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The Scenic Overview... an Archive

Walking the Gold Trail Using the "Thoughts!" of ANOTHER

 

The Gold Trail:

The Message
of an Evolving Market

 

"Understanding the events that got us here
and how they will unfold before us
is what this GoldTrail is all about."
--FOA (5/6/01)

Two roads diverged in a yellow wood,
And sorry I could not travel both
And be one traveler, long I stood
And looked down one as far as I could
To where it bent in the undergrowth;

[...]

I shall be telling this with a sigh
Somewhere ages and ages hence:
Two roads diverged in a wood, and I--
I took the one less traveled by,
And that has made all the difference.

--Robert Frost (1874-1963)

Yellow Woods

"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 Scenic Overview...the Third 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

January 2001 to April 2001 (Archive III) 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 (1/25/2001; 10:00:13MT - usagold.com msg#55)
A Comment, then The Gold Of Troy
Hello Randy!
I thought this would be a good time to take a break from the trail. Here, at my place on the Trail Head, we can consume the luxury of a more relaxed, liberal conversation. Some day, I hope Michael, yourself or others may physically join (actual posting) in talks. I know MK is very busy (talking to friends / clients and counting his / their gold (smile)) so his being here, in spirit only, is enough for today.

For you, Randy, I'm afraid that the times ahead may make yourself one of only a few that will talk to me. You see, attitudes in this gold market are going to become very hard, almost stone like. Some of this will be reflected in a widening "valley between paper gold owners and physical gold owners",,,,, that is a subjuec I have, in the past, referred to. Unless one has the reasoning powers to see the future in physical gold, as I know you do, the possibilities of overcoming and / or regaining ongoing and future losses of wealth will congeal many a person's feelings . So, for now, engage your free spirit and have a glass of my best wine. I hope you enjoy this red, there were only 500 cases of it made in the whole world and I got the last one (smile). All the best, my friend.

---------------

(after a sip and a moment to reflect)

You know, in a little bit, in the next post, I'm going into a whole discussion about ancient gold,,,,,, carrying the thought right to the present. But before doing that:

I think it's a real shame, the way our Western / American investment culture has changed the private persons perceptions of gold,,,,, indeed, a change in their perceptions of all wealth. It seems that almost every form of asset holding must be in some form of leveraged and / or non real ownership. Paper this,,,,,, paper that,,,,, ten to one gains,,,,odds are on your side,,,, and so on and so on. And, the problem is not just gold,,,, it's visible in everything.

I guess this is what happens when decades of currency inflation leads to almost free money flow for any imaginable use,,,, and that unlimited ability to borrow and spend comes on top of little or no price inflation! The dollar's reserve function and the lack of significant price rises such a world financial structure creates,,,,,, has developed a frozen value perception in our currency's image. A frozen value image that our society absolutely knows is their net worth's purchasing power for real things. Collectively, it isn't and never has been.

We have a whole generation,,,, even several generations,,, perhaps, yourself included,,,,, that do not perceive their standings as being high up upon the hill. Many, if not most, of the voting public see their economic location at the bottom or only partially up said economic mountain,,,,, and they see that any fallback in the economy will drive them into negative territory. In reality, we are, and have been on easy street. With such a conflict, is it any wonder that Alan Greenspan must inflate further? No different from the past,,,,,, but still inflate, regardless of the world's new currency environment? In addition, following such a public political directive, our fed's inflation can casually respond to the changed nature of our derivative economy and not seem out of place while doing it.

With this almost national perception of a false "net worth purchasing power" and with our ability to borrow more into said net worth, our perception's impact,,,,,,, as a whole,,, on society's money culture cannot be resisted. Yet, all this proceeds as our fiat values, in reality, are transitory and always have been. It's just not understood as a natural process. We see it in all our conversations, at home, at work, at play and on the internet. With such a well grounded belief:

----People are reduced to playing a game with their wealth, instead of employing it to create a better standard of life. A better standard based more upon the security of ownership, now, than upon some quantity of purchasing power who's future value conversion is unknown.------

----------------

(another pause and a sip)

You know -------- some readers think I'm being disingenuous when I write,(and I am using that word with Samuel Johnson's 1755 definition) but it takes that much and more to impact the diverse minds that come here. When saying diverse, I mean intentions as well as educational and cultural backgrounds.

I know there are "real asset" people, like yourself, here. Physical gold advocates that are, in no rime or reason, gloom and doom gold bugs. Like you, Randy, they applied their mental faculties using a lot of hard work and grew to understand the real world and where it's going. Not just following the Western investment crowd.

But, we also engage no less than a small hoard of "western style" paper gold bugs on this venue,,, as over the years they have become and represent the majority of hard money thought regarding gold. Using the thoughts and perceptions I just outlined earlier (above),,,,,, these people,,,,,, mostly Americans and foreign natives using American trends as a guide,,,,,,, are employing their assets into this hard money arena,,,,, and doing it using historic realities, not future realities. That's fine if we relive the past! However, today, the evolution of our currencies lifeline trend has deformed these investment methods into little more than gambling. And it's the exact same gambling dynamic they vocally deplore and are trying to escape from in other areas. In case any readers are drifting off, here, I'm directly referring to paper hard money investments in today's world. Not only are these perceived hard money vehicles "not the same as before",,,,,,,,,,, like the currency, too ,,,,, their station in life is moving on. Out away from what their past precidents.

(another pause)

When gold is discussed on public forums and at investment conferences, many true physical gold advocated don't perceive the motivation behind the oratory from today's paper gold bugs. Their interest in physical gold is real, but their actual intent is to gain "a" security by profiting from a gold dynamic created by other's buying actions. Never to gain "the" actual security by entering into the gold dynamic themselves. Many of them don't have a clue of what all that means. Yet, such an understanding would delinenate the huge difference within this concept. Especially today,,,,, and in the future as said difference may make or break the financial worth of many. Here is an example of such thinking:

----- Two guys are talking about shoes:
"Hey, did you notice how few people have shoes today? I know we have them and their use is obvious. It balances our overall physical appearance and gives a long-lasting foundation for our feet and for our human structure. In turn, shoes support all the other investment clothes we own and use during our life."

While these fellas are talking several other "Americans" overhear the conversation and join in:
"Shoes,,,,, shoes,,,, what's this about shoes? You say there is a demand for them,,,, a deficit in supply? Oh yes, we completely understand the concept and fully embrace it. Without shoes, none of us could economically stand up straight. The whole world is woefully shy of them and will someday be forced,,,,, if not by foresight, by need, to own them. There is no way any of us could transverse a hard rocky economic road without gold,,,, weeeee mean shoes! Man alive,,,,, I'm going to buy a shoe factory and make some money from all this new demand."

But, the first two guys observed and asked:
"But, wait a minute,,,,,, aren't you going to follow your own keen concept and buy some shoes for yourself and your family first? You know, that public shoe company does not and will not,,,, by government tax laws and regulations,,,,,, sell it's product directly to it's owners. They can only give paper profits to their owners. During all the big rush, you will be in with all the other "shoeless buyers"

Oh yeah,,,,,, we will later buy them,,, said the traders,,,,, besides, I got a 1/4 shoe now,,,, that's a start. And, by holding these tiny shoe laces, we can stand here and fit in with all you well heeled players (grinning like Texas Westerner on an oil well ). Look, I'm in this to make money,,,,, it's just a concept like all the others I follow. I do the same thing when I'm with other "conceptors" of the same ilk,,,,,, I talk their talk to understand their concept. But, I really don't need your gold as long as I got my paper profits.

OK, said the two guys with shoes. We don't mind your talking with us, so long as your perceptions don't distort our end purpose of having good shoes,,,,,,, and just don't complain when your company's value can't equal the worth of good shoes on the hard road before us.

------------------

Further to consider,
I think many players degrade our reasoning because it just suites their confrontational nature. Their constant replay of the same past failed positions clouds the view, even as it does make everyone think harder. Some may have to drop more wealth before they learn, I don't know? In addition, some paper players, caught up in the paper game our currency inflation creates, mentally cannot let go. To do so places them outside their social strata even if it saves them much heart ache and money. They feel that only the leverage is in the leverage of some gold substitute, never gold itself as the means to an end. Own silver, mine stocks, erivatives, etc.,,,,,, and that position will restore their already considerable loses, they hope.

It's a: "there just has to be a way I can play this game using some paper system",,,,,," even another more leveraged metal if need be". I, myself, know the feeling and over a lifetime have evolved through it. Problem is I doubt others will have that same luxury of so much time.

So, Randy, let's go back in time and space to build a gold perception the physical gold advocates have understood from the beginning.

I'll post in a few hours (if the power stays on at the Trail Head) (smile)

TrailGuide

 

FOA (1/25/2001; 16:28:50MT - usagold.com msg#56)
The Gold Of Troy!

Hello again Randy,
Let me read something to you that will set the tone of this ongoing discussion:

---- Was There a Real Trojan War? ----

Until the 19th century it was widely believed that Troy and the Trojan war were imaginary. Then, in 1871, an American named Heinrich Schliemann began excavating an ancient city in Turkey. To the amazement of many, this retired businessman had discovered the lost city of Troy.

Nine cities have been found at the site, one on top of the other. The seventh city was destroyed around 1250 BC and appears to be the Troy of legend. You can still see the ruins of its towers and its walls, which were sixteen feet thick.

Schliemann identified Troy's location through clues he found in the Iliad, the epic attributed to the Greek poet Homer. Little is known about Homer except that he was blind. In ancient times it was believed that he had lived during the Trojan War, but most modern scholars think that he lived in the 8th or 9th century B.C. His poems weren't written down when they were first composed, but were transmitted orally for many years. Some people suspect that the poems were actually the work of successive generations of poets, and that Homer didn't exist. Of course, the same thing was once said about Troy.

All thanks to the work of Heinrich Schilemann. Without him we might still regard the Trojan War as nothing more than myth. What started the Trojan War? It has been suggested that the Greeks may have been fighting to gain control of the Dardanelles, a water passage between the Mediterranean and Black seas, near Troy. Or perhaps the war truly was fought over a woman named Helen. The truth is lost in the past.---------------------------------

Well, Randy, that Mr. Schilemann (1822 - 1890) was quite an explorer. His work helped uncover a mountain of knowledge about ancient life. Not to mention it helped us conceive how these people viewed their "wealth of Ages". Thank goodness for California gold. too! Yes, I said that right, as that is what financed his work if you can believe it?. Here is more, then I'll begin:

------

Heinrich Schliemann was a bold dreamer and a prolific liar. Despite those credentials, it wasn't politics that brought him to Gold Rush Sacramento in 1851. Instead, it was the death of his brother Ludwig, from typhus. Schliemann, a German-born merchant had been living in St. Petersburg, Russia.

He planned to make sure his brother was properly buried, claim what he believed to be a sizable estate, and get back to Europe. What he found, however, was that his brother had been buried without a tombstone, and his brother's business partner had made off with the loot. So Schliemann paid $50 for a marble headstone, and set himself up in business as a gold broker. In addition to making up outrageous stories in his diary, Schliemann was more than a little paranoid. Afraid of fire, his office was located in Sacramento's only brick-and-stone building, at Front and J streets. He wrote that he often slept on top of the gold, with pistols across his chest.

Despite two bouts of yellow fever, Schliemann persevered, and in nine months he made more than $400,000, some of it legitimately. He returned to St. Petersburg in1852, using his Gold Rush fortune to make an even greater fortune in the Crimean War. And his money allowed Schliemann to indulge his real passion in rchaeology -- and preserve himself a place in history.

In 1871, Schliemann, using Homer's "Iliad" as a guide, began digging in what is now Turkey, and found the lost city of Troy. A German merchant with a penchant for prevarication spurred the growth of modern archaeology and found the gold of an ancient era -- using the gold of California.

-------------------------------------

Oh boy, what a life, what a story?

Yes, on that small mound, about 5 miles from the coast, they found layer after layer of ancient cities. One of them was indeed, Troy. The treasures were many and quite a few made of gold. Hair - rings and small fluted beakers, vessel covers and sauceboats, even a spectacular large diadem (head dress) with pendants. These treasures are, in fact housed in some 50 museums around the world. Later, around our time (1994) it's been certified that a lower level of excavations did, indeed belong in the Bronze age, 2600 - 2300 BC. This places these golden remains around the same periods and datebacks as in the Thebes works.

-------The studies in Egypt.

One current project called The Theban Mapping Project, is giving us a better and better idea of how life was during these early civilizations, and this is but one of several "modern" evaluation of ancient life.

In that area of the world, researchers are probing a lot of ancient lifestyles. From around 3000 BC, through the Old Kingdom (2700 - 2100 BC), during the Middle Kingdom (1700 - 1200 BC), passing the New Kingdom (1500 - 1000), into the Graeco - Roman Period (300BC to 400 AD),,, this is truly some record of life. It, along with many others, uncovers and exposes so much history it's astounding.

----------------

Our reasons for following these old lifestyles is, for us of course, to gain a better perception of how humans understood and used their wealth, back then. What is coming to light, for for gold advocates, is an ongoing evaluation of how we, as a modern people, have lost so much of our connection and understanding to what wealth is, how much it's worth and how to use it. This is, of course, in contrast to the ways wealth, including gold was seen and valued then.

---------------

Concerning "gold as money", One of the first things we established about the Troy collection was that there were very few, if any coins found. At least allowing for the size of the find. Nine + levels were dug, representing a hugh section of antiquity and no coins remained with the find. Here was a mass of civilization leaving treasure after treasure of fantastic gold artwork, yet, no coins to speak of. We cannot conclude that the coins were taken and melted down, because the art was just as valuable, yet it didn't get taken. And these treasures were laid down in several cities and generations, over time.

Researching further, many of the other great finds from the BC and early AD period were from tombs and lesser burial sights. Places where people of "excessive worth" took their excesses with them. But regular cities with regular people had relatively few coins. So what is the point? Let's go further.

----------

Some of the earliest coins were stamped with a detailed press, struck with a blow that indented the heated metal. The Alyattes from Lydia (610-561 BC) was one of the earliest. It and a whole host of later coins were marked this way. We know that some of the most rare were natural forming in stream beds, because they were electrum (natural combination of gold and silver). They would not have been man made that way, at that time. Mostly because the silver gold combinations, in natural forming metal, were never equal in amounts. Giving the coins different values. Were they this particular about content and weight? You bet. The first coins were called staters, meaning "weighters" and were used as the norm for weights in other coins.

So, with the Athens, Macedon, Tarentum and Antiochus to name a few, began the worlds first coins. Gold coins? Yes they were, but money as we know it? Our view of how these people viewed and used this gold money is, we believe, far different from what gold scholars teach. And it's impact on estimates of existing modern gold supply and use is enormous.

-----------------

Randy,
walk up to any citizen living during 335BC, in the latest town where Troy once was, show them a "Head of Zeus" (Saracuse 3 stater) coin. Then show him a vessel of oil and ask which he would take in equal trade for anything? Odd are, even though your two items were of equal value, he would take the vessel. Why?


