USAGOLD Gold Discussion Forum Archive

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USAGOLDWELCOME...........#399/20/98; 15:58:21

I want to welcome all fellow goldmeisters to the USAGOLD FORUM. If you would like to post, please go to the registration page as soon as possible. I will be trying to issue passwords what's left of today and tomorrow as soon as possible to get things rolling. Let's keep it clean, have some fun, and learn a great deal from each other. I invite you to make this your headquarters for finding and disseminating gold information. I will pretty much stay out of the conversation and let this be your FORUM!. Who knows we may even have a visit soon from some old friends. Stay tuned, fellow meisters, this is going to be fun.
bmacdNew Week#429/20/98; 18:29:41

It's early in the new week, but Japan is down 276 points, and gold is down a mere nickel. So much for Japan's new bank fix. Maybe they'll make good on that sell USA Treasuries, and Buy Gold comment.

Friend of AnotherThe Markets!#439/20/98; 19:03:15

To All: It's an interesting corner that the Euro people (BIS) have put the US government and the dollar into. As the only reserve currency, the dollar must fall in value in order to reflate the world economy. But, a week dollar is exactly what the Treasury doesn't need with the upcoming Euro. Now, all Europe has to do is wait and watch as the markets do their dirty work! If the dollar stays strong, the countries in crisis will sink even lower. In doing so this will create a US trade deficit never before seen in modern times.

It is no accident that most of the economies in crisis are many of the chief trading partners of America. It's also no accident that they all are IMF/Dollar advocates. Meaning, they hold little Gold and much US treasury debt as local currency reserves. The US will be forced, by deteriorating market conditions, to lower the exchange value of the dollar. But, if Greenspan lowers local interest rates, Europe will begin to dump the dollar. For them, they don't need the dollar as a reserve currency anymore! They will hold a small amount of it only as an currency exchange intervention vehicle.

With this new definition for the dollar it will be required to carry a good interest rate. They have the Dollar in a trap that will force the Fed to lower it's value through the foreign exchange window. All the while pushing interest rates up or holding them steady to protect this reserve currency.

This isn't a strange twist as it happened once before during the 70's. Only this time a new world reserve currency is coming online, giving many countries a choice for the first time. I think China can't wait to unload it's US treasury holdings for the Euro.

I agree with Another's last post (in the archives) about the vintage wine. Gold is that reserve vintage that many people kept trying to open before it's time. By the end of the year, the currency wars will bring this fine wine to completion.

Once it goes above $360 some major defaults will occur, changing the entire aspect of the market. Add to this the introduction of the Euro and the old US Dollar gold market will disappear. Some investors are buying gold for the Y2K problem. I thing the Currency Wars will destroy the markets long before Y2K does it's deed!

Also, I am very excited to hear of this USAGOLD FORUM. I think myself and Another will have much participation with this new discussion group! It will, no doubt, be followed by many Gold investors. Who knows, perhaps even a Central Banker or Government leader? Thanks FOA

bmacdEuro#479/20/98; 19:30:44

Well, FOA, I like you scenario, and I myself will perhaps enjoy some fine vintage wine if you're right. I just wonder how quicly people will dump US dollar to buy the Euro. While the currencies and countries that make it up are not new, the Euro itself has yet to even be born. Personally, a brand new currency might not quite spell total stability to me. Guess that leaves gold?

Friend of AnotherTO BNACD:#489/20/98; 20:09:53

We continue to watch the BOJ to see if they are selling US Treasury debt. I don't think that is going to happen. They will buy gold, they will talk a great deal, but they can't sell US debt held as reserves. Why? From the beginning Japan has tied it's future to a US dollar world. They built their economic engine by trading with America using a dollar surplus mode. From a USA viewpoint, that's a balance of trade deficit in American dollar currency. It was always a week Yen (in real terms) that created the demand for goods made in Japan. The huge balance of payments surplus, held by Japan in world reserve currency dollars gave them the reserve assets to grow their economy. As governments manipulated currency exchange rates (known as the dirty float) for the benefit of an IMF/Dollar reserve system, this action gave Japan an enormous advantage in trade and finance. As this has gone on for over twenty five years, Tokyo could not help but represent a bloated financial system. Today, they have reached an end that no one ever thought would come; the dollar reserve system is ending.

As one might expect, Japan having received the largest return for supporting this system, will now suffer the largest loss. They simply do not know how to play a different game. The Yen will one day fall with the dollar. Will the BOJ buy enough gold through the BIS to offset the complete destruction of their financial system? They will no doubt try, but I doubt their is enough gold out there to make a difference. At present valuations, all the gold held by Central Banks is worth what, 300 billion dollars? If we doubled or tripled it the amounts would make but a small speck compared to the loss of the second largest financial system in the world.

You see, the current supply and demand for gold as a commodity or weather one CB is buying or selling some of it today is really a non-event compared to a changing World Financial System. For the regular citizen, gold priced in the many thousands will have little effect compared to oil priced at $200 or $400 a barrel!

My friend, we are coming into changing times as never before. It will be here, on the USAGOLD Forum that we will follow these events. As Another would say, "We watch this new gold market together, Yes?"! Be assured, he will post here as soon as this site is known to be open. Thanks

Friend of AnotherBMACD:#499/20/98; 20:16:24

My last post was to your 18:29. Also, I somehow double posted? Because not many are here, perhaps we willtalk for a while. I expect Another will send something if able. I will reply to your 19:30. Thanks

bmacdTo Friend of Another#509/20/98; 20:45:24

Well, now thats soemthing I hadn't quite considered! A couple of points though. Remember a year ago when Hashimoto made the comment (which he later retracted) that the US might worry that Japan would start to sell some Treasuries and perhaps buy gold instead. They sure had made some money from the bonds. The US dollar would be in trouble if BOJ dumped. I doubt that they would dump it all for gold, but it may not take much. Once the US dollar comes down and loses the safe haven label, I bet on a good rise up in gold. You're right. Joe Citizen could care less if gold is $1 or $2000 except for what that says. Let's say all my prayers are answered and gold does rocket way up. Well, all is not well in the world, and then Joe Citizen has to care as any of those factors settle home. It is going to be interesting for sure. Back to Japan for a moment,I don't beleive that they're really suffering at all now, as the media would like to have us all believe. I think Robert Rubin is very nervous these days. It's early, I know, but I'm tired, and seeing as gold hasn't made it so that I need not work full time good night, and I look forward to more discussions on this site.

Friend of AnotherBMACD:#519/20/98; 20:48:44

Here are a couple of items I read from someone else:

"The China Daily published a special report from the Chinese state planning commission that outlines a plan to reallocate foreign reserves ratios away from U.S. dollar holdings. It recommends reducing U.S. dollars as a percentage of reserves from 60 percent to 40 percent. This suggests U.S. dollar sales of $28 billion. The report went on to say that China should prepare for a weaker U.S. dollar on grounds that the U.S.(as a net debtor) consumption boom has created a Bubble."


"CHINA MAY BE FORCED TO TURN RESERVES INTO EUROS: ECONOMIST BEIJING, Sept 3 ( AFEC/AGENCIES ) - China may be forced to switch much its enormous foreign currency reserves into the new Euro if the dollar falls in the future, a leading economist was quoted as saying Thursday. While there has been widespread speculation over a devaluation of the Chinese yuan, state development planning commission economist Wang Jian said China would have to watch for any fall in the dollar when elaborating its economic policies, the official China Daily newspaper reported. Wang said the US economic boom of recent years was a "bubble," caused by a massive influx of foreign capital, which could burst when the Euro is introduced on January 1. China has around 140 billion dollars' worth of reserves, with about 60 percent denominated in dollars, the China Daily said. It also has around 60 billion dollars of US treasury bonds. Wang said China would reschedule its reserves so there was around 40 percent in dollars, 40 percent in the Euro and 20 percent in Japanese yen. China currently also has German marks, Swiss francs and yen reserves. The Euro is to be launched with 11 European members from January 1 next year. The government has insisted in recent weeks that it does not intend to devalue the yuan, inspite of the Asian crisis which has undermined its exports, and that it was ready to use its huge reserves to maintain the official parity. "

I think the question of the Euro will be answered by the actions of the official government Central Banks. For a citizen living in Europe and using the Euro, it will become the best of all worlds. Not much different from the American using dollars to buy goods (in discounted real terms) from Japan or any other third world country. Only, now the shoe will be on the other foot with the USA trying desperately to sell it's goods to Europe for EUROS. This will be another strange twist as many/most of Americas foreign goods producers will, by then have stopped using dollars as reserve assets.

The outcome of a change in reserve currency is mind numbing. For the small person outside of Europe, they should "Follow in the Footsteps" of others. The holding of physical gold can and will be considered holding a currency asset as will the holding of Euros. However, the Euro will not come remotely close to the appreciation of gold as valued against all things. The ECB and the BIS will make it that way. You sir (or Ms.) will see this come to pass. Thanks

Friend of AnotherBMACD#539/20/98; 22:02:45

Before I continue, I want to thank Mr. Kosares for creating this Forum. This effort by USAGOLD will reward many readers with interesting discussion and debate about the future of gold in the world society. Michael, thank you!


BMACD: In reply to your 20:48. Hashimoto made the comment, but what position do we find Mr.Yen in now? I think it was a comment created by political need at the time. What would happen if Japan sold (dumped if you will) their US dollar reserves on the world market and/or brought Gold with the proceeds? Even if the Federal Reserve purchased some of the debt, it would no doubt drive down the value of the dollar. But this action would not help their economy as they still operate worldwide in a dollar reserve system. The dollar price of gold would rise, but not enough to liquefy their financial burden. In short, they still have to sell goods and services to the world, in order to raise their GDP. This will not happen if the Yen appreciates against all other currencies!

As you can see, this is the box they are in. It is also the predicament many other countries are in that operate using the dollar as a reserve currency. For many of them, a rise in the dollar price of gold will not help them, yet. Gold has not been brought to the forefront as a true currency reserve asset. It will when the Euro is created. At that precise time these economies will have a new market for their goods and they will accept payment in a new reserve currency.

Until this reality becomes apparent, the world financial system will continue to slide down the dollar reserve slope. This slide will create the illusion of a economic deflation, but then isn't the dollar really an illusion also? Thanks

Friend of AnotherALL:#549/20/98; 22:12:19

To some of my friends I say good day and to others good night. Will return for more discussion and thoughts. Thanks

Aragorn IIIBimetallism, etc.#719/21/98; 16:07:21

If we can accept as true that gold is the ultimate form of money, bimetallism would fall short of the mark, although much nearer than where we find ourselves with modern fiat currencies. Bimetallism would eventually fall victim to Gresham's law--the money with greater intrinsic value would be hoarded out of circulation. Assuming that a "transactional tool" exists to subdivide a metal of very great value into a fashion suitable for all levels of transactions, what would be the incentive to hold one's wealth with a large quantity of cheap metal rather than a small quantity of quality metal? Small gold would stand beside large silver.

Jinx44, in reply to your concern that gold is manipulated by "the Big Boys", is it not true that more gold is held outside of Central Banks than within by perhaps a two-to-one margin?

To paraphrase Tolstoy in "War and Peace", it is the will and actions of people en masse that drive the wheels and set the direction for a nation. The greater one's rank, the less control one has over events. Having said that, let me remind you that gold has been the honest money standard for people longer than it has not. Fiat money has been a contrivance, by those of "high rank", that historians will someday marvel at as an incredible acheivement in worldwide "suspension of disbelief", or more simply, "fooling all of the people for some of the time". The will of the many will eventually overcome the will of the few.

On another note, I question why some individuals indicate a certain fear or loathing for the day that sees gold priced as never before. Fear and loathing should be directed toward a monetary unit that has nothing more than thin air and confidence as its foundation. To attach a standard physical quantity (of gold) to the future definition of a term such as "dollar" would, in my view, restore peace of mind. Any fear and loathing should be directed toward a government that resists and fails to intelligently respond to the will of the masses.

ANOTHERAragorn III (9/21/98; 16:07:21 Msg ID:71)#799/22/98; 07:00:04

Mr. Aragorn, Your write offers good thoughts. I also often question why a person would want to hold the "silver for the little person"? Indeed, the gold can be divided into very small parts and still it holds the good value. I think the silver issue comes from the same view point that gold should not be "up valued" against paper currencies. It has always been seen that an official reset of the gold price is "the bad thing". Always, it is "at all costs do not raise gold price"!

The political Western stand is "Give the citizens silver and let that price rise, but, keep the gold low and we purchace it for our well being". It would seem that those of the "democratic power" want to hold the gold for "insurance" (as Mr. TYoung rightly does) and never allow it's good effects to pass to the "little person", as you say. Perhaps we do still see the "human nature" at work with silver. Persons are always attracted to the leverage argument in any investment. Again, the western analysis uses the past dollar performance of silver to make the point of "it will rise at faster rate than gold". I think, if the past economic and monetary performance was to continue, this could be true. However, we come to the end of this era. The changing of a monetary system for the benefit of removing "debt load" does also require the changing of rules for past game!

History will be written as this: "we now know that in times of major financial change, real gold increases in value and holds that value far greater than any paper gold derivative" also " no other form of commodity (silver and platinum included), even food, was valued as gold". Even in times of past war, soldiers and citizens were found starving for food, but still, gold was found in the pockets, not food!
Thank You

ANOTHERGoldfly (9/21/98; 21:37:48 Msg ID:77)#809/22/98; 07:36:39

Mr. Goldfly, Perhaps your question will be answered in the future we now approach. However, for today, if we place ourselves in the land of Russia at the entrance of the "once most strong bank". What price do you offer for gold to replace the lost savings account? It would seem that in the process to return a portion of your wealth, that does represent a "lifes productive efforts", any price for gold would be as "the bargain".

I do admit that it is not the good position for ones family to be in, as others will also bid for this opportunity to gain gold. Tomorrow, when you and your neighbor use Euros to purchase the gasoline, a much smaller supply of gold will be divided by the dollars in existence. Few will concede that gold could be so high, as at present, "dollars price gold". But few have known a time when "Gold priced dollars"! Thank You

GoldflyGold Value#819/22/98; 09:30:52

Mr. Another, thank you for your response. Believe me, I don't need to be convinced of the frailty (flimsiness? fantasy? foolishness?) of the 'Paper House.' What's astounding is how long it has lasted. Undoubtedly, Russia's economic meltdown is an example of what can be expected in an America awash in paper assets and debt. They just started at a lower point. I am building my position in gold while the cost is low. I have not followed gold closely until the past several months. With my question regarding where gold should be priced, I'm just trying to get a better handle on where we stand in this situation, hopefully then to have a better view of where we're going

USAGOLDPOSTING PROBLEMS...#829/22/98; 09:43:07

Seems we're experiencing technical difficulty. The technical people are looking into it. Starter Bugs, not millennium bugs.........Try shorter posts and don't forget to save it because we don't know what's going on here. Will post when its fixed.


I have been following your posts for a long time and want to congratulate you for the quality of your thoughts. You have certainly brought in light important concepts for the GOLD holders/investors community. Of particular importance , are your insight about the views of oil countries and their willingness to move from a dollar world to an alternative. Also , you predict the demise of the dollar as it is obvious to everybody that a pile of debt can't back the world reserve currency. You think that the birth of the EURO will precipitate the incredible shift of currency reserve allocation (for investors and CBs). The compelling reason for such a shift lies, in your opinion ,in the fact that the EURO is backed by GOLD. I respectfully disagree.The EURO is not backed by GOLD. The European CB has currency reserves to intervene on the currency market if need be . Some of these reserves are backed by GOLD . These reserves (about 50 bln EURO) are fairly small in comparison to money supply and there is no link whatsoever between the money that european citizen will use and GOLD. The European CBs as well as the US have GOLD in their vault to some extent. The situation has not changed.

sniperPassword#849/22/98; 10:48:04

Can passwords be changed??

ANOTHERREPOST:#859/22/98; 11:15:31

My post to Mr. Aragorn is lost? Will send again if able.

USAGOLDBack up and running.........#909/22/98; 12:52:00

Had an archiving problem. But things should be OK now. Post at will! Sorry for the inconvenience.

GoldflyGold Value#909/22/98; 13:33:41

Mr. Another, thank you for your response. Believe me, I don't need to be convinced of the frailty (flimsiness? fantasy? foolishness?) of the 'Paper House.' What's astounding is how long it has lasted. Undoubtedly, Russia's economic meltdown is an example of what can be expected in an America awash in paper assets and debt. They just started at a lower point. I am building my position in gold while the cost is low. I have not followed gold closely until the past several months. With my question regarding where gold should be priced, I'm just trying to get a better handle on where we stand in this situation, hopefully then to have a better view of where we're going

Friend of AnotherTO: RAINMAN (9/22/98; 10:19:25 Msg ID:83)#929/22/98; 15:21:04

Rainman, We do disagree on this reserves issue! To make my point I'll start with my most solid concept and work forward. First, people are the real backing for any currency/money. It doesn't make any difference if circulated money is gold or if circulated paper currency is backed by gold and silver. When no one will use it or accept it, money it is Not! All the gold and silver in the world could be stamped into coins and if people are not willing use it, it can't be money.

You have heard this called the confidence factor. Well, I think a persons confidence in money is built after money is seen working, not before. We are not born with this confidence, it comes only if money continues to buy goods and services at a constant price, over time. People will accept fluctuations in the buying power of money, but that tolerance has limits. Once currency starts to fluctuate in it's purchasing power or exchange rate, citizens begin to require other types of backing for their money in order to maintain confidence.

