USAGOLD Gold Discussion Forum Archive

Electronic reproduction sourced from
Golden TruthTO F.O.A#2399502/01/00; 00:09:15

Please don't go, the stuff you talk about is bound to draw some heavy fire, i'd say it comes with the territory.
GOLD as you know is a very "emotional" subject. Please its not fair to the rest of us, and heaven knows you've tried to be fair with us.

These are evil days F.O.A you must not be dragged down by people that take aim at you, they know you're GOOD thats why they attack you. Instead of shutting the h*ll up and listening to what you have to say, and maybe asking a question or two. They come to "DESTROY AND KILL" any knowledge that can be learned from you.

I am very mad about this developement, because you F.O.A are one of the main reasons i read this forum, please don't go?
Not now, after all this time you've spent with us.
Please forgive us all, for we are all lost here without you.
P.S If you decide not to ever come back, i and many others will truly miss you! As you always say "Believe it"
Please do believe it. Also F.O.A i know you are a very good person and a song that comes to mind is "How do you fix a broken Heart and how do you stop the Sun from shining and how do you stop the World from turning round" "Time" because only time heals all wounds.
So please come back in a time or two, when you feel up to it again, until then, i wish you health and happiness! :-)

P.P.S You will be missed Sir!

Golden TruthTO HLIME#2399602/01/00; 00:21:24

You good sir are a very mean person, i will avoid all you have to say in the future. END.
Simply MeWhat? FOA gone?#2399702/01/00; 00:32:36

I don't know whether to be more upset or offended to be left and lumped in the same category (forum) as....Permafrost, is it? When did PF say ANYTHING of substance? Never. His "philosophies" are conceit and arrogance, with nothing but his own hubris to back it up. He made no realistic arguments. His posts were nothing but puffery. And I have no earthly idea why anyone found them worthy of reading, let alone rebuttal! (I tried once. Found it was like getting into a mud-wrestling contest with a pig. All you get is dirty, and the pig likes it.)

FOA: I wish you would reconsider your decision to leave the forum. Your posts were the icing on this rich cake of information. Are you going to let Permafrost win? (As I believe his entire intention in posting here was to drive you away.)

Petty bickering makes my "eyes" tired.
Where's the beef (gold)?
simply me

Black BladeFOA (What's This!?!?!?!?), and Koan#2399802/01/00; 00:54:12

FOA: I always read your posts with interest. I didn't necessarily agree with everything you presented over the last several months, but your posts always pointed me in a different direction and stimulated a lot of discussion. For this I thank you. Hell, I didn't always agree with Stranger either, but he made some valid posts that got me into some mental debates with myself. I'd rather you stick around and continue to stimulate the discussion here at the "Round Table".

Koan: I have been in N. Nevada working on some projects for a couple of the large mines here. I came back from Myanmar and Thailand in September. That jungle environment is just a little humid for my taste. I didn't see any Asian black bears, but I did see tracks and droppings in some of the washes, as well as SE Asian spitting cobras, crates, and Russels vipers. Also saw some local Heichein and Shan miners and their families who were kind enough to share tea and show me their gold! It sure is interesting to see how highly gold is valued in that part of the world. It sure is a labor intensive business for those people. I may get to Chile this coming fall for a couple of months. I might try to get some time and go to El Asiento, Bolivia and see if I can swing a mine tour at San Critobol (Apex Mine).

I am still riding my energy service stocks (BHI, SLB, and RIG), telcoms (GTE, Q, USW, LU, etc.), a smattering of techs, and of course I have added quite a bit to some of my Mine stocks (SWC, T.FN, SIL, N and HGMCY) and physical PM's.

Take care my friend, Black Blade.

Strad MasterMy two Vienna Philharmonics into the FOA discussion...#2399902/01/00; 00:56:01

I was one of the old-time posters at Kitco when the Kitco site was just a few months old. It used to be my home page. I wittnessed the appearance and disappearance of "Big Trader", ANOTHER, FOA, "Lurking Gold Bug" who became the infamous LGB, Vronsky, PH in LA, and many others too numerous to mention. I read the food-fights (as they were called) and even intervened in some of them. Eventually, I learned the simplest and best technique for avoiding raised blood pressure: skip over the posters that were disruptive. Nothing drove them nuttier than to be ignored. Nevertheless, the Kitco site degenerated into a more or less meaningless chat room with PM's as a peripheral topic at best. In the meantime I made personal friends with a number of the posters. Thanks to PH in LA (my dear friend and musical colleague) I finally dropped in to USA Gold and, due primarily to FOA's postings, have been learning much that otherwise I wouldn't know. USA Gold is now my home page. Primarily, I look forward to FOA's postings since they are the most thought-provoking. Without fail, I read his brilliant work, PH's (since we are friends), Peter Asher, because he knows a lot (and now we are friends as well), Elevator Guy (because we engage in fascinating off-topic debate via e-mail), Farfel, because he is so entertaining and knowlegable (and now we're personal friends as well), and a smattering of others when something catches my eye. Oro's postings are fascinating but generally too long to read religiously, when one has three kids to homeschool and a musical career to persue. (sorry - Oro - nothing personal). Pretty much everyone else, I ignore, due to time considerations and blood-pressure considerations. Life is too short to get bothered by the postings of an internet crackpot, especially when it is impossible to know who or what is behind it. The bottom line is that in the long run, the quality of postings have to demonstrate their worthiness before I waste inordinate amounts of time reading. That is the case with FOA. It takes someone of tremendous intelligence and sensitivity to write what he writes and equally so (if I do say so myself) for the reader to glean from his writing what he intends. He makes no predictions - except in the long term, but his erudition and obvious immense inside knowlege keeps me coming back for more. It would be tragic for FOA to leave this forum over someone whose very handle (Permafrost) gives us an insight into where he is coming from. Since I rarely read any of his postings, I can't comment on their content, other than to say that what I did read led me to decide to skip them in the future. I wish FOA would do the same - just ignore him so that we who are in his corner and want to learn can do so. In a way, that last comment reminds me of a high school history teacher I had. He was completely ineffectual in terms of managing a classroom. Kids would throw spitwads and papers at each other in the back, talk constantly, and generally do everything to disrupt the proceedings. Ocassionally he'd get red in the face and yell at them to quit it and they'd just ignore him. Eventually, though, he learned to ignore them as we, who wanted to learn, also did. Because, I came to understand, he was the most brilliant history professor I had ever met. His knowlege of history was staggering, fascinating, and virtually bottomless. Those few of us who sat at the front of his class drank in every word and benefitted profoundly from his love of the subject. We learned history! The others learned how to shoot spitwads. Who is better off now? Certainly, I don't want to imply that FOA is ineffectual when it comes to "managing" the class - that's not my point, nor is it his job. My point is that we who want to learn will learn despite the static in the environment. So, please, dear FOA, if our words count for anything, know that you are appreciated by most here and your decision to leave is troubling to say the least. I, for one, hope that you will reconsider. I want to learn what you so generously have offered. Thanks and blessings to you -- whatever you and your friends decide.
PERMAFROSTALL; Cananami, Cavan Man, mellow88. I'm sorry as well...about FOA et al#2400002/01/00; 01:05:02

First apologies for inadvertantly including wrong terminology in the content of my last post last night; I was shocked by what is happening here and my mind was wandering. They've been finding dozens of people mutilated to death or buried alive here for the last two weeks...I will not address that issue unless it interests the forum as this place is nominally a gold or money concern.
I was saddened to see what happened yesterday when I got back to my computer terminal this morning. I'll first replie to the handles above.


I'm not a sedevacantist. I don't know what that is. I'll tell you what I am since I take it you want to know. I'm a member of the first Christian nation of the world. I embrace the religion I was born into but do not IDENTIFY with it, just as having a finger doesn't mean you're just a finger. The part is not the whole. I also acknowledge Zoroastrianism, the ancient religion of the Arian peoples (whose blood still flows in the veins of the Greeks, the Indians, the Persians, and my people). I also believe that the greatest achievements in human thought were accomplished by the ancient Indian teachers, the Pre-
Socratic Greek philosophers and the Persian poets. From what I've read, my religious/philosophical inclinations would have found a sympathetic echo in the tradition of the gnostics--were they not extinguished a long time ago. Did you know that the Church (the Roman one) launched a crusade against the Cathars (another Christian sect) in 1209 and exterminated them? The knight who led the crusade, when asked by his men who they should put to the sword and who they should spare in the towns they attacked, replied with the immortal words, "Kill them all. God will know His own."
I'm not a religious zealot.

Cavan Man;

According to my wife, there are three cities in the world built on seven hills. Moscow, Rome and Constantinople. Revelation 17.9: "The seven heads [of the beast] are seven hills, on which the woman sits." The subject is the Famous Prostitute mentioned in the Bible. You know where I live...

I used the wrong words yesterday to allude to this passage in the Revelations 13.15: "The second beast was allowed to breath life into the image of the first beast, so that the image could talk and put to death all those who would not worship it." I will not comment further on this one.



As for you, Dear Sir(s) FOA;

I second your proposition--let the Forum be the Court.
This is my understanding of your position. You are saying that gold is good but it will NEVER be allowed to become "good as gold". But buy it if you have dollars as opposed to euros [though to the best of my knowledge you only said this first last weekend and not before. I may be wrong.] The tacit implication is that the euro is the better bet because the banking establishment that you're part of will aid and abet this new fiat beast and keep gold in chains. So, in the end, you're still a Euroman and not on the side of golden angels.

Justice be done!

PERMAFROSTALL; Cananami, Cavan Man, mellow88. I'm sorry as well...about FOA et al#2400102/01/00; 01:07:04

First apologies for inadvertantly including wrong terminology in the content of my last post last night; I was shocked by what is happening here and my mind was wandering. They've been finding dozens of people mutilated to death or buried alive here for the last two weeks...I will not address that issue unless it interests the forum as this place is nominally a gold or money concern.
I was saddened to see what happened yesterday when I got back to my computer terminal this morning. I'll first replie to the handles above.


I'm not a sedevacantist. I don't know what that is. I'll tell you what I am since I take it you want to know. I'm a member of the first Christian nation of the world. I embrace the religion I was born into but do not IDENTIFY with it, just as having a finger doesn't mean you're just a finger. The part is not the whole. I also acknowledge Zoroastrianism, the ancient religion of the Arian peoples (whose blood still flows in the veins of the Greeks, the Indians, the Persians, and my people). I also believe that the greatest achievements in human thought were accomplished by the ancient Indian teachers, the Pre-
Socratic Greek philosophers and the Persian poets. From what I've read, my religious/philosophical inclinations would have found a sympathetic echo in the tradition of the gnostics--were they not extinguished a long time ago. Did you know that the Church (the Roman one) launched a crusade against the Cathars (another Christian sect) in 1209 and exterminated them? The knight who led the crusade, when asked by his men who they should put to the sword and who they should spare in the towns they attacked, replied with the immortal words, "Kill them all. God will know His own."
I'm not a religious zealot.

Cavan Man;

According to my wife, there are three cities in the world built on seven hills. Moscow, Rome and Constantinople. Revelation 17.9: "The seven heads [of the beast] are seven hills, on which the woman sits." The subject is the Famous Prostitute mentioned in the Bible. You know where I live...

I used the wrong words yesterday to allude to this passage in the Revelations 13.15: "The second beast was allowed to breath life into the image of the first beast, so that the image could talk and put to death all those who would not worship it." I will not comment further on this one.



As for you, Dear Sir(s) FOA;

I second your proposition--let the Forum be the Court.
This is my understanding of your position. You are saying that gold is good but it will NEVER be allowed to become "good as gold". But buy it if you have dollars as opposed to euros [though to the best of my knowledge you only said this first last weekend and not before. I may be wrong.] The tacit implication is that the euro is the better bet because the banking establishment that you're part of will aid and abet this new fiat beast and keep gold in chains. So, in the end, you're still a Euroman and not on the side of golden angels.

Justice be done!

Golden TruthTO ALL and F.O.A#2400202/01/00; 01:08:26

As part of the court of the peoples opinion, i hearby find F.O.A innocent! As for permafrost i find you guilty of "Character Assassination". I wish for you to leave this table round at our Castle and be banished to a lesser land, until you have learned how to behave as a true Knight in our GOLDEN KINGDOM!

In the meantime we the Knights of the round table stand united in calling for SIR F.O.A to lay his Golden Sword back down upon the table, for there is now just an empty spot where he once sat with us!

SteveHESOP and ORO#2400302/01/00; 01:34:19


You said recently, "...So, essentially, the current global dollar debt demand is being met by the rise in equity prices forcing the delta hedging arbitrageurs to buy more stock with non-broker margin from the stock markets. The purchase of more stock dictates the rise in prices and forces the arbitrageurs to borrow more funds to buy more stock.
The higher stock prices allow more cashing in of ESOP stock options, a greater tax kickback to the corporations, and therefore, higher higher earnings. Higher earnings then attract further equity buying, forcing up the stock price.

The following was from a CPA friend. I tried to get a handle on how ESOPs increase earnings. From the explanation it would seem to decrease earnings, therefore taxable liabilities, and increase cash. Simply, how are ESOPs contributing to increased stock prices through increased earnings if the net affect is decreased earnings, less taxes, and more cash? Or, what am I missing?

from my friend:

An employer deducts the value of a nonqualified stock option as a business
expense for the tax year in which the option is included in the gross income
of the employee (deduction at employer's corporate tax rate)- decreases
profit. When exercised, employer gets cash - no taxable income.

H-2703Tax consequences of compensatory options to the employer.
Employers are entitled to compensation expense deductions in connection with
nonstatutory options, see ¶ H-2883, but not in the case of statutory
If stock is transferred to an employee in a transaction which is subject to
the rules that apply to statutory stock options, no deduction is allowable
to the employer at any time. 3

3 Code Sec. 421(a)(2).
RIA observation: An employee is taxable on the compensatory benefit
realized through a statutory option because he is required to include in
income the difference between the amount he receives from the sale of option
stock bought through exercise of the statutory option, and the amount he
paid for the stock. But the employer is not entitled to a deduction for the
compensatory benefit provided to the employee through a statutory stock
The employer does get a deduction if and when an employee makes a
disqualifying disposition of statutory option stock (see ¶ H-2883).
For the employer's deduction with regard to a statutory option where the
optionee doesn't satisfy the holding requirements, see ¶ H-2800 and ¶
If an employee has compensation income through the grant or exercise of a
nonstatutory option, the employer is entitled to a deduction under the rules
that apply to the transfer of property for the performance of services. The
employer's deduction is allowable for the tax year in which the employee
includes in income the compensation attributable to the compensatory
property (see ¶ H-3651). 4

4 Code Sec. 83(h).
RIA observation: The timing of the employee's inclusion in income, and the
corresponding deduction by the employer, of the compensation attributable to
a nonstatutory stock option, is determined by whether the option had, or
lacked, a readily ascertainable fair market value at grant.
Nonstatutory options granted before July '69 are taxed under Reg § 1.421-6,
rather than Code Sec. 83, see ¶ H-2870.
For the written statement that corporations are required to furnish to
persons to whom stock was transferred on exercise of statutory stock
options, see ¶ S-3179 et seq.

¶ H-2704"Statutory option" defined.
"Statutory options" are options governed by specific code sections that
impose restrictions on both the employer and employee. They include: (a)
incentive stock options (ISOs) (see ¶ H-2750 et seq.), and (b) options
issued under an employee stock purchase plan (see ¶ H-2950 et seq.). 5

5 Reg § 1.421-7(b)(1).
An option may qualify as a statutory option only if the option is:
(1) not transferable (other than by will or by inheritance laws) by the
individual to whom the option is granted, and
(2) exercisable only by the individual to whom it was granted during the
grantee's lifetime. Therefore, an option which is transferable by the
individual to whom it was granted during his lifetime, or is exercisable
during the grantee's lifetime by another person, is not a statutory option.
However, if the option, or the plan under which the option was granted,
contains a provision that permits the grantee of the option to designate a
person who may exercise the option after the grantee's death, this will not
disqualify the option as a statutory option. 6

6 Reg § 1.421-7(b)(2).
The determination of whether an option is a statutory option is made as of
the date the option is granted. An option which is a statutory option when
granted does not lose its character as a statutory option as a result of
later events. Nor can an option which is not a statutory option when granted
become a statutory option due to later events. 7

7 Reg § 1.421-7(b)(3).
Illustration: A parent corporation gives an employee an option that
qualifies as a statutory option to buy stock of its subsidiary. The
subsidiary is no longer a subsidiary before the employee exercises the
option. The option is still treated as a statutory option when it is
exercised. 8

8 Reg § 1.421-7(b)(3)(ii), Ex (1).

¶ H-2705"Nonstatutory option" defined.
Options that don't meet the requirements for statutory options (see ¶
H-2704) or that are granted under a plan (or offering) that does not
qualify, are treated as "nonstatutory options." 9

9 Reg § 1.83-7(a).
Compensatory stock options which do not qualify for statutory stock option
treatment under Code Sec. 421 are referred to as "nonqualified" options 10
or "nonstatutory" options.

10 Reg § 1.83-7(a).
RIA observation: Reg § 1.83-7(a) (footnotes 9 and 10) does not actually
define "nonstatutory options." Rather, it describes the tax treatment of
options that don't satisfy the statutory option requirements. The term
"nonstatutory option" thus is a "catch-all" designation for those other
For discussion of the meaning of "nonstatutory option," see ¶ H-2853 et seq.

¶ H-2750Incentive Stock Options (ISOs).
"Incentive stock options" (ISOs) are options granted to employees by their
employer corporation (or the employer's parent, or its subsidiary) to buy
stock in those corporations. ISOs are subject to grant period requirements
and exercise period requirements. The option price may be no less than the
fair market value at grant. ISOs can be issued on a selective and
discriminatory basis. However, if an employee who receives an ISO owns more
than 10% of the employer (or its parent or subsidiary), the option price
must be at least 110% of the fair market value of the ISO stock, and the
option is not exercisable after five years from the date of grant.
Neither the receipt nor the exercise of an ISO is a taxable event. The
employee is not taxed until he sells the underlying stock. He may have
capital gain at that time. But, if the ISO stock is disposed of before the
required holding period has run, the gain is includible in income, and a
portion of that gain may be ordinary income.
The employer is not entitled to a deduction with respect to an ISO. However,
if an ISO is disposed of before the holding period has run, the amount of
the ordinary income includible in the employee's income is deductible by the
The term "incentive stock option" refers to an option that is granted to an
individual, for any reason connected with his employment, by his employer
corporation (or by a parent or subsidiary of the employer corporation), to
buy stock in the employer corporation (or in the employer's parent or
subsidiary corporation), and that satisfies the ISO qualification
requirements, see ¶ H-2753.
"Incentive stock options" (ISOs) are "statutory options," which status
determines the timing of the income consequences to the employee receiving
the ISO, and the nondeductibility of the ISO by the employer, see ¶ H-2704.
Thus, the employee has no regular income tax liability when he receives or
exercises the ISO. However, an ISO is a tax preference item for purposes of
the alternative minimum tax (see ¶ A-8313 et seq.). Aside from alternative
minimum tax consequences, the employee is taxed when he sells the stock
acquired with the ISO. That income may be treated as capital gain, see ¶
The employer has no deduction at any time (unless there is a disqualifying
disposition of the stock), see ¶ H-2761.
For the "statutory option" treatment to apply, the individual receiving the
ISO also must satisfy certain employment (see ¶ H-2809 et seq.) and holding
period requirements (see ¶ H-2795 et seq.).
The employee's failure to hold the stock for the required period makes the
ISO's exercise taxable to him upon premature disposition. The employee may
realize ordinary income, and the employer have a corresponding deduction, in
the year of that premature disposition, see ¶ H-2799.
For the applicable statutory rules governing ISOs, see ¶ H-2751. For the
incorporation in the ISO rules of interpretations under corresponding prior
law provisions, which applied to those earlier options, see ¶ H-2752.
For the basis of stock acquired through incentive stock options, see ¶
P-5002 et seq.
For rules that deal exclusively with employee stock purchase plans, see ¶
H-2950 et seq.
For nonstatutory options, see ¶ H-2850 et seq.
For noncompensatory options, see ¶ I-6500 et seq.
For required information statements related to ISOs, see ¶ S-3179 et seq.

¶ H-2751Statutory rules governing the taxation of incentive stock options.
The tax consequences of an incentive stock option (ISO) are determined not
only under the Code Sec. 422 rules whose application is limited to ISOs but
also under the statutory stock option rules of Code Sec. 421, 1 and the
stock option rules of Code Sec. 424. 2

1 Code Sec. 421(a).
2 Code Sec. 424.
The statutory option rules under Code Sec. 421 and Code Sec. 424 that apply
to both ISOs and options granted under an employee stock purchase plan are
covered in the paragraphs which follow. The statutory option rules under
Code Sec. 421 and Code Sec. 424 that are specifically limited to options
granted under employee stock purchase plans are covered in the discussion of
those options at ¶ H-2950 et seq.

PERMAFROSTLaw...#2400402/01/00; 01:46:37

I have read your message. Thanks for your comments, sir. I am not in disagreement with you.


UsulChat forums#2400502/01/00; 01:48:24

They all tend to go the same way. I have seen this in all kinds of chat rooms, Usenet news groups, web chats.

Some have the fortitude to ignore the irrelevant and seek out the valuable postings, which remain like gold flakes
in a bedrock of junk quartz.

Despite all their difficulties, chats remain popular because of their interactivity. Those who find their difficulties too much might be better off setting up their own dedicated web site. Customised discussion groups can even be set up...

Black BladeThrowin' a bone to Nickel62 :-)#2400602/01/00; 01:53:24

Nickel prices are on the rise and are taking Canadian nickel producers along for the ride. A recent boom in the demand for stainless steel, in which nickel is a big component, brought the base metal's value up to around $3.95/pound in London Friday for a 46-month high. Analysts from Montreal to Australia are bullish on nickel, with some forecasting prices of $4.54/pound by the end of March, before moving
higher. Shares of Inco (N:TSE,ME), the western world's largest producer, jumped by $1.45 on Bay Street to reach mid-day trading at $27.35/share, while rival Falconbridge (FL:TSE,ME) hit mid-day at $24.75/share after gaining $0.40. (Jan 28/00)

PERMAFROSTGolden Truth, ALL...#2400702/01/00; 01:54:21

I solemnly swear that I will abide by the wishes of the Knights of the round table.

From the son of the Ancient Ones...

TEXNow repeat after me........#2400802/01/00; 02:00:11

Jeez Everybody.........get a, repeat after's only a GOLD's only a GOLD's only a GOLD Forum.........
PERMAFROSTPeople are strange when you're a stranger; On closer reading...#2400902/01/00; 05:27:04


Apparently you challenge me [among other things] to prove my assertion that the dollar is not backed by oil. I suggest you take your dollar bill to your local bank and try redeeming it in oil.
Now that I had time to read most of what you wrote yesterday; and digest the reaction of those who commented; I'm appalled.

But I know why you acted so, even if the others don't understand. So it seems we shall meet soon.

OROSteveH - CPA - tax accounting and SEC rules#2401002/01/00; 05:29:02

The CPA is exactly correct regarding accounting rules for tax purposes. Trouble is, these are different from the GAAP rules which are used to do the SEC filings and public accounting.

Normally, the option is issued at the time of the stock being somewhat below the strike price, S. At the time of excercise, usually the 5th year from issue, but often before that, the option would be excercised if the stock price, P, is much greater than S.

On the tax accounts of the employee the sum
P - S
appears at the time of excercise. The employee pays the sum S to the employer and pays tax at his marginal tax rate, normally 28%-35%.

The corporation has a tax book and a GAAP book, a cash flow book and a few other accountings of the business.

In the Tax book, the sum
P - S
appears as an expense under the limitations you posted.

Therefore, the corporation gets a tax credit of 35% of that sum. The corporation also receives from the employee the strike price - S in the option contract granted.

By the magic of GAAP standards, the corporation records the tax benefit (35% of P - S) in the operating income line, and consolidated there one also finds the sum S received from the employee. The sum P - S is never charged to the corporate books. The future liability of buying back the shares issued never appears, only the expense of buying back previously issued shares is listed.

The GAAP then makes the corporation list the cash flow elements in the reconcilliation cash flow report, where both the tax credit and the employee contribution appear separately.

As an example, let's use DELL, who do not abuse this accounting gimmick too badly:

The Financial data table:
<!--StartFragment-->FISCAL YEAR ENDED

Results of Operations Data:
Net revenue........................$18,243
Gross margin.......................4,106
Operating income...................2,046
Income before extraordinary loss...1,460
Net income.........................1,460
Income before extraordinary loss
per common share(a)(b):
Number of weighted average shares
Balance Sheet Data:
Working capital....................$2,644
Total assets.......................6,877
Long-term debt.....................512
Total stockholders' equity.........2,321

===> As you see, the only mention of the stock options outstanding is in the difference (my addition) between the outstanding diluted and undiluted shares.

The dirt is dished out in the cash flow statement:


Cash flows from operating activities:
Net income..............................................$1,460
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization......................103
===>Tax benefits of employee stock plans...............444
Changes in:
Operating working capital...............................367
Non-current assets and liabilities......................51
Net cash provided by operating activities.......2,436
Cash flows from investing activities:
Marketable securities:
Maturities and sales.................................15,341
Capital expenditures....................................-296
Net cash used in investing activities...........-1,414
Cash flows from financing activities:
Purchase of common stock................................-1,518
===>Issuance of common stock under employee plans...........212
Proceeds from issuance of long-term debt, net of
issuance costs.......................................494
Cash received from sale of equity options and other.....--
Repurchase of 11% senior notes..........................--
Net cash used in financing activities...........-812
Effect of exchange rate changes on cash...................-10
Net increase in cash......................................200
Cash at beginning of period...............................320
Cash at end of period.....................................$520

===> Stock options issued come in with the lines marked above, the 35% of P - S is $444 million, The sum S is the $212 million. The total addition to cash flow and operating earnings is $656 million. Quite a substantial sum out of the $1460 million income - some 40% of it, in fact. That, however, pales in comparison to 1998 when the young company's employees were vested in a large chunk of their options:

------------------ RETAINED
Balances at February 1, 1998................
Net income................................
===>Stock issuance under employee plans, including tax benefits.................
Purchase and retirement of 149 million shares .................................
Balances at January 29, 1999................
2,543$1,781 $606 ($66)$2,321

===>The total cash from the ESOP was $1096 million of the $1460 million reported, 65%.

Mr GreshamFOA -- What about the rest of us?#2401102/01/00; 05:34:47


You went from asking for a jury decision, to walking out on the case? I don't believe that of you. Wait – I think the jury is returning to give its verdict – just a few remarks while we wait, OK?

(By the way, in civil court a "preponderance of the evidence" is all that is required, and a judgment in some value clears the case – there is no requirement of "guilt beyond a reasonable doubt" or a unanimous jury vote.)

Here I am trying to pack the night before for a solo vacation to a Caribbean island – my first getaway in four years (three of it working two jobs -- businesses) since our daughter was born. I am tired, very tired. Now I check in here and find my other "family" being torn up by an offense given and taken, and I feel helpless and cheated in the conflict between you.

If someone like Permafrost, here sporadically for a month, could drive you away, ("But, no amount of camaraderie is worth being associated on stage with this other nut.") then I wish you would have made that clear to Michael, to decide or to put to all of us to decide what kind of forum "firewalls" we need to have. He IS the host, and it is his right to choose which of his guests he wishes to stay. I think he had warned PF before and could have followed through quite easily with no arguments from the rest of us.

To not-quite-coin a phrase: "Aren't you being a little bit hasty?"

I'd hate to see "Gresham's Law" come true, about bad posters driving out the good. How can we ever progress if the path to wisdom is so fragile as this?

We all didn't go through the Kitco experience with you, and we assumed that all was in a healthy state here with a moderated forum. You must have been pretty burned there, but USAGold is a pretty mild environment, wouldn't you agree? I helped fight the Troll Wars over on the TimeBomb 2000 forum, and it was vicious last spring. But why would you withdraw from everyone else here?

About false accusations, and how they can shake up even the best of us:

I went back to my old college a couple years ago, and ran into my math professor. A guy who welcomed me into his home and helped me through a bad time when I was a student. He was just coming out of a two-year "period from hell" after he had been accused of sexually harassing a female student (NO way he did it!), after the suicide of another student they had both known well. After she insinuated herself into his company "for consolation", she accused him. Stab in the back, seems to me. Imagine what it did to his work life and family.

I myself was totally burned on false accusation last summer by a woman with a neighboring suite in my office building (one that I was fortunately already moving out of) who had apparently had some break-ins to her office through a door she later admitted in court she had always left unlocked to a back hallway. Never a word to me in months of apparently "suspecting" me. Just a whole thing building up in her imagination. So I come back in to work one evening and find the building's exterior door left wide open, not just unlocked. She comes in an hour later and I go out on the landing to tell her I found the building open. Then she calls the police on me! For being at my office, and for being kind enough to tell her about a potential danger! The whole Miranda reading and all – I was in total shock! They didn't believe her after interviewing me, so she put an anti-harassment court case in by surprise and I was "restrained" away from my office for a week, until the judge figured out that she was a nutcase. ("He put a tape recorder in my closet, your honor." Paranoid.) This was just last August, and you can probably tell how pissed off I still can feel about it. Out of there now, totally.

Something about people's opinions and their anatomical parts is occurring to me here, but you probably know it already ("Opinions are like ***** -- everyone's got one!)

FOA – PF is a person on a religious-type crusade. (He's also caught up with all the attention he's able to get that he probably can't get anywhere else.) He seems to be somewhat unstable, mentally or emotionally. I've known quite a few dozen on that particular pathway, so I don't think you can converse with him in any meaningful way on a gold/finance forum. He just latches onto you (like that women did to me, or that student did to my professor) to scratch his own itch, and then disappears. He's a bit above your common Internet "Troll", but the effect is the same when you're trying for a level much above the usual.

You went to a surprising lot of effort to answer his posts – and wrote some of your good stuff there, too ("Yet, as a lion, I know my place on earth while as the wind, you will never know yours!"), but I felt you knew the rest of us were listening too, and so you kept up the quality. We mostly ignored his writing once we saw its quality level, and then we read your responses. I don't think too many of us went back into his to see just what you were answering; there wasn't much, and you usually include the take-off points you want to talk from anyway. We are trying to learn, not waste our lives checking out arguments.

This guy got to you tonight, and honestly, I just don't get why.

Well, I gave my two examples above to suggest how we may hit our boiling point when we encounter a crazy person, when we try to be reasonable fair-minded people like most of the people we choose to associate with, and this person just won't get off our case. So what do the other normal people at the convention do when someone raises a ruckus? You suggested it in another post about PF: You get together with the other people there and see just what you still want to accomplish together. You don't let one person barrel on in and break up your good work. Clear up the problem and get on with it.

It ain't about the PEOPLE we're walking the trail with – it's the trail we've found ourselves on that's new; we may get to know each other along the way (and we do), but the trail is what's brought us here. Let's stay on it. You ARE allowed to ignore things that don't help us move along on our way.

Jury's back:

"Mr Gresham, your vote?"

"Sir FOA has presented a consistent window into a world future we all want to learn more about. He has not betrayed or misled anyone by his words here, which are freely given and generously explained.

"Mr Permafrost has failed any standard of proof in his accusations, and recites what he has heard only from others ("NWO", "Illuminati") by hearsay. He has failed to make his case.

"Find for the defendant, Sir FOA, we award costs, and award on his counterclaim that he be made secure from the badgering of Mr Permafrost on the forum premises by such means as he or the host may deem necessary and effective."

Mr GreshamOro - early hours#2401202/01/00; 05:43:30

Good morning, Oro --

Did the cat wake you, too?

Turbulent night, eh? Posting wasn't working for a couple hours after I wrote the previous, so I was stuck on Solitaire, ruminating about the forum, my attachment to it, financial futures, and conflicts between people. Also the ability of people who've never met or even seen one another to communicate so well!

Wondering if you or maybe Journeyman can recall the film or comedian who gave us: "I refuse to have a battle of wits with an unarmed person." 'Twould be my advice to Sir FOA.

Have a good day, week, and I hope to find all in good repair upon my return to this land of fable and fortune.

OROLord Gresham of the Exchequer#2401302/01/00; 05:51:46

Fare you well this morning?

The quote is a keeper. Showed it to the wife - she plans on using it.

The thing keeping me up was a dog who would not budge out of the car for over 2 hours after keeping me company while I cleaned up, and another who would not clam up unless I was there. House has separate kitty and doggy floors.

GoldflyFOA, I'm with you buddy....#2401402/01/00; 05:53:02

Permafrost, I used to read your stuff when you started posting. You have some good points to make, but the combative style and derogatory nature of you posts are a big put-off.

FOA, just do what most of us do- Ignore him.


Mr GreshamOro & the animals#2401502/01/00; 06:02:05

My good Sir Oro –

We need such doors as you have in your castle. Raising and lowering the drawbridge for each canine or feline request is indeed tiresome. Since I have been working mostly at home, I have come to learn who it is I really serve.

When the cat leads you downstairs to his dish, and you find it's still mostly full from the last time, you share a moment of interspecific surprise, and then move on, I guess. We are locked in a duet of habit now.

It was probably a Woody Allen movie, but it was a long time ago.

Well, one more importuning of Sir FOA, hoping he's quieted after an evening's rest and still reads us, and then, back to bed. Perchance to sleep.

Cavan ManDear FOA#2401602/01/00; 06:16:12

Your sensitivity is very admirable. Please accept that compliment from one who knows! :) (smile)

One of the greatest intellects the world has ever known, Thomas Jefferson, was also a VERY sensitive person. He was also a very kind and generous individual.

While I do not know you well enough to remark upon your intellect though I suspect it is considerable, I will say that your kindness and generosity rivals Jefferson's from what I have read of you both.

Still with you (always was from the beginning), CM

Mr GreshamFOA -- One more thing (well, maybe a couple...)#2401702/01/00; 06:19:32

You are a reasonable man, and it's not a reasonable thing to do it this way, over this.

You are "on stage" only by how many of us read and interact with you in the privacy of our own individual thinking and wish to know and grow. You are "on stage" only by having earned our respect. Each of us decides who is "on our stage." And you are "on stage" only with those others we read and respect.

Someone may post and not be read. Someone may post and not be respected. That person is not "on stage" for many of us.

Pace yourself. Discern which conversations will carry the most listeners the farthest. Wait, if you wish, for outside events that we can look at together, and spend less "classroom time" answering questions, if that wears you down. (It would me!)

Many will be able to tell you years from now in ways they can't now how your shared understandings helped them in their lives.

Think long term, not just have it turn out "oh yeah, USAGold. Didn't there use to be this guy FOA there... I don't know, how DID it turn out? like he said? or was that somebody else? I dunno... what's on CNBC?"

nickel62I've been away and missed all the fireworks.#2401802/01/00; 06:41:01

I have greatly appreciated and learned from the comments of FOA and would be saddened to lose the ability to read his posts in the future. Like the many other readers who have responded I would like to ask you to continue to share your significant intelligence.

ORO Someone suggested that they couldn't read all of your posts because of their length be assurred that many of us ,myself included, not only take the time to read your posts but save them and reread them to further our own understandin.Thanks to ORO and FOA and many others for finaly allowing me to begin to understand the monetary secrets that have been obscured from my view for so many years.

nickel62Black Blade#2401902/01/00; 06:43:16

Thanks for the bone I appreciate it. I think the nickel market is a harbringer of things to come in the commodity markets in general. Unfortunately I invested my nickel money in Voisey Bay and we have a while longer to wait on that particular deposit I'm afraid. Thanks for the information.
Cavan ManDear FOA#2402002/01/00; 07:15:16

RE: Cavan Man 23948

Before entering Cooperstown or Canton, one must be in the retirement mode. Around here (USAGOLD), when you go, "in the hall", you still must keep working (another smile). Please reconsider. I'm in your cult (bigger smile).
Hipplebeckto Sam Adams#2402102/01/00; 07:44:33

Concerning leasing gold and the Washington agreement;
The European CBs never said they would stop leasing. They said it would not be expanded.
I have seen lots of people miss this.

Twice DiscipledFOA: Your Impact#2402202/01/00; 07:48:03

Dear Sir,
I would like to let you know that your words do not fall on deaf ears. I have taken your many insights and words of wisdom and combined that with other sources to come to one conclusion. The US will suffer greatly in the transition to whatever monetary system is establish after the dollar falls. In my opinion we will experience devastation far greater than anything which occurred in the early 1930's.
In preparation for this event, whether this year or in 5 years, I have decided to take the tax hit (believe me this was gut wrenching since I did my taxes last night) and taken 45% of my IRA and converted it to physical gold holdings in my hand, NOT STOCKS, NOT CALLS, NOT PUTS, just PHYSICAL and mainly because of your informed and provocative words. I may take the other and invest in physical in the IRA or the Central Fund of Canada which has physical gold and silver. WHY? Because I have read and researched other sources in conjunction with your words, and I feel this may be the only way to protect my family in what lies ahead.
Without your words I might have known about this, but would not have had the slightest idea of how to prepare. But with YOUR ENCOURAGEMENT I have taken those steps which I feel are best for my future.
My most humble thanks,

Please do not deprive those who have just arrived at this Round Table the privilege to achieve the level of understanding and wisdom which you have given to me.

The Invisible HandDear Sir FOA#2402302/01/00; 07:48:31

Dear Sir FOA,

This is the first time I am addressing you directly at this Forum. I want you to stay here.

Here's why: I started investing in the early nineties. As a good Harry Browne freak, I should have had one quarter of my portfolio in gold. I did not have that until 1998.

In December 1998, when I did not yet know you, I thought I had found two technological and two economic arguments for selling all my shares and T-bills and have 75 % in gold and 25 % in zerobonds.

My two technological arguments were that Wall Street was high because of internet shares which I thought to be threatened by Y2k and that euro-conversion, also threatened by Y2k, would make sharetrading difficult.

My two economic arguments were that there was a shortage of gold supply because the central banks had lent gold and that AG had in a speech in late 1998 said that inflation was coming (after having coined irrational exuberance three years earlier).

I found you and this Forum in March 1999. You have opened such a universe to me.

I am a lawyer who is 37 years old. During my undergraduate law studies and postgraduate European law studies, I criticised many aspects of EU law in my dissertations, mainly competition law and harmonisation of company law. After my studies, I criticised in my pamphlets the agricultural, trade and immigration policies of the EU. In late 1998, I criticised the euro.

Sir FOA, you have made me LOVE the euro. I, who got a postgraduate degree in European law in a foreign (for me) country, England, have found thanks to you an aspect of EU law to like.

Sir FOA, you have introduced me to the world of manipulation and government intrigue. You have reinforced my hope that justice, the act of acknowledging the truth, will one day prevail.

Sir FOA, even SteveH did have to quote from you in his letter to congress. If even Steve did have to do it, how do you expect a commoner like me to find the gold fire. Sir FOA, please don't misunderstand me, I am not asking you to be altruistic. You like to teach and you put a lot of work in teaching. Some pupils are afraid of the truth coming out.
Some pupils are afraid that the revelation of the truth will destabilise their little lives. Yes and some pupils are harsh, but why worry about them. Let them continue their imagination. We're on an express train, they want a free ride, let them have it, we shouldn't notice them (like the bumper sticker "I'm not deaf, I'm ignoring you"), the victory will be ours.

Let me stop those ramblings.

Please Sir FOA don't go.

If you can't stay please send me your posts to This email address is being protected from spambots. You need JavaScript enabled to view it. .

ElwoodTo FOA:#2402402/01/00; 08:02:27

You will agree, my friend, that this technology that will bring us our digital currency will also allow any crackpot with a computer to make himself known, yes?

Come, life is too short to allow such a person to become the means by which your immensely fruitful and reasoned discussions are ended. Ignore them.

My grandmother once told me never to argue with a fool. He will drag you to his level, then beat you with experience.


JCTexMr Gresham (02/01/00; 05:34:47MDT - Msg ID:24011)#2402502/01/00; 08:06:55


Thank you, you have spoken for me quite well as have many others this morning. I had to log off last night because I was getting angrier by the minute and about to let it get away from me.

Until last night, I had been wanting to suggest to Permafrost that he sit quietly with me on the park bench ["better to be thought a fool, than to open one's mouth and remove all doubt"]. However, I would now prefer that he sit somewhere else.

UsulThoughts#2402602/01/00; 08:42:39


I certainly hope to once again read your thoughts.
I converted some small stock-related funds to
physical in 1997... the kind of contigency I have in mind
to justify holding this barbarous relic has a lot in common with what you have discussed. The risk has not gone
away... everything points to it getting more serious.

Cavan ManDear FOA#2402702/01/00; 09:12:59

I would like to post just one more quick pleading on my behalf and perhaps for others who share my sentiments. I have a sick mommy this morning and am doing double duty.

I do not have the intellectual or academic pedigree of many and I suspect most who read this forum. Although I have a college degree, most of my education has come from the school of hard knocks. In fact, although I come from a good and kind family, I don't have any pedigree at all; nada, zilch.

Realizing my deficiencies long ago, I have had to work harde than most just to stay even. Staying "even" in every respect is even more important now with three small children. Consequently I am an inveterate seeker of information, knowledge and wisdom. Gads! I have so very much to learn. I am so far behind.

Before arriving at this venerable forum, I asked many questions, made many inquiries, sought many opinions, spoke with many different people concerning financial affairs etc. Although many I spoke with offered good "advice" and timely information, I had no peace. I continued stumbling along; continuing to search for a perspective, more importantly the wisdom and knowledge I knew intuitively was on the mark.

Here at this forum, I have found many kindred spirits. Here I found you and your friend (Where has he been?). Your words and thoughts and those of your friend; shared I believe in good measure by our very wise and knowledgable host, are the foundation of my strategic planning for the future of my family. Some might have a laugh (it's on me) at this last sentence but, as I have already admitted I am not even as smart "as the average bear" so perhaps they will understand.

FOA,I am a very cautious person (too much so I think). I weigh everything very carefully and analyze as best I can with the tool God has given me. I listen to and observe all that I encounter on this trail of life. Possessing a fiercely independent nature though (the Irish in me), I go my own way damning the torpedoes and full speed ahead. However, in your words and thoughts I see tremendous understanding, knowledge and wisdom. I eagerly await each new THOUGHT. They help me navigate and I depend on them.

FOA, your words: ".......we have a private commission...."

Your commission is not yet fulfilled. Do your duty and, for goodness sakes, toughen up would ya! Average, boring midwestern guys (and their families) like me are depending on you. Good day.........CM

GalearisAcid Rain a HOAX? NOT!#2402802/01/00; 09:17:55

For yearsI used to work as a professional naturalist doing wildlife surveys/interpretive
work, mostly botanical, in Ontario, Canada. But I also spent some quality time interfacing
with the public in speaking forums and observing the behaviors of modern man in a natural
settings. My background is in geology and botany.

I used to watch those of an affluent persuasion, the grey-haired set, driving through the
most beautiful parks in the world in their travelling homes and pulling into campgrounds in
the evening - only to pack up and exit in the early hours for who knows where. While they
were temporarily stationary and enjoying the campground setting, it was rare for these
people to spend much time outside around the campfire, or even more significant, to go
for interpretive walks with the park naturalist. (Statistically 80% of all park visitors were
transitory ones.) The most common pose for these types was one of sedentary disinterest.
One was seldom under the impression that this temporary travelling lifestyle was
enjoyable, as much as it was aimless; it always seemed to me a process of killing time and
"using up their retirement" in the currently fashionable way of travel.

And what is the point of my ramble? Most of these people had spent all of their lives in
some office in some city accumulating wealth in order to retire and "acquire" this lifestyle.
The black irony of their plans versus the reality is that in accumulating the wealth, they
had also negated the experience base they needed in order to enjoy that which they had
worked so long to achieve. In short what had happened was a process of estrangement, a
nature/culture shock that is always the result of people who have no experience with the
natural landscape. One has to be aware in order to enjoy. They had sold out to the system
and one could sense that at least some of them knew it....

And what does this have to do with declining air quality, acid rain, ecological collapse.
Everything! Those that would say acid rain, for example, is a hoax simply do not have the
opservation skills to see its effects. I do and I have seen. I am also old enough to have an
A/B perspective on it.

Why would one believe a paper that sheds such disinformation on this area that is
undoubtably sponsored by some right-wing exploitive agenda aimed at passifying the
masses? I remember seeing the 60 Minutes piece on acid rain as being a hoax. And just
that week they had measured the pH of rain coming down on London, Ontario. It was the
pH of lemon juice.

So we who deplore the disinformation ploys of the anti-gold people should surely hesitate
to rush out to believe another myth about the ecological area that is absolutely more
important than the fiscal. These disinformation ploys, one MUST remember, are ALL
from the business/exploitation area of human activity. Our ecological landscape upon
which sits our economic one, is incomparably murky to all those who read this forum and
you all should be aware of this and be suspicious of all aniti-tree-hugging propagandists.

The tree-huggers ARE right. It is simply unprofitable for most of us/you to believe
them..... If more people would get out of the office and spend some quality time in the
REAL world, this would be much more apparent.

SkipFOA#2402902/01/00; 09:21:20

Your presence will be missed here. It is truly tragic that a good person can be driven away by a few thoughtless posts from people who have not yet learned to debate an opinion without attacking the person.

A professional whom I know quite well once posted regularly on another forum (having nothing to do with investments). This person was very experienced and knew much about the theme of that forum, and gave freely of his time and wisdom. However, there were two selfish and rude critics whose fingers could not resist incessants attacks. The two critics had no professional experience in my friend's field, yet they criticized even those who defended my friend. He certainly did not expect everyone to agree with all of his opinions all the time. But when he asked others to debate options rather than attacking the person, that also resulted in personal attacks of "not being thick-skinned" -- and then he left that forum.

Nobody likes to be attacked for giving professional time or advice freely. My friend said that private e-mails actually "demanded" that he give free professional advice both on that forum and in private e-mail. He felt that his time could be better spent elsewhere. In short, his gift of time and experience was appreciated by most, but hotly criticized by a few who caused him great stress. It's a shame that he left that forum, but I understand his reasons for doing so.

FOA, this is my way of saying that I understand your feelings; but this is a MODERATED forum. So perhaps you might consider the vote of the majority: stay.

None of us will agree with everything others say all the time, even if they have professional experience. But your wisdom is appreciated.

Your postings have been very insightful, thought-provoking messages, obviously written by someone with professional experience in the financial world. My own few postings represent only personal feelings and personal experience; they do NOT represent professional experience in gold or financial investments. Thus, my postings should not carry nearly as much weight as those from posters like you who have professional experience in the world of gold, money and investments.

I would encourage ALL on this forum to remember that we can disagree with a person in an agreeable manner...and remain civil. Personally, I'd rather see those who cannot disagree in a civil manner leave this forum instead of seeing people like you leave. This is my opinion, or my "verdict" if you prefer to call it that.

To those who would disagree with others, perhaps they should refer to the guidelines that state:
"PROHIBITIONS: 1. Personal attacks; slanderous or derogatory remarks...."

When people ignore that guideline, a good forum can quickly turn sour. I spend more time lurking here than in any other forum on the internet...not only because I'm a goldbug, but also because it USUALLY is the most civil of those that I visit.


TownCrierToday's Market Report#2403002/01/00; 09:36:15

Market Report (2/01/00): Gold continues to trade sideways in a narrow range following Friday's action that returned the yellow metal to the low $280's. Standard Bank indicated that the level of physical buying interest at this time is expected to underpin the price at $280. As we send this report to the server, spot gold is trading at the lower end of its range at $282.60. Most markets are expected to remain subdued while the FOMC meets over these next two days to decide the fate of our interest rates.

In New York there were 7,036 February gold contracts in open interest to begin the week, and yesterday's first notice day for delivery on the COMEX February gold futures saw an impressive amount, 4,073 contracts, getting the nod for delivery. While we don't have the breakdown for yesterday's figures, of the additional 748 contracts held up for delivery intentions today, Deutsche Bank and The Bank of Nova Scotia were each in line for a third of those, with HSBC Securities taking a fifth. If the past is a reliable guide, that breakdown may be indicative of the major recipients for the previous day. So far, the two day total for COMEX gold delivery to be completed by month's end is 482,100 ounces (15 tonnes.)

On the topic of gold by the tonne, the weekly balance sheets out of euroland today revealed that last week the Dutch central bank moved yet another tonne of gold through the BIS (leaving them with only 35 tonnes in their program to move 100 tonnes prior to September 26th of this year.) The balance sheet of the European Central bank reflected this sale as a decline in its gold assets of 9 million euros, and by doing so, it settled our personal speculation regarding a possible change in ECB policy to bi-weekly (rather than quarterly) gold revaluations. Elsewhere, Japan's Finance Ministry announced that the level of foreign exchange and gold reserves held in January reached $293.154 billion, gaining over the nation's record figure set just one earlier by $5.074 billion. We can't help but wonder how much of that addition might be monetary gold, hearkening back to last week's discussion of Japan's 25% increase in non-monetary gold imports and the U.S.'s stunning 250% increase in non-monetary gold exports. (Might the Dutch movement of official monetary gold be flowing to Japan?) At any rate, Bridge News tells us that the seemingly familiar days of central bank sales, notably in Europe, acting as a depressant on prices is "over." That was the opinion expressed by South African President Thabo Mbeki on Monday at a World Economic Forum press conference. And to round out our look at the world, after picking up 16 tonnes of gold in 1999 from domestic producers, Gokhran (Russia's State Depository of Precious Metals and Stones) has plans to purchase 60 tonnes this year. With domestic production in the vicinity of 125 tonnes, it looks like they will be competing with the Central Bank of Russia, who recently indicated their own plans to acquire an amount greater, done through the domestic banks that buy directly from the miners. Ahhhh...there's nothing like a little competition for a scarce resource to get your blood flowing early in the day.

That will do it for today, goldmeisters. We'll see you here tomorrow.

TownCrierThe Fed adds $2.95 billion#2403102/01/00; 09:56:11

Federal funds were trading at 5-13/16 percent, above the Fed's target rate of 5-1/2 percent (will probably be changing tomorrow, though) at the time of this temporary addition to banking reserves through overnight system repurchase agreements.
GalearisDear FOA#2403202/01/00; 09:56:17

My previous post was a paste (in haste) without a prior perusal of this web site. Apart from it being off topic, it was untimely too.

I have experienced my share of dismisses from individuals out there, both in public and on forums. I suspect we all have. For the politician I suspect it is even stimulating on some level, but I would ask you to reconsider your decision to leave. You are better than a politician; you are a gentleman, not a taker. But I would humbly ask you to continue to share your wisdom with us.

Barbarians may be pounding at the gates, but they only win if you let them in.....

OROThe Stranger - excess consumption#2403302/01/00; 10:03:46

The basis of an economy is consumption demand the "aggregate" of our prioritized wish lists and needs. Second is resources for exchange; what we have to give in return for the items on our list usually in terms of money. Then comes the supply of that demand; what is available in the market in terms of other goods/services.

The important item here is to see that property/assets, goods and services trade for each other, money facillitates the exchange. Money neither causes nor initiates demand, neither does it provide supply. Income is the going rate of exchange for one's production/service.

A pretty good summary is demand limited by income induces supply.

Artificial demand is that demand which is induced by untimely debt and by currency depreciation. In short, stuff we buy because "inflation" fears induce us to spend funds we would rather keep on hand had its depreciation not been a threat. Debt which we took upon ourselves because "real" interest rates were lower than the market preference.

Demand at its source is strongly dependent on age, and therefore on age demographics. The young child has many wants that only grow greater as he matures. His parents meet these as best they can with a balance of temperance and indulgence. The young adult has a new set of needs as soon as the support of parents is not needed, that is, once preparation for work is done. Then comes the need for work clothes, transportation, lodging. The young worker, however, has less income than his older and more experienced co-workers. Often, the young worker is much less effective at his work than the latter and has a lower income to show for it. The new technologies and way of thinking of the young worker's generation are still developing, as are their skills.
The young worker then starts on the road to middle age, a familly is created and a true home becomes necessary. Debts are undertaken and consumption roars ahead with obligations taken on for the next three decades. The worker becomes capable in his work and moves forward in positions and responsibilities. The technologies and mindset of the maturing generation come to dominate the operations of leading and new corporations specializing in the new tastes and technologies.
The next phase is that of the aging mature consumer and worker who's familly obligations are mostly done as the children leave the home and are ready to fend for themselves. New debt is no longer accumulated, retirement looms and it is time to collect savings and investments for the long term. At work, a dynamic stability is found. Prosperous businesses are nurtured for the next generation, while failed experiments in business lay far behind. Debt is paid down, furniture and fixtures go unchanged for a decade at a time, clothes don't wear out as quickly as they used to. Entertainment, qulity, and travel are the main expenditures. The growth industries of the past decades are mature and the mindset has moved past the worker, advancement is no longer offered and no longer sought. Often, work is downsized to afford more time for hobbies, fun and rest.
Finally, old age creeps up on the retiree and expenses once thought essential for happiness are set aside with disinterest. Work is done either for fun for the well off, or due to necessity for those less fortunate. Debts are long gone, assets are spent down rather than accumulated. Consumption is far lower.

The US, and with it many other industrialized nations, have a baby boom and a baby bust generation much larger than the previous demographic humps. The Boomers and X-ers are at the point of the peak hump going through the peak "experience" (productivity) and spending years. The pattern, however, is ahead of itself on spending relative to prior examples. Spending is some 4 years ahead, while savings and investment are at the average in terms of level. The stock market correlation is also ahead.
The main reason is that of the debt spree. While incomes (as "total compensation") are growing at 5-6% in "real" terms, debt growth has mushroomed in real terms as well, but at a greater pace. This means that more of the wish lists of people in this age group are filled - and at an earlier time than ever. That early satisfaction and high debt load puts in danger the driving force of consumption if the economy were to stumble. Furthermore, as was partially inevitable, given the demand boost due to the population pop, the US had specialized in the great industry of marketing, moving about and assembling to order imported products for local consumption. These three items, when put together, dictate both a greater displacement "when the music stops" and make sure that this disaster will occur. Furthermore, this occurrence will have come some years earlier than it had in Japan 1990, or in the US of 1929 - or in the US of 1959 and 1966, when personal leverage was not as great relative to income as it is today.

The US elected class had attracted this generation with currency support, subsidized interest rates for housing, and a decline in government's take from the economy so that these people can have a greater share of it. In the meantime, the government had continued with great expansionary forces and the use of debt traps and such to extract more from poorer countries, the better to satisfy this generation's needs.

The structure built by this dense concentration of demographically driven demand and exacerbated by government policies and their support by trading allies, is teetering on the brink of deflationary collapse. The mechanics of the markets and the interests of the powerful financial players in the Anglo bank realm are squarely on the side of monetizing the debt that has accumulated. This will turn a deflationary collapse into an inflationary one.

Perhaps more on this later.

JourneymanDefending Gold: Chapter 2 #2403402/01/00; 10:23:31

Defending Gold: Chapter 2 @FOA, Peter Asher Mr. Gresham,
Farfel, Aristotle, TownCrier, Canamami, ORO, PERMAFROST, ALL

Awhile back, culminating with a post headed "The Crime of
1873" -- an indirect indictment of gold," posted January 9,
2000, and based on a link posted by CavanMan, to whit,,

I was seeking specific indictments of the old gold standard,
the one of which Alan Greenspan remarked, "The reason why
there is very little support for gold standard, you know as
well as I in the current context, is the consequences of
those types of market adjustments are not considered to be
appropriate in the 20th and 21st century." -to US House
Banking Committee, July 22, 1998

It occurs to me that a very articulate and genuinely felt
extension of Greenspan's comment was just recently posted by

"Indeed, a free world economy needs and demands a
currency that can expand and contract with changing
conditions. The curse of the old gold standard was that
it didn't allow this latitude and always created a
crisis when needs required this flexible money supply.
Only a separate gold market can offer a means to truly
measure the success of the money creating treasuries.
This is the direction we are heading, for better or
lt.html FOA (01/31/00; 20:34:19MDT - Msg ID:23965)

I would suggest that any of us hard-core gold bugs who wish
to defend a return to some form of gold standard, need to
address the objection stated so well by FOA above.

Am I the only one left standing?? PERMAFROST? ORO? Mr.


JourneymanFree advice @FOA & PERMAFROST (& you know what that's worth)#2403502/01/00; 10:27:54

FOA I'm with you all the way -- I just think you may get off
"the road" before it arrives at it's final destination, a
defacto electronic REDEEMABLE gold derivative. I'd surely
like to talk that over with you (and apparently with Another
in the background.) I wish you guys would just ignore
PERMAFROST'S ranting and raving. It's good you respond to
his substantive points. Don't waste your time or emotional
energy on the rest.

This forum isn't like a stage --- writing vs. a live
performance allows the audience to completely pick and
choose what they spend their time on. A better analogy
would be a three ring circus, where everyone gets to pick
and choose what they "watch." Which "ring" do you think
most people will watch more closely, you or PERMAFROST?

You and Another don't need to be so sensitive -- your
information is very strong and useful; to withdraw from the
contest under such conditions will make some believe this is
a sign of information weakness!! Sort of like Ross Perot
withdrawing in his first presidential race.

One more try: Sir, you do us here a disservice. Your action
implies that we are not able do discern true value when we
see it. I personally would feel insulted were that truly
what your withdrawl signaled.

Why did you cease posting?? You only said Another demanded
it?? Why??

PERMAFROST, cool it! Just make your points unemotionally.
The rest really does detract and it wastes my time!


18KARATgoldfan, follow up on Fannie Mae, mortgages#2403602/01/00; 10:28:27

I've had a good read of that paper you referred to,
My immediate reaction
is that there are some parts of it I do agree with.
I mentioned in one of my previous postings:
It's a characteristic of bubbles
that they suck in all available capital.
And I gave as an example,
that people mobilise their collateral,
by means of mortgages and home equity loans
to plunge on the bubble market.

I'm not sure that the mortgage provider
can actually be 'blamed' for this though.
It seems to me that it is very much demand driven.
Bubbles cause buyers’ panics,
where people are desperate not to miss out.
The mortgage provider borrows on the money markets
to meet the surging demand for loans.
I believe that the non-bank mortgage provider
would still be functioning as a broker though.
Provided it is selling suitable term paper
to match the liquidity requirement of its customers.

Where the mortgagees require long-term, fixed interest-rate mortgages,
this demand can be met by aggregating and securitizing the loans,
and selling the resulting bond instruments.
The people buying such bonds,
either directly or through a mutual fund,
would be committing their money long-term.
Thus there is no increase in money supply.

Where the mortgagee requires a floating-rate mortgage,
or a home-equity backed, revolving line of credit,
the mortgage provider should only sell short-term paper,
even committing some of its assets to establish a line of credit in the cash market
so as to be able to meet demands for liquidity.

As a general rule:
Prudent practice requires that a mortgage provider, acting as a broker,
should always try to match up the term-preferences of borrowers and lenders.
Where a mismatch is unavoidable,
due to constraints imposed by supply and demand,
a prudent broker can use the debt-swap market
to lay off the risk onto someone who is more willing to accept it.
Since swaps can be expensive,
this cost would be passed on to the borrower
as part of the cost of setting up and operating the facility.