All throughout these early times, prior to BC and into some AD, people didn't see these gold coins as we think of money today. These various gold coins had tremendous value, but they were just gold pieces. They were wealth for trade like everything else was.. That's simple logic, I know, but the vessel of oil, for instance was just as tradable as a gold coin. In fact, within most of the medium sizes city states of that era, barter of like goods was just as good or better than gold coin. One's life was better if he owned wealth he used.

Humans of that period didn't live all that long a time span. Even though some accounts prove otherwise, the majority of life went by rather quickly. If you were a regular part of society in general, your wealth was what you had and consumed during those short days. There were no banks or investment houses and the average person's return on a wealth unit was his length of use and it's quality of life enhancement. More to the point, this logic made these guys spenders of gold, rather than savers! If you had gained gold in trade, for your services or goods supplied, you had no reason to save it. There was no other money that needed to be hedged against value loss.

It's becoming more and more apparent that average people of that time quickly traded (spent) their gold for something useful of value, for both them and their family. They didn't have the excess we know today. In modern nomenclature; this logic dictates that a much smaller amount of gold money circulated and circulated faster than many supposed. All forms of jewlery and art objects were in the same situation.

For longer savings, even for those of above average means that had all they wanted, people tended to spend their most valuable gold coins first, while saving the least valuable (bronze, silver, iron) for emergencies and later use. To us, today this sounds strange, but place yourself in that time. It was better to build your most useful and needed store of things while times were good.

Therefore, you traded the gold, which brought the most equal trade, first. If things got so bad that one had to dig up the stash, you were trading for last ditch things anyway. Kind of like wrapping up and burying beef jerky to get you thru a pinch. This use of lower metal is suported. Remember, lots of things served as money objects them. Even much later, AD, it was common in Roam to trad big iron bricks that were forged as a bull. It's use was in trade for "one bull" or something of that animal's value.

This tends to explain why so many hordes of lesser quality, non gold coins are always being found today. Roman silver, bronze, iron, copper coins are very common. The classic belief is that all the gold was found, melted down and recast. But that action just didn't fit the whole profile of life's need back then. The majority of gold in average and even upper hands was always on the move, in trade or payment for service. Each succession of ruler, simply reused the old coins or melted them down and restruck with a new image. And new gold was minted only if it was easy to find. Especially stolen jewlery. Mined gold was a very last resort.

Remember, real useful goods crowded a rich ruler's house, too and these were just as valuable and tradable as gold. Besides, far too many finds have come up with jewelry and no coins to suggest some robbery by thieves sold the coins to new rulers with melting pots. The gold would have been taken whether coin or art.

Taxes were paid in goods, service or coin (preferably gold) and regular people knew it. Far better to trade your gold and save your wealth in a bulky form so the tax man's take at least has a chance of taking less than enough. To store your wealth in gold and risk him finding and taking it all was just not acceptable.

The great gold stores we have found almost always point to their being the reserves of a rich ruling class. Just like modern billionaires, after too much comes excess and gold was the only alternative for someone with guards and regular army.

On the Road

More and more evidence is mounting that the largest portion of gold, during this early period was, "On The Road"! The perception that every person had some portion of gold as savings is blunted by their lack of need for such wealth. Gold was needed and used to spend "On The Road" more so than in local domains. Whether for armies or traveling merchants, gold moved more than it was saved. Even gold in the form of art was "fair game" for the regular people to use as a tradable medium. In fact it was just as likely used as money "on The Road" as coins. This further explains the findings of small amounts of jewelry in most of the locations where small towns were located. In the reasoning of Troy, the lack of coinage supports the movement of gold more than the saving of it.

We find gold more in the "upper status" burial places of great cities than in the areas where common man traded, lived and kept his personal worth. We further conclude that gold was much harder to find and utilize, back then than many supposed. Yes, great amounts were around, but the reality was that these amounts were perhaps 1/2 or less than many others conclude. Simply because finding or producing gold meant displacing labor that could be making barter able goods of equal value. Besides, gold that was in trade, was valuable enough that what existed mostly covered it's need in long distance commerce. This further points to a much greater value for a much lesser amount of gold while it was used during this period.

When evaluating lifestyle wealth, back them, many often find themselves comparing things in a relative mode with today's perspective. In this position we think the mark has been far missed for gold worth. It's possible that gold payment, in these early times amounted to a hugh premium compared to today. The various goods and lifestyle conditions in existence, indicate a much higher relative worth for their goods of daily life. Thereby giving gold a much greater relative worth within one's life also. If a one stater Darius of gold, from Cyrus of Persia was worth a very valuable vessel of oil, why utilize the effort to find gold just to trade for some oil. Better to skip the gold production and make the oil. This was the norm for thinking by people not trading on the road, living "within local" city states. Indeed, outside the need to pay armies, a much smaller amount of gold did the job much better than us modern thinkers thought was necessary. Further, the use of oversea warefare and trade perhaps lost more gold into the ocean than we will ever know.

Consider these possibilities well. In that gold today is in a much lesser existence, compared to modern goods supply and lifestyle enhancements, when comparing it to it's value in life in the past. It's true worth as a wealth medium could be a 1,000 times higher! For it to return to it's ancient position of true asset wealth, for trade outside the modern currency relm, we can see where it's European benefactors have once again placed it "On The Road" to much higher fiat currency prices.

Next: Gold from the Roman era forward.

Thanks Randy and ALL

TrailGuide

 

FOA (01/29/01; 14:39:33MT - usagold.com msg#57)
Getting some fresh air.

I put on my boots, backpack, gloves, binoculars and went out walking the trail today. A fella came up and asked, "after yesterday, how ya doing"? I said follow me.

We went down to a stream and filled my bucket of water. I took off one glove and stuck a finger into the pail of water.

The water quickly started steaming and my friend jumped back with an expression like he couldn't believe what he just saw.

I said, "it's ok,,,,, this is a good sign because the water isn't boiling,,,,,, it means I'm cooling off!
(partial smile)

I asked him to thank everyone for me and excuse my human nature, until I do the same in person. But, just the same, I'll stay over here a while longer and send letters for all to read from the Trail.

TrailGuide

 

FOA (02/01/01; 13:47:10MT - usagold.com msg#58)
Troy and Beyond, Even to Rome!
http://www.grifterrec.com/coins/timeline/timeline.html

Once again Randy, Hello and thank you for your efforts as the technical manager of this path! (smile)

Hello also, to all the others that have come to our hikes, walks and talks. We started this recent discussion, "going back into the beginnings of gold", right after our hike #54 "The Curve". There was good reasoning for stopping and camping here, because it was time to understand gold as few have ever understood it in our time. Taking a few days to overlook the valley from this spot will enhance our perceptions and prepare us for the next leg ahead.

So, grab your coffee and tea and lean back,,,,, the stars are out to light the night so our Thoughts alone may travel ---------- "The Gold Trail"!------

-----------------

Going back over #56 "The Gold of Troy":

You noticed that I structured that discussion in a way that makes the independent mind wonder about. Let's pull those thoughts together and move along.

We found that history had left us with some conclusions that were, it seems, never concluded. Archaeology had never been approached by someone like us, with a different hard money perspective. Yes, all the records were there, but most every paper written on the subject appeared carbon copy. They all projected our modern sense of money into the economic structures as they existed, back then. "Of course, we are today more complicated", our history papers said,,,, so,,,,,, allowing for that difference "the ancients still operated back then the same as us now". How neat!

Yes, our teachers "called our perception of money, their money and our perception of goods, their goods" in the same context we can use now. They said "hey, they were using hard money to buy and sell from each other, just like we once did" Again,,,,, how neat"!

---------------

The Treasures of Troy, all 259 items, were hidden away since 1945 because of various war and political problems. The significance of the find was tainted with scandal until only recently. Around 1994 (or 1995?+/-) the entire lot resurfaced in a museum in Moscow and several well respected scholars were finally able to examine and evaluate the exhibit and the actual site. Their conclusions? Using modern tools of the trade showed that while Schliemann did indeed find several lost cities stacked upon each other, his find went back further in time than anyone thought.

A recent book "The Gold of Troy" (April 1996) gives even further clarification.

From the author's works comes evidence that Troy was a ------ "leading center for gold jewelry making in western Asia Minor and the Aegean" --- " Thus the largest of the Trojan Treasures were Industrial in Nature and refute the supposition that they were objects in burial sights".-----


My research into many more papers and books, like the above and other written works, further shows that the sight was more of a grand market. With numbers of craftsmen in separate offices and work sites turning out some of the very finest gold metal works one could imagine. Even by today's standards. There were metal molds and crucibles found that were used for various metal working projects. We also conclude that the city was rebuilt several times over an extremely long slice of antiquity,,,, each time performing the same function of a trading town. All done during a slice of time that said gold coins did not trade as well as the other metal ones. Gold was saved, not traded.

Once again, returning to the theme of #56, there were virtually no coins found among the priceless gold art objects. Being a big gold trading town, worked over hundreds of years, certainly some gold coins would be around? Especially if gold and other metal coins were saved and used as money. But, none were around.

------------
Jumping back to:

The object of our viewpoint from #54 "The Curve", was to point out that gold today, has no currency price. Yet we are asked to value it on a gold for goods basis established by modern currency exchange rates. We wondered if the ratios in value between gold and goods, today could be the same as they were in ancient times and middle ages. If this ratio could be matched, we are told that the value yesterday and today would be much the same as our modern money says it is. I do wonder?

We buy and sell gold today, based upon the supply and demand of printing press contracts created on established exchanges around the world. In our present time, there is no trading price for gold based on the independent trading of physical gold alone. Or on the actual trading of gold goods, outright. All currency pricing and therefore modern accepted values for this metal is established on the paper derivatives markets.

To better grasp what we are really doing when buying real gold,,, close your eyes and imagine:

----- Today, we are simply "paying a fiat currency commission for the advantage of holding and owning physical gold metal"! ------ People that trade this paper system, exclusively, are simply betting on what that commission will be, not the eventual gold value. ------

----For actual gold obtainers, this function, that our exchange paper pricing mechanism is doing, is giving us metal for an unknown real price and value.------

I say "commission" in the above, because the total quoted price a coin dealer sells to you at, is little more than the world gold trading market's guess of the risk it is taking in supplying customers with the metal,,,,,, without a real market to establish it's currency price. It's that simple.(smile)

None of them and none of us know what the real value or price gold today is. I use the phrase; "our advantage of owning the metal", because buying physical gold for today's currency,,,,,,,is like buying a lifetime wealth option that never expires. The commission one pays for this gold coin position, in the for of what we call today's price,,,,,,, may one day go to almost zero as our paper market structure fails from the discovery of real price.

All happening because these physical gold options, we call real gold, return to actually trading for a value based on their worth in our world. It's the Physical Gold Advocate's "advantage", because while he is waiting for the real value to emerge, the real value that we know existed in antiquity has never gone away! It just doesn't have a marketplace to show it. It will.

All the while paper gold players are playing for scraps,,,, giving up their commissions,,,,, betting on the changing price of said "commission". Indeed, one that cannot go too far up without killing the entire system. And thinking it's the real price for gold they are betting on all the while.

"You think long and hard on that one? (smile)

For us, as hard money "Physical Gold Advocates", to understand the value of gold, we must remove ourselves from present time thought and think of gold as the Ancients did. Not as money but as little tradable hunks of metal. Gold for goods, straight up, as the citizens of Troy did!

-------------

Troy and Beyond, Even to Rome!

Back then, there was no other currency. No paper moneys or banks. One had no need to save gold as a hedge or savings account. Your wealth was in the useful things contained in the world around you. Those little hunks of metal were just that, little hunks of gold that everyone knew had trading value. They were not money, not the way we think of money today. They were just a beautiful metal, gold.

In fact, that is why you carried them, to use that gold if it brought the best deal in a trade. That was worth considering because they didn't always bring the best trade. Unless most of the time you were on the road. Within local communities, at least, goods for goods exchange always traded better than goods for gold. But over distance, the town next door or the seaport across the Aegean, those gold hunks could usually do better than the flask of oil you took with you. One made the best use of gold by using it, not saving it.

Unlike today, the laws of money were turned on end from our perception. Gold was for spending (trading) and spend it people did, especially "away from home". There were many non-gold coins around then, silver, electrum, bronze, iron, copper and they did something we cannot comprehend;

----"this bad money drove good money into circulation" ---- (smile).

Yes, the little metal chunk that carried the highest trading return was spent first! But why? Because the average person's wealth and savings accounts were denominated in the real useful things you owned and consumed during your short life. (See my #56 again to get the mind working) This, my friends is the reason the vast majority of physical gold stayed "on the road" of commerce while all the other metal coins were saved for later use. Gold traded best, so it traded first.

The common repeated ratio that during most of the Greek times a 1 to 10 value existed between silver and gold was official dogma and sounded about as right then as it does today. But, like today, it was seldom tested on an established exchange. That's because the coins had no denominations and were much less traded between themselves, not to mention there was no exchange! Anyone holding gold would be a fool to trade it for silver or any other metal because a trade for goods or services would surely bring a much higher return. The same was true for silver because it was better to risk a trade for goods than be taken in a trade for gold.

Back then, gold chunks were, by far, more rare and tradable than most any other coin produced. If it wasn't traveling by night or stayed too long in a trading town, it was quickly melted into the next generation of national coinage and sent packing again. Or it temporally became the object of a Troy metal craftsman's hand. You see, those little chunks of gold, I point out again, had no denomination of currency unit on them. They were fair game to become tradable gold in any form, be it bar, coin, chain or chip. The same rare gold made the circle between coin and "use object" many times over.

All of this is supported because aside the finds of major treasures, the finds in "working towns and homes" did have tiny gold objects of wealth but rarely did they have gold coins. The presents of these other tiny pieces of gold wealth in medium size homes indicates that they would have had the resources or incomes to use gold coins as trading vehicles,,,,,,, but they did not have the resources to tie up that much wealth by saving coins of gold! That same "logic train" negates the premise that these same working people couldn't afford gold and therefore used lesser metals as coinage in equal value or in a 1 to 10 ratio of gold! They did use these other coins, but used them less. Gold finds, relative to other coins are rare because it was always spent. Place yourself in their times?

Again, people "did" often have and save "other" metal coins. So many, in fact that great numbers of these bronze, silver, etc. coins keep being found at dig sites today, all across Europe and Asia minor. Many of them found right in the same "regular" backyard saving accounts we ourselves sometimes use. Planted long ago as the next best trading item one could store and not lose too much "use wealth" during the wait. Indeed, these lesser items could afford to be put away.

But, you thought silver was more in style as a coinage then, because so much of it survived? If that were the case, those metal items would have made the exact same trip gold did. They would have been melted down and reused into jewelry and coins, never laying down for rest in such great numbers. (good logic, yes?)