This backing, to maintain stability comes in only two forms that I know of. The currency can be turned in or exchanged for real items held by the government Treasury as backing (gold?). Or, the Central Bank can purchase the currency in the open market using Exchange Reserves as Backing. The obvious, well documented problem with this comes when the government doesn't have enough Backing to maintain confidence in the currency. As in the case of the dollar, they have created more currency unit obligations than they have Exchange Reserves Backing to defend it with. If the need arises. I know that you already fully understand how this works.

My point? Modern digital currencies are today defended in the open market with Currency Exchange Reserves, not Gold. Most countries call their gold reserves. But, no country today classifies it's Gold as Usable Exchange Reserves . The Euro will!

Of the 40 to 50 Billion in reserves that the ECB will hold to defend the Euro, some 15% will be Gold Bullion. Unlike currency reserves that will be sold to purchase Euros as defense, gold reserves will be added by selling Euros to buy gold from the EMCBs. At present, the dollar has only one competitor for reserve currency status on the world stage, gold.

The dollar has been made strong in a low gold price.

To compete with the dollar for world reserve recognition, the ECB will add Euros to the EMCB (European Member Central Banks) to replace their gold. The EMCB will then be free to purchase gold on the open market, using no longer needed US dollar reserves. Remember, the Euro will be the main currency reserve of Europe. The ECB will not have to sell it's currency dollar reserves as they are a small token amount for balance. The roaring price of gold in dollar terms will now make up the lions share of Real Reserves backing the Euro!

In this context, the ECB will have no problem using the new dollar gold valuations to cover any dollar commentments of it's overextended members. Now my friend, you have my view! Perhaps you now understand why some natural resource countries value gold today at a Far higher dollar price than currently exists! Thanks

Friend of AnotherLOST POSTS?#939/22/98; 15:32:46

To All: I was going to reply/debate some other points but we have lost the prior posts. If anyone can repost, I will surely copy them first. These things happen! Thanks for the Forum Michael, it's still a great place!

Aragorn IIIFriend of Another (9/22/98; 15:21:04 Msg ID:92)#949/22/98; 16:13:17

Splendid! And of course, the various European Member Central Banks will want to hold on to their own gold reserves to the extent that they can, selling little (and only as necessary) to the European Central Bank when they find that they are individually in need of additional transactional gold currency--Euros. Certainly, the exchange rate is better today for acquiring gold than it will be in days to come.

The question I'm sure that everyone wants answered today is "what will be the official exchange rate offered for gold by euros?" That is indeed a well-guarded secret! Perhaps it has yet to be decided, or perhaps there will be an adjustment period during the time that the dollar and yen and others come to terms with this new arrangement, and perhaps offer similar plans for stability. Ultimately, the system with the most gold can offer the largest value in outstanding transactional gold currency.

Yet, this question is of little concern to me. Rather, I would like to know for certain that this system will be adequately disclosed to all who shall use the euro--including the "little people"--so that this euro may not be subject to political manipulation, so that it shall be as money from long past--but with all modern conveniences for modern transactions. Simply put, "Will the common man know that 'there is gold in the euro'?"

Tech#959/22/98 17:00:00

Friend of AnotherAragorn III (9/22/98; 16:13:17 Msg ID:94)#969/22/98; 18:01:45

Aragorn, I doubt that the common man will feel there is gold in the Euro. He will know it but not fully understand it. The currency confidence factor comes from a strong positive exchange rate, much like that enjoyed by the dollar today. The average European will buy from the USA in the same way that Americans buy bargain goods from other countries. Using an overvalued dollar makes one feel as their is no inflation, even though there has been massive dollar currency inflation over the last twenty years (the real cause of price increases when the exchange rate is allowed to balance a negative trade deficit).

As for the Euro being a clean, unmanipulated money system? Of course not! There will be all kinds of problems, but they don't carry the debt that the dollar does after all these years of reserve currency status.

The Euro will be the lesser of the two evils. Perhaps by a factor of five. That is also why many major investors will hold gold as a proxy for Euros. Not to mention that it will increase in value a great deal. What exchange rate for gold in Euros? I think it will be more of a free market type system, but Another thinks $6,000 in todays dollar buying power. We shall see. Thanks for the consideration! I wanted to reply to your first posts but lost them? FOA

sarxkilltest#979/22/98; 18:11:14


bmacdAragon III and Friend of Another#989/22/98; 18:50:59

Wow, reading you two is great education! No doubt the price of gold will go up with the Euro. $6000, as Another thinks, sounds wonderful to me! The thing is, true the price is cheap right now, in USD, although more expensive in terms of many other currencies thanks to the high USD.

I'm Canadian, and thanks to the fall of the Northern Peso last month, my silver actually wasn't so badly priced with exchange, and saved me from margin calls! However my point is that with the introduction of the Euro, a huge amount of trade once denominated in USD, will now be done in terms of the new Euro right. This has to make commodities more expensive then, as all that trade in USD disappears. doesn't it? Now depending on whatever the Euro's exchange is set at, to tie everything in together, commodities versus Euro vs USD, and the Euro vs the USD, by the time the free market does settle it all out, the price effect on commodities could be very large could it not? Have I gone in circles here, or am I answering my own question, it just seems that I'm missing a link somewhere.

bmacdAragon III- the Common Man#999/22/98; 18:54:48

The common man will likely perceive whatever is suggested that he perceive re the value of gold to the Euro. Just as gold is perceived by the public as almost evil now, when the tide turns in favour of it, then will how it is perceived by the common man. I think Dines calls it the WolfPack Theory.

jinx44Bimatallism#1019/22/98; 20:58:39

Sirs, I believe that a bimetallic currency standard would go farther than Au only. In so much as the Big Guys-Soros, LBMA, BIS and major owners of in-ground reserves, can effect pricing moves that will only hurt small people. Wouldn't Ag+Au give more stability to world currencies? I reference Wm. Jennings Bryan's "Cross of Gold" speech as a point of departure on the issue. Thank you

Friend of AnotherThe direction of gold.#1029/23/98; 07:06:03

TO ALL: I think we now are now in one of the best periods for gold ever to occur. You have every hedge fund, trader and producer ready to short/sell into any major rise in the dollar price of gold. They will be wrong, this time!

During the lows a short time ago, major CBs were buying gold in small amounts through the BIS. All of the small sales announced by other CBs were taken in with ease. The BIS did not make a public announcement that these buying banks were behind this coordinated effort driven from the BIS. Many years ago this would have been the case. This time they will not want to start a panic with the Euro about to commence operation. Am I correct with this view?

We should see each pullback in gold stop at a higher price. These pullbacks will be used by major buyers to complete their acquisitions of gold and hence the distribution of dollars. Well before the end of the year, many will look back and understand that we will never see these dollar prices for gold again, ever! The same forces that confounded the efforts of gold theorists to explain the drop in price, will now confound them again. The next 18 months or less will give rise to this metal in a way that will have gold bull analysis calling for a large pullback. It will not happen. We will run through $400, $600, $800, $1,000 and on. Each time a pullback occurs, massive buying will ensue. For guidance, look to the US balance of trade deficit and a fast changing negative exchange rate for the dollar to chart the course.

Also, as this unfolds, look for the US Federal Reserve to raise interest rates solely for the purpose of defending the currency. A currency with a future that no longer holds resurve status. High rates will be of little help, much in the same way that Canada, Mexico, Brazil, Korea and others have raised rates to no avail. Some would call this an extreme view? From what I understand of this era, it is an extreme view for extreme times. Perhaps what Another has told me is true, "many are to comfortable with familiar habits of finance to understand the potential for change". We shall see! Thanks

jinx44Bimatallism#1039/23/98; 07:53:59

With all the big players in this Au market, wouldn't a bimatallic Au/Ag standard be advantageous for the little people (like me)??? I reference the "Cross of Gold" speach by W.J. Bryan. THX

Aragorn IIIReply to Friend of Another, and requested reposts#1049/23/98; 08:07:33

FoA, Thanks for your comments to me yesterday. You concluded with, "I wanted to reply to your first posts but lost them?" It is reposted yesterday. Also, ANOTHER's comments were lost due apparently to technical difficulties. I was fortunate to have made a copy prior to its disappearance, which is also reposted. Question for Michael K: Will posts over one day old be archived and accessible for future viewing? Presently, it seems this is not the case.

overtonMR USAGOLD Comments on PM CO's in your neighborhood#1069/23/98; 10:08:50

If one wanted to add a little speculation to his physical holdings what would be your opinion on some of your neighbors (Gold companies) Newmont, Getchell & really speculative Canyon Resources

jinx44rebuttal to A3 posting Msg ID 104#1079/23/98; 10:52:55

"Bimetallism would eventually fall victim to Gresham's law--the money with greater intrinsic value would be hoarded out of circulation. Assuming that a "transactional tool" exists to subdivide a metal of very great value into a fashion suitable for all levels of transactions, what would be the incentive to hold one's wealth with a large quantity of cheap metal rather than a small quantity of quality metal? Small gold would stand beside large silver. Jinx44, in reply to your concern that gold is manipulated by "the Big Boys", is it not true that more gold is held outside of Central Banks than within by perhaps a two-to-one margin?"

A3 I am not advocating gold instead of silver. Silver as the small transactional tool, coins in the pocket, etc., seems like a reasonable idea. Silver has been an historical metal for currency since Babylonian and Assyrian times - in addition to gold. The older ratios were between 1:6 and 1:10 Au to Ag in 3000-1000BC. As far as the big boys go, I am inclined to distrust the ECB less than Soros, so if corporates like Soros and individuals like me hold gold 2:1 over CB's, then that tells me guys like Soros can make a mess short term - nicht war? Seperate thought: If the ECB will buy gold from the EMCB's(as the mechanism to expand the supply of available currency) in exchange for Euros and the EMCB's then buy gold on the open market with $US, where is the confidence of the people in the "gold-backed Euro" if there is no convertability of Euros for gold for the people? If I am nervous about the Euro, how do I convert to gold at the ECB exchange rate? Or do I just buy on the open market? THX

USAGOLDWelcome!#1099/23/98; 12:21:53

I would like to welcome gold bugs from near and far. If you would like to register for posting, we very much welcome it. Please click on the Sign Up. If you would like to say something or ask a question or address another poster, don't be shy. We created this site for it to be used. We have had a strong response so far in terms of registrations as well as visits to the site. Overton, I'm sorry, but we don't give advice on gold stocks, though all three companies you mentioned are welcomed and esteemed members of the Denver business community. We still have some glitches here and there but we will get this thing in proper shape. When does a lurker become a poster?? Here's an incentive for you: All first time posters will receive a free copy of THE ABCs of GOLD INVESTING. Til midnight tonight only. You post, it's out the door to you. In fact all who have posted so far will receive a copy. Best wishes to all. Have a golden day!

RAINMANREPOST FROM YESTERDAY @ A and FOA#1109/23/98; 13:46:33

Some posts might have been lost in the ether yesterday including mine.I will repost an approximate duplicate. First of all , many thanks to A and FOA for their valuable contribution to the GOLD holders/investors/analysts community whoever they might be. They seem to have good insight about oil countries state of mind relative to $ as a trade/reserve currency and to GOLD and oil relationship. The US $ is a " soon ?" to be worthless currency . It is backed by trust and debt . The first will evaporate and the second will explode including hidden liabilities like pensions and government backing for debt issuance. Will the EURO precipitate that demise ? The $ will fluctuate against the EURO as it does vs DM . Certainly in a more volatile manner.The current account deficit of the US is skyrocketing and besides a hint by AG that the FED might cut rates , it is certainly the main reason why the $/ DM is in freefall . Only a regional conflict (IRAN vs AFGHANISTAN or N KOREA vs whatever ) might save it for now. Later , the US vs Europe preparedness for Y2K bug could play a role. Does the EURO GOLD backing have a say in the equation : certainly not. There is no GOLD backing for the EURO. Only a fration of ECB currency reserves (about 50 bln EURO) is denominated in GOLD . There is no relationship whatsoever with the money supply which is used daily by citizen and companies. ECB and regional CBs still hold GOLD and the US as well. Nothing has changed. Thanks.

Aragorn IIIA reply for jinx44 ("rebuttal" seems too harsh#1129/23/98; 15:01:56

for our dialogue)
At the risk of oversimplifying, let me suggest that the productivity of mankind can be classified into one of two possible categories--goods or services. Understand that by "goods" I refer to the production of real things that are useful and have value. These goods may also be called commodities, which is the term I shall use throughout.

Some commodities endure, while others are consumed. Commodities find their value through their utility in one or several functions...industry, construction, energy production, food production, etc. Gold is indeed a commodity with many uses, but it finds its largest value for its role in commerce. In fact, its unique suitability for this role in commerce (as money) raises its value so high that it precludes its usage in other functions to the point of luxury.

Modern technology (such as e-gold(tm)) allows gold to be easily subdivided and transferred among accounts in the course of commerce and daily transactions. Quantity is simply not an issue in that scenario. But, if it were insisted by the population that the money be in a physical form convenient for transactions, gold coins would not fit the bill. Even the smallest gold coin would have a value too high for the purpose. A proxy would be necessary.

If the "Powers" that issue the proxy currency could be trusted not to issue currency in excess of the established ratio with gold held in reserves, then this proxy currency need not have any intrinsic value of its own. They are essentially warehouse receipts for X amount of gold held by the issuing entity.

You imply, perhaps rightly so, that the issuing entity (governments or central banks) is not trustworthy, and therefore the currency DOES need to have intrinsic value. And as I have just discussed the shortcoming of using gold in hand-to-hand transactions, you suggest that silver would fit the bill. Several problems present themselves.

Due to the size of the global money demand, any formal role of silver in commerce would dictate its value as a commodity in a manner similar to my earlier discussion of gold. Use of silver for industrial or manufacturing purposes would also become something of a luxury. And even the smallest silver coin, when properly valued as a money-commodity, would likely have too large a value to facilitate small transactions. So perhaps now the need arises to include copper as a monetary commodity. And with so much copper available, and its importance as an industrial commodity, I hope you can start to appreciate the difficulty in establishing what the "proper" ratio should be between the metals such that X copper equals Y silver equals Z gold. Due to the changing value of copper for industrial use, and perhaps likewise for silver, their relative values must be allowed to float over time, which would undermine a weight-based monetary system, whether it be bi- or tri-metallic.

This is where Gresham's law will take over and upset the system.

It would not be prudent to unnecessarily 'raise the price' on important industrial commodities such as copper and silver by formally linking them into a system to play a role as a monetary commodity. Better to avoid the difficulties and let gold shoulder that burden alone. There are more people alive today than the sum total of all who walked the earth before us. Think about the logistical problems that creates that did not exist before.

We cannot simply return to a system of commerce where the hand-to-hand money has intrinsic value. But what we can do, SHOULD do, WILL do, is move to a system wherein the hand-to-hand currencies represent, reliably, X amount of gold on reserve, payable on demand. When the day arrives that people en masse see the true nature of a fiat currency, arbitrage opportunities will be exploited through purchasing gold on the open market until its value equals that of the money supply divided by the gold reserve in the treasury. Or as you suggest, this could happen sooner, driven by the likes of Soros and company. My apologies for the length and typos.

Pu'ukaniTime?#1139/23/98; 15:36:40

Michael, Congratulations on this new site which I'm sure will be of great value to all in the days ahead. Are your noon to midnight times Denver (Mountain) times? When you live in the middle of the Pacific Ocean it helps to know the time zone that's being referred to on frequently visited web sites. TIA

TYoungArchives#1149/23/98; 15:44:27

Mr. Kosares, any chance you could advise when the archives will be up and running? Nice of Another to drop by the other day. Thanks. Tom

Tyler RoseGold Backed Currency#1169/23/98; 16:15:09

Thank you, Michael for this new site. I follow it with interest. Another, Friend of Another or other informed sources: I have a hard time visualizing a return to a gold backed dollar or euro, for that matter. If you had a gold backed currency, how could you allow miners to mine gold? They would effectively own the mint. If gold is fixed in price relative to the currency, would we be able to trade it? If so, would it be at the fixed price only? What happens if a private mining company discovers a new "mother lode" that triples the supply of gold? In my opinion, the only way to have a gold backed currency would be to have a world-wide currency, perhaps issued by BIS at a fixed rate of exchange. If that were so, then I can't imagine that there would be an openly traded market for gold. Any comments would be appreciated.

bmacdTyler Rose, Gold backed Currency#1179/23/98; 18:31:29

Perhaps I'm oversimplifying, but why couldn't currency be backed by gold and trade in the open market? Currencies right now are traded in the open market and their reserves vary depending on the country. Some have reserves of gold, some have reserves loaded with US Treasuries, some with USD, some with other currencies. It's possible that with the job of backing currencies, gold would be less volatile and just more valued.(I said possible, not probable). I can't imagine how the world could all at once agree to pull gold off the open market. Can you imagine what would happen to the price especially during the process? I just don't see it. But almost anything is possible.