Private sector mortgage-brokers would be well advised
to be very prudent in how they operate.
They do not have access to a line of credit from a central bank,
which has its own printing press for dollar bills,
Or else they will crash.
The S&L crisis in the US a few years ago
shows how real the risk can be.

The final issue relates to Fannie Mae,
and whether it is creating credit,
as opposed to merely broking mortgages.
I am not really familiar enough with Fannie Mae's modus operandi to judge this properly.
If it is the case, that it is absorbing term-disparity risk itself,
while relying on its government backing to protect it.
Particularly if it is borrowing short-term and lending long,
like banks do.
Then it is indeed creating money backed by nothing but credit,
i.e. promises and thin air.
And it should be treated as a bank.

Remember though, that the borrowing of money is not inflationary in itself,
provided that the debt instrument (IOU)
finds a buyer (lender) willing to back it with his own cash.
The money is merely transferred from the lender to the borrower,
for an agreed term, for an agreed fee (interest).
Both parties are consenting adults.

Of course, if one is borrowing against the family home
and then "investing" in,
then the real issue is the loss of asset quality (to put it mildly).
Perhaps we also have a margin loan on top of the mortgage
just to add a certain extra frisson of excitement and leverage.

The danger to the borrower is that the market will crater.
And the home will be lost, or encumbered by huge debts.
The danger to the lender is that a lot of bad debts,
backed by collateral that is worth a fraction of what it was yesterday,
will drag down the lender.
The danger to the system is that a lot of failing lenders will create a massive deflation.
As fiat money vanishes back into the mist from whence it came.
Like Japan. - A deflation that the central bank & government
cannot reverse even with zero interest and massive deficit spending.
Because the banks and the consumers are on strike,
and all the capital is being sent overseas.

Banks really are different.
Depositors are persuaded to put their money into demand deposits
where they are led to believe their money is merely warehoused,
and available on demand.
However, apart from the minimum reserve requirement,
and the bank's shareholders' capital,
IN REALITY the short-term bank depositor has nothing to back his funds,
other than the collateral-backed promises
of the long-term borrowers to repay...eventually.
This is a very illiquid asset.
Furthermore, in a bubble, collateral can often be priced "optimistically".
Borrowers have even been known to default!!!
Hence the short-term bank depositor may find
that a large part of the money in his demand account is notional, even fictional.

If too many people were to try to draw on their short-term deposits at the same time,
only the Fed or the US Treasury could rescue them.
Bank account money is true fiat currency – held up only by faith.
"In debtors we trust" - the biggest potential debtor being the government.

Otherwise in a crisis:
A bank can try to sell its loans at a discount to other banks, if it can find a buyer.
It can try to raise new capital, if it has friends with deep pockets.
Or it can even call in its loans, if its contracts allow it to do that.
In a general crisis, this is like throwing gasoline on a fire.
And only causes the conflagration and panic to spread.
Banking panics like this used to be common in the 19th century,
before central banking was invented.

The fundamental contradiction in the banking system
is this belief that you can have your cake and eat it too.
That money can be lent out long term, and yet still be available to be withdrawn on demand.
You can only do that my friend, if you have two cakes.

And so that is what the bank does.
To sustain the illusion, it creates the myth of two cakes.
But in reality only one of those cakes is real enough to eat.
Only one of those accounts is real enough to be spent.
The other one must stay unseen in the cupboard.
It can be referred to as if it were a cake – a fiat cake.
But if anyone asks for his cake…
Well, we'll just juggle the few cakes that we keep as an emergency reserve,
So that no-one will actually notice that any cakes are missing.
And hope to heaven that they don't all ask for cake at the same time.
You see? This is how fiat debt-backed currency is created.
We lend out most of the real cakes, long term,
and ask for an "IOU cake" in its place.
The IOU's we carefully place in the cupboard,
And pretend they are still just as good as real cakes.
But of course, you can't eat IOUs until the cake is repaid.
But, if you really have faith, you can live your whole life accepting
that a cake can be in two places at once.

- 18K

Peter AsherJourneyman, All#2403702/01/00; 10:47:15

We're on the road for 2 days going back to Oregon after a 2 month stint in So. Cal. Lot's of partial posts written recently, all the way back to Steve's classic case ambulance driver. Need to catch up ---

Mr. G -- good speach!

Permafrost: -----Oh, never mind!

The Earthlink E-mail is history in ten minutes. We'll be back at This email address is being protected from spambots. You need JavaScript enabled to view it. (No space this time)permanently.

Mr GreshamJourneyman --Defending Gold #24034#2403802/01/00; 11:24:37

Here is where my knowledge of financial history shows its lack of depth. Most of what I've heard about the operations of the gold standard in the 19th century and early 20th echo the anti-gold propaganda line about it being "inflexible" and exacerbating the Great Depression. (And of course Roosevelt "rescuing" us from it.)

Imagining an alternative economic history, with gold standard continuing throughout the 20th century would be a giant intellectual exercise -- but one that is probably fit for an Oro, and all the rest of us thrown together.

In any event, money is defined as "the most marketable commodity", and the world economies and governments of the electronic age have created a "market share" for fiat currency. People WILL use it, and what FOA is basically asking us is: Why should any power elite just eliminate one of its major successful-so-far holdings of value and tools of power -- fiat -- unless forced to? As long as people will believe in it and use it, they'll keep it alive. They just have to manage it better than the competitors, and use gold as the scorecard among them, perhaps.

If the gold is in Ft. Knox or elsewhere held safely, the US has its Plan B ready. But Plan A is working pretty well for them so far, eh? What was Oro's estimate of what percentage of World GDP the bankers are able to siphon off annually?

Back in a week or so...

lamprey_65Galearis#2403902/01/00; 11:34:58

Enjoyed your post on acid rain. Many don't see the common thread of which you speak - that's unfortunate. Hidden agendas are not solely the purview of the liberal media/politicians.


PH in LABehind the scenes at USAGold#2404002/01/00; 11:42:17

ALL & especially FOA:

I plead to being behind the curve on the Permafrost situation (which I have noticed developing for some time) due to other committments...(my website is under construction and will be coming online soon. Watch here for announcement of the grand opening!)

Even though I have little more to offer to the many testaments of appreciation and admiration directed at FOA, I can offer a little bit of behind-the-scenes explanation as to how the present situation came about.

Permafrost is not Tzdeak*.

He is Chris.

Yes, that intellectually sloppy, fuzzy-thinking, intellectually lazy, unimaginative entertainer... (need I go on?) disrupter has been kicked out of Kitco just as she was kicked out here. Some may have noticed that she had conceived a campaign of disinformation and defamation against Michael Kosares and USAGold, accusing them of being a CIA front, in her last weeks before her sudden disappearance at Kitco. I brought her stupid garbage (yes, FOA, your inescapably appropriate description of their thought processes makes that word usefull here, too) to Michael's attention because I have always found her stupidity to be insufferable. He replied privately that his legal people felt that USAGold would have an actionable case against both her and Kitco. There was a time lag during which he made this known to Bart. Suddenly, Chris disappeared from the radar screen at Kitco. At the same time, Permafrost intensified his/her presence here. FOA was absent for a time and when he began to catch up with the forum, he started to reply to Frosty's old posts. The effort of doing so gradually became herculean (as the struggle against stupidity so often is). In reading his posts, Parts I through IV, we can see exhaustion set in for FOA. And especially because he has done it all before. Remember how patiently he tried to deal with Chris the first time?

Did anyone notice FOA's reference in his post, Part 3:

"PERMAFROST (1/3/00; 2:31:57MDT - Msg ID:22103)
FOA Msg ID: 21859 Part 1 Dear Sir, Thanks for your response...You are advocating a global financial system predicated on the peaceful and mutually-beneficial "concubinage" of gold and the "new girl in town" fiat money the Euro which you unwarrantedly presume to be relatively more "chaste" than the Old Whore, the US dollar, ONLY because it is not "backed" by as much debt as the dollar, and its "lovers" (the EU Central Bankers,the Rothschilds?; an assorted variety of ILLUMINATI...Etc" (Upper case by PH in LA)

When did FOA ever refer to Illuminati? Never!! This is Chris' pathetic understanding of how the universe works. Not FOA's. Never has been. Never will be! There are many other clues that I refuse to ferret out now. But please compare how perfectly the tactics and thought processes of both Chris and Permafrost co-incide. Note their language similarities. Note the similar gramatical constructions. Note the similarities of their emotional reactions... the same posturing of a weak idea and the abandonment of it when it is challenged. The same pointless anamosity towards FOA. They are the same person!

Chris/Permafrost is looking for attention.

There is no need for us (or FOA) to give her any at all. FOA has demonstrated to the judge and jury and it is obvious to any thinking person: She simply has nothing to offer here. No good thoughts that will remain after we, "faceless fools" have disappeared. Therefore, we should not grant her the attention she craves. Period!

Stradmaster is right. There is too much else in the world that merits our attention, to pay any whatsoever to intellectual lightweights, mentally ill, pathetic disrupters looking for notoriety to bolster their underlying and well-deserved lack of self-esteem.

Last time I commented on Permafrost, I concluded that he should be allowed to stay.. that maybe s/he would learn something. At that time, FOA seemed to understand how childish and laughable he was. Now FOA grows weary. I didn't imagine that could happen, but I was wrong. Permafrost's password should be withdrawn now. The loss of FOA would be irrepairable. The loss of Perma would be unnoticed.

Chris and Perma will be back, with alternative IDs. Believe it! It will take time for us to notice it; they can hide behind other passwords, but they cannot hide their stupidity and intellectual laziness. We will spot them. And we will keep weeding them out. This is an on-going process. It is an unfortunate side-effect to the anonimnity of the internet that protects FOA and Another at the same time.

But it is no reason for FOA to withdraw. Stay friend! Many understand your frustration. Don't let it tarnish your accomplishments and good thoughts posted here over such a long time. The journey beckons. It will be so much richer with you at our side, than without you.

TheStrangerORO#2404102/01/00; 11:47:34

Thanks, ORO. I hope you do continue your tutorial.

I look at the squeeze taking place in profit margins and just wonder at the inertia of managers who persist in holding the line on prices. This, and recent productivity gains, may be delaying what I consider to be the inevitable proliferation of prices increases. It may also be giving the Fed a false sense of security. In any event, no one seems to really want to take away the punch bowl this time. They hope instead to achieve their means by merely charging a thirsting public a few pennies more at a time to take a drink. In short, I agree that the inflation part of your message is imminent.

Debt, on the other hand, both public and private, is at levels which do not meet some of the extremes of the past. I suspect this has a lot to do with your baby boom demographic and their present day penchant for savings. At any rate, this consideration causes me to doubt your collapse scenario. I would, however, like to read your further thoughts on this subject.

BHDear Sir FOA#2404202/01/00; 11:49:17

With great dismay I have read the latest turmoil
here (again).

In the meanwhile, so many and valuable messages have
been posted here asking you t o r e m a i n on
this forum, that there is nothing left I could contribute, except my support for any one of them.

So, I'm not going to repeat my #22845 as one of the
many lurkers, but if I may quote Sir Gresham(#24011):

"FOA - what about the rest of us....?"

lamprey_65Stranger#2404302/01/00; 11:58:17

Notice that computer prices have begun to rise? I believe you are correct, the landscape is beginning to change as these companies are finding it more difficult to hide behind the accounting tricks allowed by the SEC/politicians. The cat is riggling out of the bag.


JAORO#2404402/01/00; 12:14:43

I was recently talking to our Controller about some of your writings on Stock Options and how the way they are treated from a tax standpoint seems to distort the earnings picture. He mentioned that there have been some accounting rule changes that are to go into effect this summer. I got the impression that these rule changes would change how companies deal with stock options. I would be interested in your thoughts or comments.
Golden TruthTo PHinLA #2404502/01/00; 12:30:35


Hello PHinLA you know i've been very suspicious also about CHRIS being Permafrost. It's so very evident in the childish replies and absolutely insane comments at the end of a reply, Example, her replie to me in her closing statement about being the "Son of the old ones" or something stupid like that, and i mean STUPID. Dear Michael this "impostor" must be KICKED OFF this site forever,period, no questions asked! Chris is causing mental anguish for us all, and i want her out of here right now!

She has driven out of the finest minds i have ever read, off of this forum and i,am really mad because of it.
She is a very sick person who needs mental help, anyone who plays with peoples minds and enjoys it, has got to go!

Dear F.O.A please do not let this person upset you, they are not dealing from a full deck, their elevator doesn't go all the way to the top floor, their one brick short of a load, or one french fry short of a "happy meal" :-) Please reconsider!

Also Michael i submit that if permafrost is allowed to stay it will start to disrupt other posters also, if F.O.A doesn't come back and GOD, i hope he does. Chris will start to focus in on her next victim, you? me? Oro? just wait and see. This person has done enough damage and i say enough is enough. Forum members its time to FIGHT and defend F.O.A's honour. Who do you want to read and learn about GOLD from F.O.A or permafrost(a.k.a chris) to me the choice is very clear and that is F.O.A! "United we stand divided we fall"

Let M.K know were you stand so we can move forward and hop back onto the GOLDtrail with F.O.A as our Guide.

OROgoldfan - custodian roles#2404602/01/00; 12:35:04

The custodian role is a need that is filled only under conditions in which "traders" recognize that need. Government as we know it in the past 200-300 years, is a new form, particularly that of the post US and Napoleonic revolutions. Though it may be headed by great of depraved personalities, government is largely a headless monster with conflicting motives. Largely, it is an organization intent on self preservation and part of the "trader" world in that its members seek to profit from government's overwhelming power of violence over the rest of a country's citizenry.

The custodian role in most cases is better filled by widely accepted charitable organizations. Government tends to quickly move away from the custodial chores that served as an excuse to gain fresh power, and subverts them into a method for the promotion of themselves and of extortion from industry and citizenry.

Thus, the (innocent?) error of the constitution's authors in allowing regulation of interstate commerce and of putting the mint in government hands. These allowed the Federal government to exact tolls on all and to explode the money in order to fight needless wars that impoverished the country.

It should be remembered that the basis of modern forms of sovereignty and government are outgrowths of the mass production technologies of the industrial world before the information age. The great leap of efficiency from the railroad, the powered factory, and the energy of coal and oil could only be utilized with large scale facilities run by monstrous bureacratic organizations. The sensitivity of these facillities to sabotage and attack, and the fact that they could be run by serfs as well as freemen were the balancing forces.
Nations and their governments were formed as a result of either of two things, the opportunity to profit from plunder and enslavement of the unprotected, or from the need to protect against the plunderer. The plunderer could be the labor union or the army of the empire next door.

The laws and the governmental structures were a function of the simple fact that if a toll were not exacted from the citizenry in one geographical area to support a large military, a military force would be funded outside of that area in order to invade it and take it over. This way, a toll would be exacted by the government of the locality in order to fund defense against foreign intrusion and subsequent exaction of tolls and issuance of exclusive monopoly charters in the event of a failed defense.

As long as there was more to get from attacking and capturing a territory than the expenditure necessary to accomplish it, there was no way to avoid the expense of war. Governments were given to the democratic or dictatorial political form and the socialist economic structure in order to exact the maximum tolls necessary to fund defense or to repay war debt.
In short, war was funded because it was sufficiently profitable for someone to fund one or more of the sides in the war. It should be noted that war debt had to be repaid, otherwise the resources to fund warfare would be provided to another, most likely an enemy.

Unions and democracy were necessary in order to avoid mass sabotage and to put social pressure on people to join the military as cannon fodder, which was not possible under anything but the two extremes of controlled democracy and radical dictatorship.

Thus Bolsheviks received funding to take over Russia and leave WWI. The charters for coal, gold and grain exports and the repayment of revolutionary debt provided a handsome return. That over 50 million would perish and four generations live in terror could not interest anyone with the means to fund a revolution or a war.

The Civil War was not fought because of the secession of the Confederacy, nor over the freedom of slaves. It was fought for a number of reasons: (1) in order to force the Union to accept the transition of power over the issue of money to the large banks who would receive national charters and buy the debt of the nearly insolvent Union. (2) in order for the manufacturers of the military equipment to sell their wares at great profit and in large volume to both sides. (3) in order to buy southern plantations at great discounts after the war. (4) in order to avoid paying the plantation owners the full value of the labor of the slaves - once freed, the former slave labored in the North for a wage of 1/4 to 1/2 that of a white man, often less. (5) in order to create a national debt to be paid at high interest (at the time of issue).

The reality of the great wars, revolutions and economic calamities are told in terms of cash flows and return on investment. The stories of heroics, of fending off tyrants, of securing freedom and protecting "interests" are often true. Nevertheless, they are either reaction to an attack funded by those enticed with the prospect of plunder, or are such attacks in themselves. Most likely they are both.

Like the IMF funding structure being based on the estimates of the resources it is possible to tax out of the member countries, so are the debt restructuring programs of the IMF to its "clients" (read victims) subject to "austerity" (i.e. plunder and taxation) measures designed to limit economic choices of the citizenry and to force "fire sales" by small and even large businesses.

As they say, "they get you coming in, and they get you coming out."

koanpalladium up up and away?#2404702/01/00; 12:46:57

up $8.30 to $493 - hit a high of $499.50. Seems to me this is a pretty big story for the precious metals <g>!
onlychildPermafrost, FOA#2404802/01/00; 12:54:53

A little competition is healthy in any environment, as long as the competition is fair. However, when one Knight is wearing armour (though thin it may be) and wielding a mace while mounted on horseback, and the other stands in the open with no weapon except his intellect, then blood will flow. In the long run intellect may prevail if the onlookers can distract the mounted Knight long enough for him to be pulled from his horse. Once on the ground a kight in armour is helpless and can be dealt quite easily. I believe the people have pulled the mounted Knight from his horse. Now, FOA, it is up to you to deal with him. We will watch in great anticipation to see if Permafrost can deal with you in a non-confrontational way. Otherwise I vote for mob rule, we can draw and quarter the offender and cast him/ her out.
OROJA - ESOP#2404902/01/00; 12:55:54

The last round of SEC regulations on the subject were on the table for years. They are always "pending" and are struck down at the last minute. Last year, the year 2000 GAAP was supposed to include a fair accounting. A day or so before the meeting that was to approve the changes, they were dropped from the draft.

When will it happen? when the ESOPs no longer serve a purpose, i.e. during the depths of a bear market, when caution urges people to be looking carefully at balance sheets.

SMUProbing the Soft Underbelly#2405002/01/00; 13:19:09

Let me be firm and frank.
My first posting to this esteemed gathering of the wise and the many little space. I am amazed at how you could cram all that long winded verbage into such a small posting box.

poke, poke

As the saying goes..."size doesn't matter, it's how you use it."

So, how have you used it my Lords and Maidens? Have you talked your way down the Information Highway of endless riches. Or, have you festered in the enless yada, yada of verbal gold labyrinths? Twisty little passages, all alike, that promise that pot of riches....BUT always around the next corner. There comes a time for everyman to examine his path and to admit that he made a wrong turn twenty years ago. You had a destination once. It may now be time to lay down your pride, admit that the path was wrong, and go forward into a new direction.

JourneymanRe: ORO (02/01/00; 12:35:04MDT - Msg ID:24046) etc.#2405102/01/00; 13:35:59

ORO, well, just incredible! One of these days, you're going to have to tell me how you do it. There was a science fiction short about Issac Asimov based on the protagonist's efforts to find out how one writer could be so prolific. The "punch line" was that Azimov wasn't one man -- there were nine of him. Hmm?? We do know about Dolly, -- and now the Japanese bulls - - -

I really appreciate the work that goes into your posts --- and the time and effort it took you to acquire the knowledge that lies behind them. If I fail to acknowledge each one, it's probably because I'm busy trying to keep up and attempting to make a few contributions of my own.

While I'm at it, your post MId#23891 on Jan. 30 was also a classic. I'm referring to the part of it that explains the establishment's motivations to keep fiat as "The Engine That Runs The Machine." I hope you won't mind me quoting it?

High regards,

Cavan ManFOA 23974#2405202/01/00; 13:50:19

Just read your last post. Now, my Irish is UP. I didn't quite understand the depth of your anger.

FOA, screw that dumb b------/b----!!!!!!!

One rotten apple doesn't spoil the whole barrel. You have a huge audience of faithful admirers and believers here.

Stand and fight. Stand and deliver.

OROThe Stranger - Inflation and the dollar#2405302/01/00; 14:22:10

The breakup I see has to do with something that is widely ignored in the US.

There is a dollar economy and there is a US economy. They are not identical.

The dollar economy includes the whole globe and contains at least a double dose of debt. The global dollar debt is at least as large as that within the US. There lies the problem. Dollars are held in private and in government (CB) reserves. Dollar debt is owed by the US to EU and Japan, and by many LDCs. The latter have been trying their best to put their hands on enough dollars to repay dollar debt - both sovereign and private. These attempts have caused the prices of imported goods to fall and have distorted currency valuations across the globe. The dollar, being the reserve currency, is the most distorted considering the volume of goods and services it trades internally and externally.

As in the pre 1970 days, the dollar has two prices, one a "golden" price outside the country, and one a paper price within the country at about 45% of the external value. Free trade under these conditions result in extreme pressure on both production and services. If one takes the portion of production and services within the US that constitute retailing of foreign source items and services then one finds the productive US economy to be (conservatively) 20-25% smaller than the GDP figures suggest. That leaves the US with an overvalued currency both within and without the US. In the global arena, the dollar comes out as having a value of 1/3 its traded exchange rate against the other currencies.

Obviously, the US can only maintain these discrepancies because of support by the other G7 or G10. Foreign dollar debtors are forced to sell to the US in order to get the dollars they need in order to survive outside bankruptcy. The flow of dollars into these hands is used to roll over and pay down debt. This debt is recast in Euro. The numbers are amazing, as I had shown in prior posts.

Both the success of dollar debtors and their failure to repay dollar debt cause hardship in the dollar arena, because they both destroy dollar supply. Repayment destroys far more than default.

The banks looking for the dollars for repayment of dollar debt come to US banks and debt markets in order to obtain them, they sell US securities (bonds) or absorb dollars from the US banking system through the BOP dollar flow, and by borrowing from US banks/credit markets. In both cases dollars must be created within the US and used to settle dollar debt abroad. This leaves the Fed with the need to lend and buy back securities to the extent that funds are missing because of extinguishment of dollars that flow outside the US.

The Fed operation is monetization and it is the easier alternative to letting even foreign bankers fail. That is the source of the collapse I expect. Not from too few dollars alone, but from the combination of too few in foreign hands and too many inside the US, where the replacement dollars are created. These are the most effective dollars in translation into price levels.

Is this a better presentation?

JAFOA#2405402/01/00; 14:25:38

I have read "In the Footsteps of Giants" and have been reading your posts on this site for about a year and one half . As I have said to you in the past, I haven't decided in my mind what to make of them. I do find them interesting reading. The posts do tend to contain some mystery, possibly because of the writing style of Another and the certainty of the words you use to present your scenario. Your posts and those of Another give one the sense that you are privy to inside information regarding world financial matters. And if in fact you are, then people would be wise to take note of such information. I found your post FOA (1/19/00; 8:53:32MDT - Msg ID:23197) to be very straightforward in outlining events as you see them with even some general timeframes. You have also been good to attempt to answer questions I have had of you and I thank you for that. I have basically decided to take you at your word and wait and watch events to see if they transpire as you suggest. I think it would be unfortunate if you should quit now, since your potential reward may be as simple as experiencing the joy of being able to say "I told you so, aren't you glad you heeded my advice". I think you stated "Our sole reason for writing is a private commission to share official directions and perceptions with the average citizen of the world." So you are basically doing this as a public service. Those throughout history who have done the most to serve their fellowman have been ridiculed and made fun of, at times, it just goes with the territory.

Yes, I like others are asking you to reconsider and come back.

However, unlike others I do not think Permafrost should be banned. I agree that name calling and gutter language are not appropriate and considered bad form. Good ideas can sometimes come from unexpected places and well intended people can have bad ideas. I have also observed that this forum does a pretty good job of policing itself. This forum for the most part attracts bright articulate people and in cases where it hasn't members stand up and ask for justice as they have in your situation. In summary I thought I might share a story I heard years ago when I attended a business retreat while in graduate school. A number of the department heads were not working well together to make a point the facilitator told this story.

It seems there was this little sparrow that put off flying south for the winter. Well, after all his sparrow friends had left it started turning very cold and he decided he must begin his flight. As he was flying south it began to rain and the rain formed on his wings and turned to ice making the flight very difficult. The sparrow became very fatigued and fell to the earth landing right in the middle of a barnyard. The little sparrow thought to himself, I am about freeze to death, what a horrible way to die. Just then a cow walks out of the barn and proceeds to drop cow manure on this little sparrow. He then says this is really a awful way to die. However the fresh manure warmed him up and he started to feel pretty good so he commences singing and chirping for all he is worth. At this point a cat walks into the barnyard, hears the sparrow chirping, digs in the manure finds the sparrow and eats him.

Now there are three morals to this story. (1) Not everyone that dumps on you is your enemy. (2) Not everyone that takes crap off you is your friend. (3) When you are warm and comfortable be thankful, but don't get boastful about it, as it may only be temporary.

And so lets go forward and each commit to use this forum to better our knowledge of Gold and how it relates to personal and world financial matters.

AristotleJourneyman and FOA#2405502/01/00; 14:42:52

After dropping in for a quick review of things before getting back to my other activities, I discover I should have done something else with my extra moment. My, what a disaster. I'm confident that the spirit of the abundance of intelligent men and women gathered at this site will prevail over the vexing but unavoidable interruptions that are inevitable in any public gathering place. Even the best-tended garden gets a weed or two. Fortunately, we have a good gardener here, so I don't fear for the quality of the site over time. From his absence, it seems clear that MK has many rows to hoe, and it is only a matter of time before this area falls once again under the gardener's eye. So take note, all of you dandelion seeds drifting by on the cyber wind--this is not the place for you to attempt to take root. Our soil is too fertile, and the crop too unique to be put at risk by willfully noxious elements. But that is just my view as an outsider looking in.

Personally, I come from a long line of knuckle-draggers, and enjoy the distinction of being the first member in my family to walk erect. As it is, I mash upon the keyboard with hands that want for opposable thumbs, and owing to my youth I've not yet mastered the art of throwing stones. So it comes as no surprise that when Permafrost had an early post that referred to me as a "pagan" held up against assorted "gurus," I lacked the mental faculties to decipher his meaning. I shrugged my hunched shoulders, furrowed my neanderthal brow, grunted, scratched, and wandered off at my slow pace, looking for a bone to gnaw on.

Journeyman, in response to these words by FOA:
-------"a free world economy needs and demands a
currency that can expand and contract with changing
conditions. The curse of the old gold standard was that
it didn't allow this latitude and always created a
crisis when needs required this flexible money supply.
Only a separate gold market can offer a means to truly
measure the success of the money creating treasuries.
This is the direction we are heading, for better or
worse."------you, then, offered this challenge:
"I would suggest that any of us hard-core gold bugs who wish
to defend a return to some form of gold standard, need to
address the objection stated so well by FOA above."

The particular bone I have been gnawing on since the new year began has been an attempt to lay out the nature of a natural currency system in terms that don't overwhelm my own overtaxed brain cells--all three of them. It is very nearly ready for submission, and I can tell you now that the world as we know it needs, I repeat, NEEDS fiat currencies. At first blush, that my seem to run counter to everything that we stand for, but I assure you, it is the only way for Gold to truly have its day, as it should--as it will. The various failings in the past were due to a flaw in the architecture of the monetary system. If I have succeeded in my effort, the truth of the matter will be a source of extreme comfort to Goldhearts, and will strike everybody else as quite natural and, in fact, desired. The good news is that all signs point to the euro system as ushering in the repairman for the flaws in the old architecture. If they follow through with it, and get the support as needed, current Gold owners will reap the benefit of their foresight and wisdom--or else they will simply be basking as the beneficiary of plain ol' dumb luck. If these repairs are brought to completion, as I am inclinded to believe they will be, then we will never see Gold so cheaply obtainable--whether you choose to measure its price in dollars or by such means as loaves of bread.

Dammit, FOA. After I post this longer work in the next day, if you don't respond with your usual brief pleasantry, then I will very likely go back to my knuckle-dragging ways. I would certainly appreciate any feedback from the unique view that you share with ANOTHER on these matters.

Gold. You don't have it unless you HAVE it. ---Aristotle

UsulTime#2405602/01/00; 14:58:35

Diem adimere aegritudinem hominibus
Time heals all wounds

Tempus omnia revelat
Time reveals all things

JourneymanPerverted Law Causes Conflict#2405702/01/00; 15:06:01

TO ALL: I was looking for a quote for Aristotle in a little
booklet called "The Law." Then ORO's really fine post,
(02/01/00; 12:35:04MDT - Msg ID:24046) further reminded me
of that little gem. I had forgotten just how good Bastiat,
the author, was. He nails the "legal plunder" aspect of
government to the wall. This "legal plunder" has become so
prevalent, we all think of it as normal. If you want to
escape the chains and memes of our current western culture,
and see the government-business-political-ideology axis and
the mess it's caused clearly from the crystal perspective
available to a 19th Century French statesman, read Frederick
Bastiat's "The Law." It's quite short, elegant and to the
point -- and it's free on-line from various sources. The
posted link above is one source.

One ironic out-take from "The Law:"

Perverted Law Causes Conflict

As long as it is admitted that the law may be diverted from
its true purpose---that it may violate property instead of
protecting it---then everyone will want to participate in
making the law, either to protect himself against plunder or
to use it for plunder. Political questions will always be
prejudicial, dominant, and all-absorbing. There will be
fighting at the door of the Legislative Palace, and the
struggle within will be no less furious. To know this, it is
hardly necessary to examine what transpires in the French
and English legislatures; merely to understand the issue is
to know the answer.

Is there any need to offer proof that this odious perversion
of the law is a perpetual source of hatred and discord; that
it tends to destroy society itself? If such proof is needed,
look at the United States [in 1850]. There is no country in
the world where the law is kept more within its proper
domain: the protection of every person's liberty and
property. As a consequence of this, there appears to be no
country in the world where the social order rests on a
firmer foundation. But even in the United States, there are
two issues---and only two---that have always endangered the
public peace.

What are these "two issues" in 1850s U.S "that have always
endangered the public peace?" You'll just have to read to
find out!! ;>


UsulTime#2405802/01/00; 15:14:45

"Time reveals all things, and you will see that what I say is correct, namely that:

The entire march of time reveals what is hidden,
yet also does it hide what is revealed."

The Consideratio Brevis of Philip à Gabella, 1615

JourneymanComic relief (and serious stuff too!) @Aristotle#2405902/01/00; 15:29:53

A master of comic relief as well!! Thanx, I needed that. AND your much anticipated "perfect practical financial system" post as well.

By the way, I would not argue we don't need gold derivatives of various sorts, just that we don't need, and indeed in the long-run won't have independent fiat currencies. Well, maybe. Waiting for your post!!

Regards, J.

Galearis@lamprey_65: acid rain as myth/disinformation by liberals......#2406002/01/00; 15:42:17

Only works if the vast majority of the lay public is so estranged from reality by the processes and machinations of living in a modern "civilized" (read urban) envirnoment that they are incapable of seeing what is obvious to those of us who view the natural world with educated eyes from training AND inclination.

I used to travel our northern (Ontario highways) and could predict the bedrock geology by how badly the trees were or were not impacted by acid rain. The granitic (low-lime) areas showed considerable insult revealed as top die-offs (trees do not die from the top down); whereas lime-rich areas (whether it was due to glacial overburden or bedrock type) showed lesser affects (but it was usually there).

I would also say that one does not have to be a liberal or socialist, or christian, or any group oriented mindset to have concerns without an agenda in this area. If the majority buys into the myth that the eco-buffs are tree-hugging, wimpy, bubbleheads seeking attention then we are ALL in a world of trouble. Pun intended.

I would like to see some of these people try to keep up with this particular wimp out there where nothing exists but trees for hundreds of miles. Then again, if more actually cared enough to look around them, would we even have such an envirnomental crisis. Values, values, it all comes down to values. Our culture is unwell with those it chooses. This is reflected in how we use the world.

And the (so called) environment really is in crisis!

My apologies to the group for this off-topic discussion.

CamelMr. Snowflake#2406102/01/00; 15:43:48

In trying to summarize the position of FOA,Mr. Snowflake( Permafrost) said FOA believes:

" buy gold if you have dollars as opposed to Euros ( though
to the best of my knowledge you <FOA> only said this first last week and not before)."

How pathetic!I have probably read all of FOA's posts over the last year and he has allways said "buy gold". Once when very seriously challenged by a number of people he grudgingly allowed that it might be acceptable, under certain circumstance, to buy a few gold stocks. About half a dozen people over the last year have requested information on how to buy Euros or Euro demoninated investments, and he has allways refused and encouraged them to buy Gold.

Snowflakes understanding of this basic issue is so false and miusguided and delivered in such an insulting manner that he should be removed from the list and NEVER allowed to return.

His is just another example of ruthless, mediocrity displacing, virtrue and talent.His thoughts will melt as soon as they hit the ground, especially in this heat.

Also,along with global warming, another example of the liteny of misguided science foisted on the general public we might add that of cigarette smoking.Who can forget all the years that the tobacco industry insisted and assured us that smoking was not harmful to your health. Even today that are a few top management people that won't admit the truth.

Correlation does not prove causallity they tell us.

This seems to me to be one very possible discription as to what may be happening with the debate on global warming. Don't forget that the main opposition to precieving global warming as a reality is led and funded by the oil industry, which is distubingly similar to the efforts of the cigarette industy on the smoking issue in times past.

Golden TruthAristotle#2406202/01/00; 15:44:00

You are a true Gentleman and i can't wait to read your next installment, thanks for all your wonderful work also!

Cavan ManAristotle 24055#2406302/01/00; 16:20:17

Sir Aristotle:

Good wit; you may be a knuckle dragger but you are higher up (or is it lower down) on the food chain than me, a mere box salesman (and empty ones at that!). I look forward to your reasoning as to the fiat standard and continuing enlightenment. Thanks in advance....

Cavan ManFOA (one more time)#2406402/01/00; 16:30:24

Sir JA is right. Your commission is a public service. You are looking out for the welfare of every common man.

The FOA/Another THOUGHTS are very important to thoughtfully consider and as I believe, accept, because, while any fool like me can conjure a convincing argument to buy and hold gold, the real value to be found in your words is; when POG hits $1000.00, do I sell out in exchange for Pokemon cards or hang in there and wait everybody out. For my kids and others like me, that might be the difference between a classical education in Europe or a BS from East Japip U.

Come now, let's be reasonable. Do you want to carry that sort of guilt around the rest of your life? (Note: The Irish are quite adept at dishing our guilt and making in stick.)

On another subject (no pun intended), someone posted a link to another post at another forum where it was suggested the FED has a plan to begin issuing 5 and 10 year Treasuries redeemable in gold. This could be "plan B" that Mr. Gresham spoke of? What do you think? I think the dollar as we know it tanks either way. Thank you for (re) considering.

JCTexReginald Howe / february 1st#2406502/01/00; 16:36:13

"...The Fed and the ESF are the only arms of the U.S. government with broad statutory authority "to deal in gold" and thus by reasonable extension in gold futures and derivatives. Were the Fed to engage in such activities, it would of necessity have to do so subject to all the institutional safeguards that govern its more important functions. Unlike the Fed, the ESF is virtually without institutional structure or safeguards. It is under the exclusive control of the Secretary of the Treasury, subject only to the approval of the President. Indeed, direct control and custody of the ESF must rest at all times with the President and the Secretary. The statute further provides (31 U.S.C. s. 5302(a)(2)): "Decisions of the Secretary are final and may not be reviewed by another officer or employee of the Government."

Originally funded out of the profits from the 1934 gold confiscation, the little known ESF is available for intervention in the foreign exchange markets. In the absence of a Congressional appropriation, the Clinton administration used funds from the ESF to finance the 1995 U.S. bailout of Mexico. However,..."

This one is too long to post, but worth the read.

AristotleJourneyman, my good man--#2406602/01/00; 16:55:43

"we don't need, and indeed in the long-run won't have independent fiat currencies."

You know, that was my original thinking, also, but boy was I surprised as I delved deeper into this. And just as you can be sure that I wouldn't suggest the odd notion that use of fiat currencies are vital to the viability of monetary Gold, you can perhaps gain some confidence that I am also not spewing pro-Gold propaganda without equally having seen the compelling reason behind Gold ownership. Believe it or not, Gold will be the savior of fiat currencies, and will in turn be bouyed by them. Strange but true. And very encouraging for those who hold Gold near and dear--the world will embrace the precious yellow metal. And with that, I'm back at the grindstone.

(By the way, thanks for that great link you provided!)

Gold. Get you some. ---Aristotle

Canuck@ SMU (24050)#2406702/01/00; 17:25:55

Interesting message.

I have been very quiet in the last month; unwinding my long
position (Y2K). I have contemplating my long position in gold. As you put it, I have stopped to look behind myself and check the path forward.

Is it possible for you to elaborate on your message?

TheStrangerWhat a Place#2406802/01/00; 18:44:01

Thanks, ORO, for taking the time to help me with this. Thanks also to Lamprey for addressing his comments to me. Reading your words along with Aristotle's, Journeyman's, JA's etc., I am reminded what a great group of intellects we have here. Amazing.
Al FulchinoFrom an email a friend sent, re :Comments by Ed Yardeni#2406902/01/00; 18:44:05

An inflation scare on Friday pummeled stock prices. A global
synchronized boom and tight labor markets could put some upward pressure on
costs and prices. But, I expect offsetting deflationary pressures from
productivity, technology, and lower oil prices. Investors are starting to
worry about a series of rate hikes this year. I still expect just two 25-bp
rate hikes during the first half of the year. My range for the Dow is
10000-13000 this year, with the bottom end likely to be tested in the next
few months. The top end is my target for yearend. A flight to quality and
talk of paying off the federal debt pushed bond yields lower notwithstanding
renewed inflation jitters. My range this year is 6%-7% and 5%-6% in 2001.

ESSAY: The Longest Expansion & Economic Democracy

The US economy is experiencing the longest expansion in our history. The
forces driving our prosperity remain very powerful suggesting that the
prospects are good that the expansion will continue. If I had to explain in
15 words or less why the US economy is performing so well, I'd say: Since
the late 1970s, the individual has enjoyed more and more Economic Democracy.
To put it in terms of Adam Smith's "The Wealth of Nations," the individual
has more opportunities to pursue his and her self-interests and is less
constrained by special interests. "Power to the People"--the mantra of the
1960s radicals--has become the established modus operandi.

Here are some of the sources of our new Economic Democracy:

1) DEMOCRATIC MARKETS. In the United States, and increasingly around the
world, markets have been deregulated and opened to global competition by the
elimination of Iron Curtains, Berlin Walls, and other trade barriers. Often,
these barriers and regulations protected special interest groups at the
expense of consumers. Power has shifted away from politically well-connected
producers to consumers. In competitive markets, producers have lost their
power to raise prices. Instead, to be profitable, they must find ways to
offer consumers better and better products and services at lower prices.
This forces them to cut costs, increase productivity, and to innovate.
Increasingly, the individual has the power to choose the best products and
services at the lowest prices from any producer in the world.

2) DEMOCRATIC CAPITAL. In the past, would-be entrepreneurs were unable to
bring their ideas to the market for lack of financing. The deregulation of
the US capital markets during the 1980s brought greater democracy to
finance. Innovations such as high-yield bonds permitted much greater access
to capital for entrepreneurs. The proliferation of Populist Capitalism means
that the distinction between workers and capitalists is disappearing. More
and more employees are getting a stake in their companies through profit
sharing and stock incentives.

3) DEMOCRATIC TECHNOLOGY. Technology is empowering more and more people, and
liberating us from the constraints of space and time. The PC and the
Internet are "capitalist tools" that everyone can own and use. They level
the playing field by giving everyone the same access to a seemingly infinite
source of information, knowledge, and opportunities. Anyone can communicate
and transact with anyone else on the planet any time. As broadband
technologies become widespread, we will all have a 24x7 open line to the

Here are the probable consequences of greater Economic Democracy:

1) Inflation is dead. Of course, there can be brief spasms of inflation and
plenty of inflation scares. But competition, productivity, and technology
are all powerful inflation suppressors. So policy-engineered recessions to
beat down inflation are less likely.

2) The tradeoff between economic growth and inflation is dead. There
probably never was a tradeoff anyway. In the past, it was uncompetitive
markets that caused higher inflation, which led to higher unemployment.
Competition has lowered inflation, which has led to lower joblessness. As
labor markets have become more competitive, we have all lost our job
security. Instead, we have more job opportunities and record real incomes.

3) Productivity is alive and well. There is no reason why the rebound in
productivity growth during the second half of the 1990s can't continue and
even gain momentum. The technology revolution is in its early stages.
Broadband, Internet appliances, B2C, and B2B all have the potential to boost
productivity dramatically.

4) The forces of Economic Democracy are self-propagating. As they create
more prosperity for more people, they spread around the world. Nothing
succeeds like success. More and more people and their governments around the
world are recognizing that the true meaning of life is SHOPPING! The
well-being of the consumer is increasingly at the top of most economic
agendas. The best means to achieve this goal is Economic Democracy.

The risk is that success breeds excess. In other words, we have nothing to
fear but greed itself. In the past, economic recessions and even depressions
followed the bursting of speculative bubbles. The bubbles burst when tight
credit replaced easy credit. This happened in 1998 in Asia when capital
poured out of the region. But Asians responded quickly by accepting greater
Economic Democracy, and capital poured back, thus reviving economic growth.
Some of the air is coming out of the speculative bubble in the US stock
market right now. I doubt that this will be enough to derail the longest
expansion as long as Economic Democracy continues to gain ground around the

Ed Yardeni

Al FulchinoClarification#2407002/01/00; 18:45:18

The preceding was commentary by Ed Yardeni, not me or my friend.
SMUPaths to Riches#2407102/01/00; 19:05:00

Thanks for your reply. I'm glad that the post caught your interest. It was worded to garner attention. You seem to have your destiny well in hand.

Napoleon Hill's classic work "Think And Grow Rich" proposes that the power of thought engenders action. Thoughts are things which, when pursued with desire and persistence, can lead down concrete paths. Depending on the original thought, this path may blossom to fruition and productivity or wilt in despair and hopelessness.

May I humbly suggest, that based on observation and past results, that our THOUGHTS have brought us to a dead end. Investing in PMs has washed us down the stream of despair and poverty.

It is time to go forward.

andrewFOA#2407202/01/00; 19:37:49

This is a word of support for FOA. I believe that the amount I learnt from him has been invaluable. Thank you.
andrewaussie interest rates#2407302/01/00; 19:52:37

Six minutes before the announcement of the Reserve Bank's 0.5 % lift in official interest rates an email message slipped out of the Reserve Bank of Australia. It was meant to be officially released at 9.30 EST. It was sent to 64 recipients by "accident". There was a flurry of activity and the Aussie rose about 0.8 US cents before the official announcement. A lot of people made a lot of money in those six minutes. Just another example of manipulation. This comes after the Aussie fell 3 US cents on Friday.
Canuck@ SMU#2407402/01/00; 19:53:34

I am at the crossroads of hell. My buddies boast of riches
while I hold just enough 'equities' to prop up the gold and end up about even. I swing from bullish to bearish on the half-hour; I've lost my objectivity.

I plain and simple missed the late '98 and '99 run-up. I can live with that but missing the run-up while simultaneously catching the gold downdraft is disheartening.

I read a most interesting article late last week, perhaps Saturday, in the National Post. It is/was entitled the "The
Implosion Of The Internet". The general slant of the story is that internet users have been doubling every year or so and presently 139 million Americans and 12 million Canadians
use the 'net'. This represents approximately half of the population of the respective countries. The author, claims that saturation is nearly upon us; very close in the USA, followed by Canada, England, Japan, etc., etc.

This raises a flag in my mind. The internet, arguably, is the genesis of the economic expansion in the last 2,3,4,5 years. When internet user GROWTH reaches equilibrium, what happens next? No wonder the AOL-Time/Warner merger; we have 'em on the net now, now we have to entertain 'em or lose them. I perceive when saturation occurs, that is to say, when growth stops, many a buck will leave and find a new home. This leaves the money 'sloshing' about, chasing too few goods/services (supply) and we have learned from our friends (ORO, ARI, Stranger, FOA, etc., etc.)(not Perma-dickhead I believe is the name) what that means.

Another, (I like the word ANOTHER) concept I wrestle with is the massive computer/network/hardware/software expenditures pre-Y2K. Corporations have spent oodles of dough upgrading their systems to the latest and greatest and where will new sales be? (Lucent, Dell etc.) These companies, IHMO, will have 2/3/4/... bad quarters, yes?

That's my gold bull thought this half-hour.

If gold drops one red nickel tommorrow I'm dumping it all.

That's my gold bear thought for the next half-hour.

Talk to you in an hour!!

JuliaPermafrost#2407502/01/00; 19:54:27

I take you to be a speaker about several ancient religions. So you undoubtably have heard of the initiates of the great religions. And surely you would have heard that the sources of the teachings of initiation were never revealed to the public. I'm sure you know already that there were reasons for that and purity of the message was one of them. The real meaning was preserved through the ages because they did not try to explain the ineffable to those who don't get it. My point is that there are reasons that people deliver their messages in veiled protect the message from being adulterated by those who don't get it.

The thoughts offered here are gifts to those who receive them. Gifts hold no bars infront of anyone preventing them from stepping away upon the desire to do so. Even evil thoughts, like evil gifts, meant to harm, do not hold anyone captive who upon seeing the evil in them refuses to let them build a nest in their mind. For a thought is like a pigeon who when set free finds no place to rest and build its nest, returns home to roost and lays its eggs in the one who sent them.

Thoughts of contempt and chaos and confusion and ill will are not welcomed. Your posts are as a blank screen for me as I look for truth and kindness and goodwill in their message.

Now it's time for you to move on and don't come back. Your attitude has been no less than abusive. I am saddened that you chose this way to present yourself. People the world over have witnessed your performance. I give no applause nor do I want an encore.

andrewAussie Interest rates up#2407602/01/00; 20:14:16

Six minutes before the official release of a 0.5 % rate rise the Reserve Bank of Australia "accidently" emailed 64 people of the announcement. There was a flurry of movement in the currency rooms and the Aussie rose 0.8 US cents before 9.30 EST the time of the "official" announcement. Some people obviously made a lot of money in those few short minutes. this come on the back of the Aussie's 3 US cent tumble on Friday. Just another case of market MANIPULATION?
CassiusHow Clinton and Rubin used the ESF to cap the Gold market.#2407702/01/00; 20:48:19

Ladies and Gentlemen:
I just read an incredible article by Reg Howe at the Golden Sextant website. This is such an astonishing story and revelation that all who participate of this forum should be aware of its contents.
A lead in paragraph follows and I think it will be the grabber for all to complete the read:

Evidence is accumulating that the administration of Bill Clinton may have turned the Exchange Stabilization Fund (the "ESF") into a political slush fund to make itself look good and simultaneously profit some of its closest Wall Street friends and supporters. Specifically, the known facts support credible allegations that the Clinton administration has effectively capped the gold price by using the ESF to backstop the selling of gold futures and other gold derivative products by politically well-connected bullion banks. Such interference in the free market price of gold would undermine its traditional role as a leading indicator of inflation. And it would do so at the same time that the administration's many adjustments to the CPI have rendered that lagging indicator of inflation also suspect. Among the bullion banks most heavily involved in selling gold futures and purveying gold loans, forward sales and other derivatives that undercut its price is Goldman Sachs, former Treasury Secretary Robert Rubin's old firm.

Now I understand......and, so should you.

lamprey_65Cassius#2407802/01/00; 21:15:06

Just finished reading it myself...WOW!!!

IF this is true and gets out -- I don't know how the president can survive another scandal.


chanJulia #2407902/01/00; 21:22:36

your msg (02/01/00; 19:54:27MDT - Msg ID:24075)


canamamiReply to Cassius - #24077#2408002/01/00; 22:04:33

An awesome piece. A clear and tightly reasoned synthesis of the outstanding theories, supported by reference to publicly known events leading to Howe's ESF hypothesis. It's unfortunate that FOA was not cited as a source, as much of the argument appears to be based on the FOA/Another thesis.
BonedaddyCassius, thanks for the link.#2408102/01/00; 22:06:53

I wouldn't put anything past Slick Willy. But, there is one thing that we all need to realize. The price of gold isn't going up on this news. GOLD's time has not yet come.

Right now, NOBODY CARES!

Nobody cares that Willy is a coke head, a sex offender, a con artist, or a real estate swindler. America is fat, stupid, and lazy. Our enemies grow stronger by the day. China buys missle technology by buying Clinton the '96 election.
Credit has never been so easy. America has never been so blind. The shipwreck that is comming will be grand indeed. I am not eagerly awaiting the days that will see GOLD rising to thousands of dollars per ounce. Those will be very dark days. But still, I buy my GOLD. What else am I going to buy? A new sport utility vehicle? A jet ski?
I happen to like GOLD. I know other people who happen to like GOLD too. This is all we need to make a market. If you doubt my reasoning, simply take a look at Pokemon, Beany Babies, Pet Rocks and any other "currency" of doubious origin.
Someday, maybe tomorrow, the world takes a hit. Hurricane, volcano, war, revolution, death of a leader, you name it. Something, like a shot, snaps all the nations attention onto the "crisis". (Selfish people don't do well in crisis mode.) The stock market stumbles. The "smarter class of investors" panic. Trillions of dollars are wiped from mutual funds overnight. Then, and only then, will people seek real money in the form of GOLD. Having GOLD is a lot like having a gun. You pray that people will play nice and stay honest so you'll never need it. If you have ever needed it, you know what I mean. If you haven't, I really can't explain it. It's just something you have to learn on your own.

Chris PowellFOA and the gold cause#2408202/01/00; 22:10:40

I spend several hours each night working
as best I can as a volunteer in what I
understand as the gold cause, represented
in part by the Gold Anti-Trust Action
Committee Inc. I have had the privilege
of using this fine forum -- the best I've
seen on the subject -- both as a poster
for my group and as a student. Like most
of the rest of us here, I have most looked
forward to the posts by FOA, because he
doesn't just believe certain things; he
KNOWS things too and he has made an enormous
effort to explain them. I have assumed that
he has done so because he too sees himself
as working as a volunteer in the gold cause.
So his ceasing to post would be a disaster
not only to this wonderful forum but to the
gold cause. In the name of that cause I beg
him to return. We all are going to suffer
some blows but he can bear them proudly.

SippinSMU & What the future holds#2408302/01/00; 22:11:31

SMU, your post seems very sensible and prudent, but there are some major bullish people getting the jitters and have turned very bearish of late as far as the stock market goes. This is my problem with riding my investments into a stock market that seems to be a great risk. Personally, I want to be in something that I can count on at least not diving into oblivion at any moment. I don't have a great vast quanity of wealth and I was fully invested in the stock market until early 99. I thought mutual funds was like a savings account. I was of the belief that the market would only go up or be neutral at worst over a length of 5 years or so.

I don't believe that these statements made continuosly by investment gurus is true. The logic is on the side of a major market correction in my humble opinion. I firmly believe that TIME is on my side and not of those playing the market like a neverending cash cow.

That's what I am looking for. Long term security, not a few years of good times and a sickening feeling in my stomach when I and all the " investment experts" are proven wrong.

I have no problem with diversification into markets of all types. I just wonder how longterm PM holders would feel if they dump at the wrong time after holding so long. I imagine it would not be very good. Pareing down ones holdings and still being in the game if a bull market in gold hits, would be safer and more mentally healthful than a full dump. You can be right about your convictions and still profit.

But if I was in the predicting business, I would guess we are in the earliest stages of a bear market in equities, maybe a very long one.

Solomon Weaver(No Subject)#2408402/01/00; 22:11:34


I certainly hope you have had the chance to read through all of the many posts today….the strong consensus seems to be that you should stay among us…..

Perhaps you are a busy man and your many worries were already taking you away from us…at least in body…..perhaps we as your 'GOLDEN FAMILY’ at the CYBER ROUND TABLE will always hold your heart. You Sir, will suffer no less than we will, for surely you found a place here where many serious minds gave intent consideration to your views…what better way to pay respects to a fellowman.

There are such lovely respectful letters in the Archives which document the way MK and Another and you started out here….there is the common thread of gold, dollar, oil and Euro which seems to run like a wine through all our if to almost make us drunk and forgetful of the smaller details in life….there is the constant spirit of surprise as the spirit of the forum on each day emerges…one day mired in numbers games, another watching the great escapades of the commodities markets.

Your worlds could certainly be recorded and refined and "posted" on a web site as individual documents, a one way street without answer or perhaps rebuttal….but what of all the great thoughts that we help stimulate when you are here with us…discussing these things….as they say….walking the path.

Poor old Solomon

SippinFOA is very good at analysis#2408502/01/00; 22:32:26

FOA to me, seems like a professor of theories and facts and has a great way of formulating it into readable and understandable viewpoints. Now Permafrost is not very impressionable or convincing with rants and raving that seem to come from delusion or mind altering drugs.

Permafrost has a distaste for the unfairness of the money world and wants to vent his anger on all those that don't believe his every word on how "unfair the world is". Well here's a little tidbit of fact for you, "The world has always not been perfect and never will be". Get over it. Place your bets and quit the whining. ITS ONLY MONEY AFTERALL.

I have a feeling this issue over gold is more of a pride thing than monetary with most posters anyway.

goldfanORO (02/01/00; 12:35:04MDT - Msg ID:24046)#2408602/01/00; 22:46:46


thanks very much for your long reply....Ouch! Well, I know you're right, it's mostly about power and greed. Even Quaker meetings blow up over such issues. But I resist believing it's inevitable. I don't want to fall into the despair that overtook so many intelligent and honest people, in Ancient Greece, the later Roman Empire, even Russia today, driving them to suicide, not wanting to live longer among such people. I have had such moments, feeling I've lived enough, not wanting to experience the mess I fear will come, watching my kids struggle. Even on this Forum, we get a small taste of it, in FOA's entirely justified sensitivity to the stupid attacks of a psychopathic personality. ( I hope for all our sakes he has not indeed gone, but particularly for yours, maybe you will find a way to communicate with him off stage?)

I have myself been "in the room" when a captain of industry, of one of our largest multi-national oil giants, tipped off a young friend of his to a buyout being proposed by his company. The two got financing after hours from one of our big banks, and bought megashares in the buyout target the next morning, before the news became public. And they cleaned up. And the young man, having stolen his stake, is now one of our largest and most successful real estate developers. So it goes in the world of "senior" management. Now, everything is done to gun stock prices, and profit option holders.

Well. the stuff you're describing is on a much bigger stage.
Nonetheless, the power brokers must at least give the appearance of civility. Or we will be back in the days of warlords, border wars, and assassinations.

I am getting too old to fight, but, I will muster a killing rage against anyone who openly tries to take away the freedoms I want my children to enjoy.

I salute your efforts to discover what would cause the collapse of the present set of financial "epicycles’ and what would be a simple, elegant and quality archetype to put in their place.

I wonder if you could spare a moment to consider the questions I asked in post
# 23776 as follows;

goldfan (01/28/00; 18:17:17MDT - Msg ID:23776)
ORO (01/28/00; 14:56:18MDT - Msg ID:23769)
Sir ORO Thanks for your quick reply. I'm starting to get it, but the terminology defeats me at times, like swimming in wet sand...

You said

Total US dollar debt outside the US is likely larger than the $23 trillion figure.

Total dollar debt market size within the US is about $25 trillion (without $7 trillion in financial debt) over an $8.7 trillion economy.

>>> What is the difference between "total dollar debt market size within the US", and M3? Is Financial debt, M3? What else is there?

I would also greatly appreciate help with understanding some terms I found in an article by David W. Tice at He

"But if our trading partners resist running a large current account deficit with the US, our monetary officials are left to finance the country's growing mountain of debt through a sharp devaluation of the currency"

and further on he says"

"all will be ultimately faced with the dilemma of havng to respond to the inevitable devaluation of the dollar, as the US seeks to reflate
its economy."

My question is, How exactly does a monetary offical, or other government agent, devalue the dollar? Do they just announce it? ( I know that seems like a dumb question). And also, how does devaluation "finance a mountain of debt"? I thought that debt was already financed, that is what it is, a means of finance? When the bond is signed it is financed. Or does it mean "pay the interest on" and if so, why not say so? What am I missing here?

Thanks again for your help, with sufficient education, we may yet save our democracy.


goldfanFOA, civil discourse in the agora#2408702/01/00; 22:52:01

Sir FOA I too would very much miss your voice on this stage.
In my experience, persistent heckling so disrupts a meeting, that there can be only one solution. Throw out the heckler.


goldfan#2408802/01/00; 23:06:49

Canuck (02/01/00; 19:53:34MDT - Msg ID:24074) Canuck (02/01/00; 19:53:34MDT - Msg ID:24074) Canuck I wonder if you would consider your gold as an insurance policy, not as an investment? I've bought gold at all prices and just watch with bemusement as it dips and rises. Gold is not popular right now. Neither are iodine pills. But if we had a nuclear reactor explosion around here, watch the price of iodine pills take off! Anyhow, I have a bottle of iodine pills for insurance, not for investment.

Nothing is good as gold

Goldfan (another canuck!)

she-goldCassius#2408902/01/00; 23:09:05

The article accusing the ECF is amazing. By trading gold through the ECF, both the Treasury (as an organization) and the Fed can honestly say they don't deal with gold or gold derivatives, since the ECF is an independent organization. So, much like the bailout of Mexico (and bankers like Goldman Sachs), the ECF bails out bullion bankers (like .. uh.. Goldman Sachs). This is the mandate of the ECF as they see it, especially given the amount of gold they appear to be short.

The ECF has $40 billion to play with and is accountable only to the Secretary of Treasury.. and the President. What I find interesting is the fact that a PORTION of the official gold held by the USA (8,140 tons) is allocated to the ECF. (look at the footnotes to the Treasury Stocks in the above link: "Includes gold in Exchange Stabilization Fund") So how much of the USA gold is in this fund? Who knows? Is there flux between the Treasury and the ECF?

The bottom line: the ECF is mandated to deal in gold and gold derivatives for the sake of "stabilization". This is how and why they manipulate gold.

They don't call it a slush fund for nothing...

AristotleWas doing some research in the Archives--found this old reminder of what could happen at any time#2409002/01/00; 23:35:18

Aristotle (06/27/99; 00:10:01MDT - Msg ID:8099)
ET and CoBra(too)
"CoBra, you are right that much of the petrodollars were recycled in the form of loans to many of the poorer countries that have certainly not been very successful paying them back. The Third World debt crisis can probably be chalked up to the wave of borrowing prompted by the Oil Crises more than any other single cause. As for your comments on the hedge funds, I simply don't know about their role as a means to patch a hemorrhaging system. It may be just as you say. My take has been that have sprung to life and exist because there are opportunities to be exploited on the fringes of the regulated financial sector occupied by typical finacial institutions. Motivated by greed and arrogance, patronized by those too desperate, reckless, or greedy not to. So while I haven't viewed them historically as part of the cure, I do see them today as contributing to the problem. An element of that is in Part 5.