------------
(My thanks to The Smithsonian Institution, Doug Smith and many, many others that have, with the advent of the internet, placed so much of this research in public view. Also thanks to all those that have educated me over all these years)
-----------

I'll read several partials from these written pieces:

PARTHIA:

-------Some of the most interesting ancient coins were neither 'Greek' or 'Roman'. In fact, the coin producing civilizations of the ancient world spread far across Asia including people and places rarely mentioned in beginning World History classes. One of the most well known of these were the rulers of much of what is today Iran, Iraq and surrounding regions: the Parthians.----------

--------The land areas of ancient Parthia lay between the Caspian Sea and the Persian Gulf, and its boundaries included all of modern Iran and contained portions of what are now modern Iraq, Turkey, Armenia, Azarbaijan, Turkmenistan, Afghanistan and Pakistan---------

--------(it) roughly corresponds to modern Iran, was approximately 648,000 square miles, about equal to the areas of Great Britain, France, Germany and Spain together ----

----------The Parthians created an empire which, at its height, presented Rome with a serious challenge for the control of the Middle East west of the Euphrates river. They were the only civilized power to withstand the might of Rome at its height- the same Romans who had conquered Carthage, Macedon, the Seleucids, and the Gauls. So, who were these Parthians, whose empire stretched from the Hindu Kush to Mesopotamia? ----- (They) created an empire which lasted for almost 500 years (and) have been so nearly forgotten ----------

---------The Parthian kingdom began with the election of Arsaces I to the kingship of the Parni in 247 BC.--------- In 238 BC, Arsaces I succeeded in defeating the Seleucid governor of Parthia and establishing the Parthian kingdom. With his accession, ***** the coinage of Parthia begins, and would continue, with only a short break, for the next 500 years. This coinage has proven extremely important for Parthian history for several reasons; primarily because of the scarcity of written records - the Parthians themselves did not leave behind any written legacy---------------- For the majority of Parthian history we have to rely on a combination of fragmentary literary sources and references, archaeology, and the coinage itself to create a coherent, though incomplete, story.****

------------- *** Their coinage formed the medium through which western, in particular Greek, ideas of coin design were transmitted, and transmuted, in the Middle East from the Euphrates to the Indus and beyond. The Parthians developed one of the first recognizably feudal systems on record- which was transmitted to the Sassanians, and thence to the Arabs. **** The Persian epic history is now thought to include lengthy portions from the Parthian era - the Parthians had a great oral tradition, in keeping with their nomadic background, and greatly valued BARDS and story-telling. The Parthians also left a legacy in art and architecture, creating a style that mixed Hellenism with native Persian influences, particularly in ornamental metal work. There is even a small literary legacy with the "Parthian shot" - a phrase taken from Parthian horse-archer tactics in which the archer would feign flight, and, while riding away, fire over the back of their horse -----------

---------Their economy and success was based on taxes paid by traders using the 'Silk Road' that connected Rome and the West with China and the East. Parthian finances depended greatly on Rome's failure to make direct contact with China until the late second century AD. Parthians were known for being men of their word and their coins continued to be issued with fair weight of good silver long after Roman silver coins were being debased.------------------

--------------------------------

Well;
here we find a major civilization that existed during most of the early BC Greek periods and crossed well into AD Roman period. We have found that their coinage tells set the pace for much of that time.

Most of the coinage, we have dug up today, from that period and part of the world was in the lesser metals of silver, bronze, etc.. Even the Persian, preceding the Parthia, had most of their coins in silver form. This, no doubt, lead to our present hard money education that silver was as good or better than gold, back then. The fact is, as we are concluding, that gold and gold coins were made back then and circulated more widely because of their value. The mere existence of gold coins (those little hunks of tradable gold) supports this concept of their use. Indeed, their rarity today indicates their value, back then as most of them were recoined. Leaving only lesser coins behind.

The Persian king, Darius The Great, did issue gold Darics right along with silver Sigloi and did so as early as 500 - 490 BC. This we all know and agree. But so few of them survived, modern thought created the view that gold was far too scarce to be much used as a complete tradable unit back then. But this view takes on the same arguments we hear today, always leaving out the possibility that gold value was much higher. Carrying a larger share of wealth with less metal. It was scarce, but that isn't what erased their record of existence. Gold was used so well and needed so much that it was always "in trade" and "on the road". If it wasn't, it was melted into Another countries wealth.

However, it was the recent discovery of Parthian gold coins that best supports a change in concept for hard money followers. It was thought that gold was not used in that land and trade from Greek nations was always done in the lesser Parthian metals.

In 1982, in an archaeological dig at Tillya-tepe, a real Parthian gold coin was found (a Gotarzes I (95-90 B.C.). Later in 1991, several Vonones I (A.D. 8-12) were found as authentic! While the archeological significance of these coins is still hotly debated, I am aware that there is a supporting passage in an Ashmolean Museum piece, where around 94 BC the process of working gold is mentioned in Parthia. The existence today, of known gold working and trading, in this era, opens up the entire hard money proposition about the evolution of gold as wealth. If gold was traded, there was enough for coinage trade too. The Parthian find completes our supposition that gold moved freely between nation states then. Indeed, the workings of gold at Troy, a stop off on a major trade route between these cultures, adds to this. The fact that Greek coinage, in gold, was also widely used, even as it was rare in that nation's borders, means that Greek gold and coins had to have also come mostly from supplies "on the road" as they passed through the region. This concept demonstrates that gold moved and during that movement was coined, often.

In fact the earliest Greek gold coins (The Head of Zeus) came from their colonies on Sicily and in Tarentum on the Italian mainland. Not on their local soil.

The same argument was applied to gold use pertaining to the Greeks. Because gold was indeed hard to find around their local area, many concluded that the few Greek coins produced in this early time were done so from necessity and as a last resort. As we pointed out before, Troy changed that perception because gold is now known to have been a long established trade item, subject to the craftsman's hand. In fact, several examples of gold coins with holes in them indicate they may have been hung as jewelry in chain. Gold was rare and was melted if it held still too long. But, it carried a higher value in trade than any other coin across all of middle asia.

For a "Timeline" view of these cultures - link above. -

At that site, we can see how the Parthians walked right along side the Roman development even as they passed through Troy along the way. All during the same era. Their timeline use of gold coins now offers an counter concept against accepted hard money thought based solely upon Greek and Roman history alone.

----------------------
Further:

Following the death of Philip II of Macedon, his son Alexander The Great spent the last 13 of his 33 years life changing the world. The gold coin of "Macedon, named Alexander the Great, stater, (336 - 323 BC) became "The Coin" and standard of the world for some time. He set the precedent of "recoinage" by melting down the gold of other nations into his stater piece. It is in our view that his practice had more of an impact on perceived known gold stores than most everyone accepts. His people did work the mines for gold, but produced far less of it than imagined. Rather, his mints were ordered to melt and restamp any and all gold that passed their way. Most of it was "gold on the move" as was the custom of his time and before. Rather than adding greatly to the existing gold supply, he just better identified what was already being used in commerce.


That practice was something the early Roman era planers would not understand until after most of their Roman Republic years had passed. Truly, Roman stamped gold during the Republic years, would be very rare (as it is today). At first relying greatly on other's gold coinage as a tradable unit. Only later did their armies melt captured gold for government storage. Following in the "Footsteps" of a process that continues to convert existing gold into identifiable gold. Even into our day.

It wasn't until the era of Roman dominance that they recognized the need for Roman tradable gold. Gold in their name for use away from home by their armies. During this time the first Roman "aureus" were struck by their armies. Coins created from "taken" gold, already in use, was formed into the very best trading chunks a soldier could have. The coin "Lucius Manius" (82-81BC) aureus, was one of the many created after the Roman Senate allowed their generals to coin "taken" gold as trading money. Thus begins one of the greatest gatherings and usage of gold known at that time. Some of it the very same gold we use today.

If one read my posts during the Washington Agreement period, you will recognize the phrase "On the Road"! Beyond the obvious political reasoning we often present here, the case for "to little gold today" has been behind our motivations for some time. The gold in our world is not as great as so many suppose it is. I hope to demonstrate why this gold "on the road" concept will further influence our political currency situation as it evolves.

Let's stop now and continue later.

Thank you all for your support and kind words.
TrailGuide

 

FOA (02/09/01; 14:24:03MT - usagold.com msg#59)
Current background
http://www.usagold.com/dailyquotes.html

Hello everyone!

I was going to post this on the Main Gold Forum page because I didn't want to break the chain of thought here. But, because it's so long,,, I'll post here and reference this item on the trail later.

If a gold advocate reads Michael's wonderful piece (see link above), all the reasons for buying gold should be clear. His sound purpose is certainly clear to me. But, far too many savers have been lost in the blizzard of conflicting stories about gold. With all the changes that are taking place now, many have just backed away.

After giving my talk about "the curve" (along with other talks), I hope that at least a firm perception is in place as to why our current gold prices are little more than a facade. A currency price based mostly on the trading of contracts, not gold itself. Most of you grasp this, yet wonder why the "facade price keeps falling?

I'll use some things from the Carl H post the other day (
Carl H (02/07/01; 20:05:56MT - usagold.com msg#: 47727)

Hi Carl, I'll comment first them start into your post:
-------

From where I sit:

There were two distinct parts to our (Another and my words as added) commentary over the last several years. Political history buffs would have recognized it right off and spotted where we were going with it. For the most part, all of this discussion was centered around the decades old combat between the Old World and our Western World. I'm talking about the combat for economic domination.

For those of you too young or not versed in recent history, during the last 30 years, most of Europe has been trying to work itself out from under American financial influence. This has shown itself so often it would take an entire documentary to reproduce or explain. Perhaps, larger than History of the world vol 1 thru 17 (smile). For us, though, the most important aspect of this has been in the slow formation of European economic unity. In fits and starts they have worked their way through various currency blocks that embarked on all sorts of fixed exchange rates and trade agreements.

The metamorphosis of their most recent 20 year struggle resulted in today's Euro and the expanding zone of financial structure it represents. This is only the most recent example of an effort that started somewhere back before our time. Perhaps the European Economic Unit (ECU) could pinpoint the modern beginnings of this struggle. Again, this represents the most recent 20 year segment.

The world's economic timeline will no doubt look back and mark this period in a way that we mark ancient history. I think most scholars will use the BC / AD reference as a way to describe it. Perhaps BE / AD, meaning "Before EMU" and After (dead) Dollars. The currency birth and political movement we have just witnessed will indeed have just such an impact on our Western lives and truly require a time stamp to reference it.

---------------

In the BE period, gold was the only other world currency. Yes, this dethroned metal currency and wealth asset was still used the world over as a last resort. A last resort against a failing dollar, that is. Gold values, BE, went through many convulsions as the dollar's use and stability ebbed and flowed. All the while, the world held gold "just in case".

As the political motivations to create a "Euro system and currency" grew, many nation states found themselves at economic risk. They hedged their economy between dollars and gold, but wanted the new possibilities another economic zone could offer. It was a new way to break the total economic control of our dollar reserve system. Everyone, it seems were watching and maneuvering as EMU approached.

The problem for many wealthy states was: how to continue within world economic trade, save your currency exchange wealth in reserve and not be killed if this new Euro system became a huge success? For some, gold was the main conduit to hold your excess reserves in, that way you were between currencies. But there were several problems.

----------------

The dollar had already approached it's useful life several times. By the early 90s, it was a basket debt case of super currency expansion. Ready to fail, right then and there! It was kept alive through CB participation, because it remained "the" world reserve and we could not operate without it. As the modern world evolved, digital currencies of fiat nature were and will remain the number one way to do trade. No matter the costs or problems entailed in their use, or how often these worthless papers come and go, humanity uses and demands their presence. We have but to go no further than into several of today's currency inflating nations to see where the locals still use paper money. My point here is to not expect a return to hard money. Hard wealth as savings, yes. But hard money? Never again. See my other posts for further explanation.

Make no mistake, CB support for our US unit is the only reason it's exchange rate didn't plunge, throwing us into a massive, local price inflation. And, because most other countries held dollars as a reserve, they would have inflated also. All this support was done in order to stop a complete economic trade breakdown before EMU. A decades long wait.

The trick for the CBs was to keep holding dollars and even expanding those holdings as needed to balance US trade deficits. Deficits, by the way that have not only been negative for a long time, but have grown explosively during the 90s and right up and thru EMU. This dollar support made sense because holding reserves in a failing currency, while building a new one offered little loss potential. Yes, once the new system began to function, your dollar holding's value would eventually be reduced almost to nothing. But those reserves only represented support for the system itself, not actual buying power in the native currency's land, USA. You see, once a permanent trade deficit becomes structural to the function of the currency's economy, those dollars,,,,,, those units of reserve buying power,,, can never return for the purchase of anything! Without killing the exchange rates and native economic structure first. Yes, in the case of what comes first (chicken or egg), you cannot send dollars home to buy useful goods at a reasonable price if the whole trade structure fails. In the US's example, used here, local inflation would drive the dollar prices of everything we export through the roof, long before all the goods were brought. Completely, negating any and all exchange gains from a falling dollar exchange rate.

So,,,,, once the Euro was functioning and morphing into it's new reserve roll, the ECB would,,,, like in the US's present roll,,,,, have no need for excess foreign cash reserves. However, some wealth structure would have to be present in the asset reserve category to replace those lost dollar values as they failed. That structure would be gold. More problems.

Prior to and just after EMU, many oil producers and a whole host of other wealthy nations / individuals, were not going to buy into the Euro first off. What if it failed? Or worse, because the dollar was on it's last legs of support already, any failure of the Euro system package would also lead to a total break away of continued support for the dollar. In this dynamic, even dollar holdings could dissolve! This was the background from where Another's Thoughts were being broadcast. During the BE period, about five years before, there was indeed a near failure to proceed with EMU! After some 20+ years of effort, such a failure would have sent us back to the gold standard (and worse) of days gone by. Many of you can remember this during the 1995 area. The effort seemed to be falling from political bickering. It was critical to oil wealth producers and many others that the Euro be born. If it didn't, an all out bid for real gold by everyone would ensue and I mean everyone. More problems.

Part of the support package for continued use of dollars revolved around oil. If for any reason, oil prices rose prior to EMU, it would break what little economic life that remained. It was well known that the entire local US structure depended and was built on reasonable priced oil. Later, this position and it's pricing dynamic would begin the movement of commerce settlement away from dollars. But, not yet. Actually, in the years prior to EMU, oil needed to plunge in dollar value in order to prop up the system. It did, boy did it,,,,, but not for free as so many thought.

It was well known that gold could buy oil, or better said,,,,, a cheap gold market price would buy cheap oil! But forcing down the gold price for the benefit of private sales would be some effort as long as people were buying in mass prior to EMU. That mass buying process would feed on itself from the fear of a dollar / Euro transition. Thereby, negating the whole cheap gold for oil game. Yet, the ECB (and the BIS) already knew this gold market of ours and knew it well. You see, our dollar gold market has evolved over many years. Long before the 90s, it was well on it's way to becoming a virtual paper market place. An easy trading market that basically held "it's paper gold price" well within the commodity use function of gold. Around $400 to $600 was considered about right. With Western views sliding into complacency as our world dominance grew, we as investors grew to see "trading gold" as the best use of our wealth. If we wanted to engage hard money thought at all, we just traded the price, not own the gold. In this atmosphere the mine industry exploded with easy capital. See my post about Mr. Parks great article below. So we as private gold owners unloaded tonnes of gold many started down the road of owning leveraged gold securities instead.