BCEuropean Central Banks and Gold Reserves#1189/23/98; 19:08:38

TO: FOA, Thank you for your thoughts on the relationship between the Euro and gold. In your response to Aragorn III, you state: "Unlike currency reserves that will be sold to purchase Euros as defense, gold reserves will be added by selling Euros to buy gold from the EMCBs." What do you see as the fate of any central bank that has sold off most of their gold reserves? If I remember correctly, I believe Luxembourg has done this, for example. Will they be at greater risk than central banks with larger gold reserves? Thank you. BC

Tyler RoseGold Backed Currency#1199/23/98; 19:09:59

If a currency is backed by gold, that implies that a fixed unit of currency can be redeemed for a specific amount of gold. This would mean that the government would be willing to exchange it's gold for the currency which it issued on the basis of a fixed rate (if it were other than a fixed rate, the government would be underwriting the vagaries of the market price of gold). A gold backed currency means that the government will print no more currency than they have gold to back that currency, so, if the price of gold can fluctuate according to an open market, the government would be forced to call back currency if the price of gold went down, as a result of market factors. I don't see how it would work, if gold were allowed to trade as a free market. Maybe I'm dense? TR

Friend of AnotherWELCOME!#1209/23/98; 19:21:21

Welcome Tyler Rose and Aloha Pu`ukani, I have seen these names before! TYoung, I agree with you that it would be really nice to have the archives so we could read them back in time. Aragorn III, that was some post! Good to see people writing their views for everyone to see. Questions are nice, but you can not follow a market properly without seeing it through everyone's eyes, both large and small. In this light these discussions make markets become real life events, impacting our real living habits through time. Not just a moving graph line on a computer screen. For the future, myself and a few others truly do think that these monetary changes will not only be something we see, but will be something we will feel in our homes. Our families and neighbors will have to make adjustments to account for the very events that we chronicle here. Thanks of considering! FOA

Friend of AnotherTyler Rose (9/23/98; 19:09:59MST - Msg ID:119#1219/23/98; 19:37:43

Tyler Rose, I don't think we are going back in time to a gold backed currency. Even as Aragorn III (id:112) spells out the possible correct way to divide the metals for one, he also shows that it is an undertaking that requires political agreement by most countries / Treasuries. An insurmountable task, for elected officials. I can't add to his post, but I can show more to think about! Unfortunately, the future for the Euro will most likely present an evolving monetary system that we in the audience must watch as the play unfolds. No doubt, if the world financial arena becomes bad enough, Europe could evolve back into a Gold Standard. They have been there before but human nature being as it is, this is not where they want to go.

The one positive aspect is that the Euro will become a major transactional currency for a larger functioning gold market. To unseat the dollar gold will have to be brought back as a true currency evaluation tool. Much more so than it is today.

Following these lines we can see that the world value of gold will have to increase many times in order to create a large enough pool of value to be of use in measuring the billions of currency obligations outstanding. Just as none of the governments, that supported the old London Gold Pool never wanted to re-value the gold price upward in their currencies, they will now be forced to accept an open gold market evaluation!

I fully expect a soaring gold price in US dollars to force the American Treasury to implement foreign exchange controls for it's currency. They will never accept the public vote of no confidence that gold will deliver. Note that none of this can take place during the time that the World gold market transforms from being a dollar settlement system. This was a function of the dollar reserve currency status that is soon to end. That transformation will be part of a financial panic that witnesses the default/liquidation of billions of dollar/gold assets, built up over many years. The trading of gold in dollars will stop for some time as these loses are worked out. Only after this debacle will gold be able to naturally trade in Euros exclusively.

I know this doesn't address all of your reflections, but I thought it needed to be put forth. I think all of this will be well discussed as events begin to play out. We shall see. Thanks

bmacdGold Backed Currency#1229/23/98; 20:11:08

I agree with Friend of Another, I doubt that we'll go back in time to a gold backed currency. It does seem that counries that have sold off gold reserves have had some 'problems' with their currency ( I live in Canada). Gold can still be held in reserves as a backing of currency. The world right now has this silly belief, (read people have been manipulated to believe) that gold is evil. It's of no value, and no use as currency. Odd then that many of these same people still want this worthless thing in jewellry form. Gold isn't a dead issue. It has always represented wealth and stability. It's the last days of this dollar and present currency mess spitting and fighting to stay alive that is causing the powers that be to keep gold at a low level. At some point that ends too. I'm probably repeating myself, and I apologize but obviously the system now in place isn't going to able to survive. Countless countries are printing money (Japan has stopped mind you) like there's no tomorrow. How can these currencies hold value? Then there's the mountains of debt. John Q. one day soon, will wake up and realize that there is no value in any of this, and want a hard value asset. By the way, note the countries that have not sold gold reserves (US, Japan, Germany, France, to name a few. I had a point, and it was that, gold does represent value, and even just holding it in reserves as a backing, without returning to a standard, is still representative of stability.

AUBUGx10Test run#1239/23/98; 20:24:36

Simply a test run sorry!

Friend of AnotherBC (9/23/98; 19:08:38MST - Msg ID:118)#1259/23/98; 20:25:45

BC, Hello! Will they be at greater risk than central banks with larger gold reserves? Yes and no. It depends on the productive capabilities of the country. I think we must remember that gold (in a goldbug interpretation) is money, not part of the goods and services it is traded for. If a country has something the world wants, the world will deliver gold to their door to pay for these productive efforts. The world may also deliver currencies acting as money. As long as we have an open market gold valuation to keep the paper money honest, any productive country can develop a positive balance of trade. This can create a surplus that could be used to add gold to the national treasury.

A nation selling it's gold cheap is no different from one that sells it's trees, land or any other real thing at two low a price. They made a mistake. To correct this they may also repurchase these real things with productive efforts. The whole argument of gold, currencies and debt comes from cheating by the Central Banks with a dirty float of exchange rates. In progression this leads to over creation of the currency by it's treasury. Further on, the real purchasing power of the national currencies can never represent the true productivity of the country. A better answer/reply to your question would be: In the future a CB with gold has a better chance of covering it's past mistakes than one that doesn't. A lot of past mistakes with too little gold does put them at risk. That risk being that the citizens will have to produce more for less. Thanks

USAGOLDAnswers for Pu'ukani and TYoung#1269/23/98; 20:35:42

Yes, Pu'ukani, all times are mountain and though we are separated by a great sea let me remind you that the University of Hawaii, Colorado State and Air Force Academy all play football in the same conference -- a nice advantage for Colorado students who get to visit your beautiful state for various functions. And, TYoung, yes, I look forward to the archives as well. It was one of my intitial criteria and apparently the most difficult technical problem to overcome. I talked with Tech Marett this afternoon and he assures me he is on the case. I was asked early on if I wanted to wait until the archiving was ready to launch and I opted for getting on-line and filling in with archives later. Be assured I am as interested in archives as all of you. Nice to see all these posters here tonight.

Friend of Anotherbmacd (9/23/98; 20:11:08MST - Msg ID:122)#1279/23/98; 20:47:25

bmacd, one last thing then I have to go. Canada (your home country) is a good example for my last post to BC. They are a fine group of hard working people, in a country full of natural assets that the world wants and does buy. Yet, by allowing their government to gamble with their currency in a effort to stay in a Dollar/IMF world monetary system, they are going broke! In time they would look like Russia if this system doesn't change. By selling their citizens gold, the stage is set for them to, again, dilute another productive part of the economy. That being to tax and/or grasp for the gold mines of the nation to minimize the CBs past mistakes! I think this is a real possibility that is never discussed by the industry in front of stockholders. Goodday

Tyler RoseGold Backed Currency#1309/23/98; 21:10:55

bmacd & FOA: Thanks for agreeing with me that a gold backed currency is not in the works. While this may not be possible, I am interested in a solution to the current problem we face: unlimited printing of money, by USA and others. Printing money is a lot easier than raising taxes, but accomplishes the same goal: transfer of money between classes. Short of limiting currency issue to the amount backed by some hard asset, how do we control the printing presses? I can't think of a ready answer, but someone needs to come up with one, if we are to escape this trap that we are in. One possible approach would be to legislate the amount of new money created to equal the amount required to maintain a level playing field based on inflation; however, I don't think anyone would trust the government to not manipulate the numbers to print whatever they wanted. A hard problem, but one that could perhaps be solved by some collective intellect on a forum such as this. TY, TR

PeteFOR ANOTHER OR FOA#1319/23/98; 21:26:13

I will make my questions short and sweet. 1) I noticed today that a hedge fund needed immediate funding in order to divert default. Is this just the tip of the iceberg and a sympton of things to come? 2) Will an interest rate cut by the FED avert the inevitable or is it too late? Glad you are both posting here at USAGold and appreciate your THOUGHTS. Thank you, Pete

bmacdTyler Rose#1329/23/98; 21:57:25

Well, nice idea in theory, and I hate to sound so distrusting (but what the heck!!), but the those doing the manipulating, are the ones that need to be legislated, so it couldn't happen without 'room for adjustment or error' or whatever playing room they gave themselves. The problem that I have with government numbers is that they're always adjusted later, which then totally changes the picture of the new ones just released. Sorry, I don't trust them overly. THis whole thing is a big game. Problem is the rules aren't so clear. Can you rationalize what's going on in the markets now? I can't really. I have an economics background or so I thought, and most of the time I just shake my head. All I am sure of is that commodities will go back up, and so will gold!!! On that note, I'm off for some sweet dreams. Good night, and this discussion forum is fantastic.

Friend of AnotherPossible large default in gold paper? LTCM#1339/24/98; 06:29:33

Thursday September 24, 6:50 am Eastern Time LONDON, Sept 24 (Reuters) - Gold rose then paused in early European trade on Thursday as bullion dealers sniffed a possible recovery in prices and looked to New York for guidance. London and Hong Kong dealers said another factor lifting prices was market talk that a U.S. hedge fund was covering short gold positions.

Friend of AnotherPete (9/23/98; 21:26:13MST - Msg ID:131)#1349/24/98; 06:39:18

Pete, Looks like you are on top of the market news! Haven't seen you in a while. Another read most of your old posts. Here is a partial copy of my (FOA) last post on the old USAGOLD Another (Thoughts!) board. The full write is still there in the archives.

Another had told me that a large default in paper gold was coming, real soon. I didn't have a clue who it was. Now we have a BIG clue!

9/3/98 another archives
Michael, I'm looking for a large default in the paper gold market. With the major CB only buying now something is about to give as the most extended shorts can not cover. A default is most likely part of a game plan to get the ball rolling. This spike in gold will no doubt crush the dollar. The next few months will offer the last period of time to roll out of dollar assets at a good price. Of course, all of this is my opinion from and for the most part, Another's.

Friend of AnotherMORE TO: Pete (9/23/98; 21:26:13MST - Msg ID:131)#1359/24/98; 06:58:47

Pete, To answer your questions: Yes, this is only a very, very small tip of the iceberg. Many of these people are short the gold paper market and they are the ones in the know, at least we are told? And just look who is in the rework group: Goldman Sachs, Merrill Lynch, Morgan Stanley Dean Witter & Co., Travelers Group Inc. and UBS AG will make up the committee.

Pete, I wonder how many tons they move in world gold markets! The change in motion by the BIS, concerning gold and the Euro is going to play them right into the European game plan! Read a few of the last (Thoughts!) archives at USAGOLD. I may reprint some of the things written here the last few days, it begins to tell the story that is before us. The Fed will push money like mad for now, but they will be raising rates like mad a little later as the dollar falls off the charts! Keep up your analysis, as you see things some of us don't catch. All minds don't work the same and it helps to mix Gray Cells in different portions. Thanks

turtleFOA to PETE#1369/24/98; 08:13:42

Dear FOA,who's Pete?--the last msg I can find from 9/23 is Tyler Rose about 4:00. Michael, still no archives?

AUBUGx10Defaults#1379/24/98; 08:14:37

rumour day. whats going on with UBS?? announcement due shortly. any bets re default on short position in gold

Friend of AnotherARCHIVES?#1389/24/98; 09:31:38

AUBUG and TURTLE, I did the smart thing this AM and saves yesterdays Noon to Midnight posts. If anyone wants me to I will post the entire discussion at another time. It was quite a bit. Turtle, Pete is a knowledgeable poster I have seen on Kitco. To bad we lost it all, some of it was about what is happening now! I will repost one item I presented earlier. thanks


We are going to offer THE ABCs of GOLD INVESTING again today as an incentive to all first time posters. You post; its out the door. We had several e-mails from posters who didn't get their passwords in time to get a post up before midnight, and some who didn't get the message yesterday. Well, here's your chance. Same offer as yesterday until midnight tonight. There's plenty to talk about, so there's no excuses. It was nice to see all the posters last night and we hope the unfolding events will draw even more today. Registrations are still coming in at a steady rate and the lurker numbers are rising. We are still working on the ARCHIVES. My position remains as stated yesterday -- I want it as much as you do.

turtleFOA/Pete#1419/24/98; 10:52:49

Yes, please I would like to read the whole discussion--I remember yesterday's post (repost). The UBS is part of the bailout of LTCM--does aubug think they are in trouble with gold too?

Aragorn IIIYesterday's discussion#1429/24/98; 10:56:12

Unfortunately, I find as I log in this morning that yesterdays posts from Noon to Midnight are inaccessible. Michael: maybe until the archives are in place, you could simply let all of the discussion remain as one continuous file...until the point is reached that it is too large.(?)

turtlere leaving posts as one file#1459/24/98; 13:47:32

Michael, I like Aragorn's suggestion--is it possible? I seem to keep losing portions of the postings. Thank you for all you're doing.

USAGOLD*****UPDATE TO ALL*****#1489/24/98; 16:01:30

We think Aragorn's idea a good one, so we will let the discussion run as suggested from this point on until the archives are set up. Jeff Marett tells me it would require too much in the way of man-hours to repost past discussions at this point (about two hours). Perhaps it would be good if Friend of Another posted what he saved. Jeff assures me the archives will be operating properly within the next 48 hours. Sorry for the inconvenience. We're doing our best.

VictoriaThanks and a few questions:#1509/24/98; 17:34:06

Thank you USAGOLD for putting this forum together. Thank you Another and Friend of Another for your considerable contributions. I am not sufficiently versed in global economics to contibute to the discussions. However, I do have a few questions. Friend of Another - I believe that in an earlier post you hinted at the possibility of government interference with gold mining companies as they find their currency and future prospects erroding. Does this prospect lead you to favour physical gold over mining shares as a wealth preservation vehicle for the individual investor? From all that Another and Friend of Another has written does it follow that countries that are rich in gold and/or rich in oil will achieve a far greater role on the international stage than they currently enjoy (South Africa, Venezuala, ...)? Could the membership to the G7 change dramatically and if so do you care to provide your educated guesses as to who would leave and who would join? As gold prices start to rise, for all of the reasons that have been stated, do you foresee much of a time lag before the price of oil starts to rise? I thank you all in advance for your consideration of my questions.

twwgold investing#1519/24/98; 17:48:14

Thankyou for this most educational site. I have learned a great deal in the two months I have been reading the market report. I have two questions for anyone willing to assist in my education. Firstly, if we are hopefully in the early throws of a gold bull, where is the best "bang for your buck". Physical? Large producer? or junior? Secondly, if I am speculating on a penny stock, when does the stock price appreciate the most i.e. exploration stages? drilling confirming gold or not until there is a mine in production? The reason I ask is because I see some small producers with share prices only marginally higher than other companies along ways from mining stages. Thankyou for your help.

awalrusCritical Move Time#1529/24/98; 17:48:36

I'm a lurker for the past year at the Kitco site... I'm 100% percent invested in gold stock via a mutual fund and have a small cache of 1/4 ounce coins. I have the feeling that if gold spot can climb past USD $300 and stay there for a couple of days, we will see a $10 up-move... which might be enough to attract small investors in sufficient numbers to create a steady rise. With the XAU above it's 200 day moving average and more mention of gold as a possible alternative in the mainstream press, it would appear critical mass is building for a heady move. Or am I wrong??

TYoungDerivatives...#1539/24/98; 18:46:57

I mentioned to Another the other day that I thought derivatives would cause loss of confidence in the US$ and asked what he thought would be the cause. Well, looks like derivatives are at the forefront. I was really just pitching a high fast ball to a high fast ball hitter.... Another...but I'd still like a comment. Yes? Tom

jinx44Keeping a hold on private gold#1549/24/98; 18:57:14

Thank you to everyone for your postings. This is an enlightened place to hang out in. I certainly agree with the concepts contained herein. I think holding the physical is my choice due to potential market clearing problems and the ever-mentioned Y2K issue. My DEEP concern is around the USGovt and its' cavalier attitude towards the lowly tax-paying citizen. I understand that EC countries do not currently impose import duties on officially minted bullion coin. If the USG pulls an 'FDR' on private gold, perhaps a quick flight to Europe would keep personal wealth out of harms way. I would hope that this country would not tolerate confiscation again, but given the insoucience of the public, who knows? Can anyone comment on strategies to preserve wealth against confiscation? How far should one go towards maintaining their financial safety in these troubled times. Will there be any sovereign safe-haven for those of us who value freedom? I hope I haven't upset anybody with my questions, but I think they are pertinent to the situation. thanx

bmacdtww#1559/24/98; 20:02:20

Well you asked for opinions, so I'll give you mine. I'ld imagine that the best bang for your buck would be a junior that explodes. But they are risky and volitile as if gold isn't volitile enough. Plus you've got to pick a good one. Personally, and I've been investing in gold stocks for years, I would always stay with the bigger names. While most of these have close to doubled in some cases over the last few weeks (Placer Dome from $12-13 low to $22.00 area today- Canadian $, TVX under $2 to over $3.50, as examples), when gold moves back to the $400 range they will at double and triple again. WHen gold was last in the $400 USD range, TVX was $15.00 (CDN), Battle Mountain $11.00, Placer over $40.00. I held all through the last couple of years, because I had no worry that these companies would disappear. They weren't small, so it was just waiting for the gold price to recover. I guess it's my way of decreasing risk. Ian MCAvity once told me that initially gold stocks well outperform the bullion percentage wise. As above gold from $300-$400 is 33%, but the stocks will move 200-300%. There is a point though where the percentage climb in the stocks slows down and at that point it pays to hold bullion. I have no doubt at all that he is correct. Again only my opinion- everone has different methods. I like to sleep at night, although my entire portfolio is gold and mining with some oil stocks, I still feel OK because of the companies that I have.

