this "message". MK, you also presented
a question to me that I'm sure was rhetorical: permission to use
some of these works in News & Views?
Oh my! You build a forum rock for Gold Advocates to stand on and
present their case from; then you ask such a question???
Sir, you are the epitome of what gracious courtesy strives to
become! Yes, please do use even the smallest portion of offerings
as you desire and do feel free to disagree with any point in them.
(smile)
Michael, the reason for our city meeting, today, was so we can
step behind this closed door and listen in on a discussion there.
It's in progress and we are suppose to be here, so let's go in
now.
===================================================
Hello to everyone that just arrived.
In this talk we are shifting the schedule a bit to delve into
a political money issue: as the question was presented by Mr.
Kosares earlier. He is the gentleman that's just entered and is
standing to our left. Not only is he also an educator of gold
issues, to the public at large, he is also a keen observer of
human dynamics in the political sense. So, this particular area
of thought was the attraction for his being here. It's a privilege
and honor to have him sit in on our discussion.
===================
To start off:
Someone once asked me if all of our thoughts were on the level?
Well, at a young age I often thought there was difference between
fact and opinion; then I learned that everything spoken was opinion
and anything written was fact! A few years later, someone told
me that anything spoken is not true and all things written is
opinion! Last year I was told that everything is an opinion and
nothing is true! Ha! Ha! So, today, I state for the record that
all of our Thoughts are Absolute fact!(smile)
====================================
We are asked to expand our thoughts pertaining to "a future
U.S. gold mobilization in defense of the dollar" and elaborate
on what "the settlement price in such a situation" could
be? These truly are exceptional, thought provoking questions,
and will require an equally dynamic explanation. I'm assuming
most or all of you were at all of these "message" talks
and have our past, long running, basis of context in mind. To
understand our position, one has to grasp how position we came
to know it.
We begin.
=======================================
I am sure most Americans are uncomfortable at the prospect of
our stores of Political Gold being shipped off to defend the dollar.
Uncomfortable as this may be, unprecedented it is not. During
most of the years of an active Gold Exchange Standard gold was
routinely "shipped off" from nation to nation to satisfy
foreign demands. Not just entirely to defend our dollar's value;
the aim of these operations was, then and now, more so to keep
the dollar in settlement use.
Yes, the dollar's continued use for trade settlement and the defense
of that valued use was always the aim of these gold trades; but
even below this is a deeper meaning to this function.
========================================
From a dollar point of view, shipping gold then, and now, was
in the same context of defending one's currency on the exchange
market. In the context of this use; gold was not sold as a commodity,
rather it is clearly traded as an officially earmarked "good"
that can further support the "tender status" of internationally
held dollars.
The psychology of "gold exchange" is more manifest in
our "legal tender" function than most strive to understand.
Standing aside, for a moment, from our previous discussions concerning
modern fiat demand's impact on the dollars recent value; we look
more closely at the logic of this "tender"
function.
============================
Local dollar currency, circulating within US borders, is given
political value because of it's legal tender designation. Dollars
outside our domain, while often sharing the same trading value,
are not covered by that law. Even though, through protocol they
are commonly accepted, they are not legal tradable money; unless
they re-enter the US again.
The process of defending the dollar by shipping gold is, today
as much as yesterday, an expression of maintaining political "Legal
Tender" status for international clientele. Indeed, as an
ongoing trade deficit in the US has become irreversibly structural
to the integrity of the local economy and remained in this function
for many years; the legal tender function of foreign dollar reserves
comes very much into question. It begs this suggestion: does the
international dollar have any internal political force backing
it's value overseas? This question can only be addressed by shipping
gold in a legal "currency defending" process.
============================
During most of the "gold exchange standard" period our
dollars were nothing less than contracts for gold in storage.
As we all know, to defend such a non expiring gold contract nature,
as the dollar was held then, one must sometimes perform as the
note is written; and gold on demand was said performance. Indeed,
the circulation, use and retention of international "dollars
in reserve" was built upon both; it's old gold deed form,
that could be traded for gold, and it's use as a viable "legal
tender" vehicle, to buy local US goods.