In this backdrop, new mine supply was more than what the world needed, at least the Western world. All the CBs, both American and Old World, began a policy of discounting gold. All for the purpose of supporting the dollar reserve system. Yes, the US played this game, knowing full well the currency reasons behind the Old World purpose; to hold the dollar steady until Euro birth (EMU). You see, we (USA) thought this was great because we gave the chance of EMU a one in 100 shot! This truly backfired and now the BIS / ECB have the US fed in an inflation trap.

So, the dollar got support from CB's holding more of it as a reserve,,,,,, the dollar got support from a falling gold price,,,,,, the dollar and the economy behind it got support from crashing oil prices. All of this leading up to a huge change. A change that to this day is still mostly behind the screens.

The next part of the play came as world paper gold traders starting making use of a good thing,, falling dollar gold prices! Never mind that the real gold movement behind the paper market was becoming a tiny fraction of this paper trading. Never mind that the dollar would eventually step back from world reserve status,,,, changing the settlement function of our paper gold market overnight and killing everyone's paper holdings. They said:

----"Why,,,, we know why gold prices are falling, the CBs of the world want it down,,,,,, but we don't believe all this talk of Euro success",,, "there are a hoard of other reasons", "besides, we are making tons of money playing this paper game"!-------

------------

Now, I'll pause to introduce some items from Mr. Carl H's post.

-----
Section 1 -- Bullion Banks Establish the Gold Carry Trade

From what I have read, it seems that a few years ago a number of Bullion Banks started borrowing gold at interest rates of around 1% from Central banks. This gold was immediately sold on the spot market and the money and invested it in higher yielding investments. This type of operation is referred to as a carry trade. This practice went unchecked and has reached a point where at least 6000 tons and probably as much as 10000tons of gold are owed to the central banks. To put these numbers in perspective, annual world wide mine production is estimated to be about 2500 tons.
-------------

Thank You Carl.

Yes, they did introduce the gold carry trade then and the timing was no accident. I also have to point out that Another was the very first to mention (post) a gold lending number anywhere near that level. He said it was around 14,000 many years ago or would soon approach that level. Everyone, except those that knew the game, said it was NUTS! Now, the 10,000 figure is on every desk in the world.

Central Bank lending of gold for low rates made absolutely no sense. A fact almost every hard money writer expresses. But, they fail to bridge the conclusion. If a low gold price was wanted, and they did indeed want it, the CBs could have sold the gold outright, driving it down. Then brought it back later. With the growing public perception, so well outlined in Mr. Parks article, no one would have minded it as the stock markets were all the rage. Why buy into a diving market and hoard all this excess gold for long.

Further, in a different light, the CBs could have simply used the mining industry strategy and apply the interest gained on the cash sale proceeds to buy the gold back later at higher prices. Indeed, this is exactly what the mines are doing now.

Further: They didn't need to lend it, just sell it. Later, they could have just printed new money, that is, create near money securities for their own account and apply them to long term contracts from the industry,,,,, buying new mined gold to replace the sold gold. No need for the lending equation at all. But, you see, there was a need.

So,,,, the only reasonable, legal reason for the banks to create a world wide gold lending structure was to grow a paper facade that the real gold buying, Another spoke of, could hide in. All perfectly legal, but very political. Again, I point to Another's long ago post that said; "the reason gold prices are falling is because so many people are buying it". Ha! Ha! That one was greeted with total disbelief and ridicule. But, boy a lot of money was lost by people that turned from that message.

Now, back to my post:

-----------
In the middle of all this new paper trading environment, people didn't notice what was happening. Way back when CB lending was just beginning, some smart people starting taking just a little bit of the action. Besides being big buyers of CB gold sold outright, they were also buying some of the borrowed gold. The same gold that was lent into the market by the CBs and other big players. You know, the gold that's borrowed, sold to create a pot of money. Then that money draws interest until it's used to buy the new mined gold and replace the loaned stuff. The same process that also makes the gold carry trade in our currency markets.

Well, that real gold off take, done by these major gold advocates, was not all they they took (smile).

Now,,,, a lot of these people started thinking. "We already have a lot of gold and our demands in the decade prior to EMU may drive the market way up. So, why not help the CB's purpose (and ours) by always bidding low at outright sales. And because our money is tied up in gold, drawing no interest, why not play the CB game for them? We'll take some of our buying money and use it to create the cash pot for the BBs,,,, for use in their gold lending deals. They can skip the borrowing and sale of gold part and just commit our money to pay for the new mined gold. Drawing the standard few percent in return. The mines don't need to know that no gold was sold. Further, the BBs will need to hedge a fall in price to protect themselves in the deal. In doing so the public will see the derivatives price of gold fall, just as if some was sold.

Note: The BBs (in this small niche of deals) must only protect their interest from a falling market because that is the only function that would threaten the mine's future repayment of gold,,,,, a to low gold price. If their collective actions did drive the paper trading of gold to the floor, killing 90% of the industry's ability to continue operation, their profits from their paper hedge could at least cover the liability. Yet, conversely, any rise in price would be no threat to this particular deal structure.

So,,,,,,in the middle of all the gold carry trade, naked shorting, gold sales from regular investors and, in general, a blizzard of paper gold trading,,,,,, some major players were building real gold buys and not driving the markets as they did it. The success of this operation created the dynamic that allowed physical gold to be purchased off the radar screen and the flow of oil to continue. Once again, no manipulation outside our standard paper arena! As Another was oh so fond of saying: "gold and oil will never flow in the same direction". (smile) Now, more from Mr. Carl H:

----------------------------------------

Section 2 -- Lining up the Gold to Unwind the Carry Trade

I consider the above paragraph to be fairly well established information. Now, I will speculate for a moment. If I were the bullion bankers and was in this situation, I would want to get my hands on a tremendous amount of physical gold at cheap prices. As far as I know, only the central banks and mining companies have large amounts of physical gold. In the case of the mining companies, it is still in the ground. I will assume here that the central banks would be very reluctant to let the bullion banks default. It would show how stupid or corrupt the central bankers are and it might be a big enough scandal to change the outcome of some elections. Ok, so this means that I have to convince the mining companies to sell me all the gold they produce for the next several years at prices close to what they are currently. So, how would one go about convincing the mining companies to sell their future production? Youíd either have to convince them that the price of gold was going to stay low for the period of time for which you wanted them to sell you the production or you would have to coerce them into selling future production. To accomplish this, you would have to convince them that there was a large supply of gold that was going to be dumped on the market. As stated above, the only other large holder of gold is the central banks. So, you have to convince the central banks to drive down the price of gold and act like they are ready to dump much more gold.

So, the question then is how to separate a central banker and his gold. Simple, create a potential crisis of a magnitude that it will force him to sell gold to prevent it. This is easily done by simply writing a huge gold call options (or surrogates thereof). Then, if the price of gold rises, the Bullion banks will fail and probably take the financial system with them. This compels the central banks to cap the price of gold at a level that less than the cost of production for many mines. This forces those mines to hedge or go bankrupt. The Bullion Banks can then acquire the forward production at prices near the cost of production, or to acquire the bankrupt mine. What is even better is that hedging will help hold down the price and force other mining companies to hedge.

--------------------

OK,,,,,,,,,, again thanks Carl.

Your view above is very clear. But it is based on several lines of thought that don't exist.

(First), the BBs are not really at risk. Yes, in my macro view, if the gold system was to default out of sequence, world trade flows would indeed, break most of the BB, but do it from the regular economic side of their structure. However:

It's the function of the marketplace, itself, along with the entire gold marketplace that's at risk. In the event of a total run on gold, induced by a huge surge in gold demand, the banks would force their clients, on the short side, to post so much collateral that it would force them into bankruptcy, on the spot. Most of you may not know it but all the mines and even gold industrial players have margin thresholds that, when reached, go up like a rocket. Even ABX has a $600 point that requires massive additional collateral beyond that level. Any short run in the paper gold markets would be almost overnight and go thru $2,000 like butter. In that event, even ABX would not have the collateral to cover it. Remember, below ground valuations are not deliverable in a gold run that demands three day delivery!

The bank's short positions are, as our good poster ORO once pointed out, always hedged in paper positions. If the market ran away, the bank's demands for performance on those positions would crater every arena they function in. Once, again, the banks play the market forces against each other. If, in the course of operation the whole realm of forces are played to zero, the banks just stand aside. I know, of course, that they would be impaired, but the bulk of the blast would be endured by everyone that plays in this marketplace.

The point of my presenting this is that the whole object of the paper gold dynamic is and always was to function for industry hedging habits, not so much to deliver gold to the public. Yet, because this maze was encouraged by the CBs to grow so super large, it's goal was so that political gold could be moved. One day, this entire structure will have served it's useful purpose and then it will be allowed to fail. That day is approaching.

To bring us up to present:
To date, that purpose has been served largely because it succeeded in keeping dollar supporting oil prices down, extending our US economy,,,,, until EMU. As evidence to the process, notice how oil prices began their dollar rise only 6 months into post EMU. Clearly, there was no longer a need to support our dollar economy once the Euro was established. Indeed, just like a turning supertanker takes time, so too does the higher energy prices take time to work their will. Make no mistake, the world has seen the very last of cheap dollar oil. The next dynamic of that process in the transition of oil settlement support into Euro denominations. Notwithstanding Iraq's move as a convenient trial balloon, the mass of this transition will not begin until the US has clearly embarked on a slowdown. And that slowdown, energy induced as it is, will, this time, force the fed to fight it with a super inflationary buyout of anything and everything that defaults. Right down to your shoe laces. This, my friends is the inflation dynamic unleashed once a currency is removed from reserve status.

Further; its no mistake of identification in understanding the ECB / BIS roll in all of this. That the ECB has started cashing in all it's interest on dollar reserves points to a new direction in currency warfare. Our own Randy@ The Tower has documented this for some time. In addition, their marking gold to market is a prerequisite to following the Fed's new inflation stance by scoring the dollar against the Euro gold price once the paper gold markets fail.

FOA (02/09/01; 14:29:38MT - usagold.com msg#60)
Background part 2

Further; its no mistake of identification in understanding the ECB / BIS roll in all of this. That the ECB has started cashing in all it's interest on dollar reserves points to a new direction in currency warfare. Our own Randy@ The Tower has documented this for some time. In addition, their marking gold to market is a prerequisite to following the Fed's new inflation stance by scoring the dollar against the Euro gold price once the paper gold markets fail.

To the point:

However, there were still outstanding gold deliveries on all sides that needed to be addressed, even after EMU. So,,,, around early 1999, the BIS decided to allow the erosion of the paper gold markets to continue to conclusion without fighting it with outright buys.

LeSin's post today (# 47852) about someone noting a BIS offer to take England's gold is to the point. (Hi LeSin, how is your French Sorrel growing? (smile)) That was the last offer before a changed position. They would not do it today. Look at your charts and see where this market the time where gold was finally allowed to drop below $280. It is indeed strange that it hasn't fallen much further.

Where once they stood ready to buy gold outright, in order to stop the wholesale reproduction of contract gold from driving the traded price too low, and degrading the very asset that gave oil producers reason to support the dollar,,,,,,, the market itself would now be allowed to kill itself. All so the final gold contracts could be delivered. That process was evident in the Washington Agreement and the years it would take to complete that workout. (see my Macro below for further explanation)

Where I had seen the WA as a breaking event, Another had long before seen it as an extension of the process that would eventually drive paper gold credibility to Zero. Indeed, he said (posted) that well before WA. As an aside, he always said that all paper would burn. In retrospect, prior to EMU, if it didn't happen, all paper assets were subject to destruction and now I see his point. Post EMU, just gold paper is now in the hearth. He does think EuroLand is the future and I respect that position, greatly!

In my Macro view told in a slightly different way:

We all thought that one day the whole gold system would explode in some huge short covering rally. Indeed, if the Euro failed,,,, producing no EMU, the sudden demand for gold would have driven the paper market sky high until it too broke from financial failure. Making million airs the world over of countless gold owners,,,,, and billionaires of any leveraged player that brought mines, futures or options. Well, maybe billionaires for those that cashed in while the shorts still had money to pay. But,,,,,,,,,,, it never happened. Thank the EMU folks for that.

Now we entered the AD era,,,,, the European Monetary Union (EMU) was a success,,,,, the Euro was formed. This was a political sea (for me also) change regarding gold. It was around spring 1999 (that time again), was when Another made a point I will never forget. It was posted here on the USAGOLD forum. Now that we were in the AD era, the decision was made to let the dollar paper gold market kill itself. We all posted endlessly as to why it could /could not and would /would not happen, but there was one other aspect left out at that time.

As I mentioned above; most of the major gold buyers,,,, the physical gold advocates,,,,,, those that want it as a wealth reserve,,,,,, were gathering physical gold all prior to EMU. Even after EMU, as we worked our way into the early Euro era, gold ownership is intended to bridge the transition away from dollar reserve use. For these nation states and individuals just want gold,,,, not for trading now,,,, nor for use now,,,, and they don't care about it's dollar price now.

We thought that after EMU, dollar paper gold prices would slowly climb as physical demand impacted the paper marketplace. But the problem with that is that such a climb will destroy the ability of the BBs to function and complete that portion of contracts that require delivery. Remember, we now have countless major Euro players waiting for gold deliveries from mines and other contracted sources. Overall a small portion yet, all within the trading noise of this huge arena. Yet, this gold is a major part of the Euro system of the future as it will be a replacement asset for nation states that stand outside the Zone but will trade within it. (as a contrast to Britain that will join)

From the time of the Washington Agreement until it's end (three years left out of four+/-),,,,, the dollar paper gold world will be allowed to do the equivalent of a currency inflation. No nation or government CB will now stand in the way. You see, the only way the physical deliveries can be completed is for the market place to have it's way. In doing so, by continuing to short the market in a piling on stance, liquidity will remain for delivery. Remember, the gold recipients do not care what the dollar paper price is at delivery, only that their gold buys can be completed. And for that to happen, the BBs must have an ever lower price. Hence the contradictory nature of the major ECB bank, regarding gold.

Yet, the real message must not be lost. Between now and then (perhaps tomorrow or in a year or so), physical gold will embark upon it's own road. A GoldTrail if you will. A drama seldom witnessed ever, much less seen in our time. I state flatly and for the record that the premium paid on the purchase of physical gold will climb through the roof in the days, weeks, months and years ahead. Between us Physical Gold Advocates, we will know it's but a reflection of the free market to come and a true account of where it's value really stands. For the paper trader, it will become the curse of lost wealth.

This, my friends is the face of a failing paper gold market. A market that evolved far beyond what it originally was used for. A "New Gold Market" built for the support of a currency's ending timeline and allowed to die of it's own misconception.

From here we can see the "advantage" of physical purchased for an unknown value. Gold held as the ancients held it.

No denomination necessary until it is allowed to trade,,,, "Free" once again!

Then our journey will be done. Then our wealth will be complete.

"We watch this new gold market together, yes?"

Thank you all for your time
TrailGuide

 

FOA (3/10/2001; 20:58:11MT - usagold.com msg#61)
On the road!
Hello everyone!