Friend of AnotherCOMMUNICATION PROBLEMS!#1569/24/98; 20:31:48

All: I am having major link problems as my feed is thru the caribbean/bahanas into Florida (USA). Am told the Hurricane is the problem? Will return ASAP.

bmacdCHina's Gold Reserves#1579/24/98; 20:52:20

Does anyone have any details? I heard that China might be doubling it's gold reserves.

bmacdawalrus#1589/24/98; 20:57:49

It's sort of a chicken and egg thing. You need the investors to come in to push gold convincingly over the $300 mark and hold, and then more come in. But what pushes it up to begin with. I totally agree with you. Perception has to change and it may be starting to, albeit slowly. The more confidence is lost in the paper we know as money, the more investors will turn to gold to protect themselves. The only confissence I have in paper money now is that it gets printed at an alarming rate.

GoldflyRe: FOA's The Direction of Gold#1599/24/98; 21:05:32

All right! Friend of Another, I like your thinking! Mr. Another? What do you say about this? "By the end of this year" is laying it on the line. Friend, you speak of a price run to $1000. In an earlier post, you spoke of the figure $6000. Where do you see the price (not value!) of gold come E-Day, January 1st? How about the 1st quarter of '99? (I do enjoy the prognostications of the learned!) GF

pa kuaU.S. Monetary Policy#1609/24/98; 21:20:24

Your FORUM is appreciated.A question that puzzles me is the seemingly open attempts by the Fed and the bank interests to "correct" the stock market boom, and lower the dollar's value in an orderly way (which makes sense) without concern for the monetary situation abroad. The structure in place since 1946 is not going to last more than a year(?) If we just patch it again now. A crash would be ideal for wealthy interests: they could buy cheap stocks and gold etc. If not a crash, then we could face a repudiation of our debt down the line, perhaps in a year. There are many details that could be mentioned, but this is the essence of my puzzle. Do some really believe that crashing gold and bringing the stock markets down will not do us great harm as a nation?

twwbmacd/investing#1619/24/98; 22:31:18

Thankyou for your insight. I presently hold some fn and en as well as rangy. I want to increase my gold exposure. With limited funds would 10k split between three majors or a pm mutual be better exposure. Thanks again

pa kuaU.S. Monetary Policy#1629/24/98; 22:49:44

Your FORUM is appreciated.A question that puzzles me is the seemingly open attempts by the Fed and the bank interests to "correct" the stock market boom, and lower the dollar's value in an orderly way (which makes sense) without concern for the monetary situation abroad. The structure in place since 1946 is not going to last more than a year(?) If we just patch it again now. A crash would be ideal for wealthy interests: they could buy cheap stocks and gold etc. If not a crash, then we could face a repudiation of our debt down the line, perhaps in a year. There are many details that could be mentioned, but this is the essence of my puzzle. Do some really believe that crashing gold and bringing the stock markets down will not do us great harm as a nation?

jinx44bmacd/ China gold#1639/25/98; 00:42:09

I very quickly read an article that said the PRC announced that they had or were purchasing 1000-1500 tonnes of gold. Article also stated that it is believed the real intent of the PRC CB was to accumulate 8-10,000 tonnes and the announcement was propaganda to defuse and downplay the inevitable leaks that would come from their actions. Can't remember the site-sorry.

nugget0getting the hang of it#1649/25/98; 03:45:24


nugget0Crash course in market theory#1679/25/98; 05:12:53

just got connected to sat TV....saw all the young faces at the NYSX...thought to myself..those young people are controlling the worlds finances...but they don't know their history..I'm not ancient, but I do remember my uncle brewing schnapps in the bath, my grandpa cutting homegrown tabacco & making sell on the blackmarket...& going to my other uncle who had gold...& thus war Europe grandpa saying.."always have gold"..I was 4 years old. In 1979 I employed a vietnamese "boatperson", in my new adoptive country...he managed to escape because he bribed the guards in his village with gold...he lived & prospered. I was taught gold prospecting by an old Swedish miner many years ago, & in my retirement have done well.. nothing, in my opinion, surpasses the thrill of finding, & the beauty of a nugget...It has been an education, & a delight to find other people, similarly predisposed to gold on the forums I have been to. I have been "lurking " on several forums,& benefitting from them....Another,& friend..have a wisdom that I can relate to...the world is becoming a dangerous place, changes always bring the uncertainties ,the possibilties,the excitement..we have a big bubble out there...the spin doctors (young) are out there in, what I need to know, to validate the buying of the additional gold that I have been doing.."on hunch"... is a lucid explanation of some of the market terminology that I have been reading, derivatives, gold guys out there in auroland know all the lingo...we are probably scared by the same scenario...but talking different languages..don't abbreviate the important bits...there are lots of interested people out there...

nugget0ooops..sorry#1709/25/98; 05:15:35

sorry bout that

AUBUGx10UBS & gold & the Titanic#1719/25/98; 07:29:25

The derivatives market is about to blow apart. What we have seen is just the tip of the iceberg. Gold will move out of here as it appears to be doing but it is too soon to get overly bullish. There are LOTS of suprises out there at present and the next few weeks through to end of October will be hairy. While I totally agree with Another & FOA there will be a transition period preceeded by a panic. What does a bank do when it runs out of money? Two things it either closes or the local CB gives it some more. The possibility for a sell off in gold over the next few weeks should not be discounted.

jmannext bottom for gold#1729/25/98; 08:25:59

Gold seems to have a 22 week cycle, bottom to bottom. The next time for a bottom will be mid Nov. I would think that this bottom will be a wave 2 pullback, only to be followed by a wave 3 advance. Dynamic time analisis run on some gold stocks also suggests a trend change in this time frame. Any comments welcome.

PeteANOTHER & FOA-THINGS TO COME?#1749/25/98; 10:06:55

My Dear FOA, Thank you for your prompt reply. If only some(NOT ALL) posters at Kitco were as courteous and gentlemanly as yourself and ANOTHER, Kitco would be much better off. IMVHO. Their loss is USAGolds gain. My views are very simple minded. I have not the brainpower or ability to disect every little nuance in the markets and therefore try to analyze as best I can. My thinking is that the current currency crises occuring throughout the world was and is unsustainable. The FRB is between a rock and a hardplace. The strength of the dollar has to be decreased to help most currencies before a world wide depression took hold. In other words something has to be done before the dollars strength destroyed the world economy. My 1st thought was that the FRB would be forced to devalue the dollar by a rate cut. My 2nd thought was that this would be a temporary solution. The dirivitive markets have been in a no lose, win win situation for several years due to such things as the yen-gold carry trades which in time were carried to extremes. That these would eventually default because the dollar would have to reverse course soon. Once this reverse happens, many highly leveraged dirivitives would be caught in a squeeze that would put the dollar in jeopardy forcing the FRB to again change course and defend dollar by rate increases which in turn will tank the equity and bond markets. As you stated in a recent post that you and ANOTHER expected a major default which will mean the beginning of the end for the dollar. The recent hedge fund bailout is as you say only a small tip of the iceberg. More will surely follow as sure as day turns to night. Your prognostications such as a Jan 1988 post?(Can't find it for now) that some on Kitco used to trash ANOTHER predicting that a rush to cover may be difficult to contain and predicting that the price of gold would be $320-$360 by year end was and is right on as of now. Also your post on Jan 10, 1988-21:03 predicted with no uncertain terms that the BIS would not allow the price to go below $280 has also held to date within acceptable parameters. I am still trying to determine in my mind why a concerted mean spirited effort was made by certain posters on Kitco to so desparately squash your input and what their true motives were? We will watch closely as events unfold, yes? Thank you for listening to one of a simple mind who has as much faith that gold will triumph in the end as I have in God. Pete

Ph in LATo: Friend of Another Re: Currency controls#1759/25/98; 10:09:42

Yesterday, it seemed to be Friend of Another writing: "I fully expect a soaring gold price in US dollars to force the American Treasury to implement foreign exchange controls for it's currency". This is a theme that would be of great interest to United States residents with real assets outside of the US such as real estate, foreign currencies, etc. For those with limited experience in such further demonstration of government perfidy, can you clarify what might be expected in such a future? Obviously, the exact course of such developements would probably be difficult to detail in advance, but it ought to be possible to offer a description of how controls have worked in other countries, along with what the intended effect would be for the government. Would it become impossible and/or difficult for citizens to repatriate funds/assets held outside the country? It seems hard to imagine the chilling effect "currency controls" would have saying that holding gold outside the country under such circumstances might be unwise, too.

JONNYTESTING#1769/25/98; 10:48:07


el St.OnePete Posting#1779/25/98; 13:35:00

I remember reading Anothers Posts. Where you credit Jan. 1988 I am sure you met Jan. 1998. I appreciate your and every one's posts, keeps us all thinking. I have heard or read of a Chinese Curse, probably should credit Confucius. "May you live in enteresting times" These are certainly interesting times, and getting more so every day. Till when

USAGOLD*****Archives Update*****#1799/25/98; 17:09:16

It's been an amazing week, fellow goldmeisters. Tomorrow, the forum will be down for about two hours (and hopefully less) starting at noon mountain time tomorrow to get the archiving into production and work out some of the remaining tech bugs. With any luck, we will up and running like a brand new Mercedes Benz by this time tomorrow. Thanks to all for your patience. I've been reading the posts late this afternoon and the discussion so far has been interesting to say the least. There is much to think about this weekend. I've got today's Wall Street Journal and London Financial Times under arm as I go out the door tonight. Both are featuring extensive coverage of the LTCM debacle (predicted by our own FOA) as it affects the international banking sector. I look forward to this weekend's discussion. I wish all a restful weekend. See you here Monday. I will update if needed on the Archive situation.

USAGOLD*****The Forum will be down today****#1809/26/98; 08:59:56

for about two hours starting around noon mountain time. We will be hopefully putting the final touches on the Forum Archives. Thank you for your patience.

USAGOLDJust a short note to say......#18709/26/98; 14:04:38

We are now up and running. The Archives are fully funcitonal. Now all your golden thoughts and words of wisdom will be stored for posterity. Though we think we got it the way we want it, there may still be a small problem or two. If you come across a problem, please let us know. As it we have to apologize. The archiving bug ate up the posts from September 19,1998 through September 21, 1998. For this we apologize. If anybody by some stroke of luck saved those posts, please e-mail them to me and we will add them to the archives. I know there was some good stuff there and I hate to see it lost. I want to thank all of you for your patience. All copies of THE ABCs of GOLD INVESTING will go out as promised. -- The Management

USAGOLD****To Gold Bugs from Near and Far****#18809/26/98; 14:21:01

Welcome to USAGOLD FORUM! If you would like to participate in the discussion, please click on the Sign-Up button to register. It's fast and painless. We will get your password to you as soon as possible. So far we have had a much stronger response than I originally anticipated. We have had a large number of registrations and there has been a strong, consistent flow of visitors as well. The next goal is get the number of posters and the flow of information up and that I leave to all of you. This site was established to be used by those hoping to learn something from it and have some fun in the process. We encourage the participation of all. I want to thank Jeff Marett at E-Street Communications for doing an outstanding job on the technical aspects of this site. I look forward to re-starting the discussion. There is much in the wind surrounding this gold market. Now that we have archives, there's no stopping us. Let the discussion begin!

Friend of AnotherForum Open?#18909/26/98; 14:43:15

I see the Forum is open. I'll check my system and hope to be back here in an hour or less. I think there is more to discuss now than ever before.

JeffJust a simple test.#19109/26/98; 15:56:13

Just a test post to correct a message ID bug. -Jeff

Friend of AnotherSystem working.#19209/26/98; 16:42:37

My link is up so I will be able to post. I'll start with a reply.

Friend of AnotherGoldfly (9/24/98; 21:05:32MST - Msg ID:159)#19309/26/98; 17:00:37

Goldfly, "By the end of this year" is laying it on the line"? I hope you didn't think I meant that gold would go to $1,000 by the end of the year! It could, under the right conditions. We will most likely see it begin a climb past the $330 / $340 area. Remember, if it gets past $360 before the Euro comes out, it would create a panic that could destroy many of the shorts. As you can see, a large portion of them are Hedge Funds! These same funds are big into currency trading. The disruption in the financial arena would , as Another has shown, be catastrophic! You wouldn't have an official gold market to buy from! Another has not sent me a reply yet, but later on we may get some discussion from him. FOA

ETDerivatives#19409/26/98; 17:04:23

Hi all. Thank you for the forum. After learning today from the NY Times that LTCM's actual exposure is $1.25 trillion rather than the original $100 billion, it's made me wonder what the total exposure to banks is out there. A recent 'News and Views' pegged it at around $60 trillion or so. As I understand it, investors had approximately $2.2 billion in the fund and through financial magic had exposed themselves to $1.25 trillion. I further understand about $400 billion is invested in several thousand other hedge funds. If other funds exposure is similar, that would place total exposure at around $200 trillion. At even half this amount, it is impossible to cover without a huge hyperinflation in paper credits. As this NY Times story was released after the markets closed Friday, I'm curious as to what others think concerning Monday's open. I can't believe those in the know concerning the risk are about to waste any time leaving the paper markets and heading to gold. All this time the real level of risk with derivative contracts has been a well-kept secret, but the 'cat is out of the bag', so to speak, for all to see. Will we see the greed turn to fear Monday? ET

Friend of AnotherVictoria (9/24/98; 17:34:06MST - Msg ID:150)#19509/26/98; 17:32:18

Victoria, Welcome to the discussion group! It has taken a while to reply with the bugs in the Forum and on my end.

Many disagree with a physical gold only investment. Another has spent an enormous amount of time, writing how the times will be different in this era.

I think most of the diversion comes in where investors can not envision gold going up in price all that much. Most don't feel they can create a meaningful return through holding bullion only. The slant is always towards the leverage of mining companies. Most think they will be able to exit these securities and move to physical after some of the future rise in price is complete. That's good if we continue to progress into another economic cycle typical of the past. However, the American economic system is about to change in a way few can follow. The small person will come out far ahead of the large investors by holding onto gold through thick and thin.

As for the large Gold resource countries becoming more powerful? That's a good question that I would like to see others, including Another commit on. It gets right into the politics of money! Will oil rise with gold? I have to agree with Another, oil in dollar terms is going to go up out of sight. But then again, the dollar is also going to go down out of sight. I think these very items will get a good amount of coverage right here as time goes by. Thanks

bmacdET-Greed to Fear#19609/26/98; 17:32:19

On Monday-well likely. Greed is great when one thinks there is something to gain, but at this point all that has kept the market going is falling apart and will further. So fear seems rational to me!! Honestly, I was saying this to my Dad the other day, I almost hate being so happy these days, because all that we've all felt would happen is now happening. I'll do well by it, so will fellow gold bugs, and commodities people. But being right means a lot of people will get hurt as the house of cards collapses. Well my Dad's response (he's a huge gold bug) was too bad. We've suffered over the last couple of years, but hung on. Anyways, I'm still trying to figure out what happened on Friday that made the market go north and gold south. I left for a clients (one where I have no access at all to information) with gold over $300, the Dow heading south etc. What exactly did happen? Anyways ET, Monday would likely see a more fear driven market after all this kicks in but we must remember that this week AG will announce that interest rates will come down 25 basis points, and regardless of the fact that Japan really can't lower theirs anymore, England's are on the way up, and Germany has said absolutely not to a rate cut, and France about the same, this 25points will save the world, and the party will go on and the world's problems all solved! Tongue in cheek, but nothing surprises me anymore!!!

Friend of AnotherET#19709/26/98; 17:43:47

ET, The swings in the markets (all markets) will get larger untill the average investor cannot stand it anymore. Remember, during the great German monetary inflation their stock market went wild, even by today's standards. Today, the people in the know, know the risk! They are playing the same game, with the same mindset of a currency holder. I can get out before anything goes wrong! The problem for them now is that they think the markets will stay open while they cash in, it won't!

ETbmacd - Greed to Fear#19809/26/98; 18:02:39

Thanks for the reply. In the whole scheme of things, AG's rate cut is meaningless, like you say. I guess my point with the first post is to try to gauge reader's views on the NY Times revelations. This seems to be a watershed event to me. This derivatives exposure has always been hanging out there but never brought to the forefront like this. ET

ETFriend of Another#19909/26/98; 18:11:01

Thank you for the reply. You've hit the nail on the head as far as I'm concerned. I can't see how most of these markets can survive this type of leverage. I think you are correct, the average investor will not make the connection until the markets are closed. I don't think we'll have long to wait. ET

Friend of AnotherPh in LA (9/25/98; 10:09:42MST - Msg ID:175)#20009/26/98; 18:31:32

YOUR PARTIAL QUESTION: "Would it become impossible and/or difficult for citizens to repatriate funds/assets held outside the country? It seems hard to imagine the chilling effect "currency controls" would have saying that holding gold outside the country under such circumstances might be unwise, too."?????