Over the last decade or so, with both it's gold deed function
and "legal tender" function blocked by political motive
and structural economic forces; the currency can and must be defended
through other means. Further, our international dollar has degenerated
away from being even basic "money"; to being little
more than an international derivative of derivatives; that represents
currency swaps, gold loans, uncollectable foreign debts and still
more gold swaps. In this end stage of failure, our external dollar
arena must eventually be defended with performance, if demanded;
if it's use and credibility as an international settlement medium
is to continue. With the US now clearly proceeding into a recession,
and doing so with the competition of another reserve currency
for the first time, local price inflation will prove irresistible
in undermining international dollar exchange values.
If foreign political motive decides to no longer support international
dollar denominated gold derivatives with physical delivery or
refrain from using gold as a trade settlement; the US will have
to choose between shipping it's gold or seeing all international
dollar structure and use fail! In it's place, Euro system currency
would easily become the main reserve as soaring gold values would
replace "tender" value lost from dollar failure.
We think that: given ongoing lifestyle enhancements afforded to
US citizens from the current dollar's value as a reserve currency;
the loss of this standard is of greater importance than the loss
of gold! Local political motive will answer this foreign dollar
value challenge by using gold as somewhat of a bribe for letting
the air out of the dollar slowly. The result will be a massive
dollar price rise in gold that performs over several years; as
the reserve function transition politically begins.
The nature of the current dollar based gold market, outside US
borders, is perhaps leveraged 1,000+ to one and will require ever
greater physical gold shipments, at ever higher values, to maintain
dollar credibility. This failure process will draw US gold stores
out in the form of "currency defense"; not as gold sales
aimed at keeping the price down. A purely legal defense use of
politically owned gold.
Still, gold shipments will always be far behind the price curve
and only be done as last resort crisis operations. Further, the
rise will be so intense as to provoke a complete cessation of
all derivative gold trading within US borders. Long before this
occurs traders, both foreign and local, will bail out of our gold
derivative markets even as physical prices rise. A spot physical
gold market will be all that remains. Something local citizens
will cherish and paper brokers will deplore!
===================================
To date, these gold shipments have been ongoing but have not,
yet, involved original US political owned gold. The bullion involved
has been metal subjugated from foreign third world countries through
dollar for gold swaps; executed thru US currency protocols. Mr.
Kosares is correct in observing how foreign gold is drained from
these nation in trade for debt relief and crisis support. In classic
form, we will be the next in line to be "swapped out"
also!
I expect that "our" crisis will begin by year end as
the Euro foundation becomes complete in the issuance of real currency.
The new designation of our gold reserves is a classic signal that
a major crisis is coming. A suspicion will eventually arise that
native US money growth, now approaching 20%, will accelerate in
hyper form to save it's banking function and political gold stores
will not be
available to redenominate the currency. The very thought of a
loss of reserve status for the dollar is on everyone's minds and
will soon break out into open currency warfare. By then; the Washington
Agreement's restrictions of bullion supplies will begin to bite
as players demand gold and rush from the failure of contract credibility.
By then: it will become known that the only way to stay whole,
without bullion relief, will be in aligning one's self within
the Euro Zone of financing. Those that started early in resolving
some of their political gold debts will be the first to receive
backing. England? Swiss? The rush will be on!
How far will gold rise? At first blush, foreign dollar assets
will not, in any way, return home! They will circulate offshore;
either from lack of understanding of the issues, a thought that
things will be worked out or from foreign exchange controls aimed
at protecting the failing US economy!
These reserves will circulate until their gross exchange value
simulates a figure that can be reasonably expected to "buy
something" within the US; ten cents on the dollar could be
a guess? However, keep in mind that the fed will be printing like
mad, local prices will be soaring and no one will be chasing dollars
like they do today. I expect that physical gold trading, within
the US, will follow far behind foreign trading for a time. Perhaps
a $5,000 to $15,000 ratio will be a thought as dollars within
the US will be worth more than outside. Still, the relative value
of physical gold will eventually converge as a trading standard
is reached.
Keep in mind that there could be a gap between physical prices,
reflecting reality, and futures prices crashing. The Western gold
world looks to the current paper gold price as the value for bullion;
even though it is but an illusion. A market trading 90% derivatives
and 10% physical cannot, in any stretch of the imagination, produce
a gold price relative to real things.
===========================================================
Our understanding
For years academia has gone round and round about how the US illegally
went off the "gold-is-money" standard. Well, I know
that and so too has most every hard money person has delved into
this area. All of those days are never going to be reworked to
change history; so why waste our time on a wrong that's not going
to be brought to justice today? Well, we can look at some of those
particular points so as to find clues for a better context concerning
our subject.