Well,,,,,,, things are not as before,,,, are they? (smile)

In my last post USAGOLD Forum post (#48858) we noted that the paper gold game was reaching it's limits. The BOE was almost asking "what do you want us to do"? The answer came as plain as day as the paper price was driven a little lower in return for a gold sale reduction. Yes, clear as a mountain stream,,,, the unwinding has begun! It will continue until the big event when the gold rules are officially changed. Not much different than when the dollar hit it's credibility limit in 1971. As Randy has often pointed out; the US printed gold contracts back then until they (dollars on the gold exchange standard) lost their mathematical ability to be converted into gold.

Everyone that is expecting some huge paper short covering rally has got to ask themselves one question; "do ya feel lucky"? (smile) It's important to consider this because today's paper gold contract market is in the same credibility position as the dollar in 71. There is simply no way the Bullion Banking markets are going to allow our current marketplace to adjust to this mismatch by marking "This New (paper) Gold Market" to market against any true "delivered" physical gold value. Forget it! It's never going to happen during the dollar reserve era.

Just as in 71, this modern fiat gold market will be disconnected from the real gold market. Back then the dollar remained at $42 / ounce +/- as a somewhat free physical market exploded into the hundreds. Today, considering the magnitude of the mismatch we have attained, the paper market will probably never pass $360, even in the worst possible short crush. The dollar forces will call $360 the right level just as they called $42 correct??? All the while physical gold will slowly gravitate completely away from any connection to the real demands for delivery.

Even such a rise toward $360 would occur only after the BBs decided not to sell into the paper market any further. It all depends on how the rules are changed later. We shall see.

What's coming in 200?:

Let's see, spot gold is at $358 plus the physical premium of $2,200,,, so that equals $2,558 per K rand. Oh,,, you say that's crazy??? You will just demand delivery of your contracts at at $358? Or call your gold accounts for full allocation? But wait, didn't they just declare position limits, cash liquidation only for all out months, a $4,000/oz premium for spot conversion because of the shortage and forced customer reserve requirements triple the actual physical value for all converted BB physical accounts? And you wonder how or why anyone in their right mind today could pay in the future a $2,200 premium to a coin dealer? Ha! Ha! That's just the warm up, my friends.

What's in process now??:

The Washington Agreement placed in context where the Euro system is going with gold. That pronouncement drove home the fact that our Dollar gold pricing system was going to die with the dollar reserve function. The WA placed us "on the road" to high priced physical gold and low priced contract gold. It could have been the end of the LBMA pricing structure, right then and there, except that it would have clocked the global financial structure too fast.

Indeed, our Euro friends helped the system out by giving it some more of the same poison, more paper gold inflation. Yes, all the while since the WA, people have been falling all over each other trying to explain why so much new European gold has entered the market through lending. Yet, all that was mostly lent was more paper credits built upon a failing dollar gold pricing system. You see, they left the maintaining of system credibility to the dollar faction. Kind of strange how gold keeps showing up as part of the US trade deficit? Even is it's only a trickle.

Gold bugs cry that the paper market is not free because government endorsed inflation in this arena is killing it's price structure. Almost as if they want fiat gold that less inflated? Well, that's great if your "gold" money is in our modern gold producing industry and that's hip deep in committing it's product to satisfy these same paper contracts. Yes, this mistake of "hard money" allocation by western savers, is the result of ignoring history and how currency systems evolve. Gold industry investments work if the current fiat system is remaining "in use", but showing price inflation. However, when currency systems fall "out of use" while moving into super price inflation,,,,, the next competing system will side with physical gold! It doesn't happen often, but when it does real wealth in one's hand becomes worth many times investments in "almost gold". Truly, the dollar price of physical gold is going higher than anyone expects.

To make this clear:

It makes no difference if the current paper gold price bottoms here or is sold into the dirt. Just as soon as the dollar paper gold system begins to lose credibility in matching physical gold value,,,,,, gold bullion and gold bullion alone will out perform every possible hard money competitor. That includes all the other metals! "Noone" will need to teach this dynamic to the public then. All we will have to do is watch it all unfold. Believe it!

-------------------

It's coming time for our next talk about gold in antiquity. Walking the GoldTrail becomes all the easier when we understand just how little of it is truly out there. Far, far less than the paper pushers would have us think.

Until then;

"We watch this new gold market together, yes?" (smile)

TrailGuide

 

FOA (4/12/2001; 5:54:42MT - usagold.com msg#62)
sample
test


FOA (4/14/2001; 14:10:14MT - usagold.com msg#63)
The Journey
Thoughts are a river as it runs upon the land
they begin with a purpose and nourish us as sand

we walk a path by this water so near
and our vision must know this trail will prove dear

so trust in your heart that this way is the birthright
and the sun will light in the darkest of night

these Thoughts make us dream a truth that is whole and
"as this river runs through it, may it strengthens our sole"

----------------

Few things in life remain the same. Always near, yet sometimes far, the future is before us and will remain so for ever more. Look back for understanding, look back to know how we once thought, look back to confirm your own feelings, but don't look back to know the path ahead! That future, my friends is the water that flows from us today.

No one changes the world by their own actions. But the future can be shaped by our understanding and how we, as a people react to new perceptions. Yes, in our living of life, this very dynamic makes the world tomorrow. Better said, we are the future we seek to know! Understand us and where we are going and one can plot a course that points the future.

---------------------

With time on my hands, recently, I did a research project. I ask all the Gold bugs in the world to stand in a straight line. Then asked all the physical gold advocates to make a parallel straight line next to them. Boy, that was some long line (smile). For days on end, I talked with many of them as I walked between the rows. I was struck to make several observations:

All the gold bugs seemed to be talking nervously. Always looking up and down the row to see what the next fella was doing. With cell phones, laptop computers, private radios and every form of communication, they were all trying to do the very same thing; trying to make more currency. Almost the same thing that people who trade the stock markets are doing. Strange, I thought. The gold bugs hated this unbacked fiat currency as a wealth trading unit or a wealth holding unit, but still wanted to own more of it than the real wealth of gold. All of their actions were aimed at protecting themselves against any loss of currency function by making more of the same failing currency. Keeping ahead of the coming loss by having more of the deteriorating wealth item added to them? Kind of like a French farmer's logic reply to the knowledge that Paris is about to fall; " I'm not worried, got my wealth in cash in the bank of paris and I know the government will add to my holdings enough to cover any failures of ruler ship". So I ask myself what is the farmer and gold bug gaining here?

Standing back across the row, I asked a physical gold advocate what he made of all this? It's all very clear to me he said:

"""""""You know, fiat is a good thing in this day and time and we all could not do without it. These gold bugs would have you think just the opposite, even while they try to make more cash wealth for themselves. Yes, it's true, the current major world fiat is breaking down as it folds it's hand. But the current gold market, these bugs trade in, is run by the same guys that don't want their fiat use to end yet. So when they change the rules of the market, look at how many gold bugs leave? Almost none of them.

The rules of play, using Casino Chips instead of real gold, are all right out in the open just as the gold market we used to know becomes little more than a shell game. A Dollar Gold Casino, if you will, and the gold bugs don't want to leave it. If they can't use "near gold" to play with, they won't play at all. So, their whole advocating of the gold story is just talk. They stay right with trading fiat assets instead of gold even as their market slowly fails their purpose.

It's almost as if they didn't really want gold wealth in the first place. I see it as if they want everyone else to make physical gold worth more so their fiat based assets can grow? God awful logic for a gold advocate, but then again, they aren't gold Advocates? These are the new breed, aren't they? Fiatgold bugs? Well, I write it all off as the Gold Bugs can't see the difference anymore and still crave playing in the same house, using the same house rules. Most of them would rather the government keep the fiat going at the expense of just a little higher gold price. Say $500? Just enough to make their fiat grow. Instead of advocating holding bullion wealth and a freegold market to crash the old system. Ha! Ha!, These guys even want those in charge to change the rules back into the players favor, bankrupting the house in the process! There is no chance in hell of any casino doing that to themselves. It'll only happen when the casino's credit is taken away. And that process is in the works, don't we know! That's why I am a physical gold advocate. My time will come as the fiatgold bugs go broke with the casino. I guess it's the nature of life that we go down with the ship we sail."""""

---------------------------

Will it all pass as this gentleman presents it? I sure do think so.

Tell me, how many of you are watching supply and demand, CBOT positions, Comex OI, trading volume, gold share directions and chart TI? And for how long have these items told you nothing about the direction of currency gold prices? You see, the future of the world value of gold is now waiting on the outcome of a political currency war. A process that's been in the works for more than a few years now,,,,,, And the longer this stretches out, the more the outstanding supply of "almost gold" securities is built up. Making the whole Fiatgold Bug arena ready to fail in a mighty fall.. All done in an effort to keep the dollar system going. We have been presenting this picture for some time now and the end comes closer.

Every time the ECB doesn't "blink", ANOTHER economic nation block looks closer at the EuroZone as the backing economy for a new reserve currency. As each day passes with the EuroZone showing even marginal growth without the benefit of an American style trade deficit, the internal economic dynamics of the USA builds against it's dollar management policy. Eventually forcing the US into a full blown super inflation that has no limits.

Every day that the ECB marks gold to the market, it says that; "when the market for gold is free of the forces of dollar management, it's value will be marked to the market ----- whatever that value may be and independent of the Euro currency's use and position in the world"! Indeed, by inference, the value of oil also be marked to market through gold. Slowly, the world shifts on it's axis, my friends. We must not be blind to this change.

It is as we pointed to; the different nature of the EuroZone economies, diverse social management and attitudes towards gold values, will eventually support that nation block in the mists of a crushing US downfall. Within the total dynamic of this economic transition, physical gold values will return to a level where they will once again represent the "wealth of nations".

For us, "the wealth of mankind".

--------------------

So let the water flow clear as the sun in our day
this time is for us, as we push on for the bay

mind you this stream can speak words quiet and fair
this river of "Thoughts that are free as the air"


Ladies and gentlemen, friends and readers,
later today I will begin on the main USAGOLD FORUM the next series of:

"The Thoughts of Another"

thank all
TrailGuide


[Editor Note: The following post by ANOTHER was provided at the Discussion Forum]

ANOTHER (THOUGHTS!) (04/14/01; 18:08:54MT - usagold.com msg#: 51887)
Thoughts!
To this USAGOLD Forum and Mr. Kosares, good evening.

Thank you FOA for your time and work.

We talk once again my friends. This forum, it grows strong for all ages and nature of peoples. Read they do, from all places on earth. I read and see the knowledge as written, but it be the knowledge we still must see that speaks with greater strength.

Walk the gold trails of my good friend, do I. On my feet are "strong sole" of thick leather, purchased with much knowledge of physical gold. These shoes not go bare before our journey is done. On trail I see your "thin sole" gold investments cast aside and scavenged by beasts. Their owners walk no more as these investments took not this hard road of dollar transition. Many more will wear paper gold wealth thin before this walk be done. Only physical gold will see sun after this storm.

Some say dollar strong and holds much value still. It bends not and is strong and worthy. I say their vision is limited to see only post supporting roof. Not what on roof already or what must be placed on roof. When new Euro currency is done, full weight of dollars will return as your wet snow. In that day, we check curve of this good post, not before.

Some say dollar buys much gold and is strong in metal. I say, paper gold be not metal! We have more dollars than gold in world. As long as your system works, you sell gold to gain real dollars and we sell dollars to gain real gold. All be well in your world and mine, yes? Soon, dollar return in bank and Euro return in bank be equal, no? More later, dollar return become even less than Euro. Tell me about your paper gold value then, my friend. Perhaps, dollar then seen strong in this lesser gold only. You think long and hard on this before end of year?

I think Euro buy much more oil then. We shall see. I will return often now. Discuss our future then.

We watch this new gold market together, yes?

Thank You
Another

[Editor Note: The following post by ANOTHER was provided at the Discussion Forum]

ANOTHER (THOUGHTS!) (04/15/01; 18:58:39MT - usagold.com msg#: 51943)
Mr Gresham (04/14/01; 18:44:54MT - usagold.com msg#: 51889)
Welcome Mr. Gresham. We talk for a time, yes?

You write:

"We who read here generally buy the coins, one ounce and less. The "Giants" you speak of are usually buying the large bars (100 ounce?), yes?"

I ask you, how many of your bars in tonne? This is the small purchase size.

"Is there a limited supply for them to get, and only through the large brokers with their "private wealth management" programs?"

I would say the BIS is best broker, always. It best to sell dollars for gold when gold is offered.

"I am trying to understand why this knowledge you bring is not being acted upon by some others with "deep pockets", such that the markets would be moved, or shortages occur, even before the dollar is seen in weakness."

My friend, you see the gold with "Western eyes". In mind, it be always, "how much currency does my gold bring". In this world of much paper gold, it bring not much dollars yes. In such matter, your currency makers do make your wealth lay low. This dream of much dollar currency for gold is the illusion in the "Western Mind". Your men of "deep pockets" do probe for shortages, however, their wish for low supply is not to be found. Their pockets are full with "credit gold" and sad are they at currency price this brings. It is the fools game to corner paper gold printing press, no? Sir, I stand with no fools!

Days and nights do pass and one morning will bring a dollar price for gold you have never known. In that day, I will cast this currency down and walk with real wealth. In this day, the gold will trade in Euros and no bribe of credit gold will be needed to mark this new money.

Today, I my world it be how much gold does dollar currency bring. A difference in understanding from yours, I think. Today, amount of bullion available for dollars no longer the reflection of bullion dollar exchange, it be now the most terrible bribe for world dollar use. An acceptable deal in most of world, such is real world outside your laws, no?

But, it is here, in act of making extra credit gold, where the "shortage" you speak of, is measured my friend. A good man with one eye does see this time as of but few years and short days. Aside from our Euro political changes, history alone does show all great currencies end with this overselling of credit gold as last of era. This paper gold credit is always for the fools first and last. It value is later reduced to same as currency, along with holders of no gold.

It be our good fortune (and yours) that bullion is offered still. For the simple man, such as I, this wealth is that for kings but more so for his people. For all peoples, gold will be again the wealth of ages.

In this day, at end of dollar era, all do see real bullion sold for sake of market credibility, only. Perhaps too, bank credibility, I think. In this world, the lower this dollar paper price, the more bullion becomes available for credibility sake. It is the good thing for men of "small pockets" and the curse against traders and fools.

I bid you the good fortune of "small pockets" with much physical gold! We watch this new gold market together, yes?

Thank You
Another

[Editor Note: The following two posts by ANOTHER were provided at the Discussion Forum]

ANOTHER (THOUGHTS!) (04/18/01; 06:19:54MT - usagold.com msg#: 52086)
Reply

USAGOLD (04/16/01; 19:15:36MT - usagold.com msg#: 51997)

----- I would also like to take this opportunity to welcome Another back to this Table. The circle is now joined in continuity again -- all around. Already I have added to my own file of vintage "Another (Thoughts!)" with this shrewd observation:

"This dream of much dollar currency for gold is the illusion in the "Western Mind". Your men of "deep pockets" do probe for shortages, however, their wish for low supply is not to be found. Their pockets are full with "credit gold" and sad are they at currency price this brings. It is the fools game to corner paper gold printing press, no? Sir, I stand with no fools!"