Ph, The possibility of FXC (Foreign Exchange Controls) is very real. This topic has been discussed in several well written books spanning 25 years. In a way, the closing of the gold window in the early 70s was a form of FXC. Anyone outside the country could no longer get their gold because too many dollars had been printed to cover the gold in the US treasury.

Today, to many derivatives have been printed (paper gold is one of them) than can be covered by the outstanding dollars! The US Federal Reserve either prints a load of dollars to cover this contingent or the system falls apart. If the Fed prints, the Americans get inflation. If the Fed doesn't print, the world financial system, based on a dollar reserve currency, starts to implode and foreign holders of dollar assets try to exchange these for their local currency. To do this they must take the dollar home to the USA for exchange! During this exchange, if the dollar loses to much value in the exchange rate, these foreign holders just SPEND THEM in America!

Again, the US experiences price inflation, only this time it's during a global deflation in dollar assets. To stop this chain of events, this time the US Treasury closes the dollar window. It's usually a last effort to hold the banking system together. The gold window was closed by holding gold at a low price valuation and not selling any of it. The dollar window will be closed by buying dollar currency at a rate so low as to stop most major holders from exchanging. This usually brings a two tier market , dollars inside the country worth more than outside the country. For some time, all dollars outside the US were called Eurodollars! Will we see these Eurodollars exchanged for Gold ???? In some countries, the CBs already have. Thanks

ANOTHERTYoung (9/24/98; 18:46:57MST - Msg ID:153)#20109/26/98; 19:41:45

"I mentioned to Another the other day that I thought derivatives would cause loss of confidence in the US$ and asked what he thought would be the cause. Well, looks like derivatives are at the forefront. I was really just pitching a high fast ball to a high fast ball hitter.... Another...but I'd still like a comment. Yes? Tom"
Mr. Young, while in the US I have seen your new fast ball hitter! A good eye has he, and a fine person. His composure and stature as in play, is the image of a true American to many from afar. Sir, I will swing for your pitch as my view now becomes clear. This LTCM, they stand in the open for all to see. This "Noble House" holds no resources above or below the ground and many now ask "how this palace of paper could stand"? To this I add "how will they deliver the real items they owe"?

Others have built their fortune holding the debt of these traders. And now Default will follow default and all will look to settle for real things that become short in supply. Sir, the confidence in this dollar was purchased with "the greed of men". Soon, this "backing of greed " will lose the support of oil. For the value of a world currency is not made from the "fools gold" found in a gambling den. Thank You

GoldflyDecember Gold#20209/26/98; 20:46:42

Mr. FOA: No I didn't think you meant $1000 by end of year, but you did say (love those archives!) "Well before the end of the year, many will look back and understand that we will never see these dollar prices for gold again, ever!" I was looking for a bit of clarification. Is $50 such a strong move? (Be gentle, I'm just asking. When I said "laying it on the line," I supposed we were talking $100-200 increase)........After the turn of the year, do you expect a continued gradual increase? Where *does* that $1000 figure come in? (Not to be confused with "Where will Georges make landfall?") GF

ANOTHERPete (9/25/98; 10:06:55MST - Msg ID:174)#20309/26/98; 21:57:35

My Dear FOA,
Thank you for your prompt reply. If only some(NOT ALL) posters at Kitco were as courteous and gentlemanly as yourself and ANOTHER, Kitco would be much better off. IMVHO. Their loss is USAGolds gain. My views are very simple minded. I have not the brainpower or ability to dissect every little nuance in the markets and therefore try to analyze as best I can. My thinking is that the current currency crises occuring throughout the world was and is unsustainable. The FRB is between a rock and a hardplace. The strength of the dollar has to be decreased to help most currencies before a world wide depression took hold. In other words something has to be done before the dollars strength destroyed the world economy. My 1st thought was that the FRB would be forced to devalue the dollar by a rate cut. My 2nd thought was that this would be a temporary solution. The derivative markets have been in a no lose, win situation for several years due to such things as the yen-gold carry trades which in time were carried to extremes. That these would eventually default because the dollar would have to reverse course soon. Once this reverse happens, many highly leveraged derivatives would be caught in a squeeze that would put the dollar in jeopardy forcing the FRB to again change course and defend dollar by rate increases which in turn will tank the equity and bond markets. As you stated in a recent post that you and ANOTHER expected a major default which will mean the beginning of the end for the dollar. The recent hedge fund bailout is as you say only a small tip of the iceberg. More will surely follow as sure as day turns to night. Your prognostications such as a Jan 1988 post?(Can't find it for now) that some on Kitco used to trash ANOTHER predicting that a rush to cover may be difficult to contain and predicting that the price of gold would be $320-$360 by year end was and is right on as of now. Also your post on Jan 10, 1988-21:03 predicted with no uncertain terms that the BIS would not allow the price to go below $280 has also held to date within acceptable parameters. I am still trying to determine in my mind why a concerted mean spirited effort was made by certain posters on Kitco to so desperately squash your input and what their true motives were? We will watch closely as events unfold, yes? Thank you for listening to one of a simple mind who has as much faith that gold will triumph in the end as I have in God. Pete
---------------------------------------------------------------- -------------------------
Mr. Pete, This LTCM, it begins the beginning of your increase in wealth. As Mr. TYoung has spoken, I do add that; "these boys of summer have struck out"! This game will never be played beyond your shores again. As I write, all that hold the debts of America ask, "of what form does the collateral take"? The dollar is represented as the "gambler's tool" and of little use as a builder of wealth. This Euro, it does hold at least, "the pretense of respectability".

Sir, what you have written, it is done well. Follow this change of weather as it is at the door, perhaps it has entered your home as the new season for gold. Even I, myself will add flavor to this new gold market. Of the "mean spirited ones" you speak? They are seen in all the world as "boys that curse the wind, but a strong wind has no ears". Thank You

ANOTHERI will be gone for a time. #20409/26/98; 22:00:47

Thank You

Ph in LATo FOA RE: Currency controls#20509/26/98; 22:18:43

If I read your answer to my question correctly, you mean that holders of dollars outside of the US will be offered such low rates to convert them to other currencies that they will prefer not to do it? Will the converse be, then, that holders of Euros will be offered many dollars? Or will some sort of double standard be devised? Are you familiar with our expression "having their cake and eating it too"?

el St.OneForeign Accounts#20609/27/98; 03:25:04

Question for ANOTHER or FOA. I have heard of a bank in the states that has accounts denomenated in any of several foreign currencies. Do you see any advantage to using one, for day to day settlements. If so which currency or combination of currencies, currently available, are to your liking? Would these foreign accounts be the first to go under controls? Till When

BCThanks#2079/27/98; 06:27:24

Michael and USAGold staff: A hearty thank you for sponsoring this forum. It instantly has become a daily stop on my Internet rounds, and I always find some valuable information. I knew nothing about your company a couple of months ago, but have developed a great appreciation for your operation from my daily visits to your Website and your excellent newsletter. Please keep up the great work. Thanks again. BC

BCSwiss Franc & Gold#2089/27/98; 06:29:31

FOA and ANOTHER: Thank you for your participation here. My awareness and knowledge of the current financial markets has expanded greatly from your observations and comments. ... I have always considered the Swiss Franc to be a very stable currency, and saw it as an alternative to the Euro for stability and safety. However, recent events -- e.g.: accusations/lawsuits re: Swiss banks withholding gold from Jews deposited during WWII, and recent Swiss Air crash as serious assaults on what some consider the Swiss' impeccable reputation. I would assume now that the backers of the Euro see the Swiss Franc as serious competition to the Euro, and Euro-backers would benefit greatly from weakness or lack of confidence in the SF. Is the Swiss Franc likely to maintain its strength in the years to come, or will it also weaken (by design or by circumstances) as other currencies of the world weaken one by one? Do you consider that the SF will remain or ever be again a safe haven or is gold the only safe haven during this upcoming transition phase you speak of? Thank you. BC.

Friend of Anotherel St.One (09/27/98; 03:25:04MDT - Msg ID:206)#2099/27/98; 08:35:40

St. One, ________ It's the same story for any financial operation, if the economic cycle repeats itself. Everything will work out fine. I have been forced to rethink any investment direction because of the input from A (Another). History shows that we get caught the worst when the times change. The banks are no different. They are run to make profits by people using the established architecture. Foreign currency accounts are not provided for customers with the intent of creating a vehicle to protect against changes in the national law (read that established architecture). If FXCs are implemented, your account is voided to some extent? Foreign currencies are just like your dollars, the bank doesn't hold them in the account. It's loaned out and the bank Credits you for the money. With FXCs they cannot import the real thing, even if asked to by a customer. Even if they could the new exchange rate would destroy your purpose for holding the account in the first place. That's my view on it? If anyone can show this to be incorrect, please do? FOA

bmacdET from yesterday#2109/27/98; 10:11:52

I went back to yesterdays postings after I signed off, and read your reply. You're right, I dove on one point, and then went off on a tangent without really replying to what you had said! (Sorry). I agree, if the NY Times piece doesn't hit investors smack in the face and scare them to death, I don't know what ever will. With all the bad news that has hit as this world economic mess unfolds, I would have thought a stampede into gold would have started long ago. It's not like any of this is a huge surprise. It's been a ticking bomb for ages. I hope you're right that this piece of news will be the straw that broke the camel's back. Know what I find scary about it? That the Fed was involved in a bailout at all. That's not their job. There will be other financial institutions to fall for the same reason, and is the Fed going to order them bailed out as well? The numbers for the LTCM are staggering.

Ph in LATo: FOA Re: Devaluation as Foreign Currency Control#2119/27/98; 11:39:16

This question of foreign currency controls is one that I have in fear thought long and hard about for purely selfish reasons. If I read your view correctly, the mechanism of controls will be a dollar, whose fall versus the European currencies has already begun (153 Spanish pesetas per dollar in August to 142/dollar today) falling much, much more as the gold¥carry trades unwind, the American stock market fails and the Euro offers an alternative world reserve currency. ANOTHER has said that "trying to maintain wealth in dollars will be like trying to hold the hand one meter below a falling stone". Yet you also said yesterday to el St. One "...the new exchange rate would destroy your purpose for holding the (foreign currency) account in the first place." But wouldn't holding foreign assets actually be the reason in itself? If the dollar is falling, that would mean an appreciating investment in dollars for holders of foreign currencies. If dollars are trading, one or the other, either the dollar or the other currency, must be going up. I cannot imagine a system in which both the dollar and the foreign currencies go down at the same time. Such a system would not be a trading system, it would be chaos. We would have to be facing a complete destruction of the international monetary system as we have known it these hundreds of years. In any case, even if there comes a period of adjustment during which the gold trade ceases and currencies do not trade, real assets in other parts of the world will continue to exist. During such a time, there might be little or no international trade and no convertibility whatsoever from one currency to another. But the underlying assets would not cease to exist. Someday they would have to be tradeable again. Please correct me if I am way off base here; I am but a simple man trying to peer into a fog-shrouded future enough to protect a family in a time of great change. Many hold physical gold and do understand TYoung's concept of insurance but do not yet see desperation and catastrophe overwhelming our civilization. The thoughts of others so obviously more well-versed in these matters are enormously appreciated. Thank you!

TYoungPh in LA#2129/27/98; 15:29:10

All currencies today are dollar derivatives. If, and I repeat if, debt defaults occur the world monetary system ...created since 1971...will fail. No currency will be safe. All are based on debt. LTCM may be a situation of debt default were couterparties defaulted rather than just a few bad bets. Try to understand what happens when the underlying basis for the world's currencies...debt...fails. What do you have left...Nada. The Euro may well meet the same fate. If currencies were back by gold and gold suddenly disappeared...what would you have? Same concept. Yes? Tom

Friend of AnotherPh in LA (9/27/98; 11:39:16MDT - Msg ID:211)#2139/27/98; 18:11:12

PH, I may have sent you (and others) the wrong signal in my reply to el St. One . In your post you noted:
"Yet you also said yesterday to el St. One "...the new exchange rate would destroy your purpose for holding the (foreign currency) account in the first place."
You must read that statement in context of St One's question. At least as I understood it. My thoughts to him were from a standpoint of having an account in "a bank in the states"?? See his post (Msg ID:206). My explanation was directed towards a person that wanted to hold foreign currency in an account "in the states"! Does this make more sense? Ph, I thank you for giving me your interpretation of this. It has been one of my greatest problems, trying to refine some of Another's message. Many people have picked it up out of context without receiving a better "English" explanation! Sometimes I don't get all of it in the first read. As time goes by, events have made it more understandable. On this Forum, I am able to explain in the company of very polite interesting people.

Also: It is clear to me that this Forum is not for the use of only a few. It is for ALL thoughts and the understanding they impart. I consider myself but a guest in this grand hotel! Thanks

Friend of AnotherTYoung (9/27/98; 15:29:10MDT - Msg ID:212)#2149/27/98; 18:15:20

TYoung, That post was excellent!

GoldflyTo TYoung#2159/27/98; 19:13:17

I was with you on your post about collapsing debt to Ph in LA.....until gold disapeared......Where did it go? GF

Ph in LAFailure of debt?#2169/27/98; 19:21:10

Thanks, TYoung for pointing out that "if" all debt fails...Yes, but... It sounds a little like postulating "if the sky falls..." I ask in all seriousness if the sky ever could fall. True, the LTCM default cascading throughout the system...etc. But isn't that a unique aspect of debt? There really is no end to the supply. If some of it defaults, someone, somewhere can merely create some more. After all, the basis for all dollar derived currencies today is promises (with a generous injection of thin air and a tenuous connection to gold via the free market). Maybe those who ultimately make the promises (ie. governments) will become discredited to one degree or another, but someone else can still take on the task. As they say, it may be a hard and dirty job...but somebody has to do it. (And there are advantages!)

GoldflyTo TYoung#2179/27/98; 19:30:04

Oh, ok, I read it again. I see, just an example.... sorry; 19:36:22

The answer can not "push on a string". Banks that lose capital...debt default...will not want to lend. People will not want to borrow when bad times arrive. Debt creation is a creature of "good times". Tom

GoldflyTo FOA#2199/27/98; 19:47:36

Hi, I hope you don't think I'm trying to nail you down or trap you on this gold price thing, I realize that may have been a problem elsewhere.....But I am really keen to get an understanding of your thinking on this. I've read and tried to understand the Another Archives ..... is it the debt you see oil taking a new path (Now?).....or do you have your finger on a different pulse? GF

jinx44El Santa Uno: reference FX DD acct.--Mark Twain Bank-St#2209/27/98; 22:15:08

Sorry, must have been a little too heavy on the trigger.......... Anyway, S1, MTB has domestic "FX" accts. They are a misnomer/LIE about what they accomplish. You open up a $US acct. and then pay them a hefty premium to buy, say, SFr. As I understand their Dept. Mgr., all you have is a credit balance in an offshore REAL FX acct. The USGovt doesn't believe that we should be able to hold FX accts. domestically. I don't blame them, you know how we just waste our own money, right??? So, buy FX options or open an acct. offshore, just keep it <$10,000. I recently received a 15 year chart of the SFr. versus gold. Gold is cheap in SFr and US$ prices right now. Maybe a mix of US bullion coin locally and bullion coin and SFr. cash in a SD box. One could make the argument that over the previous 15 yrs., the SFr. has become more valuable to gold - strong in gold - and also the dollar by about 70% since 1972. Govt minted bullion coins are still free of import duties in Europe, so one could take a quick trip to Benelux perhaps Adios

TYoungA...response#2219/28/98; 08:42:52

Thank you for the response. I am yet unconvinced that a debt default cycle has started. However, how would a person such as me know of such things. I try very hard to not have my beliefs proved by onesided views. Then, again, the currency system in place really is a house of paper cards. We watch and wait...with a bit of gold for peace of mind. Tom

JONNY(No Subject)#2229/28/98; 09:16:12


TYoungreference to "onesided views" #2239/28/98; 11:35:08

are to my views...that debt default will be the undoing of currencies. Tom

Friend of AnotherGoldfly (9/27/98; 19:47:36MDT - Msg ID:219)#2249/28/98; 13:53:09

Goldfly, --------- I don't mind being nailed down on price predictions. It's just that in the past I haven't had a time parameter. Read my post of (9/24/98; 09:38:18MST - Msg ID:140), them add to that what Another said in his (ID:203) post that he would add flavor to this market. Now I feel we can say that gold is going to start moving, now! After today's action, I can see someone is adding that "flavor"! My direction on gold? We will be through $300 tomorrow and be in the $320 range in a week or so! It won't stop there now that the BIS has blocked the funds from covering by buying any new large supply. I don't want to see it, but I think we will break that $360 level before the end of the year. Before the Euro comes out. Also, all the movement in the price of oil this year has been little more than posturing before the long process begins to remove oil from the dollar standard. We shall see? FOA

bmacdFriend of Another#2259/28/98; 18:08:16

Well I wouldn't mind seeing your gold price prediction come true at all. Until yesterday, I would have said the same, so help me out here if you can please. Give me all the reasons (besides that the largest contributors to it haven't sold their gold) why the IMF isn't likely to sell some of it's gold. I mean if they sell, we're looking at $170.00 gold. Apparently, they have an OK to sell gold if it's deemed necessary. I can rationalize through this, but I'ld like someone else to shoot me down on this one!!

bmacd(No Subject)#2269/28/98; 19:23:14

Japan down over 200 points, and gold up. Convergence Asset Management is now notifying investors that losses will be substantial. First LTCM and LTCB, now this one.