As you know we have discussed, at length, how gold is not money;
rather it is the very best form of physical wealth barter the
world has ever known. We also separated money from gold by defining
money as a "retained value thought"; a thought that
exists between both sides of a barter transaction as an "associated
tradable value". In this, the fiat dollars we know and use
today; represent today modern money in the very best of this money
context.
The result of such thinking draws a conclusion that fits perfectly
into our fast paced world. Fiat currency, unbacked except by it's
legal tender statutes, is a fine immediate trading medium for
short term buying and selling. It's best saved for short term
use, only, and spent to buy any and all forms of real wealth.
Of course, if it's printing production extremely outpaces even
basic GDP, it's use value eventually falls.
The problem for our dollar is that it has entered into this modern
"single use" fiat world, as a currency promoted as "real
wealth saved"; and the use of gold, as a parallel long term
savings vehicle, is dismissed and cloaked in an illusion of price.
No fiat can serve it's modern function while becoming entangled
between these opposite forces of use; a wealth for saving and
a money for trade.
Many times officials have tried to mitigate this cross function
failure by storing gold in government control and printing fiat
in a straight ratio to gold owned. Hopping to keep gold values
static so as to retain fiat values and keeping a fractional reserve
banking system viable and expanding; while having said stable
fiat values stabilize it's debt that's held as a reserve. In the
real world this cannot function as all prices and values are dynamic.
Including gold and all forms of money!
Further, we hire auditors to count the gold and the money to make
sure they match. Counting the gold is easy, but counting fiat,
in it's endless credit functions and derivatives, time and again
proves an impossible affair. Eventually the stores of official
gold must have their value "controlled" thru fiat credit
entanglements; all for some ridiculous balancing act.
It is, and will be, far better to just hire auditors to do the
best they can to count fiat issuance as an independent function.
Then, allowing gold wealth ownership to return to the public and
freely trade outside it's old official money and credit entangled
realm. There, gold can be used to "tender" in the form
of real purchasing power; as the real wealth trading item it always
was.
======================
Concerning this subject; we find collaborating evidence to this
chain of thought from the fathers of our constitution. Note that
they do not mention gold and silver in the context of money! Few
hard money people or historians have thought seriously about the
context of this wording, or how the minds of that era were thinking.
Consider the word tender as one version of the dictionary presents
it:
Middle French; tendre to stretch, stretch out, offer ------ also
--------- to present for acceptance.
----Article I, Section 10 of our Constitution says, "No state
shall make any thing but gold and silver coin a tender in payment
of debts."-----------
Clearly, even then, gold was connected in thought with being something
one "stretched out" and presented for acceptance. These
are common perceptions from a time when much of what one brought
and sold came to them through barter. Even though these early
colonies were closer in time to our modern use of money associations;
their lives were still very much in an era where, perhaps, 50%
of trade was still outright barter!
Truly, in their perceptions gold and silver was a "good (tender)
in the settlement (payment) of trade (debts)" and no state
should make anything else to function in that context. But what
about something outside this context? A medium of trade different
from bartering gold wealth for goods?
-----Would American fiat money one day be issued as a "medium"
in trade, more so than using gold as a "tender" in barter?
---------------
=====================
The common use of fiat currency is and was a natural evolution
into using "money", in it's pure associated value form,
as a medium for the trade of goods; far removed from using gold
in a "real good barter" context as a "tender in
the (final) payment (settlement) of trade (debt).
American money law may have been desecrated over and over again;
however, nothing in our original thinking precludes us from designating
"the money concept" as a "legal tender" in
trade along side gold or silver as a "tender" in trade.
In reworking the definition of "note" as it appears
on our currency, perhaps it is the money our system never had
time to allow it to become. In another time and another place,
fiat will be know as:
-a written promise to trade at a determinable value a variable
sum of other goods to the bearer--
The difference between use function and value function, of our
money, was most surely convoluted for political gain and banking
credit interest. Truly, American history has shown we did a terrible
job of rendering this ages old gold barter function useless in
a modern world. Mostly because of our complete lack of money vs.
barter understanding. Today, we enter the "end time"
thrashing of such a currency experiment.
Thank you for attending and I thank Mr. Kosares for his presence
here. Sir, please drop in at any time.