"ET, I'm glad you brought up the issue of moving metal into the market. It reminded me of the reason an important element had to be folded into Part 4 of my commentary. I'm sure that up to this stage some people are asking themselves what is the point of a lot of this stuff. I can't promise that I will remember to make all the the necessary connections, so whereas I might fail by degree, at least the info has been presented so that others can see the connections for themselves.

"The reason Aragorn spoke about Rotterdam specifically was to demonstrate an important point. The price for oil on May 14, 1979 was as posted by OPEC at $13.34 per barrel of oil to be delivered under arrangements of contracts. When these contracts fell into disarray by the unexpected shortage casued by the revolution in Iran, the oil was sought on the Rotterdam market, and the price one day later was more than double...$28. Two days later it was $34.

"Let me rephrase (translate) that into terms that not only describe this oil market development, but that might allow for a new perspective to be gained on the Bank of England Gold auction. (Interestingly, Rotterdam is only 200 miles east of London, a stone's throw across the Straight of Dover.) Rephrase:
When these contracts for delivery of the product fell into disarray by a shortage casued by unanticipated events, the product was sought on the spot market, and the price became overnight more than double the posted contract price..."

I think COMEX open interest is probing multiyear lows. While this arena isn't the typical contracting mechanism to facilitate Gold acquisitions, it does dictate the price. Is the dwindling volume a sign that it is failing to be seen as a viable market? Hedge funds could sell into it and give us dirt cheap metal while it lasts. Once the supply dries up and the fiction is revealed, it's all over! I think that very very few who are playing a timing game will derive any benefit from that approach. Remember how the paper Gold markets fell into disarray on the heels of the Washington Agreement? And that was only a political trigger. Just imagine one that finds no metal in the market.

Gold. Zing! ---Aristotle

Jason HappyMultiple topic#2409102/01/00; 23:35:45

FOA, you said,

"I said I would walk off this stage if there kind were allowed here."

I take this to mean that since 9/10 people have opted to hear the wisdom of FOA above and beyond Permafrost, you will continue to post here?

Regarding the several sudden and unexpected "anti-gold" posts made in the last 24 hours...

Imagine... the U.S. stock market(s?) are 15 Trillion strong. If 1% of stock investors made a move to gold, (or 1/1000 people made a 10% move), that would be 150 Billion Purchasing Power, or 15% of all the world's gold.

At $300 an ounce, that's 500 million ounces. Which, I believe, is about double the entire U.S. hoard. Or, about equal to the U.S. hoard and European Hoard combined. And people said that they could anticipate such a move? Foolishness, in my humble opinion. How many people rode the wave of $20 to $35 back in 1933-4? Wasn't this re-valuation too rapid of a wave to ride? Hello?!!

Some may point out that the numbers of people currently invested/enamoured in/with gold in the U.S. is 1/1000. However, I just demonstrated the effects of this figure going to 2/1000. And the facts of history, past gold bulls show that 50/2000 (1/20) people become interested in gold during typical/historical gold bull runs.

Thus, I think we will see more than 1% of the stock market move when the time comes. Keep the faith!!! The next gold bull run will make the past runs look like less than a meandor.

Regarding "Media Manipulation"... we all know that they must be in on the game in order to continue to keep over 99% of the people in the U.S. in line... after all, a 1% slip = 150 Billion in Gold purchasing power.

Recently, either on this forum or elsewhere, I read how the U.S. Government persuaded anti-drug messages to air on sitcomes.

The reason I write this week, besides the facts above, is the following:

1. Sabrina, the Teenage Witch, this week, showcased the principle of the high school buying a "gold bar" in preparation for y2k, and against "tha aliens"... yuk yuk... wasn't he a fool!

2. Sportsnight, on this evening, show-cased an "anti-gun" message by having the constitutionalist & history oriented gun-enamoured man win the girl by showing that he had an "anti hand gun coalition" card.

It just made me sick. Too many people just watch TV and absorb the feelings presented. This last week I picked up a hitch hiker in my rural town, and he was saying how guns that were not good for hunting should be banned. I told him that hunting was not the reason why we had the second amendment.... and he was shocked silly--but agreed with me...

Enough of my rant.

Gold will rock, don't worry. Keep the faith!

elevator guy@MK , the FOA / Permaflake thing#2409202/01/00; 23:38:45

Dear MK, you are a gracious host. And an even tempered man, if I read you right. However slow to anger a saint may be, there comes a time to cut off the cancerous noise known as Permaflake, or Chris, or whoever. It does not matter who it is. Too much time has been spent on someone who has a vindictive, cruel posting habit, and that with little to contribute, to boot. FOA may place too much weight on Permaflake's posts, and FOA may be "pulling rank", in getting us to ask for Perma's dismissal by withdrawing from the Forum. Maybe FOA has a thin skin. And sometimes I dont agree with FOA. (Not that I would know when to disagree, or agree, about macro economics! But thats another subject.)
FOA has spent much time and effort to share a very unusual and precious perspective, that we may otherwise not get through standard spin media. Its rare when someone goes WAY out of their way to help someone. FOA doesnt have to do this for us, its just unmerrited favor. FOA has put so much heart into answering posts, and taking time with peanut gallery questions, and trying to clue us in to the big picture. When a poster like FOA has put that much into this Forum, it has advanced the intellectual envelope of the net at large, he deserves a break.
What I'm trying to say is that after all FOA has done, he deserves some respect. Its not thin skin, as much as it is exhaustion with the mud-slinging. In my opinion, what Perma offers is not debate, but mere gainsaying, and outright attemps to dis-credit FOA with all sorts of off-the-wall attacks. (That Son of the Ancient Ones!!!!)(or Son of something)
I think we speak for all of us, except a very few, when I humbly ask you to remove the posting priviledges of Permafrost. This is your Forum, which means it is not a democracy, so of course the decision is yours, so this is not a vote. But its a really good place, and I'd like to see it stay that way.

goldfan18KARAT (02/01/00; 10:28:27MDT - Msg ID:24036)#2409302/01/00; 23:42:50

18KARAT Thanks much for your effort on money creation. A really entertaining and informative read. I enjoyed it. and, for the most part, understand it, except maybe for some terminology.
Some thoughts...
Maybe the mortgage provider can be "blamed" if for instance, they make loans too easy, and so encourage sellers to raise prices. The higher price for one house on the block, causes a revaluation of all the other houses. Their owners rush out to the bank, find yes indeed, the bank will increase their mortgage. So one sale creates 10 mortgages, the proceeds go into stocks, where one sale creates 10x the valuation in the stocks not on sale, increasing margin available for their owners, and generating yet more sales. Is this not money creation? It is certainly, the "illusion of wealth" creation! Maybe it's only money if we can spend it. Well, then, we draw some cash out of our margin account, cash that was put there because someone else bought stock and put the price up, using money they got from a mortgage, which was the result of an increased valuation caused by someone else selling a house! (that Jack built).

Maybe I'm wrong, but I understand that the job of Fannie Mae is somehow to place billions of dollars returning from the current account deficit, which can't be sucked up by Treasuries since the government is no longer running a deficit ( in the open anyhow). This ready availability of funds is pushing up the real estate market big time. maybe someone here with more knowledge could comment on this.

Concerning mortgage-backed securities, packages of mortgages... presumably the seller of these has to put the cash to work, and so seeks another loan to make. ( This loan might will be of lower quality, higher risk, since all the good stuff available has been sold in the mortgage package). Well, isn't this a loan that wouldn't have been made, if they hadn't securitized the mortgages? And so, just the act of creating the package and selling it, has created more money? I get your point that unless there is bank in the background, providing backing, there is no new money, but I wonder if that's always true? Maybe some one else could comment on this...


Jason Happyoops#2409402/01/00; 23:42:51

oops, proofing my last post, it should be "50/1000" not "50/2000" become enamored with gold during the previous gold bull runs....
Chris PowellU.S. Treasury is now gold's hostage#2409502/01/00; 23:47:59

Reg Howe summarizes the case GATA
and its chairman, Bill "Midas"
Murphy, have been making dispatch
by dispatch for months now.

Jason Happy1/1000?#2409602/02/00; 00:36:44

Regarding the 1/1000 people in the Stock Market turning 10% towards gold...

Direct mail respone rates are 2% on average. My father, in the 80's, made his money by creating a direct mail piece that elicited a 50% response. How?

It was a life insurance piece that was sent to people on behalf of their banks, promising a "free accidental death insurance" policy of $5000.00. Well, excluding car deaths, suicides and murders (gun deaths), there are relatively few accidental deaths, so the cost of the free insurance was little. However, 50% of people sent for their bank's free insurance, and 10% ended up becoming customers for the term life insurance ultimately offered. Why? It's a lot easier to get people to answer mail that comes from their bank, and it's a lot easier to get people to open mail for free stuff that they already sent away for.

The point? 10% bought the insurance. Which set a new standard for the "junk mail" industry.

Read yesterday's post regarding a 1% move in investment sentiment.

15 Trillion U.S. Stock markets, a 1% move is 150 Billion, or 500 million ounces, or 15,551 tons of gold. Keeping in mind the 2500 tons per year mine supply....

After all, isn't gold the ultimate insurance?

Jason HappyDon't underestimate the power of marketing...#2409702/02/00; 00:58:04

In case anyone missed the implications of the facts of my last two posts...

The reality of the price of gold going to the moon in the price of dollars is a mere marketing campaign away.

Marketing isn't a powerful force? You don't think it can change public opinion?

Take the entire concept of insurance. It began with door to door salesmen... selling the idea that upon your DEATH, you would want to leave something behind. Not a pleasant picture to paint; however, it became a cultural phenomenon in the good ol' USA, this idea of "life insurance" after World War II...

Relatively recent, encompasing the entire nation's conciousness in a short time, all thanks to marketing.

When will gold be effectively marketed? That's what I wonder...

Already, one ounce Gold Eagles are being sold for $400 each on the "home shopping network"...

If they can sell 'em out (SOLD OUT!!!) at that price, why isn't the price higher?

Isn't it just a matter of effective marketing?

To get the 1% to move all to gold?

or 1/1000 to move 10%?

Same difference.

Any day now....

Gold: The Ultimate Insurance

Jason HappyMarketing implications continued...#2409802/02/00; 01:16:20

Assume you were only 1/10 as effective at selling "insurance" as my father... thus, a 1% return.

Assume you are smart enough to mail out only to the top 50 million households in the U.S., because the lower 50% doen't even have $1000 to invest anyway, and therefore is irrelavant.

Assume you are an idiot, and spend a whopping $1 per piece of mail, or $50 million.

Assume the 1% investment response, 1% invest 100% in gold, or 1/1000 invest 10%, which is 150 Billion, and assume a 1% commission; that's 1% of 150,000 million, or 1500 million on a 50 million marketing investment.

Is it really that hard to sell gold?

What have we not covered in this forum to convince people to buy?

Are our thoughts really so in-ar-tic-u-late?

What am I missing?

Black BladeNot bad for a barbarous relic!#2409902/02/00; 01:25:57

Condensed from the WSJ, Friday Jan., 20, 2000, section B1.

The lost treasure of the SS Central America is finally out of legal limbo. The haul of gold bars and coin are expected to bring in over $100 million. The treasure has been tied up for the past 12 years while the legal maneuvering among the courts, the recovery team, their investor group, The Union Bank of California, Christies International and insurance companies that had paid off claims 143 years ago had run its course. The SS Central America sank off the coast of the Carolinas claiming the lives of 425 gold-rush prospectors and crew during a hurricane in 1857. The cargo included gold worth $1.2 million. The loss contributed to the financial panic of 1857.

In 1988, treasure hunter Tommy Thompson, backed by a team of investors called the Columbus-America Discovery Group began salvage operations. Eight insurers claimed the treasure for their own based on policies of their corporate predecessors had paid off on more than a century ago. Mr. Thompsons response: "finders keepers". The US District Court in Norfolk, VA, essentially agreed giving 92% to Thompson and his group, and 8% to the claimants. The California Group will begin touring with the display of gold and a giant replica of the SS Central America next month. Five stops are planned: New York, Las Vegas, San Francisco, Philadelphia, and Long Beach, CA.

Jason HappyLast time to clarify...#2410002/02/00; 01:30:08

In case my last post did not present the message clear enough...

A mailing that is 1/10 as effective as my father's, who made over a million dollars in a lifetime doing it...

Would pay of $30 for every $1 invested...

This is my current quandry/connundrum/question/concern/querry/problem

Anybody care to enlighten me?

SteveHStratfor#2410102/02/00; 03:40:32

repost on Japan:

From: " This email address is being protected from spambots. You need JavaScript enabled to view it. " < This email address is being protected from spambots. You need JavaScript enabled to view it. >
To: This email address is being protected from spambots. You need JavaScript enabled to view it.
Subject: Japan

STRATFOR.COM's Global Intelligence Update - 2 February 2000

By The Internet's Most Intelligent Source of International News &

Europe Offers U.S. an Exit from Kosovo - Now What?

STRATFOR.COM Global Intelligence Update
2 February 2000

Japan Borrows From Banks To Float Economy


Japanese Prime Minister Keizo Obuchi said Jan. 28 that his country
would forgo fiscal reforms until the economy stabilizes. On the
same day, the Japanese government announced it would begin
borrowing money directly from Japanese banks to cover budget
shortfalls. By refusing to implement deep, painful and necessary
reforms - and instead borrowing from domestic banks to fund
additional unworkable government "stimulus packages"- Japan has
sentenced itself to a descending spiral of economic malaise.


Japanese Prime Minister Keizo Obuchi stated in a Jan. 28 speech to
the Diet, Japan's legislative assembly, that "fiscal reform is
important," but that the country "cannot commit the mistake of
undertaking it while the economy is not firm and before it is on
the path of full-fledged recovery." His remarks came within hours
of the Japanese government's announcement that it would begin
borrowing money directly from its crippled banking system in order
to meet its financial obligations to local governments.

Government policies have locked the Japanese economy in a downward
spiral. In order to promote growth, Japan creates supplemental
budgets funded by borrowed money. When the government money runs
out, the economy again slips into the doldrums, thus necessitating
new projects funded by new loans. This deepening addiction to
borrowed money has caused catastrophic damage. Japan's inefficient
economic structures promote social welfare at the cost of stymied

Japan already holds the record as the world's most indebted
government. Its newest budget deficit, at 38.4 percent, will only
compound this. At this pace, Japan's debt will top 150 percent of
its GDP within three years. Japan's budget and economic structures
are not sustainable, and by refusing to adopt direly needed
reforms, Japan's economy will only decay further.

Put simply, Japan is attempting to borrow-and-spend itself to
recovery, but without constructing an environment that encourages
private sector development. Every action the Japanese government
takes along these lines to bolster its economy only extends the

Japan's latest plan seeks to achieve three goals: give business to
Japan's banks; decrease the value of the yen; and gain additional
income for the government without issuing new bonds.

First, Japan's recession has idled many of the nation's banks; few
companies are willing to take on additional financial risks until
the economy recovers. The new plan would give the banks some badly
needed business.

Indeed, Japan's banks are awash with money, but this does not mean
they are healthy. Japan's banking sector is still struggling to rid
itself of at least $2 trillion in bad loans, acquired from two
decades of irresponsible lending practices. Furthermore, Japan has
a bad habit of instituting superficial reforms throughout its
political and economic systems. Its banking industry is no
exception. When many Japanese banks went bust after the Asian
financial crisis, several "reformed" themselves by closing foreign
offices in order to avoid adherence to international financial
norms. Moreover, Japan went so far as to refine the meaning of a
bad loan, loosening the criteria, thereby delaying or preventing
unprofitable enterprises from foreclosing. This, in turn, meant
that on paper the banks appeared to be more financially solvent
than they really were. It's easy to avoid a debt reckoning if you
rewrite the financial laws.

Japan's second goal is to increase the country's money supply. In
borrowing from these same capital-rich banks, the government will
inject additional money into its economy. Japan hopes that this
additional spending will reduce the value of the yen and increase
the international competitiveness of Japanese exporters. Yet, in
the recent past financial markets have shrugged off every attempt
by Japan to reduce the yen's value; there is no reason why a
slightly less direct attempt will be successful. In the unlikely
event that it does work, it will be a fleeting success at best. As
soon as the Japanese lending spree ends, the yen will rise again.
Japan will have spent borrowed money and achieved nothing.

Third, the plan calls for loans instead of bonds - Japan's
preferred method of borrowing money. After nearly a decade of
issuing bonds to fund massive, and irrelevant, infrastructure
projects in an attempt to jumpstart the economy, Japan has
saturated its bond market. Japan's plan allows the Japanese
government to obtain additional funds without harming the bond

This actually magnifies Japan's debt problem. One of Japan's
advantages over its neighbors during the Asian financial crisis was
that Japanese debt was long-term at low interest - it in and of
itself did not trigger a crisis in the way that Korea's short-term
development debt did. Japan's new plan destroys much of that
advantage by racking up short-term high-interest loans for regular,
recurring expenses. This is tantamount to charging your rent on a
high interest credit card that you cannot pay in full. If Japanese
debt rises as Japan's Finance Minister Kiichi Miyazawa predicts, it
will top $6.15 trillion this year. When Japanese interest rates
rise, as they must eventually, the cost of servicing this mountain
of debt will be massive. Japan will have secured an additional
source of income, but condemned itself to paying interest payments

Powers outside of Japan have noticed these problems. Fitch IBCA and
Moody's Investors Service - international credit rating agencies -
have both reduced Japan's credit rating and are considering
lowering it further due to excessive debt. This raises the cost of
borrowing for Japanese businesses. The G7 and the OECD have also
tried and failed to get Japan to take more appropriate action.

Japan's Asian neighbors are also aware that the region's economic
colossus has feet of clay. Japan's Miyazawa funds, designed to
stimulate the purchase of Japanese exports in Japan's neighbors,
have found few takers in recent months. Japan has also seen most of
its Pacific Rim trading partners eschew new trade links with Tokyo
in favor of lashing themselves to a seemingly unending U.S.
economic boom. This is unsurprising considering Japan's
unwillingness to dismantle its outdated protectionist policies and
its inability to stimulate consumer demand. This "Fortress Japan"
mentality atop a mangled financial infrastructure will ensure a
continued exodus of economic - and therefore political - power from
the world's second largest economy.

By publicly abandoning financial reforms, Japan is sending a
dangerous message. Japan continues to borrow in order to fund
temporary stimulus packages. These stimulus packages create an
economy dependant on continual government investment, which can
only be paid for with more borrowing. Having exhausted the bond
market, Japan has now resorted to higher-interest loans to
perpetuate this vicious circle and make the Japanese economy even
more indebted, and more out of synch with the rest of the world.
Japan's day of reckoning is not far off.

(c) 2000 WNI, Inc.




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BonedaddyJason#241022/2/2000; 6:01:41

The wick of my lamp is short and it's light is dim. Come, join me by the fire and let your madness run with mine.
I agree completely with your marking analysis. By mass marketing, if only a fraction of the people reached were to buy GOLD, it should have a huge impact on price. Ah, but we live in interesting times. An aside to ponder: The coyote does not approach his prey directly, but he circles, checking the wind and the look of the situation from many angles. Consummate skeptic, the coyote, I like him. But even he is easily snared, because when he isn't stalking prey, he's not so careful. He likes to run on the same well known trails. For most "investors" today, GOLD does not represent money. It's not on the radar screen. The coyotes don't see it as prey. Mass marketing GOLD may yield some good result right now, but not a windfall. That would take a paradigm shift away from the view that stocks without dividends, or even earnings, are money. This brand of "investing" is the antithesis of the concept of stored value. As long as worthless stocks yield paper gains, GOLD will not be seen as money. Continue to formulate your marketing plan my friend. But realize that timing is everything. If there were a large demand for physical GOLD anytime soon, would there be enough available to feed the market? Well established brokers might quickly run out of coin and bullion. For me, the safest play is to aquire the GOLD now and sell some of it into a panicked market farther down the trail. Basically, I can stalk the coyotes now, which is fun and educational, but not terribly sucessful. Or knowing their weakness, I can set my snare in the trail and bide my time.
The most rational market plan will only succeed in a rational market. Under the current paradigm, if you applied your GOLD plan to the creation of the next worthless "fad" trinket, the world would beat a path to your door. Why not develop and market a little electronic doll that sits next to the computer and tells stock market investors how wonderfully wise they are? It could chant mantras about the markets always going up. It could quote Abby Joseph Cohen every fifteen minutes throughout the trading day. It would be a hit, I guarantee. You could then invest the proceeds in physical GOLD. I've got to saddle up now pard, daylight is breaking.

JourneymanGold standards, competing currencies & unstated assumptions#241032/2/2000; 6:37:20

@Aristotle, ORO, FOA, TownCrier, Mr. Gresham, Yellin, Peter
Asher, Stranger, Canamami, PERMAFROST, Farfel, ALL

Hmm. Aristotle, you've already got me thinking . . . .

In the heat of "battle" (not always a fruitful mindset for a
friendly if highly animated discussion) I may have given a
distorted impression of my position - - - to myself as well
as to others. Fighting _against_ the conceptions of a
perceived "enemy" (the slimey faction of the alternative
currencies folks, that is the banksters who wanted and got a
monopoly on money manufacture, and politicians they paid-off
to get it,) turns out not to be the best way to approach a
problem with an open mind.

I am in tune with the notion of competing currencies, where
the competition is fair and open. In the case of the modern
context, my unstated assumption is that REDEEMABLE gold
instruments (there isn't any reason such instruments
couldn't be megabyte, that is "electronic" in nature) would
have the upper hand.

There could and would be I.O.U.s (debt instruments) of
various sorts, perhaps even national brand names such as
"dollars," "yen," "lira," etc. circulating (bought and sold)
simulntaneously with gold, but they would ALL be circulating
in a free market context.

I suppose my ultimate assumption is that the REDEEMABLE gold
instrument, including the stability of completed barter in
it's heritage, would beat out the other currencies in free
and open competition, and would become the standard the
others were measured by. Other special purpose IOUs would
be used, but as credit-card debt, bank debt, etc. is today,
these IOUs would tend to be denominated in the most
universal units, ("dollars", "yen" etc. today, gradually
evolving into direct units of gold as E-commerce puts the
proper value on transaction costs and transparent _world-
wide_ consumer understanding.) Remember however, "free and
open competition" among currency alternatives is NOT the
current situation.

In self-defense, and to understand why certain folks might
be slightly ticked and focus on fighting _against_
something, the historical context of how gold was violently
and illegally taken out of competition with the purely paper
dollar with which it would have otherwise been competing,
that is, how gold was taken out of competition, particularly
here in the U.S. needs to be kept firmly in mind. For those
who don't know, after 1933 until 1974, "your" government
claimed gold ownership by Americans was ILLEGAL. That is,
the bankster/government factions in society made gold into a
"controlled substance," like cocaine or heroin -- and they
got away with it! (I'm not making this up -- ask me!)

To sum-up my position, including all those previously
unstated assumptions: I favor a free-market in currencies,
including any IOUs anyone wants to try to sell or trade,
including Uncle Billy's scribble on the back of that
envelope, and even "yen," "dollars," or "euros." I assume
that under such competition among trade token alternatives,
gold will prove to have an "unfair" advantage in that it's
still the "esperanto" or "electricity" of trade.

Keeping in mind goldfan's classic observation - - -

"In trading systems, barter is the only reality. All
the rest is an illusion put in place to "manage" the
system for stability until the exchange is "settled" by
completing the barter." -goldfan (1/30/2000; 9:30:04MDT
- Msg ID:23863), Chaos Dynamics and the World Economy

gold will have the advantage of "settling" the underlying
barter on the spot as opposed to carrying a future
obligation around and hoping it will be settled -- or that
you can off-load it before it's discovered it's bad debt.


P.S. One final related though ironic observation: Pre 1933
"Redeemable in Gold on Demand" dollar bonds _were_ indeed
debt instruments, that is IOUs, promising to deliver
"dollars" which were defined as a specific amount of gold.
Specifically, in 1933, a dollar was 25.8 grains of standard
gold or 23.33 grains of fine gold. That is, a dollar was
about .05 ounce of gold.

The intentionally look-alike post 1933 paper dollars,
however WEREN'T and AREN't debt instruments or IOUs since
they don't promise to deliver anything to anyone. That is,
those of us who insist that current FRNS are "debt" are
incorrect! (There is a "debt quality" to _any_ general
barter instrument however (including gold) in that it is
_expected _to be tradable for stuff later. The difference
between gold and "national brands" however, is that gold can
be traded nearly anywhere around the world. This has many
implications -- as those who have followed ORO and FOA and
the oil-for-gold notions here know.)

To repeat: Pre 1933 Federal Reserve Notes were IOUs,
promising to deliver gold to the bearer on demand. Post
1933 fiat FRNs are NOT debt instruments or IOUs.

Black BladeGold hot outta the gate! Up $1.85 and rising!#241042/2/2000; 6:44:47

Au up at the open, up $1.85 to $284.25. Rhodium up another $100. Question: will it last?
JourneymanGold standards, competing currencies, & unstated assumptions [Addendum]#241052/2/2000; 6:57:29

@Aristotle, ORO, FOA, TownCrier, Mr. Gresham, Yellin, Peter
Asher, Stranger, Canamami, PERMAFROST, Farfel, ALL

It occurs to me that the off-shoot of the "competing currencies" perspective (below, since I posted it first) sort of defuses a lot of the disagreements here, or at least transmutes them into speculations as to which brand of trade token, "dollar," "euro," gold, etc. will win in a fair fight, which will come in second, etc.

I like that much better. Of course, PERMAFROST now thinks I'm a turncoat!


JayneFOA and Forum#241062/2/2000; 7:47:43

Never judge a man until you have walked in his shoes! Just an assumption on my part, but I bet I am close to the truth. Hasn't anyone questioned why Michael Kosares hasn't said a word about this issue with FOA and Permafrost. Why is he just letting it settle a bit. Possibly, MK remembers a date in 1999. I personally believe that FOA has had the worst year of his life. 1999 will not be a year he will ever forget.
Everyone should go back and read the archive of (11/23/98;20:23:51MDT-Msg ID:1067) then
go and read FOA…Michael"FOA(3/14/99; 11:17:14MDT-MsgID:3351). My personal feelings
are that FOA lost through death a loved one of some sort. MK message that came back on the nite
of 11/14/98 was May the God of us all bless you and Another and keep you . You have made a
difference in many lives. FOA left our site for 4 months, his return was 3/14/99. Yes, its 2/2/00
approximately 6 weeks of 3/14/99 from his return in 1999. What date did he lose someone he loved so much.
What has the last year been like for him on top of his affairs in this financial world mess. He continues
to answer all of our questions, sometimes gets beaten up, lives in the real world and has gone through
shock/denial, anger, questioning, depression, acceptance of the loss of someone he loved so much.
All in a years time. Some say he should roll with the punches, ignore those who post just to cause
disruption. Be more thick skinned. If we knew the truth of the shoes he truly walked this past year, we
would all say he was one of the most thick skinned individuals around. We all go along in our merry ways, just another day in this world for us, yet, we never stop and think about what others have going on.
FOA, take all the time in the world you need. Feel your emotions and more important get some rest.
YOU DESERVE IT! Come back when you are ready. No explanation is needed, no apology to
anyone. Just come back and BE WHO YOU ARE. A very sensitive and caring individual who has
given more than you could ever get back. The 4 months you were gone at the end of 98/99 you were
missed. Anniversary dates, especially the first year are the toughest! Sometimes it's like a shock
all over. It creeps up on you. Just one thing wrong can happen or be said and anger comes back
full fledge. That's OK, as it passes. Wishing you the best on your trail in life and praying that the
year 2000 is a little more gentle to you.

GoldflyBlast!#241072/2/2000; 7:49:18

I knew I should have bought more Rhodium...

That stuff was at about $650 8 months ago.

What is Rhodium?

SteveHIn case nobody is looking...#241082/2/2000; 7:58:02

The whole precious metal group has decided it doesn't like the air where it was at. Could this be it?

Market Mth Open High Low Last Change Date Time Ask Bid
Gold(CMX) Apr 285.4 289.2 285.3 288.8 +3.4 2/2/00 6:39 286.0
Platinum(NYM) Apr 459.5 466.5 459.5 465.0 +12.1 2/2/00 6:37
Palladium(NYME) Mar 502.00 506.00 492.50 502.00 +9.45 2/2/00 6:39
Silver(CMX) Mar 525.5 531.5 524.5 530.0 +4.7 2/2/00 6:41

JourneymanMarketing gold @Jason Happy#241092/2/2000; 8:03:21

Hi Jason!

Don't be put off by us older foggies here who don't respond to your marketing ideas. I know how effective some of these strategies can be. I fell "victim" to a land sale boiler room in Vegas when I couldn't afford it and KNEW I WASN'T GOING TO FOLLOW THRU. But these guys had an answer to EVERY objection I came up with (and I came up with a lot of objections.) So I made the down payment. They'd earned it!

The one objection I didn't use (stupid me) was "I don't want the land." I think marketing gold is a good idea --- check out the multi-level gold marketing organization previously calling itself "Family Of Eagles." They even got the Canadian to mint a series of 1/10 oz. coins with FOE mint marks!

Anyway, I hope you'll keep us posted on your efforts! How about a trial marketing campaign, complete with website & literature??


SteveHEuro double backing#241102/2/2000; 8:07:09


Date: Wed Feb 02 2000 09:39
Copyright © 1999 LIBERTY/Kitco Inc. All rights reserved

"Around 747 metric tonnes of gold could be transferred to the European
Central Bank from member central banks if European union governments
approve the ECB's plan to double its reserves, said John Reade, analyst
at Warburg Dillon Read."…
"The European Parliament recently approved the ECB's request to double
its reserves to ERU100 billion but the plan has yet to receive the green
light from E.U. governments."
"If approved, the proposal would support gold prices as it would remove
the threat of significant official sales over the long term, WDR's Reade
Later in the day, the story continued: "So far, the gold market appears
to have ignored the possibility that the ECB may announce a doubling of
its gold reserves.
That may change as the approval process moves along," said Reade. End.


Funny how we are predicting this stuff now. Someone suggested this just last week as a means for the ECB to protect the EURO.

elevator guyGOLD sharply up on COMEX#241112/2/2000; 8:32:17


GCM0 at $291 this morning. My guess is that the ECB plan to double its reserves is the reason. With so few people that are aware of that news, it means that just a few buyers can swing this thinnly traded market up or down.
elevator guyCant get theah from heah!#241122/2/2000; 8:36:17

That link wont work. Go to above link, then click on "Live Charts", then enter symbol of choice.
18KARATgoldfan (02/01/00; 23:42:50MDT - Msg ID:24093)#241132/2/2000; 9:18:46

>Maybe the mortgage provider can be "blamed" if for instance, they make loans too easy, and so encourage sellers to raise prices.

Some would think so. But I would suggest that imprudent lending on a large scale has it own particular form of penalty. i.e. bankrupcy for both the borrowers and the lenders. Let the borrower and the lender beware. We are all mature adults and the money you lose might be your own.
The real problem occurs when governments give guarantees.
The government uses your tax money to subsidise someone else's screw ups. This is what they call "moral hazard".
But everyone has the right to blow their own money on mad or intemperate schemes.

As an extra point: "Austrian" economists believe that
whenever you create money "credit" out of thin air without a corresponding creation of real wealth, you are distorting the price signals and creating inevitable misinvestment.


>The higher price for one house on the block, causes a revaluation of all the other houses. Their owners rush out to the bank, find yes indeed, the bank will increase their mortgage. So one sale creates 10 mortgages, the proceeds go into stocks, where one sale creates 10x the valuation in the stocks not on sale, increasing margin available for their owners, and generating yet more sales. Is this not money creation? It is certainly, the "illusion of wealth" creation! Maybe it's only money if we can spend it

You are raising a fascinating question here. Given that security trading only occurs at the margin why are all securities of the same type valued at the same price. You know: Why do we value all shares of Microsoft at the last trade when in fact many of those individual stocks were last traded at totally different prices.

The concept is known as fungibility i.e. the idea that all equivalent securities are interchangable. It is really a convention. In practice if everyone tries to sell their shares at the last price traded they will simply drive the price down. The truth is that the value of a security is what you get for it at the time you sell it. Any other price at any other time is notional. Of course that doesn't stop margin lenders from lending against the security at its notional or "current market" price.
The fact that there is no real connection between the current market price and what the security will actually fetch in the fullness of time when you sell it, is one of the things that makes margin lending the most dangerous game in town for both the lender and the borrower.


>Maybe I'm wrong, but I understand that the job of Fannie Mae is somehow to place billions of dollars returning from the current account deficit, which can't be sucked up by Treasuries since the government is no longer running a deficit ( in the open anyhow). This ready availability of funds is pushing up the real estate market big time. maybe someone here with more knowledge could comment on this.

Sounds plausible, but if it's true, it's risking creating a real-estate price bubble.


>Concerning mortgage-backed securities, packages of mortgages... presumably the seller of these has to put the cash to work, and so seeks another loan to make. ( This loan might will be of lower quality, higher risk, since all the good stuff available has been sold in the mortgage package). Well, isn't this a loan that wouldn't have been made, if they hadn't securitized the mortgages? And so, just the act of creating the package and selling it, has created more money?

I can only repeat the point I made. As long as someone is buying the security with their own cash no money is created because the money is merely transferred from the lender to the borrower. i.e. the borrower gains a newly created loan for x dollars but the buyer of the security hands over x dollars of his funds so he has x dollars less to spend.
It balances to zero.


CoBra(too)"Forward Into The Past" - Time Magazine titles its latest....#241142/2/2000; 9:50:05

article on Austria - Subtitle - Austrian voters are fed up with mainstream political parties, making the unthinkable all too possible.
Please, All forgive me for venting - though I remember
the Waldheim affair only too well - As president alledged to be SS - and that after two terms of Secretary General of the UN - give us a break!
So now we know, AGAIN, Austria is the "pariah" of the EU and the world and held at ransom for other countries fascistoid problems. Even if I do understand the concerns, triggered by a loud and filthy mouthed J. Haider, I cannot understand the reactions, which seemingly derive from politics as: " If you can't cope with your own problem, export it to the weakest link"!
Great solution, reminding me of the problems of fiat currencies! and as I've recently posted that some of the depreciation of the euro might originate in the CDU/CSU financial scandal and Austria's problems to form a new government in a social (un?)-democratic EU in 4! months after elections,I am starting to get upset and saddened and
have to conclude: As gold is the pariah of the financial world, adding insult to injury, Austria is the pariah of the
"democratic" world.
This is the kind of shortsighted policy, perverting any
goodwill and trust in the future of our globalised world.
Apologies for mostly off topic post - best CB2

PS: @ Ari - Sorry, Sir wi'll try to clear up hedge fund
implications - haven't have time to go back yet -
thanks for answer and thaanks for your efforts - Wi'll be looking forward to your next series>

TownCrierToday's Market Report: Gold breaks higher at opening NY session#241152/2/2000; 9:59:00

Market Report (2/02/00): Gold has broken out of the sideways trend it's held so far this week, moving up over $3 to $285.50 in an early, sudden move as the New York trading session began. Trading has largely been subdued in these ahead of the Fed's 14:15 ET announcement on interest rate policy, but physical buying and short covering was reported in overseas action ahead of the Chinese Lunar New Year holiday. Sources say the metals markets have already priced in the probable 25 basis point hike, with the potential for additional near-term hikes. If the broader financial markets react significantly to the FOMC announcement, the metals markets will have only 15 minutes to reflect the developments; New York trading ends a short 15 minutes later.

Those of you on inflation watch should be aware that this latest FOMC meeting comes as the US economy officially enters the record books as the longest-ever US economic expansion. In the background, there are rumblings. International Monetary Fund Chief Michel Camdessus had a chance to share some of his views and warnings--although carefully delivered without absolutes as is ever the case with statements by high officials--with reporters after speaking to the Council on Foreign Relations. As reported by Reuters, the former French central banker and now outgoing (two weeks) IMF head warned, ""I do believe that at this moment, the euro is too weak. This means that perhaps the dollar is too strong." With its Monday close at 96.93¢, the euro has lost 3.7% this year against the dollar (following last year's slide of 16%), frustrating many western national policy makers in light of the huge U.S. current account deficit that shows no signs of relenting. Camdessus warned that while the state of this broader measure of the U.S. trade gap is not "an immediate threat," it is "a symptom of a very dangerous and unsatisfactory situation, mainly that of a perennial insufficiency of national savings in the U.S."

Meanwhile, crude oil continues to rise, lately on fresh news that the American Petroleum Institute reported US crude stockpiles fell last week by over 10 million barrels at a time that analysts were calling for a gain. Cold weather and limited imports were cited as the reason for the drop in inventory. An oil analyst at Merrill Lynch told Bridge News "Things are tight, they're getting tighter." And while Energy Secretary Bill Richardson said oil prices above $30 would bring about inflationary pressures, that seems to be OPEC's target value at this point. An Iranian oil ministry source indicated the conditions under which OPEC might consider raising its output in March would be Brent Crude prices on the International Petroleum Exchange climbing above $30 and staying there. Currently, Saudi Arabia is moving ahead on plans to switch its pricing mechanism to an IPE Brent weighted-average for crude sales to its European customers in April. State-owned oil company Saudi Aramco proposed the change to counter "perceived manipulation and volatility of published dated Brent assessments." Bridge News reports that Iran has indicated that it is also looking into a new pricing mechanism for its European customers.

Moving back to gold, today's release of COMEX delivery intentions revealed another 321 gold contracts were held up for delivery. And again, like yesterday, Deutsche Bank and The Bank of Nova Scotia were in line to receive a third of those apiece, with HSBC Securities taking a fifth. The three-day total for COMEX gold delivery to be completed by month's end is now 514,200 ounces (16 tonnes.)

That will do it for today, goldmeisters. We'll see you here tomorrow.

goldfanWhich bank? 18KARAT,anyone#241162/2/2000; 10:15:14

18KARAT thanks for your last. I get that if the money comes off the shelf, from savings, the work done and paid for, then it's not inflationary. To me the gap in time between buyng the goods.... and doing the work, getting paid, and paying for the goods, is called a loan. The longer the average time gap, the greater the loan, the more difficult to ever do the work needed to justify it, the more the inflation...?

In the new new age, as I understand ORO, we may be using a type of bank new to most of us...

Assume I'm considering banking at an independent bank, stand-alone, no government printing press to back it up. What should I look for in the balance sheet and income statement, cash flow, and notes, to help me assess the management, the degree of risk I'm taking with my deposit? (Assume I know enough about accounting statements to know when someone one in charge is blowing smoke in my face answering my questions.) 18KARAT your posts have answered some of these questions, ie matching terms of borrowing and lending to the extent possible. How do banks or other financial institutions book an asset like a mortgage, with collateral, compared to one without collateral, like a demand loan? Where does the quality of the promissory note show up, the degree of risk in it, whether it's backed by security or not? Thanks.


goldfanCNNfn joining the USAGOLD band?#241172/2/2000; 10:29:24 The link goes to this story, and other links there are interesting too...

Dangerous times

Preston Martin, a former Fed vice chairman, told CNNfn that the Fed likely will raise rates several times this year to slow the economy's progress. Even with that, he said, the Fed is facing what he described as one of the most dangerous times for the economy since 1929, the infamous year of the U.S. stock market crash. (569KB WAV) (569KB AIFF)

The Fed already has raised rates three times since June to slow economic growth. Even with the rate increases, however, little evidence of slowing economic activity has surfaced. On Friday, the Labor Department reported the economy grew at a 5.8 percent pace in the fourth quarter, its strongest showing of the year. And consumers are on a tear, according to other reports, with little interest in keeping their money in the bank. One sector of the economy that appeared to be flinching in the face of rising rates was the red-hot housing market. The Fed's three rate rises have spurred long-term bond yields to back up significantly in the past six months. Because bond rates are directly linked to mortgage rates, consumers are paying more to finance the purchase of a new or existing home. Even so, "While sales are slightly below their peak levels of late 1998, this sector hashardly suffered a body blow from the run-up in long-term mortgage rates," said SherryCooper, chief economist of brokerage Nesbitt Burns Inc. "Until the housing sector slows significantly, it is far too premature to look for a broad-based slowing in the economy."

FWIW in gold

Jason HappySorry about my bad math last night...#241182/2/2000; 10:37:39


Here was my mistake:

1% of people moving 100% of their assets is the 150 Billion.
Then, I went to 10% of each, thinking it would be the same... nope.
10% of people moving 10% of assets would be 150 Billion out
of the stock market, not 1/1000, but 1/10.

And, unfortunately, many forigners are also invested in U.S.
stocks, not just 1/2 of U.S. households.

Also, the general public does not control nearly so much
wealth. Which is the problem with using large averages.

Something like 90% of the wealth is corporate.

I remember reading Gary North's figures for money in the Banks. The corporations own most of the (then 4 trillion in m1,2,3) while the people own a paltry $300 Billion in bank accounts. He was working these numbers to try to determine the liklihood of a run on the banks.

So, once again, to rework the numbers of a mass mailing...

The 1% response of people, not corporations, spending 100% of their bank balances on gold only... we are talking 3 Billion spent. 1% commissions would be $30 million, a losing proposition on a $50 million mailing.

Assuming people control 10% of stocks, as they control 10% of bank balances... 15 Billion...

So mobilizing people out of stocks to buy investment gold could bring a return, but not spectacular.

And, this is still assuming not 1/1000 to invest 10%, but 10% of people to invest 10%, which is a really high response rate for a mailing, the best you can possibly hope for, hoping that everyong buys the gold through you, and not some other dealer.

More realistic numbers don't look quite as pretty.

TheStrangerJust Making Sure Everyone Is Paying Attention#241192/2/2000; 11:15:33

From today's Wall Street Journal:

"February 2, 2000

Manufacturers Stayed Very Busy
In January, Purchaser Data Show


WASHINGTON -- The manufacturing sector remained strong last month,
though many companies reported paying higher prices for industrial

The report from the National Association of
Purchasing Management reinforced fears that
inflation is lurking just ahead. The NAPM
index slipped to 56.3 in January -- the lowest
level since August -- from 56.8 in December.
This is the 12th straight month the index has
remained above 50, signaling that the
manufacturing sector is continuing to expand.
Still, many respondents said they were
beginning to see some signs of a slowdown.

Separately, the Commerce Department said
that construction spending reached a record
high in December after climbing a
faster-than-expected 2% from November. For
the year, construction spending was 6% higher than in 1998, suggesting
that the interest-rate-sensitive sector has remained largely immune to
Federal Reserve rate increases. Much of the rise was driven by a surge in
government spending for both military and civilian purposes...

...The NAPM survey had some ominous news for Fed decision makers on
the lookout for signs of inflation: the prices index jumped to 72.6, a
five-year high, as commodity prices, especially oil, continue to spike.
Manufacturers have previously reported a desire to raise their prices to
offset the increased costs, but such efforts have largely failed due to fierce
competition. Still, NAPM officials say that surging costs may soon force
manufacturers to raise their prices.

"There are some gathering storm clouds," said Norbert Ore, chairman of
the NAPM's business-survey committee and director of purchasing for
Chesapeake Display Packaging Co. "We're very close to the level
where manufacturers have to seek some pricing relief, whether it's politic to
do so or not."

The Commerce Department's report, meanwhile, showed that the nation's
construction sector, generally one of the first to feel the sting of higher
interest rates, remained robust despite the Fed's three rate increases last

Doubting Thomas Plan to boost Hong Kong as asia gold center #241202/2/2000; 12:32:29

Raymond chan,headof the Chinese Gold and Silver Exchange Society puts forth a plan to open a bonded warehouse for gold in Hong Kong subject to government approval.
------"establishing the warehouse would allow so-called loco [sic],(local?), London trading of gold in Hong Kong with buyers and sellers assured of an acceptable tradable form of gold priced in US$ per ounce."-------Turning to the word gold price,Chan saidhe expected it to rise in 2000'---in a range between US$ 280 and US$ 380 this year."
Suggest reading full text at above link.
Chan specified Gold priced in US$, There is an ocean of US dollars sloshing around in China and environs, What happens when the US equity market bubble pops? (some pop!)----Dollars for gold? Time will tell.

TownCrierSaudis to Go Ahead with Europe Crude Pricing Switch in April#241212/2/2000; 12:51:51

As you will see below, if an "unhappiness with the perceived manipulation and volatility of published dated Brent assessments" can lead to a change in the mechanism for European pricing, with North American and Asian markets under investigation, it doesn't require much imagination to see similar displeasure over similar problems with gold pricing to result in a shift in the pricing system...such as moving away from the futures in favor of a physical market. This is policies come about...they change/evolve due to problems and limitations of their previous form.
By Jim Washer, Bridge News
London--Feb 2--Saudi Arabia will go ahead with a switch to IPE Brent
weighted average-based pricing for crude sales to its European customers
in April, an official with state-owned oil company Saudi Aramco said

Aramco currently bases its crude pricing for Europe on newswire
published assessments for North Sea dated Brent crude, but has in recent
months been discussing a switch away from dated Brent with its customers.
The switch to pricing based on a new Brent weighted-average index
published by the UK's International Petroleum Exchange had now been agreed
in principle with European customers, the official said, in readiness for
a changeover for crude sales for April loading onwards.

"That's the plan," the official said. Work was now being done
finalizing all the legal language in the new sales contracts "to
everyone's satisfaction," he said.

Introduced in November, the IPE Brent weighted average is posted daily
on the exchange's website at The weighted average
is derived from the daily trade on the IPE's Brent crude oil futures

Saudi Arabia is the world's largest exporter of crude oil, with
current total production of about 7.6 million barrels per day. Exports to
Europe account for around 2 million bpd of that total.

Aramco had proposed the change because of its unhappiness with the
perceived manipulation and volatility of published dated Brent

At least one other major crude exporter, fellow OPEC member Iran, has
also indicated that it is looking at a move away from pricing based on
published assessments for its European customers.

The Saudi proposal has met with a positive response from European
customers, the Aramco official said.

"This has all been gone over with the customers," he said. "Everyone's
agreed to what we're going to do."

Aramco was also looking at changing the basis for its crude pricing to
Asian and North American customers, the official added.

Its sales to Asia on based on the average of published Oman and Dubai
crude grade assessments, with North American crude sales priced against
published assessments of US WTI crude.

"There are problems with the markers in both regions, but nobody's
come up with a good solution yet," the official said. "There's no
consensus among customers about what they would like to do, [but] we're
still looking to try to change in these markets."

The concentration on the legal technicalities of the changeover in
Europe was aimed at anticipating any problems that could occur when the
new system is actually implemented for April crude sales, the official

"We have to make sure the legal language's there," he said. "I don't
think it's going to be that big a problem, [but] we'll hear the screams
fairly quickly" if it is, he added.
(c) Copyright 1999 FWN Reprinted at USAGOLD with permission. For details please go to:
No further reproduction without written permission from FWN.

goldfanRisk-taking and Economic chaos#241222/2/2000; 12:57:11


I'm getting interested in investigating this, about our lives and trading times...

First I'm going to define it a little, then ask for some help in establishing measures and seeing how it fits into the chaos dynamics framework for evaluation and decision points.

Three kinds of risk-taking, personal risk, corporate risk, banking and government risk.

Personal risk -----feeds----> corporate risk----feeds----> banking/government risk
Personal risk<---------feedback----------banking/government risk

The three types of risk taking are related by this recursive equation, which is a classic case for the expression of chaos dynamics, which, undampened, will lead to wild oscillations and collapse.

Personal risk

The wages we earn can go three ways, into payments for current purchases, payments on past purchases, savings. The more the debt, the higher #2 will be, unless our wages increase, which they haven't. Even productivity increases create more debt, since a static wage has to chase more goods. ( see Sean Corrigan at for this idea). Add to this, that we are buying more from foreigners than we sell them, so more borrowing is needed to cover the trade deficit. Plus the miracle of compound interest further exponentially increases our payments for past purchases.

With savings rates at zero, or even negative, and consumer debt at 95% of disposable income and climbing, consumer spending and debt formation increasing faster than disposable income, consumers holding equity mutual funds and wildly overvalued .com's in preference to bonds, clearly personal risk taking is very high. (There's an additional risk in this last, bonds are usually in the owners name, stocks are held in street name at the brokerage. So in a real crisis, the stocks would become the property of the broker's creditors.)

What is a good measure for this risk? Maybe the unemployment rate ( or the personal bankruptcy rate), compared to what it will be if current attitude to risk persists. See the last section for my feeble efforts to measure it.

Corporate risk

Corporate risk is measured in the debt/equity ratio and the likely direction of interest rates.
When we have most companies manipulating the data to present balance sheets and income statements that try to obscure the "state of the nation" and misleadingly enhance the earnings per share, when we have corporations borrowing to buy back their stock, push up P/E ratios, and hence share prices, same for ESOP's and selling Puts, to increase income from "financing" instead of "the business", giant mergers proposed and conducted, merely to generate stock market profits for insiders, trading advertising banners on the net, both sides booking a "sale"... the corporate risks are clearly enormous.

What are average debt/equity ratios? How high is too high? Somewhere I read that corporate debt, at 24% of equity, is heifer than it has ever been, is that right? The problem here is the corporate philosophy that says that increasing the stock price is the goal, not providing a reliable product , cultivating the market for it, and providing long term employment to people in a healthy community.

Banking/Government risk

The marriage of convenience for fleecing the citizens ( I guess this is what ORO would say about it). In my way of thinking right now, banks, equity mutual funds, money market funds, stock brokers, trust companies, credit unions, all take deposits and massage them for the purpose of savings, investments, and trade. Sure the risks to depositors vary greatly among all these, but most depositors today, think of the risks as approximately equal, and just go shopping around as if the only choice was between different grocery stores. They're all backed by banks, backed by government printing presses. So the limits to supply, and therefore. to demand, will be the limits set by governments, and then banks. Their behavior is risky indeed these days.

The attitude is summed up by a quote from The Toronto Globe and Mail Feb 1, repeating something said by Jacob M. Schlesinger in the Wall Street Journal, (Long Boom Owes Big Debt to Capital Markets) I doubt they're smart enough to have intended the pun!!

"Before asset backed securities, securitization, the heavy risk of lending used to land solely on the bank making the loan. But when banks turn around and sell their loans as securities, countless investors around the world each take on a small portion of that risk.
The expansion of capital markets by such methods means that the U.S. now has more of what Mr. Greenspan calls "spare tires" in its financial system. That lowers the odds that any one pothole- a banking crisis, for example- will bring the economy to a halt."

The same philosophy about the new financial systems of hedging, derivatives, delta this and that, has become the received wisdom of governments and the media, used to soothe consumers into ever more risky behavior, preserving the "fleecing mechanisms" ( see the feedback loop in my diagram above.)

On the matter of securitization reducing lending risk. Banks and others off load packages of mortgages which generates cash, which they must then loan out. But presumably in a competitive world, the new loans will be of lesser quality, more risky, than the ones they just securitized. So they will have increased their overall risk by this securitization strategy, not decreased it. And if they securitize the low quality stuff, then someone else gets it, probably using short term funds, and the systemic risk is increased.

Hedges etc.

Seems to me, all this apparatus to supposedly reduce risk, means that financial people just increase the riskiness of their behavior, and persuade us to increase ours (via feedback) because they feel somehow safer, in order to increase profits. Same as if I get ABS brake on my car, and so drive more recklessly, because I find I can stop quicker and more surely, so when I do crash it's with much greater energy and more damage. ( a car at 80 mph contains 75% more energy than a car at 60 mph, even though its speed has only increased 33%, at 100 mph, the energy is 175% more!!).

What would be a measure of the risk taking behavior of Banks/governments? Maybe, the amount of the currency relative to some standard in gold? Let say the POG is traditionally at 40% of the Money supply divided by the gold in Fort Knox. Then today, the M3/gold ratio is $6.5 trillion/8000 tonnes , works out to $2700 per oz. The traditional POG would be 40% of that, $1080 per oz. So at $285, we have 2.5X too much money in circulation. Effectively, the $ should be devalued by 60%. Lots of banking risk!!

Risk Taking Measures

Personal Risk.
Maybe the unemployment rate ( or the personal bankruptcy rate), compared to what it will be if current attitudes to risk persists. Maybe the unemployment rate will be 30% if attitudes persist.

Corporate Risk
What are average debt/equity ratios? How high is too high?

Banking/Government Risk
The amount of the currency relative to some standard in gold? Gold should be at $1080/oz. Effectively, the $ should be devalued by 60%, and maybe soon will be...

Comments and criticism gratefully solicited.

BTW Nothing is good as gold



TownCrierFOMC Press Release: Policy Statement#241232/2/2000; 13:02:42

Release Date: February 2, 2000

For immediate release
The Federal Open Market Committee voted today to raise its target for the federal funds rate by 25 basis points to 5-3/4 percent. In a related action, the Board of Governors approved a 25 basis point increase in the discount rate to 5-1/4 percent.

The Committee remains concerned that over time increases in demand will continue to exceed the growth in potential supply, even after taking account of the pronounced rise in productivity growth. Such trends could foster inflationary imbalances that would undermine the economy's record economic expansion.

Against the background of its long-run goals of price stability and sustainable economic growth and of the information currently available, the Committee believes the risks are weighted mainly toward conditions that may generate heightened inflation pressures in the foreseeable future.

In taking the discount rate action, the Federal Reserve Board approved requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Kansas City and San Francisco. The discount rate is the rate charged depository institutions when they borrow short-term adjustment credit from their district Federal Reserve Banks.

TheStrangerInflation Will Be Even Worse In Europe#241242/2/2000; 13:10:51

Greenspan tried again to knock inflation down with a feather, today. But think about the poor Europeans. Their weak currency will make for even greater inflation over there. Putting up any fight at all will be practically impossible, given the newness of the economic recovery and the still-high unemployment levels. There would be riots in the streets. I'm afraid this doesn't bode well for the Euro.
TheStrangerCoBra#241252/2/2000; 13:25:12

Does this pan-european response to Austria's internal political affairs not illustrate the very problem facing Euro in the long run?

Yet, Austria is a democracy. What else can the government do but fulfill the wishes of the people?

TownCrierSir Stranger#241262/2/2000; 13:29:32

Various ECB officials have pointed to the European block as capable of weathering economic crises elsewhere in the world due to their degree of self-reliance. Value for value, if they can export (anything) as much as they import (oil) -- and recent numbers show that they can -- then the external exchange rate of the euro should not paint an inflationary canvas with a brush as wide and grim as you seem to have selected for them. The ECB president recently said their biggest concern was that public perception of a "weak" euro might translate into demands for wage increases, which could then give rise to higher prices all around. What element has led you to your inflation prognostication, and more importantly, in what sence are you using the term "inflation" regard to prices, or to money supply?
TownCrierThe Fed added $1.505 billion today#241272/2/2000; 13:36:53

The banking system received the temporary reserves through overnight system repurchase agreements.
TownCrierWary of Contagions, Americas' Finance Chiefs Meet#241282/2/2000; 13:49:10

In setting up a meeting this Thurday for finance ministers spanning North and South America, Mexican Finance Minister Jose Angel Gurria said, "It's very clear that when a country in the region has problems, no matter where it is and independent of its has a contagion effect. It has an effect of contaminating the rest of the economies in the region, and the perception in the markets is that the region as a whole has a problem."

It would seem that it was in an attempt to gain a measure of immunity to these types of woes that propelled Euroland toward its single currency.

TownCrierThis may surprise you...HEADLINE: Oil Prices, When Adjusted for Inflation, Are Lowest Since Nixon#241292/2/2000; 14:09:23

This Bloomberg report compares the inflation-adjusted price of Arab Light crude in October 1981 at $40.99 per barrel, while the per barrel price in December 1999 was only $13.99. (The U.S. has not yet reported January inflation rates.) Beshr Bakheet, managing partner of Riyadh-based Bakheet Financial Advisors, said, "Oil was an undervalued commodity in the 1990s and now it seems to be cyclically recovering its fair value, and this is far from calling oil prices overvalued."

A source at the Centre for Global Energy Studies in London offers a good additional reality check that we could be in store for yet higher prices as warranted: "In 1976, consumption was lower. Refineries' throughput is much bigger now, and there's simply not enough supply. The situation is very tight."

TownCrierRubin warns of risks to new economic paradigm#241302/2/2000; 14:44:22

Speaking today at the London School of Economics, former U.S. Treasury Secretary Robert Rubin cast doubt upon the likelihood that an information-based economy could render the business cycle, and its downturns, meaningless. SecTreas Rubin does not appear to have put much faith in the notion of a "new paradigm" or a "new economy." He said, "This view of the economy is contrary to all of human history with respect to markets and economies, and that should be a sobering caution."

He said that complacency had become a great threat to the economy, coming on the back of "a record trade deficit, tight labour markets, a low personal savings rate and stock valuations which were high by conventional measures" as listed by Reuters. Rubin said those factors were being improperly brushed off. "With each successfully averted crisis, with each near miss, the certainty that things will always work out seems to grow and with it the likelihood of unsound decisions in the public and private sector."

CoBra(too)@ Stranger - .Msg24125... and TC Mg 24124#241312/2/2000; 15:23:31

Hello Stranger - It's now an internationl response to Austria's internal political affairs - and as I do feel the response is exaggerating the underlying problem (though I understand the gist of the message- try to introduce same message to Turkey, for instance,a new candidate for EU-membership)- A Union starting to strive by devouring the
smaller members under questionable contexts won't in my mind deserve to any "seignorage" (tku ORO) to print 'even' paper, in lieu of legaal tender and god beware money!
And yes - Sranger - Austria is a democracy, denied the right to change the ongoing perversion of same.
Sorry for political and off topic post-
@ TC- Inflation will be even worse in Europe - You may be right, even for the wrong reasons - yes it is a blessing to have lower exchange rates vis a vis the $, benefitting EU exports - sorry official-speak - and for the right reasons
- I'm totally backing your assessment.
It oesn't bode well for the EURO - go gold BC2

TheStrangerTown Crier#241322/2/2000; 15:24:37

Thanks for your comments. I have based my bullish gold outlook for a year now on my expectation that a world which was expecting SOME deflation was going to get SOME inflation instead (emphasis on "some"). I have never painted a picture that was anything like "wide and grim". However, as we are constantly bombarded by information from all directions, I do not blame you for making this mistake.

My point was merely that the weakening Euro aggravates rising European import prices (such as oil, for example). Because of double-digit unemployment in several European countries, and because recovery there is still very young by comparison to the U.S. expansion, Duisenberg will experience greater political opposition in trying to tighten monetary policy than will Greenspan. Meanwhile, Greenspan's tightening may, in itself, be part of the weak Euro problem. Does that help?

Current gold bearishness is underpinned by the notion that a nation with veritable full employment has the latitude to defeat inflationary pressures with relative ease. In other words, it is thought that the strong U.S. economy can easily survive higher interest rates long enough to nip inflation in the bud. This perception is evident, I believe, in the optimism on Wall Street. Nonetheless, because the Fed failed to act soon enough, the perception is probably wrong.