David LinkleyEVENING NEWS#2279/28/98; 19:44:40" TARGET="_blank">Gold Uptrend Continues in Australia

TYoungGold Mining Shares...Another...?#2289/28/98; 19:48:11

Revisit this subject for I find it rather implausible to believe that SA gold mining shares will not rise with hefty profits to be had. The logic is simply not flowing in my mind. Maybe you have further knowledge in this area. Assume gold does not rise above US$600 for a few years...the share prices must rise in multiples. Any new info? TIA Tom

David LinkleyEVENING NEWS#2299/28/98; 19:57:12">Sinai-Fed Rate Cut Won't Save World (Darn) The Mexican Dollar?

David LinkleyEVENING NEWS#2309/28/98; 20:19:41">The Latest on LTCM

el St.OneHERE TODAY GONE TOMMOROW#2319/29/98; 01:15:20

FOA Many thanks for your views on my currency questions. These interesting times have me going thru my defunct memory to find the following. Wish I could remember who to credit for it. ___________________
In these times of the soaring Dow and billion dollar deals, here is a little quiz for any business or financial mogul who thinks he's on top of the world. Back in the 1920's during the last great bull market , who was..................
1. President of the largest steel company in the U.S.?
2. President of the largest gas company?
3. President of the New York Stock Exchange?
4. The greatest commodity speculator of his time?
5. President of the BIS (Bank of International Settlement), and one of the great financiers of that time?
6. The "Great Bear of Wall Street?"
The Answers...... 1. Charles Schwab---who died a pauper, after spending the last years of his life begging for meals. 2. Edward Hopson who was certified insane, and spent his last years as a babbling idiot in an institution. 3. Richard Whitney, who was president of the NYSE, was released from prison to die at home. 4. Arthur Cooger died abroad completely penniless, living in flop houses when he could afford the nightly charge. 5. The president of the Bank of International Settlement Nelson Keeley, shot himself. 6. The Great Bear of Wall Street, Cosabee Rivermore----a bit ahead of his time---died from suicide. So all of you moguls and deal makers.....just remember. You're all to human and pride goes before a fall. ALWAYS HAS ALWAYS WILL

Friend of AnotherBMACD:#2329/29/98; 08:44:25

Everyone all agrees that gold is a political metal. Having been used as real money (both in coin form and in paper receipt form) for thousands of years, it's natural human nature for governments to try and control it. It's nothing new and for generations, investors worldwide have come to expect it. Political structures will always manipulate whatever form of money is being used at the time. Today, they rework paper money on a grand scale no one could have ever believed only 30 years ago. People get very nervous as gold was worked over this last decade and fear to hold it through this process. Yet they hold paper currencies that, on a world scale, have been engineered to degrees that make the current gold markets fluctuations look normal! The same investors that have held Yen in 1990 at 64, then watched it go to 120 in 1995, and finally back to 72 in 1998! Now mind you, this is a major currency, not gold! We can also see it in reverse as American citizens held dollars in 1990 that would buy 156 yen, then in 1995 would buy 83 yen and back to 138 yen in 1998!
Bmacd, -----------
observe all the paper money today as it swings wildly on the exchange market. Those swings translate directly into major swings in price for every item traded in the world economy, not just gold! You may not see these price changes directly on the goods purchased as the fluctuations are absorbed through producers profits. But they are real never less. The market price for gold is not absorbed by anyone as it delivered directly to the buyer. But, then again, gold is also money so it is normal for it's exchange rate to change, just as any other currency does (Yen?). The notion that investors will not buy gold as it's exchange rate changes is ludicrous. In 1995 did Americans stop buying Yen when it suddenly became expensive with one dollar able to only buy 83? No. But it went up in price almost 100%. How could anyone afford it? You see, today we know gold is a major currency because it's being manipulated to no end, just like the rest of them.
What does all of this have to do with your question of the IMF? If gold is going to $170 in dollar terms, it's because the political powers want it there. It's a currency, and will be moved up and down. It doesn't fluctuate in simple commodity supply and demand terms. If it did we would have seen it much higher in all currency terms years ago. Trading of gold, on and off official markets dwarfs not only new mine supply but is even larger than all existing stocks. LBMA, trades a million ounces a day! And that is only what is seen. The IMF could sell it's gold currency assets in the same fashion that it could sell Dollars, Yen or Marks. A ready market exists.
If gold is a currency to today's political movers and shakers, we need to see it in a different light. To understand gold, is to grasp that not all world entities want it to fall further in dollar terms. Just as government CBs battle over currency exchange rates, they also form opposing sides on gold valuations. Western investors may not view gold as an asset to evaluate the worth of circulating paper money, but many resource countries do! The value they place on a currency is directly related to how much gold it will buy. This view is not lost to ECU nations either. It's easy for them to see that the number of American dollar assets worldwide takes the valuation of the US gold holdings into the many thousands and makes the current illusion of gold in dollar terms a fraud from manipulation. They also know that the US gold is held in the Treasury, not the American Central Bank, and therefore does not represent any form of backing for the dollar.

Perhaps this is the reason that the Euro gold reserves will be held by the ECB (not the national treasury as none will exist for that entity) as part of the foreign exchange reserves that DO / WILL back the new currency. It's also easy to see that the reserve gold currently held by the EMCB will find no home on the dollar market as they will have too many dollars as it is. Even if Western analysis think the Euro will not fly, it's still a fact that it will be the reserve currency for the ECB and it's EMCBs. In the coming years they, the EMCBs, will be in need or more Euros for their expanding economy and the way they will get them will be to sell gold (at a much higher rate from today) to the ECB. This need for Euro money will be driven by countries that wish not only to sell products to Europe, but also to retain the Currency as a Foreign Exchange Reserve. In much the same way that dollars are retained today, nations with a balance of trade surplus with Europe will end up with extra Euros, the same Euros purchased with gold by the EMCBs. That gold will make the Euro a truly well backed strong currency in world eyes. Especially if the dollar price of gold is soaring!
Back to the IMF: That gold is the only remaining link that the dollar has to metal. It is also out of the US government's control. I believe Arabia has some control over the IMF and it's gold as they are major contributors of assets. Perhaps someone could correct this view? As Another has told me. "If the IMF sells gold, a good deal for someone , yes? Yes!
Also, a thought? If the dollar is the current world reserve currency and all dollars circulating outside the US are called Eurodollars. Then, If the Euro becomes the new world reserve currency, will all Euros outside Europe be called,,,,,,,,,,,,,,,,,, Dollareuros? Thanks FOA

David LinkleyMORNING NEWS#2339/29/98; 09:14:22">G-7 to Support Yen

RAINMANTEST#2349/29/98; 10:16:29


David LinkleyMORNING NEWS#2359/29/98; 10:17:05 ">TODAY,S BIG STORY LTCM SHORT 100 TONS!! elSt.One, Great post! Got any more those little anecdotes?

Gandalf the WhiteHALT in NGC and NEM pending news announcement at 12:02#2369/29/98; 10:44:23

The drop in price of over a point does not look good. -- GW

RAINMAN@ F.O.A. re answer on 9/22/98 15:21#2379/29/98; 11:01:17

Dear FOA I was just able to read your answer today . You assume in your post that the EMCB will eventually purchase GOLD in the open market . Isn't that wishfull thinking? Indeed , this kind of operation would be the start of open monetary war between Europe and the US. The last war was lost by Europe in 1971 when after years of exchanging trade surplus dollars (due to the VIET-NAM war ) , they found the GOLD window closed on a beautifull summer day. The US was able to export financial calamity to the world without paying the cost for years. Nothing would prevent the US in this kind of circumstances to issue a new $ which would be exchanged at par domestically but on a different ratio (if anything at all ) externally. Most central bankers don't think in the same terms as most do on this site. They don't foresee the demise of whatever remains of the world financial system. Moreover , W. DUISSENBERG more than any other , holds GOLD in extreme contempt. It was only under intense pressure from FRANCE , ITALY and GERMANY that he accepted to include any GOLD in these reserves. He was instrumental in engineering the sale of NETHERLAND CB 's GOLD in the last 2 years . Most of the bureaucrats who make a living from European institutions, including the ECB, hate GOLD to the same extent. Thus I don't see an open financial war being started with the US on such a controversial asset. Don't forget that the current trouble in RUSSIA should be viewed as a remake of WEIMAR GERMANY in the 1920s . We know what came out and we should be aware of what will come out.Europe will soon need the protection of US armed forces again. We agree on the most important part : the current fiat currency system will disappear in an ocean of debt.However , no CB GOLD reserves in the US or EUROPE will save the system . The US $ and later the EURO are worth their weight in scrap paper. The $ will go first but debt is as big in Europe as in the US . Their socialist system ensures that pension payments won't be met in 10 to 15 years .Anyway , I doubt fiat currencies will make it that far THANKS

Friend of AnotherGood to see you back.#2389/29/98; 11:29:42

Rainman,-------------- Nice reply! You bring up exactly the kinds of political posturing that is affecting all investment markets. Not just gold. I think I can offer a timely reply to each of these items. Hope to post later today. Thanks for the consideration. FOA

USAGOLDComments After the Close...............#2399/29/98; 17:07:11

Here's something to kick off tonight's discussion. The less than hoped for Fed rate cut came 15 minutes before the gold market closed. There was a quick price dip of a dollar on the announcement and, then a quick retracement indicating the presence of buyer(s). The following published in tonight's FWN closing comments on the precious metals is from a trader I happen to know very well who generally is spot on as far as market direction goes. He looks at the market strictly from a trader's point of view. Momentum and who's doing what to whom are the keys to his analysis. He has been bearish on gold for years. Apparently, he's made an about face. I consider his change of heart important. Read on: "(Leonard) Kaplan (LFG Bullion Services/Chicago) did caution that a sharp short-covering rally is possible in gold. There is market talk that central banks are re-evaluating their leasing policy, with large bullion banks in New York curtailing some of their credit facilities, following the financial problems of Long-Term Capital Management that were in the news last week. If the liquidity in the market should dry up while hedge funds are short and need to buy the metal, a sharp upward move could occur,Kaplan explained. He also pointed out that the XAU index of stocks of gold-mining companies has been stronger lately, adding that this has been a "remarkably valuable leading indicator for the price of gold" over the last two decades. Some gold- mining stocks are up some 50% from their lows for the year, Kaplan said. He added that physical product is being bought by investors, especially in gold. He pointed out that the U.S. mint has sold more than 1.2 million ounces of gold so far this year to investors in the form of coins, the highest offtake from the mint since 1987." Food for thought, as gold is up 30¢ in the aftermarket. We have'nt seen the end of the LTCM situation...not by a long shot.

jinx44govt confiscation#2409/29/98; 17:35:19

Perhaps this is the wrong forum to ask this in. But I will solicit your valuable opinions anyway. I personally am holding physical in minted bullion coin. I believe that the EEC has no import duties on recognized bullion coins, as they do on bars and grains. I am concerned about the USGovt pulling an "FDR" and confiscating/outlawing trade or holding of gold. Does anyone have experience with shipping bullion offshore, using a local depository institution with overseas affiliates that could effect a transfer of physical, or just getting on a plane and carrying it?? I agree with the gist of the participants of this forum and believe that gold will preserve wealth better than most things in the near future. I just don't know if we will be allowed to keep it, once the USG is exposed for the manipulation of the country's wealth and currency. Thank you.

bmacd25 Basis Points#2419/29/98; 17:35:53

THe fact that the Fed cut only short term rates by 25 basis points, and didn't touch the long term rates tells me, if I'm thinking this through properly, that they still have an eye on inflation down the road. I think the rate cut is merely a token and won't do much anyways. Borrowing is already too high, and savings too low, so I would hope that consumers wouldn't borrow more. COuld it be that the way out of this global mess is a rise up in commodity prices, and with those and oil (sure to go up of La Nina is as brutal as expected) sure to rise, there is still an inflationary threat down the road? Good for gold.

David LinkleyEVENING NEWS#2429/29/98; 17:43:39" TARGET="_blank">Fed cuts U.S. rate to fend off global chaos
................No Global Chaos perhaps but plenty of confusion in the markets....What is the Fed signalling? Here's a quote from same story: "I think this is an important first step for the central bank. They didn't want to lower rates too aggressively for fear of sending a signal to the markets that they thought things were completely falling apart," said Anthony Chan, chief economist at Banc One Investment Advisors. Reconcile that with the article's headline shown here!

Friend of AnotherMy view.#2439/29/98; 18:27:57

Dec. comex gold did not make through $300 today, but it came close. Slowly the liquidity of physical supply, that was so available 24 months ago, is now drying up on world markets. The lease rates have not risen much simply because many of the Bullion Banks now understand the risk and don't want to supply leased gold for the purpose of covering the bad bets of others. In this process, the demand for borrowed gold falls away
From the beginning gold was sold down to give strength to the dollar. As the process continued, funds, large traders and investors arrived on the seen with their own oversupply story as the reason to sell. We were told that gold was no longer an asset and it would fall in value for the rest of time! Now that they have told their story and made their sales, the true gold market is about to speak. It's not a story of oversupply or undersupply. It is a story of market need for a currency evaluation tool. A way for governments not supportive of the dollar to show it's true value through gold.
Some of these short traders have already started to cover. But it will not be until gold moves into the low $300 range that they grasp how tight the market will have become by that time. It has taken years for this selling to build and it will not be covered in a few months. Perhaps many of them will have to be bailed out as LTCM was? We shall see.

USAGOLDFOA, Your last post.............#2449/29/98; 19:04:04

Good evening, FOA. It is nice to see you here tonight. I read your last post with great interest and have one question -- and this is something I have wondered about for a long time. Let us say that one of the short traders you talk about is somebody like Union Bank Switzerland (UBS). Let us say, further, that UBS has a deep (I mean deep) short position. Let us go one step futher: Let's say that those holding the long side of the contract -- perhaps one of the oil states -- determines that they want delivery because the hedge fund debacle has blown up the market. Would the Swiss central bank in a case like this be forced to lend UBS gold to pay their creditors, or face the prospect of Europe's largest bank going under? I am assuming that the creditor in a situation such as I describe would be shrewd enough to demand the gold and not printing press money. What do you say? I have more, but let's start here.

USAGOLDbmack on the interest rate cut......#2459/29/98; 19:24:35

Thank you for your participation in this venue. In reading your post tonight the thought occurred to me that what Alan Greenspan and the Fed were subtly telling the markets that they do no want the dollar to remain strong -- no way, no how, no time. Do you think he's saying the era of the strong dollar is over?

USAGOLDjinx44.....your question....#2469/29/98; 19:31:30

I am not versed on the legal aspects of transporting gold. I don't know if somebody like TYoung who posts here occasionally can help you with that. T....are you there? FOA, do you know about this sort of thing? Sorry, jinx44. You do raise a good question. I do know, however, that owning pre-1933 gold coins in the United States offers the best protection against confiscation we know of. But not even that can be gauranteed.

Friend of AnotherUSAGOLD#2479/29/98; 19:48:29

I was creating a reply to rainman and found USAGOLD here. Let me read your post and I will reply. Thanks

USAGOLD*******FORUM BUSINESS*******#2489/29/98; 19:56:47

Since I'm posting tonight I thought it would be good to clean up some FORUM business. First I want to say that anybody who would like to post is welcome to do so here. Please register. You do not have to have a PhD in economics to post and we invite all opinions, information sources, ideas. Well, you know what I mean. We have found some of our missing posts (last seen going down the gullett of the archives bug). I want to thank Randy S. for having the wisdom and foresight to save them. I will forward them to Jeff Marett, our tech guy, to get them in the archives. So far we have a large number of registrants, but the posting has not been in line with the number of registrants. Don't be shy. We need you. We also have a large number of lurkers. Our USAGOLD visits (pages requested) has more than doubled since we started. Something makes me think people want to see what ANOTHER, FOA and the rest of our posters have to say. These are indeed confusing times and we must try to help each other understand what's going on. Discussion lubricates the mind. SO DON'T BE AFRAID TO POST! Lastly, as I have said I want this to be your site. I posted tonight simply because I can't resist. So I would like to see some people come out of the woodwork. I have seen those handles, folks -- all of them. Ff your thoughts are as good as your handles, we will be on the road to solving all the problems in this country. Have a nice evening, fellow goldmeisters and welcome to USAGOLD FORUM!

TYoungjinx 44...#2499/29/98; 20:05:42

Gobermnt confiscation...pre '33 is the best bet but no guarantee. Other than that try the Perth mint...have a web site...don't have the url off hand...fees reasonable...out of USA. Practically...if things get that bad you best have those things that propel projectiles. This ain't '33 Keep your gold here and hide it at home. Yes, I have a few pre '33's...lots more bullion coins. Which I sold last week should anyone a loss:). Tom

TYoungPosting...go for it...#2509/29/98; 20:13:12

As cherokee is apt to say...swing the bat and post...the worst you can be is....EDUCATED...if your not making sense. Yes! Tom

bmacdUSAGOLD#2519/29/98; 20:20:20

Is Greenspan saying that the era for the high USD is over? I doubt he would say that exactly, but lets face it, what can the US sell these days? It's trade balance is in bad shape and gets worse, as imports exceed exports.

Friend of AnotherUSAGOLD (9/29/98; 19:04:04MDT - Msg ID:244)#2529/29/98; 20:20:46

USAGOLD, -------------- Your words:
"Would the Swiss central bank in a case like this be forced to lend UBS gold to pay their creditors, or face the prospect of Europe's largest bank going under?"