=============================================
Back on the trail again to watch it all unfold! (smile)
Thanks (MK)
TrailGuide
FOA (08/07/01; 09:43:59MT - usagold.com msg#92)
(No Subject)
Hello all!
Thought I would ramble a bit while we walk this 1/4 mile circle
in my back yard,,,,,, here on the trail. Only a few here today,,,,,,
so we can talk quietly .
Couldn't help but notice that MK posted some of his fine points
from ABCs of gold! I saw it while attending that discussion, yesterday,
in Denver (smile). You know, for people that lead a hectic life,
that book is all one needs to understand the meanings of gold.
Just do as the thrust of the text implores; put yourself on your
own gold standard and save some of your wealth in gold. After
reading all of it, it's a real simple concept grasp. Don't put
off the necessary things required in your daily life so as to
buy more gold; that just puts you in the same category as most
sweating goldbugs! Saving gold, over the long run, will allow
one to enjoy the wealth when it truly does appear. This, perhaps,
was the centerpiece of Another's thrust, so long ago: just buy
gold as you are able and as the understanding comes! Perhaps that
just proves that the ancients were smarter than we are today;
they owned gold and didn't need to hear all the politics.
Yes, I have had a copy of the ABCs for some time (smile). Only,
I had to go through all kinds of antics to acquire it. You know,,,,
CPMs private club of clientele gets all this stuff real easy,
while guys like me have to pay a small fortune for it on the black
market! But well worth the cost. (huge grin) Wait a min.,,,,,,,,
I'll pull a copy out from my backpack. I'm only doing this because
we are few here today,,,,,, I'd get thrown off the trail if anybody
finds out.
I like the part on page 69:
---------- The American political process today is characterized
by the politics of debt -------
Well, here,,,,, pass it around so you can read it.
Good stuff!
You know,,,,,,,
I think far too many people try to think of gold as an investment
instead of an asset. Aside from modern financial doublespeak,
with brokers of every kind and nature trying to sell us leverage,,,,,,
the old world ideals of real property and ownership imparted a
much more stable meaning to the term, "asset", than
we place on it today. In Old French; assez ------ enough------
implied a holding that was appropriate. Or Latin (1531); ad to
,,,,,,,,,,, implying a build up of things.
Truly, the return on an asset, placed into use, was a return of
the value of that use. Not an increase in the value of the asset.
We watch gold today and see it only as an investment that returns
little. It should be seen as an asset we can acquire at a very
low real value. In such times we should consider this action as
an opportunity to ------"ad to" or the building up of
things.
You know,,,,,,,,,,
We are all trapped in the society we came into this world with.
The history of mankind is an endless record of "us"
coming to terms with the the people we love,,,,,, but their politics
we cannot stand! The ideals are always there to reach for but
for the life of "us" our little group, in our little
time frame, cannot come together to reach for the right thing.
Strangely enough, within this America, there go I.
A friend once tried to insult me in a toast; referring to me as
the best and smartest mutt he ever knew. Ha! Ha! I lifted my glass,
in front of all, and drank with a loud gulp. Then returned the
compliment; "to my family and friends, from the best dog
in the pack"!
All that: from a fifth generation, typical Anglo-Saxon that was
born in the "USA". I walk this land, upon which my home
is owned, and tear for a future we may face. Oh the irony of it
all; that one day my time will end with a pocket full of gold
and left fist full of Euros,,,,,,, whist a sword drawn to defend
this soil of my fathers. Against all comers,,,,,, here stand I,,,,
America or nothing,,,,,, my country, my sole! To the attackers
I say " these are my people,,,,, so right and so very very
wrong".
You know,,,,,,,,,
The seasons change, so do I
and the better part of life is in knowing why
I'm off the check the path!
TrailGuide
FOA (08/09/01; 10:27:19MT - usagold.com msg#93)
"everything to do
with a gold bull market"
Hello again!