Duisenberg, on the other hand, doesn't even have the luxury of full employment in his favor. Given, for example, the French penchant for street demonstrations, it is not hard to envision what popular reaction might greet higher European interest rates.

Meantime, thanks, as usual, for all you do, Townie. I am forever in your debt.

canamamiStranger, Town Crier - Peter Cook on the Euro#241332/2/2000; 16:31:51

Stranger&Town Crier,

Re your exchanges of earlier today, I believe you will both find Peter Cook's article very interesting (I find he is one of the pre-eminent writers on the Euro). Of the two continent-wide currencies, does the Euro have the possibility of being truer money, owing to the hoops those who would manipulate it for political reasons must go through? I suspect this was (at least partly) FOA's point when he argued that the Euro had an advantage over the dollar not only because of the external "overhang" facing the dollar, but because many different governments have an input re the Euro, making it less vulnerable to political pressure. Of course, one must also offset the greater vitality and adaptability of American society viv-a-vis Europe, as well as the US' greater discipline re governmental expenditures.

Plunging euro proves a policy test for Europe, Peter Cook says
Wednesday, February 2, 2000

THE GLOBE AND MAIL - Canada's National Newspaper

Peter Cook

Brussels -- It is a safe bet that, if the euro did not exist, Europe's money crisis of the moment would be worse. The Germans would be alarmed by the selloff of their once-mighty mark, an alarm shared by the French and Italians, while the Finns, the Irish and the Spanish would be fighting off speculation that their interest rates and currencies must rise.

In the way such things happen, markets would be exaggerating the weakness of the weak and the stamina of the strong.

Instead, with 11 European currencies grouped together in a monetary fraternization that is just 14 months old, the euro faces a test, but not a crisis.

It is a near certainty that, when the U.S. Federal Reserve Board's policy-making committee ends its deliberation today, the decision will be made to raise U.S. rates. That act in and of itself could send a euro that has fallen below parity with the U.S. dollar plunging toward 90 cents (U.S.). The counter to it would be a matching move by the Governing Council of the European Central Bank meeting in Frankfurt tomorrow. Putting aside its inhibitions about a still-weak European economy, it could raise rates to shore up the currency.

The test here is whether the internal situation or the external one is thought more important. In the old days, it was the external economy that mattered (as it does for other countries like Britain and Canada now). A fall in the value of your money against your neighbour's money threatened higher inflation and capital flight and, to combat it, higher rates and a slower economy.

However, that is not the case now that Europe has a continent-size currency where exchange rates are fixed. Sure, it must worry about the price of imported oil, which is denominated in U.S. dollars. But, beyond that, it has precious few worries. The euro zone countries trade mainly with each other and their domestic prices are not going to be altered by the trade they do with others. They are in this respect like U.S. states -- which have never worried much about the external value of the U.S. dollar and have, if anything, preferred it to be weak.

So what we have here is a policy test for the European Central Bank. In the next 24 hours, we will find out it if it is fixated, in the traditional European way, with where its money stands against the U.S. dollar or whether it has the courage to break free of the old thinking and shrug off a further euro plunge.

In reading the entrails, it is a decision that could go either way. The chiefs of the Bundesbank, the euro zone's most influential member bank, are old thinkers and want the currency propped up. Others, including ECB president Wim Duisenberg, seem more relaxed. The task of the bank was "to deliver a climate of stable prices," he said over the weekend. In addition, it has delivered a true common market in capital and corporate activity. Why, then, also worry about one euro equalling one U.S. dollar?

The argument lays out, in a graphic way, the advantages of continent-size currencies. There are only two of them in the world but, increasingly, their influence and their reach is spreading. Why? Because any country that joins Europe's currency bloc, or attaches itself to the U.S. dollar, can take the same in-your-face attitude to a fall in the currency. First, it is not a national crisis. Second, it is someone else's crisis, to be dealt with in a larger context by the U.S. Fed or the ECB.

The U.S. dollar is strong and its strength has some Canadians, along with Latin Americans and Asians, talking about linking themselves to it. The euro is weak and, in its hour of weakness, Greeks and Danes and Estonians are flocking to join. This provides proof that a continent-size currency is valued for delivering certain things like price stability and low interest rates that small countries managing small currencies cannot, in similar circumstances, deliver.

Okay, this is in some minds outweighed by the great disadvantage of joining a "maxicurrency," namely the loss of the ability to run one's monetary affairs for oneself. In Europe, the British regard this as the greater prize and are becoming even more adamant about staying out of the euro. In North America, Canadians feel their economy is large enough to resist being bossed around by the Americans (who would never share control of their currency as the Europeans have done) and that they can make it on their own.

Looking ahead 10 years, or 20 years, one wonders whether the British and Canadians will still be proud currency loners, surrounded by a crowd of countries that have tied their fortunes to the U.S. dollar or the euro or perhaps the yen. From the world of many currencies, we seem to be moving to the world of a few and the greater economic safety it offers.
Peter Cook can be reached by e-mail at This email address is being protected from spambots. You need JavaScript enabled to view it.

YGMDaylight Thru The Fog?#241342/2/2000; 16:41:10

From Golden Sextant-----------Go GATA!

Also Posted By lemetropolecafe's........Bill Murphy


February 1, 2000. Two Bills: Scandal and Opportunity in Gold?

Last week the world's movers and shakers held their annual confab in Davos, Switzerland. Bill C. and Bill G. were there. No doubt the scandal enveloping Helmut Kohl, Europe's greatest statesman since Churchill and De Gaulle, provided much grist for gossip. But here at home, some began to glimpse the outline of a possible new Clinton scandal -- one that could ultimately eclipse Watergate or Teapot Dome.

Evidence is accumulating that the administration of Bill Clinton may have turned the Exchange Stabilization Fund (the "ESF") into a political slush fund to make itself look good and simultaneously profit some of its closest Wall Street friends and supporters. Specifically, the known facts support credible allegations that the Clinton administration has effectively capped the gold price by using the ESF to backstop the selling of gold futures and other gold derivative products by politically well-connected bullion banks. Such interference in the free market price of gold would undermine its traditional role as a leading indicator of inflation. And it would do so at the same time that the administration's many adjustments to the CPI have rendered that lagging indicator of inflation also suspect. Among the bullion banks most heavily involved in selling gold futures and purveying gold loans, forward sales and other derivatives that undercut its price is Goldman Sachs, former Treasury Secretary Robert Rubin's old firm.

These are serious allegations, but the current administration scarcely merits much benefit of the doubt. If these allegations are incorrect, Treasury Secretary Summers can deny them in unequivocal language as Fed Chairman Alan Greenspan did two weeks ago with regard to similar allegations of gold price manipulation by the Fed. Indeed, in a formal letter to Senator Lieberman (Dem., Conn.) (reprinted at, the Fed chairman not only denied that the Fed had intervened in the gold or gold derivatives markets, but also added: "Most importantly, the Federal Reserve is in complete agreement with the proposition that any such transactions on our part, aimed at manipulating the price of gold or otherwise interfering in the free trade of gold, would be wholly inappropriate." [Emphasis supplied.]

The odd behavior of the gold price over the past five years, including massive gold leasing and heavy bouts of futures selling apparently timed to abort threatened rallies, has generated considerable speculation regarding intentional manipulation by governmental authorities. What has made weakness in the gold price all the more perplexing are mounting shortfalls of new mine production relative to annual demand. Because most nations deal in gold through their central banks, they are prime suspects. Clarifying remarks that he made to Congress in 1998, Mr. Greenspan confirmed in his letter to Senator Lieberman that some central banks other than the Fed do in fact lease gold on occasion for the express purpose of trying to contain its price. Gold leased by central banks to bullion banks is typically sold by them into the market in connection with arranging forward sales by gold mining companies or making gold loans to mining companies or others. The attraction of gold loans is their typically low interest rates (known in the trade as "lease rates") of around 2%.

The Fed and the ESF are the only arms of the U.S. government with broad statutory authority "to deal in gold" and thus by reasonable extension in gold futures and derivatives. Were the Fed to engage in such activities, it would of necessity have to do so subject to all the institutional safeguards that govern its more important functions. Unlike the Fed, the ESF is virtually without institutional structure or safeguards. It is under the exclusive control of the Secretary of the Treasury, subject only to the approval of the President. Indeed, direct control and custody of the ESF must rest at all times with the President and the Secretary. The statute further provides (31 U.S.C. s. 5302(a)(2)): "Decisions of the Secretary are final and may not be reviewed by another officer or employee of the Government."

Originally funded out of the profits from the 1934 gold confiscation, the little known ESF is available for intervention in the foreign exchange markets. In the absence of a Congressional appropriation, the Clinton administration used funds from the ESF to finance the 1995 U.S. bailout of Mexico. However, accepting the Greenspan dictum that it "would be wholly inappropriate" for the Fed ever to intervene in the gold market to manipulate the price, it is hard to imagine any situation in which such intervention would be appropriate by the ESF, never mind one involving large profits for the former investment bank of the Secretary himself.

Last week, in response to an inquiry from Bridge News, Secretary Summers "categorically denied" that the Treasury was selling gold. With all due respect to the Secretary, this is not the allegation that knowledgeable gold market participants and observers are making. Their allegation is that the ESF -- by writing gold call options or otherwise -- is making sufficient gold cover available to certain bullion banks to allow them safely to take large short positions in gold, thereby putting downward pressure on the price and in the process making huge profits for themselves.

Two devices that have put the most pressure on the gold price in recent years are sales of gold futures contracts on certain public exchanges, the COMEX in New York being the largest and most important, and sales of leased gold in connection with gold loans and forward selling by miners. Bullion banks that engage in these activities must of necessity take short positions in gold. While these positions can result in large profits for them when the gold price declines, they can -- if unhedged -- also result in large losses should the gold price rise.

The most common tactic used by bullion banks to hedge against such losses is the purchase of gold call options, usually from gold producers, other large holders of physical gold, or entities with sufficient financial resources to guarantee cash settlement. In the absence of such protection, bullion banks leasing gold or selling large amounts of gold futures contracts for their own account (or the accounts of any but the strongest gold credits) would be forced to assume risky net short positions on which they could sustain huge losses in the event of an upward spike in the gold price. At the same time, sellers (often called "writers") of gold call options also assume risk, for they will be called upon to provide gold (or equivalent cash settlement) to the bullion banks in the event that the gold price rises above the strike prices of the options.

Given its own resources of something like $40 billion dollars and its connection to the U.S. Treasury, which controls the nation's official gold reserves of about 8150 metric tonnes, the ESF has the ability to write gold call options in circumstances where private parties would not. Should it do so, it can effectively permit favored bullion banks to engage in gold futures selling and gold leasing under conditions where they would otherwise be forced to curtail these activities as perceptions of increasing risk rendered call options from private sources either too expensive or even unavailable. What is more, the ESF can write these options clandestinely so as to camouflage the true source of what otherwise appears as inexplicable downward pressure on gold, thereby creating market uncertainty that itself augments bearish sentiment and increases the profits of bullion banks privy to the scheme.

With the Fed's announcement that it, unlike some other central banks, does not operate in the gold or gold derivatives markets, the focus of suspicion naturally shifted to the ESF. But to understand fully why gold market participants and observers increasingly sense market manipulation originating somewhere in the U.S. government, it is necessary to recount and highlight some recent history of the gold market, particularly for those not fully conversant with it. And even for those who are, Fed Chairman Greenspan's recent letter requires reassessment of working hypotheses involving assumptions of gold price manipulation by the Fed. More detail on much of what follows can be found in earlier essays and commentaries here at The Golden Sextant, together with various links to supporting or explanatory information.

The story begins in 1995. Gold is slumbering as it has for some time around US$375/oz. Japan's economic situation is worsening, and in mid-1995 the Japanese cut interest rates sharply. Gold begins to stir, jumping over $400 in early 1996, propelled in part by Japanese interest rates so low that they force yen denominated gold futures on the TOCOM into backwardation (i.e., when prices for future delivery are lower than spot). The yen is falling; gold lease rates are rising. From the U.S. perspective, an economic collapse in Japan threatens to exacerbate the U.S. trade deficit and possibly trigger massive dishoarding of Japan's large holdings of dollar denominated debt, including U.S. Treasuries.

From the European perspective, there is concern not only about the obvious economic effects of a Japanese collapse, but also that it might cause sufficient disruption in the existing international payments system to complicate severely or even prevent the planned introduction of the euro in 1999. An accelerating gold price responding to world financial turmoil is hardly a propitious environment for the introduction of a new and untested currency.

The G-7 central banks and finance ministers cobble together a plan to support Japan, including a strategy for controlling the gold price through anti-gold propaganda backed by small but highly publicized official gold sales augmented by leasing of official gold in large quantities at concessionary rates. For Belgium and the Netherlands, the largest European sellers, gold sales also help to meet the Maastricht Treaty's criteria for the euro.

Gold analysts, who at the beginning of 1996 were almost unanimous in predicting a new bull market for gold, are blind-sided. Virtually none foresaw such a coordinated official attack on gold, and many are slow to recognize its broad scope. The gold price steadily declines from over $400 in early 1996 to well under $300 in early 1998, and stays under $300 for most of 1998 and into early 1999. Every time gold looks to rally, it is slammed on the LBMA or COMEX by the same small group of well-connected bullion banks. Particularly notable in these attacks are Goldman Sachs, Chase and Mitsui, which regularly runs by far the largest net short position on the TOCOM.

Scared by falling prices and encouraged to do so by their bullion bankers who are also their lenders, many gold mining companies respond by increasing their hedging activities, expanding forward sales and buying more gold put options. The forward sales, generally made with gold leased from central banks through bullion banks, add to the downward pressure on gold and provide fees to the bullion banks, augmented by further windfall profits on the loaned gold as the price continues to fall. The bullion banks earn further fees by selling put options to the mining companies, who frequently are forced to finance buying shorted-dated puts from the bullion banks by selling them long-dated calls.

Trading around $280 in April 1999, gold is below the total cost of production for many mines and not far above the cash costs of quite a few. What is more, annual gold demand is now almost 4000 tonnes, exceeding annual new mine production of 2500 tonnes by almost 1500 tonnes. This deficit, building over several years, is largely filled by sales of gold leased from central banks by the bullion banks. Analysts trying to calculate the net short gold position of the bullion banks in early 1999 are coming up with some astonishing figures, some as high as 10,000 tonnes, equivalent to four full years of production.

Since much of this leased gold is sold into the Asian jewelry market, particularly to India which regularly absorbs 25% to 30% of annual world production, many question where all the gold necessary for repayment will be found. But at the beginning of 1999, some is expected to come from the proposed sale of over 300 tonnes by the IMF to raise funds for aid to heavily indebted poor countries, an initiative strongly supported by the U.S. and Britain.

On May 6, 1999, gold again nears $290 and is threatening to explode above $300 due in part to increasing doubts that the proposed IMF gold sales will be approved. Short positions are in grave peril. Then comes a wholly unexpected bombshell which will have even more unexpected consequences.

On May 7, 1999, the British announce that the Bank of England on behalf of the British Treasury will sell 435 tonnes of gold in a series of public auctions ostensibly to diversify its international monetary reserves. The manner of the British sales -- periodic public auctions instead of hidden sales through the BIS -- belie any effort to get top dollar and smack of intentional downward manipulation of the gold price. All indications are that these sales were ordered by the British government over the objection of BOE officials. Palpably spurious and inconsistent reasons for the sales are offered, but no persuasive ones. There is only one logical conclusion: the gold sales were directly ordered by the Prime Minister for unknown political or other reasons. What is more, his reasons are unlikely to have been frivolous. As leading supporters of the proposed IMF gold sales, the British clumsily put themselves in the position of front-running them, and ultimately the British sales are an important catalyst in forcing the IMF to change tack.

For most knowledgeable gold market participants and observers, the British announcement is the smoking gun -- proof positive that the world gold market is being manipulated with official connivance and support. But what none yet suspects is that the BIS, the ECB and the central banks of the EMU countries are having serious second thoughts about the gold manipulation scheme.

The British announcement quickly sends the gold price into near free fall toward $250. Gold mining companies panic. Urged on by the bullion banks, led again by Goldman Sachs, the miners add to their hedge positions. The very dangerous practice of financing short-dated puts with long-dated calls expands exponentially as financially strapped mining companies, threatened with reduction or loss of credit lines by their bullion bankers, are often left with little other choice. Then comes a second and even larger bombshell that takes the bullion bankers and their customers completely by surprise. Indeed, it is likely a watershed event for the entire world financial system, comparable only to the closing of the gold window in 1971.

On September 26, 1999, 15 European central banks, led by the ECB, announce that they will limit their total combined gold sales over the next five years to 2000 tonnes, not to exceed 400 tonnes in any one year, and will not increase their gold lending or other gold derivatives activities . Besides the ECB and the 11 members of the EMU, Britain, Switzerland and Sweden are parties. The 2000 tonnes include the remaining 365 tonnes of British sales and 1300 tonnes of previously proposed Swiss sales, leaving only 335 tonnes of possible new sales. The announcement, made in Washington following the IMF/World Bank annual meeting, is ironically christened the "Washington Agreement" although the government in Washington played no role. However, the BIS, IMF, U.S. and Japan are all expected to abide by it, and the BIS is expected to monitor it.

The effect in the gold market is quick and dramatic. Within days, as some gold shorts rush to cover, the gold price jumps from around $265 to almost $330 and gold lease rates spike to over 9%. By late October gold retreats back under $300, and a month later lease rates are almost back to normal levels. But the hugely over-extended net short position in the gold market is clearly revealed and far from being resolved. Two heavily hedged gold mining companies, Ashanti and Cambior, are virtually bankrupt and in negotiations with their bullion bankers. Indeed, soon the entire rationale of hedging is under comprehensive review throughout the gold mining industry as shareholders rebel at practices that take away the upside of their gold investments.

As the details of Ashanti's and Cambior's hedge books are disclosed, the recklessness of gold hedging strategies foisted onto to them by their bullion bankers becomes all too apparent. Ashanti's lead bullion banker, Goldman Sachs, is the subject of scathing comment, including allegations of serious conflicts of interest. See, e.g., L. Barber & G. O'Connor, "How Goldman Sachs Helped Ruin and then Dismember Ashanti Gold," Financial Times (London), Dec. 2, 1999, reprinted at Clearly the most aggressive bullion bankers have been caught completely wrong-footed and totally unawares by the Washington Agreement. Significantly, rumor is that the agreement was hammered out secretly among the members of the EMU, the BIS and Switzerland, that the British were given a chance to sign on after the fact, and that the U.S. was not informed until just before the Sunday announcement. For references to European press commentary on the genesis of the agreement, see W. Smith, "Operation Dollar Storm,"

Besides the three provisions relating directly to central bank activities in the gold market and one calling for review after five years, the Washington Agreement contains this statement: "Gold will remain an important element of global monetary reserves." The ECB and 11 EMU nations hold collectively around 12,500 tonnes of gold reserves (almost 1.4 ounces per citizen), making the EMU as a whole by far the world's largest official holder of gold. What is more, unlike the U.S. which values its gold stock of about 8150 tonnes (under 1 ounce per citizen) at an unrealistic $42.22/oz., the EMU marks its gold reserves to market quarterly.

The notion, shared by many, that the EMU would forever acquiesce in the trashing of its gold reserves by bullion banks operating in the largely paper gold markets of London, New York and Tokyo appears in retrospect to have been incredibly naive. Indeed, a careful reading of the 69th annual report of the BIS issued in June 1999 suggests that European central bankers were already questioning the effectiveness and sustainability of Japan's low interest rate policy, and were very concerned about the implications of the LTCM incident for the world payments system. With the euro successfully launched, they quickly lost reason to continue capping the gold price and became much more concerned about the increasingly parlous state of the gold banking system to which they were lending.

Often referred to as the central banks' central bank, the BIS is not only the principal forum for discussion and cooperation among the world's central bankers but also the world's top gold bank. Established under international treaty in 1930 to facilitate payment of German war reparations, the BIS from its founding has kept its financial accounts in Swiss gold francs, making conversions at designated or market rates as appropriate. It holds approximately 200 tonnes of gold for its own account and records on its balance sheet separate gold deposit and gold liability accounts in connection with the banking services it provides to central banks and other international financial institutions. That the BIS in early 1999 was not as aware as gold analysts in the private sector of the bullion banks' dangerously leveraged condition is almost inconceivable.

Fed Chairman Greenspan's letter to Senator Lieberman is highly significant in that it tends to negate the impression many had, including myself, that a rift had developed between the Anglo-American central banks and those of the EMU over gold. Rather, the Fed's position as expressed in the letter, together with the BOE's position that the decision to sell British gold came from Her Majesty's Treasury, implies a rift not among the major central banks, but between them and the British and American governments operating through their Treasury departments. In this connection, the Fed and the BOE labor under a handicap that does not affect the Europeans, for whereas the central banks of the EMU have direct legal responsibility for their nations' gold reserves, in both Britain and the U.S. this responsibility rest with their Treasury departments.

What is more, a quite plausible scenario now appears to explain the British gold sales. Whether it is true or not, only a very few high officials in the British and American governments and their bullion bankers are in a position to know for sure. But on known and reasonably inferred facts, the following hypothesis can be constructed.

The ESF was writing gold call options for certain bullion bankers, principally those most active in selling futures and arranging forward sales: Goldman Sachs, Chase, et al. As of April 30, 1999, it had outstanding a sizable position at strike prices in the $300 area. For writing these options in a generally falling market, it had net earnings from premiums but these were not in context large amounts, at most a very few dollars per ounce. In the ESF's monthly financial reports required to be filed with the Senate and House Banking Committees, these amounts were listed as miscellaneous income.

When gold threatened to explode over $300 in early May, and with IMF's proposed gold sales in trouble, the ESF found itself in much the same position as that of Ashanti and Cambior after announcement of the Washington Agreement. Gold call options previously sold for a few dollars an ounce threatened to cause losses many multiples of these amounts if the gold price jumped by $50 to $75. If settled in cash, exploding volatility premiums would add hugely to the loss, putting the effective strike price far above the nominal one. On the other hand, if settled in gold at the strike price, the ESF would have to deliver gold from U.S. reserves or go into the market to cover, adding more upward pressure to the gold price.

Worse, unlike the modest premium income from sales of options, huge losses could not be hidden from Congress in the monthly financial reports to the House and Senate Banking Committees. Not to panic. The ESF, being under the direct control of the Secretary and the President, has an option not available to others. Call the British Prime Minister and arrange for a very public official gold sale designed to kill the incipient gold price rally.

Cavan ManCB2 24131#241352/2/2000; 16:47:29

Don't be too hard on yourself. Here in lala land, we too have problems which are, practically speaking, intractable. It would pain me too much to enumerate so I'll pass. More knew there was no Utopia.

Considering the performance of the Euro, is there any possibility that European bankers and decision makers might have a strategy other than intervention to support the currency? After all, product differentiation must be a big part of their marketing strategy. In other words, give me one compelling reason to buy the Euro 'cause, I've got one already.

We have our Haiders too CB2. Remember OK City? Regards

YGMThe entire Reg Howe piece..Golden Sextant..#241362/2/2000; 16:50:16

....can be read if interested at above link...sorry for the missing part & for the length of the piece (it may have already been posted) but it is VERY heartening to see some sense being made of this seemingly arrogant and blatant, never-ending manipulation of Gold pricing.....GO GATA.....YGM.
RAINMANFOA#241372/2/2000; 17:10:51

Obviously M.K. took the " PERMAFROST " opportunity to give up the FOA / ANOTHER scam.
It must have been time consuming for him and the return was modest : out of the few people who post here regularly, how many end up buying his stuff on a regular basis ?
The problem is that FOA's position was becoming difficult : If you say every day " stocks are going to crash " once every 10 to 20 years , you are right.
The same is true with Gold : it is obvious that the financial system won't survive in its present form . However , will it last another 5 , 10 or 20 years ? Nobody can tell.
FOA / ANOTHER = M.K. were facing years or decades of time consuming posting until they could claim to be right.
Every time FOA was claiming that a turn-around was at hand , the market proved him wrong .
His whole theory about the Euro has also been ridiculed by the recent behavior of the US $. Obviously again , the FOA / ANOTHER scam was really becoming counterproductive for this site.
Maybe , in the short run , a few lurkers would buy some stuff , but this is not a way to build a long term customer base.
All ideas developped by the " famous " FOA and A . are not original and somebody in the gold dealing industry with a taste for macroeconomics could do the same.
Good night to all.

LeighRAINMAN#241382/2/2000; 17:26:53

Dear RAINMAN: Your comments are not only untrue but extremely rude. We at USAGOLD are grief-stricken at the thought of losing FOA. We love him as a person. For you to brazenly state that FOA's contributions here are nothing but a sales scam is to insult ANOTHER, FOA, Michael Kosares, and all the Forum members. Please leave unless you can contribute something positive to our Forum.
RAINMAN@ Leigh#241392/2/2000; 17:35:58

My dear Leigh ,

You are entitled to your own opinions as I am to mine.
What I just said might be false but it is certainly not rude since only proper language was used.
You lost your mental drug and some of your dreams.
Maybe some money as well , but who has not ?
You know as well as I do that the quickest way to make a small fortune in the last 19 years was to start with a big one and invest in GOLD.
Things will change , but think of the lost opportunities.
Best wishes.

CoBra(too)Warning - OFF TOPIC!#241402/2/2000; 17:44:01

There is nothing in sight to curb bubbles - FOMC raised basic rates - widely anticipated - 25 basis points- ONLY! -
-Let's go on and celebrate 'irrational exuberance' for ever!
- I just hope AG will live as least as long as I, and then some to serve my kids with the same kind of chimeras of
'exuberantly kind' annual stock market profits - instead of
sweaty toil for not even beating cost of living (once called inflation - a dragon Allan alledgedly has beaten once and for all).
I hail the slayer of the drag(-on) of economic cycles, the founder of everlasting goldilocks and the keeper of the evergreen. May he be the ruler of the green flo(-at)od until
his handicap requires to cover his short(s)- comings.
Anyway, Whim D. may get a chance to recover his wits from the latest foray to suggest an 50% inrease in gold backing
to the euro - vs green - the color of the day, century, millenium ... stupid.
Don't give up - Try again and again and.... resign and go..... gold!

TheStrangercanamami and RAINMAN#241412/2/2000; 17:49:25

canamami - Thanks for the Peter Cook editorial. I have serious doubts about the long-term viability of the Euro as presently constructed. One monetary policy and 11 fiscal policies just sounds awkward to me. The first real test for the Euro will be when it is time to prime the pump in, say, Spain and tighten the screws in, say, Austria. In the U.S., a central fiscal policy might help relieve such imbalances where, in Europe, the lack of one might exaggerate them further. It should also be remembered, these are not just countries. They are geographic regions with all that implies about differences in local products and services. Still, I am NO expert on the subject. I wouldn't have the courage to publish my views in the paper. That's for sure.

RAINMAN - perhaps if you try to think of FOA as a person, perhaps like you or me, who has put a great deal of effort into sharing his ideas here. Our value as a Forum is often in getting things right. But I believe the debate itself is also a force for truth. No one can deny the enormous contribution of this single man.

I suspect Michael is away from the Forum these days. I am sure you will find him plenty concerned when he returns.

One point that I think JA has already made, however. Sometimes getting at the truth is messy. I think it would serve us all well to develop a thicker skin when these things happen. Leaving the room doesn't serve anybody's better interests. Nor does heckling, of course.

RAINMAN@ Leigh#241422/2/2000; 17:49:56

Maybe , most of the posters / lurkers here don't know how the scam started but here it is :
Once , there was a Gold Forum ( Kitco ) with a lot of posters and a lot of gold buying power. On that site , ANOTHER appeared and made ridiculous predictions with precise deadlines.
He was eventually laughed out ( just as he expected ) and ended up here , drawing a few guys from the other forum.
This how USA GOLD came in the spot light . ( a small spot but still better than before )
Since then , he graced this forum with a few posts here and there ( with a nice imitation of language difficulties which don't hold under close scrutiny )
To be able to keep the gullible crowd in awe on a daily basis without wasting to much the ANOTHER caracter , FOA was invented.
FOA was less time consuming since no language difficulties forgery was needed.
Now , you are witnessing the end of a respect inspiring effort at making some money out of this forum.

Jason Happymore bad math...#241432/2/2000; 17:57:56

goldfan (2/2/2000; 12:57:11MDT - Msg ID:24122)
"M3/gold ratio is $6.5 trillion/8000 tonnes,
works out to $2700 per oz."

nope... here's the numbers:

$6,500 Billion / 8000 tonnes
8000 tons x 32152/oz = 257 million oz.
$6,500,000 million / 257 million oz.= $25,300 per oz.

You were off by a factor of 10, better than I was
earlier, when I was off by 100. Sorry.

--> Still lots of banking risk, more than you thought!

As an aside, I throught Yahoo! was over valued when it had
a market cap of $5 Billion. I saw it and laughed. Today,
its market cap is $86 Billion.

Maybe these internet stocks are NOT overvalued? They
are priced at a realistic notion in terms of gold at $25,300/oz.?

Maybe the internet stocks will NEVER CRASH, they are already
at correct dollar/gold values? The price of everything else just
needs to catch up?

CoBra(too)@ Leigh - Frost- and Rainmen are...#241442/2/2000; 18:01:00

permanently trying to season the BBQ - let's leave them to the freezin' uncomprehension of winter (who me?).

Best CB2

YGMJayne (Message # 24106)#241452/2/2000; 18:08:24

Hear Hear!

LeighCoBra(too)#241462/2/2000; 18:09:31

Dear CoBra: PERMAFROST and RAINMAN belong ON the barbeque grill. I would enjoy hearing them sizzle and pop.

The policy of freezing silence, while gentlemanly, didn't work very well to muzzle Chris or PERMAFROST. They continued to spout their nonsense to the point that FOA left. I have come to the conclusion that this type of poster should be shown the exit door before real damage is done.

YGMF.O.A.#241472/2/2000; 18:19:29

Just A Plain Thanks.....

....for broadening this mans perception of the worlds financial stage....even if you are more or less than we percieve you to be, you have been here thru thick and thin, RAIN or Shine. Time will prove out your theories and predictions. If you are the invention of someones imagination, then I'd say they did a terrific job and should write a book......YGM.
RAINMAN@ Leigh @ Cobra (too )#241482/2/2000; 18:40:09

I understand you .
This forum must have been the center of your intellectual life recently.
To realize that one has devoted time and demanding thought process to a scam must be painfull. It is certainly better to relagate this kind of disturbing possibility to the realm of non existence.
Like true democrats , you propose to push into oblivion anything which don't fit into your perception of the world.
Good luck with your lives.

RAINMAN@ Leigh @ Cobra (too )#241492/2/2000; 18:43:27

By the way , Germans and Japanese alike conducted BBQ type experiment during WWII.
You guys don't belong to your time.

LeighRAINMAN#241502/2/2000; 18:49:30

Cyber-barbeque. We're up to date around here. Seriously, RAINMAN, why don't you find a forum where you fit in? There are some great stock forums on the Internet.
adminLeigh,#241512/2/2000; 19:01:05

Rainman is now history around here. I will not put up the wholesale denegration of this table from anybody. I have patiently sat back and watched this thing unfold hoping that reason and civility would once again take hold. It hasn't. If someone wants to post tripe about the New Paradigm being the Last Paradigm about to bring heaven to earth then you had better go over to one of the stock brokerage sites and raise your glass with the rest of the spinmeisters. It ain't gonna happen here. On top of that, I didn't want to present USAGOLD as the ultimate protector of FOA for his benefit as well as the table's in general. As it turns out, that may have been an error. An attack on that gentle soul seems to have been an attack on us all. Anyone else in the mood to have their code pulled? I'm still here and I'm still watching. My hope is that FOA will return despite the now apparent orchestration to run him off. That orchestration appears to have an over-riding purpose. I'm not going to bother answering this Rainman's absurd charges. I would like nothing better than have FOA at his seat at this table right now and have clowns like Rainman pounding salt with the rest of the paper money crowd somewhere else. Why do these people want to spend time here anyway? I've had it. I'd rather see this place go down in flames than give an inch to the rabble and anti-intellectural pretenders who would attempt to undermine the work of a lifetime -- mine, FOA's Another's as well as the countless others who struggle with ideas here and try to make some sense out the complex situation we are faced with.

I'm going to start pulling codes. Most of you know the line. Those who don't will quickly find out where it is.

Leigh and all the others (too numerous to mention) I appreciate your courage and style in standing your ground. Don't worry I won't let this go any futher.

USAGOLDadmin#241522/2/2000; 19:08:32

In case anyhone has any doubts about the previous post, it was me. Hit the wrong code. MK
goldfanJason Happy (2/2/2000; 17:57:56MDT - Msg ID:24143)#241532/2/2000; 19:11:02

More Bad Math Thanks Sir Happy, when I read your post I laughed out loud!! Gold at #25300/0zX40 % = $10000/0z. So I was out by 10!! At today's POG of 285, the dollar is over valued by 97%!! Banking risk indeed. Maybe there's something wrong with my reasoning. But I agree that under this scheme, Yahoo and the others are priced about right. So those who rotate soon into the resource stocks, the "value" plays will get a huge reward. Trouble is, it'll cost $200 for a Big Mac then too..

FWIW in gold


CoBra(too)Mr. Rain - Man, I agree you're an intellectual - micro-soft -#241542/2/2000; 19:15:54

and please don't ever consider I may be in your league. Your'e already too smart for yourself and BTW you'd never stop to reconsider to leave some crumbs of your wisdom to some of the less advantageous in(-in)tellectual cripples, trusting your efficacy.
Po{u-o)r(ing) Man, when you've grown out of adolescence and still remember your gracious distribution of knowledge please, be kind enough to remember the few (no, not precious) remarks of goodwill, directed to a generation of
generated "B{N}-itwits"!
As an afterthought, I hope my antics in antique lingo are not too disturbing for your Intel(lect)!

HI - CM - will answer later!

goldfanSafe Spaces for Conversation and Debate#241552/2/2000; 19:20:59

Higher Authority

The idea of every man, or woman for themself is maybe ok as a dream, an ideal. All independent, cooperating in peace and harmony without need to appeal to a higher authority to settle disputes. But it is in the history of humans, or animals, for that matter, IMHO unworkable. Just look at this site. FOA and others, can't coexist with a nuisance like PF. The cry is, MK please rescue us. Make some rules, MK. Enforce them! Thanks MK, it takes Bear energy to keep the space safe.

So we need governments. Maybe the socialist experiment has gone too far in some cases. But the aim is noble. To find a way to live and cooperate together based on the idea that you can't measure value by money or power alone. Given human weakness, I'm a bit suspicious of the thought that we can do it all with volunteer charitable organizations. The ones I've known are also prone to become burdened with power politics and sometimes with cabals pushing a particular personal agenda, that satisfies them but none outside their group. And even the ones that do work, wind up with 5% of the people doing the work that all ought to cooperate in. Like school parent committees. Half educated half wits become president by default.

In this area, the pre-Ojibway people (pre 1500) had a civilization that stretched from the Great Lakes to Winnipeg, and lasted in harmony with each other and the land, for over 4000 years. One of the most successful civilizations of all human history. How did they do It?

And I'll bet they had something like gold, for money, and as a store of precious value. Probably shells from the far away Caribbean, and so, scarce.



RossLSign of the times?#241562/2/2000; 19:24:22

I have noticed some "gold is dead", "sell all your gold and gold stocks" messages popping up on several investment forums recently. It's just like the propaganda that appears in the major media from time to time. Could it be an orchestrated reaction to something that GATA is doing?

Also, the Reg Howe piece on Golden Sextant is really drawing some widespread attention.

The gold shorts are starting to sweat.

Cavan ManCB2#241572/2/2000; 19:33:20

Don't stay up too late tonight. BTW, I had $140 greenbacks left over from last month so I bought a 4 Ducat minted 1915; might be a restrike? I am developing a taste for Austrian coins. Perhaps someday I will vist your beautiful country!
koanPlatinum, palladium and rhodium still rising!#241582/2/2000; 19:36:22

This is headline News folks! Why the above is important to gold and silver is because it will stimulate speculation. why it is probably real is because it is based on supply shortages and supply / demand fundamentals in a mkt that by and large is anti speculation <g>. I have been loading up on platinum and palladium plays, and am nervous, but the power of the above move cannot be ignored. I am watching gold and silver very closely. Russia supplies, I think, 60% of the worlds palladium and have suspended supplies. Auto makers are short palladium. Why would Russia speed up supplies when the price is rising so well. If I was Russia I would drag my feet and then just feed the mkt slowly - we'll see.
What the inflation talk does is give a positive backdrop for an upward move.

Cavan ManTo USAGOLD Forum#241592/2/2000; 19:42:35


Hello to all. I'd like to offer a ransom (yes, you guessed it, in GOLD)for our friend's return but need help.

I offer one King's Head Sov.; George or Edward, take your pick not UNC just XF (sorry). Who's with me?

MK can pass the hat and make arrangements for delivery.RSVP

goldfanPeter Asher signals jammed#241602/2/2000; 19:56:06

emails to This email address is being protected from spambots. You need JavaScript enabled to view it. come back with earthlink unknown. Maybe you're not hooked up at home yet?


nickel62Who did you think FOA?Another was anyway the Easter Bunny?#241612/2/2000; 19:56:51

I personally don't care who the various posters are in "real "life, that is their own business. What is very graciuos of them is to spend their time helping all of us become smarter and better informed. For that I would like to thank all of you and add my hope for a return of all missing members who have contributed so much to my understanding of a subject I have been studying for most of the last twenty five years. The sharing of information and knowledge is a very powerful tool.Goldfan thank you for your earlier post, it was very enlightning.
USAGOLDFollow-up...#241622/2/2000; 19:58:54

While I'm venting, let me make another point. The purpose of this Forum, believe it or not, is not simply to generate profits for Centennial Precious Metals. It is also to promulgate an idea -- that idea being in its simplest frame of reference -- Sound Money. As we are all learning there is a whole universe of thinking that attends that concept. Centennial will get its share of the gold market whether or not this Forum exists. At the same time, I will not in the least bit underplay how important its been to the current and hopefully future fortunes of this gold firm. Have you ever noticed though how many times I have failed to respond to questions from the Forum that would have been considered an excellent sales opportunity by any investment broker? (Stranger, you know what I'm saying.) Have you ever wondered why I do not run any ads here? Why we only lightly toot our horn from time to time? Have you wondered why I haven't commercialized this site? Don't get me wrong. We have done fairly well over the past few years and God-willing we will do well in the years to come.

This Forum was originally created as a place where people of a like mind with respect to gold could have a place to gather and discuss their views, their opinions, their lives. I consider that and that alone to be of extraordinary importance and I am proud to be able to provide it. USAGOLD is a dream realized. Up until places like this existed, people who felt as we do about the nature of money, economics and politics were completely shut out from the public discussion. The fact that FOA and Another were around to help launch the site was a happy circumstance for me and the rest of us who first gathered here. At the same time, they were the catalyst. It was their acceptance of my invitation to post here that made it all possible. It was even a happier circumstance for me to see the intense level of thinking, interest and ideas that evolved here as a result of their presence right up until some of the strong posts from this afternoon. (I wish I could name names but I am sure I would leave out a shining star. I don't want to do that.) Do I agree with everything FOA and Another espouse? No, I do not. Anyone who has read the posting carefully can see that. But I do revel in the level of discussion among highly intelligent people that come here simply because these two teachers have decided to camp here for awhile. I have this strange notion that the pen is indeed mightier than the sword and this Forum is my testament to it. So in this way I am in all of your debt. You have made this more than I ever thought possible. This place was created for the gold investor and that's the way it will stay. Thank you, my friends and fellow goldmeisters. Let us hope that we ALL continue to walk this road together. And may this Mighty Oaken Table, like the subject discussed over it, never lose its luster.

SteveHSpeaking of gold and its protection#241632/2/2000; 20:19:46

This is a petition to support the Second Amendment, which protects the "right to own gold."
CoBra(too)MK - Admin - well spoken - thank you#241642/2/2000; 20:20:00

- We all feel part of your family - please accept our gratitude for the site your providing - See you in Denver-

canamamiPossibly Defamatory Posts#241652/2/2000; 20:28:37


I am writing because I value the excellent Forum you provide, which facilitates the exchange of ideas for those of us who post and lurk.

It would appear that at least a couple of recent posters were actually aiming to damage your business. Some of the others may have been aiming at that, or were just simply disturbed individuals. You may wish to retain the services of a some sort of cyber-detective, to ascertain the identity of these individuals. An action for defamation could lie against them if they can be identified (I believe the torts are called "injurious falsehood" and "slander to trade", and there are probably others a defamation lawyer could identify). Obviously, if some posters are trying to harm your business or impugn your business character, some sort of action to suppress such activities may be required.

Yours truly,

SteveHSpeaking of posturing#241662/2/2000; 20:34:04

I took the recontracting post earlier regarding oil and the Euro as doublespeak for posturing oil payment in Euro's. Am I stretching that or are others thinking what I am thinking: oil payments in Euro are close at hand?
Cavan ManDerivatives: Europe and America Part Company Again#241672/2/2000; 20:39:41

"In yet another sign of Europe's increasing philosophic divergence from the US FED and Treasury, the European Commission is expected this month to call for banks to account more fully for derivatives, stepping up pressure on the banking industry to reform and more fully disclose the nature of its risk position in financial statements."
canamamiReply to SteveH - "Currency Basket" Settlement#241682/2/2000; 20:40:32

It could be that the Arabs are moving to accepting more than one currency for oil settlement. Several months ago (I posted at that time) it was suggested on CNBC that the Arabs could move to "currency basket" settlement. When asked to respond to the "currency basket" rumours, the "guru" of the day said that that possibility had been talked about for a long time, but would never happen. What was the title of the Bond movie...."Never Say Never Again".
SteveHcanamami#241692/2/2000; 20:47:09

Seems like a first step to the Euro for settlement to me. Slow switchover instead of a leap.

Sure seems like this is all tracking just like we have been talking. Scary, eh?

TheStrangerMichael#241702/2/2000; 20:50:52

goldfannickel62 (2/2/2000; 19:56:51MDT - Msg ID:24161)#241712/2/2000; 20:54:04

Greetings Sir n. ou said, and I want to heartily agree
>>>>>> What is very graciuos of them is to spend
their time helping all of us become smarter and better informed. For that I would like to thank all of you and add my hope for a return of
all missing members who have contributed so much to my understanding of a subject I have been studying ...... The sharing of information and knowledge is a very powerful tool.<<<<<

You also said, very graciously,

>>>>Goldfan thank you for your earlier post, it was very

I'm wondering to which of my posts you were referring?


Solomon Weaverrisk - the measurement of the unexpected#241722/2/2000; 20:57:33

goldfan (2/2/2000; 12:57:11MDT - Msg ID:24122)
Risk-taking and Economic chaos
Goldfan, perhaps you have had a haughty draft of our special brand of ale....I noticed that you did an excellent job of listing all of the "risky" behavior at multilevels in the web of human economies.

Please consider my humble advice (remember I am an Earl Grey Tea totaler):

One great definition of risk : the mathematical chances of an "unexpected outcome". The risk of my stepping off a yellow line painted on the road can be identical to the risk of my stepping off a beam of the same width suspended across a chasm (as long as I am emotionally stable enough not to affect the outcome by my concern of the difference in the stakes).

In my very limited understanding of chaotic mathematics, one uses such math to describe the behavior of an "oscillator". Particularly interesting to the mathematician is the "simple mathematical pattern" which underlies the "apparent chaotic" movement of the oscillator at the boundry conditions. Chaos math seeks this pattern, but it is not able to predict an outcome in the same fashion as Newtonian mathematics would. Chaos seeks to describe systems which are outside of classic boundries.

In the same fashion, changes in the oscillation of economic activities, which appear to be outside of "classic" analysis, may be understood better by using this chaos math...but why choose to study risk? The various parmeters you suggest are not units of risk.

What is amazing in my opinion is that given the "stakes" involved (for example the financial survival of retirees who have saved their entire life and have no options to earn new income) that we have developed many investment games which because they are sold with glossy paper brochures are just sitting ducks waiting to have an "unexpected outcome" (i.e. eventually enter into a high risk mode). You don't need chaos math to make this story any more compelling.


By the way, if the only way to claim ownership of stock is to ask for the coupons, does this mean that I am entitled to ask the broker who manages my IRA (tax defered) to send me certificates to be held at home????

pdeepBond Buy-back#241732/2/2000; 21:02:18

Here's a question I have been trying to figure out.

The Treasury tells us it is buying back T-bonds with the "surplus." However, the "surplus" is wholly due to social security cash which is spent in the current year and turned into T-bonds. Hence, any "surplus" is generated by buying a long term T-bond and placing it in the Social Security Trust Fund (so-called). One can verify that the Treasury Public debt continues to increase.

If this is the case, if the "surplus" is already called for by a T-bond, how can the purchase of T-bonds lower the Treasury Public Debt figures? In fact, how can it put pressure on the long term bonds at all?

I'm sorry if this is a naive question, but I cannot seem to wrap my mind around it.....

CanuckUSAGOLD#241742/2/2000; 21:11:52

" PERMAFROST and RAINMAN belong ON the barbeque grill. I would enjoy hearing them sizzle and pop."

Even our lady Leigh can spout off from time to time, as it seems.

Permafrost's departure (I assume) was late in coming, yes?

DIRECTORBRAVO FOR MK#241752/2/2000; 21:20:49

Thank you to MK.I have mostly been a lurker at this fine Forum. But it does irritate me to see some of the recent unwelcome Posters that have shown up here. Thank You MK for defending yourself and this great FORUM that you provide for us.I would only ask that in the future you would discard such unwelcome Posters as soon as you notice them.You have the right to do so,and there should be no interference from anyone here about your decisions. We all know you are a FAIR AND HONEST PERSON. There should be no pleading from anyone on this FORUM to let anyone come back that you have judged as bieng undesirable.So please keep us proud of you and the FORUM.And I plead of you FOA,to PLEASE come back and guide us on the TRAIL so we won't be triping over any logs that may fall in our path.And Thank You to all the GRREAT POSTERS here,and you are all GREAT. Except of course the occasional ones that MK is dealing with.
goldfanSolomon Weaver (2/2/2000; 20:57:33MDT - Msg ID:24172)#241762/2/2000; 21:25:10

Sir Solomon Thanks for your remarks on my "risk-y" post. I'll think a bit on what ye've said there and let ye know in the mornin if any thin else occurs t' me...

As for your stock certificates, In Canada, we have a thing called an RRSP which I think is like your 401k, and the certs there are held in trust, by a trust company, because they are tax deferred and belong to the government as well as to the purchaser. So these should be safe from the clutches of the broker's creditors. But I don't know about IRA's, if the certs are in street name, unprotected by a trust company, then you should certainly ask that they be delivered to you, in your name, at home. You own them, you're entitled to them. The broker will probably charge you something to register them.

Nothing is as good as Au

TheStrangerWhat Is the Fed Looking At?#241772/2/2000; 21:28:31

I think it is a measure of the value of this forum that everything you read below was thoroughly spelled out in advance RIGHT HERE, MANY MONTHS AGO! It brings me pleasure in the extreme to see it now in the popular media. There is but one piece of this forecast which remains to be fulfilled. If we can just keep Canuck in his seat a little bit longer.

From Yahoo Business News:

"...two key inflation indicators released on Friday were certain to raise some eyebrows at
the inflation-phobic Fed.

Inflation across all sectors of the economy, measured by the implicit price deflator in the
gross domestic product report, rose 2.0 percent in the fourth quarter, almost double the rise
in the previous quarter.

Workers' pay and benefits increased a larger-than-expected 1.1 percent in the fourth
quarter, according to the government's Employment Cost Index data. The ECI saw the
biggest quarterly jump in benefits costs since early 1993.

Finally, Fed officials frequently mention that a number of temporary factors which conspired
to keep U.S. inflation low in the past few years are now heading in the opposite direction.

Weakened economies in Asia are springing back to life, oil and commodity prices are
gaining momentum and U.S. healthcare costs are rising too.

Consumers Spend With Abandon, Workers Running Out

One of the Fed's chief concerns is an imbalance between supply and demand. Consumer
demand is extraordinarily strong, but the workers needed to produce all the goods or
provide all the service they demand are in increasingly short supply.

``Demand is putting very significant pressures on an ever-decreasing available supply of
unemployed labor,'' Fed chief Alan Greenspan said last week.

Greenspan says a ``huge'' rise in stock prices was swelling consumer wealth and driving
demand to a level where supply could not keep pace without creating inflation."

Gandalf the White"HoF" Nomination for Post # 24162#241782/2/2000; 21:30:28

This golden gem should be mounted at the ENTRANCE to the "Hall of Fame". -- What say you all ? -- Seconds ?

PH in LAAcid Rain! & Perma Frost!#241792/2/2000; 21:44:49

We always have to hold our noses, and try not to get any on our shoes whenever people like Rainman and Permafrost put in one of their idiotic appearances. Rainy has obviously been around Kitco long enough to know a little history. Well, so have I. Funny that I don't seem to recall anyone named Rainman going that far back. I do recall posters with the same stupid points of view, who also never bothered to prove anything they said either. Whose ideas were always destructive. Who delighted in stirring up ill will. Of course, these yahoos paraded around under a wide variety of handles. I remember one who boasted that he had eight passwords at Kitco at the same time... all valid (until they started getting kicked off, one by one). This same poster even had his own website where he never bothered to post anything at all (except to whine stridently when Bart finally kicked his ass for blatent bad manners). About the only idea he thought worth-while to post about was "arrows". His completely forgettable point was something about "arrows not meaning a damned thing". This is the mentality of Rainman. ie. No mentality at all.

How true to form that he still blathers on about "lost opportunity". As if all stocks always go up (or at least have for the last 18 years). How about that one Fleckenstein was talking about the other day? "" or something. $40 million market capitalization and the company's prospectus says "Presently the company has no business activity or prospects. It is seeking the right opportunity to merge with another company." How 'bout this one? Rained-on-man? Someone made money on this one. Was it you? If not, why not try to get some of it. It should be going up just as soon as it finds a company to merge with. Whatever you do, don't buy any of that useless GOLD! They're going to be giving that stuff away pretty soon! Maybe you have some laying around that you'd like to give me. On second thought, don't bother. I wouldn't take it from you. Give it to one of your clients instead.

As far as your STUPID, STUPID, STUPID idea that Another and FOA are Michael Kosares: Do you have any idea how hard it would be to pull off a deception of that magnitude? Hell, every time one of those Kitco jackasses tried to pass himself off as someone else, they were always spotted right away. Hepcat, RJ, LGB, etc. And they think MK could do it. HA! All those assholes tried, and made laughingstocks of themselves. Now they want to show up here as Rainman. Or Permafrost. What jokes!

It's always the same story. They think they smell a little blood in the water and they start oozing out of the woodwork again. With the same laughable story. Like chickens pecking an injured hen to death.

But there is no blood in these waters. FOA/Another have not conceeded the field. They are just revolted by the likes of Rainy and Permy.

So am I.

PS. Sometimes only one kind of language says what has to be said. It is not profane. It is real.

koaninflation#241802/2/2000; 21:51:06

I agree completely about demand and "wealth creation" being inflationary. And high oil prices just exacerbates and speeds up the inflationary pressures. Where it ends is anybodies guess. I would expect the feds to continue to tighten to try and gradually slow down the mkt. Pretty basic analysis - hardly worth my mentioning <g>.
GoldflyFOA - Remember....#241812/2/2000; 21:54:06

Remember? (As near as I can recall....)

"Boys they are that shout at the wind. But a strong wind has no ears!"

TheStrangerkoan#241822/2/2000; 22:02:29

They haven't even started to tighten. These quarter point increases in light of what's been done to the money supply are a joke!
Jason HappyRight on!#241832/2/2000; 22:22:04

SteveH, I went to the second amendment website url you gave, and in the time it took me to read the page and sign it, 30 other people had also signed the online petition. Up to 4494 at this time... Yahoo! (tm) oops, I mean, Yee Haw!

goldfan, 8-)

JourneymanMuch ado and many wasted man-hours about nothing @Nearly ALL#241842/2/2000; 22:22:40

Aw, look folks, just ignore these guys if you don't like 'em! Echoing YGM & Nickel62 was it? I really don't care who comes up with good ideas and challenges, or what they call themselves. Ditto the drivel. "Journeyman" isn't really MY name, you know!

Just ignore what you don't like -- if it goes away, fine. If not, continue to ignore it.

And don't let FOA's squimishness infect the whole culture here --- pretty soon I'll be afraid to write my mind for fear of hurting someone's feelings. When that happens, I'll banish myself!

Look, every time one of these folks posts, they get more column-inches in reply than FOA, ORO, and TC combined --- from YOU!! That's probably the main reason many of them do it. I bet they're gleefully counting up the responses and the man-hours it took you to write those responses right now.


Jason HappyHA HA!!!#241852/2/2000; 22:28:18

If you go to the home page of i-charity, above, you will see that they run several online petitions...

I just about lost it, when I saw that the first petition offered is an ANTI-gun petition, and I thought that I unwittingly just supported the enemy by giving these guys any sort of publicity. Oh no! After all, the anti-gun petition is listed first!

Then, I went and checked the numbers, to see how many people signed the "stop the guns" petition... Grand total? Are you ready? 29! HA HA!!!

MariusOn MK's rules, thin skins, & civility#241862/2/2000; 22:42:09

I must admit that I missed the actual catharsis which caused FOA to withdraw from the forum. Forgive me, but I was preoccupied battling this rather nasty upstate NY winter. I've commented before on MK's absolute right to regulate the discourse here, and I appreciate the relative civility at this forum.

However, I think one needs a certain epidermal thickness if you're going to put prognostications and theories on the table, particularly in the rough and tumble world of the InterNet. The majority of the forums I've visited (prior to this one) are frequented by barbaric, illiterate slobs. Anything you say out there can get you "flamed"--not just challenged rudely, but shouted down by the mob. It's not for the faint of heart, or the overinflated ego.

I can't say I completely understand or agree with all of FOA's theories and predictions, but I appreciated being able to read them. I pass over a lot of stuff here that I view as either incomprehensible, or pure wind, but I always come back in the hope I'll find that one tidbit that sheds light on some issue. That will continue to be the case with the reassurance that Michael isn't afraid to kick a little butt when the circumstances call for it!

THX-1138Judicial Watch Question#241872/2/2000; 22:44:07

Is there any information within the article "Two Bills" that Judicial Watch could use to prosecute Bill Clinton with?

I was trying to decide whether it would be useful to send that article to them.

A guy can always hope can't he.

ORO18K - the value and the last price#241882/2/2000; 23:02:53

The setting of prices at the margin

You wrote in response to goldfan:

>The higher price for one house on the block, causes a revaluation of all the other houses. Their owners rush out to the bank, find yes indeed, the bank will increase their mortgage. So one sale creates 10 mortgages, the proceeds go into stocks, where one sale creates 10x the valuation in the stocks not on sale, increasing margin available for their owners, and generating yet more sales. Is this not money creation? It is certainly, the "illusion of wealth" creation! Maybe it's only money if we can spend it

You are raising a fascinating question here. Given that security trading only occurs at the margin why are all securities of the same type valued at the same price. You know: Why do we value all shares of Microsoft at the last trade when in fact many of those individual stocks were last traded at totally different prices.

The concept is known as fungibility i.e. the idea that all equivalent securities are interchangable. It is really a convention. In practice if everyone tries to sell their shares at the last price traded they will simply drive the price down. The truth is that the value of a security is what you get for it at the time you sell it. Any other price at any other time is notional. Of course that doesn't stop margin lenders from lending against the security at its notional or "current market" price.
The fact that there is no real connection between the current market price and what the security will actually fetch in the fullness of time when you sell it, is one of the things that makes margin lending the most dangerous game in town for both the lender and the borrower.

The value of nothing

There is a separation of value and price. At a given price one will find a given number of sellers at otherwise identical market conditions. The value of something to the seller, in his circumstance, and in monetary terms - is obviously lower or equal to the sum of the price and the associated expenses of the sale.

The buyer, obviously sees the value of the purchased item to be higher than the price paid. Otherwise, the price at which the deal was consumated would have been different.

The price is set between two valuations. It is to the mutual advantage of both parties under the circumstances.

The price of everything

For the financial markets, as with any others, including real-estate, prices are set at the margin both by those wishing to sell and those willing to buy. Those who do not sell value the item more highly, those who do not buy either have not the interest or the means - or they just do not think the value is below the price.

Prices in times of panic and liquidation are often the result of irrationality of fear (also the buyer's fear of opportunity loss) and that of involuntary actions such as bankruptcy and margin calls, as well as the occasional result of automated trading. These are the result of a change of circumstance.

Often one finds that Graham's security analysis methodology which values a business in rather strict terms is the correct way for an investor to choose among opportunities. It is not to the trader's advantage to seek value but to follow the conditions dictating price, most prominent among them the mood and the psychology of the markets.

Here comes too the point of common opinion. People tend to hold common beliefs that are wrong because they are uninformed, disinformed, or do not think for themselves. Most people are wrong about most things most of the time. The only things where common views are correct are when people see the obvious, or have been carefully educated till their understanding is sufficiently close to complete.

The common contrarian instruments of traders have had great results but are still not adopted by everyone. Indeed, they would not be contrarian if they were. In many cases, the momentum of a market may continue well beyond the point where contrarian indicators go on "red alert" as a strong wind of psychology may be reinforced by true or false news and reports.


Buying the house in the example you discuss sets the expectations of the people of the neighborhood, telling them that the value they had assigned to their home was appropriate for the time and are happy for not selling. The people who did not buy but were interested in buying would either be saying "I can't believe they paid so much", or "I wish we bought when prices were lower".

As prices continue their trend one finds certain threshold levels are reached where vast numbers of people decide to sell since the improvement in other areas of life relative to the option of staying in the same house when such a good bid price is available is just too much for them.


To put it in a nutshell; prices are set by those engaged in trade but also those who do not participate in the trade still have a part in dictating prices by their decision not to sell or not to buy.
It is, therefore, justifiable under most circumstances to use the last price as the measure of price for the whole inventory.

tedwINTEGRITY#241892/2/2000; 23:03:34

I thought the article on the Golden Sextant was great.

I only have one thing to add. Denials by the Treasury Secretary (verbal or in writing) mean nothing. The Treasury
Secretary answers to Bill Clinton.

I think Bill has proved he can look us all in the eye and lie. And I see no credible evidence that he has had a change of heart.

He has no integrity. Adolph Hitler signed an agreement not to Invade Czechoslavakia and it meant nothing to him. Our Government at the highest levels is wicked, without integrity, and their denials or promises mean nothing.

Golden TruthTO CAVAN MAN & F.O.A#241902/2/2000; 23:15:46

Cavan Man count me in for a 1/10oz GOLD Maple Leaf to have F.O.A return, i can mail it to C.P.M, if Sir F.O.A accepts your gracious offer!

Skip2nd for "HoF" Nomination for Post # 24162#241912/2/2000; 23:25:15

Gandalf the White (2/2/2000; 21:30:28MDT - Msg ID:24178) submitted "HoF" Nomination for Post # 24162.