The smile of recognition returns to my face as this point is made in these few, short sentences better than I have seen it made in entire articles on the subject. Welcome back, my friend. --------

Mr. Kosares,

Thank you for your welcome and acknowledgment. I add that within this circle many feet have walked and the prints of the Kosares show most lasting impression. I see the stature of this man as American, however no Western mind is found within him. One day all will rush and follow your path before strong tide washes the deepest heal mark from sand.

It be true, my friend, in history no man does corner printing press. Many have take this path before. Even declare themselves "leaders" of "financial knowledge" and "sophistication", do they. The Gresham does make wonder about such things and asks for reason noone does claim gold from printer?

Such demand be as 100 men with contract asking Spanish farmer for 100 basket of olives where clear examination in field display only 10 basket. Such good reasoning have these men, demand delivery and illusion of wealth to others be none! None ask full collection for fear of illusion to become reality, no? Perhaps, take what offered and wait next year. Better, sell claims for olives to Western investors with little eyes and clean shoes? Perhaps financial knowledge and sophistication of these paper sellers is more considerable than average fool. In the days that come,

"better one olive in house than six blooms on tree"!

We watch this new gold market together, yes?

Thank You
Another

ANOTHER (THOUGHTS!) (04/18/01; 06:41:33MT - usagold.com msg#: 52088)
Reply

Mr Gresham (04/17/01; 10:33:51MT - usagold.com msg#: 52041)
ANOTHER: WA, BIS
Was the Washington Agreement the most significant event in gold since you were last posting in 1998? Do you have any reflections on those events?

Mr. Gresham,

One must weigh the mind of this Randy. It be heavy, yes? Do read the thoughts of the BIS for these same are printed review as #52046. Hold a mirror to these events for reflection. Such descriptions I discuss come next day.

Thank You
Another


FOA (04/18/01; 20:20:06MT - usagold.com msg#64)
Lombards, Normans and Franks
Hello again, everyone! (big smile)

I'm glad to see you are wearing the big wilderness bags today. You got my message that it's time for a serious hike. Alright!

After years and months of talking about gold, I have talked to friends about switching my delivery. During all this time, I did my best to emulate Another's style of presenting information and observations. Mostly here on USAGOLD, while he stood aside for a period. If you have read any bit of his works you know that style. He points to things, inserts thoughts, then drops names, ideas, political intrigues and suppositions. All in his good way of making people think and form perceptions on their own. While he has sometimes talked "through" a forum venue, in the process reaching others he knows, this endeavor was always for the citizen and never started as a shallow ploy to influence traders. It was more for the simple person that those "Thoughts" were meant. Truly, in the middle of all the gold rhetoric, his one plain comment remained intact and has never changed; buy physical gold!

During this period, I worked at breaking up my delivery. Even in clarifying, my replies were mostly partial answers. I have to admit, this has been a larger challenge than expected (smile). Now, I want to talk to you as I have plainly conveyed perception to others in the past. Using a human dynamic to make my points, as is my usual mode. So, I'll continue to employ a down home, on the trail tone. Please remember, I'm restoring a world of lost disk data while doing this. At first, most of this will be right out of the old brain.

You have read the varied items in Gold Of Troy #56 and Troy and Beyond, Even to Rome # 58, so lets get going.

-----------------------------

Onward the trail!

Look at this grand view.

It seems like forever, doesn't it? I'm actually speaking about this never ending struggle we have had understanding gold. Well, don't feel bad, mankind has been at war with gold for as long as he has gained an educated opinion about money. (grin)

Pity us. From the very beginning the good earth gave humans the perfect vehicle for commerce and trade, but we have bastardized it at every turn. No wonder so many modern people are lost to seize the day when it comes to keeping something of lasting value. They have been so influenced by today's convenient lifestyles that they lost the meanings of real structure in savings and savings with enduring historic stability! Content to trade their life's personal financial security, that these meanings would have provided, in exchange for some other perceived grander returns! Returns that only modern risk securities can provide. All the while placing an ever larger portion of their work's returns in long term peril. Assets from hard efforts they may never get to use!

It seems the whole of Western thought has some bit of concept about gold. They know it's good in crisis and will admit to making a quick shift into bullion at peril's first sign. Even Gold Bugs consider the point of timing when they will run for the cover of those big bars. Using their mine share profits to make a score! It's the same for investors in lesser metals; they just want to hit that quick ten times gain over gold before their split second switch to the yellow bullion occurs. Truly, it will never happen because gold will not hold still long enough for their purpose.

Hard money investors, to the man, point to a shortage of gold and the ongoing paper manipulation that's making it so cheap. Yet, in the mist of all their planning and strategic understanding the logic completely escapes them as to "from who" and "from where" they will all buy this bullion so quickly? As if each and every one of them has the secret timing and will beat out all the other Gold Bugs when conversion day comes. And still, somehow, someway the world bullion price will accommodate their gathered profits from playing these other "near gold" securities?

My friends, it was Another that always said "this gold market it be not as before". Perhaps this is the hidden perception that so scares Gold Bugs. The possibility that our physical gold market could jump well into the many thousands before their waited purchase. A jump in dollar value that never reverses. A jump that stops the contract function of this market in it's tracks! Frozen because the other side cannot supply the gold or the cash to cover their bet against you.

Then there is the Euro question. Many American Gold Bugs say it's just another fiat currency. But, in the same context I ask them "if that's so important to you , how did you just pay to fill up your car"? Others ask how I can trust the Euro. Well, I don't trust it any more than the dollar, or any other major world fiat. I just use it for the life function we all enjoy. Further, I ask back, how can you not trust the fiat you use?

The whole Another thrust about the EMU was to delineate the political shift that had been in progress for some 20 years. And how this ongoing shift would effect the currency valuations of everything we use. The price inflations that are coming that no one has ever deemed possible!

This shift revolved around the major world political players and their use of international trade vehicles to forward their own agenda. The very vehicles that impacted economies, and therefore our lives the most. Dollars, oil, gold the EMU, etc.. The discussion was much deeper and long-term in nature than many could grasp. It's focus was especially attuned to the coming change in the value of gold. A change so real, so profound that it's dynamic just couldn't be believed. We will indeed have to see it to believe it!

Even more so, it's all about the illusion of wealth that manifests itself so well at the very end times of major currency failures. Perhaps this is also a fear hidden in the Euro skeptics. The possibility that they will one day lose the wealth and lifestyle their dollar valuations afford them. Once again, the simple are warned from wise words, "your wealth, it not what your dollar say it be"!

Onward!
-------------

It wasn't always this way.

Gold, that wonderful metal that has all the unique qualities to function as our one and only wealth medium, and we just can't use it without altering it's purpose. You know, the Lydians had it right, back around 430 BC. They didn't struggle with the concepts of money, like we do today. They just stamped whatever pieces of gold they found laying around and kept it for trade. There was no need to clarify for certain that their gold money needed properties of "utility", store of value, medium of exchange, etc. etc.. They didn't need to identify these qualities were in gold before they stopped questioning if it was safe to use gold as savings. Gold was owned and the knowledge that people owned it and carried it for trade was alone enough to make it "worth it's weight as wealth".
-------------

Why then and not now?

You see, back in antiquity there existed another property that could override our need for modern definitions of tradable wealth. That property was found in the one identifying mark of wealth that transcended all ages; real possession!(smile) This factor and this one factor alone had the ability to activate all the other modern attributes of money properties, even when the knowledge of these attributes was unknown in the ancient era. Come now, Alexander the Great didn't know about "utility" did he? (grin)

--------------

Wealth.

As a means of example; think about art work for a moment? That fine painting that graces your main prominent wall. It's tradable for something, isn't it? Perhaps that Renoir for the acreage down the street. That use would cover some of the medium angle, right? A little bulky, but the large value makes it no more or less cumbersome than five gold bricks.(smile) Utility? Just watch your friends stare at it for hours. Store of value? A Renoir? We don't even need to discuss this .

But, one more thing, is it wealth? Of course it is. You see, it is wealth because you possess it, and the very knowledge that you possess it is held by others. One, a few or perhaps many equate your value for that painting by your possession of it. That understanding starts a need / desire valuation in the minds of your friends and associates. This social dynamic flows through relatively close groups of people and can eventually stretches across the world as it activates this worth equation in us all.

These paintings command a value, a price, a demand, precisely because everyone of them is possessed by an owner. In the world of wealth, worth is enhanced because the supply is lessened by this "possession attribute". And possession is how most people in antiquity, understood wealth.

Think now, could the worth of all the Renoirs in the world be the same if say, half of those wanting such paintings could own a credit for one? And further, they considered that credit account as the same as the real thing. No! The publicly known art value could not be the same because the demand would be lessened and the value decreased. Satisfying the wealth need of these new owners with "almost Renoirs". In this way the owners of this true wealth, represented by those real physical paintings, could not see their worth value expressed in the marketplace. However, the inherent value would still exist, just not quantified "for all to see". A situation not dissimilar to our gold market today.

So, if the attribute of "possession" is a major component and identifying mark of wealth, why does it play such a roll to enhance the modern contemporary properties of real money? Because, with money, once possession identifies the item as wealth, that alone can represent the unique utility function money must have. In this light, we can see where money need not have a commodity use to satisfy it's utility function. The wealth function alone is enough when applied to money. Wealth is the utility.

The store of value function of money is further enhanced because the possession of real wealth also continuously maintains or increases it's worth over time, across generations. And that worth or value is relative to all things.

Further, a medium of exchange alone can apply to many metals, but it must be wealth and therefore owned outright by all who use it ""if it is to correctly function in it's ability to denominate real value in commerce"". This last thing is something we Western peoples have virtually no concept of and will one day suffer for it.

Today, all forms of cash money and most financial assets do not function as wealth because their ownership is second party at best. Fiat dollars, in every form including cash only represent something owed to you. A credit of goods or effort performed. It represents nothing owned at all. Their function in society does work but it works for us by providing a lesser valuation in trade than real items would produce. We accept this concept and reduction of worth as the price for modern high speed commerce.

Many hard money philosophers have pointed their finger at others for the fiat situation we use today. It was the bankers and governments, the kings and cohorts, big business and robber barons or some communist manifesto that forced us to use this type of money. Well, you may not like the process and consider yourself above or apart from it all. You may even declare all of them evil. But, in the end, one fact remain; society may govern itself in many ways over thousands of years, but it has never stopped the evolution that corrupts the use of real money as official money.

Over time and life spans gold has been brought into official use countless times. Only to be bastardized by forces, we as peoples can never control. After every failure and ruination of much wealth, the cries always return to bring gold back as money. Once again to begin the long hard road that leads to the same conclusion. Gold coins then bank storage then gold lending then gold certificate use then lending of certificates then certificates are declared paper money then overprinted then gold backing removed then price inflation then,,,,,, we begin again. But this time it's different the hard money crowd say. Yes, it is. Only the time has changed.

For the better part of human existence, gold alone has served all of the best functions of tradable wealth. But as soon as we call it our money, human nature takes over. Yes, we can call it a stock or a bond, a piece of land or a painting, a car, boat or antique, but just don't label it as money.
---------------------

Up the hill and thru the pass!

The Lydians, Greeks and Romans all held gold. From Parthia through Rome and on to the Visgoths, Lombards, Normans and Franks, they all held gold as wealth. It was wealth first and traded as what we call money second. Possession identified that gold as real wealth, even if that ownership was for but the moment of a trade.

From the earliest times right into the Old World periods of Europe, gold served as the most valued wealth asset one could use in trade. It was by far the largest unit of tradable wealth in circulation that could be counted on to bring a premium in trade while shopping between cities. It moved, it flowed and it traveled. It was indeed, always "on the road"! Lesser metals and other tradable wealth assets always competed with gold for it's trading function, but only gold made the best "on sight" trade. When given the choice of other "almost moneys", gold would always bring an extra slice of meat or fuller basket of cloth.

The irony of gold use over most of it's earlier periods was that few average people kept it for long. Hence the seldom discovery of gold coinage where average people lived (see my earlier posts). Be sure, it represented wealth to these commoners, in good form and to the highest degree. Yet, their possession of this wealth usually constituted only a short time period. This short ownership occurred because gold did, would and could trade so much better for the needed things in life. For the worker, service wages paid in gold meant you just got a bonus or raise and the time had come to finally buy what you couldn't afford if paid in other means. If these people saved at all, it was usually in the form of the lesser metals (see my other posts).

---------------

If gold was so valuable back then, there must have been a bunch of it saved and transported into our modern time?

No, not really! We used to try and extrapolate all the gold that was mined and turned into jewelry, bullion or coin. If it was so good for coin and trade, civilizations must have saved every ounce, we thought! But something kept nagging at our conclusions. Something that kept turning up over and over at our digs.

Some of you have seen the Gold of Troy pieces or other fine examples of old gold craftsmanship at other museums. Ever notice how good they were at making gold so long ago? From intricate bracelets to rings, head dress items to fine cups, even the most thin of leaf. Some of it was so small we had to use magnifying glasses to see the work clearly.

This gold in jewelry and art work form was the other major form of traveling wealth. In many of our recent findings we now think that jewelry and coin traded places as easily as getting your check cashed today. Throughout the ancient land, gold centers occupied the trade routes. Any gold that rested for too long, was quickly recruited into a form that worked for the next traveler. In fact, evidence now points to all forms of gold ownership, not just coins, being a short term proposition for the average man. Indeed, contrary to what we thought, the fingers of all mankind did, through the ages, touch gold!

Now place yourself in that time. You work for Rome in the army, a fighting man. Not all of you were paid in lesser metals, many of you were relatively better off. You did carry some of your wealth with you in the form of gold coin or jewelry. In the case of a Roman soldier, a gold ring was very probable. When you went into battle, did you leave your few gold items laying in the tent? Or did you wire them back to a Swiss bank for safekeeping until after the battle? (big grin)

What we are finding, in the form of molecular fragments at battle sights, leads us to believe that most wars were fought with most wealth possessions worn or in pockets. Gold included. To make a long story short, we now believe that a great deal of early gold was scattered on trails, in the sea and during every war. In fact, rubbed, scraped and powdered to the four winds.

Because gold was so valuable in long trade, extremely small creations were carried as jewelry. Much smaller and much more able to be lost than other larger units of the lesser metals. The nature of so much of this gold was that it was easy to be lost and dispersed. Especially considering the modes of travel back then. We as museum visitors see all the magnificent pieces displayed. What we don't see are the countless broken, partial and fragmented items that are never offered for viewing.

Knowing what we know now, we believe that a very large portion of gold was lost and scattered on a yearly basis. Add to this the fact that most gold mining brought almost the same return as making many of the goods it purchased and we can see how gold was and is over counted. Where it was once taken as fact that all gold was looted and remelted, we now think that gold stocks were lucky if replaced.

By the time of the great gold coinages in Europe, the gold that flowed into these major commerce centers was all there was left in the world!.

Let's rest here for a few nights. There is a lot to consider before we go on.