Michael, In the circumstance you describe, no CB would set the precedent of supplying gold to cover a gold contract (not of their making) that has failed! They may find themselves in a position of not having enough gold to cover all possible claims. This would also imply that it would be legal to use a nations gold in this way. It may not be.

I think, the major players on the receiving side of these gold contracts only deal in paper that would force the CB (or any supplier of gold) to perform in the event of a Bullion Bank failure. More often than not, the problem for the bank would be to collect the currency that was created from the proceeds of a gold loan. If that has been lost then they must purchase the gold back from the entity that it was sold to. If that is an option! Or the lender of the gold (CB) could extend the contract, however, once the contract is found to be in nonperformance, it all goes up in smoke! A mess indeed! thanks

bmacd(No Subject)#2539/29/98; 20:22:33

I guess I left that one hanging without summing up!!! If the dollar comes down the US will be able to compete because their goods won't be as expensive. (Mind you I'm sure you all knew where I was going with that).

bmacd(No Subject)#2549/29/98; 20:23:03

I guess I left that one hanging without summing up!!! If the dollar comes down the US will be able to compete because their goods won't be as expensive. (Mind you I'm sure you all knew where I was going with that).

USAGOLDT & Jinx#2559/29/98; 20:31:48

Thanks for stepping to the plate, T.....You're just full of baseball analogies these days aren't you? Keep those questions coming Jinxster and thanks for you participation.

Friend of AnotherTYoung#2569/29/98; 20:33:16

Did you expect gold to cross $300 today? Or did it do as your tea leaves predicted?

Friend of AnotherBMADC#2579/29/98; 20:36:51

If the dollar falls to low how will Mexico sell to the US? Perhaps this is as it should be. The dollar worth less than the peso!

bmacdLower Rates#2589/29/98; 20:41:13

It seems to me that AG may also be lowering rates, to stall or at least soften the fall in the market. Most of us agree, it's going south. Well with all the profits in the market wiped out, there goes the budget surplus, and the beautiful economy right? Well if he can stall that a bit, then perhaps a mass stampede out will not take place. He changed his stance on monetary policy quickly, coincidentally, right before the Fed orchestrated bailout of the LTCM. I hate to accuse anyone, but I'll say it again, these markets are so manipulated it's hard for true market forces to prevail.

bmacdFOA, Mexico#2599/29/98; 20:44:22

Hey, there's yet another nightmare-Mexico. Wasn't the peso at about 3.5 to the dollar when the IMF bailed them out a few years ago. I can't tell you today's figure, but I know in the last few weeks, it was 10 to the dollar. Mexico is bankrupt, and the US can not let Mexico collapse. I'm surprised how little has been said about Mexico lately.

bmacdIMF#2609/29/98; 20:46:37

Which leads me to another thought. Exactly where is the IMF going to get all this money to bail everyone out? THey're broke. Is no one concerned that they might sell gold?

Friend of Anotherbmacd#2619/29/98; 20:46:40

Speak of manipulated markets, look at Japan! They have taken rates down to nothing and still no recovery. Is this the same fate for the USA?

Friend of AnotherIMF sell gold?#2629/29/98; 20:50:34

Only if the right people ask for some supply. You can bet no one will know who buys it. All the attention will be on how gold was sold and it isn't even an asset anymore!

Friend of AnotherAgain Mexico?#2639/29/98; 20:54:36

Not long ago the whole world was at risk if Mexico didn't get help! Now they are small peas in a big pod. Just remember, the world is selling gold because no one needs it. That is all the citizens need to know. But I think TYoung knows better, Yes Tom?

Tyler RoseUSAGOLD#2649/29/98; 20:56:41

Re: your 19:04 to FOA In my experience, a "long" does not know who the "short" is. If the long wants to get delivery, he simply holds the contract to the first notice day and tells his broker that he wants delivery. I did this earlier this year with the COMEX. Took about 3 months to work out all the details, but eventually received a JPM bar of 4 9's fine. I don't see how the Swiss Central Bank would have to cover a UBS short position. If the Oil State holding the long side of the contract wanted physical, they would look to the exchange to provide that --- unless it was an off the books, private deal. I believe you must be aware of that, or am I wrong? Respectfully, TR

bmacdFOA-Japan#2659/29/98; 21:04:11

True, it's being manipulated too. Correct me if I'm wrong, or missing something (because I do at times), but the problems are different in a lot of cases. First of all, Japan is a land of savers- they don't spend anything, they save it all. Well in the US, most savings (besides in a home) seem to be in the market, and lots has been borrowed for that. The average American household is in debt. Americans are spending. The countries are also the same. Japan has a huge surplus, it's loaded with money and assets(a lot of which are US treasuries I might add, they own a lot of American debt). The US is the biggest debtor nation in the world. It borrows like crazy. THose fundamentals alone, I think, make the situations in both countries different. I also don't believe the media when they say that Japan is in such horrid shape, that's just passing the buck (literally) and making it sound like the US has no problems. True their banks are in a mess with all the bad loans, but hey writing them off won't really solve anything, they're off the books, but the situation is still the same. As a similarity, now we will start to see some banking problems, as the derivatives problems are start to surface here. Just some thoughts-please correct me if I'm wrong. I'll pick it up tomorrow (goodnight all)

bmacdJapan#2669/29/98; 21:06:52

One more....America's printing presses are running at top speed printing money. Japan turned theirs off.

USAGOLD******A FIND MESS INDEED, FOA*******#2679/29/98; 21:08:45

Yes, it's a fine mess we're in, FOA. I think we are fast approaching the day ANOTHER has forecasted -- the day the gold market doesn't open. Then we will have a new monetary order. I continue to find yours and ANOTHER's discussion compelling and a vital service to your readers (including me). It is amazing how in the grand scheme of things, the fundamental analysis you and ANOTHER has offered has come so close to describing reality right up to the events of the past few days. No one else I know of (and I read a lot) has come as close to understanding the nature of the currency problem at hand as you have. The stage for gold, my friend, is set. This is my last post tonight.....I want to discuss devaluation with bmacd sometime, but not now. Think the 1970s, lionheart, there are lessons there.

Ph in LADerivatives: Another Rumor#2689/29/98; 21:09:44

Today, in conversation with a friend who knows someone with insider knowledge at Merrill-Lynch, I was told that his contact says that Merrill's derivative position is leveraged at about 97 to 1. That would go far in explaining why they were so eager to help with the bailout/takeover of LTCM. As a pillar of the establishment, Merrill ought to be somewhere near the middle-of-the-road. With exposures like these, the whole industry just might be set to go up in smoke. ANOTHER said long ago that he feared that the Central Banks were losing control of the situation, and that gold at $360 would signal an all out run to infinity. Greenspan and the Fed jumped into the middle of this bailout more like scalded cats than like a Central Bank in control of the strongest economy in the world. To my knowledge, this action is unprecedented and way beyond anything a central bank ought to be doing, isn't it? They might have reigned in the gold today, but silver sure seems to be on a roll. What does it all mean? We, too, watch and wait!

Friend of Anotherbmcad: Japan?#2699/29/98; 21:14:34

I know people there, they are in a bad way. The World press does not do a good job of telling the story. They do not compare apples to apples when it applies to living standards. People in Japan have far less space in the home. Often they count their savings in a retirement plan as ready money. It isn't! I must travel also. Will complete my reply to Rainman tomorrow. thanks

USAGOLDTyler Rose....#2709/29/98; 21:32:07

Well, I was going to kick back with the latest Clancy (Rainbow Six) but then you this important question. As I understand it, the largest percentage of gold transactions occur in London by private contract. As ANOTHER once said in so many words they have contracted more gold there than has ever existed on Earth (or something along those lines. I wish I were as eloquent on the subject. I would recommend a visit to ANOTHER's Archives.) And perhaps we could engage FOA in this conversation if not tonight then sometime soon. COMEX is simply a side show, but even here, there are substantially more contracts written than can be backed with the gold at COMEX warehouses. Once again, this is why physical ownership is so critical As FOA was just saying the paper is likely to match but matching paper to physical will be tough. It will be settled in paper at most likely much higher prices, and the remaining question is whether or not this will correspond with a hyperinflation in the United States. But there are many lurking out there who can help you with this and I invite them to put in there two cents (while it still buys something). Thanks for your question, Tyler Rose, and have a nice evening.

GoldflyMEXICO???? PAH!!!#2719/29/98; 21:45:34

Hang Mexico...We don't 'em!........ Ross Perot and I are about two Vulcans short of a mind-meld, (say that with a high-pitch Texas twang- it sounds hilarious!), but he was right about that giant sucking sound (wasn't he Mr. Clinton?). For a nation to be prosperous it must create wealth. A service economy doesn't hack it......and transfering our manufacturing base across the border hasn't done a thing to improve the lot of the average Mexican, they are still dying trying to get out of that mess (boy I had to tone down that word).....Ok, maybe not nothing, but look at Chiapas, revolutions do not foment when the population is productive and prosperous...... I know, I know, this trading bloc thing is some sort of "Oh yeah? So can I." to meet the economic challange of the European Community. The difference is all of the EU countries are roughly equal, Mexico (and the rest of Latin America) cannot keep pace with the US. A privleged trading status would be one thing, but equal partners is ridiculous.....What does this have to do with gold? I dunno....I'm rambling but let me say this: When elected President, the first thing I will do, (just before making Pat Buchanan head of the education dept) will be to sign an excecutive order abrogating NAFTA.... Thank you for your support!((((and now back to our regularly scheduled programming))))

GoldflyNo More Gold?#2729/29/98; 21:48:09

Could somebody explain to me (or point me to the right place in the Another Archives) why gold is going to stop trading??? What happens then?

jinx44GoldFly#2739/29/98; 22:47:28

As I understand it and have read here, the prognostication is that the gold physical market is such a tiny fraction of the gold paper market that if/when there is a rush to gold, the physical market will be pushed to cover all the paper that has been sold and the unsuing frenzy to cover before the other guy will push spot gold lock limit up for days or until the exchange/govt stops trading in physical. Then it will take a while for the lawyers to steal enough from the deal to settle the lawsuits and arbitration. Gold will then open for trading awhile later at an order of magnitude higher. Then, gold will be priced by the market for its' true value. Perhaps the rise in price will occur slower and with pullbacks. Either way, I will still own it.

TYoungFOA @ 9/29...20:33#2749/30/98; 06:47:35

Gold did about what I thought...down a little. I can not predict, short term, where gold is going. My tea leaves are all stuck together. Think it will go to mid or high $280's. Which almost assures a break above $300 :). Tom

Friend of AnotherTYoung#2759/30/98; 07:21:11

It looks as though we will have a rough day in the equity markets. Perhaps the quarter point drop in rates was not only a political move for LTCM, but also a market move to create a default situation for the derivative players. Once they are taken out, and their short positions received by new owners (banks), rates will begin to increase. This would certainly bail out these short positions, now held by the largest and most connected bank entities. No matter how it works out, the American dollar economy is about to be shaken as never before. I'll be in and out during the US market day. Good luck

RAINMANTEST (AGAIN)#2769/30/98; 07:41:47


RAINMANUSAGOLD FORUM#2779/30/98; 07:44:58

First thanks to USAGOLD for this site. I was not able to access today's discussion without posting a test message first. When clicking on "today's discussion " I was sent back to the 29th .Maybee it is because my handle is raiman? eheheh

PeteFOA#2789/30/98; 09:18:30

My dear FOA, I posted this message on Kitco 9/27/98. To date I have not gotten one comment. Your last post to TYoung answers quite clearly. The feds will in my estimation help those that promise to liquidate in an orderly manner by eventually steering derivitive positions to cancel or alleviate such losses. Can you elaborate further?
Date: Sun Sep 27 1998 14:22
Pete (All-Liquidation of derivitive positions in an orderly manner by LTCM) ID#222231
The feds and other regulators will be looking at all hedge funds with a jaundiced eye. The FRB engineered a bailout for LTCM in order for them to liquidate their derivitive positions in an orderly manner. Hmmmmm. What does this portend for the various markets? Did the fed promise to enact policies that would help and not be adverse to these derivitive liquidations. For instance, if the bets placed were for increasing rates, will the fed cut rates? If gold bets were for declining prices, will the fed sell or lease into the market until these positions are unwound? Anyone have any comments or theories as to what will happen and the consequences?

AUBUGx10Gold market#2799/30/98; 09:38:02

The derivative market is about to cause serious problems for every other market there is since derivatives are derived from what already exists. Until a clean out takes place nothing will be safe. This includes gold and silver. I would not expect there to be too much upside potential just yet. Once again just exactly what contracts are written on what markets are not known. What is the point on relying on regulations when you have an unregulated market (derivatives) shortcircuiting them. There is no Federal control over this market part from the ability to pick up the pieces and eventually outlaw it.

Friend of AnotherRAINMAN (9/29/98; 11:01:17MDT - Msg ID:237)#2809/30/98; 09:39:46

Nice reply! You bring up exactly the kinds of political posturing that is affecting all investment markets. Not just gold. I think I can offer a timely reply to each of these items. Hope to post later today. Thanks for the consideration. FOA Rainman, You offer a different view of the present predicament the world finds itself in. While I do not hope to show where your thoughts are wrong, we may attempt to see this through different eyes. Not yours or mine, but others.
Your words: "You assume in your post that the EMCB will eventually purchase GOLD in the open market . Isn't that wishful thinking?"

No sir, I would call it thoughtful thinking. The EMCBs (European Member Central Banks) are the CBs of the eleven nations that will join in monetary union. They hold a good deal of gold that was left over from previous monetary wars with the New World, America. You are correct that they lost that war in 1971 when the US closed the gold window. However, that was yesterday. My friend, the generals of lost wars have long memories. In those days countries wanted off the dollar hook more so for national reasons than financial. We now know that, compared to today, the dollar in 1971 was in great shape! The leverage of third world debt was nothing as compared to the current dilemma. The push to get gold in exchange for dollars, in that time, was precipitated by a belief that the present world currency crisis was to occur back then. Perhaps by 1978? What the history of world economic finance succeeded in teaching them was that they were wrong in their expectations of dollar debt EXCESS! I'll get back to the question of gold buying in a minute.
Your words: "The US was able to export financial calamity to the world without paying the cost for years."

Absolutely correct! With the collapse of the gold wars, there was simply no competing currency that could function as the dollar in a reserve status. The oil countries saw this almost immediately and proceeded with the " Beruit Resolution" to allow them to compensate for any loss in purchasing power by the dollar. It would seem that even though America won the gold war they were still receiving "incomming" from other nations! Even so, the world was forced to accept the dollar. They didn't like it then and I can tell you, they like it even less now! ----------------------------------------------
Your words: "Nothing would prevent the US in this kind of circumstances to issue a new $ which would be exchanged at par domestically but on a different ratio (if anything at all ) externally."

Rainman, I read your words as a jump to present time. What you speak of is Foreign Exchange Controls (FXC) for the US dollar. I wrote a piece to PH in LA and others about FXCs. The only way the US would ever enact these controls would be in the event of a national economic emergency. For the last twenty + years to present America has run a Balance of Trade Deficit.

In other words they send dollars out of the country as they buy everything in sight as imports. It's the same thing you speak of above "able to export financial calamity to the world ". Without the ability to export dollars at a high exchange rate (read that manipulated strong dollar) for the benefit of US citizens, the American economy would revert back into a regular economic system. In other words, FXCs would block the very thing that keeps inflation low and the GDP running at a high rate. Never the less, in an economic emergency (the dollar coming home because it is no longer needed as a reserve asset) FXCs would be enacted because the resulting inflation would be ten times worse than without it!
Your words: "Most central bankers don't think in the same terms as most do on this site. They don't foresee the demise of whatever remains of the world financial system."

Well, I know someone that has the brain of a Central Banker and they are very concerned about the orderly progression of the world financial system. They are pragmatic in their belief that a currency system based on the dollar has indeed reached the end of it's ability to expand! What we are witnessing today shows that the world dollar debt load has reached it's limit and must be dealt with. In the current system, if the debt cannot expand, new money (purchasing power) can not be increased. No, the press will never print these views of CB leaders. But that is the nature of the political game. Always has been, always will be! Most Europeans have come to expect it and work and live around it. It's just the system.

As for what to do about the dollar? Back in 1980, the Europeans started the birth of the Euro. It began as the ECU (European Economic Unit). Much of the world has waited for this Euro in a period that seems like forever. During this time the world dollar remained the only game in town, and in consequence the only way to keep the economy alive. So the dollar debt was expanded in degrees no economist could have ever dreamed of. In fact, most of them thought the end was reached back in 1987! Boy, those were the good old days! We come to today, traveling on the back of a derivatives nightmare that from the beginning was the only, last way to expand debt further. It is done and none too soon as the Euro comes out in 1999!
Your words: "Moreover , W. DUISSENBERG more than any other , holds GOLD in extreme contempt. It was only under intense pressure from FRANCE , ITALY and GERMANY that he accepted to include any GOLD in these reserves. He was instrumental in engineering the sale of NETHERLAND CB 's GOLD in the last 2 years."

Rainman, --------you have hit the proverbial nail on the head. Yes, France Italy and Germany did apply pressure on the new ECB. But, that is the point, the ECB unlike the Federal Reserve that is controlled by a single power, will be controlled by three countries of different economic and financial purpose. This will create a balance never before seen in a world Central Bank as it controls the world reserve currency! Forget all the talk and conjecture about an independent ECB. That's just for show. The European citizens are far to knowledgeable of political motives to ever expect an un-manipulated Euro.