I second that nomination.


koanmoney supply and inflation#241922/2/2000; 23:32:44

I am sure you are right Stranger. Money supply theory is simply outside my arena of knowledge. Wish I knew more about it.
FarfelSwimming in the New Paradigm....#241932/2/2000; 23:44:47

So this week Qualcomm announces a pact to sell its wonderful products in China, and the stock rises 20% in a flash.

But when the Chinese government recently announced it is allowing retail gold sales to the Chinese people (potential one billion customers) for the first time in ages, the gold price failed to register its own immediate 20% gain.

Where is the syllogism here? There is none.

Where is the consonance in logic? There is none.

It's called "The New Paradigm," and it is truly a Wall Street scam to end all scams. Nobody other than Bill Clinton and his merry gang of manipulators could have conceived of such a scheme.



YGMApologies if this has been posted previously.........#241942/3/2000; 0:09:02

An Urgent Message from Don McAlvany:

<Picture: Under Construction>

Dear Friend,

If you are anything like me, you are growing increasingly perplexed by the price action of the financial markets. This past year the Dow Industrial Average was up nearly 25%, yet two-thirds of the stocks listed on the New York Stock Exchange were down! In fact, over 30% of the stocks on the NYSE hit their 52-week lows during the week of December 17th.

Additionally, the NASDAQ composite index was up an unbelievable 86%, yet virtually the entire move was accounted for by only four issues (Microsoft, Intel, Dell, and Cisco). Again nearly half of the stocks listed on the NASDAQ were down for the year! According to Media General Financial Services, a Richmond, VA market data company, the 1999 figures for the three major stock exchanges are very sobering. They reported that 4186 stocks declined in value, while only 3397 rose in value. Furthermore, if the interest and high tech stocks are removed from the equation, the stock market performed horribly last year.

Why then do investors seem to have such a peace about their stock portfolios? I believe we have been massively distracted from what is really going on. The news media is reporting only part of the story. Our attention is continually directed toward the indexes (like the Dow), toward the price action of the Internet stocks, toward the high flying IPO's (Initial Public Offerings), and toward the latest and largest takeover mergers. All these elements give the illusion of success, well being, and growth. But what is really going on?

For the vast majority of stocks, there is an ominous story developing. Stock yields, as measured by dividends are at historical lows (less than 2%). Price/Earnings Ratios (P/E ratios) are absurdly and historically high. Why aren't investors responding differently to the fact that 63% of the stocks listed on the NYSE are in a market decline?

I have been warning our readers of these facts while trying to make sense of some of the other financial markets. Long-term bonds, for instance, turned in their worst performance in over 20 years! 30-year bond values dropped nearly 25% from December 18, 1998 to January 12, 2000! During that 13-month period, interest rates soared from 5.0% to just over 6.7% (a 34% increase!). This jump in rates has actually devastated the market value of the 30-year Treasuries. How can investors remain so complacent in light of such grim results?

What is actually behind the rise in interest rates? What is causing this enormous shift to take place in the markets? I believe the answer lies in what the Federal Reserve has been doing while we were all being effectively distracted in other directions. Last year, the Fed embarked on the very perilous course of rapidly expanding the monetary base. So rapidly, in fact, that we now face some serious repercussions. We remember all too well the painful consequences of double-digit inflation in the late 1970's. But how many remember the reason for that inflation? The inflation that we experienced in the latter half of the 1970's was a direct result of the monetary expansion that took place in the preceding years.

The definition of inflation is an expansion of the money supply. What we term "inflation" generally refers to the rising prices of goods and services that we "see" and "feel." Yet rising prices are the result of inflation, not the cause. The problem is caused by excess dollars in the system vying for or chasing the same number of goods and services. In a perfect economic model, the money supply should only expand as rapidly as the growth of the economy, only as fast as new goods are created. But this isn't what has been going on.

The Fed has been on a "drunken binge" recently. According to the U.S. Financial Data published by the Federal Reserve Bank of St. Louis, the following increases have taken place. The Adjusted Monetary Base for the last two months of 1999 was up 48.1% on an annualized basis. For the entire year it was up a full 16%. Adjusted Reserves were actually up 41.8% for the year with an annualized rate of over 100% for the last six months!

The Financial Times of London reported in their January 10,2000 issue that in the three months ending January 3rd, the consolidated assets of the U.S. Federal Reserve Banks surged an annualized 64.3%!

These are huge increases. In their attempt to insure liquidity for our financial markets, I fear the Fed is on a collision course with inflation. The decade of the 1970s should serve as a cruel reminder of what happens when the restraints are removed from monetary expansion. It was a time when the government "ran the printing presses." Double-digit inflation ravaged the average investor. It only subsided with Paul Volker finally and decisively cut credit and raised interest rates to astronomical levels. (Remember interest rates between 18-21%?)

The Fed has only two choices now:

1. To cut back on liquidity, raise interest rates, and stop credit expansion; or

2. To continue to expand the money supply at an ever increasing rate to maintain and prop up the financial markets.

If they do the former, the U.S. could be thrown into a severe recession/depression. Stock prices would collapse and the current "prosperity" would come to an end. If they choose the latter, we could literally be heading towards runaway inflation. Neither choice is easy - both could end very badly.

What about the gold market? Of all the economic and world events that can affect the price of gold (ie., currency devaluation, economic uncertainly, military action, a rush to liquidity, Central Bank selling, etc.), inflation clearly stands out as the most dominant influence. In the same decade of the 70s, while the money supply was expanded and interest rates rose, the price of gold soared. Gold initially jumped from $35/ounce to $197/ounce before retracing to $102. From there gold continued its meteoric rise until it hit $850. Although gold's performance has been lack luster in recent years, it is worth noting that it still trades at eight times higher than it did in the early 1970s. Remember too that the purchasing U.S. dollar has lost 85% of its purchasing power since 1972.

Gold has always served as the world's "safe haven" for money. If we indeed are entering a period of inflation, we would all be well-advised to hedge against rising interest rates, lower corporate profits, falling bond prices, and a continuing decrease in the purchasing power of the U.S. dollar. The best insurance I know of for an economic portfolio is gold. Because economic trends today tend to be global in nature, I would expect world demand for gold to increase significantly over the next 6-18 months.

During a single day of trading last year, gold jumped $44.00. This was during a period of reasonably secure and normal markets. It was announced that the Central Banks might cease their gold liquidations. However, what would happen in a day or in a week if panic actually set in? There would be little or no time to act or react. I continue to encourage our investors to purchase gold now in quiet markets while it is still vastly under-priced. No one waits to buy fire insurance until the flames reach the second story at their house. Please don't wait to protect your portfolio until it is far more expensive to do so, or until there are too many others trying to do the same thing. I encourage you to read the information throughout this site carefully. I believe it will prove to be very helpful in preparing for the uncertain times ahead.


Don McAlvany

YGMGATA Bank Account Balance#241952/3/2000; 0:26:40

$148,698.00.......not too shabby for 12 months of so-called disgruntled gold stock shareholders whining....I think it was Martin Armstrong that dismissed GATA as such.........How's the cell Martin? Did you paint the bars Gold?......I truly hope your associates don't leave you holding the bag......They deserve MUCH more attention than you......Could be Rubin and his Goldman Sachs buddies will be paying the piper soon also.......YGM.
Peter AsherGoldfan#241962/3/2000; 0:35:06

Just got in. Robin forgot to cancel the forwarding from here, down to there and the dog was still chasing his tail. All fixed now.

Still reading 2/2 posts.

ChrusosFOA#241972/3/2000; 1:24:45

Dear FOA
As a serious lurker who relishes your posts as the best on the net I have come out of deep cover with a message of support. I am based in Cape Town. I read extensively on many sites but there is nobody who does it like you. I have clipped all your posts and together they read so coherently, elegantly and intriguingly. If you leave us here on the trail after guiding us for so long what shall we do?

From my lawyer's perspective your posts, uniquely, best articulate and fit the momentous times in which we live. Your trail guidance has pointed out the landmarks and territory, which I would otherwise wander in, lost, not really knowing where north is.

I am very happy to be billed as one of your followers – this does not mean of the slavish mindless sort but rather as a student who has found a wonderful professor with a special worldview.

Mr. Permafrost is aptly named as frozen sterile subsoil. I would be very upset too if I was in your shoes and he insulted and baited me in public. So I hope that MK will remove Permafrost. Substituting him for you is like giving us a worn out, stinky old vagrant's shoe for a Rolls Royce. I also enjoy all the other wonderful posters but to me you are the best and have profoundly challenged my thinking.

May God bless and strengthen you. I wanted to quote you something from the book of Sirach 6:36 part of the apocryphal writings of the Bible " If you find a man of understanding, get up early to call on him; wear out his doorstep with your visits."

Thank you for everything you have given us – I for one deeply appreciate it. Please keep leading us on the golden trail and sharing your wisdom with us, your digital friends from around the world

ElwoodGold as Money#241982/3/2000; 2:53:39

Aristotle wrote previously:

Aristotle (02/01/00; 14:42:52MDT - Msg ID:24055)
Journeyman and FOA

Begin quote:

Journeyman, in response to these words by FOA:
-------"a free world economy needs and demands a
currency that can expand and contract with changing
conditions. The curse of the old gold standard was that
it didn't allow this latitude and always created a
crisis when needs required this flexible money supply.
Only a separate gold market can offer a means to truly
measure the success of the money creating treasuries.
This is the direction we are heading, for better or
worse."------you, then, offered this challenge:
"I would suggest that any of us hard-core gold bugs who wish
to defend a return to some form of gold standard, need to
address the objection stated so well by FOA above."

The particular bone I have been gnawing on since the new year began has been an attempt to lay out the nature of a natural currency system in terms that don't overwhelm my own overtaxed brain cells--all three of them. It is very nearly ready for submission, and I can tell you now that the world as we know it needs, I repeat, NEEDS fiat currencies. At first blush, that my seem to run counter to everything that we stand for, but I assure you, it is the only way for Gold to truly have its day, as it should--as it will. The various failings in the past were due to a flaw in the architecture of the monetary system. If I have succeeded in my effort, the truth of the matter will be a source of extreme comfort to Goldhearts, and will strike everybody else as quite natural and, in fact, desired. The good news is that all signs point to the euro system as ushering in the repairman for the flaws in the old architecture. If they follow through with it, and get the support as needed, current Gold owners will reap the benefit of their foresight and wisdom--or else they will simply be basking as the beneficiary of plain ol' dumb luck. If these repairs are brought to completion, as I am inclinded to believe they will be, then we will never see Gold so cheaply obtainable--whether you choose to measure its price in dollars or by such means as loaves of bread.

End quote

Elwood replies:

No, Ari, I think this is one area where FOA has it wrong. Gold, like other forms of wealth, is nothing more and nothing less than an economic good. Like other economic goods its price, as determined by its value in trade with other goods, is set by factors relating to supply and demand. [Note: I'm speaking of physical gold, not paper gold.] If the supply of gold falls in relation to that of other goods its price will rise. That is, in a system which uses gold for money, the prices of other goods in terms of gold will tend to fall over time as technological advance occurs. This technological advance is what drives our civilization forward. Any society in which the laws and institutions promote the division of labor will experience this progress and economic growth.

FOA states, it seems, that our modern world, because it is modern, requires a money supply that is flexible or that is able to expand and contract as needs required it. This need cannot be fulfilled by a fiat currency since a fiat currency, history has shown, only expands. The same fate which is about to befall the dollar will, in time, consume the Euro as well, but that time is much further down this road we travel.

The reason that the Euro will be used widely in the near future is the choice that is being granted to those who engage in economic transactions: Gold or Euros. In essence, we have a system with parallel convertibility rather than the direct convertibility we've seen in systems of the past. This parallel convertibility will, at some point in the future, be outlawed due to its tendency to reduce the "flexibility" of those who issue the Euro fiat currency.

What I'm getting at is that, even today, gold, if used as money, will adequately suffice in that capacity. Over time as its value rises relative to other goods more will be mined or converted from other uses just as today more oil is produced when its price rises relative to other goods.



CanuckApologies#241992/3/2000; 4:48:10

@M.K., Leigh

Sorry re: last night.

Still a little choked re: FOA.

Still puzzled (re: PFrost) shots at Oro ("Lord ORO" - the financial wizard; and "pagan ARI" - the sensible/sensitive

@Stranger: You are the MAN. Your finesse is only overwhelmed by your intelligence.

nickel62Goldfan The post I was referring to was on the Three Risks.#242002/3/2000; 5:20:42

"The problem here is the corporate philosophy that says that increasing the stock price is the goal, not providing a reliable product , cultivating the market for it, and providing long term employment to people in a healthy community."
You have pointed out many of the current problems in this article. Combining this with ORO's piece on the marginal nature of pricing assets at the value of the last sale leads to part of the answer in how we got here.
Twenty years ago I had the opportunity to visit the proprietary trading desks of several large Wall Street firms. This was in the quiet period between 1980 and 1982 when the stock market was a backwater and long term returns to equity for the prior ten years were 2% per year or less.Nobody and I mean nobody wanted to work in this business except a few obsessed individuals who thought stock investing was the only job in the world. The world of Wall Street was in transition from the clubby high commission old school tie days of the seventies , when "traders " almost always came from the New York fruit and fish markets and seldom had more than a high school education. They survived on their wits and their ability to do numbers accurately and reliably in their heads,thus the fruit and fish market served as a good training ground.The main trading room of Morgan Stanley (they had just started doing their own trading before that they had looked down on that part of the business)was a medium sized room with fifty or so people running around contacting clients over the phone and relaying the various bids and asks to a group of "position traders" who sat on a raised platform inthe front of the room so they could see the various sell side traders who sat at their phones and took calls from their respective client traders who worked at the major buy side firms. Thus a market was made. The power of the market was what determined price. But the really memorable thing was that under the raised table sitting on the floor was an MBA with a personal computer cranking the various information that the position trader wanted into the remember at this time personal computers were brand new and almost primitive. but what that young kid was doing was figuring out how to move the price so that the firm could make a profit on the block of stock they were positioning and resell it at a higher profit. ORO's analysis had been done by someone on Wall Street and they had figured out that if you could find a way to move that last trade all the stock you held could be "revalued" upward and maybe sold at that price. The various techniques of limited float and resricted stock and buy and hold investors could be manipulated by various means to make sure that the rest of the outstanding stock didn't reappear in the market to mess up your orchestrated price and vast profits beckoned. The simple story shows where this would lead. As index funds (and which stocks would go into them)
provided the means of generating predictable demand to be used to help lift stock prices when desired. The predictible nature of this index buying gave a clear direction of which stocks would rise and the effect this would have on future buying by how large a percentage this stock would represent in the indexed purchases of all future buyers. Pointing ut your vision of the unfolding dynamics allowed you to convince other non-indexed managers of the future price direction of particular stocks and thereby gain their willing purchasing power and/or willingness to buy and hold and therefore not mess up the manipulation. The targeting of uncooperative money managers with disinformation or convincing them to go short on stocks you were manipulating higher would both punish the non compliers and strengthen the play by providing additional non-price sensitive buying as the stocks that were shorted had tobe re-bought to cover at much higher prices. The use of delta hedging to protect the downside of clients could be sold at a price and this would allow the shorting of large amounts of a target stock that when the conterparties had to cover could provide explosive upside caused by non-price sensitive buying done in a panic as the underlying stock gets to levels not thought possible by other market participants. Those foolish enough to think they are playing in a free market are sucked in further as they continue to sell or buy thinking that the historical value points are still valid, or the techical trading points for that matter. In reality the game has been changed by the manipulators and these value and technical inflection points now become useful tools to use against their folowers. i.e. Get someone outside the game to sell a stock short because it is so obsuredly overvalued and then use your various tools to drive it much higher. Point out the direction to other follow the leader managers and they will jump on to help lift the price either through knowing cooperation or more commonly through the fact that they are twenty something kids who haven't a clue. So I now know where the young man sitting on the floor under the Morgan Stanley position trading desk has gone. Ultimately to allow the wiping out of my generations retirement savings through the concentration of indexed funds in a hand full of ridiculously over-valued "blue-chips" who are doing exactly what goldfan has so eloquently pointed out. Producing false earnings and restricting the shares outstanding and using all the corporate cash flow and additional borrowing power to enrich themselves and the investment bankers who help them control the deal.

18KARATRe: ORO (2/2/2000; 23:02:53MDT - Msg ID:24188)#242012/3/2000; 6:05:41

Wealth and value.

I heartily agree, Oro, with everything you said, but you know, it's still a very curious thing that Goldfan is drawing our attention to.

Let's say Microsoft's market cap goes up by a couple of billion dollars today as a result of a small rise in its share price negotiated by the few people who actually traded. and of course implicitly consented to by all the non-traders.
There is no corresponding movement of money that has occurred to explain where that rise in value has come from.
There is no place where a few billion bucks has disappeared to explain how it came to be in Microsoft.
The value of the wealth in the stockmarket is simply not a conserved quantity.
Likewise no-one had to labor to create the billions of extra dollars wealth.

Let's say a bunch of speculators go mad and drive up the price of a stock, daytrading amongst themselves.

The whole of the market finds itself so much wealthier.
In so far as the stock can now be sold at its new value, for dollars. Does this mean that money has been created?
and is it not true that even if you sell a share at twice the price at which you bought it, no money is created because the transaction of buying and selling is a zero sum game.
The share goes from seller to buyer, the money goes the other way.
The total wealth increases if the share is sold at a higher price than its previous transaction.
Yet no money has been created.
The money has changed hands at a higher rate of exchange relative to the shares.
Yet, the total number of shares and dollars that exist after the transaction is exactly the same as the number that existed before, though they are in different hands.
You could of course argue that the utility or public good has increased because both the buyer and seller are happier.
So is that what wealth is - a measure of happiness.

In 1987 when 40% (or whatever) of the capitalization of the market disappeared in one day.
Where did it go?
Who got richer when all those shareholders got poorer?
All those billions of dollars of shareholders' wealth just disappeared.
And the value of the shares is not just an illusion because you could at any time trade them for cash, houses, private jets etc...

Can you see why I'm suggesting that wealth defined by transactions at the margin in a securities market is purely a notional concept?
It really is just paper wealth until it's sold and in the bank.
Or exchanged for real goods.


Black BladePM markets still look good, especially PGM's, look at Rhodium!#242022/3/2000; 6:19:05

FOCUS-Key platinum metals comfortably above $500

By Marius Bosch

LONDON, Feb 3 (Reuters) - Platinum and palladium set new highs on Thursday, spurred by good demand and a supply shortage, dealers said. Platinum moved to its highest in nearly 10 years, while palladium set an all-time high. Both were fixed in London at $502.00 a troy ounce. A shortage of spot metal caused by a lack of deliveries from major supplier Russia was behind the soaring prices, with palladium and platinum already 13 percent higher than at the start of 2000.

Rhodium, another platinum group metal (PGM), continued its sharp climb, with dealers quoting the asking
price as high as $1,975 -- an eight-year peak but still well-off the highs of $7,000 reached in 1990. ``Rhodium and the PGMs once again are the only metals in the complex worth mentioning,'' said Helen
McCaffrey, Treasury Analyst at NM Rothschild & Son.

Russia supplies more than 70 percent of the world's annual palladium needs but political factors have
kept Russian palladium off the market so far this year and for most of 1999. Platinum and palladium, along with rhodium and ruthenium, are used in various combinations in autocatalysts to purge noxious gases from exhaust fumes.


McCaffrey said platinum and palladium were supported by a quarter percentage point increase in U.S. interest rates. ``It is difficult to argue against the trend at the moment, however, we will be watching the forward markets -- particularly platinum's - for signs of further lending which may see prices ease off slightly,'' she said. Lease rates, or the cost of borrowing metal, helped fuel platinum's rally with the rate to borrow one-month platinum now around 60 percent, double the rate in mid-January.

Palladium does not suffer too much from liquidity problems with the current lease rate around 8-9
percent, well away from the 200 percent seen in previous rallies. Dealers said platinum's premium over gold is the largest it has ever been. ``The platinum-gold spread is as big as its ever been, but bearing in mind the overall views on both metals, it would be brave to even sell it here,'' one bullion dealer said.

Russia was unable to export platinum last year due to loose wording in a December 1998 law which was
not amended until early 2000, and major South African producers said last week they would not be able
to increase exports. A decree on Russian platinum quotas, allowing exports, could be signed in 10 to 20 days or even sooner, a senior Russian industry official said on Wednesday.


Gold traded steady in Europe, and was last quoted at $285.00/$285.50 from the New York close at
$284.50/$285.25. Dealers said gold remained in its recent range of $280.00 to $290.00. ``Physical demand remains weak and fails to add some price support. The market is now a bit long and the risk for some profit-taking is increasing,'' a Swiss dealer said.

Silver remained stuck in its recent range and dealers expected the trend to continue. It was last quoted
at $5.19/$5.22, just up from the New York close at 5.17/$5.20.

nickel62Remember the old story about the dumb brokerage client?#242032/3/2000; 6:49:51

who falls in love with a very micro cap Canadian mining stock and begins to buy a little every day. The thinly traded stock eventually begins to rise and the client becomes all the more in love with its possibilities. Soon he has sold some of his other stocks and buys more and more of the micro-cap mining stock and it continues to rise. Now fully convinced of his investment genius in finding the source of great future wealth he sells all other investments including his life insurance and house and buys yet more of the stock. Needless to say it rises still further as he purchases the last tiny bit on margin. Then becoming sated with his success he decides to diversify and calls his broker to suggest he sell a little to buy a new name. The brokers classic response of "To who?" sums up the problem of stock manipulation before they invented index funds and delta hedging. With these two new computer driven systems the market price can be obtained for a portion at least of the stock by increasing the number of shares at the margin that can be sold to realize real proceeds and therefore reward the manipulators.

Is money created? Well everyone who ones our little mining company stock thinks he has seen a "real" increase in his net worth. Being uninitiated in the "skam" these other owners are patting themselves on the back for their wisdom in being "buy and hold long term investors".They accordingly prepare to spend their newly acquired wealth either directly by selling to the computers or indirectly by increasing their margin debt either directly or indirectly.
In the US stock market if you replace our Canadian micro cap with GE,Intel,Cisco Systems and Microsoft you have over 27% of the NASDAQ valuation. While not all of these are necessarily in the NASDAQ the same effect is achieved. Sell to whom? The computers until the flows reverse.Then find out that MicroSoft et. all are worth 10 cents on the dollar best case. Don't think so? Then hang around and see what pricing stocks at the margin means when the leverage is reversed. No Bid!

Black Blades&p futures up +8.50, Au up +0.80 at $285.30, Bonds up slightly again.#242042/3/2000; 6:50:53

Looks like fun on the street today after only a puny 0.25% rate increase. Hmmmm..............
Thriveron a lighter note...#242052/3/2000; 7:17:30

Taking it with you

There once was a rich man who was near death. He was very grieved because he had worked so hard for his money and he wanted to be able to take it with him to heaven. So he began to pray that he might be able to take some of his wealth with him.

An angel hears his plea and appears to him. "Sorry, but you can't take your wealth with you."

The man implores the angel to speak to God to see if He might bend the rules. The man continues to pray that his wealth could follow him. The angel reappears and informs the man that God has decided to allow him to take one suitcase with him. Overjoyed, the man gathers his largest suitcase and fills it with gold bars and places it beside his bed. Soon afterward the man dies and shows up at the Gates of Heaven to greet St. Peter.

St. Peter seeing the suitcase says, "Hold on, you can't bring that in here!" But, the man explains to St. Peter that he has permission and asks him to verify his story with the Lord.

Sure enough, St. Peter checks and comes back saying, "You're right. You are allowed one carry-on bag, but I'm supposed to check its contents before letting it through."

St. Peter opens the suitcase to inspect the worldly items that the man found too precious to leave behind and exclaims, "You brought pavement!!!???"

JuliaMK, FOA, ANOTHER#242062/3/2000; 7:28:48

Thank you for clearing the "debris" from under our table.


koanpalladium up $14 to $512 #242072/3/2000; 7:32:18

Palladium is screaming and pulling the other metals with it. Platiunum is up $6.80 and gold and silver up lesser amounts. As I mentioned over the last two days this was a scenerio I thought could happen, but still along way from it. I think what is working in palladiums favor is that there just isn't "any" <g>. and I doubt that many users would have stock piled much, becasue the price has been rising steadily and you generally would not stock pile at percieved high prices - this is a great drama <g>. Thanks for keeping us informed Black Blade.
UlyssesLawyer's gold#242082/3/2000; 8:07:11

Allen G's on his deathbed,tells his wife to put his gold in suitcase above his bed in the attic s that when his spirit ascends to heaven he can grab it on his way up. Six weeks after he dies, wife is up in attic, notices suitcase is still there.Silly man'she thinks,he should have told me to put it in the basement.
FOAChanges#242092/3/2000; 8:11:45

Some changes I was asked to make.

Hello all,
The last post (s) by Rainman only underscored the point Another made to me earlier. His (Another's) message is so strong and political that it will always draw out "verbal assassins" in an effort to destroy the concepts (MK understands this and communicated it to me also). Especially as they (events) start to really confirm this new direction. Some of these (forum) disruptions are deliberate and some are due to mental dysfunction, but all of them divert most people from fully grasping the trail in the context given. I don't think everyone fully realizes just how much of an
impact these "Thoughts" (as political wills force the issue) will have on the international assets and business plans of major people. Some of them will argue against these viewpoints as if all their wealth depended upon it. Indeed, it just may!

Some time ago (many years), he privately planted these Thoughts very deep in the minds of a few. Only recently were these items produced on the Web for all to see. It was done in a way that did not betray things gained in confidence, but still made people see the world as others did. Another withdrew when the attacks (he knew would come), arrived. I wanted to continue on in a "narrative" fashion that would spell out these changes (events) more clearly as they occurred. As an American, I knew that most "Western Thinkers" would not ,did not and will not grasp these
political changes until they were well underway, or worse. Even then, every attempt will be made by special interest groups to show events in a different (more dollar friendly) light. Virtually assuring a stampede once the real bell is rung.

Truly, other major changes in world affairs are coming. Once they are visible, I believe Another will return and comment. Again, he does not write to engage people, he writes to place other minds "in the pipeline of political thoughts and directions". I truly think it has more to do with ethics and honour than the love of man. This may be a harsh observation on my part, but some cultures (as well as individual standards) require this.

My posting here as FOA has attracted to much of the same caustic attacks that he walks right through. In reality, he is thick skinned as one could imagine such a person to be. As one of you posted an "A" item earlier, "these attacks are as boys having words with the wind, yet a strong wind has no ears" (or something like that). But, as the "thin skinned Westerner" I am, I do a poor job of representing his thoughts the way it was done before. After Permafrost continued his mindless comments, I was "asked" to no longer post as FOA in a give and take forum setting. Even
though I offered extended reasoning, it was never addressed in a clean logical fashion. The Rainman item only underscored this. But (if MK will allow), I will continue (as FOA) the "Gold trail Hikes" in posted letter form somewhere else on the USAGOLD site. We can still address many of the forum discussion items as deemed necessary. Yet, it will be done more in a letter format. If I am to post again on the forum (sparingly), I must use a different handle and debate the issues as myself, rather than represent the Thoughts of Another. This removes me from a conflict most of you did not know existed.


To everyone that wrote here in support of these writings, I reply with a thanks from a true heart. I accept this knowing that your words are also for all the other fine persons that post here.
MK, you are the Hollywood producer and director of this drama. A film being shown around the world for all to see. It's your call my friend?

Thanks FOA

DiewarzuFOA, Permafrost, et al...enough already!#242102/3/2000; 8:22:51

Just a lurker's perspective...
This forum seems to be becoming more of a soap opera than a gold discussion forum. Drop the egos and post your ideas. It seems that people here are more interested in making each other feel good about how good this post was and how intellectual that post was and how much of a wonderful thinker this person is and how foolish that person is and who is the most educated, etc, etc. GEE WIZ! Who cares about all that stuff...I just want to learn more about gold and related issues (I used to read this site daily several months ago, but now I rarely come here more than once a week due to all the extra "ego fluff" type posts). Nothing is either good or bad; only thinking makes it so. So drop the prideful thinking, get over it and use this forum as a means to share wisdom/insight/knowledge that is "relevant" to the subject matter: GOLD! Sheesh, didn't realize that "sensitivity" training was going to end up being a requirement to read/post on this forum. P.S...Hope I didn't step on any toes or offend any egos with this post;->

JCTexFOA#242112/3/2000; 8:54:21

I cannot tell you how nice it was to see "FOA" on the board, again. I am too damned proud to beg, but I was weakening fast. There is no way you could know how much many of us appreciate what you have done in the past, and we look forward to whatever you and MK work out. Your knowledge and perspective is not something easily replaced, if at all.
LeighDiewarzu#242122/3/2000; 9:05:01

Dear Diewarzu: In case you haven't noticed, this is an INTERACTIVE forum of human beings. We can't help developing friendships and relationships of all sorts. If that bothers you, there are other places (golden sextant, gold-eagle editorial archive, etc.) where you can read in peace. We won't bother you there.
LeighFOA#242132/3/2000; 9:09:43

Thank you for sticking with us! I can't wait to see your new "Trail Hike" site!
Ulyssespdeep msg#24173#242142/3/2000; 9:11:37

The Social Security surplus buys NON-MARKETABLE Treasury securities ,i.e. worthless I.O.U.s.This is money owed to U.S. taxpayers by U.S. Govt.-kind of like owing money to a relative- if it doesn't get paid back, who cares?
elevator guy@FOA#242152/3/2000; 9:36:42

Good to hear your "voice" again!

I didn't realize Another was caught up in pressure squeeze regarding your posting.

If you post by a different handle, I'll know it right away, as soon as you say: "We walk this trail together, yes?"

HoltzmanThe Latest....#242162/3/2000; 9:41:46

Holtzman here,

Wave Theory

I've no memory of whether this next bit is fact or simply historical fiction, but I recall a story set several centuries ago in a coastal village in Japan. One day the ocean pulled back, as if for low tide, but then it kept going and going until the beach was exposed halfway to the horizon. Shellfish lay helpless on the exposed sand. The fishermen left their boats where they lay aground and walked about, collecting their day's catch by hand. Children went out to collect pretty shells by the handful. No one seemed to think this ominous. Indeed, the villagers to a man assumed this was a gift of good fortune.

All but one. On the bluffs overlooking the beach lived an elderly gentleman. As he looked out upon the strange sight below him, he realised instantly what was going on. He'd seen this happen nearly a century before when he'd been little more than a babe. There was no time to lose, but his swiftest son would still take at least half an hour to reach the village below, and they were well out of shouting range. The man took up a torch and ran to his fields which were then quite dry as harvest time approached. He cast the torch into the fields and the fire quickly spread. He yelled to his sons to help him fan the flames. They thought he'd gone mad but thankfully they obeyed him.

Far out on the exposed beach, most of the villagers had their eyes on the sand, but one child looked back homeward and saw smoke rising from the headlands. Her cries roused the adults. The threat of losing the harvest overwhelmed the villagers' fascination for the beach, and they all ran, man woman and child, back through the village and up the hills to save the crops.

The last of them had just arrived at the top of the cliffs when they heard a roar behind them. They looked back and beheld what the old man had known was coming. The horizon looked wrong. It rose well above where it should have been, then could be seen for what it truly was: a dark grey wall of water towering in across the sands where they'd stood scant minutes before. It continued in, rushing over the boats that were still in their berths, crashing over the market at the beach's edge, howling inland with a ferocity unimaginable. In seconds the entire village was gone, and the waves were lapping scarcely a hundred paces from where they stood at the top of the high bluff.

Simply Me wrote in (1/13/00; 2:24:52MDT - Msg ID:22814), "Just a report from street activity. Gold and silver is being dumped all over the place! Small time dealers don't even want it because the premiums have crashed." Sadly, this is what I was afraid would happen. It's why the poor tend to remain poor: most never see the wave coming. And even among those who do hear the roar, most would rather die than be seen by neighbours as someone who dares to buck the trend. It's only a tiny minority of people who have the intestinal fortitude to do the opposite of what the neighbours do.

To everyone here reading these words, the simple fact that you Are reading this forum means that you are one of that farsighted minority. Now of all times, with the dot com seabed lain open enticingly in front of you, don't capitulate. The tide will return. Count on it. When the ocean is in its calm time, the beach is a wonderful place to reside and thrive. But when you see the warning signs, no matter how strongly you hear the call to follow the masses, have the sense to keep near high ground.

And should anyone ever wonder why so many people take time out of their busy lives to expose their observations to this Forum, let's just say that that old man's sacrifice set a standard worth aspiring to.

A few weeks ago, another poster said that I did not understand the road ahead. He was quite right: none of us have certain knowledge because there's always some aspect somewhere that we haven't considered yet. Far from upsetting me, his comments Inspired me to respond with what I hope will be yet more aspects for debate. And I very much hope that he will return and help us continue the exploration.

Gold in a Dollar Collapse

Mr Gresham made an excellent point in (01/02/00; 02:30:24MDT - Msg ID:22030). I'd previously stated that I didn't expect the purchasing power of gold to dramatically increase just because of a fiat currency crisis. Which is to say, a ducat buys dinner for two today, and I expect it will most likely buy dinner for two in the years following any particular fiat currency crisis.

But I should have more clearly stated that, during the onslaught of a fiat currency collapse, and especially at its epicentre, all bets are off. To discern what may happen in future, I find it best to look for similar situations in the past.

Before the imminent collapse of the USSR was visible to all, one Russian rouble had a purchasing power within the USSR of slightly more than one U.S. dollar. Even then, however, there was a certain favouritism for external currencies, particularly U.S. dollars, among those who bought and sold on the black markets (which, in practice, meant every Russian citizen). If you wanted to purchase forbidden goods, you had to do so with dollars. Still, the rouble/dollar exchange rates, both official and black market, didn't waver much from year to year.

As each Soviet citizen in turn became aware that the USSR was dead but simply hadn't stopped moving yet, he or she began doing what many readers here did prior to Y2K: they began converting their local currency into anything which would hold resale value and/or sustenance value. And, as always, there were those who did not see, who trusted in the authorities to keep things proper forever. It breaks my heart to think of the millions of people, most of them elderly, who within a few months' time saw the purchasing power of their rouble life savings dwindle to 1/1000 of its former purchasing power. How many pensioners do you know of who could withstand receiving the equivalent of $9 per month? However, those Soviets who had spare rooms full of vodka bottles or rice or U.S. dollars survived and in many cases thrived.

Did the purchasing power of a bottle of vodka increase within the Soviet Disunion? Did the purchasing power of a paper U.S. dollar rise there? In the heat of the collapse, most assuredly so. By one hundredfold? Perhaps in exchange for a few items, yes, but not across the board. Urgency plays a great part in short-term expenditure decisions. Would you spend $20 to post a letter? Without hesitation you would if that letter were a valuable contract which absolutely positively had to get there over night. But even a rich man wouldn't send Christmas greetings at such postal rates.

When faced with an urgent need to purchase a scarce commodity, desperate people will spend whatever is necessary. For example, the dollar cost of vital medicines in the collapsing USSR did indeed soar. Over the short term. Because the entire world had not collapsed along with the USSR, and because the black marketers' lines of import/export had not collapsed along with the official ones, a rising price quickly inspired suppliers to import more, which in turn brought prices back down. When considered in retrospect, those ex-Soviet citizens who were able to avoid spending their U.S. dollars managed to pass from one end of the storm to the other without a dramatic change in the purchasing power of their holdings. During the chaos, however, the U.S. dollar was seen as better than gold, simply because it was reliably steady.

But barely a decade before, that same U.S. dollar had been anything but steady. Following WWII, the U.S. experienced a multi-decade economic boom, brought about largely by the absence of competition (the rest of the planet's factories having been, in the main, bombed out of existence). By the Viet Nam war period, however, the rest of the planet had recovered. Meanwhile, the U.S. had made a strategic blunder by allowing its military/economic might to be fuelled by nations not under its control. The U.S. had then compounded its blunder by defending and sustaining Israel.

Do understand here that I appreciate the twentieth century jewish desire to return to the religious homeland, and I appreciate the U.S.'s long-standing inclination to come in on the side of the underdog. The problem is that, when any humanitarian gesture places a nation at a military disadvantage, the cost in vulnerability is generally higher than can be justified.

Certainly from the Muslim point of view, the modern nation of Israel was and remains nothing more than the latest crusader kingdom, an invasion from Europe populated by Europeans. Be clear on this: Arabs do not see Israelis as Middle Easterners. They see Israelis as Germans, Poles, Russians, Americans, etc., people who have the indecency to walk about in public with practically no clothes on. Time and again when Westerners launched crusades, they were worn down then turned back by the Islamic world's superior military might and tactics. This last time, in the mid-1900s, the Muslims discovered they were no longer superior in either. But then they realised they held an even more powerful tool of persuasion. They had the oil.

Interestingly, most U.S. citizens I've spoken with seem to think that OPEC's crude oil price hiking was responsible for dollar inflation in the 1970s. From what I've observed, though, OPEC simply provided the initial moment of clarity. It was the U.S. government itself which caused the inflation, indeed which encouraged it.

U.S. military commanders (who had, since the 1940s, assumed they were invincible) had already watched in growing alarm as tiny Viet Nam successfully snubbed its nose at them. Into this uncertain environment came a clarion call: oh my god, someone could pull the oil out from under us. Those of you who've read Tolkien will recall Sauron's moment of clarity when he looked out of his supposedly invulnerable fortress to see the source of his power poised to fall into the flames.

Fortunately for the U.S., there was more than one source of oil. But those domestic sources (and neighbourhood sources such as Latin America) came with a higher cost of production, and the infrastructure necessary for significant production had been neglected in favour of temporarily cheaper sources half a world away. For the same reasons the U.S. instituted rationing during WWII, the U.S. instituted inflation during the 1970s.

How would that help? The production cost to pull a barrel of oil from an American well was drastically higher than the cost from an Arabian well. With the U.S. suddenly realising it had allowed itself to become beholden to forces potentially outside their control, there came the urgent need to increase the retail price of a barrel of oil, at least within the borders of the U.S., to such an extent that U.S. wells could be profitably dug and operated. To safeguard the U.S.'s military support structures, it was consciously decided by the U.S. federal government that the U.S. economy should be sacrificed by inflation. Once sufficient domestic infrastructure had been restored, it was possible to reverse gears and enter the Volcker era. Texans be damned; Alaskan oil would still flow.

This, by the way, answers another question raised here some time back: why should the Bank of England be fool enough to sell its gold at what everyone could see was a 20-year low in price? The answer is simple: because there was something far more valuable in danger of being lost than whatever measly loss might be incurred on a sale of gold. To again reference Tolkien, a man who refuses to cast away something of value at need has lost all sense of proportion.

And what was that far more valuable something which the BoE was trying to defend? Not the LBMA: that's only a side issue intended to draw attention. The core issue is simply that Britain wishes to avoid becoming Europe's equivalent of Alabama, or worse yet Puerto Rico. The UK wishes to enter Euroland as the equivalent of New York. And history is on our side in this regard. Britain's historical tendency is to hold back and watch how some new era begins, learn by watching other people make mistakes, then join in when things are well under way.

Infinite Diversity in Infinite Combinations

FOA wrote in (12/29/99; 7:51:39MDT - Msg ID:21774) that, "the diversity and different social nature of Euroland will become it's most profound currency strength. If they were a more homogenizing people like the US, the Euro would become just another dollar! Their Old World, Hard Money conflicting nature will be reflected in a New Gold Market and a responsible world currency. Their practical Real World focus will not allow them to reject this digital currency as we move forward in world trade. The very best balance for the next 1,000 years. National states and broad based cultures, such as China and India will wholeheartedly embrace such a system. The prospects of using the Yen in such a world demonstrates the lack of understanding about how that currency and it's society functions."

I almost frantically hope you are right, FOA. But it does seem to me that, while the progress of an historical event may appear to be along a single path, very seldom if ever is there a single driving force behind it. Rather, like the tectonic plates I mentioned earlier, any resulting motion is caused by one opposing force failing to hold its position. There is a fault line running through the EU right now, and the American Experience has already provided the appropriate names for our adversary positions: States' Rights versus Union.

Ten years from now, will Germany be a sovereign nation, or just the European equivalent of Michigan? Will a portion of a Austrian citizen's retirement taxes be diverted to support a less productive Spanish citizen's retirement? That's how it is today in the U.S., with Chicagoans supporting Mississippians. I can see the benefits, and the perils, in both sides. I also have no significant say in which side will win out.

The average Californian does not know whether the earth beneath his feet will shift leftwards or rightwards, nor does he know exactly when the shift will occur, but he's quite certain the earth will shift someday in some way. As a result, he builds his house to withstand a shift in any direction. And that is certainly the situation in which I and my neighbours find ourselves.

I cannot say with any confidence, FOA, that loose and competitive confederacy will be the actual result for the EU. Interlocking alliances and even monetary unions have been implemented before, with widely varying results. Much as I sympathise with past American advocates of States' Rights, I'm not sure that Jefferson's loose confederation would have fostered a better standard of living for its people than the strong Union which was actually implemented. I do suspect, however, that it would have been less threatening to its citizens and indeed to its neighbours. For example, a loose confederation would have lacked the military might to have stolen the northern two thirds of Mexico. And it certainly would have lacked the ability to confiscate its own citizens' property.

While Spain, France, and Britain were taking turns vying for world empire, there was no rationale for European unification. The phrase "I am a European" occurred then about as often as the phrase "I am an Earthling" occurs today. Europe was a geographical abstraction only, not a source of commonality. But thanks to the end of Empire and in particular to the longevity of the Cold War, this continent now finds itself not so unlike the North American colonies of the 1700s. In contrast with the peoples outside the EU, we find to our surprise that Frenchmen are not so very different after all from Spaniards.

For that reason and others, I think that ultimately there's no chance of avoiding a United States of Europe. But there are two ways of getting there, and the first is the one I must say I prefer. That would be a gradual evolution over many generations, gently reaching a stage where Europe is as homogenous as, say, Australia. But much as I would prefer it, the odds of Europe developing this way are quite small in my opinion. A far more likely future as I see it, and a far more ominous one as well, involves a compulsory United States of Europe.

CoBra(too)'s posts on 2/2/2000 provide an early warning sign of the trend which I fear will continue, and indeed accelerate: Austria's sovereign right to elect its own leaders is already coming under increasing pressure from the EU. A loose confederation of equals would not do such things. A compulsory federal government like the present USA most assuredly would. I don't recall the details, but didn't an American State a decade or two ago elect a governor who was flagrantly in favour of apartheid? How did that go over in the other States, and what was the reaction of Big Brother? For that matter, isn't South Carolina currently being pressured to change its flag? I can think of few more emotional tokens of sovereignty than one's flag.

As to whether FOA's optimistic expectations will carry the day, or whether my and CoBra(too)'s more worried view will, I simply cannot tell. Although history is filled with the brevity of triumvirates and confederacies, it's always possible this time it will be different. Be reassured, FOA, I deeply hope you are right. I just don't feel sufficiently optimistic to bet my life on it.

The strategy which presents itself to me is to build my house to withstand any of several outcomes. That means to own British pounds because the UK is my nation today; to own euros because the EU is highly likely to become my nation all too soon; to own dollars because, who knows, the Fed may prove more reliable than the ECB; to own physical gold because no-one should trust any government overmuch; to continue to own unhedged gold mining stocks because they may yet have their day; and to own the stocks of well-established multinationals which are large enough to be their own nations, because they are often able to survive and even thrive when one of their many host countries convulses under them.

Peter's Neo-Feudalism

To Peter Asher regarding (12/28/99; 23:08:52MDT - Msg ID:21760), actually I quite agree with your conclusions about what you call neo-feudalism. As I allowed during a previous post, I'm rather a great admirer of Nicolo Machiavelli. You'll note that he wrote The Prince in the 1500s as something of an open letter to a self-made lord whom Machiavelli hoped might bring order to Italy. Heredity does often provide continuity, but every dynasty must start somewhere.

And dynasties have a way of changing their appearances over the millennia. I feel that The Prince should be required reading for anyone trying to make his way in the modern business world. Simply replace the word Prince with the word Manager as you read it and you'll see why. Individuals all over the planet have democratic voting rights as citizens of their nations, yet walk through the doors of their workplaces and immediately become, as you say, "Serfs and Lords."

The biggest single difference in today's neo-feudalism versus the medieval model is that heredity is no longer a given. In the U.S., the "all men created equal" credo is accommodated by allowing a schism between ownership and management. While the succession of managers ideally encourages survival of the fittest, the succession of ownership still allows for heredity. The Ford family, for example, has had on-again off-again generations participating in management, whilst the family fortune has descended through each generation regardless of management participation. But is Henry Ford the Whateverth a public figure? No. Is he secretive, or at least intensely private? Yes. Does any U.S. citizen fear him? Not that I've ever heard. Why? Because he isn't doing anything worth becoming alarmed about.

Interestingly, a similar owner/manager schism has been more slowly forming in the UK and in Europe. For example, Elizabeth Windsor is, in a manner of speaking, the largest shareholder of the kingdom, but it is Tony Blair who manages it for her. The ceremony to open parliament is very similar to an annual stockholders' meeting where the owners give their blessings to the managers' plans. While Elizabeth has far less influence over her corporation than does Bill Gates over his, this is because Elizabeth is no longer the majority shareholder of sovereignty.

Her predecessor, George III, had considerably more influence over his parliament's management, and let me be the first to say that this was to everyone's detriment. His arrogant disregard for the concerns of other shareholders (members of parliament, home country aristocracy, and also colonial aristocracy such as George Washington) resulted in the splintering of the English speaking world and came close to causing a revolution at home to boot. Thomas Payne, the man who wrote the Common Sense pamphlet so intensely popular in the colonies, was in fact a fresh-off-the-boat Englishman who had tried (and failed) to begin the revolt within the mother country.

I'll admit to being basically a monarchist, or at least a willing feudalist, and yet I do firmly believe that a man's actions are more important than his birth. For example, I think Prince Charles' actions have not earned him the throne, though the tradition of heredity will most likely place him on it. Pity. I would favour skipping him and placing the crown directly on William's head, allowing House Spencer to more quickly replace the obviously failing House Windsor. But as you can see I would still favour placing a crown on Someone's head.

I also think Bill Gates is someone to be far more concerned about than any Rothschild in the past half dozen generations. At least the Rothschilds' goal as a family is discreet continuity. They don't need to build an empire. They already possess an empire, just as the present generation of the Henry Ford family does. All they have to do is maintain and defend what they already have. By contrast, upstarts such as Bill Gates and the original Henry Ford must radically alter the world around them if they mean to rise above their humble beginnings and acquire great wealth. People with the Rothschild mindset living in California go out of their way to build earthquake-resistant homes. People with Bill Gates' mindset living in California are standing over the San Andreas fault working away at it with a jack hammer. Which sort of people would you prefer to live next to?

Putin: a good word

To The Invisible Hand, who was concerned about imminent nuclear war begun by Russia in (12/31/99; 7:16:55MDT - Msg ID:21891) and (12/31/99; 15:02:02MDT - Msg ID:21911)...

There's little mystery to why Yeltsin resigned.

HoltzmanThe Latest....Part 2#242172/3/2000; 9:43:47

Though Yeltsin's campaign was briefer than George Washington's, I think the two men would have understood one another. In both cases, had they been younger, neither would have let go the reigns of power. The exhaustion of age gave Washington no choice but to let the fledgling U.S. begin its clockwork presidential succession. There's reason to hope the same exhaustion will now let Russia follow in the U.S.'s footsteps. I have no fear of Putin. Indeed, he seems quite rational.

The only motivations Russians ever had to reach out beyond their lands were the zeal of Communism and the fear of outsiders invading them. With Communism disgraced, the zeal is gone. That leaves only the fear of invasion. Regarding that, I deeply resent the way NATO and the EU have handled things. We should have invited Russia into NATO and the EU ahead of all others. Her economic shortcomings pale into insignificance compared with her military might (both the part which is still loyally Russian, and the part which is up for sale to the highest bidder).

So long as we fail to welcome Russia into Europe, especially if the EU quickly becomes a compulsory United States of Europe, we invite at best another cold war with a spurned Russia, and possibly even a hot war. Probably not under Putin, and hopefully not at all, but where's the sense in running that risk?

Why 2K?

To Strad Master, who wrote in (12/31/99; 19:34:42MDT - Msg ID:21933), "Well, it looks like Y2K may turn out to be the biggest hoax in world history." Certainly that was the sense one got in the innocently quiet dawn which followed the Hour of supposed Doom.

But was European monetary union a hoax? Everyone aware of its impending 1/1/1999 deadline was on edge in the months (even years) leading up to it. Would it work? Surely something would go horribly wrong. The whole of western Europe would collapse into financial anarchy without hope of recovery. Well, not exactly. What did in fact happen was that every involved individual did his or her panicking ahead of time. No-one over here in the financial community spent the 1998/1999 New Year's at home. Result: only a very few minor glitches which were beaten into submission well before opening hour the following Monday.

I'd been quite confident since then that the century date changeover would be navigated by the professionals just as EMU had been: smoothly and with minimal upset. Perhaps not every penny spent on Y2K remediation was efficiently spent, but the calm aftermath justifies almost any amount of waste. Though Y2K provided many opportunities for hoaxes, Y2K itself was no hoax.

Which is why I wrote on Tuesday 28 December 1999, "I personally expect there will be no significant software downtimes in any of the English speaking world's crucial systems (finance, military, power supply, communications)."

But my, was I wrong.

Barely a day later, the automated credit card equipment in my part of the world seized up. It did not seriously hinder me because I had, some months ago, tucked away one paycheque's worth of £5 and £20 notes. These functioned quite well as soon as I could make it to the front of the queue, past surprisingly dim people who kept hoping that perhaps it just needed one more attempted submission and their faith in plastic would be restored. It wasn't the end of the world as I knew it. All the same, it was certainly more obnoxious than I'd anticipated. And it arrived a few days ahead of schedule just to be especially tricky.

I'd also expected rather a stronger upward surge in financial investments come Monday 3 January 2000, and a rather stronger downward surge in metals. Neither materialised. Indeed, things then proceeded to become quite wonky in ways I'd never anticipated. So much for making specific predictions. I promise I'll stay nicely nebulous in future.

Dudley Moore: "But do you feel you've learned from your mistakes?" Peter Cook: "Oh, certainly, certainly, I've learned from my mistakes. I'm certain I could repeat them precisely."

I.V. Holtzman

PS: Gandalf, Aragorn, there's a mining related page at I think you'll find most intriguing. Indeed, I highly recommend the entire site.

PPS: There are deeper truths than gold, my friends, and Canuck Gold gloriously stated one in (01/20/2000; 09:49:02MDT - Msg ID:23254): "Idealists... If only everyone would come around to their way of thinking, everything would be right with the world. (I know this from practical experience because my wife is one of them.)" Thank you, Canuck, I'm relishing that maxim... in solitude of course, because if I share it with a certain someone I'll never hear the end of it <smile>.

TownCrierToday's Market Report#242182/3/2000; 9:45:07

Market Report (2/03/00): Gold drifted sideways, looking for a direction in overnight action. The path of least resistence it found was generally upward, particularly during the London session where the AM gold fix was $285.25, up $2.15 from yesterday's fix. In early NY trade the yellow metal is currently at $284.90 up 40¢ from yesterday's NY close. Financial World News reported that London gold was thinly traded "but physical demand continued to underpin general business" according to dealers there. With Hong Kong markets closed February 4th - 7th for the Chinese New Year holiday, activity is expected to decrease, with gold holding a narrow range during this time.

The Fed's widely anticipated rate hike of 25 basis points was taken by the market in stride yesterday. The early and heavy COMEX buying was said by traders to be from "a large NY trade house...along with a broker typically associated with fund activity," according to FWN. This was said to be followed by other funds joining in. Bridge News reported that UK officials with HM Treasury said today that the Bank of England is set to continue the auctioning of the 290 tonnes remaining in its originally announced program to sell 415 tonnes following the completion of this first phase of sales on March 21st. We can't help wondering why these Treasury officials felt compelled to make a point of this item today, unless it is a thinly veiled attempt to reassure jittery bullion banks (and their depositors) that this physical gold would indeed be made available to help satisfy their needs for the metal.

The World Gold Council is a self-stated proponent of gold in all its forms, and it is not opposed to sales, seeing these transactions to be the vital function of gold as a strategic economic asset. But they draw the line where the reasons for sales by the official sector are couched in a fog aimed at altering the public's proper perception. In a speech last week to The Business Club Zurich, WGC's CEO Haruko Fukuda offered these good words in regard to the circumstances surrounding the UK gold auctions: "Right from the start, we at the World Gold Council have been critical of Britain's gold auctions, a policy which has puzzled many observers. The British government argues that in terms of volume related to the size of the market these auctions are inconsequential. That is a fair point. After all, global demand for gold is currently exceeding newly mined supply by more than 1,000 tonnes a year. But we have consistently argued that this reasoning entirely misses the key message that is being sent to the market by these auctions. That message is not that 'the British government is mobilizing some of its gold reserves in order to help solve some domestic crisis' but instead it is that 'the British government is selling some of its gold reserves because it no longer believes in gold as a reserve asset', and it is this message which has been so intensely damaging. Parliamentary opponents to the British gold sales have persistently called upon the Prime Minister, Mr Tony Blair, and his Chancellor, Mr Gordon Brown, to deliver a coherent, economic rationale for these sales, but these calls have been dodged by the government. Instead, there have been obfuscation and evasion; the auctions have been defended by the government not on the basis of sound economic policy but along the lines of 'everyone else is doing the same', which is not only untrue but also astonishingly weak."

Meanwhile, the same parties (Deutsche Bank, The Bank of Nova Scotia, and HSBC Securities) continue to be on the receiving end of the growing number of delivery intentions announced for the February COMEX futures contracts. Today, another 285 contracts were added to those 5,142 contracts already called for during the previous three days, lifting the total amount scheduled to change hands by this month's end to 542,700 ounces of gold.

That will do it for today, goldmeisters. We'll see you here tomorrow.

Cavan ManDear FOA and USAGOLD#242192/3/2000; 9:50:21

FOA: Whether for ethics and honour or, love of man, your friend has let the horse out of the barn. I humbly submit to him that he has created for himself somewhat of a responsibility to continue with his THOUGHTS which demand his continued presence and consultation to some forum venue. as his time permits.

USAGOLD: You have said you do not agree with all FOA/Another have said, nor do I. However, I believe it is correct to say you do agree with much of it. Simply as an outlet for their collective insight, this forum is invaluable. I know from your words you intended from the beginning to make a home here for FOA/Another. At the same time, you rightly host an open invitation to comprehensive debate and disagreement for the benefit of all. But,either we see the wisdom and merit of the FOA/Another discussion or, we do not. If we do, then, realizing the highly controversial nature of the content of discussion, we make a concerted effort to maintain civility for their benefit on this forum. If you want to label that comment censorship then, fine. Conversely, if we do not see the merit of their THOUGHTS then, perhaps allow some other accomodation. In my opinion though, any other accomodation will be less than good although obviously better than none.

You are the best censor we know.

Indeed, this person, FOA, has a true and good heart; so generous is he/she with knowledge and understanding. This person has been challenged here by participants who are both esteemed and nitwits using highly inflammatory rhetoric. Please exercise a bit of diligence and editorial license when it comes to participants who engage FOA/Another in a manner not befitting the very high intellectual standards of this forum.

We live in an increasingly hostile and uncivil world. While we cannot control what surrounds us, we can make some modest attempt to influence what is written here at this web site.

Thank you for reading.

TownCrierThe Fed today added $4.765 billion to the banking system#242202/3/2000; 10:01:51

To help meet the system's reserve-maintenance needs, the Fed added these temporary reserves using overnight repurchase agreements. So what else is new?
ThriverA quick comment on FOA/Another's contributions#242212/3/2000; 10:38:13

An old joke goes that two scientists will spend hours arguing over the expected results of an experiment that would take five minutes to perform.

What most people don't realize is that often it is more important to know and understand reasons and techniques behind something than just to somehow get the 'right' answer. Students who take enought math classes find this out.

The fundamental message of FOA/A that I get is to buy and hold physical gold. Most people I know would dismiss this out of hand as far too simple. Why, there is even less thought or timing involved than buying index stock funds.

For me, this I would anyways, even if I had never heard of FOA/A. BUT, it is truely interesting to get a peek behind the curtain, and see beyond the magician's hand motions. For we all know magicians are masters of the sleight of hand, and offical explainations we are given aren't designed to enlighten.

I'm a mere page here at the castle. But when my chores are done I do like to sit on the floor just out of sight, and hear the talk of the mighty ones sitting at the table.

nickel62Inverted yeild curve means recession ahead!#242222/3/2000; 10:54:52

Traditionally an inverted yeild curve means a recession is being picked up by the bond market. I hurry to add however since the number of outstanding 30 year bonds are actually very few and the proclivity of our financial masters to continue to manipulate every market in sight I might wonder if the plunge in 30 year yeilds is signalling something different this time. Economic chaos perhaps in the derivative markets?
JourneymanDefending Gold: Chapter 2a @Elwood (2/3/2000; 2:53:39MDT - Msg ID:24198)#242232/3/2000; 11:01:57

Nicely put!!


SteveHIt starts#242242/3/2000; 11:21:51

Le Metropole members,

Rumors are sweeping Wall Street that a primary
bond dealer is going under as a result of the
Treasury's announcement that it is reducing 30
year Treasury bond supply.

The Fed has denied an emergency session has
been called,but does not deny a big dealer in trouble.

30 year bond yields have collapsed in a very short
period of time from 6.76% to 6.06%. Forward price
30 years are even lower in yield.

There are many market players caught the wrong
way on yield curve trades as the curve has now
inverted in what must be record time.

>From a Cafe European bond dealer:

"something should happen because this thing is lethal for all asset swappers"

Banking stock index diving.

Meanwhile, the cash market for oil products are
on fire with cash prices way above NYMEX.
Situation very explosive.

Gold only up $1.40 in this VERY BULLISH gold
market environement. Manipulation crowd desperate
to hold gold price down to avoid a gold derivative
blow up as is occuring in the bond market.

More later

<A HREF="">Le Metropole Cafe</A>

All the best,

Bill Murphy
Le Patron

TheStrangerThe Round Table#242252/3/2000; 11:41:03

When I arrived a little over a year ago, this forum was an inchoate group of goldbug intellectuals struggling to understand the machinations of a beleaguered market. I remember Michael used to post a greeting to every new member who happened along. Sometimes, on a slow day, he would challenge the room with a thought or two just to keep the discussion from dying.

But, today, the USAGOLD Forum has become a place where many intelligent people from many different backgrounds help piece together a gold mosaic which enlightens us all. This growth did not happen by accident. It happened because our host understood two heads to be better than one and a whole lot of heads to be better still. I often wonder if Michael, himself, isn't awed by the result.

I don't like to read inflammatory or disruptive posts any more than the next guy. But I submit the truth we seek has never been jeopardized by the heat of this debate. Yes, hotheads do get angry and storm out of the room (I've done it myself). But, perhaps because no other forum equals what is offered here, they ALWAYS come back.