Thanks
TrailGuide

 

FOA (4/19/01; 17:50:29MT - usagold.com msg#65)
Reply

Hello again everyone,

I thought it would be a good idea to make some clear comments and replies regarding my perceptions. Using some questions and thoughts from the main forum will also help. This may make it easier for us all as we "follow in the footsteps"!

Auspec makes several points and contention for me to address. Please read his complete post first (and all the others I'll address). Hello auspec, you write in reference to my hike #61 here on the trail:

auspec (4/19/01; 08:48:52MT - usagold.com msg#: 52175)
-------*If the dollar's status is now so similar to what it was in 1971, why would we see the Brazil type hyperinflation now as opposed to the simple ongoing degredation of fiat that we have all come to know and hate? Why the extreme portrayal of the dollar? It's clear the dollar is an old toad and there are young stallions waiting in the wings, but it's hard to see this as an all-or-none issue where the dollar {banana} goes from being the world's reserve currency to being "nada". Where's the middle ground with dual and competing reserve currencies in common use?*

--------------------

Well sir, I'm going to try and reply in context to the way you asked these questions. Considering well all your prefacing stated before asking for info.

Using the 1971 dollar incident is a perfect way to engage common ground thinking about our contract gold market today. No it's not a perfect analogy, but it's real, real close and sharpens our understanding and ability to see the subject clearly. Especially considering the tremendous number of different hard money people that read this Centennial Forum. But we must not confuse the point by thinking a similar break today will cause the coming price inflation we speak of.

Yes, after the 71 dollar gold break, we did see some good price inflation. But was that caused by the wholesale cancellation of international dollar convertibility into gold? No! That price inflation was not gold backing related because we had already, years before, been printing dollars far beyond our stated gold to dollar conversion ratio, $42+/-. That spell of price run ups was the result of to many dollars being printed before and after the 71 gold breaking event.

Sure, the gold price run up after that didn't help the dollar's image. But, by then it didn't make any difference what the gold price was. Even if it want back to $10/oz. we were never going back to governing the volume of dollars in supply. Not by using gold, not by silver, not in any way that would fix or slow the presses! We couldn't. Any long term slowdown, then or now, in such an established fiat was well past the politically survivable stage. This is the way fiats work, rather gold backed or not, they always break from strict printing discipline. The history behind us says so and the future before us says so. As an example in dollar terms, look at any five year average of money supply growth from 71 till now? Truly, we were and are printing our way towards the end time of dollar use. The only question was how long would the world keep using dollars? How much longer
would the timeline extend?

Some hard money people thought that the world would simply convert to gold itself, in place of dollars. But, the simple fact, as I and most especially Another have made so often, is that the modern world must use a fiat form of currency to operate. And, considering that point, after the 71 gold break, there was no other strong, fluid currency for us to revert to. It wasn't until the end part of the 70s that the Europeans started down the long road of creating something else.

There were times when our foreign trading partners were thinking of breaking away. This is when the US spiked rates. Again, we confuse this action with stopping the inflation presses. Quite the contrary, the killing rise in rates was just a signal that we would not go completely hyper. On our side, the only reason we could afford to take this economic killing gamble was because oil was still priced and settled in dollars. But that is a whole Another book.

The prestige of many international dollar holders took a real bath because they held dollars in place of gold. When they tried to initially bid for gold, the US and London made sure the price rose fast enough to tell a story to these dollar converters. That is; "bid for gold and it will soar" cutting off your conversion. Sure the US made all sorts of noise about how awful and incorrect the rising gold price was. Even showed their hand at managing the price a little so it didn't go up too fast. All the while saying they were fighting for all they were worth to keep it down! Truly, the last decade shows naive Gold Bugs just how much in control they were and are of this so called "free commodity market in gold". Oh well, back to your point.
---------

You see, the dollar is going to fail now because a good alternative is available now. All this has something to do with the coming new gold valuation, but that new price level is not related so much to gold backing a currency again. (more on that in a min). The dollar is toast because most of the world doesn't like the management policy. They didn't like it in 71, but tolerated it because gold was suppose to keep flowing in repatriation payments. And if they didn't like it back then, they god awful hate it now!

We like to think that the dollar is what it is because we are so good. (smile) But, the truth is that for over a two decade period +, none of our economic policy, our trade financing policy, our defense policy or our internal lifestyle policy has pleased anyone outside these borders. We managed the dollar for us (U.S.) and the rest could just follow along.

Our fiat currency has survived all these years because others have supported our dollar flow in a way that kept it from crashing it's exchange rate. We talk and think like we are winning the tug-of-war when, in fact, they just aren't pulling to hard. Waiting for their own system to form up.

Truly, most of the world likes the most conspicuous aspect of the euro that we describe as it's biggest weakness; it's management by several varied nation states. All supporting different thoughts, cultures, backgrounds and perceptions of government policy. Some compare it to the many nationalities in the US, but it's much more competitive than that. It's thought that this mixture will produce a more good for all management of a Euro world reserve currency. Truly, because gold plays no part in today's dollar management or the Euro, then political styling is all that's left.

My friends, a national fiat in our modern world only functions if the whole world uses and supports it's flow and most importantly likes it's management (political styling is the catch word). This support and use of our dollar can and will change faster than many think possible once the Euro is finished. Our dollar is not going to become a "banana" or "nada" in the future, as auspec notes. It already is and has carried this trait for some time now as does every fiat today. The only thing that keeps them from cascading away is world support and use.

Point:
When most of the major players that styled the Euro decide to swing even 1/2 support toward that new money, the exchange rate for our dollar will plunge to it's true worth! That dollar value is there now, you just don't see it yet. The price inflation that many (auspec) don't / can't see happening, will be the result of our currency management changing to confront the nature of all the above. The world economic financing, pricing, saving, settlement and opinion is shifting toward the Euro. As this happens the US will have to raise rates ever higher, even as it massively prints more currency to support our internal economy. Our entire economy will slow and fail as this price inflating process moves on. Some will call it stag / flation, but will change that description as the it becomes more of a crash / hyperinflation.

Right now, the actions of our fed is telling this truth. We must inflate while we watch the Eurozone enjoy it's basically internal trade economy. As other nation blocks embrace that zone, they will pull economic function from us.

You write:
------

*Comments: Again it is easy to see the dollar as losing a large piece of the action, but hard to see its total demise or its falling out of use. The US as the largest military force in the world certainly has its overriding benefits. The US has enormous resources; physical, financial, and spiritual. American creativity and "know how" has changed the world. This country will not turn over and simply give in! Let's look forward to the next 5 years and place probabilities on what is likely to happen as far as the dollar/euro is concerned. I will rank these various scenarios in what I see as their most likely odds of happening:

-------------------

Auspec, before I list your most likely odds, I would like to comment on your above.

We must not confuse a currency's "total demise" or "falling out of use" with a "loss of identity". In our time there have been few major moneys that went away. Today, we have a whole world of national fiats "in use" and "not demised" that still carry their nations identity. They lose value at an incredible rate, are mismanaged to the highest degree, are laughed at and despised. But, still they are "in use" as they function for their governments and economies. Usually, they function along side whatever major reserve currency is in vogue. Today, the dollar, tomorrow the Euro. Make no mistake, the entire internal US sector can and will function as it's currency runs a price inflation just like these third world countries. We will adapt as they have by dropping our living standard accordingly and adopting the Euro as our second money. Also:

The prestige that we have the largest military force in the world does not help our money problem. We talk as if we will let any country die that does not use our money or support our currency. I point out that the British also made such comments and it didn't stop their downfall. Nor the Russians. Also:

I point out that many, many other countries also have the same "enormous resources; physical, financial, and spiritual" that we have. But the degrading of our economic trading unit, the dollar places the good use of these attributes in peril. Besides, the issue beyond these items is our current lifestyle. We buy far more than we sell, a trade deficit. Collectively, net / net, using our own
attributes and requiring the use of other nation's as well. Not unlike Black Blade's Kalifornians sucking up their neighbors energy supplies (smile). We cannot place your issues up as example of our worth to other nations unless we crash our lifestyle to a level that will allow their export! Something our currency management policy will confront with dollar printing to avert. Also:

NO, "this country will not turn over and simply give in" as you state. But, we will give up on our currency! Come now, let's take reason in grasp. Our American society's worth is not it's currency system. Around the world and over decades other fine people states have adopted dollars as their second money, only to see their society and economy improve. Even though we see only their failing first tier money. What changes is the recognition of what we do produce for ourselves and what we require from others to maintain our current standard of living. In the US this function will be a reverse example from these others. We will come to know just how "above" our capabilities we have been living. Receiving free support by way of an over valued dollar that we spent without the pain of work.
--------

Your "various scenarios" with mine notes added :

1}Ongoing MODERATE debasement of US Dollar. {Brisker} Business as {than} usual.

----Near term, yes.-----

2}Gold and/or Oil breaks away from the dollar.

---- Oil is already doing so for a year now. The gold market is in the process of self inflating it's paper side of the function. The first minor lease rate signals are already behind us. The ECB and BIS are coming more in control as the dollar faction must either sell it's gold also or begin to fold. If they want the game to continue a little longer the US must not put it's gold on the market or the BIS and ECB would bid it with their dollar reserves. Ending it all then and there.------

3}Dual and competing reserve currencies. "Co-Currencies" in Reserves. The currency war that is in clear sight {thanks to ANOTHER and FOA}.

----- I would add that the vision of co-currencies is just a passing function as we get from here, dollar reserve, to there, Euro reserve.-----

4}Status quo.

----- We have not been here in our life times (smile).--

5}All out war that distracts/rescues the dollar and extends its life. Wag the dollar.

------ As we enter the down side of our economic function (like we are doing now) the massive money printing by the fed will risk the dollar's slow slide to becoming a super slide if a war breaks out. People run to the best managed world money in a war, not just the one with the current best exchange rate value. In the past the dollar was the one, today the Euro would receive the flow. The US would be risking killing it's last bit of dollar timeline with any war today.---------

6}Dollar merged with euro/backed by euro.

------ I know a few people that make a lot of sudden money wealth and give almost all of it to the church (or charity). Others are much more smarter and support the church (or charity) for the rest of their life. Retaining some control over how the charity is used. This is how the EuroZone would handle us. Actually, it's the same way we handled them after the war. We didn't just merge our checkbook into theirs, did we? Net / Net, they will have the wealth to be offered, not us.------

7}Brazillian or Weimar style hyperinflation of the USD, the Big Banana, or the 'little banana'.

------- Full on, wide open, in your seat, flat out! It's in the pipeline!------

You write and I comment:

Debt is designed for default as fiats are for debasement.

--- My friend, debt is the very essence of fiat. As debt defaults, fiat is destroyed. This is where all these deflationist get their direction. Not seeing that hyperinflation is the process of saving debt at all costs, even buying it outright for cash. Deflation is impossible in today's dollar terms because policy will allow the printing of cash, if necessary, to cover every last bit of debt and dumping it on your front lawn! (smile) Worthless dollars, of course, but no deflation in dollar terms! (bigger smile)

At $30,000 POG the US as we know it will be no more, agreed?

-----Agreed, but still in use. Just like all those Pesos around the world! But remember, at the very least, the first $10,000 of that figure would represent the current purchasing power of the dollar today. We will most likely get there long before price inflation jumps way up. Once the current dollar gold market fails and gives way to a free physical price, we will see that figure even as our
economic function drives all other hard money metals into the toilet. I talking about .50 cent silver. while gold races past it's first grand. When we see it we will understand it.-----------

What advantage would it be to the Power Elite to destroy the dollar.

-------- Wrong context. What advantage does the Power Elite gain by expending assets to save an already failed currency. Better to do what major players have done for centuries and are doing now, buy gold and evolve your power base to use the next reserve.-----------

The end of a currency's lifetime always ends in gold debasement?

---- In almost every case. Sometimes in the open, sometimes hidden.------

Ok, this is going overtime (smile). I will try to cover more (and others) in a day or so. Also, the question of Another at his keyboard? I reword things from him quite a bit for bare readability. But, his delivery is pure. I don't always pretend to understand it. Then, that's a whole other story (smile)

Thanks
TrailGuide

 

FOA (04/21/01; 21:12:52MT - usagold.com msg#66)
Of Money and Men

Hello again!

Continuing along with our discussion, clarifying some points and positions, we once again offer some straight talk. Elwood has some points in his
Elwood (04/19/01msg#: 52225). Sir, you referenced our last full hike on the GoldTrail #64, quoting first this portion:

"Many hard money philosophers have pointed their finger at others for the fiat situation we use today. It was the bankers and governments, the kings and cohorts, big business and robber barons or some communist manifesto that forced us to use this type of money. Well, you may not like the process and consider yourself above or apart from it all. You may even declare all of them evil. But, in the end, one fact remain; society may govern itself in many ways over thousands of years, but it has never stopped the evolution that corrupts the use of real money as official money."

Then you write:

------ Thank you, sir, for sharing your deep thoughts. True, your words are, but why is this a reason to abandon the fight for sound money? Surely you must be aware of the massive inefficiencies that will accompany a system with two moneys. There will be two prices for every good, one stable, the other not. Would not the timeline of such a system be extremely short compared to that of a system of sound money even though the sound money eventually becomes corrupted? How is this system better (or even different) than what we have today?---------

Hello Elwood (smile),

The fight for sound money is not dissimilar from the ages old fight for peace in the world. Mankind has been striving for peace over our entire existence and still it does not come. Countless lives and fortunes have been lost and the same battle continues. Perhaps we should reexamine our collective needs and try something different. Truly, what is to be lost? This is the same mind set our new political styling is shooting for. It's a good effort because history is on their side.

Yes, it's a noble effort to try and get the world on a sound money program, but after failing at it for centuries, a little side trip cannot hurt. (smile). Most people, like yourself, say sound money and think sound currency. Usually it's some form of gold backing that makes the currency sound. The trouble is it cannot be maintained. The logic in my words above are evident and the last part of the statement demonstrates the selfreplicating nature of our dealings with "sound money". Again, in a restructured form:

"""Society has never stopped the evolution that corrupts the use of real wealth (gold) as it strives to use it as official money""""

Elwood, I don't care if all of it is legal or illegal, moral or not, right or wrong, because the larger issue overwhelms these arguments. That being; we have never been able to control our power structures in a way that disciplines the printing of currency. The Romans alloyed other metals into their gold in a form of modern day paper printing. Even in the so called wonderful days of the various gold standards, be they actual coins or paper substitutes, the world debased the system from the start. Also you write:

----Surely you must be aware of the massive inefficiencies that will accompany a system with two moneys. There will be two prices for every good, one stable, the other not.-----

We never intend to have two moneys. The concept is better seen as the Euro and a wealth reserve. Still, to defend against your thrust, what do we have now? Travel the world, my friend and mingle in the world of currency. In almost every country of the planet there are several prices for ever good sold! All depending on what nations currency you choose to use. Today's system is working with perhaps hundreds of moneys!