Still, the direction is clear, to appease a thinking populous the Euro can not act like a dollar. It will have debt and problems, but those will be neutralized with the initial demise of the dollar as a competitor. W. DUISSENBERG ? He's a good choice. Read his story of remarks over the past few years. I think the World Gold Council web site has a lot of it. He does have a slant towards gold and the EMCBs didn't have to push all that hard for it. Most of the squabble was public posturing anyway. He sold off the Netherlands gold to other CBs that in turn sold it to more important clients that they needed for Euro support. Mr. D thinks his country will prosper without gold in the Euro environment more so than other members. We shall see.
Your words: "Most of the bureaucrats who make a living from European institutions, including the ECB, hate GOLD to the same extent. Thus I don't see an open financial war being started with the US on such a controversial asset."

I think you give these bureaucrats more power than they have. Europe has far less of them than the US and they certainly don't have the political lobby support. They are just like everyone else, they talk and think their pocketbook. Presently gold has no influence on them as the entire region is functioning on a dollar standard. Sure they talk of selling gold, but they only look at it now as a way to raise money to pay debt. When the Euro begins and the economy strengthens because of a strong currency they will again talk their wallet.

I can hear it now, "Lets keep gold for our countries because we can see how the dollar has crashed in gold terms." and "We need to expand out currency base to increase out pensions so lets issue more Euros to the EMCBs for gold".

Rainman, I agree that the ECB will be just as bad as the FRB in the US. It's just that they will be further back in the time cycle of currencies. I have only so much time here on earth so I accept the notion that was told to me, "live with it" !
As for starting a financial war with the US, it's was already started long ago when they took the first steps to create what would obviously be a major block currency. The only difference today from 1971 is that the US dollar is tapped out to the limit! Again only time will resolve the outcome of this viewpoint. The same applies to the question of US armed support for Europe? My opinion is that if the US does have to intervene it will be because they want to save the world financial system! The New Euro financial system!
My thoughts: As I have said before, the ECB will use newly printed Euros to buy gold from the existing stocks in the vaults of the EMCBs. That gold will be added to the present 40 to 50 billion in "exchange reserves" in the ECB to back the currency. In this process the EMCBs will receive what they really need for the future as all trade converts into Euro settlement. There will be demand for this currency so the only exchange intervention that will be necessary will be to sell Euros! Any dollar assets collected will be sold in the open market as dollar reserves will be useless for backing. More likely than not, these dollar sales will be seen as sending the currency home to the originator. If inflation or FXCs become a problem, then the dollar will be used to purchase gold on the open market, if there is one. There is more to it than this and I will ask Another to Chronicle these events for us as we proceed.
Your words: "However , no CB GOLD reserves in the US or EUROPE will save the system "

Oh yes it could. Remember, money and debts are but an illusion in human minds made real with ink on contract paper. People may be ignorant of high financial affairs, but stupid in the ways of real wealth they are not. Trash the entire paper currency system today and the basic human instinct from thousands of years of history would return. They would revalue gold and issue currency behind it on a pay as we go basis. Yes it would be the same old currency play, but after a world economic debacle none of the present politicians would be in power. Life goes on my friend. Thank you so much. I invite your discussion as events unfold. FOA

Goldflyjinx44#2819/30/98; 10:29:00

Hi jinx, thanks for the info. Question. Why should the government step in. That is, under what pretext? Because the price of gold is going up? So what? ...... Sure everyone here understands a connection between gold and dollar value now, but doesn't that become irrelevant as the economy unwinds and inflationary/deflationary pressures are brought to bear?.....And besides, as it stands derivitives aren't regulated, right?......It just seems like a big jump to get the feds to start overtly sqaushing the POG, especially since it would have to start trading again anyway (at a magnitude higher). FOA, what am I missing? GF

Friend of AnotherPete (9/30/98; 09:18:30MDT - Msg ID:278)#2829/30/98; 10:36:43

Hello Pete,--------------------------
Yes, I think you read it about right. It's chock full of political intrigue. For some time, Another has posted that dollar rates were about to be taken up, in his opinion, to defend the currency against the coming Euro. At this late stage of currency war preparations, it's world economy be dammed, the battle is about to begin. The LTCM group knew this, so they bet the farm on higher rates.
Pete, these people, at this level of power are not stupid. Gamblers, yes, stupid no! They work on real knowledge, not a traders guess as the press has portrayed them as doing. Problem is that their bet was as large as most countries and it would have caused a further CB embarrassment had so much money been made on an inside decision. I think they talked of lowering rates first to destroy their capital, then later took them over on the news. When it's done, rates will rise. That's why these major players are now selling off the Dow Jones on a rate cut, they know what's coming. Their position in the old LTCM portfolio will be sold off with a big profit, just as their old management had bet it would. The obvious portent from all of this is that the US economy is about to take a hit of unimaginable proportions from a currency war fought during a collapsing world economy. Wow! My best financial advise? Forget gold, buy a super fast computer so you can access this site later on! It's going to get real interesting! Thanks


Jessie LIVERMORE'S REMINISCENCE OF A STOCK OPERATOR is a must read . The part about how to evaluate price action in agricultural commodities is most important to the GOLD market of our days.

Friend of AnotherPh in LA (9/29/98; 21:09:44MDT - Msg ID:268)#2849/30/98; 10:50:02

PH,----------- I read your post about M-Lynch. It just shows what a house of cards this equity market has become. And brokers tell clients to buy the real value? If this system ever starts to unravel, it will take down everything. Yes, I do believe the physical gold market will close in due time. Perhaps assets in Spain will retain value? Do you have an opinion?

RAINMAN@ FOA#2859/30/98; 10:52:49

Thank you for your answer.I can see your point and am sure I will learn a great deal from your numerous contributions to this site. I will think about your words for some time and try to submit some more questions in the coming days.

Friend of AnotherUSAGOLD (9/29/98; 21:08:45MDT - Msg ID:267)#2869/30/98; 10:55:56

Michael, thanks for the notice. I hope it helps people see the world in a different light. It did for me. FOA

Ph in LAAssets in Spain: Reply to FOA#2879/30/98; 12:51:17

FOA: The question of assets in Spain is one that I think about every day. On one hand, it is comforting to realize that real assets will always be real assets no matter where and/or what they are. As we consider the coming fate of the dollar's reserve status and wait for the inauguration of the Euro I expect assets in Spain to retain and even increase (maybe drastically) in value in dollar terms as the dollar falls. (The process has already begun with a fall of 7% in the dollar versus the Spanish peseta since August.) However, the spector of currency controls leaves me in fear. Of course, there are few limits to which the authorities will not stoop to preserve their privilege to loot and deceive the common man out of the rightful fruits of his labors. But their efforts would not be entirely a one-way street: Currency controls would severely restrict international trade and therefore could only be tolerated as a stop-gap emergency measure...not unlike Nixon's wage/price controls to combat inflation. At the same time, persons intent on repatriating their foreign assets would certainly look for creative ways to circumvent the controls. It would be very hard to seal off the Canadian border to gold smugglers (ie persons who had converted their foreign currencies to gold). Certainly, closing the gold market would be possible but a black market might spring up. It might be easier to prevent foreign government Central Banks' reserves from flowing back into the US, but that ultimately depends on military might, something that would not instantly evaporate with the outbreak of currency war. In short, it would be a very different world if the situation ever reaches such extremes. Rights and freedoms that have been taken for granted in the United States for generations would have to be abolished. Would this be tolerated by citizens? Such drastic changes usually take time. We watch and wait.

Ph in LAKudos to FOA#2889/30/98; 12:59:21

Sundance Kid to Butch Cassidy: "Those guys are good! Who are those guys, anyway?" as they watch the trackers follow their trail through the dark of night.-----------When I read your comments to Rainman and Pete I feel like Sundance. Who are you guys? (Just kidding!) You analysis is spectacular. That disection of the LTC bailout is breathtaking. It makes way more sense than anything else I have seen on the subject. Please know that your thoughts are appreciated, read and reread many times over.

jinx44To Ph in LA#2899/30/98; 13:23:19

I am glad to see your postings that delve into the micro or local aspects about the macro forces that are being discussed, e.g., if gold flies high (when!) and the USG takes steps to punish treasonous horders of gold - you and me - what are the options? I hope that we will see more of this kind of discussion. A boat ride from Miami to Bermuda (John Templeton territory) a quick hike across the largest undefended border in the world - US & Canada - bury it and wait, using a US PM depository agent to xfer physical to Europe for you (if that's not outlawed too quickly). That's why I like minted bullion, no assay and mostly universal acceptance. Also, no import duties or restrictions into Europe (currently). I can only hope that the IRS, Treasury, FinCEN has massive Y2K problems and loses database access in late '99 or early '00. That could be a real boon to personal freedom and wealth preservation. A taxpayers delight!

jinx44To Goldfly#2909/30/98; 14:04:00

In my post about the FDR move to outlaw gold, I was positing the scenario that when the $US falls out of bed and the Euro starts to take over as the new world currency, the price of gold will sky. That being said, the USG would fear that their hold on the dollar would be undermined if citizens could hold or trade in other liquid assets like gold, SFr., Euros, etc. This would give them reason to do the same thing FDR did. Since WJC is a self-admitted re-incarnation of FDR, he will want to confiscate private gold to add to the USTreasury gold in Ft. Knox (which is most of the gold that was originally stolen from US citizens in 1933) to give him the most gold at the least cost - theft is cheap if you are a govt - to then revalue the new $US and allow the additional expansion in the new currency. The USTreasury has about 8100 tons/7800 tonnes already. Why wouldn't they want to get more for themselves by virtue of a set of laws that already carry precident for confiscation??? WJC is a criminal. Expect the worse. If you have another scenario to post, I would be interested to hear it. I am still learning.

Goldflyjinx44#2919/30/98; 14:45:29

We're both learning. Well, as far as confiscation goes, you may be right. I was only addressing the issue of the market being suspended. I suppose they could go hand in hand. Rather depressing.....I'd turn the conversation to guns but there are other forums for that kind of thing......Somehow, (perhaps it's wishful thinking) I don't think the government could implement such in this day and age. Just too much basic mistrust by the people. But I'm relatively young- maybe public sentiment toward Big Bro- uh, Uncle Sam that is, has always been this unfavorable? GF

RAINMANGOLD#2929/30/98; 15:39:46

The entire world has sell orders between 298 and 300. Mines willing to hedge future production , short term long who bought between 275 and 290 , hedge funds willing to protect their stops. Against them , the average citizen is buying bullion at a pace not seen since 1987 , system traders have already identified a breakout and some institutional investors have already noticed that there is a new inverted correlation between stocks and GOLD and are hedging their exposure by buying some GOLD. We will break 300 by friday.

BCGreenspan Comments on Gold Standard?#2939/30/98; 17:44:36

Is Allen Greenspan preparing us for the Euro? Here are parts of an article, entitled: Greenspan's Prescription, that appeared in today's (Sep 30/98) Investors Business Daily. ...................Whenever Federal Reserve Chairman Alan Greenspan testifies to Congress, all ears are trained on the magic words: interest rates. But as policy-makers call for an update to the world's financial system, the rest of Greenspan's testimony is worth a closer look. ...Greenspan and Treasury Secretary Robert Rubin will soon chair a summit with the finance ministers and central bankers of major nations. Their topic? What kinds of institutions could have helped prevent a financial crisis in a few small Asian countries from wreaking havoc on the world economy? So far, the White House has few ideas...........By contrast, Greenspan put forth some concrete ideas on the subject in his recent testimony to the House Banking and the Senate Budget committees. The Fed chief focused on the basics - stable currencies and open markets - rather than huge bureaucracies to help "manage" the world economy. ...Today's major problem, he noted, is the way financial panics in one country infect others. That wasn't the case in the late 19th and early 20th century. Then, the economy was just as open to trade and global capital flows as it is now, Greenspan argued................The difference? A gold standard governed the value of currencies. That made economic policy clear for anyone to judge. It made it tough for governments to hide their mistakes. And it kept banks from lending too much. "Imbalances were generally aborted before they got out of hand," Greenspan said. .................Is Greenspan calling for a gold standard? Not exactly. Later in his testimony to the House, he said, "There are ways of simulating the effects of the positive aspects of the gold standard without actually going to it."

jinx44BC-- AG's 1966 speech on TGS#2949/30/98; 18:38:19

Doesn't the following direct quote from Dr. AG's 1966 article on Gold and currencies sound very much like the AG of today?? I take his early writings to be more of a single world gold standard with national currencies. Certainly, he would agree with the EEC and their Euro backed by gold - albeit fractional gold. I hope that he gains the stature with the public that would push forward his ideas about the NWO currency instead of Clinton, Rubin, Gingrich inventing something far worse. Any gold in a standard will be preferable to most people. #########article follows#### "When gold is accepted as the medium of exchange by most or all nations, an unhampered free international gold standard serves to foster a world-wide division of labor and the broadest international trade. Even though the units of exchange (the dollar, the pound, the franc, etc.) differ from country to country, when all are defined in terms of gold the economies of the different countries act as one--so long as there are no restraints on trade or on the movement of capital. Credit, interest rates, and prices tend to follow similar patterns in all countries. For example, if banks in one country extend credit too liberally, interest rates in that country will tend to fall, inducing depositors to shift their gold to higher-interest paying banks in other countries. This will immediately cause a shortage of bank reserves in the "easy money" country, inducing tighter credit standards and a return to competitively higher interest rates again. A fully free banking system and fully consistent gold standard have not as yet been achieved. But prior to World War I, the banking system in the United States (and in most of the world) was based on gold, and even though governments intervened occasionally, banking was more free than controlled. Periodically, as a result of overly rapid credit expansion, banks became loaned up to the limit of their gold reserves, interest rates rose sharply, new credit was cut off, and the economy went into a sharp, but short-lived recession. (Compared with the depressions of 1920 and 1932, the pre-World War I business declines were mild indeed.) It was limited gold reserves that stopped the unbalanced expansions of business activity, before they could develop into the post- World War I type of disaster. The readjustment periods were short and the economies quickly reestablished a sound basis to resume expansion. "

Friend of AnotherAll:#2959/30/98; 18:54:41

PH in LA,------------ thanks for the kudos! That was nice. Perhaps by looking both ways we will not be run down by the train that's coming. By the way, as you know Spain is one of the EMU countries that will join in Jan. If you have assets or contacts there, could you update us as to how people are taking it? Always good to hear all sides. RAINMAN : on Market Rap with Bill Fleckenstein, September 30, 1998, he had a interesting report
"Golden development... Moving on to the gold market, the Belgian National Bank, governing council member of the ECB (European Central Bank), said "The bank has no need or desire to sell gold in the future to satisfy reserve restructuring."

The "in the future" part of the phrase is interesting because in the past the ECB commentary hasn't mentioned this. Another bullish development for gold. Bills page is at:

ALL: -------- This was part of the latest from WGC. I think the lease rate action will work in reverse as the Bullion Banks also draw away from servicing their clients. They (BBs) may not want to borrow gold (acting as the dealmaker) and risk having a contract go bad. This action would push lease rates down for a different reason, "no demand from the middleman"! ??? So, the action in gold rates, up or down may signal a bull move from lack of liquidity?

"In spite of the short covering, lease rates jumped, with the one-month rate climbing from 0.4% a week ago to 1.7% amid reports that central banks were beginning to exercise a good deal more caution over the quality of their immediate counterparties, the bullion dealers, and the ultimate beneficiaries of leased central bank gold, the short sellers.

Friend of AnotherBC#2969/30/98; 19:10:56

Bc, ---------------That was some post! If Mr. Greenspan is trying to signal something it will not be seen by the regular wall street boys! But, you can be sure that the major world investors are moving their assets before the change takes place. America has never fought a currency war from this position. Everyone still thinks the US military might has something to do with a paper fight, it doesn't. Look at Russia, a huge military nuclear power! But they lost the financial war without a shot being fired. Could AG be sending up the white flag before the fact? I doubt it.

Ph in LAStill thinking about LTCM#2979/30/98; 22:44:55

Dear FOA: Your post about the interest rate cut fakeout played on LTCM to strip them of their excessive profits has been resonating in my mind all day. One or two thoughts refuse to go away:
1) Would the Federal Reserve really go to these lengths over a single hedge fund, no matter how big? I mean, they certainly have no profit motive to drive them to something like this. The profitability of their business activity is a given. They create money. Like having a goose laying golden eggs or money that grows on trees. And wouldn't this kind of double cross look prety bad if word ever got out?
2) And what about other hedge funds? Haven't others followed the same path as LTCM, betting on the true direction of future interest rates? Is the Fed group prepared to take over others when they hit the skids too? How many could they handle? Just how big is their greed? You say that the size of LTCM's bet was as big as some countries; yet how much bigger could this get? Bigger than several countries? Or a whole region? Or do you mean that it is perceived as OK if huge assets go by default to banks but looks unfair if a private entity gets away with it?
3) The obvious (and conventional) explanation, "that LTCM had to be bailed out to keep others from being dragged down with them" seems somehow cleaner.----------
Something else nibbling away on the fringes of my mind: Is silver's recent rise related to this whole near-default matter? I have heard several times that LTCM had no positions in gold but no specific denials about silver. Has anyone else heard anything?

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