It is in the nature of this beast, I believe, that no one of us shall ever deliver the whole truth. For this reason, as I have said before, I believe the table only serves us well to the extent that it is truly round. Let us hope that no one who shares his wisdom here will ever be granted a seat at its head. And, as for our proprietor, let us hope his wisdom continues to guide him towards an open debate where censorship and expulsion are limited only to those cases where deliberate attempts have been made to seriously disrupt the process.

goldfannickel62 (2/3/2000; 10:54:52MDT - Msg ID:24222)#242262/3/2000; 11:42:00

Volatility exponentially increasing is the mark of the beast!!! If it were a bridge vibrating in the wind, we would be well advised not to drive onto it. Article by Auerback at link above is on this subject, some clips from that below. It may not be a new thought, but if Mr. AG. wanted to get the world back to some sort of gold backing for currency, is he not making all the right moves so as to have the result appear inevitable??

Auerbach>>>>Ironically, earlier statements of Mr. Greenspan suggest that the Fed chairman once had an appreciation of such counterparty risks. Giving evidence to a Congressional Committee in 1994, Greenspan noted that "the failure of a
major derivatives dealer could impose credit losses on its counterparties that could threaten their financial health. Second, the dynamic hedging of options positions (e.g. associated with portfolio insurance) and certain other risk
management techniques lead market participants to buy assets when prices are rising and to sell when prices are falling. In principle, such behavior could amplify market price movements."

The Fed chairman added that "even if derivatives activities are not themselves a source of systemic risk, they may help to speed the transmission of a shock from some other source to other markets and institutions." Such an analysis seems prescient in light of what occurred in Asia, Russia, and Latin America in 1998, yet by this time the leader of the Fed appeared to be singing a completely different tune. Rather than establishing a lead on restricting or, at
the very least, regulating derivatives' trading and exercising some oversight over the US banks and other financial institutions which employed such instruments, Greenspan came out against such measures.He pointedly
opposed the FASB proposal to make derivative positions more transparent for investors by requiring such companies to mark to market their positions. Both he and then Treasury Secretary Rubin also blocked then CFTC Chairman Brooksley Borne's attempt to bring over-the-counter (OTC) derivatives under the control of the Commodity and Futures Exchange. Ms. Borne eventually losther job for aggressively pushing the proposal.Greenspan argued that such reforms "may discourage prudent risk management activities and could insome cases present misleading financial information."<<<<<

Maybe AG doesn't want to fix the system until it is irretrievably broke, kind of like pouttting exlax in the hooch to make your kids stop drinking it.


Al FulchinoRhodium up 600$; 40% . What exactly is it?#242272/3/2000; 11:57:28

Partial information on it:

Rhodium is a precious metal of the Platinum group with properties of wear and corrosion resistance that make it ideally suitable as a final finish for all types of jewellery whether real jewellery made from other precious metals such as gold or silver or fashion (costume) jewellery made from a variety of materials such as copper,brass,cast pewter or cast zinc.

Rhodium is a white bright metal as plated and has many advantages over other white metal finishes such as silver or tin in that it is very hard so as to provide good wearing ability but also rhodium is almost impervious to attack by most naturally occurring chemical compounds and so the finish

does not tarnish

SteveHquestion from a person#242282/3/2000; 12:15:16

This was sent to me. Thoughts are not mine but his comments are interesting:

Dear Sir,

There are so many articles written on the U.S economy, its gov't debt,
current a/c deficit, the "bubble" market, gold manipulation, huge money
supply, US$ strength...etc.. It looks like that the whole situation is
going out of hand and we are heading towards a disaster. The only
strange thing is it still has not happened after so many years. Similar
to other crises happened in Latin Am., Asia or Russia, we need some
events to trigger the crisis and several "sniper" funds to do the

The strength of the US economy is under the blessing of these crises.
Historically, the US$ had been in a downward trend from 1985, e.g. :
- SFR - 85' US1=2.80 95' US$1=1.20
2/00 US$1=1.65
- FFR - =10
=4.85 =6.75
- DMK - =3.30
=1.35 =2.01
- BPD - =0.90
=0.50 =0.62
- YEN - =260
=80 =107
It bottomed in 1995 and started to improve since then. Reason? Probably
due to the several crises
that happened in : Mexico from 7/94 to mid-96 and
Asia from 4/97 to end-98 and
Russia from mid-98 to mid-99 and
Brazil from end-98 to end-99 and who is next ?

Suddenly US is a very reliable place to park your money and invest for
the long term because US has
the " master planner" of the universe that can prevent crisis from
happening (in the US only). For this to
continue, there has to be more crises around the world so as to make US
look good. The biggest challenge to US's status right now is Europe and
its EURO. So we need some events there to trigger a crisis (is there one
already?) and the "master planner" and its satellite "sniper" funds will
have to position themselves and get ready for the kill. The objective is
the "transfer of wealth".

US is a debtor nation. It owes others too much money but there are lots
of ways to get the money back. But don't worry, after you are being
shot, they will send in the "red cross" (IMF, BIS or a consortium of
banks) to save you and get you up so that the game can continue some
times in the future. This is different from the Vietnam or Korean or
communist warfare which are sure to lose. This is a money game that the
US is pretty sure to win. Nobody or no country is able to fight the
"master planner" and its powerful "sniper" funds. The tiny states of
Europe, even the Union, are no match to the US so the natural place to
invest is still US which is comparatively speaking, safer.

Europe has its own problem to solve now and its EURO is under pressure.
It is too young to stand on its feet and without the blessing of the US,
its survival is seriously in doubt. Indeed, it would be a naive thinking
that your enemy will help you to beat himself or to let you share his
fortune. Definitely not a good time to invest in Europe. The hunting
dogs (from US) are sniffing for the prey and very soon you will smell
blood in the street. If Europe falters, the US is really infallible.

Is my "imagination" a little wild.
Any comment? Thanks.

goldfanSolomon Weaver (2/2/2000; 20:57:33MDT - Msg ID:24172)#242292/3/2000; 13:13:11

Solomon thanks for your cheerful response. Ale sounds good. Here's more....

You said
<<<In the same fashion, changes in the oscillation of economic activities, which appear to be outside of "classic" analysis, may be
understood better by using this chaos math...but why choose to study risk? The various parameters you suggest are not units of risk. <<<<

When Hillary was asked "why climb that Everest mountain, man, are you crazy? He is reputed to have answered, "because it's there". I really like probability theory, without knowing much about it. And I do really get a rush out of finding simple equations that seem to describe complex events. To me, a good equation is like contemplating a language of God. I like Art too, and beautiful gold coins, but I'm utterly transfixed by something like :
e*¡ + 1=0.

>>>>>>What is amazing in my opinion is that given the "stakes" involved (for example the financial survival of retirees who have saved their
entire life and have no options to earn new income) that we have developed many investment games which because they are sold with
glossy paper brochures are just sitting ducks waiting to have an "unexpected outcome" (i.e. eventually enter into a high risk mode). You
don't need chaos math to make this story any more compelling.<<<<<

No you don't need it, but I think we can use it like ships use radar in a fog, to avoid the big icebergs that would sink us. Hopefully, we won't just use it to go faster, thus increasing the risks again. Maybe use it to allow us to enjoy the voyage more, feeling safer, and in fact, being safer. nickel62 had a compelling story about the way the stock traders use derivatives, etc. to defraud us and eventually themselves. Maybe if we got good at detecting changes in fractal dimension, we would be able to spot the scams in the way the numbers came up, and stay away from them. I wonder if the pure stock trading isn't still in the small caps anyway, where the float isn't big enough to interest the big guys??

From Webster's, Risk: 1. hazard, peril, exposure to loss or injury 2. Insurance. a. the chance of loss or the perils to the subject matter of insurance covered by the contract; also, the degree of probability of such loss. b. short for the amount of risk, that is the amount which the company may lose...

So this is the sense I am using the word, as when we talk about the risk/reward ratio of a particular contemplated stock purchase. The downside (risk) is the probability of loss of a certain amount, the upside (reward) is the probability of gain , probability as in 10% or 20% or quite likely( 80%?)or not very likely(maybe 5%?). (Fascinating how we use the word probable and possible.)

I'm hoping I can do this without going into the 10% plus or minus 2% 19 times out of 20 that the statisticians use.

Also to respond to your note on chaos dynamics. As I get it, the strange attractors, are cascading bifurcations of wonderful shapes that emerge when a recursive equation is repeatedly solved, output becoming input, over and over and the results graphed or displayed on a screen. Moreover, these patterns which repeat and repeat, are shown in reality, as changes in scale, but not dimension, fractal dimension. The shapes look the same, yet are different in "size". Think of a coastline, its shores bumpy and indented, the closer you look at a segment of shore, the more it appears to be the same "shape" as the large coast line itself. The shore of a mud puddle would display the same.

Studying the recursive equation that represents such a system, lets us figure out its fractal dimension. When the fractal dimension changes abruptly, we know we are at a saddle point, about to cascade over into another area of the pattern. Anyhow, I'm no expert on this. But It fascinates me. And I think it gives substance to our intuitions when it comes to human affairs. How many people do you know who get into a "saddle point" and then just fall back into the same old pattern, instead of changing habits, and getting to new territory?



GDFOA re:your 24209#242302/3/2000; 13:16:44

FOA, I have not posted to you directly in the last 8 months of following your posts but have searched this forum constantly for your THOUGHTS. I was deeply saddened last night when I read your final reply. The feeling I had was one of great loss, like if your best friend moved to another state.

Needless to say that my eyes got watery when I read your 24209. It's great to see you again. I look forward to our next hike.


goldfanOOPs!!!My Msg ID:24229)#242312/3/2000; 13:16:44

that's e to the power of pie times i. This translator doesn't recognize my pie sign. Not enugh ale, or it would be more pie eyed.


goldfanOOPs!!!My Msg ID:24229)#242322/3/2000; 13:17:09

that's e to the power of pie times i. This translator doesn't recognize my pie sign. Not enough ale, or it would be more pie eyed.


OROCurrency systems - cool site#242332/3/2000; 13:56:10

Following a link provided by SDRer I found this site.

He was suggesting this piece of work from Dr. Zander, 1935:


Particularly good for Aristotle, Journeyman, Nickel62, goldfan, 18K, and anyone else trying to figure out which currency structure is "better" or more likely to satisfy the needs of the various contenders for power.

goldfancleaning up my Msg ID:24122)#242342/3/2000; 14:41:23

Sorry I messed up some math and some numbers in this post. Cheerfully pointed out by Sir Happy.

for corporations, the current number is debt at 26% of assets (an all time high?).

for the value of the dollar, traditionally, POG is 40% of the M1/oz., not M3/oz. so the figures become, the M1/gold ratio is $510billion/8000 tonnes , works out to $2000 per oz.
The traditional POG would be 40% of that, $800 per oz. So at $285, we have 2.8X too much money in circulation. Effectively, the $ should be devalued by 64%.

Crazy, but that's close to what I had anyway. All routes lead to Rome...


goldfanMore on risk#242352/3/2000; 14:46:04

From Webster's, Risk: 1. hazard, peril, exposure to loss or injury 2. Insurance. a. the chance of loss or the perils to the subject matter of insurance covered by the contract; also, the degree of probability of such loss. b. short for the amount of risk, that is the amount which the company may lose...

So this is the sense I am using the word, as when we talk about the risk/reward ratio of a particular contemplated stock purchase. The downside (risk) is the probability of loss of a certain amount, the upside (reward) is the probability of gain, probability as in 10% or 20% or quite likely( 80%?)or not very likely(maybe 5%?). (Fascinating how we use the word probable and possible.)

I'm hoping I can do this without going into the 10% plus or minus 2% 19 times out of 20 that the statisticians use.

Also a note on chaos dynamics. As I get it, the strange attractors, are cascading bifurcations of wonderful shapes that emerge when a recursive equation is repeatedly solved, output becoming input, over and over and the results graphed or displayed on a screen. Moreover, these patterns which repeat and repeat, are shown in reality, as changes in scale, but not dimension, fractal dimension, the shapes look the same, yet are different in "size". Think of a coastline, its shores bumpy and indented, the closer you look at a segment of shore, the more it appears to be the same "shape" as the large coast line itself. The shore of a mud puddle would display the same.

Studying the recursive equation that represents such a system, lets us figure out its fractal dimension. When the fractal dimension changes abruptly, we know we are at a saddle point, about to cascade over into another area of the pattern. Anyhow, I'm no expert on this. But It fascinates me. And I think it gives substance to our intuitions when it comes to human affairs. How many people do you know who get into a "saddle point" and then just fall back into the same old pattern, instead of changing habits, and getting to new territory?

Risk Taking Measures

Personal risk

What is a good measure for this risk?

I guess I'm speaking of the risk of great loss of savings, the risk of loss of employment, the risk of severe deprivation in material standard of living, as a worst case.

Maybe the unemployment rate (or the personal bankruptcy rate), today, compared to what it will be if current attitudes to risk persist. Maybe the unemployment rate will be 30% if attitudes persist.

So the risk index is 30/4.5=6.7 That's high.

What it says to me is, that the individual person's indifference to risk of loss in the equity market, or the high consumption rates, or high debt rates, will, repeated by enough people, create a high probability that this person could become unemployed, without savings.

However, I just plucked the number 30% out of the air. I'd like a better way of establishing the index.

Maybe, consumer debt payments as % of disposable income, divided by savings rate as same %, divided by probable % of DOW left after the crash.

A "good" index would be 10/10/90=.011 Today, its more like 18/1.5/.25=48 !!
And since the savings rate is really negative(more creative government accounting), the thing is infinite!!

Corporate Risk

What are average debt/equity ratios? How high is too high? Somewhere I read that corporate debt, at 26% of assets, that would be 36% of equity, is higher than it has ever been, is that right?

Among the most risky behaviors of corporations today are borrowing to buy back stock, selling Puts to buoy stock prices, and using a high proportion of ESOPs instead of paying wages.

I have no idea where to get data to measure these. But they're all reflected in stock prices, and in P/E ratios. Maybe the P/E ratio could be considered a measure of the degree of risk the company is taking, instead of blaming it all on the investors. After all, investors are taking their cues from the company and also , adding to it, their own desire for more and indifference to risk. The reason that P/E ratios are high, is not only because have made them so, but also because corporations have taken risks and risky attitudes, encouraging investors by hiding the truth.

So the total corporate risk index would be the DOW P/E today, divided by the DOW P/E in "normal" times. Say 25/10=2.5,

I think however, that the total value of the stock market is contirbuted mainly mainly by a few companies whose P/E ratios are much higher than this average, 100 or more.
So maybe a better index of risk would be the dividend yield ratio. Normal yield divided by current yield 6/1.2 = 5. Suggesting a drop in average stock prices of 80%.

The problem here is the corporate philosophy that says that increasing the stock price is the goal, not providing a reliable product , cultivating the market for it, and providing long term employment to people in a healthy community.

Aside on the effect of buy backs, puts and ESOPs:

This makes a really neat study of a recursive equation which would demonstrate chaos dynamics.

stock price(at time t) = P/E(ESOPeffect (stock price at time t-1) + buy back effect + P/E(earnings increase from operations(at time t-1)).

This is loaded with opportunities for wild oscillations due to uncontrolled feedback. The stock price depends on the earnings which are coupled to the stock price. (Thanks to ORO and Bill Parrish for this insight). And the buy back causes potential instability in earnings, because a drop in stock price will force a write down in treasury stock assets, making it harder to pay debt interest. Buying back stock with debt, increases the debt to asset ratio, creating instability.

Just recently, the wizards at several of Canada's banks announced a new fund for widows, orphans and other risk averse groups. A NASDAQ index linked mutual fund.
Just another financial service from your caring and capable local bankers.
Talk about helping the IRA carry the suitcase into the pub!!

Banking/Government Risk

What would be a measure of the risk taking behavior of Banks/governments? Maybe, the amount of the currency relative to some standard in gold? Let say the POG is traditionally at 40% of the Money supply divided by the gold in Fort Knox. Then today, the M1/gold ratio is $510 billion/8000 tonnes , works out to $2000 per oz. The traditional POG would be 40% of that, $800 per oz. So at $285, we have 2.8X too much money in circulation.

Effectively, the $ should be devalued by 64%. Lots of banking risk!!

Summary for today

Personal risk index: 4800 times normal.
Corporate risk index: 20% of present valuations.
Banking risk index: the dollar at 36% of current purchasing power

Comments and criticism invited.


JonManipulation of POG#242362/3/2000; 15:32:10

Has GATA come up with any evidence? Have MK, Another, FOA expressed opinion on this subject?
TownCrierA good tale...#242372/3/2000; 15:33:15

Concluding remarks from Miss Haruko Fukuda's speech last week to The Business Club Zurich. Miss Fukuda is the Chief Executive Officer of the World Gold Council.
'Before I end I want to leave you with an anecdote which for me reveals in a dramatic human form the practicalities of gold's historic importance. The great Russian opera singer, Feodor Chaliapin, lost his entire fortune - then worth more than a million pounds - in the Russian revolution. This disaster seared him. He left Russia after the Revolution and went to live in France where in 1931 he bought gold bars and put them in a safe in his cellar in Paris. He was interviewed by the British Sunday Express newspaper on the 5th of May 1935, when he said, "People in Britain think that governments cannot collapse. They think bank notes are money; banks are impregnable. But I have had everything I made in 25 years stripped from me. I was reduced to singing for tea in which there was sawdust, and bread in which there was wood. With my bar of gold and a pen knife I shall never go hungry."'

JuliaAristotle#242382/3/2000; 15:46:40

Did I miss the salami? Not to rush you or anything. I sometimes miss things because I can only log on as time allows. Just didn't want to miss your piece.
Thank you for caring enough to serve your thoughts here.


JuliaFOA#242392/3/2000; 15:55:44

I knew you wouldn't leave us. I've got on my hiking boots. Please let me know where you'll be writing your letters. Michael????

Thank you FOA and ANOTHER


CoBra(too)The EU & the Austrian Debacle#242402/3/2000; 16:04:44

Well we have a new government, a coalition of the Freedom and the Poeples Party, which presumably will be inaugurated tomorrow by an unwilling President Klestil, at the cost of not only being isolated throughout the EU and in all probability many other countries might follow suit -as Israel already did and the US seems ready too -. This is a no win situation for tiny Austria, but also may have sown the seeds of distrust and growing uneasyness among the "guaranteed equal" members of the EU family.

Mr. Holtzmann, your latest excellent thoughts on this topic are not only timely, but add a quality of reality to subconcious and nightmarish fears I declined to bring to the light of the day. This is a global play for economic, political "seignorage" power, where the small are the pawns in the fist of the big brother. In democracy all power comes from the people has now a new meaning and we're all the poorer for it. This episode leaves me more a sceptic of
the values claimed to (still) be the foundations of democracies.

On another topic I'm beginning to wonder for how long further the POG can be suppressed in view of ballistic PGM's, since the group of PM's and PGM's historically moved
in tandem.

Best regards CB2

PS: Ari - I'm sure you didn't miss Marshall Auerbach's great
essay on derivatives on the cafe. M.A. explains the topic a lot better than I ever will.
FOA - good to see you back.
MK - sorry about some of my recent "more bitter" posts

YGMGold, The Fed, Money Supply & A Little Past History......#242412/3/2000; 16:57:14

From the Von Mises Institute...

Money and Freedom

by Joseph T. Salerno

[This talk was delivered at the Mises Institute conference on The History of Liberty. It is posted here February 2, 2000]

The historical embodiment of monetary freedom is the gold standard. The era of its greatest flourishing was not coincidentally the nineteenth century, the century in which classical liberal ideology reigned, a century of unprecedented material progress and peaceful relations between nations. Unfortunately, the monetary freedom represented by the gold standard, along with many other freedoms of the classical liberal era, was brought to a calamitous end by World War One.

Also, and not so coincidentally, this was the "War to Make the World Safe for Mass Democracy," a political system which we have all learned by now is the great enemy of freedom in all its social and economic manifestations.

Now, it is true that the gold standard did not disappear overnight, but limped along in weakened form into the early 1930s. But this was not the pre-1914 classical gold standard, in which the actions of private citizens operating on free markets ultimately controlled the supply and value of money and governments had very little influence.

Under this monetary system, if people in one nation demanded more money to carry out more transactions or because they were more uncertain of the future, they would export more goods and financial assets to the rest of the world, while importing less. As a result, additional gold would flow in through a surplus in the balance of payments increasing the nations money supply.

Sometimes, private banks tried to inflate the money supply by issuing additional bank notes and deposits, called "fiduciary media," promising to pay gold but unbacked by gold reserves. They lent these notes and deposits to either businesses or the government. However, as soon as the borrowers spent these additional fractional-reserve notes and deposits, domestic incomes and prices would begin to rise.

As a result, foreigners would reduce their purchases of the nations exports, and domestic residents would increase their spending on the relatively cheap foreign imports. Gold would flow out of the coffers of the nations banks to finance the resulting trade deficit, as the excess paper notes and checks were returned to their issuers for redemption in gold.

To check this outflow of gold reserves, which made their depositors very nervous, the banks would contract the supply of fiduciary media bringing about a monetary deflation and an ensuing depression.

Temporarily chastened by the experience, banks would refrain from again expanding credit for a while. If the Treasury tried to issue convertible notes only partially backed by gold, as it occasionally did, it too would face these consequences and be forced to restrain its note issue within narrow bounds.

Thus, governments and commercial banks under the gold standard did not have much influence over the money supply in the long run. The only sizable inflations that occurred during the nineteenth century did so during wartime when almost all belligerent nations would "go off the gold standard." They did so in order to conceal the staggering costs of war from their citizens by printing money rather than raising taxes to pay for it.

For example, Great Britain experienced a substantial inflation at the beginning of the nineteenth century during the period of the Napoleonic Wars, when it had suspended the convertibility of the British pound into gold. Likewise, the United States and the Confederate States of America both suffered a devastating hyperinflation during the War for Southern Independence, because both sides issued inconvertible Treasury notes to finance budget deficits. It is because politicians and their privileged banks were unable to tamper with and inflate a gold money that prices in the U. S. and in Great Britain at the close of the nineteenth century were roughly the same as they were at the beginning of the century.

Within weeks of the outbreak of World War One, all belligerent nations departed from the gold standard. Needless to say by the wars end the paper fiat currencies of all these nations were in the throes of inflations of varying degrees of severity, with the German hyperinflation that culminated in 1923 being the worst. To put their currencies back in order and to restore the publics confidence in them, one country after another re-instituted the gold standard during the 1920's.

Unfortunately, the new gold standard of the 1920's was fundamentally different from the classical gold standard. For one thing, under this latter version, gold coin was not used in daily transactions. In Great Britain, for example, the Bank of England would only redeem pounds in large and expensive bars of gold bullion. But gold bullion was mainly useful for financing international trade transactions.

Other countries such as Germany and the smaller countries of Central and Eastern Europe used gold-convertible foreign currencies such as the U.S. dollar or the pound sterling as reserves for their own domestic currencies. This was called the gold-exchange standard.

While the U.S. dollar was technically redeemable in honest-to-goodness gold coin, banks no longer held reserves in gold coin but in Federal Reserve notes. All gold reserves were centralized, by law, in the hands of the Fed and banks were encouraged to use Fed notes to cash checks and pay for checking and savings deposit withdrawals. This meant that very little gold coin circulated among the public in the 1920s, and residents of all nations came increasingly to view the paper IOUs of their central banks as the ultimate embodiment of the dollar, franc, pound, etc.

This state of affairs gave governments and their central banks much greater leeway for manipulating their national money supplies. The Bank of England, for example, could expand the amount of paper claims to gold pounds through the banking system without fearing a run on its gold reserves for two reasons.

Foreign countries on the gold exchange standard would be willing to pile up the paper pounds that flowed out of Great Britain through its balance of payments deficit and not demand immediate conversion into gold. In fact by issuing their own currency to tourists and exporters in exchange for the increasing quantities of inflated paper pounds, foreign central banks were in effect inflating their own money supplies in lock-step with the Bank of England. This drove up prices in their own countries to the inflated level attained by British prices and put an end to the British deficits.

In effect, this system enabled countries such as Great Britain and the United States to export monetary inflation abroad and to run "a deficit without tears"that is a balance-of-payments deficit that does not involve a loss of gold.

But even if gold reserves were to drain out of the vaults of the Bank of England or the Fed to foreign nations, British and U.S. citizens would be disinclined, either by law or by custom, to put further pressure on their respective central banks to stop inflating by threatening bank runs to rid themselves of their depreciating notes and retrieve their rightful property left with the banks for safekeeping.

Unfortunately, contemporary economists and economic historians do not grasp the fundamental difference between the hard-money classical gold standard of the nineteenth century and the inflationary phony gold standard of the 1920s.

Thus, many admit, if somewhat grudgingly, that the gold standard worked exceedingly well in the nineteenth century. However, at the same time, they maintain that the gold standard suddenly broke down in the 1920s and 1930s and that this breakdown triggered the Great Depression. Monetary freedom in their minds is forever discredited by the tragic events of the 1930s. The gold standard, whatever its merits in an earlier era, is seen by them as a quaint and outmoded monetary system that has proved it cannot survive the rigors and stresses of a modern economy.

Those who implicate the gold standard as the main culprit in precipitating the events of the 1930s generally fall into one of two groups. One group argues that it was an inherent flaw in the gold standard itself that led to a collapse of the financial system, which in turn dragged the real economy down into depression. Writers in the second group maintain that governments, for social and political reasons, stopped adhering to the so-called "rules of the gold standard," and that this initiated the downward spiral into the abyss of the Great Depression.

From either perspective, however, it is clear that the gold standard can never again be trusted to serve as the basis of the worlds monetary system. On the one hand, if it is true that the gold standard is fundamentally flawed, that in itself is a crushing practical argument against the principle of monetary freedom. On the other hand, if the gold standard is in fact a creature of rules contrived by governments, and it is politically impossible for them to follow those rules, then monetary freedom is simply irrelevant from the outset.

The first argument is the Keynesian argument and the second the monetarist argument against the gold standard.

Two recent books have elaborated these arguments against the gold standard. The economic historian Barry Eichengreen published a book in 1992 entitled Golden Fetters: The Gold Standard and the Great Depression. Eichengreen summarized the argument of this book in the following words:

"The gold standard of the 1920s set the stage for the Depression of the 1930s by heightening the fragility of the international financial system. The gold standard was the mechanism transmitting the destabilizing impulse from the United States to the rest of the world. The gold standard magnified that initial destabilizing shock. It was the principle obstacle to offsetting action. It was the binding constraint preventing policymakers from averting the failure of banks and containing the spread of financial panic. For all these reason the international gold standard was a central factor in the worldwide Depression. Recovery proved possible, for these same reasons, only after abandoning the gold standard."

According to Eichengreen, then, not only was the gold standard responsible for initiating and internationally propagating the Great Depression, it was also the primary reason why the recovery was delayed for so long.

It was only after governments one after another in the 1930s severed the link between their national currencies and gold that their national economies finally began to recover. This was because, unbound by the rules of the gold standard, governments were now able to bail out their banking systems and run budget deficits financed by bank credit inflation without the constraining fear of losing their gold reserves.

Thus, the phrase "golden fetters" in the title of Eichengreens book is a reference to Keyness statement in 1931, "There are few Englishman who do not rejoice at the breaking of our gold fetters."

Of course, what Keynes and Eichengreen fail to understand is that the end of the classical liberal era in 1914 caused the removal from government central banks of the "golden handcuffs" of the genuine gold standard. Were these "golden handcuffs" still in place in the 1920s, central banks would have been rigidly constrained from inflating their money supplies in the first place and the business cycle that culminated in the Great Depression would not have taken place.

A second book that inculpates the gold standard as a leading cause of the Great Depression was published in 1998 and is entitled The Great Depression: An International Disaster of Perverse Economic Policies. According to the authors, Thomas E. Hall and J. David Ferguson, one of the most perverse and destabilizing economic policies of the 1920s involved the Fed violating the rules of the gold standard by allegedly "sterilizing" the inflow of gold from Great Britain.

This means that the Fed refused to pyramid inflated paper dollars on top of these newly-acquired gold reserves in quantities sufficient to drive U.S. prices up to the inflated level of British prices. This policy would have made U.S. products more expensive relative to British products on world markets and would have helped mitigate Great Britains ongoing loss of gold reserves through its balance-of-payments deficits.

These deficits were the result of the fact that Great Britain had returned to the gold standard after its wartime inflation at the prewar gold parity, which, given the inflated level of domestic prices, significantly overvalued the British pound in terms of the dollar.

These deficits could have been avoided if the British government had either deflated its price level sufficiently or chosen to return to gold at a devalued exchange rate reflecting the true extent of its previous inflation.

Hall and Ferguson, however, ignore these considerations, arguing that when the U.S. sterilizes gold:

"The impact on the system is that Britain bears the brunt of the adjustment. Since the money supply in the United States did not rise, neither did U.S. incomes and prices as they were supposed to, which would have helped Britain eliminate their payments deficit. Since Britain was not aided by rising exports to the United States, Britain must experience a more severe decline in incomes and prices than would have been the case if the U.S. money supply had gone up. In this way Britain would bear the brunt of the adjustment in the form of a more severe recession than would have occurred if the United States had been playing by the rules. Thus it was critical that each country play fair."

Thus, in Hall and Fergusons view, the rules of the gold standard dictate that when one central bank irresponsibly engages in monetary inflation and subsequently attempts to maintain an overvalued exchange rate, less inflationary central banks must rush to its aid and expand their own nations money supplies in order to prevent it from losing its gold reserves.

But if a nation losing gold due to inept or irresponsible monetary policy can always count on those gaining gold to share the brunt of the adjustment by expanding their own money supplies, this is surely a recipe for worldwide inflation.

Now, this line of argument indicates that Hall and Ferguson completely misunderstand the true purpose and function of the gold standard. To begin with, a gold standard functions much better without a central bank, because these institution, as creatures of politics, are inherently inflationary and tend to promote rather than restrain the inflationary propensities of the fractional-reserve commercial banks.

But, second, under a genuine gold coin standard, the choices of private households and firms effectively control the money supply. As I explained above, if the residents of one nation demand to hold more money for whatever reason, they can obtain the precise quantity of gold coin they require through the balance of payments by temporarily selling more exports and buying fewer imports.

This implies that, if a central bank does exist and it wishes to act in accordance with a genuine gold standard, it should always "sterilize" gold inflows by issuing additional notes and deposits only on the basis of 100 percent gold reserves and insisting that the commercial banks do the same. It should not permit these gold reserves to be used as the basis of a multiple credit expansion by the banking system.

In this way, a nations money supply would be completely subject to market forces. By the way, this is precisely how the distribution of the supply of dollars between the different states of the U.S. is determined today. There is no government agency charged with monitoring and controlling New Jerseys or Alabamas money supply.

Hall and Ferguson reveal their uneasiness with and lack of insight into the operation of the money supply process under a genuine gold standard with the following example:

"[S]uppose a fad had swept the nation in 1927 because Calvin Coolidge appeared in public wearing one gold earring. Then every teenager in America wanted to wear a gold earring 'just like silent Cal'. . . . The result would be an [increase] in the commercial demand for gold. Since more gold would be used in earrings less would be available for money. . . . It would be beyond the power of government to do anything about this fact. What a scary thought, the teenagers of America would have caused the U. S. money supply to decline."

While it is true that the commercial demand for gold does play a role in determining the supply and value of money under a gold standard, it is hardly cause for alarm. Rather, it highlights the important fact that the gold standard evolved on the market from a useful commodity with a pre-existing supply and demand and was not the product of a set of arbitrary rules promulgated by governments.

Now, Hall and Ferguson conclude that by breaking the rules of the game and persisting in sterilizing the gold inflows from 1929 to 1933, the Fed caused a monetary deflation in Great Britain and throughout Europe. The nations losing gold were forced to contract their money supplies and this contributed to a financial collapse and a precipitous decline in real economic activity that marked the onset of the Great Depression.

Thus while the authors blame the initiation of the Great Depression on Fed sterilization policies, they attribute its length and severity to the gold standard. According to the authors: As long as European countries remained on the gold standard and U.S. sterilization continued, there could be no end of the Depression in sight. The U.S. gold stock would become a huge pile of sterilized and useless gold. Starting with the British in 1931, our trading partners began to recognize this fact, and one by one they left the gold standard. The Germans and ironically the U.S. were among the last to leave gold and so were hurt the worst, experiencing the longest and deepest forms of the Depression.

So although Eichengreen emphasizes the gold standard as a restraint on government monetary policy and Hall and Ferguson the failure of governments to play by its rules, in effect, they reach the same conclusion: the gold standard, and with it monetary freedom, stands indicted as a primary cause of the greatest economic catastrophe in history.

In the face of the historical evidence they adduce, can any defense be mounted in favor of the gold standard? The answer is a resounding "yes," and the defense is as simple as it is impregnable. As I have tried to indicate above, the case against the gold standard is from beginning to end a case of mistaken identity. The genuine gold standard did not fail in the 1920s, because it had already been destroyed by government policies after 1914.

The monetary system that sowed the seeds of the Great Depression in the 1920s was a central bank manipulated and inflationary pseudo-gold standard. It was central banking that failed in the 1920s and stands discredited to this day as the cause of the Great Depression.

A detailed case in support of this view can be found in the works of Murray N. Rothbard, particularly in his book Americas Great Depression and a forthcoming book on A History of Money and Banking in the United States: The Colonial Era to World War II.

In these works you will read that the U.S. money supply, properly defined, increased from 1921 to 1928 at the annual rate of 7 percent per year, a rate of monetary inflation that was unseen under the classical gold standard. You will also learn that during the 1920s the Fed, far from operating as the deflationary force on the money supply portrayed by some monetarists, increased the categories of bank reserves within its control at the annual rate of 18 percent per year.

Finally you will read that from 1929 to 1932, the Fed continued to exercise a highly inflationary impact on the money supply, as it feverishly pumped new reserves into the banking system in a vain attempt to ward off the cyclical downturn entailed by its own earlier inflation of the money supply. The Fed was defeated in this endeavor to pump up the money supply and "reflate" prices in the early 1930s by domestic and foreign depositors who reclaimed their rightful property from an inherently bankrupt U.S. banking system. They had suddenly lost confidence in the Fed-controlled monetary system masquerading as a gold standard, when they perceived at last the dwindling prospect of ever redeeming the rapidly expanding mountain of inflated paper claims for their gold dollars.

* * * * *

Joe Salerno teaches economics at Pace University and is co-editor of the Quarterly Journal of Austrian Economics.

See also the Austrian Study Guide on Money and Banking. This contains references and links to many online articles in .pdf format.

TheStrangernickel62#242422/3/2000; 17:25:38

I want to pick up on your comments about the inverted yield curve. Yes, some inverted yield curves have resulted in recession, though some have not. But the fact that we find ourselves in this situation certainly makes Farfel's stagflation scenario look plausable.

On his way back from Davos, Robert Rubin stopped off in London for a speech he delivered yesterday at the London School of Economics. My daughter, who is a student there, was fortunate enough to sit in on the event. I don't know how much his remarks reflect what was said quietly between the giants at Davos, but they were none too reassuring for investors just the same.

According to my daughter, and to a report from Adrian Van Eck, Rubin said that American spending and investing habits have reached a level of optimism which may not be sustainable. He said that we must be cautious in times of prosperity because prosperity breeds an unwillingness to make responsible financial descisions. He talked about globalization, technology, and the liberalization of trade being moves which will eventually increase the welfare of everyone. But he said such things are no insurance against the present danger inherent in the rising complacency among investors and policymakers.

Perhaps Rubin's timing in leaving Washington was no accident.

SOSRhodium & Ruthenium#242432/3/2000; 17:39:43

Would Black Blade or others know if Rhodium and Ruthenium are traded exclusively in a cash market environment (and if so where?), or are they also traded in futures markets somewhere in the world? Links, sites to such information?
Gandalf the WhiteYES, Holtzman -- The Hobbits read your every word ! ( +others) #242442/3/2000; 17:58:41

AND, in keeping with the attempts to understand the "deep" level of knowledge extended to all at this TableRound, the following posting is extended. -- ORO, if you could please use this logic format in your next explaination, the Hobbits would appreciate it!!! --
PS: IF anyone has questions, please ask the lost one, Aragorn III.
PPS: Hi Stranger -- Twas me that was the official "greeter" of the early days. -- MK just madeup the contests.
(From a rec.arts.books.tolkien posting dated 21 July 1995.)
In an effort to compare the relative strengths of the Maiar, a recent poster to r.a.b.t. compared Sauron's strength to Gandalf's and the Balrog's by stating:
S>G and G=B implies B<S.
It's an intriguing way of stating the problem.But Gandalf the Grey, who fought the Balrog, wasn't as powerful as Gandalf the White. Also remember that we're talking about a Sauron who has invested much of his native power in the Ring, which has weakened him greatly while he is not in posssession of it; he is not as strong as he was with his original native power:
Gg < Gw

Sn = S + R

Sn > S
Now Gandalf was afraid of using the Ring, for fear it would conquer him; yet if he had used the Ring, he would have had enough power to defeat Sauron (Fellowship pp. 70-71 hardback):

Gg < R

Gg + R > S
But if the Balrog had arrived at the Bridge of Khazad-dum first it may have been possible that, though greatly weakened by Gandalf, it might have obtained the Ring. So, if the Balrog had been victorious,

Bv = B + R - Gg
would the Balrog have been able to overthrow a Sauron whose native power had been diminished by the loss of the Ring?:

B + R - Gg > Sn - R
And when Gandalf had returned from death, would he have assisted the Balrog, hoping that

(B + R - Gg) + Gw > Sn - R

Bv - 1/2(Sn-R) < Gw - 1/2(Sn-R) ?
ORO, Is this TRUE?

goldfanAmazin'.com#242452/3/2000; 19:01:06

Now look at this....

Amazon loss in quarter biggest yet
Expansion triples sales from year ago
The Wall Street Journal Inc. reported a $323.2-million (U.S.) net loss for the fourth quarter, its largest to date, but said its book division achieved profitability and overall sales nearly tripled from the year ago period, to a record $676-million.

These results continue Amazon's tradition of increasing its on-line retailing business faster—and with bigger deficits—than Wall Street analysts had expected. The Seattle based company said fourth-quarter sales were up 90 per cent from the previous period, its fastest quarterly growth since going public. The company added 3.8 million customers, bringing its total to 16.9 million.

Amazon said its fourth-quarter pro-forma net loss totalled $185-million, or 55 cents a share. [hat figure excludes non-cash charges related to acquisitions and stock-based compensation. In the year-earlier quarter, Amazon had a $46.4-million net loss, and a proForma net loss of $22-million, or seven cents a share.

Amazon's chief financial offlcer, Warren Jenson, said the company's results were hurt by an inventory sharge of $39.4-million. Amazon had previously said it would be taking a charge relating to overstocking of toys and electronics gear that didn't attract customers.

Cheered by the results and outlook, investors boosted shares in Amazon 13 per cent to $78.62 in after-hours trading, following a rise of nearly 3 per cent in regular trading on the Nasdaq, where it closed at $72 yesterday.

>>>>>>>I hear they call this the burn rate, how fast they spend the CHEERING shareholders money on current expenses so they can inflate the gdp and the productivity numbers with goods sold below cost.
Step right up and throw your money on the fire folks, magician Bezos man of the year this year, President soon, will spiral your stock right out of sight.<<<<<<

>>>Wonder what they can possibly do for an encore??? Maybe these guys understand the true worth of a dollar. This is all proforma too. Meaning it's not audited. The real numbers could be a lot worse.<<<

It really burns me up too...


koanReubin#242462/3/2000; 19:17:22

My guess is that anything he says (even out of office) will be choreographed through the White House and Greenspan. They are all trying to effect a soft landing. They want the mkts down, and cooled down, but gradually. They need to get the point across that this is an overheated economy, but they don't want a crash; and they don't want to stifel the world recovery. The Reubin text you gave Stranger has exactly the right tone. In my opinion.
Jadeat Yahoo....The Action in the Bonds.............#242472/3/2000; 19:24:35

The 30-year Treasury bond was up 1-31/32, or $19.6875 on each $1,000 of face value. The yield, which moves in the opposite direction, fell to 6.14 percent from 6.29 percent on Wednesday. The 10-year bond was up 30/32 with a yield of 6.43 percent.

The move in bonds resulted in the yield curve, which normally reflects higher yields on longer-dated bonds, becoming even more inverted than it had been. Because many financial players borrow at the short end of the curve and lend at the longer end, an inverted curve can turn profits into losses.

..................``The move in bonds is the most humongous I've ever seen. It indicates that there is a problem somewhere. Hedge funds are getting murdered and we don't know that it's over. I suspect there is something at work that is not totally in the public's eye yet,'' said Alan Newman, technical analyst at H.D. Brous & Co, Great Neck, N.Y.
The bond market action

YGMTwo Very Pertinent Quotes........#2424802/03/00; 20:08:40

"We have far more people selling derivatives, index funds and mutual funds [unit trusts] than there is intelligence for the task *"
"When you hear it being said that we've entered a new era of permanent prosperity with prices of financial instruments reflecting that happy fact, you should take cover *"
"In the late Twenties it was impossible to read any discussion of the economy without encountering the new paradigm, namely radio and electronic communications. One should read about that before putting too much emphasis on the computer world as the new paradigm *"
* Professor J K Galbraith, 1999


"The fate of the world economy is now totally dependent on the growth of the U.S. economy, which is dependent on the stock market, whose growth is dependent on about 50 stocks, half of which have never reported any earnings..." Former Fed Chairman Paul Volcker, Friday, May 21, 1999

schippiXAU & FSAGX Chart#2424902/03/00; 20:10:12

Chart shows local bottom being formed?
YGMFrom Bill Murphy#2425002/03/00; 20:13:20

Le Metropole members,

Midas du Metropole has served commentary at
The James Joyce Table.

"A class action lawsuit was filed today by a New
York law firm against the Board of Directors
and officers of Ashanti Goldfields Co. in Ghana,
Africa. It is for shareholders that purchased
Ashanti stock between July and October of last
year. The details will be all over the press

"This is a big event for the gold market. In essence,
the suit was filed because of their excessive
hedging policies. That now puts all Board of
Directors of gold producers that they are on
notice that they will be held accountable if
the hedging policies of their firms are overly
aggressive and subject the shareholder
to penalties as a result of a rising gold price."


"If the supposed smartest minds in the gold world -
the investment bankers led by Goldman Sachs were
advisors to Ashanti - and they blew it - how can
any Board of Director of any gold company be
comfortable with any kind of excessive hedging
structure for a company that they oversee? Almost
no one thought the $84 price rise in late September
was possible. That fast a price rise was not even
put in the computer models that were presented
to the Ashanti officers for option volatilities
by its Goldman Sachs advisors."

"Yes, indeedee. This is big news for the big
picture. With 10,000 tonnes of gold loans
outstanding, what are the shorts going to do if
a bond market run up like today occurs in the
gold market again. Another yen type move! Another
$84 gold type blitzkrieg move! What if that move
is $284 in gold next time? Yen could be found.
Money can be printed. Gold? Is the United States
willing to donate the 8,000 tonnes we supposedly
have in Fort Knox (or under Fed/Treasury auspices)
to bailout the collusion bullion dealer crowd?
How will Greenspan and Summers explain that to
the Congress and the American public? How will
the dollar fare in that type of scenario? Yikes!"

"Hello Barrick Gold. I have a question. When is
your next hedging seminar planned for your
Board of Directors?"

<A HREF="">Le Metropole Cafe</A>

All the best,

Bill Murphy
Le Patron

SHIFTYLe Metropole Cafe really big news!#2425102/03/00; 20:15:01

I just read Bill Murphy update "Class action lawsuit filed against Ashanti officers and board of directors". Go Gold!
YGMSHIFTY#2425202/03/00; 20:21:08


and a "GO GATA" My smile is going to crack my face. :-))
pdeepUlysses#2425302/03/00; 20:41:53

Thanks for that answer. I had the same epiphany driving home from work, not quite so tired. Of course, the T-bonds held in the SS Trust Fund are held in a non-tradeable account. For now. But at some point in the future, those bonds will be redeemed. Now *that* should be interesting.

meanwhile, there's still time to buy the real stuff at great prices!

Golden TruthTO F.O.A#2425402/03/00; 20:48:40

HI F.O.A!!! I,am so glad to see you back :-) I think your idea about writing your "thoughts" in letter format is excellent. It would keep the RIF-RAF from just tripping over it, and then start shooting from the hip.
If posted somewhere else it would be a little more work to find and then, i think one could not claim all kinds of ridiculous conspiracies with mean, mean intentions!

In other words any one who goes looking for your letters, should not be allowed to "deride" them over in the public forum. Yes we can discuss among ourselves in a polite way, but any and i mean any ABUSE in the verbal sense gets your "passcode" pulled.

Why? on the grounds that whoever, went looking for the post to begin with. Knew it was out of the way and if they don't like F.O.A's message they are not being forced or accidentally exposed to it. More to the point if you don't like what you see, change the CHANNEL! and leave us and F.O.A alone who do enjoy what we read and talk about.
I think personally anyone who resorts to personel attacks that come out of left field, especially from new posters who don't ask F.O.A questions politely, but just start to attack and attack, should be the first ones to GO!

Dear M.K i,am just trying to get some ground rules in place to keep F.O.A posting here. I really don't think we want to lose someone as knowledgable as F.O.A, I know I DON,T!!!!!!!!
P.S Lets keep this hike down the GOLD trail alive!
Welome back F.O.A we'll get this set up yet, believe it!!

Mariusgodfan's message 24232#2425502/03/00; 21:09:16


Please accept a gentle jest & correction:

The power of Pi is infinite.

"The power of pie" is that it goes really well with coffee!

agbullCommon sense and common men#2425602/03/00; 21:13:00

Common Sense and Common Men

As an exercise in understanding value, this article is useful in assessing money versus value and wages as a constant in history.

If we look at the Bible we find that a Shekel was four day's wages for the common worker. A shekel is about .364 troy ounces of silver. Therefore one troy ounce of silver would be worth about eleven days worth of work.

A month's wages would be equal to three troy ounces of silver and a years worth of effort would equate to 36 ounces of silver. Let's compare this to today's standard. The minimum wage is nearly six "dollars" per hour. Or perhaps better stated as one ounce of silver per hour, so a typical day is worth eight ounces of silver. A month is worth about 275 ounces and a year's worth of effort would equate to 3300 ounces of silver.

If you were working toward a retirement fund in 1BC a savings of 1000 ounces of silver would represent about 27 years worth of savings. In today's world a thousand ounces of silver represents about four month's work.

Let's be really ridiculous for a moment and wave our magic wand. Our wand is capable of making the "people" all wish to preserve some of their savings in silver. Let's say for our example that everyone in American decides to buy a day's wages in silver. Although the average wage is greater than the minimum, let's simply use eight ounces as previously discussed. Now eight troy ounces times 100 million workers is equal to 800 million ounces of silver or a year's worth of silver mining for the entire world.

Let's get real funny and wave our wand again and pay our workers in money (silver) for a year, why not if enough people demanded money rather than credit life might be different. OK, so a day's wages in the USA would be 800 million ounces of silver. Right now there is about 900 million ounces of silver available to the market and the potential to mine about that much per year, so all known silver would be used in two days!

We could go to Gold, since there is four times more gold in reserve than silver we would use up all gold reseves in eight days if it were priced the same as silver. Of course we all know gold is about 50 times more expensive than silver. So for our example gold would last 8 days times 50 or 400 days, therefore people could be payed in gold ( in the USA only) for over a year before the reserves were completely depleted.

gidsekGoldfan , Just Nitpicking here but...#2425702/03/00; 21:22:19

"When Hillary was asked "why climb that Everest mountain, man, are you crazy? He is reputed to have answered,
"because it's there"."

It was in fact Mallory who gave this answer not long before he died in a summit attempt in 1924. His body was found last year.


BonedaddyPeter Asher (A Seriously Off-Topic Post)#2425802/03/00; 21:27:05

Thanks for steering me toward Gershwin. As planned, I stopped by the music store tonight. It's only 60 miles from here to the nearest shopping maul. Some of the tunes were familiar to me, Rhapsody in Blue, I Got Rhythm, Summertime. I think my favorite so far is "They Can't Take That Away". There are several advantages to being so far from modern civilization. One is that you can digest an entire music CD on the way home if you don't drive to fast. Who would want to drive fast while listing to Geshwin? (Not exactly Sammy Hagar, is it?) I'm looking forward to the morning commute tomorrow.

Mellowly yours, Bd.

Chris PowellLatest from GATA Chairman Bill "Midas" Murphy#2425902/03/00; 21:47:53

GATA Chairman Bill "Midas" Murphy outlines
the hidden stresses in the financial markets
and their implications for gold.

Chris PowellGold Fields chairman denounces overhedging#2426002/03/00; 21:49:03

He sounds just like GATA.
SHIFTYGoldman Sachs possibly going under!!#2426102/03/00; 21:54:43

Don't ya just love it!
TheStrangerkoan on Robert Ruben#2426202/03/00; 22:04:45

Believe it or not, someone else raised your same jawboning point to me by email. But remember, Ruben is now a co-chair at Citicorp (or is it co-CEO?). You are suggesting he runs the nation's largest bank according to his own privately held convictions while making public pronouncements to the contrary to somehow benefit Alan Greenspan. Believe me, all economists are accutely aware of the influence their own forecasting record has on their reputation. It seems to me a stretch to say this very prominent one would so easily discard his personal reputation to favor a former colleague.

The other thing is that the inverted yield curve seriously raises the specter that Rubin is right. That was my point to begin with.

Where do you live, anyway, that you have all these bears? I don't recall your ever having said.

NORTH OF 49Just when you thought it was safe to go into the gold mining biz---#2426302/03/00; 22:15:51

Gold scam busted
City precious mineral dealers tied to worldwide smuggling conspiracy

Calgary precious mineral dealers were part of a worldwide organized crime syndicate smuggling gold ore stolen from a Newfoundland mine, say cops.

At least $100,000 worth of gold ore was recovered when the RCMP raided city businesses.

"One piece of gold ore alone recovered from Calgary was worth $10,000," said Newfoundland RCMP Sgt. Bruce Whillans, who headed up "Operation Billions" which arrested the gang.


RCMP investigators traced the entire conspiracy -- which started in Newfoundland, spread across Canada, down into the U.S. and finally to Europe -- said Whillans yesterday.

The end product was especially rare and beautiful gold in the form of leaf-like patterns embedded in quartz, and much-coveted by collectors.

Police were called to the Nugget Pond mine near Snook Arm, Nfld., last August, where owners feared precious ore was being stolen.

They feared employees were throwing chunks of gold-bearing ore over the fence and picking them up later by snowmobile.

"The ore was being distributed to organized crime outlets in Montreal, Quebec, and passed on to precious mineral dealers in Calgary and Edmonton," said Whillans.


The Mounties caught up with the Calgary connection in November, when busts were made. "On Nov. 29, we seized 90 kg of gold ore worth $100,000 in Calgary," said Whillans.

Charges are pending against 14 people, including one from Calgary.

goldfangidsek (02/03/00; 21:22:19MDT - Msg ID:24257)#2426402/03/00; 22:31:59

gidsek (02/03/00; 21:22:19MDT - Msg ID:24257) gidsek (02/03/00; 21:22:19MDT - Msg ID:24257) gidsek (02/03/00; 21:22:19MDT - Msg ID:24257) gidsek (02/03/00; 21:22:19MDT - Msg ID:24257) nice to hear from you again, I put these errors in to find out who's reading my stuff....(smile)


goldfanWHOAAAAA#2426502/03/00; 22:33:54

I swear 'm not smokin anythin...

goldfan#2426602/03/00; 22:42:39

Marius (02/03/00; 21:09:16MDT - Msg ID:24255) Sir Marius....Thou art fooling with my most precious musings...have a care sir.. anyhow I agree about the pie and coffee. the equation is e (base of natural logs) to the power of Pi times i (sq. root of minus 1) + 1 = 0. Ist not beautiful sirrah??? We can derive all the integers from just 1 and 0, and e, Pi and i are not otherwise related, but the equation is true!!! What a miracle!!!


JourneymanRumor that SOMEONE's goin' under#2426702/03/00; 22:55:24

@ SHIFTY (02/03/00; 21:54:43MDT - Msg ID:24261)
Goldman Sachs possibly going under!!

They were talking about a similar rumor on CNBC this afternoon --- but didn't mention anyone by name.


Peter AsherBonedaddy --- Goldfly#2426802/03/00; 22:55:25

Happy to here that.

Your favorite could be the scource of another Gold song.

The earnings of my life,
No No, they can't take that aw-ay,
From me.

Goldfly, you got any free time?

THX-1138ESxchange Stabalization Fund#2426902/03/00; 23:41:27

Anyone else get the feeling that the ESF is the actual Plunge Protection Team?

****I hope they keep the price of gold down tomorrow. It's my payday and I want to get two more coins at a reasonable price.
They can go ahead and let the market blow UP on Monday.

SteveHGoldfan#2427002/03/00; 23:51:14

Oscillation. Your theory would seem to hold plenty of merit. I can see that perhaps after the system might break-away from norms, that it may end up where you predict but the peak or high of the breakaway may be lower and or higher than you suggest and then as the oscillation dampens, it will settle where you suggest.

All I know is my intuition factor is on high alert with all the news hitting from all corners. Let's take a look:

Soros saying he knows where the bubble stands and won't say.
GS in the news and talk of bunkruptcy.
Gold OI lowest in longtime.
Deutshe Bank and Bank of America rumors.
Gold Market manipulation rumors.
Talk of reducing US debt in 13 years, 12 years too late perhaps.
Talk of Comex and LBMA trade stoppages.
Derivative discussion and wrong side of bond yield reversals.
Rate of news in the above is coming all to frequently now. Frequency increases and harmonics are starting to break loose peripherals. Ouch.

Yes, Goldfan, this is all too much to fathom. Thanks for the cogent analysis.

For FOA, post here, just ignore the posters that offend.

ElwoodWag the Dog Scenario?#2427102/04/00; 00:08:34

Let's not forget that this administration has twice in the past used our armed forces to deflect attention from domestic issues. It's not out of the question and, God knows, they'll believe saving the dollar is worth risking American lives. They'll be thinking that with the prospect of war the dollar be less likely to falter. This may work against them in the gold trading pits, however.


koanReubin#2427202/04/00; 00:13:44

Actually, I think you read a bit more into my post then I posted, I think <g>. Reubin was just saying the economy was too hot. Greenspan says the same thing - they are both on the same page, but reubin can say a little more than Greenspan because he is not the fed Chairman, yet he shares similiar status (read impact). what I missed Stranger is why you would think this is some how in comflict with his/Reubins job - and I really did just miss it <g>. Alaska
SHIFTYkitco / metalsman#2427302/04/00; 00:43:10

I notice a $2.00 difference in the spot price. Who is correct?
Simply MeTo All: Bravisima!#2427402/04/00; 01:56:11

Thank you, MK, FOA, Holtzman, ORO, Journeyman, nickel62..too many to mention (sorry for names I've missed) Thank you all for your hard work, sharing, and attitude of comeraderie(sp?). Today's posts were wonderous to read!

I'll shut up now, till I have something that might be interesting to someone, somewhere, somehow.

Gold is rising, slow but sure.
It's a good day.
Simply Me

Black BladePGM's still lookin good! - will Gold follow?#2427502/04/00; 05:10:10

Platinum is up +$6.00 in overnight trading to $510.00, Palladium down a buck to $511.00, and Rhodium down -$100.00. Rumor from our friends at GATA has it that the Defense Logistics Agency (Strategic Reserve) is calling for the US Mint to return a substantial supply of Platinum. Russia apparently has some major supply problems (perhaps the stockpiles have been raided?). A little info on PGM's follows:

The platinum-group metals (PGM) comprise six closely related metals: platinum, palladium, rhodium, ruthenium, iridium, and osmium, which commonly occur together in nature and are among the scarcest of the metallic elements. Along with gold and silver, they are known as precious or noble metals. They occur as native alloys in placer deposits or, more commonly, in lode deposits associated with nickel and copper. Nearly all of the world's supply of these metals are extracted from lode deposits in four countries--the Republic of South Africa, the U.S.S.R., Canada, and the United States. The Republic of South Africa is the only country that produces all six PGM in substantial quantities.

PGM have become critical to industry because of their extraordinary physical and chemical properties--the most important of which is their catalytic activity. Since the mid- 1970's and continuing today, automobile manufacturers have used catalytic converters containing platinum, palladium, and rhodium to reduce automobile emissions. Similarly, the chemical and petroleum-refining industries have relied on PGM catalysts to produce a wide variety of chemicals and petroleum products.

SOS: I don't know if Rhodium trades as does the other metals, however, there are investment pools that exist. I don't know much about how they operate but it is a thinly traded market. Our friend AL Fuchino gave a fairly good description of Rhodium. I've seen it as laser etching on high-end jewelry pieces. It is the brightest silver-white metal I've ever seen - very impressive!

Black BladeRhodium races higher, trades above $2,300#2427602/04/00; 05:36:06

This just in! Not even a gram available! hmmmm.......

Reuters Story - February 04, 2000 04:05

LONDON, Feb 4 (Reuters) - Rhodium prices were firm on Friday in Europe, with spot metal jumping to $2,300/$2,425 an ounce, up some $250 from Thursday and its highest since September 1992. Traders said a potent cocktail of a lack of spot metal, panic consumer demand and the strength of all the platinum group metals (PGMs) pushed a thin rhodium market higher.

Traders said rhodium had changed hands at $2,300 an ounce and above this morning. "It is soaring again...there is just no supply and the consumers are panicking," a trader said. Rhodium, used with platinum in the production of autocatalysts for cleaning motor exhaust fumes, is being driven higher by short supply. "It is red-hot and there is nothing in Tokyo, not even a gram," another trader said.

Japanese usage in catalysts is increasing, borrowed metal is not being returned to the market, and major producer Russia is not supplying metal, traders said

Black BladeThe death of hedging?#2427702/04/00; 05:46:22

If the boys at GATA are right, and a class action law suit is filed on behalf of Ashanti shareholders today, this could probably mean that other producers will feel the heat from their shareholders. Short-covering activity as seen with Goldfields, Harmony Gold's new acquisition, etc., could be the driving force behind a new trend in the gold industry. As some producers unwind their hedge positions, the others may likely feel pressured to do likewise. Those left in the dust could end up in a similar situation as Ashanti, Cambior, and Emperor Mines. Goldman sachs may suffer as well as news about their bad advice carries over into the general markets. Then again, perhaps this is just speculation and wishful thinking.
NoNameSelling gold#2427802/04/00; 05:47:32

Hi All,

I've been lurking here for a long time. I've enjoyed the discussions and have learned a great deal. Thank you All!

I have a question though. Yesterday I called a local gold dealer an asked about selling gold bullion coins. He gave me a price of $279 an oz. when SPOT was at $289. From past conversations with him I know he sells the same coins for nearly $20 over SPOT. Seems like quite a spread to me. Is that typical? If not, is there a recommended place to sell gold?

Thanks in advance.