I'm just placing another "rather large marker" here
on the trail for us to follow all the conflicting stories that
come out; especially as all this moves into a higher gear. Note
the first news item and how it reflects the paper pusher view
of dollar advocates; all taken from USAGOLD NEWS FEED:
=====================
US euro futures data could spell currency trouble
-------Europe's single currency could be headed for trouble if
data on U.S. futures traders' positions is any indication. Recent
figures from the Commodity Futures Trading Commission show that
speculators have been fortifying long positions in euro futures
for almost two months, a situation some see as a contrarian sign
of an imminent decline.----------
-----The Commitments of Traders report showed that speculative
interest was nearly flat the week of June 12 and has steadily
built up to the current long bias, analysts said. "It is
a fairly bearish signal,----------------
------ But the fate of euros really hangs on the performance of
the U.S. economy, since the gains in euros have been largely a
factor of weak dollar fundamentals.------------
http://money.iwon.com/jsp/nw/nwdt_ge.jsp?section=news&news_id=reu-n09239372&feed=reu&date=20010809&cat=USMARKET
end
=====================
Note:
The last item above could just as easily be printed in Another
format that better indicated the new financial market ahead:
------ But the fate of DOLLARs really hangs on the performance
of the EURO ZONE economy, since the RECENT LOSES in DOLLARs have
been largely a factor of STRONGER EURO
fundamentals.------------
Puts a different view on it doesn't? Now read a bit of reality
news from today's item:
================
Dollar Falls to Three-Month Low as Extended U.S. Slowdown Seen
-------- New York, Aug. 9 (Bloomberg) -- The dollar fell to a
three- month low against the euro as a report of rising U.S. jobless
claims reinforced concern the world's biggest economy won't revive
anytime soon. ------- Since a Federal Reserve survey yesterday
showed stagnant growth the past two months, the U.S. currency
has shed about three- quarters of a cent versus the euro. Today's
report that more workers than expected filed claims for unemployment
benefits last
week drove the U.S. currency to the day's weakest level. --------------
------- ``People are questioning the relative strength of the
U.S. economy'' after the Fed survey ----------
----- U.S. corporations would likely welcome some further weakening
in the dollar, as gains in the currency make their products less
competitive overseas. General Motors Corp. Chief Financial Officer
John Devine criticized the government's strong-dollar policy yesterday,
telling reporters that the currency's strength -----`is destroying
the manufacturing competitiveness of this country.'' -------------
-------- The euro started trading in January 1999 at about $1.17,
and since falling below $1 in February last year, it has twice
failed to sustain rallies above 95 cents. ---------------
-------- Today's euro gains also came as the European Central
Bank said in its August monthly report it will ``closely monitor''
whether interest rates are appropriate, a signal it may be preparing
to lower borrowing costs as soon as this month. A rate cut may
bolster expectations for
a rebound in European growth. -------------------------
http://quote.bloomberg.com/fgcgi.cgi?mnu=news&ptitle=Currency%20World&tp=ad_uknews&T=news_storypage99.ht&ad=world_currency&s=AO3KXQxWhRG9sbGFy
end
====================
Note:
Notice our General Motor's CFO's comment --------- "the (dollar's)
strength is destroying the manufacturing competitiveness of this
country.'' -------!!!
This should read --------"the Euro's weakness is destroying
the manufacturing competitiveness of this (USA) country.''
This item of relative logic is further confounded in that the
Euro is hardly week! American media, being dollar biased as it
is, has used every moment to educate us to see how far the Euro
has fallen. When it fact the Euro has only fluctuated in a tight
band; just below a currency level that shifts "American real
productivity" competitiveness toward the next largest economic
block. Giving the world financial structure every reason to move
into Euros to denominate and settle trade.
Consider this item: ------ The euro started trading in January
1999 at about $1.17, -----------
Using this 1.17 figure blurs our reasoning just enough to allow
one and a half years to pass without anyone complaining it's fall.
We are positioned to look at this process as --" oh see the
poor old Euro, it can't hardly get back onto its feet". Consider
that that 1.17 figure was nothing but a "nano-second"
spurt, more similar to an IPO (initial public offering); relative
to almost no actual
goods trading. In it's beginning setup we can see that the real
range, from hindsight over a period of time, was between around
98 and 83. This is the area where the ECB/BIS wanted the new currency
to occupy in its war to unseat the dollar. Yes, the Euro is only
down some 10% as of today! This is not the sign of a failing reserve
system of 300+ million people!
Further:
Also note the above -------- Today's euro gains also came as the
European Central Bank said in its August monthly report it will
``closely monitor'' whether interest rates are appropriate ------
Suddenly the tide has turned and the ECB is seen as ahead of the
curve while still in a non inflationary management position; relative
to the dollar. Going forward everything the fed does will be seen
as