------Would not the timeline of such a system be extremely short compared to that of a system of sound money even though the sound money eventually becomes corrupted? -------

My goodness, we have used a dollar system that has been debased and on the way out for 40+ years. Well before our 1971 gold break, this country was printing IOUs as if they were currency. Yet, the thinkers of our time, the same ones that employ two week trades on the stock markets, all ask for guarantees of decades before considering a new currency? Planners simply cannot employ the logic of a group that trades options, futures, strips and swaps, then asks for longevity before the fact.

-----How is this system better (or even different) than what we have today?---------

The real issue is our misunderstanding and misuse of the term "sound money". That thought has been bantered around for hundreds of years. Truly it does not exist except in the minds of men.

Money, the term, the idea, perhaps the ideal,,,,,,, is something we dreamed up to apply to one of our chosen units of tradable wealth. Usually gold. We could take almost every item in the world and use it in this same "money fashion". Still, this form of trading real for real is just exchanging wealth. It isn't exchanging money as we understand money.

Gold is no different than anything else you possess as your wealth, it just so happened to be the most perfect type of tradable wealth in the world. So it evolved to be used the most and eventually labeled in the same function of what we consider to be "sound money".

Now, consider that all wealth is represented in and of itself. You cannot reproduce wealth through substitution, like giving someone five pieces of copper for one piece of gold and then have then think they now have five pieces of gold! This is the process we try to perform within the realm of man's money ideals. We have always debased trading wealth by duplicating it into other forms and calling all of it, collectively, "our money".

This duplicating, this replicating, this debasement is the result of taking the concept of a credit / contract function ( paying in the future) and combining it with the concept of completing a trade at the moment. Think about that for a moment?

As an example, I'll give you a paper contract to pay you later for some oranges and you give me the basket of oranges. Better said, I just gave you modern man's actual concept of money.

Or I trade you a basket of apples "or gold" for those same oranges and the deal is finished, done! We have been taught to think that this is also the concept of money trade.

The first uses what our currency system has evolved into, what is really money in our mind. Where the second uses no credit form at all and is more comparable to trading real wealth as the ancients traded using gold.

Contemporary thought has always blurred these two notion; saying that these two methods of trading are one in the same and both forms use the same idea of what we think money is.

Further refined; we evolved our money ideals into a perception that credits and contract payments can be used as if they contain the same value in payment as trading real wealth. They could and can if managed correctly. But, we have never managed credit money to match the same proportions as existing real wealth (gold). We have tried to manage this combination of wealth trading and money credit for as long as we have been seeking "peace"!

So:
We use, today, many forms of wealth holdings, all standing right beside our dollar use. Many of these wealth items have and do perform much better than our fiat currency. One has but to use one stock holdings as an example.

You may have $5,000 in cash in hand and in a checking account, while also owning $200,000 of ,say, Microsoft? Obviously, the stock is a competing, dual form of currency wealth. It's value rise has overshadowed the gain on your fiat. But, is it driving your currency out of circulation? Seen anyone recently using this superior form of competing wealth to pay for a fillup at the station? No?

We all need and must use some form of fiat currency to operate in this modern world. It makes little difference if MSFT went to $10 or $10 billion, you would still use the currency system in trade as a more efficient form of modern trade. Society now uses these " money" systems without any form of gold backing, not because they are "strong" or "stable", but because they work more than they fail.

Still, over the last several decades, we now have come to expect an attempt at "political styling" our fiat money that benefits more than one nation block. Further, we expect a wealth asset to not so much stand behind the system but to measure it's speed of failure or success. Knowing full well we will accept and expect some loss of value as payment for this use convince of Fiat Euro.

This is the road ahead. A fiat no different from the dollar in function, yet a universe away in management. A wealth asset that also stands beside this money, yet has no modern label or official connection as money. In this way modern society can circle the earth, to once again begin where we started. Having learned that the concept of wealth money and man's money were never the same. We shall see.

Thanks
TrailGuide

 

FOA (04/23/01; 20:30:04MT - usagold.com msg#67)
Replies and Custodial Gold

,,,,,,,Two French men were fishing in a boat, just off of Nice. Several other boats were within close sight, always watching to see if these guys found anything. All of a sudden Henri hooks a huge one and brings it to the surface while Pierre nets it. Both of them look at the fish in the net and hesitate, not wanting to bring it onboard. "What is it", Henri asks? "I don't know, can't make it out, but it's a good one, I'm sure" says Pierre. By god, whatever you do, don't haul it in. If we can't name it the other boats will laugh at us. Let's just keep the net in the water, pointing at it and talking loud while we circle the boat. Eventually, one of the other boats will get a look and blurt out it's name,,,,,,,,,,,,,

,,,,,,, Eventually, the ruckus attracted hundreds of other boats (the miracle of marine radio and the internet) and they stormed in close to see the news. During all this action, none of the other boats saw the fish very well, therefore no identifying name was mentioned. Eventually, tired from throwing out various possibilities of the significance of the catch, Perre and Henri pulled the thing in for all to see.,,,,,,

,,,,,, To their amassment, no one else knew the exact name or significance of this exceptionally fine fish! You see, there just wasn't enough details about it, "floating around" (smile) to know it's purpose. But still, all hailed the duo as superior fishermen and brought them drinks and dinner in port!,,,,,,,,

The moral of this story: In this game of life, we all fish from time to time. But, to a sportsman, the size or type doesn't matter because it's the art of catching that counts. Besides, every catch has a name and we will eventually find it's "namer". (bigger smile)

-------------------------------

elevator guy (04/23/01; 00:07:49MT - usagold.com msg#: 52371)
second thoughts
------ I seem to be caught in an internally conflicted spiral of wealth logic, due to my having grown up in Dollar Land. When some prominent poster here said that GATA was "barking up the wrong ree", I felt GATA had been given short shrift for their efforts. Now ----------------

Hello Elevator guy,

Thanks for attempting to understand it all. If you follow our lead, we will not change your mind about anything. Rather, you will have the "luxury" of seeing things in a different context from the usual Western Gold Bug fixation. With that perception becoming part of your "Total" overall understanding, as events occur, you may choose to interpret their impact differently.
After my above story about Custodial Gold, more in a min.
============

ET (04/22/01; 21:30:40MT - usagold.com msg#: 52361)
Hey FOA - thanks for your thoughts. You write in part;

"This is the road ahead. A fiat no different from the dollar in function, yet a universe away in management. A wealth asset that also stands beside this money, yet has no modern label or official connection as money. In this way modern society can circle the earth, to once again begin where we started. Having learned that the concept of wealth money and man's money were never the same. We shall see."

I happen to know from history that your idea will fail. It will fail because there is no difference between wealth money and man's money, despite any forthcoming "new age" management. You see, FOA, markets can't be managed, and every time it's tried, they fail. Yours will be no exception.

Hey ET,
I think yourself and anyone else that takes your position on my posts should reconsider my thrust. Our libraries and history halls are chock full of records that endorse our perception fully. All of your great money thinkers engaged the very same problem; trying to force society's power structures to use gold and it's decline as official money.

It's not the management of money that was the problem, it was the management of man's authority to maintain gold and it's decipline. Over and over, we watch good monetary theory fail as society fails to control their controllers. Then, your good scholars document the "every reason" and "what for" of why it failed. We read it all, teach it all in schools and once again, history repeats. The money presses come on!

The road before us is to not manage gold. Rather, stop it entirely. Forget about calling it official money and let it seek it's own level against every fiat as a worldly wealth. In every other asset, we now have countless examples of other forms of wealth that walk side by side with our current dollar system. Practically all of these have far outperformed (thanks Mr. G.) our pure fiat dollar. Some doing so at incredible rates! And to date, none of them have obtained more settlement use than our digital currency. Even the underground people go back to currency eventually. This ongoing fact is an enormous experiment happening right before our eyes. For twenty+ years this has happened as our dollar is proclaimed, unusable! Yet, Gold Bugs loudly proclaim that gold would supplant the Euro if allowed to seek it's own level as wealth.

My friend, you should also read your scholars books again, for they tell the very same tale we do. We have read a few (smile) and embrace their position, but our position stands aside the needs of a modern Gold Bug that prefers a "fiat" gain on leveraged gold investments. We present it from a Gold Advocate's stance, that holds gold itself as the wealth while embracing society's pennant for fiat.

==============

Elwood (4/22/01; 11:17:14MT - usagold.com msg#: 52335)
Trail Guide You write:

-------
We never intend to have two moneys. The concept is better seen as the Euro and a wealth reserve. Still, to defend against your thrust, what do we have now? Travel the world, my friend and mingle in the world of currency. In almost every country of the planet there are several prices for ever good sold! All depending on what nations currency you choose to use. Today's system is working with perhaps hundreds of moneys!
----------

---does the ECB intend to hold works of art, boats, land or any other wealth items as part of its reserves? Will they officially mark their currency against any of these other wealth items? Can you understand my skepticism regarding this attempt to "un-money" gold? -------------

Hello again Elwood,
My analogy using various art works was meant as an example of how other wealth holdings currently ride next to our dollar system. Just as above in reply to ET, wealth can and does outperform fiat and people do not short circuit the system in a major way.

The ECB is treating gold completely different than the dollar faction. Where the US has seen gold as a competitor for their failing currency, they tried to destroy it's "known dollar market" value through paper manipulations. Something we have been chronicling for years, now. Prior to EMU, gold was the dollar's only replacement and because of the dollar's massive, overwhelming printing, was a major threat. Understand that it wasn't just the printing of this fiat that threatened it's replacement, it was it's one-sided management in a many sided world. For the US, keeping the dollar price of gold down was, for a long time, the only way to keep some nation states using it. Allowing the markets time to cycle gold for dollars at ever lower exchange rates.

The ECB is using the current leveraged paper gold market as a way to force the dollar faction to break itself. Their marking gold to market is a hangman's roap, just waiting for the prisoner to climb the stairs. When the US "WALKS" FROM HONORING CUSTODIAL GOLD, once again like in 1971, that will be the end! The system wide banks of the ECB will allow the dollar gold market to soar. Creating a wealth reserve not unlike their holdings of other currencies, only far more true to human perceptions. As the dollar crashes on foreign exchange markets, these CB dollar holdings will be just cast down, as Another said. No need to spend them.

Elwood, they are not trying to Un-money gold! They are going to un-Westernize gold so it performs it's historic function of acting as a tradable wealth holding. No longer following the Gold Bugs view that governments need to control gold so it acts like real money in the fiat sense. Truly, the BIS and ECB are today "Walking In The Footsteps Of Giants"!

Elwood writes my words then comments:

---------
"Now, consider that all wealth is represented in and of itself. You cannot reproduce wealth through substitution, like giving someone five pieces of copper for one piece of gold and then have then think they now have five pieces of gold! This is the process we try to perform within the realm of man's money ideals. We have always debased trading wealth by duplicating it into other forms and calling all of it, collectively, "our money".

This duplicating, this replicating, this debasement is the result of taking the concept of a credit /contract function ( paying in the future) and combining it with the concept of completing a trade at the moment. Think about that for a moment?"

--------------

Yes! This is what we need to fix. As long as man believes that he can (without cost) create value, capital or whatever by making a bookkeeping entry in a ledger, we will live in a world possessed by the ìcopper into goldî illusion, no? But there is nothing wrong with credits and contracts as long as they are backed at par by real money, because there is no illusion in this. We are capable technologically of creating such a system, and we will have a prime opportunity politically when the dollar reserve function dies.

Sir Elwood,
Today, our perfect gold system has been bastardized into it's current form. Over a half century or more, we eventually came to this. No there is nothing wrong with hard credits and contracts, based on the discipline of gold. But, we as a society cannot create a force strong enough to save our children from the eventual inflation this abuse creates! Gold or no gold, as with peace and war we end up with fiat anyway! The illusion is in our calling gold money and using it in a fiat credit function. For thousands of years, from baskets to computers, carts to cars, guns to rockets,,,,,, this new prime opportunity of which you speak,,,,,,,, has always been blowing on the wind!


Again Elwood writs my words, then his:

-----------
We all need and must use some form of fiat currency to operate in this modern world. It makes little difference if MSFT went to $10 or $10 billion, you would still use the fiat currency system in trade as a more efficient form of modern trade. Society now uses these " money" systems without any form of gold backing, not because they are "strong" or "stable", but because they work more than they fail.
-------

No! Fiat is used only through threat of force. ANOTHER implied as much when he stated that this was a way to get oil off the dollar without war. I ask you, sir, look around you. See all the things in your life brought to you by voluntary exchange through the market economy? An economy capable of all this is certainly capable of producing a free-market medium of exchange, no? This is what I mean by sound money (the Rothbard way).

Elwood,
Your note of Another is out of context from the discussion and events of that posted time. I completely agree that our market economy is a sophisticated, remarkable thing. However, Rothbard tells the way it should be done and history tells the way it was done. Indeed, while we may never overcome the human failures of war and fiat inflation, the wealth of common man does not have to be expended while society tries yet another time.

Thanks for your thoughts, sir. (smile)

===============
Mr Gresham (4/22/01; 14:01:22MT - usagold.com msg#: 52345)
Book 'em, Dan-o!
===========
BH (4/22/01; 13:53:50MT - usagold.com msg#: 52343)
TRAIL GUIDE---ESF/Bundesbank-----
===============

Hello Gentlemen,

I suspect the gold in West Point was reclassified in a show of good faith to those that own some international gold paper. I'm talking about people who's reasonably priced product you cannot live without. I doubt the gold has outright swaps written against it or was swapped into the enemy's camp (so to speak). While the ESF has the right to trade currency swaps against other's gold (and they do do this). Our gold has yet to be possessed by others. Just as in 1971, when many dollar holders thought US gold was "in custody" for them, so to does the current world dollar gold markets. However, this open certification shows just how tight the system has become.

We have said for some time that the dollar faction has inflated paper gold and done so with very limited actual bullion of their own. We maintain that most of the leverage created in this arena has been done with the gold of private Western owners. Modern GoldBug owners that once held physical gold but now seek gold leverage and gold industry investment instead of gold wealth. That gold has now been leveraged for all it's worth as it filled the use void. Today, we are reaching the mathematical end that that game can be played. Others know this and the West Point business is an attempt to counter this perception. Even if it was only a political move. We are getting close though (smile).

There is no logic in that the Bundesbank would risk it's gold. They were major supports of the Washington Agreement. Counter to perception, the entire EuroZone CB system awaits the day when they can convert failed paper gold borrowers into Euro borrows. As our paper gold market fails to function, shuts down and physical gold soars, there will be no bookkeeping market to offload these paper positions into. The conversion ratio into Euros will then be something to behold. Along with the demand for currency Euros and physical gold! The BIS /ECB is delighted that the dollar faction is lending all the "gold on paper" the dollar market can stand. Eventually, the US will walk right up to the gold window with the intentions of selling, only to fall away as they stair at a mountain of foreign CB dollars.

"""We watch this new gold market together, yes?"""

Thanks
TrailGuide

 

ANOTHER (THOUGHTS!) (04/24/01; 06:03:56MT - usagold.com msg#68)
test
thank you

 

---END of (Archive III) January 2001 through April 2001---
(Archive IV) Nearing the Great Divide -- Gold Trail posts from May 2001 - June 2001
(Archive V) The Trail Widens -- Gold Trail posts from July 2001 - September 2001
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