Black BladeMore news, also notice Ashanti gets another stay of execution!#2427902/04/00; 06:11:51

LONDON, Feb 4 (Reuters) - European bullion market attention focused on the platinum group metals (PGMs) on Friday, with palladium at a new record high and platinum at its best for nearly 10
years. Gold edged higher, but trading was routine as prices clawed their way towards the ceiling of the current $280.00/$290.00 band. ``All eyes are on the PGMs really, there is not a lot going on in gold, but it has steadied up slightly,'' one trader said. Palladium was fixed at an all-time high of $515.00, up from Thursday afternoon's previous record fixing of $511.00. Platinum was fixed at $511.00, its highest since March 1990 and up from the previous fix of $502.00.``There is nothing new this morning. It is just onwards and upwards,'' a platinum trader said. ``It is still the same old story with platinum and all depends on the Russians,'' a European trader said.

Russia supplies more than 70 percent of the world's annual palladium needs and a large proportion of its
platinum, but political factors have kept Russian metal off the market so far this year and for most of
1999. Platinum prices have risen by about 15 percent since the start of the year, while palladium has gained
about 13.5 percent. Technical levels on the upside were hard to gauge, but there was historic resistance from the summer of 1990 around $520.00 on platinum. Otherwise, traders cited $550 as objectives for platinum and palladium. Momentum indicators on the charts are sending off overbought signals, but both platinum and palladium are ignoring these. `The market has to correct at some stage, and when it does happen it will be swift...that is the danger,'' the first trader said.


Gold bullion was modestly higher, building on the closing highs seen in New York overnight. The overnight gyrations and turmoil in U.S. bonds, with rumours swirling around debt markets of problems at U.S. investment houses and hedge funds, did not have a direct impact on the market. Neither did Friday morning news that troubled Ghanaian mining group Ashanti Goldfields Ltd said its hedge counterparty banks had agreed a further rollover of a deadline for it to pay up for derivative contracts until February 17. The deadline, which had been extended three times already, was due to expire on Thursday night.

``There is the potential for it to go up to $290.00, but it does not look too inspiring,'' the trader added. Spot gold was quoted at $287.30/$287.80 an ounce, slightly up from the New York close of $287.00/$287.75.

Silver was quiet, but held above support around $5.20. It was quoted at $5.23/5.25, compared with a previous $5.22/$5.25.

Black BladeUnemployment down, wage inflation rising, s&p futures +9.90, and Au up +2.10 at $288.70!#2428002/04/00; 06:56:35

Going to be interesting today!

NEW YORK (CNNfn) - U.S. job creation posted the biggest monthly jump in more than two years in January and wages rose at a faster-than-expected pace, pushing the jobless rate to a generational low.
The economy generated 387,000 new jobs last month, the Labor Department said Friday, well above forecasts of a 270,000 gain and the largest increase since September 1997. Average hourly wages -- a closely watched figure on Wall Street as a harbinger of inflation -- jumped 6 cents to $13.50 an hour, a larger-than-expected gain of 0.4 percent. The jobless rate declined to 4 percent, the lowest since Jan. 1970.
Wall Street economists and Federal Reserve officials including Chairman Alan Greenspan have expressed concern lately about the robust U.S. job market, which has led to a shrinking pool of workers available to produce the surging quantity of goods and services U.S. consumers demand. Both bonds and S&P futures surged following the report's release, pointing to a higher open on Wall Street.

HenriAmplats Strike#2428102/04/00; 06:58:18

Amplats (purportedly the largest PGM producer in the world) has announced that the refinery worker strike planned to begin yesterday resulted only 60 workers not showing up out of 291 at the Rustenburg Base Metals Refiners division. The National Union of Metalworkers of South Africa gave Amplats notice earlier this week that it intended to strike from February 3 over a pay dispute.

Is Amplats a larger supplier than Russia? Is this strike one of the reasons for higher prices?

nickel62My crystal ball has been a bit cloudy for the last ten years or so,BUT#2428202/04/00; 06:59:16

seems to me that the action in Rhodium,Platinum and Paladium might just attract some of those day trading dot com investors to the whole precious metals sector. Any spill over of that could set off the momenteum investors following along big time. Wouldn't that be nice?
nickel62Steve H#2428302/04/00; 07:05:20

could you please clarify what you know about GS in the news and talk of bankruptcy and "rumours about Deutsch Bank and BankAmerica" Any elaboration so that I know what you are talking about would be helpful. I realize these are just rumours.
Black BladeGold sky-rocketing?#2428402/04/00; 07:15:56 says gold up +6.30, Bloomberg and Bridge says gold up $7.50. Kitco strangely quiet! what gives?
Dollar Billsilver question#2428502/04/00; 07:17:34

I am certainly glad to have found this very interesting
classroom to learn in.
The forum greatest posts section is terrific however
every day in the archives seems to be loaded with
great posts.
I will be a reader here but I do have a couple questions.
Warren Buffett bought a large holding of silver.
Does this educated forum have a view that silver may
rise as a result of coming changes?

TheStrangerkoan#2428602/04/00; 07:23:07

Forgive me, koan. I evidently did misconstrue your words. I thought you meant that Ruben didn't really believe what he was saying and that he was saying it just to tow the party line. Such behavior, had he been guilty of it, likely would have been inconsistent with the model by which he guides Citibank.

I spent a summer in Kenai once. I didn't see any bears, though.

Black BladeGold up $9.10 to $299.00#2428702/04/00; 07:29:58

Bloomberg now post gold up $9.10. Looks like $300.00 gold possible today!
Black BladeGold up $9.60 at; 07:32:11

You people seeing this? Is today the day?
HenriHelp?#2428902/04/00; 07:34:19

I am new to this site and as I cruise through the archives I find must respect and admiration attached to the postings of "Thoughts of Another" and "Friend of Another". I have found a couple of their postings, but I was wondering if anyone has a comprehensive listing of dates/message #'s so that this newbie can catch up?
Thanks for any help.

HenriHelp?#2429002/04/00; 07:35:08

I am new to this site and as I cruise through the archives I find must respect and admiration attached to the postings of "Thoughts of Another" and "Friend of Another". I have found a couple of their postings, but I was wondering if anyone has a comprehensive listing of dates/message #'s so that this newbie can catch up?
Thanks for any help.

TheStrangerGold#2429102/04/00; 07:43:08

Up $8.00 at Morgan Stanley!
elevator guyGOLD sharply up#2429202/04/00; 07:52:36

$300 now. What next?
Black BladeApril Gold up +$9.90 to $299.90#2429302/04/00; 07:59:03

To the MOON! Rumor that a major producer buying back hedges! Don't know who yet.
nickel62There must be some truth in the Goldman story I just got confirmation from one #2429402/04/00; 08:03:31

trading desk. That still makes it just rumour but they have their talking spin doctor Larry Kudlow on CNBC criticizing the politicians(?)wanting to retire all the government debt. This guy should have stayed in drug rehab.He will basically say anything his handlers tell him to.Waiting for confirmation from another trading desk,but it appears that Goldman is caught short in gold and its main problems where caused by big loses in bonds. Thus the Kudlow laying the pipe for a reversal in government action in order to save their butt. Larry Summers must have forgotten to call his friends at Goldman before he decided to buy back all the thirty year debt. Robert Rubin is going to be missed more than he knows.
Black BladeKitco chart broken? Try this link! - real time?#2429502/04/00; 08:06:13

Gold retracing a bit +$6.40
nickel62Stranger#2429602/04/00; 08:09:11

Robert Rubin is not trained as an economist,he recieved a law degree from Harvard Law Summa cum Laude I believe. And is clearly one of the guys on Wall Street who is smart enough to not try and let everyone know how smart he is. As someone onec said about Larry Summers is the type of guy who thinks he is the smartest guy in the room and spends his time making sure everyone in the room shares his opinion.Rubin on the other hand probably is the smartest guy in the room and spends his time telling everyone else how smart they are. That said I think he is largely responsible for the situation that we have gotten ourselves into over the last eight years.The main culprit, but too smart to be an economist.
Zenidea(No Subject)#2429702/04/00; 08:14:16

giddy-up :)
Black BladeNotice that Goldman declined comment, while others said no problemo!#2429802/04/00; 08:18:21

Though Citigroup doesn't normally comment on its intra-quarter trading results, a spokeswoman said, "We're fine." Bank of America and Goldman Sachs declined to comment, citing company policy. A spokeswoman at Donaldson Lufkin & Jenrette also said, "We're fine."

"We're not having any problems as a result of Treasury prices," said Lehman spokesman Bill Ahearn.

TheStrangerNickel#2429902/04/00; 08:24:02

Thanks for filling in some gaps. Actually, while I can't confirm Rubin's undergraduate major, he did do his junior year abroad in '60-'61 at the London School of Economics.
schippiXAU moving Up#2430002/04/00; 08:32:48

From Steven Jon Kaplan 2/2/2000
The spread between the XAU and spot gold rose a sharp 2.0 to 226.3, and is now moderately above its equilibrium
level of 220. This high spread is signaling danger for gold and its shares; avoid their purchase for the rest of

I really don't understand the above, I scaled Up 2/2/00 and again this morning.

Black Blade(No Subject)#2430102/04/00; 08:34:18

Gold Fields slams industry hedge addiction
Reuters Story - February 03, 2000 13:11
By Darren Schuettler
JOHANNESBURG, Feb 3 (Reuters) - Gold Fields Ltd, the world's second biggest gold producer, said on Thursday it was insane for companies to keep major hedge books that had depressed gold prices and made new projects uneconomic. Gold Fields, which bought back the bulk of its hedges last year, also urged institutional investors to pressure companies to ween themselves off hedging. "I don't think hedging is appropriate at the level and the scale it has developed in the mining industry," Thompson told analysts after releasing the company's quarterly results.
"To sell ounces in the ground at $270-$280 (an ounce) when the price of replacing them is $350 (an ounce) or better is just insane."
Thompson has publicly criticised the industry's hedging practices since Gold Fields repurchased most of the 1.8 million ounces committed to forward sales and call options. The company still has about 200,000 ounces of forward sales required for its Tarkwa gold project in Ghana. Thompson said he was not opposed to hedging to protect particular assets or if it was required by lenders to fund a project. But the industry's level of hedging was out of control. "When it gets to a scale where the top 10 mining companies in the world have over 70 million ounces has led to a lower and lower gold price. "If we collectively continue to do that, we're going to ensure that no new mines are developed actually have to write down reserves." Gold Fields had seen its mineral reserves fall to about 74 million ounces from more than 90 million due to the lower gold price, he said.
"I think it's time the institutional investment community point that out to the mines, that they shouldn't do it. It's not in our interest." Thompson said the industry should take a broader view of the market. "It involves looking at overall industry and community attitudes to gold and the image of gold." He said it was still very difficult for the public to buy gold, noting that the recent UK gold auction was largely restricted to institutions. "There is a lot we need to do as an industry to start to look at making gold available to the public and create a market for it," he said.

SteveHNickle62#2430202/04/00; 08:38:44

I believe it was Murphy and a site kitco had as a reference.
JourneymanSomeone goin' down @Nickel62 & Black Blade#2430302/04/00; 08:43:33

If it is Goldman, it isn't likely it's because they were inadvertantly out of the loop. If I remember, they're the first stop for US Grabit bonds on their way to the market. If it IS Goldman, there must be some other reason. If one of the largest and most well connected (rumor is the PPT works through Goldman for example) financial on the planet is in trouble:

1. It's bad enough to scare me.

2. It will get "too big to fail" aid.

Regards, J.

nickel62Journeyman You are right I can't see Goldman out of the loop on anything .#2430402/04/00; 08:57:44

They have been a major force for almost a century. But Milliken and Drexel were the sharpest boys on the block until they blew up as well.It is Goldman from what I have been told but it is because of problems in bonds not gold, my source said gold was moving because their fellow sharks are aware that they will have to cover their gold short in order to restructure the hit in the bond market.ALL STILL ONLY RUMOUR, but as you all know rumour in this business is about the only way you are ever going to get the news out. If you wait for the Wall Street Journal to blow the whistle on one of its largest clients you will wait a very long time. Counterparties are probably already looking to cover their exposure to Goldman and that alone could provide one of the most interesting events in a long, long time. You can imagine that many parties were willing to take Goldman on as a counterparty thinking they were above the possibility of ever not being there.
nickel62This is from a newspaper story yesterday to explain the drop in some of the #2430502/04/00; 09:14:18

stocks. Goldman Sachs etc. he price of the 30-year government bond on Thursday surged following Wednesday's U.S. Treasury's announcement that it will use the government surplus to start buying
some bonds back. Rumors abounded that Wall Street firms bailed out of losing trades that had bet long-term bonds would decline. The speculation about a short-covering
squeeze in turn fed the buying frenzy.

Stock prices of investment banks that have a sizable bond business, such as Goldman Sachs Group Inc. (NYSE: GS) and Lehman Bros Holdings Inc. (NYSE: LEH), declined.
A Goldman spokeswoman declined comment on possible losses and a Lehman spokesman said the firm was "not having any problems as a result of Treasury market prices."

Black BladePalladium futures top $520 an ounce in New York#2430602/04/00; 09:39:30

All Time High for Palladium! The games are finally getting fun again!
nickel62Brilliant piece on the impact dirivatives can have on the market.#2430702/04/00; 09:47:17

Marshall Auerbach at Le Metropole Cafe has a very insightfull piece the close of which is below:
But this is the same Federal Reserve which has underwritten those who lost money in Mexico in 1995, or who lost money in Korea in 1997 and in Russia in 1998. The Federal Reserve's successive bailouts have created a huge moral hazard problem. Even Long Term Capital's John Meriwether is back in business again after being rescued by the New York Fed. The US monetary authorities have in fact not established a market-based system, punishable by the disciplines meted out by the free market but, rather, a socialized system which underwrites losses through tax-payer generated bailouts, thereby engendering even more reckless financial behavior and even greater use of derivatives risk. Of JP Morgan's total $3.4 billion of exposure to Korea in 1997, $2 billion were linked to derivatives swaps. This perhaps explains why Morgan was at the forefront of the move to convert Korean banks' short term debt into sovereign debt underwritten by the Koreans and ultimately, the US Treasury. But it certainly does not justify the involvement of the US monetary authorities if they genuinely believed their rhetoric about the virtues of free markets and self-regulation. No financial institution is being forced to pay for the consequences of its folly through a classic free market mechanism - bankruptcy. There is, as a consequence, no philosophic consistency to the American position. But if we are not prepared to adopt market-based punishments for irresponsible financial behavior, then can one really quibble with the European Commission attempts, however modest, to exert some form of regulatory control over this growing source of potential market instability?


tedwDollar down#2430802/04/00; 09:48:52

Dollar down $8.90 per ounce versus Gold
koanplatinum, palladium, silver and gold#2430902/04/00; 09:57:30

Well, I mentioned this as a possibility, but was sceptical meyself. Platinum and palladium leading the way based on supply/demand fundamentals (palladium more than paltinum). Now we have speculation (first in a long time)which will exacerbate the real shortages of the white metals and silver. The speculation can work because it is supported by real supply/demand problems and real inflation. But speculation will ultimately be the mover. This looks real good to me. I have been positioning myself for a week with much trepidation given the number of false starts I have seen in my lifetime. Kenai has the real big grizzelys. But they are mostly just fish eaters. Just don't argue with them about their fish or startle a mom with cubs <g>.
TownCrierToday's Market Report: Gold glitters#2431002/04/00; 10:00:38

Market Report (2/04/00): What a difference a day climbing $10 from the time of our report yesterday. The yellow metal has made a dramatic break to the upside, surging through its past trading-range ceiling of $290. As we write this report, spot prices have been most recently quoted at $295.60, up $9.00 from Thursday's NY close, and COMEX April gold futures have taken a good look at the $300 mark, visiting $299.50 in early trading. The lesson to be learned is that complacency should be taken at your own risk. Gold had been taken off the radar screens of traders captivated by the lively performance of other markets. One trader told Reuters in London this morning, "All eyes are on the PGMs really, there is not a lot going on in gold, but it has steadied up slightly." Then less than three hours later Reuters reported that spot gold had rallied to a high near $296 after a break through $290, and a dealer told the news service "There were a few dealer stops around $290.00. The gap between $290.00 and $293.00 was ugly on the way up." Dealers had said that the price had benefited from speculation in the market that producers were buying back their hedge positions during the past week, though noting that the overnight rumors of U.S. hedge fund and investment houses connected with bond market votatility had made little direct impact. Speaking of producers and their hedges, Ghana's Ashanti Goldfields remains in the news...receiving a fourth extention to the deadlines (the latest expired Thursday) for payment owed to their hedge counterparties following the September/October price surge following the announcement that 15 European central banks would curb their gold sales and lending operations. In a small-scale imitation of the IMF's standard operating procedure with emerging markets these days, Ashanti's lenders continue to roll over Ashanti's expired facities, and counterparties have extended margin-free arrangements until February 17th.

For those on inflation watch, the today's report of the U.S. Labor Department showed unemployment falling to the lowest levels in 30 years, down 0.1% from December to 4.0%. Average hourly wages were up 0.4%, and the pool of available workers decreased by 2.1 percent over this period. Because Fed Chairman Alan Greenspan has made it known that he closely watches this latter statistic, the future prospects of further rate hikes by the Fed seem to be well in the cards.

And finally, FWN reports that Greece will be deregulating its gold trade (following the efforts in Italy as we reported a few days ago) so that it would follow the same rules that apply to their foreign exchange markets. The central bank is dropping its restrictions that apply to individuals and credit institutions regarding gold trading for purposes other than commerse and industry which were in place under older rules restricting foreign exchange and capital movement to only The Bank of Greece and authorized banks and brokers. As Greece is the next country in line to join the European Monetary Union, they are getting their affairs in order in to qualify. The Greek Prime Minister today announced that elections would be held early in order to "clear up the horizon," gaining a fresh mandate to take to negotiations with European Union partners as Greece officially will apply in early March for EMU entry next January. Greece was the only EU country that failed to meet the Maastricht treaty criteria for first-round entry into the monetary union. With Greece necessarily changing its rules so that gold is treated like foreign exchange've got to like the sound of that, and the direction it points to...a return to the monetary forefront.

That will do it for this week, goldmeisters. Have a golden weekend.

Felix the CatNEW DRAGON YEAR!!!#2431102/04/00; 10:04:12

Happy Chinese New Year!!!

goldfan#2431202/04/00; 10:09:16

Dollar Bill (02/04/00; 07:17:34MDT - Msg ID:24285) Dollar Bill.... Hi! For silver stuff, check out Ted Butler and Marcia Peters at

Nothing is good as gold though!


Al Fulchinotedw#2431302/04/00; 10:14:47

Excellent way to put it, Ted. We hope it lasts, only for the right reasons.
goldfanUSAGOLD Question? or Anyone?#2431402/04/00; 10:17:19

Sir Sitemaster How can I post pictures or graphs here? Maybe I have to find a site I can link to in my posts? Anyone know a cheap one?


JourneymanA matter of perspective#2431502/04/00; 10:33:10

"Dollar down $8.90 per ounce versus Gold." -tedw (02/04/00; 09:48:52MDT - Msg ID:24308)

So far tedw, yur the only one to get the perspective right!!!


schippi@goldfan#2431602/04/00; 10:48:14

goldfan, with regard to your request for
a free place to post. Suggest you try
They provide free web pages and have
great support tools and easy uplaoad.
ALWAYS enjoy you Physics/Math posts.
I'm working on wavelet theory & fractal
( Schippi ) retired mathematician

goldfanORO or anyone re treasury bond buy backs#2431702/04/00; 10:56:58

Murphy at GATA just said:

>>>The bond market has turned negative again. Frank
Veneroso noted this morning that all the Treasury
has to do to fix the inverted yield curve problem
and the bond dealer bad trade problem is to announce
that it will buy back shorter-dated notes as well as
the 30-year Treasury bond.

But Icarus notes that this would require Treasury
Secretary Lawrence Summers to eat crow. For the spin
this morning by the establishment was that President
Clinton had told the dealers that this was coming
when he announced that U.S. debt was to be reducted.<<<<

Is eating crow the only problem outcome here? Isn't it true that the more they buy back, the more $ are put in circulation (M1 traded for M3). What is happening??


FarfelBased upon todays CLASS ACTION LITIGATION against ASHANTI...#2431802/04/00; 11:31:46

...I would be interested in soliciting participants to a Class Action lawsuit against the PEGASUS GOLD (PGU) Board of Directors and its respective bullion bank counterparties who, unlike Goldman Sachs, chose to pull the plug on its client and destroy the entirety of the common shareholders' investment.

In December of 1997 and January of 1998, ALL of Pegasus' hedge contracts were closed out in response to the demand of Pegasus' bullion bank counterparties such that proceeds could be used against balances owed the lender. The termination of Australian dollar hedges generated tremendous losses during the company's fourth quarter.

There appears to be a litany of malfeasance on the part of Pegasus' directors and its bullion bank counterparties.

Most notably, the financing of the super expensive Mount Todd project (approx. $400 million invested) based upon totally unrealistic gold price levels that the bullion bank counterparties surely knew could never be reached, given their inside knowledge of the mechanics of the gold carry trade. The failure of Mount Todd allowed the bullion banks to seize control of other various excellent Pegasus gold producing properties for "a mere penny on the dollar." This de facto grand theft of the corporation's prized assets by the bullion banks also suggests self-dealing on the part of Pegasus' Board of Directors who continued to receive huge six figure salaries even as the company was collapsing.

As we discovered recently when Kuwait leased 70 tons of gold for some $300 million in US military aid, it is much easier to print money than to find physical gold. Hence, the Mount Todd $400 million write-off by the bullion banks in exchange for several million ounces of seized gold reserves is, in fact, a real bargain.

Finally, unlike Ashanti, when Pegasus experienced cash flow troubles, its bullion bank counterparties refused a standstill agreement and this is a double standard that is simply unacceptable. Most likely, Pegasus' bullion bank counterparties did not mind seeing Pegasus close out its gold hedges based upon insider knowledge of the operations of the gold carry trade plus insider knowledge of future central bank gold sales plus insider knowledge of the operations of the US Treasury Dept's ESF activities under the guidance of former Treasury Secretary, Robert Rubin.

The statute of limitations has not expired for any legal action and I believe that, based upon the Ashanti lawsuit, an analogous legal argument can be made for recovery of damages suffered by common shareholders in the PEGASUS GOLD bankruptcy.

I am in discussions with some relatives in the shareholder litigation field concerning the viability of such a class action, and am also exploring the viability of a class action against the Board of Directors of ROYAL OAK and its respective bullion bank counterparties plus several other gold companies that I cannot name at this moment.

Please contact me at:

This email address is being protected from spambots. You need JavaScript enabled to view it.

If you could provide names and respective shareholdings, then that would be extremely helpful. Until a class action is actually filed, I will ensure the list remains completely

Also, any suggestions, special insights, or advice would be helpful.

Finally, please be warned: This is an investigation and no guarantee of future litigation.



OROHedging, Risk and the Carry Trade#2431902/04/00; 11:40:09

18KARAT (2/3/2000; 6:05:41MDT - Msg ID:24201)
Re: ORO (2/2/2000; 23:02:53MDT - Msg ID:24188)
nickel62 (2/3/2000; 5:20:42MDT - Msg ID:24200)
goldfan (2/2/2000; 12:57:11MDT - Msg ID:24122)

The 1987 crash was widely associated with hedging strategies based on Modern Portfolio theory assumptions of continuous pricing and nearly unlimited liquidity. The markets started the crash with a normal trading process of undoing the vast rise in margin trading and the vaster rise in leveraged derivatives tied to the SP. The bottom line was that the Markowitz theory was being applied using plane jane Black Scholes equations for asset price valuations to hedge the SP index like weighted portfolios. The automated trading mechanism faced the same problems we see today in the limited liquidity of the global dollar markets leaking into the US debt markets.

The much maligned PPT was formed then, as were the gold futures for oil futures trading structures. The role of the PPT was to save the financial markets from forced liquidation of leveraged positions. The same action undertaken by AG in Sep-Oct 1998 was taken in Oct-Nov 1987. Government and Fed guarantees were issued to the clearing houses (banks) that will back their obligations in the event of counterparties not being able to live up to their commitments, i.e. default.

The position traders of the houses may have precipitated the sell off through the normal set-up of traps for the broad public and the automated investors. The expectation was that the forced liquidation by those trapped at the top of the market would leave the houses with these people's cash. It didn't. Instead it left them with the prospect of a nightmare of broad and numerous bankruptcy proceedings. Their own leveraged positions, in the meantime, would have accrued interest and legal costs while causing their own liquidation as counterparties could not save them. While they set up the markets for disaster by perpetuating short squeezes all the way up, the much broader participation of the public and the presence of heftier leverage on the upside took them by surprise.

The PPT actions from this time forward were intended to cover the trading houses from the danger of default of their counterparties by supplying the houses with liquidity to buy the stocks from their distressed counterparties through the index futures. The main line of growth business was the selling of options and futures hedging strategy products to the large semi-automated investors (pension funds) that put a risk upon the issuing banks. The only way the risk could be acceptable is for the government to promise an unending stream of money through government guarantees. This is the Japanese model, that ended up with the BOJ saturating the world with a pool of yen mud.

After numerous people got covered in this mud by using carry trades, and found themselves with no source for yen when the miniscule interest payments came due, few are willing to borrow yen to buy dollar debt, Euro debt, or LDC debt. There is no business left on earth in which even a 1.5% yen rate of return is possible. The only businesses with a high enough return are those subsidized by governments - such as those high tech businesses in the US that consume capital to subsidize operations - but get a kickback from government accounting and tax laws to make them appear profitable.

Back to the PPT, as goldfan put it from AG's testimony in goldfan's (2/3/2000; 11:42:00MDT - Msg ID:24226) quote of Auerbach - "the failure of a
major derivatives dealer could impose credit losses on its counterparties that could threaten their financial health. Second, the dynamic hedging of options positions (e.g. associated with portfolio insurance) and certain other risk management techniques lead market participants to buy assets when prices are rising and to sell when prices are falling. In principle, such behavior could amplify market price movements."

What this means is that without the PPT action, the markets, once started on a downward trend, would crash within a couple of trading days to 3% of its price today, 30% in 1987. That is because the hedge instruments all have a component of selling on the way down as well as a component of buying on the way up. In the inexorable math of negative compound interest when coupled with margin debt and plunging market valuations, the money created in order to lend to the sellers of hedge instruments would disappear as it is extinguished. The falling money supply would cause the markets to dump more securities as the hedge obligations become worthless. There is no way the derivatives stabilize anything unless there is a buyer of last resort. There can not be a buyer of last resort unless there is a lender of last resort to lend to the buyer. The lender of last resort can not lend if there is no one to monetize the borrowings into "cash". Thus the whole system is capable of actually providing a hedge only if guaranteed by the government's printing press. In other words, THE GOVERNMENT'S GUARANTEE of INFLATION IS THE BASIS of HEDGING, it stands behind the workings of the derivatives markets just as it has always stood behind the debt markets, just as it stood behind banking. When push comes to shove, the whole system comes to the Fed's marble steps to mooch them into buying debt securities. The PPT is there to prevent this from happening.

The PPT organizes the buying of last resort both by providing the cash balances for this, and by doing direct buying. With help from the Fed giving "special discounts" to targeted last minute saviors of the financial system - those who will borrow (with Fed and ESF guarantees behind them) for the purpose of buying stock index futures and options that will raise the prices of the indexes. A $40 billion ESF can move to buy $400 billion of stocks by buying of stock index futures and the selling of naked put options (then the $40 billion would control $800 billion of stock and would have the effect of supplying more cash to the ESF balances). The Fed would lend as much as necessary to banks who will short futures and call options, or buy the subsidized put options and delta hedge into the underlying stocks (and bonds) by their purchase with funds created for that purpose at a subsidized interest rate. This cash in the markets would abruptly stop the slide downwards and raise the amount of cash in the hands of former sellers, who will use it to buy the securities once the panic conditions are over. I have known of this system for 2 years. The more informed know of it from its 1987 inception.

As a matter of currency flows and the equations of money supply and demand for and from debt creation, this system is based on the GUARANTEED flow of dollars from the Fed into the US financial markets. From the US markets, this flow of dollars branches out like hot lava into the foreign equity markets through portfolio rebalancing, and from the US consumer to the rest of the world through the trade deficit. If these dollars are destroyed through the repayment of dollar debt rolling over into Euro, there will still be a net shortage of cash dollars for the LDCs to pay their interest obligations and buy oil. The dollar would continue rising and the markets could be continuously bailed out till the outstanding dollar debt outside the US no longer functions as a sink for the dollars created for saving the markets.


Back to the ocean of Yen.
The Yen of the ocian have evaporated and rain in other lands, like the waters of the Pacific precipitating over Bungle-a-desh, the vast pool of yen precipitates debt everywhere else. Being structurally identical to the interest structure of western banking - the money formed from debt is always in short supply without the formation of fresh debt. They monetized 45% of the yen debt within Japan by the end of 98. It is probably 50% or more by now, yet the debt is so enormous that the yen supply from monetization is not sufficient to cover the interest payment requirements on the debt.

The new debt was in dollars converted from previously sanitized Yen. The Yen, once sanitized are hard to recover because of the Japanese trade surplus. The result has been the climb in Yen values once borrowing in Yen for the carry trade had ceased in the face of the dearth of Yen to repay interest. The shifting of the trend in the Yen killed the trade. Since the lending had invoved conversion into another currency, the Yen had long disappeared back into Japan where they were very likel converted into paper bills and stuffed into a mattress.

Even at 0 interest rate at the BOJ window, the system can't induce local borrowing and paper cash yen are forever running into financial fallout shelters under people's mattresses. The only borrowing that the 0 rates induce is financial borrowing outside Japan. Because of the sanitization strategy that the Japanese must follow in order to maintain the international value of the Yen, the end result is that the money that is created by the BOJ impacts the world as Euro and Dollars.

By the way, the talk of a weak yen is obviously nonsense when one considers that they still have the oldest population on earth and they must spend the yen on imports of food, oil and medical goods so that more Japanese can spend their time on the old folks. They really can't afford to have the yen fall in value. The Yen enjoys a segniorage margin of 165%, which is better than Europe's. The Japanese use this sparingly, prefering to get what they can through dollar conversion.

Back to the carry trade - its buildup, and its crash.

Japanese debt markets have traditionally grown debt outstanding at a rate beyond that of their equivalent of M3. Since 1990, the Yen M3 has grown more quikcly. The interest rate spread between the Yen prime rate and dollar rates started rising immediately after the Japanese started lowering rates while the Fed maintained higher interest rates in 1990. Japanese funds were leaping into the Asian Tiger economies that were growing very quickly and supported high interest rates from this point till 1994. The YM3 departed most signifiantly from the broad debt measure when during 1994 the Fed raised interest rates so that the spreads between dollar rates and Yen rates went from 0-2% to 4%. At that point YM3 started expanding at double the broad debt rate of growth. This indicates that the funds provided by the BOJ were not staying in Japan. The growth rate of YM3 peaked at 20% in late 1995, but it remained at 8-10% growth level from 1997 through 1999. The growth corresponds to a pickup of the interest rate spread from 2% in 92 to 4-6% in 1995. Japanese government holdings of US Treasuries expanded tremendously at the time as well.

US M3 which was falling in growth rate from a 10% growth rate in 1974 through 1984 to 0% in 1992. In 1992, the moment spreads reached 2%, it started growing quickly and reached an 11% peak growth rate in early 1998. At that point the yen carry trade had grown large enough to overwhelm the bilateral trade deficit of the US vs Japan. The peak of the dollar Yen exchange rate occurred then, as US interest rates were only 4% higher than Japan's 1.5% rate.

The Japanese flow of funds into the US since the dollar bottomed against the Yen in 1994 kept the dollar rising despite huge deficits with Japan. The only possible reason for this was the carry trade, which exploded in the end of 1994. Since 1994, the Japanese growth in YM3 was indeed so great as to comprise 2/3 of US M3 growth. This went on through 1996, when Japanese YM3 started growing less quickly, it was because the spreads of US rates over the Japanese had fallen from 6% to 4%

Since early 1993, the growth in YM3 can be almost completely attributed to the carry trade. The carry trade balanced out the trade surplus till mid 1997, exceeding it by a significant margin. Since then, the excess had disappeared and a Yen shortage appeared in the Asian Tiger economies. Through the financial flows from that region to the US, the Yen managed to fall steadilly against the dollar till mid 1998. At that point the Japanese BOP surplus, particularly with the US, was so large that the carry trade could not compensate, leaving a $20 billion deficit in yen supply in the second quarter of 1998.
The carry trade collapsed and the yen deficit continues to date. In the wake of this collapse, the dollar weakened and the LTCM debacle ocurred.

The amount outstanding in the Yen carry trade is about $0.7 trillion on top of the $1.7 trillion of accumulated trade surplusses invested abroad, predominantly in the US. The Yen demand is not staunched by the increasing spread in dollar yen interest rates, now back to the 5% range. The deficit stands at about $60 billion annualy. With Yen interest payments due standing at $10 billion this year, against a large dollar supply from both the carry trade and the trade surplus at some $150 billion.

As happened in Asia, at some point no interest rate spread would be sufficient to entice sufficient Japanese yen to convert into dollars. As that day approaches, dollar illiquidity will mount and force the Fed to increase its monetization activity from its already high pace. Prices will then start rising. The chaos of the bond market over the past few days is nothing compared to what we will see then.

By the way, the bond market activity is related to an equivalent to monetization - the buy back of bonds by the treasury during a fiscal surplus. The monetary effect is similar to that of a tax cut at the highest marginal rates.

TheStrangerHere it Comes#2432002/04/00; 11:50:19

Placer Dome just announce a suspension of all hedging activity.
USAGOLDCarry Trade...#2432102/04/00; 11:53:00

Just heard that Barrick and Placer will no longer be forward hedging -- gold up $20.
OROThe Stranger - PDG cause or effect?#2432202/04/00; 11:54:53

The PDG disclosure was rumored for gold miners in general. Do you think this rumor did it? Or do you think that the PDG announcement has more to do with today's market action?

Which is the chicken and which is the egg. Ahh... and who came first?

schippiFSAGX & FDPMX hourly Gold chart#2432302/04/00; 11:54:54

Fidelity Select Gold Sectors moving Up!
koangold up $18 - silver up .18#2432402/04/00; 12:00:15

Holy mackeral!
TheStrangerORO#2432502/04/00; 12:06:34

Good point. I am reminded of when a runner jumps the gun and everybody follows him accross the starting line. The situation is that electric.
GoldflyWowers!!!#2432602/04/00; 12:27:49

Gold up $25!!!!!!!

To da MOON, Alice!!!!!

Gandalf the White< ; - )#2432702/04/00; 12:28:51

What a difference a day makes! (And a couple of Mining Companies thinking of their real owners.)

TownCrierThe perfect Valentine's Gift#2432802/04/00; 13:05:41

Is it jewelry, or an investment? decide.
Give the smart gift that keeps on giving!

nickel62The talking heads are falling all over themselves making shure nobody #2432902/04/00; 13:21:58

thinks about buying a gold stock. Commodities are bad. Tech stocks are good. Repeat after me. Commodities are bad. Tech stocks are good. You know for the first time in a long time I think they might be spooked.
Al FulchinoRescue package#2433002/04/00; 13:34:49

The Evil Suppressors have the weekend now to save themselves once again. Even the best magician's have only so many tricks up their sleeves.
TownCrierHere's a thought on gold#2433102/04/00; 13:40:15

For those debating their own gold purchases, and wondering what Monday might bring, consider this:

Hong Kong has been closed for the holiday and couldn't add their own purchasing fuel to the fire. More significantly, Australian miners are among the biggest hedgers, and when their business day opens Monday while we're still sleeping on Sunday, if they see the writing on the wall that it is time to unwind their own positions also...this might make the Washington agreement reaction look like small potatoes.

BeowulfCNBC in Europe#2433202/04/00; 14:11:46

The damb CNBC channel here in Europe. The talking heads were sitting there going blah, blah, blah tech stocks, bonds taking up time with no real info, then they cut to the trading floor. The first words out of the trading floor announcers mouth were, "Gold is up $23 dollars and I'm trying to find out what's goi.." Then they cut to a commercial and start showing the Tonight Show and Jay Leno. Basterds.

Anyway, my coin dealer quoted me via e-mail this morning the price at $296 spot for coins. When I got home and called the States to talk to him he said he'd honor his quote even though the price was now $10 higher. So I bought some more to make up the difference at the current price because it felt like I was stealing from him. Anyway, he's got my business from now on.

PhosGold activity#2433302/04/00; 14:15:33

I had thought from what I had read here and elsewhere on the internet that the gold activity today was somehow derived from the inverted bond yield and that Goldman Sachs was involved and was in derivatives trouble. However a poster on another site (Longwaves) posted the comment below today, FWIW.

"Yesterday, I talked to a good friend on the Goldman Sachs bond desk in New York. He said that the rumors are completely false and that they were all having a good laugh about them. You can take that FWIW but I trust him."

So was today's action just the unwinding of some hedge positions? Why was today picked? Usually gold has been taken down heavily on Fridays wiping out gains made in the past two or three weeks. Has the gov't backed off its futures trading because of Reg Howe's piece? Is this the beginning of the bull? It has appeared that way so often before that I have difficulty believing the gold move might be underway.

Does anybody have a feel why the North American gold stocks did so much better today than the S.A.'s?

TownCrierHello Sir Henri...this link will get you to an archive of some early posts#2433402/04/00; 14:28:33

Henri (02/04/00; 07:34:19MDT - Msg ID:24289)
"I am new to this site and as I cruise through the archives I find must respect and admiration attached to the postings of "Thoughts of Another" and "Friend of Another". I have found a couple of their postings, but I was wondering if anyone has a comprehensive listing of dates/message #'s so that this newbie can catch up?
Thanks for any help."
Perhaps someone else might have some help on the other posts.

VoyagerFOR YOUR THOUGHTS#2433502/04/00; 14:33:15

Federal Reserve Board
Reportedly Considering
Emergency Session
By Sherman H. Skolnick < This email address is being protected from spambots. You need JavaScript enabled to view it. >
A reported emergency has been developing regarding two major banks and a major bond and gold trading firm. The highly secretive Federal Reserve, America's PRIVATE central bank, is reportedly considering the possiblity of
an emergency session. The necessity apparently of an emergency session has been caused in part, or in whole, by the following: [1] Rumors have apparently been sweeping Wall Street that one of the world's largest, if not
THE largest bond and gold trading firm, Goldman Sachs, is possibly going under. This stems reportedly in part from the U.S. Treasury's announcement that it is reducing 30 year Treasury Bond supply. Goldman Sachs reportedly
has been heavily speculating in derivatives, that little-understood, highly dangerous tinkering with assets inside of assets inside of and linked to underlying assets. {Remember how Orange County California went bankrupt by
their reported speculating with these mysterious manipulations called "derivatives".] Goldman Sachs reportedly has been in the forefront of worldwide efforts to knock down the price of gold and reap huge profits at
the expense of workers and stockholders of the gold mining industry.[A South African gold mine went into bankruptcy in 1999 when the "wreck the price of gold" crowd, including the Bank of England, forced gold down to just over
250 dollars per ounce. The average cost of production of gold, by the best, most efficient mines, is about 285 dollars per ounce.] The derivative gambling, in the trillions of dollars, is a complex formula of tricks,
involving gambling on gold and oil and Treasury Bonds, all interwoven like a group of Chinese magic boxes inside of boxes inside of boxes. When gold shot up from 252 dollars per ounce to 330 dollars per ounce in the fall of
1999, some contended at the time that Goldman Sachs and other gold trading houses were heavily SHORT on gold and could not come up with the gold supply to make good the LONG speculators that reportedly included worldwide
financial pirate George Soros. At the time, there was reason to believe that Goldman Sachs would invoke an emergency clause, used when there are storms,
wars, and revolutions interfering with complying with contracts, called Force Majeure. [For background see our prior story: "Bank of England and the Gold Crisis", on our website.] [2] Goldman Sachs is reportedly in a sinking
boat with Germany's huge financial ship, Deutsche Bank, and the worldwide bank octopus Bank of America. This trio are major players in Foreign Exchange, called ForEx, trading and speculating in foreign currencies. If
the emergency continues, the Federal Reserve, according to some bond and gold experts, would have to come up with some 600 Billion Dollars, as a rescue attempt for the reputed trio of bust financial players. According to other financial sources, the Federal Reserve can come up with 130 Billion dollars, that is, some say, "the limit of the number of lifeboats the Fed can supply in a hurry". Beyond that, some experts contend, the Fed would have to order the printing of a flood of paper money, falsely masquerading
as the "U.S. Dollar", in fact, Federal Reserve notes backed by nothing but hot air. [3] Do not expect the sphinx-like Federal Reserve to admit there
IS an emergency and that they are considering an emergency session of their highly-secretive deliberations. Some extremely well-informed financial experts have their views posted on a website called: [a summary can be obtained, but further
details require you to be a subscriber]. They quote a bond dealer as saying "something should happen because this thing is lethal for all asset swappers". [4] Bank of America, headquartered in San Francisco, already is
facing billions of dollars of problems as the result of a suit filed in U.S. District Court in San Francisco. The details of that suit have been publicized primarily only by us. It is a class action on behalf of victims,
heirs, and beneficiaries, of World War Two whose assets were stolen by the Nazi puppet government of Croatia, the Ustasha, and later secretly deposited during and after the war reportedly with the Vatican Bank. [Emil Alperin, et
al vs. Vatican Bank, No. C99-4941 MMC, in the U.S. District Court, Northern District of California. Details of the suit as well as the complete First Amended Complaint are on our website: under
the title "Vatican Bank Sued For Alleged War-Crimes"]. Little-known by the public, and rare if ever mentioned by the monopoly press, Bank of America,and its parent holding firm, Bank America, are owned jointly by the Vatican
Bank, the Jesuits, and the Rothschilds. In recent years, also a major ownerof Bank America reportedly have been the Japanese mafia, the Yakuza which own a major interest in most every bank in California. Seldom reported, the
Yakuza are major dope traffickers in the U.S. What may come of the situation, which some financial experts contend is an emergency or an emergency developing? An inflation may develop as a result of the Federal Reserve ordering up a huge supply of paper money to be used to bail out the
reported sinking ship containing Goldman Sachs, Deutsche Bank, and Bank of America. The price of gold would go UP if the so-called "U.S. Dollar" goes DOWN. Further, Clinton would welcome an emergency, real or fabricated, so he
could stay in office beyond the expiration of his term. Those close to him have been quoted as saying they heard Clinton say he would not mind staying
beyond his term by some emergency. And will an emergency, real or fake,intefere with U.S. Presidential election? Stay tuned. _____ BULLETIN -
Primary Bond Dealer in Trouble / Oil Products on Fire From Bill Murphy - Le Patron 2-3-00 Le Metropole members, Rumors aresweeping Wall Street that a primary bond dealer is going under as a result
of the Treasury's announcement that it is reducing 30 year Treasury bond supply. The Fed has denied an emergency session has been called,but does not deny a big dealer in trouble. 30 year bond yields have collapsed in a
very short period of time from 6.76% to 6.06%. Forward price 30 years are even lower in yield. There are many market players caught the wrong way on yield curve trades as the curve has now inverted in what must be record
time. From a Cafe European bond dealer: "something should happen because this thing is lethal for all asset swappers" Banking stock index diving.
Meanwhile, the cash market for oil products are on fire with cash prices way above NYMEX. Situation very explosive. Gold only up $1.40 in this VERY
BULLISH gold market environement. Manipulation crowd desperate to hold gold price down to avoid a gold derivative blow up as is occuring in the bond
market. More later <>
All the best, Bill Murphy Le Patron ============
Since 1958, Mr. Skolnick has been a court reformer and since 1963,
founder/chairman, Citizen's Committee to Clean Up the Courts, divulging
certain instances of judicial and other bribery [often involving banks owned
and operated by judges] and instances of political murders. Since 1991, he
has been a regular panelist, and since 1995, moderator/producer of
"Broadsides", a one-hour, weekly, public access Cable TV Show cablecast
within Chicago to some 400,000 viewers. For a heavy packet of printed
stories by our group, send $5.00 [U.S. funds] and a stamped, self-addressed,
BUSINESS size envelope [#10 envelope, 4-1/4 x 9-1/2] WITH THREE STAMPS ON
IT, to Citizen's Committee to Clean Up the Courts, Sherman H. Skolnick,
Chairman, 9800 So. Oglesby Ave., Chicago IL 60617-4870. Office, 8 a.m. to
midnight, 7 days, (773) 375-5741. [PLEASE, no "just routine calls]. E-Mail:
This email address is being protected from spambots. You need JavaScript enabled to view it. WEBSITE: <> [ NOTE "s"
after my name in website] Before sending FAX, call. <<...>> SIGHTINGS
HOMEPAGE </> This Site Served by TheHostPros <>

TheStrangerUSAGOLD#2433602/04/00; 14:38:00

I think now is a good time to remind everybody that USAGOLD is an excellent source for those seeking to purchase gold. I do not have any financial relationship whatsoever with USAGOLD, but I very much appreciate the free information service provided by the forum. Let's all remember that the sun does not always shine on the gold business. I hope that, while this lasts, at least of few of us will assist our host in the making of a little hay. Thanks. (This advertisement is an unpaid, unsolicited, and unabashed expression of gratitude.)

By the way, I have been an active trader in the markets for 22 years. I made more profit today than I have ever made on any single day in my life. I hope others are experiencing the same results. Let's keep this going!

nugget101Gold bars#2433702/04/00; 14:39:04

Does anyone have a source for Japanese Fine Gold cards, Korean Pigs/Toads, and Chinese Tael doughnuts?


TownCrierSelling gold question....Sir NoName (Dave)#2433802/04/00; 14:40:17

NoName (02/04/00; 05:47:32MDT - Msg ID:24278)
Selling gold
Hi All,
I've been lurking here for a long time. I've enjoyed the discussions and have learned a great deal. Thank you All!
I have a question though. Yesterday I called a local gold dealer an asked about selling gold bullion coins. He gave me a price of $279 an oz. when SPOT was at $289. From past conversations with him I know he sells the same coins for nearly $20 over SPOT. Seems like quite a spread to me. Is that typical? If not, is there a recommended place to sell gold?
Thanks in advance.

Hello Dave!

If you were chomping at the bit to sell gold at $279, you must be jumping up and down to sell it now that the price has climbed to $302. Michael Kosares at Centennial Precious Metals is the resident gold dealer guru who also happens to host this forum. You can call him to discuss your interests in buying OR selling at 800-869-5115, the toll free number to reach him in Denver. I'm sure he'd love to help take this gold off of your hands.

LeighGold Surge Headlines the Drudge Report#2433902/04/00; 14:42:04

"Gold Rush: Up Over 7% in One Day"
nickel62Phos I'll take a crack at giving you my two cents. #2434002/04/00; 14:59:51

From what I have been able to discover their was a major mismatch in the bond trading positions of several market players. The rumours are that they were Goldman,and two large banks.It was the Treasuries decision to shorten the average maturity of the outstanding government debt by using the "surplus" to buy the 30 year treasury debt. Since there is not that many 30 year issues in general and they are evidentally heavily used in various hedging stratgies and also by industries such as insurance to secure their annuities a mini buying panic developed as everyone tried to secure there share of 30 year notes at the same time. The firms that were heavily leveraged into a short position in the 30 year were punished big time. Goldman,Deutsch Bank and BankAmaerica were supposedly on the wrong side of the trade and with the 40 to 1 leveraage these guys use the pain can get very severe very quickly.It is these losses that started the rumours that Goldman was "busted" which of course panicked everyone who relies on them as a counterparty for dirivatives and thousands of other transactions. I think the movement in the gold market was kicked off by the covering of Placer Domes hedge book and the reality that that type of announcement would have on other short players. Everyone then ran for the same very small door at the same time and the price squirted up. With the main firm that has stomped on every gold rally for the last ten years distracted by their own problems the market actually acted like a market for a change.
Gandalf the WhiteRead the words that started the ZOOM#2434102/04/00; 15:07:48

Friday February 4, 4:35 pm Eastern Time
FOCUS-Placer Dome suspends hedging, sees price rise
(All figures in U.S. dollars unless noted)
By Allan Dowd

VANCOUVER, Feb 4 (Reuters) - North America's third-largest gold producer, Placer Dome Inc. (Toronto:PDG.TO - news), suspended its hedging program on Friday in expectation of an improving gold market and called on other producers to rethink their policies.

The Canadian-headquartered miner also announced that it had 1999 gold output of 3.15 million ounces at a total cost of $231 an ounce. It said it expects production this year of 3 million ounces at a total cost of $245 per ounce.

It said its hedging allowed it to realize an average $480 per ounce on its gold forward sales during 1999. The average price realized on all of the company's gold production was $341 an ounce, or $62 per ounce over the spot price.

In midday trading on Friday, April gold was up $10.40 at $300.30 an ounce, having touched $300.50, from a low for the day of $289.90. Spot bullion was quoted at $297.20/7.80, up from London's late fix of $293.65 and Thursday's New York close at $287.00/7.75.

Hedging, a practice common in the gold industry, allows a company to guard against a fall in gold prices by selling future production at a fixed price.

It can pay handsome dividends in an environment where confidence in gold is declining, but it can backfire when bullion prices rise.

``We have a very successful hedge program, however, we believe it is time to adjust our approach,'' Placer Dome President Jay Taylor said in a prepared statement.

Investors responded positively to the announcements, pushing Place Dome's stock up C$2.85 a share to C$15.50 in afternoon trading on the Toronto Stock Exchange on Friday.

Place Dome said it believes gold prices will move higher, in part, because of an agreement by European central banks to limit their sales, but also because the ``industry needs to do its part,'' the company said.

``So as of today, the company has ceased adding any new hedge positions. As a result, we expect to see our hedge book reduced by at least 2 million ounces of gold by the end of this year,'' Taylor said.

``We will continue to manage our existing positions, but we want to be clear about the need for the industry to show leadership and confidence in gold,'' he said.

The company said it will release details of its hedging program on February 24, when it is scheduled to release its year-end financial results.

Placer on Friday released details of its 1999 production levels, and tooted its horn about its lower than industry average production costs of $159 an ounce cash cost and $231 total cost.

It estimated production cost in 2000 at C$165 per ounce cash and total costs at $245 per ounce.

The company's 1999 gold production of about 3.15 million ounces compared with 2.9 million ounces in 1998 and about 2.7 million ounces in 1997

Placer's hedged production at the end of 1999 was comprised of 7.4 million ounces in forward sales and 2.5 million ounces in call options at expected prices in excess of $400 an ounce with an aggregate positive mark-to-market value of $350 million.

Approximately 85% of the company's reserves remain unhedged, it said.

($1=$1.44 Canadian)

JonPOG vs US$#2434202/04/00; 15:18:51

The dollar continued strong in spite of surge in gold price.Unusual indeed! One of them will have to give. I'm betting it will be the dollar. Go gold go!!!
nickel62Article on the bond problem from Bloomberg#2434302/04/00; 15:24:08

Bonds Shaken by Bets on Lower Prices

By Ted Merz

New York, Feb. 4 (Bloomberg) -- Wall Street's biggest bond traders kicked off
2000 with a $67 billion bet against Treasury bonds rising.

So far, the wager has proved costly.

Anticipating the Federal Reserve would continue to raise interest rates to slow
the economy, the 30 primary dealers that trade with the Fed had by Jan. 5 sold
$67 billion of borrowed bonds, a bet prices would fall and they would be able to
buy them back cheaper.

Treasury Under-Secretary Gary Gensler's announcement yesterday that the
government would reduce sales of debt, as well as buy back securities due in
10 years or more, prompted a scramble for bonds, producing the biggest
two-day rally in bonds since the October 1987 stock market crash.

``People had taken too much pain and they were unwinding whatever positions
they were in,'' said Martin Mitchell, manager of government trading at Legg
Mason Wood Walker in Baltimore.

The surge also set off a rash of speculation that banks or hedge funds unable to
buy back bonds they had sold were suffering losses and would need to be
rescued. That prompted more buying.

A trader at Goldman Sachs Group Inc. said Deutsche Bank AG had suffered big
losses. A trader at Credit Suisse First Boston Inc. claimed Salomon Smith
Barney Inc. lost a bundle. A trader at Deutsche said Goldman and Merrill Lynch
& Co. were in trouble because of the sudden increase in bond prices. Officials at
the firms said they suffered no major losses.

The Fed took the unusual step of calling news organizations to squash talk it
was meeting to bail out a hedge fund or a bank. That revived the specter of
Long-Term Capital Management, a fund that collapsed in September 1998,
triggering a rush into the safety of Treasury bonds and prompting the Fed to
organize a bailout.

``Normally the New York Fed does not respond to market rumors, however, we
would like to confirm that rumors of a meeting of market participants at the bank
are completely unfounded,'' said Doug Tillett, a spokesman for the bank.

Bad Bet on Mortgages

The benchmark 30-year bond rose 1 30/32 to a price of 99 26/32, causing its
yield to plunge 14 basis points to 6.14 percent. Since the current rally began
Jan. 21, the 30-year bond has returned 8.4 percent, including reinvested interest.

``There is a growing realization that we are serious about paying off the debt,''
said a senior Treasury official.

While the gain has been spurred by investors snapping up Treasury bonds
because they expected them to become scarce, it was accelerated by traders
swapping out of unprofitable mortgage securities.

Mortgages were expected to do well this year as the Fed raised rates because
higher rates would translate into few bonds sold and slower prepayments, said
Jim Shallcross, a portfolio manager at Independence Fixed-income Associates
in McLean, Virginia.

``Generally people think that during stable and higher interest rates mortgages
will outperform'' Treasuries, said Phil Barach, who manages $20 billion in bonds
at TCW Group Inc. in Los Angeles.

The primary dealers reported to the Fed that they owned $26 billion of agency
and mortgage-backed securities at the beginning of the year. Those fixed-rate
mortgage securities have lost 0.67 percent this year, compared with a 0.66
percent gain for Treasuries, according to Lehman Brothers Inc. indexes.

As investors became convinced that the Treasury would reduce the amount of
debt outstanding, investors unwound the bets against bonds they'd made, said
Joseph Pregiato, co-head of fixed-income sales at Josephthal & Co.

``The only thing you can say for sure is that the movement in the marketplace
suggests that people are having some forced liquidation,'' said Van R.
Hoisington, president of Hoisington Investment Management Co. in Austin,
Texas, a fixed-income money manager of about $4 billion.

Bill Gross Weighs In

Michael Hoeh, who manages $5.5 billion in bonds at Dreyfus Corp., said also
contributing to the pessimism about mortgages and the optimisim about
Treasuries were comments that Bill Gross, head of Pimco Advisors Holdings
LP, the world's largest fixed-income manager posted on the firm's Web site.

``Bill Gross put his thoughts on his Web site about fixed- income markets and
there were indications he was more bullish on Treasuries and less bullish about
spread product such as mortgages,'' Hoeh said.

Gross told the L.A. Times that Pimco was ``partly responsible'' for the spark that
prompted the surge in prices by beginning to by Treasury bonds about a month
ago while he was selling mortgage securities and other shorter-term notes.

One indication investors are concerned about losing more money in mortgages
is the widening of swap spreads, one measure of the cost of financing
purchases of fixed-income securities. Ten- year swap spreads traded as high
as 100 today and finished at 90, up from as low as 70 a week ago, traders said.
Nicholas Walsh, who helps invest $10 billion in fixed-income asset at J. & W.
Seligman & Co., was among the investors who bet on mortgages last year,
increasing his holdings of mortgages at the end of last year to 25 percent of his
portfolio up from about 20 percent, selling corporate bonds and Treasuries. So
far, Walsh isn't selling the mortgage-backed securities, betting on a rebound.
``Once this volatility recedes in the Treasury market, mortgages can rally,'' said
Walsh. -- Ted Merz in the New York newsroom with reporting by Jonas
Bergman, Beth Williams, MaryAnn Busso, Monique Wise, Vernon Silver and
Kathy O'Donnell in the New York newsroom (212) 893-3037 and Katherine M.
Reynolds in Washington (202) 624-1934/tm/fk Story illustration: To graph the
yield on 30-year U.S. bonds: GT30 GY News by category: NI HEDGE Hedge
funds NI BON Bonds NI SWAPS Swaps NI SWAPSCOL Swaps Focus columns
NI COR Corporate bonds NI MOR Mortgages NI MMC Mortgage market
comment NI ABS Asset backed securities NI DRV Derivatives NI NEWBON
New bonds NI SCR Securities firms NI RATES Rates of return NI WIN
Bloomberg exclusive NI FIN NI BNK NI SCR News by region: NI US U.S. For
closing mortgage market stories, type

©2000 Bloomberg L.P. All rights reserved. Terms of Service, Privacy Policy and Trademarks.

nickel62Why is it when we lose money its our stupidity and when the #2434402/04/00; 15:29:39

big boys lose money its the taxpayers problem. I have finally realized that the best "investment" is really political contributions. Look who the largest contributors are to all our candidates for President and then ask yourself how many are being bailed out by the same people they gave a couple hundred thousand to get re-elected.
CoBra(too)Ashanti - Warriors or Nuts?#2434502/04/00; 15:43:03

Ashanti's problems of overhedging seem to have started a rethinking of (over)hedging. Besides it became a political issue - 40% of Ghana's exports are now gold and the state, and I feel correctly so has a 10% free carried interest in any gold venture - and another 10% option carried at cost.
In case of ASL the Ghanean government retains 20% interest, translating into a large part of their exports (current acc.) - would you give up this kind of your own asset to financial shennanigans and perpetrators, which tricked you into this mess? GS as investment banker to ASL has certainly breached its fiduciary responsibilities in this case!
Let's get back to reality and have all the rocket scientific vanilla hedge meisters aand their partners in leveraged crime, outsmarting the financial world for too long get the taste of their vanilla scam (scum)!
Kudos to Goldfields and even to Placer Dome, though I've changed my mind on their legitimacy to speak out in this case, for their statements to cease overhedging.
On a final note: The world seems to feel this Friday is a black one for the Austrian democracy(!) - I feel democracy was reinstated, together with some souvereignity in a small country by a Union condemning the outcome of free elections among their "equal members". IMHO- Austria may well be the incarnation of the nightmares some of the leaders of more equal EU members may have in regard to their own more pronounced right wing problems.
Regards CB2 - on a golden Friday

schippiA flight to Quality#2434602/04/00; 16:37:25

NEW YORK (CBS.MW) -- April gold surged to a near four-month high Friday,
boosted by large trading house, commodity and hedge fund buying as players moved their
money to physical assets.

April gold jumped $23.10 to $313 an ounce on the Commodities Exchange division of
the New York Mercantile Exchange, it's highest level since mid-October.

David Jesser, managing director of Alaron Trading's San Francisco branch, attributed
gold's rise to trade house buying and active fund buying, such as commodity funds and
hedge funds -- "the larger players."

"The uncertainty in all of the financial markets is being reflected in this movement in gold,"
he said, so it's a "reallocation of assets" into gold. "Historically this type of price action is a
flight to quality," he added.

FSAGX Up 9.89%
FDPMX Up 9.33% Enjoy!

Al FulchinoThe Stranger#2434702/04/00; 16:53:15

Ummmm how EXACTLY did you make more money today than any other in your life. Could you share? And what do u make of the 30 yr bond rate drop this week? Thanks
BeowulfBuying gold for Y2K#2434802/04/00; 16:55:40

I guess those whole bought gold solely for the purpose of Y2K can now see how smart they were. YOU MADE A GOOD CHOICE AND GOT IT CHEAP EARLY.

I now believe in the holding of physical instead of stocks. My NEM was up around $3 but my physical jumped $23. Woohoo.

Physical..It's the only place to be.


RockCNBC Changes Their Stance On Gold Again#2434902/04/00; 17:05:58

I was watching CNBC tonight after the great break through of Gold today and when Sue Hurrera was commenting as to what the implications of this break through of Gold is today she said that, "GOLD IS NO LONGER IS A GUAGE FOR INFLATION." I almost fell off my chair because for the past six months CNBC and their big CEO cheerleaders have been saying that there is no sign of inflation because all you have to do is look at the price of gold.

But now that all these varibles are coming together with the new jobs report, a tight labor pool, wage inflation and the mining companys that are putting a stop to the hedging and not to forget the bond market madness, now inflation is the talk of the town, but for CNBC to lie to the sheeple once again and they say that Gold is no longer a means to guage inflation just blows my mind. What do they think we are stupid? They will do anything to surpress the truth concerning inflation but there is too much going on now and reality is taking its course as the laws of economics are prevailing and its time to pay the piper. Have a great day all my fellow goldmeisters, I love reading all your posts.

Early LightFed shrinking the money supply#2435002/04/00; 17:10:43

I would welcome anyone's comments on this.

As you all know the Fed flooded the system with cash last year prior to Y2k. By retiring treasuries are they not decreasing the nation's money supply at it's core? After all, the government debt is the basis of all our money. How many times have those treasuries being retired been multiplied through the nation's money supply by commercial banks? 10x? More?
By going to the root of money the Fed has withdrawn an amazing amount of liquidity in one fell swoop. By tightening short term rates they are working on the other end of money supply. Cutting supply off of both ends at the same time will have a leveraged effect that it would have taken many more .25bp raises to accomplish. The shrinking of the money supply could account for both a stronger dollar (fewer of them) and lower interest rates.(As the 30 year bond becomes a collectible)

The stock market when it realizes what is happening will look a lot like Wiley Coyote as he chases the Roadrunner off the cliff. He continues to run for a bit, until he realizes exactly what is beneath him. Air.

CoBra(too)Ashanti Nuts - an explanation....#2435102/04/00; 17:12:22

Before Ashanti has gone "nuts" - the Ashanti nut was known in these parts of the world as peanut, no, not in "shorts" - in shells!
Have a precious weekend - CB2

nickel62Rock Unfortunately Yes they do.#2435202/04/00; 17:14:06

But they also know that they are out of business once the hundreds of thousands of day traders who have become their core audience get fleeced and return to more normal forms of making a living.
nickel62Rock Unfortunately Yes they do.#2435302/04/00; 17:14:18

But they also know that they are out of business once the hundreds of thousands of day traders who have become their core audience get fleeced and return to more normal forms of making a living.
TheStrangerBeowulf#2435402/04/00; 17:25:21

Last week I talked to the Gold trading desk at one of the world's largest investment firms. They told me they spent the entire month of January buying coins back from disappointed y2k enthusiasts. Many of them evidently bought those coins during the October run-up and were getting out at a loss. It is a shame really. But it illustrates how important it is to do your homework before you invest your money.

Your Newmont was up 14% today. Your physical was up 8%. Physical has risen 23.7% since its bottom last May. Newmont is up 78% since its bottom in Sept.'98.

CoBra(too)Re: PDG Hedge position#2435502/04/00; 17:30:14

Amazin' - I must have missed something in PDG's last Q., when they stated a position of 4,5 moz hedged - today they claim to decraese the book by two moz from 7,5 moz.
It seems it took Jay Taylor less than a Q. to raise the
hedge by more than a third - well done - hope your Pipeline
will outlive the highgrade raping for some time - Getchell and Western Areas certainly look forward to same "treatment"
- PDG - Permanent Downgraders of Deposits - Sorry for the attack - though you've deserved it - a Permanently Disgruntled Goldshareholder! CB2 - if u wanna know!

Gandalf the WhiteThe "BIG" Question !#2435602/04/00; 17:46:07

Mr. SJKaplan is of the opinion that the COMEX short covering actions of today are just like (if not worse than) the Aug Spike of '99. "It will not last" and he bases that, in part, on Placer Dome only announcing that the would not EXTEND the hedging policy and cover their existing forward sales from future production, BUT DID NOT buy any of the existing position back as did AU and GOLD.
ALSO, on the local coin front, the dealers were inundated with public sales of one ounce coins after the start of Y2K, and whereas the suppliers premiums were big at the end of 1999, NOW the suppliers premiums have dropped to less than US$3. in January. The ability for the public to buy at less than the normal $15. to $18. markups were standard because of the supplier low premiums and the dealers comeback sales too. TODAY, when Spot the Dog price rocketed in the afternoon in NY and settled at over US$308. the dealers are only willing to pay US$300. or less and willing to sell at US$310. !!!! HOWEVER, they were willing to pay the same price for KRands, Eagles and ML !!!
SOOOO the "Question" is -- A FLASH in the pan ?
OR the start of Aragorn's "Thunder in the Night" ?
What you all of you think ?
Gandy and the Hobbits want to know.

Gandalf the WhiteOh -- IF Gandy could learn to type !#2435702/04/00; 17:48:44

The end should have said --- "WHAT DO all of you think ?"
TheStrangerAl Fulchino#2435802/04/00; 18:07:19

Al - I have most of my life's savings in gold mining stocks. Almost all of them were bought since the major secular bottom which was put in by the XAU in Sept.'98. I made even more money today than I made on the biggest day last October.

Bill gross at Pimco Asset Management is probably the world's biggest buyer of Treasury Bonds. Today, he said the bottom for the bond market is probably in. He bases this view, in part, on the fact that long treasuries are starting to run short of supply.

Well, I am nobody to argue with Bill Gross on this subject. But, for our purposes (us goldbugs, that is), the bond market is really just a means of measuring inflation expectations. This is an altogether different consideration from what Gross is talking about.

Inflation is a POLICY matter. We choose either to have it or not to have it. Lately, we have chosen to HAVE it. Nothing the Fed can realistically do in the next few days or weeks can change the path we are on in the very near future. (Certainly not these silly quarter-point fate increases!) I personally can't imagine buying 6% govies in this environment, but some insurance companies have based their policies on them and haven't come up with an alternative yet. For that reason, for awhile at least, I would caution against drawing any broad conclusions from the price behavior in this area.

CoBra(too)@ Gandalf t he White #2435902/04/00; 18:07:49

Sir, either you are or Steve Kaplan is right!
POG's spot has beaten its masters and PDG is in a spot - either they buy out WA (another 250mill $) a/o upgrade Getchell - as it seems they're also overhedged and may have problems with their banks (only one side of the venerable counterparties - parties I'd love to en-counter too -only on equal terms, actually).

GdW - Look at the facts - ASL class action, Washington Agreement unfinished -additional 750t/au asked for supplement 30% reserve backing, Goldfields calling for limit of producer hedging .... next to annual physical supply deficit and short position due to au carry -SCARY -BC2

Canuck@ Townie @ Stranger @ All#2436002/04/00; 18:08:22

From Townie,

"Hong Kong has been closed for the holiday and couldn't add their own purchasing fuel to the fire. More significantly, Australian miners are among the biggest hedgers, and when their business day opens Monday while we're still sleeping on Sunday, if they see the writing on the wall that it is time to unwind their own positions also...this might make the Washington agreement reaction look like small potatoes"

What a beautiful day!!

Let's race ahead to 6:00pm eastern; are 'they' going to be able to bring this back down under control or is this the runaway 'short covering' rally we've been waiting for.

I recall FOA saying when this gets started $100/day increases will be seen. Is Monday a $100 day; ie: close at
$408. I see the $100 days coming; is Monday a retracement or a full 'rip'.


CanuckCorrection#2436102/04/00; 18:09:35

Let's race ahead to 6:00pm Sunday ...
TheStrangerEarly Light#2436202/04/00; 18:14:23

When the Treasury retires debt they pay for it with money.
TheStrangerCanuck and Gandalf#2436302/04/00; 18:25:30

Canuck - Has anybody ever accused you of being bi-polar? I love you man!

Gandy - as a matter of fact, you were the first to welcome me here! Thanks, again!

About Kaplan: I can vouch for his comment about y2k liquidations. That was practically the only business Morgan Stanley's Gold Trading desk did last month. But Kaplan is playing a dangerous game trying to call these short-term moves, and I think you would be smart to ignore him. With each passing day it becomes increasingly clear that the BoE gave us a major, major, major bottom last year that will support a long and important bull market in gold. Your challenge is to stay in your seat, seatbelt fastened, and don't let anybody convince you otherwise!

nickel62Gandalf the White#2436402/04/00; 18:42:33

I think that this time the chances are better that we might have a continued rally. If indeed it was Goldman Sachs that was put into dire straits by losses in the bond market then the $23 up move in gold is going to help drive the stake into their heart on monday. As several people have commented the Austrailians are going to be very big coverers of their short postions on monday as well. Their is really little likihood that new players are going to be willing to borrow money to short the gold market and buy bonds with what has been happening in both those markets over the last year. The gold carry trade is dead now I think and there are still many players still haven't capitulated. It is the covering of these players that will most assuradly continue to squeeze the market north. The sharks in the pool will begin to see blood over the weekend and most likely try to rip the wounded apart. This is the behavior that always surfaces when one of their hated competitors stumbles.But only if they are pretty sure they are mortally wounded. Undoubtably their are restructuring meetings going on as we speak trying to figure how to staunch the bleeding. And most likely they will be successful at least over the short term. But the game will have been changed significantly. And that is very beneficial for gold. As we know the price most likely would be several hundred dollars higher if the manipulation had not held it down for so long and the question you want to ask now is not whether or not the rally will continue but rather are the forces to stop it there anymore? 1)The main purpetrators of the manipulation are wounded and unlikely to be able to blow large amounts of money without close oversight of the people that have had to lend them the new money for the restructuring.2)The question of market manipulation is much more of a public issue thanks to GATA.3)The bond market is no longer under control so the ability to borrow gold at low interest rates and speculate in the bond market is not an attractive opportunity.4)The European and the Asian's have begun to clearly verbalize that they know they have been the target of recent US and UK monetary exploitation.And they are probably silent participants in this current situation.5)The Ashanti, Cambior fiascos cost shareholders a lot of money and they are not going to listen to too much BS from any mining executives who think they somehow understand enough about the world monetary policies to be over hedged in this market. 6)The boards of directors of all these companies know that the managements of all mining companies have no ability to predict the future price of gold at all and it was the fast talking MBAs from the Bullion Banks who talked them into it in the first place. i.e. As a director you might have been stupid enough to think Goldman was smart enough and working for your best interests but your damn sure that you mining company employees don't have a clue,even the best of them. And now Goldman doesn't look so smart either. 7)The class action law suits will bring the lawyers into protect the directors and the managements will either change the hedging strategy or they will be changed.8)Once everyone understands all these factors it is a matter of 8 rats fighting over one piece of cheese,and the first rat will sell out all the others in a New York second.None of these things were so clear six months ago.
R PowellMr. Gandalf#2436502/04/00; 18:50:47

CoBra(too)@stranger - Hello friend ...#2436602/04/00; 18:52:19

Quote: When Treasury retires debt they pay for it with money!
I guess that's a fact (and pse let's not go back to creation of same or vs. currency). As I understand TSY retires some of the long bonds - creating 'virtual' scarcity (squeeze) and exaggerating and exasperating the inverted Y-curve - to the detriment of hedgers? and shorter maturities - on the virtue of (virtually) unearned tax receipts, again to the detriment of l.t. health & pension (contractual) plans, which have been conveniently pushed off the balance sheet.

My humble conclusion is that the US (budget - or any other) surplus is a virtual Fata Morgana - paid by virtual money .... from virtual (getting used to cyber - not ZAUBER! epressions) capital gains taxes.
Get real - go gold - CB2

goldfanORO Nickel62 thanks#2436702/04/00; 19:10:41

ORO Your post on hedging et al is a another great opus. Such a pleasure to read and study and try to understand. And such a fine rage at the "mud" slingers. I only hope I can parse it for all it's gold in time.

Nickel62 Your earlier work describing your experience in the trading pits sounded in me a cry of almost pain, gnashing of teeth!! Both you and ORO have today been catalysts for me to write what follows on "Loans". Thanks


goldfanLending and Borrowing, Getting and Spending#2436802/04/00; 19:12:18

Considering Loans

When I was young I remember, from where I know not, a little saying, "Neither a borrower nor a lender be..." Here's my thoughts today on this after further digestion of the meals I have been taking at this site.

Any delay between purchase of a "good" and payment with either barter, or currency earned by productive work is a loan. So is any delay between payment with currency earned, and purchase and taking delivery of the "good".

Loans are a necessary evil. Necessary to facilitate commerce and productive work. Evil because in the hands of "money-men" they contain the seeds of savings-destroying inflation, and deflation. These are the men who, when we protest that our currency is constantly dropping in value, say "give it to us, we'll keep it safe for you and even cause it to grow...."
(the African bushmen say "the whiteman has a magic hole into which he puts money and there it grows.")

If expectations of "safe" savings is reduced, then people will live only for "now", they gamble, they put little thought or effort into ensuring the future of the community or of the environment for the sake of their children. Having little stake in the community, or faith in their neighbors, they become the easy prey of despots.

Whatever financial system we dream of for the future, let it shun lending and borrowing, as the plague.

I remember long ago reading a story of a Yorkshireman, a skilled maker of fine cabinets in the 21st century. One day, at his age 40 or so, he was showing his youngest son through a shed in which he had just finished stacking, with plenty of "stickers" between the planks, for free circulation of the slow drying air, layer upon layer of new cut fine maple wood to dry. "There son, he said to the boy, "coom 40 year, thee'll make some fine cabinets o' that".

I can almost cry telling this story, to think what we have lost by our insistence on having it all now, without true payment.

Another story...Squirrel running around digging and burying nuts in the forest is not "lending" those nuts. He's working, planting his surplus food to grow next year's dinners, and to renew his winter shelter.


goldfan#2436902/04/00; 19:19:54

nickel62 (02/04/00; 18:42:33MDT - Msg ID:24364) Yahoo!!! thy nemesis is nickel62. How I laughed when I read this broadside!

Many thanks


canamamiThe True Reason for Today's Rally :-)#2437002/04/00; 19:22:11

I posted this last night at a stock site, re a gold mining company in which I own shares:

P.S. The tech bull will soon end, because today I bought some shares in a gold mining company that's going internet....T.WIM....traded over 40 MILLION shares today....once I go with the flow, the flow will turn. A last-ditch solution for we MIQ'ers: miq.COM

So, there it is. Gold could only rally once I bought into a gold mining company that was going internet. Only then could my "magic" good fortune cause the POG to rally. Now, if I sink everything into internet stocks, that sector will truly crash, and my abandoned gold investments will rally. In fact, but for time constraints, I was going to post here last night to announce the imminent gold bull, based on my most recent investment choice.

In any event, a happy day for was a long-time coming.

goldfanschippi (02/04/00; 10:48:14MDT - Msg ID:24316)#2437102/04/00; 19:22:53

Sir Schippi many thanks for your suggestion of geocities, I have been there since, and done what I wanted

And I would be grateful for any help or suggestions you could give me on my quest for a way to do fractal analysis on these time series in financial systems. I'm not a mathematician, merely an enthusiastic amateur. I consider mathematics to be one of the languages of God, and I delight in seeing piles of chaotic numbers organized and summarized in simple equations... and the insights to be gleaned therefrom. One of my greatest pleasures recently has been connecting with my teenagers around their math homework. Finally, we have a common interest!! Reviving this stuff, trying to find ways to explain it so they'll like it , remember it, and see how useful it can be, is a great challenge.....

Nothing is like gold
Everything=nothing right?
and gold is... you got it...


Canuck@ Stranger @ All#2437202/04/00; 19:27:59


From another (love the word Another) site:

"Have just been advised that ABX may be making an announcement Monday that they are unwinding their hedge position.. "

Let's work on this rumour!!
@ Stranger:

". . . bipolar . . ." That's the nicest thing anyone has said to me today. Now I can say "I'm not fickle ... I'm bipolar ... some Stranger told me that."

Congrats on the windfall, something to do with timing I'd bet.

Onward and upward (FOA)

Gold ..get you some (more) (ARI)

Go Scotty MAN!! Go!!

USAGOLDStranger....#2437302/04/00; 19:33:25

You forgot to tell them that the same stock you mentioned went from 35 in April, 1998 to 14 in September, 1998. $100,000 invested then would have yielded $40,000 in September or about $55,000 now -- commissions and spreads not included of course. (I don't have a calculator handy.) Or how about the period Oct 98 through when that stock went from 30 to 16, or the recent downtrend from 30 to 20? If gold were to have made the same move (from 30 to 20), it would have hit the $225 mark and God knows what that would have done to Newmont stock -- if the company still existed. That's not to say that I have a problem with gold stocks. Far from it. I've always thought they have a legitimate place in the portfolio -- especially since I agree with Mundell's theory that in a tri-currency world only gold can offer a nation-state the means to defend its currency...legitimately. The required gold will have to come from the ground. I've always had a problem though with stockbrokers who sell stocks at the expense of the metal that lies at the heart of their value. Chris Thompson the CEO at Gold Fieldds has been echoing the same themes for over a year now. Many feel, including Thompson, that forward selling helped stock values at the expense of the metal itself -- Barrick, of course, being the premier example. I don't want to get into a discussion of the merits of Newmont or whether or not its a preferable gold stock. Other than the fact its located in Denver (and its CEO and myself share the same barber), I have no particular connection to the company. However,I am supporter of the gold mining business in a major way (and in fact have great respect for Newmont's prospects.) But I don't think even the chief executives of these companies would call their stock a proxy for the hard metal. If they did, they would only succeed in undermining their own value as business executives. Perhaps you were not trying to pit stocks against the metal, but it seemed to be the case when I read your post. Please clarify?

P.S. One of "the world's largest investment firms" may have experienced liquidations of coined gold, but we didn't. Nor did any of our competitors I've talked to. I am toying with the idea that this "noise" may have been an attempt to create an atmosphere by the big houses in which they could buy gold cheap to meet their short obligations on the pretense that Y2K was causing liquidations -- liquidations that were not in fact occuring. As a matter of fact, I would have to say in January we had such a dearth of selling that we thought something was wrong. I recall the atmosphere in the silver market the weeks and months ahead of the announcement that Warren Buffet had purchased a large tranche of silver. Premiums were dropping on the buy side to sometimes one dollar or better below the spot price -- it was ludicrous. What we didn't know is that the bullion banks needed silver to meet the Buffet order. Did they created the illusion of abundance that did not exist to get weak hands to sell? It was only when Buffet's annual report came out that we discovered that he had been acquiring silver (and wanted 1000 ounce good London delivery) as the bullion houses dropped their bids way below melt. (The London oil traders were doing the same thing with oil until the Gulf wised up and made them price in basket of oil terminals, and put an end to that little arbitrage game.) As it is, gold has risen steadily during this period that premiums have dropped on coined bullion raising the question: If there is such an abundance of metal and the premiums need to be run down, then why is the price rising? I would question your sources a little more closely, Stranger, starting with "If there's so much gold around then why has the price been rising since the start of the year?"

CanuckGold#2437402/04/00; 19:34:29

" Here I sit ...(Miller Time) the fire,
Watching the SHORTS freak and perspire,
I'm happy tonight ... gold's out of sight,
Walking in a golden wonderland !!!!"


koantreasury notes and gold#2437502/04/00; 19:34:47

Weather retiring treasury notes is real or virtual, the net result is that there are less 30 year bonds for the private sector to purchase - that makes it pretty real.

I find it interesting the different theories on the rise in gold; but isn't it a bit curious that gold zooms just as palladium and platinum make major breakouts. I think the hedge and short covering in gold was a direct response to a convergence of several variables ( I suspected this would happen - why not the pros), lead by the white metals, big inflation numbers and real shortages and scared stock and bond mkts. I am aware of post hoc ergo proptor hoc possibilities, and I may be wrong (wouldn't be the first time), but statistically I would say that an analysis of variance would point to the breakout in the white metals as causing the stampede. I have hardly been on this site for a long time, but I saw the signs of this a week ago and posted it here. Gold and silver were doing nothing - only palladium and platinum - but I have seen follow the leader before and when there are real shortages the leader has a good chance of just keeping on trucking. Last I agree with stranger (what's new?) about Kaplan's take on the gold mkt. I think he is wrong. I like kaplan a lot, but I think he often hits very big nails not quite on the head. I stole that from Tom Wolf's comments about Marshall McLeun <g>. Just some ideas from koan or koanhead as I have been know in other places <g>.

Al FulchinoStranger#2437602/04/00; 20:13:03

As usual, thank you for your comments; you wrote in part:

TheStranger (02/04/00; 18:07:19MDT - Msg ID:24358)
Al Fulchino
Al - I have most of my life's savings in gold mining stocks. Almost all of them were bought since the major secular bottom which was put in by the XAU in Sept.'98. I made even more money today than I made on the biggest day last October

I ask: I am assuming you are selling on dips. Is this correct?

I have about 20 k in gold stocks and have just been riding them as I view inflation to be waiting in the wings as you do. Well let me clarify. I believe it is already here. I also think the gold stocks will eventually pan out even more, because of that . I am holding much more in physical in safe places, as I do adhere to the benefits that both you and FOA/Another promulgate. I think each of you have made good points on possession of physical. Thanks again

TheStrangerMichael#2437702/04/00; 20:14:27

You make valid points about the relative price histories of gold and gold stocks. I think the leverage is better in the stocks, but I confess, I would have slept much better lately in the metal itself. To me, timing is everything, but, to real INVESTORS, owning the gold usually makes more sense.

I was interested to see your comments about post-y2k liquidations (or the lack, thereof). I was wondering if you were having the same experience as MSDW. Perhaps you have a different type of clientele. I have talked to a trader in New York enough to know he has no emotions about gold one way or the other. If anything, he is just bored and wishes somebody would assign him to a more exciting department. I warned him last week he's about to be inundated with orders again (he was last October). But I don't think he even cared to listen.

By the way, I also phoned the new MSDW gold analyst and sent him the recent John Hathaway article by email. I told him he is far too ambivalent about gold and better get on board before the train leaves the station. He said he would take my comments into consideration. Apparently, he is still taking things into consideration as I have seen no change in his forecast.

Here's why brokers don't recommend the metal: Wall Street firms maintain a usual spread between bid and ask of about 7%. On top of that, they charge a commission of as much as 3% depending upon order size. This means the purchasing client's first monthly statement will show an ungodly 10% loss right off the bat. Then he is charged for delivery or storage, depending upon which the client chooses. If the client chooses delivery, the broker has to get it assayed and delivered back to the firm in order to sell it later on. If the client chooses to leave the gold in storage, there is a fee of .75%/year, minimum 3 years. On top of all this, the broker must open a separate precious metals account and get the client's signature on a disclosure statement before entering any orders. The alternative to all of this, of course, is just to enter an order for some Newmont and sell it when the client is ready, all done easily and cheaply over the phone.


TheStrangerAl#2437802/04/00; 20:22:35

Yes, absolutely, I agressively bought the dips. But I have hardly traded in and out at all. I am too chicken of missing a day like today.

I have over $1million in gold stocks, so I have had some pretty sad days (are you listening Canuck, skip and a few others?). But I have hedged with other stocks so that I was never at a loss overall. The one thing I have had going for me throughout, however, is confidence in my own research, a great deal of which came from reading this forum!

Solomon Weaver*sset reallocation my *ss.#2437902/04/00; 20:34:11

David Jesser, managing director of Alaron Trading's San Francisco branch, attributed
gold's rise to trade house buying and active fund buying, such as commodity funds and
hedge funds -- "the larger players."

"The uncertainty in all of the financial markets is being reflected in this movement in gold,"
he said, so it's a "reallocation of assets" into gold. "Historically this type of price action is a
flight to quality," he added.


Too bad this guy didn't read FOA/A. He claims that the spike in price is a reallocation of assets into gold. First of all, he should maybe have said "it is a reallocation of assets into paper claims on gold". THERE ARE SOME OF YOU WHO READ THIS FORUM WHO ARE HOLDING IN THE MONEY CONTRACTS AND WATCHING THEM GO MORE INTO THE MONEY - I PRAY FOR YOU THAT YOU WILL BE ABLE TO GET PAYMENT ON YOUR "WEALTH". CAVEAT EMPTOR - LET THE BUYER BEWARE.

I along with Stranger prefer to have some Newmont....use no margin and get leverage from gold prices going up...particularly when they stay up. And in the right market, Newmont can issue shares to "buy" Juniors and thereby increase their reserves.

Also, has anyone really stopped to think what this asset allocation idea is??? How much gold is really "sold" every year? 4000 tons at $10,000,0000 per ton is $40 billion. Is buying an option considered an asset allocation???? How much of those 4000 tons are for "investment" purposes?? About 100 tons or about $1 billion? With something on the order of $700 billion sitting in money markets, waiting to jump back in, and with $7 trillion "worth" of stock market float just waiting to "be sold at a profit", wouldn't a true "asset reallocation" into gold just explode the paper markets.

Oro you have to correct me on this, does the daily trade of gold futures border on 1000 tons per day? But what very small fraction of these paper games make actual claims on the physical markets??? Less than 1%? It is like a big game of musical chairs but instead of n-1 chairs for n players it is n/100 chairs for n players.

Another card to watch in the big picture....when we talk about "asset allocation".....Warren Buffet. Very unlike the Hunt Brothers who tried to corner the silver market using increasing leverage, Buffet has used the same strategy in silver that he uses in cash, buy a dominant position (thereby taking that position out of the trading float) and let the company reduce the float by buying back shares. For a couple of paltry $billion, Buffet was able to suck up a dominant position in the worlds "available" silver. If I am not mistaken, February is the month when a lot of the leases on Buffets silver come due.

We had already discussed a while back that with so much of his net worth in stocks, Buffet had no interest in using his silver bullet to shake the markets. Now, at what appears to be a top in the market, Buffet has an atomic bomb which he could use to detonate the PM markets, and he can do all of that simply by "saying he will recall leases". I am sure he already has his eyes on the companies he wants to buy on the cheap and since the world will be begging on his door step to sell some of his silver, he will have some extra to fund his shopping trip. The silver market rarely makes headline news...but I bet that sometime very soon it will.

Jason Happy and I were discussing the other day about the above ground supply of silver being on the order of 4 ounces per world citizen (or about 8 times the number of gold ounces - mostly in jewelry and silverware) and yet the amount of vault silver is closer to 1/4 the number of ounces of vault gold.

Here is my take on the situation: The silver market is like a little shack sitting next to the golden Astrodome. The big manipulators are able to throw a couple bones out to the shack and keep the price under control...and yet, now we appear to be in a situation where major hedge books are getting in trouble...that means that "holdings" and "positions" which are private (unregulated) are becoming the objects of counterparty negotiations (when you fold at the gambling table you have to show your hand). It is a new environment where counterparties are no longer willing to trust eachother (in collusion) and where on a forward moving bases, there is much more incentive to keep your trades clean. Yet silver flies under the normal radar and some big players will think they can still play their collusions there. As gold rises, silver will make some very major mood swings (much higher volatility than gold) but due to the fact that it is a small market, there won't be such whiplash on the critical hedgebooks. But there will be some pretty intense counter party defaults. The "lock-up" on paper trades will hit silver first, there will be "cash" settlements "forced" on counterparties in lieu of metal delivery, Buffet will step in and make out like a bandit on getting metal into the hands of those who really needed it (industrial buyers). Then the Arabs will understand that what just happened in the silver markets (cash settlements)is a harbinger for what "could" be happening in gold. This of course will drive the Arab gold paper buyers nuts because they will already be getting enough "worthless?" paper money for the oil they are exporting.

Just like y2k, the "truth" of the gold scam will never really be told...there will be enough turmoil to put the blame somewhere other than on gold short sellers. All that most Americans will know is that gold is once again a "good" investment...something most of them always knew in some small way.

One other small item: I noticed that the spot price on silver 90% junk did not make the same move as in bullion spot. Could this be a sign that the silver supply is getting low enough that all those junk bags are starting to get dumped into the market in lieu of pure silver??? If so, then this market is getting desperate!!!!

Poor old Solomon

Al FulchinoThanks Stranger#2438002/04/00; 20:36:07

I had meant to ask if you were selling on the highs and buying on the dips. If I would only be patient <smile>. But I think I get the picture now and thanks again. I am gonna wait things out.
R Powelldollar weak or strong?#2438102/04/00; 20:37:11

I always thought that as a rule a gold up move equals a dollar down move and vice-versa. If todays jump is just the beginning, will we see the dollar down? Mr. nickel 62 spoke of Long-Term Capital Mangement's collapse in Sept. 1998, the rush to Treasury bonds and the bailout. With talk now of bank, trading firm and/or hedge fund problems and possible bailouts or intervention I'm wondering how did the dollar react to the LTCM affair? Also events seem to be unfolding as many here have surmised, congratulations are in order! I'm glad everyone has been so persuasive for such a long time and I'm glad I was smart enough to listen. Persistence rewarded Mr. Stranger, good work! Perhaps now the icing on the cake would be for all the mindless buy crowd to become a buy anything golden hord. seriously, any thoughts on the dollars strengh or lack therof? I wonder what's happening at Kitco, they've probably torn the house down.
USAGOLDStranger, continuing on gold stocks, etc...#2438202/04/00; 20:41:01

So right, Stranger. Timing is everything. A good advisor to help put together the right mix is not only advisable, in my view, it is absolutely essential. A solid blue chip held for the long run in my view though is going to be a big winner despite the swings for the reasons mentioned in my post.. I think you probably know that I am accumulating as I have hinted as much here, even named a name once in a moment of irrational exuberance. Actually, Stranger, the only point I was trying to make in that too lengthy post was that I think both make sense -- especially with most other sectors overvalued in stocks and metal still on the bargain table. As a good (and wise) friend said to me today "Which would you rather own, one ouce of gold or two shares of Amazon?" The one an historically unassailable asset of last resort; the other a piece of paper representing a company that has never turned a profit (though its down a good job promoting its stock.)

What do you see as Ashanti's options, Stranger? That's a tough situation. Here you have a company that represents a good chunk of Ghana's income. Will the government let it fall into the hands of its creditors? What a mess. Is nationalization a possibility? A good friend of mine in the gold trading business told me today that the situation is far from over. It seems Ashanti won't even talk about its margin calls anymore and now gold is up another $25 and who knows what happens Monday.

Thanks for the clarification, Stranger. Happy to see that you a bilateral gold investor.

JCTex[GATA] Will Barrick curtail hedging on Monday?#2438302/04/00; 20:53:30

Subj: [GATA] Will Barrick curtail hedging on Monday?
Date:02/04/2000 9:44:18 PM Central Standard Time
From: This email address is being protected from spambots. You need JavaScript enabled to view it.
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10:10p EST Friday, February 4, 2000

Dear Friend of GATA and Gold:

Here's some brief but delicious news and commentary
dispatched tonight by GATA Chairman Bill "Midas"
Murphy to his subscribers at

Please post this as seems useful.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

By Bill "Midas" Murphy
Friday night, February 4, 2000

The Cafe is loaded with plugged-in members as to what
is going on behind the scenes in the gold industry. They
live in South Africa, Australia, Canada, and Europe,
as well as the United States.

One is close to Barrick Gold and has been giving the
company untold grief about its excessive hedging. He
was the one who told me about Barrick's survey of
buy side/sell side analysts and that Barrick had put out
a powder-puff version of the results; that is, the results
were a great deal more negative toward the company's
hedging than it let on.

As I reported today, Placer Dome is curtailing its
hedging activities to some degree. This announcement
was a HEADLINER. Another one MIGHT come Monday.

For this Cafe member tells me that he understands
that Barrick Gold is will announce that it will not be
rolling over its hedges as it has been doing for a
zillion years. Instead Barrick will deliver gold into
them as they expire.

That means is that Barrick will no longer be selling
into the gold forward market!

First Placer, then Barrick, if our info is correct.

Will the Australians be far behind, or will they be
asleep at the switch?

This is very very bullish news. The bullion dealers can
no longer feed the press with their usual
disinformation that it is producer selling that is
holding down the gold price. That kind of market
pablum talk is history.

The Gold Anti-Trust Action Committee has been urging
producers to take this sort of action for months now.
We have been saying it makes no sense for producers to
be short the gold market now. GATA told producers that
they were shooting themselves in the foot by hedging so
much, that if they did not show belief in the own
product, who else would? They were turning off
investors for their shares.

The market agreed, as gold share prices have been
sinking like a submarine. Today the XAU finally
reversed course and rose 14 percent, much of that
rise coming AFTER the Placer news.

If Barrick gold does make this sort of announcement on
Monday, I propose that all of us Cafe members get a
glass of wine or champagne and toast Arthur Hailey,
the great Canadian novelist who sold all his Barrick
stock in protest of the company's hedging policies.

That came about because of GATA's request that
Internet gold share investors send faxes to Barrick
gold at the Denver Gold Conference last October to
protest the company's hedging policies and urge them to
cover their hedges. We called it "Tora! Tora! Tora!"
and we announced this suprise fax attack at exactly
7:50 a.m. on a Sunday morning as the conference was
starting. That time in the morning was when the
Japanese surprised the U.S. fleet at Pearl Harbor.

I did not even know that Arthur Hailey was a Cafe
member at the time. I was stunned when he sent me a
copy of the letters he had sent to Barrick Gold and to
Chris Thompson, chairman of Gold Fields, the world's
second-biggest gold producer. Hailey praised Thompson
for taking Gold Fields' stand against hedging.

Hailey stepped up to the plate and took action. It
caught the attention of the press outside the United
States and many highly regarded journalists reported
what Hailey had done and interviewed him.

As a result, Barrick was besieged by irate
shareholders. Many of them had read about Hailey press
and agreed with him. Hailey had been a Barrick
shareholder for many years.

Other shareholders began to sell. Barrick's share price
made 52-week lows yesterday.

One reason Barrick's share price did so well today was
that the rumor of this Monday announcement was
circulated among gold fund managers this afternoon.

If Barrick was going to cut back on its ridiculous
hedging policies, big-time investors wanted in on its
plentiful gold assets in the ground.

Monday will be an interesting day, to say the least.
But Hailey goes into the Gold Hall of Fame regardless
of what Barrick announces.

Placer Dome heard him loud and clear.

I will be toasting to you, Arthur, on Monday and
winking to you at the same time.



Zenideapt pd ag and au fever#2438402/04/00; 20:55:25

You know it sometimes seems a little intimidating in this room oweing to the caliber of wisdom and experience that seems to eminate from this forum but its heartening to know that to some degree we come here by the same spell.
Personally I am a addict gold/platinum gold hunter on the beaches around the world , and on the last trip scored 46 rings in 4 days. A tip :), inter-alia! Some beaches in asia are absolutely riddled with gold and the general public have no idea indeed what a gold detector is . So I have been picking up the booty of what has been dropped for years. When the public see what that amazing machine does next minute I have a audience following me , the only hassle with the asian countries is the currency is ho hum and it is a hassle bending over every sweep of the wand picking up the dross/coin cash. So here I am collecting each trip chucking a bundle in to some locked bank box. Now I do it not so much for money but gee it gives me hope , theres nothing like bending over and picking up some gold bracelet or ring studded with diamonds :). whatta a buzz !. I know I am not in the majorities financial league here but have a few hundred ounces up my sleeve. Last night was like a walk on the beach , and the beauty being I didnt have to bother bending over to
pick up the money that usually gets in the way , yeah I sat here watching it up up up , with a hidden smirk :).
I saw the AU turning out more dollars and felt the confidence that the beaches like a bank account are still storing my hoards . Love you guys :)

UlyssesRock#2438502/04/00; 21:08:53

Please don't fall for the "WAGE INFLATION" garbage. For a good analysis of the subject, look up Gene Epstein's column in Barron's, 10-6-97. In it he gives the lie to "wage inflation".
Al FulchinoTomcat#2438602/04/00; 21:11:21

Haven't seen the TOMCAT. You still with us buddy?
Solomon Weaverdoublespeak#2438702/04/00; 21:18:16

``Normally the New York Fed does not respond to market rumors, however, we
would like to confirm that rumors of a meeting of market participants at the bank
are completely unfounded,'' said Doug Tillett, a spokesman for the bank.
That's right, the meeting will take place at a New York Hotel.

Poor old Solomon

LafisrapGandalf the White (02/04/00; 17:46:07MDT - Msg ID:24356)#2438802/04/00; 21:48:57

The "BIG" Question ! I have still been a gold buyer this year, but yes, for the last 6 weeks I have been paying close attention to coin dealer spreads on 1-ounce gold coins. It's been very interesting to me. Virtually all coin shops seem to have been immediately impacted with a flood of Y2K sell backs. I expect the coin dealers will take a bit of time to recycle all the repurchased gold coins. The interesting question is just how long that will take. Then, the premiums will go back to a normal range, no?

It was a very beautiful day in many ways. I am happy that I have been aggressively buying gold, happy that I was confident enough to liberally borrow cash to make the purchases when the POG was low, and very happy that God has given me the ability to earn money and pay back the debts.

It is OK with me if the POG only moves up from now on, but it is also OK with me if the POG goes down, way down, so I can buy more. I look forward to the opportunity to buy more gold, but I know that at higher prices I may feel that I am paying too much. I like the POG at around $250 to $275. At that price, I know what to do. It is a no brainer.

What will I do if the POG hovers around $310 to $330? I dunno.

Reading this forum has helped me to make intelligent gold purchases. I thank you all very much. I'm not sure if my dollar wealth increased more today than it ever did, but it is probably so.

Here is my investment strategy:
* stash away a largeish amount of cash for security
* buy gold with the remaining cash
* borrow cash and buy more gold
* earn cash and pay off the debt
* keep going

I am a little worried about whether I should buy more gold as the POG continues to rise. I will be getting less gold for my cash.

I sure need gold to go to $30,000.


Chris PowellWill Barrick curtail hedging on Monday#2438902/04/00; 21:51:45

Latest from GATA Chairman Bill "Midas" Murphy.
goldfan18KARAT re disappearing wealth#2439002/04/00; 21:52:13

About these messages and the disappearing wealth

18KARAT (2/3/2000; 6:05:41MDT - Msg ID:24201)
Re: ORO (2/2/2000; 23:02:53MDT - Msg ID:24188)

I8KARAT Really enjoy your posts from down under, in case you're up and about in your day today, my night, what do you make of the possibility we could be looking at Aussie miners unwinding hedges like crazy Monday, pushing the POG up another ..who knows? and my further thoughts on this you said:

>>>>>In 1987 when 40% (or whatever) of the capitalization of the market disappeared in one day.
Where did it go?
Who got richer when all those shareholders got poorer?
All those billions of dollars of shareholders' wealth just disappeared.
And the value of the shares is not just an illusion because you could at any time trade them for cash, houses, private jets etc...

Can you see why I'm suggesting that wealth defined by transactions at the margin in a securities market is purely a notional concept?
It really is just paper wealth until it's sold and in the bank.
Or exchanged for real goods.<<<<<<

What is true is that the shares cannot all be traded for goods, cars houses, etc. only those few which are sold while there is still cash available to pay for them. The rest have no value, or very little. So maybe we need some measure of wealth that multiplies the portfolio by some probability factor less than 1 that gives the expected return. This could be something like the true value of the currency, as I calculated in my post on risks. Today, it is 36 %. We could make it mandatory that all published figures of portfolios, stock indices, mutual funds etc. any "price" at all in connection with the idea of wealth, have to be accompanied by this figure, prominently displayed. Instead of the price of gold today, the news services would be obliged to give the price of the dollar today, ie. 38 cents. The closer we get to $800 gold, the higher this figure gets. Of course, in that case, the stock index would be a lot less than it is today! I guess, maybe you could pick a hole in this idea...? Fun eh!

Good as gold

TheStrangerMichael/Ashanti#2439102/04/00; 22:07:03

I beg your forgiveness, Michael. I know little of the Ashanti situation. (Thank goodness, I managed not to buy that one.) Ordinarily, I would expect the old shareholders to be relieved of ownership and new stock to be issued to the creditors. The company would go right on operating as a public company, but old shares would be worthless. Ghana would have no reason for concern... no reason, that is, unless Ghana, itself, is a major stockholder. If that is the case, we are dealing with a political situation which is beyond my powers to discern.
Black BladeNo more hedges at Placer Dome = Rise in POG!#2439202/04/00; 22:07:46

I talked to some friends at PDG, and aparrently some of the gold action today is related to PDG's announcement that there will be no more hedging as they believe that gold will only rise from the recent lows. I don't know much more than this, but since Jay Taylor has taken the helm at PDG, it looks as if a new attitude toward gold is taking shape. Mr Taylor recently took over the CEO position from J. Wilson this year. Perhaps now other producers will follow in PDG's lead. The official annoncement follows:

Gold Stocks Soar With Gold Prices As Placer Dome Will Suspend Hedging Friday, February 4, 2000 06:44 PM

By Christopher C. Williams, Staff Reporter

NEW YORK -(Dow Jones)- Newmont Mining Corp., Meridian Gold Inc. and other gold stocks glittered brightly in a weak general market Friday after a strong upward move in gold prices. The April futures contract for gold gained $23.10, or 8%, to close at $313 an ounce.

Among the gold news shaking the market Friday was Placier Dome Inc. (PDG, news) saying in the afternoon it would suspend its gold hedging position, which ABN AMRO analyst Todd Hinrichs noted, will take 62 metric tons of annual gold supply off the market. It also led to talk that other producers may also suspend their hedging positions, which would push the price of gold higher.

"Gold prices were on the move and producers said we're not going to hedge,"' said an analyst whodeclined to be identified. Placer Dome said it would suspend its gold hedging activities in light of improving gold markets and reduced producer hedging. The company expects to reduce its hedge book by at least two million ounces of gold by year-end. Among those posting double-digit gains Friday were Vancouver, British Columbia-based Placer Dome,Denver-based Newmont Mining (NEM, news), Reno, Nev.-based Meridian Gold (MDG) and Houston-based Battle Mountain Gold Co. (BMG). According to market sources, there was talk earlier in the day of a producer buyback centered on Ghana's Ashanti Goldfields Ltd. (ASL). An Ashanti spokesman declined to comment on the rumor.

A precious-metals trader noted gold stocks hadn't participated in the rally in other metals of late and
are playing a bit of catchup. The trader also said there was a short squeeze in gold. Hinrichs repeated his "buy" ratings Friday on several gold stocks, such as Toronto-based Agnico-Eagle Mines Ltd. (AEM) and Barrick Gold Corp. (ABX), Newmont and Placer Dome.

He said that if the three top producers with significant hedge positions follow Placer Dome's moves, it could take up to 200 metric tons of gold off the annual market. "If they can, it would really push the price of gold a lot higher," he said.

Agnico-Eagle and Barrick join Placer Dome as the top three producers, he said. A market source noted that was speculation that Barrick, which reported fourth-quarter earnings Friday, will probably say during a scheduled conference call Monday that it will also reduce their hedging, or at least won't add to it.

Spokesman Vincent Borg said the company will update analysts and investors on its hedging policy but he declined to say exactly what the company intends to do on hedging. He cited gold prices and the company's record earnings for the jump in Barrick's stock price Friday. Barrick reported net income of 20 cents a share, a penny below year-earlier levels but generally in line with the Street's expectations, say analysts. Newmont spokesman Doug Hock pointed out the company, which has a relatively small hedge position of 4% to 5% of reserves, is especially leveraged to the movement in the spot prices of gold. "We tend to move with spot gold prices," he said.

Black BladeFarfel and Pegasus (PGU)#2439302/04/00; 22:21:28

Your propsal RE: msg. 24318 sounds good. Unfortunately Pegasus (PGU) now Apollo (private bank-owned entity) only now has three viable mining operations: Florida Canyon, Imlay, Nevada, Montana Tunnels and Diamond Hill north of Jefferson, Montana. The CEO Warren Nenecker and the Board of Directors stripped what cash was left for their golden parachutes. The Mt. Todd fiasco was based on the premise that there would be satellite deposits around Mt. Todd.......There weren't any! And the deposit was very silicified and had extremely poor recovery. I would think that a class action suit would be fruitless, though I would like to see those involved get their due! Good luck and take care - Black Blade.
MariusSolomon's Prayers#2439402/04/00; 22:22:38


As one holder of "paper gold" well into the money, I gladly accept any/all prayers. Having sweated out the last COMEX catharsis, I had mixed feelings watching the day's events. Joy, astonishment at the explosion in option premium that occurred within the last hour of COMEX trading, and concern about how long to wait to take profits. Thankfully my broker has performed admirably and quickly even in crisis.

I have no way to know if this is the "big one" that's been predicted for so long. My focus, in order not to let my imagination run away with me & force a mistake, is to simply see what the remainder of the weekend and Monday bring. I temper my exuberance with the knowledge that the shorts have many weapons at their disposal, and have held on far longer than anyone thought possible. I realize this ability isn't infinite, but who knows whether some other non-Washington Agreement country can be jawboned into leasing some metal to help squash this rally. My only reason for discussing this aspect is to caution all not to be too crushed if we don't ride to $600 next week!

A final blurb: Murphy commented today that the uptick busted the stops on something like 7,000 contracts, and that Goldman was buying up every call option they could get their hands on. I'm feeling a little jazzed over all this, but I can't even imagine what the atmosphere at GS must be like, especially if they've got big bond trouble, too. Even at my piddling level of trading, this promises to be a white knuckle weekend. Well, I'm off to at least put in an appearance in bed, even if sleep is a fantasy. Good luck, all!

Black BladeFarfel, one little side-note#2439502/04/00; 22:26:28

Oh, I almost forgot. When Nenecker and his ilk were in court for the bankrupcy hearings and the debate over whether they should get their "Golden Parachutes" raged, the miner were being asked to take cuts, etc. The judge thought that these guys had a lot of gall asking for their payoffs.....never the less, they got it! Only in America!
Black BladeChris Powell and Barrick Hedges#2439602/04/00; 22:35:22

Boy, I hope you and the boys and girls at GATA are right. It seems that Barrick had unwound 500,000 ounce position last month, could they have already begun a systematic unwinding of their position? My hat is off to you and Sir A. Haily!
ThaiGoldLong Term Gold Rewards#2439702/04/00; 22:35:32

Hello again to Everyone:

As many of you know, I don't post much. But when I do, I am
not shy, squeamish, nor write in riddles to confuse anyone.

TheStranger, has indeed had a remarkable cap-gain today on
his Golden Stock Portfolio. And he may recall our exchange
a few months ago, when we unsheepishly/singularly/alone here
posted what we felt were sound long term gold "investments".

Of course, everyone here knows that physical gold is the
best long-term preserver of wealth imaginable. And everyone
should obtain whatever amounts of it they're comfortable
with. As insurance. Insurance of your basic wealth.

But wait: Many of us also would like to increase our wealth,
rather than just preserve it. Physical Gold can do that too,
but the turn-around costs often make it a bummer. Unless you
buy and hold it for a very long term. That's not a bad idea.

But for the really greedy amongst us, there is nothing that
can compare to capital gains achieved thru sound long-term
investing in quality (Blue Chip -- if there is such a thing)
Gold Mining Shares. Add to that, regular dividend checks.!.

I'd just like to post here tonight, once again, for new guys
and gals in this forum, what I consider to be a fine metals
portfolio of Precious Metals Mining Shares:

NEM/NYSE: Newmont. Gold. Pays dividends. Sensible hedging.
SWC/AMEX: Stillwater Mining Co. Platintum/Palladium/Rhodium.
CCH/NYSE: Campbell Resources. Gold. Up 50% today.
HL /NYSE: Hecla Mining. Silver. A steal at today's price.

ie: That is my portfolio and it experienced a paltry gain of
only 23% today, in aggregate. It probably will do better in
the next few days. Or hours. I'm confident, and need only
wait for far greater long term payoffs. And dividend checks.

There is something about to happen, that many may not be
aware of: Gold is going up. And, oddly, this time around,
the Gold Shares are going up as well. It will take only
a few moments early next week for our hated-kin, those day
trading dot-com wizards, to take notice. And they will.

The result will be an astounding flood into Precious Metal
Mining Shares as they flee their about-to-crash dot-com junk
because they (despite our often thinking it) are not dummys.

Why.?. Because it's the easiest/fastest/least-hassle of any
other investment for them to swing their trading activities
into. On a moment's notice, they can dump -say- Amazon.Com
and re-invest into -say- CCH. Same broker. Same software.
Same account. Same everything. And now, even the same gains.

Those traders (typically) do not have easy access to Futures
or other golden derivitive trading accounts. Their software
isn't geared to it. Their spirit and trade experiences will
keep them in the NYSE/NASDQ/AMEX environment. Not COMEX, not
FOREX, nor any of those other exotic safe havens, bonds etc.

Nope. They just wanna make a fast buck. And they will. In
the stock markets. Trust me. You heard it here first.

Got Some.?. ... Get Some.!.

ThaiGoldRePosting glitched 1st Paragraph#2439802/04/00; 22:40:10


Hello again to Everyone:

As many of you know, I don't post much. But when I do, I am
not shy, squeamish, nor write in riddles to confuse anyone.

**the above paragraph got cut somehow on the initial post,
**and probably will again, this time. Life is never easy.

Got Some.?. ... Get Some.!.

Black BladeAl Fulchino#2439902/04/00; 22:41:22

Your right! I haven't seen TomCat here for awhile, not to mention TurboHawg and Goldspoon - especially with the recent blast-off in PGM"s! BTW, do you have any inside scoop on the petroleum trade up there in your neck-o-the-woods?
Jason Happy(No Subject)#2440002/04/00; 23:04:28

Do policy makers in the U.S. government read this forum? I ask because of this week's announcement of the U.S. buying back bonds with the imaginary non-existant surplus, creating a shortage of available bonds...

Two weeks ago, I posted:

(01/21/00; 13:35:18MDT - Msg ID:23371)

The real problem is that the question really is:

How do you honor (pay in gold) a collection of fruadulent claims (dollars). Typically, you don't. The frauds get nothing. The problem is that all the people have been forced, or accepted the fraud, (paper dollars).

The problem is in assuming that if gold is at $20,000 of today's dollars, gold therefore must have the purchasing power of $20,000 of today's dollars. That's the confusion that entangles us as users of fiat dollars.

In fact, if you even tried to declare a national bank holiday, and give (sell) people an ounce of gold for $20,000 just to be fair, you would have no takers.

Also, distributing gold in this way leaves out those people who have made loans in dollars, and expect a return, but have none.

You really need to divide the gold up between the people holding dollars, and bonds, and bank loans... so that's 32 trillion to divide, not the 6 trillion...

Typically, the way creditors and debtors are put on the same plane is that governments end up monetizing their debt, so
everyone's a holder of dollars, and nobody holds bonds anymore. Then, everyone is left to fend for themself as the value of the currency drops rapidly to zero.

Yes, I own gold and silver, and I am extremely excited by the recent price jump. Not necessarily happy, but nervous. Do we really want the pain of reality that will surely come to the entire nation if this gold bull takes us well past the $600/oz or $1000/oz. mark?

I fear for the people who "will be destroyed for their lack of knowledge"...

ZenideaHi Jason #2440102/04/00; 23:17:19

Indeed !, ( to paraphrase msg 24400.) A Concern. Its an emotional mixed bag of sweets isnt it?. Lucky we are Christian natured perhaps enough in that we maybe reassured in the knowledge of Faith, Hope and Charity dwells within us to dispell our fears . :)
koanpdg stimulates gold action#2440202/05/00; 00:42:59

I agree that the pdg decision stimulated the gold action today, but the $64 question is why they chose today. My simple theory ( which really could be wrong!) is that the pros could see that pt and pg were just going to continue on because the cause of the rise was fundamental; and they knew gold would probably follow. They also knew that gold was at a bottom or close to the impenetrable bottom of $250 placed there in August 98. So they read the writing on the wall and promised no more hedging. This helped them with the gold price, with their stock interest, in that unhedged cmpanies will do better in a rising mkt; and with their income, if they perceive a rising mkt.

I felt pretty sure myself that platinum and palladium would keep going because every report I read said there was a big increase in demand, and just no supply at all. As well I was pretty sure that we could not see a large sustained rise in any of the 4 precious metals without affecting the others. Try to imagine either gold or silver going up by themselves.

Having said all that it does worry me that Kaplan is bearish, because we have to give him his due - he was dead right the last time there was a move up and he was about the only one that was right.

koanAshanti and Ghana#2440302/05/00; 00:47:01

Ashanti and Ghana are, I think, inextricably intertwined. Ghana is going to have to rescue Ashanti somehow; and do it on their terms. Ashanti is just too important a revenue source for Ghana - one of the $64 questions is how will this affect Birim and the Dunkwa property ( I think it's dunkwa <g>.) This will prove interesting.
Jason HappyPlacer Dome?: $480 is too cheap a price for gold?!!!#2440402/05/00; 02:07:41

This gold bull caught me off guard. Yes, I expect gold to rise MUCH more than it has, but "why now" "why today" "why the placer announcement?". And it took me a while to figure out why the Placer Dome announcement was so important.

Yes, I know all about the short selling, and how this market seems to have been waiting for a monumental event to shake it, since the near & imminent failure of Ashaniti and Cambior seem to only have put people on their toes.

It was a part of the Placer Dome announcement that finally hit me. Usually, I roll past the numbers... their average sales price for gold in their hedging program was $480. While, overall, they sold gold for much less, because the spot price is obviously much less.

Finally it hit me; in saying that a $480 hedging price... that they are stopping the further persuit of this practice... it is no longer seen as "profitable" ???... they are really saying that they expect the spot price to rise above the average sales price of $341 that they had been able to achieve with hedging at the very least, and, at most,


They are not merely saying "no more hedging" therefore, less gold for the shorts, expect short covering for a short term bull... oh no.

Yes, that is a bullish statement, but compared to:

"we believe we will make more money if we stop selling gold at $480"

it's nothing!
Of course, this is all just my opinion and speculation, and Placer Dome has not mentioned specifics...

"We believe that gold prices will move higher..." Placer President Jay Taylor said in the news release. I'm just trying to read between the lines, and that's what I see. And, I'm far too ignorant to know even remotely how they could have been getting an average price of $480/oz through hedging, so I'm obviously no gold market rocket scientist. I just read the forums, the Bible, etc.

Anyone else? Next!

THCA Present for Oro#2440502/05/00; 04:18:10


I continue to enjoy your posts here. Many thanks.

I found an article that you may find interesting. Pls let me know if you have any comments.

Blind Man's Bluff: Behind the Curve Everywhere



CanuckNumbers#2440602/05/00; 04:54:18



Numbers plucked from on-line brokerage, believed to be correct but cannot guarantee accurancy.

'Past performance does not guarantee future results...'

CanuckThe Big Number#2440702/05/00; 05:01:04




Have a golden week-end!!

CanuckNone#2440802/05/00; 05:09:25

Mr. Long, "Hi Shorty, why the frown, you look like you lost
your best friend."

Shorty (weep..weep), "All my mining friends have left me
and I have no one to play with"

Mr. Long, "Now, now, don't cry. Here's a whole bunch of new friends for you. Meet all these 'dot com' people....INTY and
Micro and LUcy and AMAZing and everyone else. Have a ball!!"
. . . . . . . . . . . . . . .


LeighZenidea#2440902/05/00; 05:48:22

Dear Zenidea: Thanks for your interesting post last night! Can you answer a question I've always wondered about? How deep do we need to bury our gold to keep it safe from metal detectors? Can you give us any gold-hiding tips? Thanks again!
Canuck@ Stranger (24378)#2441002/05/00; 06:06:01

I never miss a word you say man.

A year and a half ago when I was working the NASDAQ (primarily techs funds) I was holding the proverbial 10-15%
gold as a hedge. Back then I did not know what a 'hedge' was, all I knew was I was protecting my 'techie' investment.

In Nov. '98 I signed up with USAGOLD for which I am eternally grateful to M.K. and began to see the light. Along
with yourself there are some 'super-minds' here that REALLY
know the score.

As time went on I found myself shifting from 'techie' to gold. In Nov. '99 I approached a full-fledged broker for advice. With an understanding of hedging I told him what I was doing and I wanted a 'hedge' against Y2K. He blabbered on and on about equities and the big bull run thru the rollover and all of 2000 and forever. I nodded and left.

I think I have my investments close to yours (with the exception of a herd of zeros). A little physical, maybe 20%,
60% gold stock (FN, AGE, GOLD, HGMCY), 10% long bond, 10% equity; to hell with the cash.

Did you see my post a few days ago? The Internet Implosion and post-y2K hardware blues. What do you make of my queries?



nickel62Canuck#2441102/05/00; 06:25:51

I humbly think you should think long and hard about the zeros in your portfolio.
JourneymanLook out above - - - FINALLY? @koan, Jason Happy, TC, ALL #2441202/05/00; 06:42:42

There have been many questions and much frustration as to why the gold price dropped back so hard after the Washington Agreement caused run-up, and then has lain dormant ever since.

I'd suggest that we tend to overestimate the speed at which, even in this dawning of megabyte speeds, the human level of organizations operate. Thus we, as individuals, wonder why things don't happen sooner rather than later. WE know what's going on, afterall!! Why haven't THEY reacted yet??

In the case of the miners, and for that matter, the rest of the institutions when confronted with an alternative not built into their automatic (previous) responses -- both mental and electronically programmed -- someone in the institution must:

1. Shift their attention to the "new" development.

2. BELIEVE the new development is "real," usually on skimpy evidence.

3. CONVINCE the rest of the people in the institution to gamble on his/her perception of the new development.

This third stage probably causes the longest time delay. This is the process that has been delaying the melt-up. After all, who's going to let their **** hang out first on this new idea. Are you Columbus or will you turn out to be Icarus?

Placer Dome's statement may have been the catalyst, but the POG is the Nina, the Pinta and the Santa Marie disappearing below the horizon. There is no Washington Agreement to explain this; there is little room for explanation other than there are too many contracts and not enough gold.

The establishment is either out of ammo (remember the fundamentals -- 90% of this "ammo" is psychological) or have delayed as long as they can.

Look out above!


Of course, "Prediction is very difficult, especailly of the future." -Yogi Berra

nickel62Jason Happy The $480/ ounce gold price Placer was talking about#2441302/05/00; 07:00:02

is if you ignore the time value of money. In other words they are taking the price they will get up to ten years from now and nine years from now and eight years from now,etc. and multiplying each years price by the amount they have hedged out in that year and then presenting a simple and misleading I believe average sale price achieved. Becuase you can sell gold forward by borrowing it form a Bullion Bank and selling it at spot today and the Bullion Bank then invests the sale proceeds in a money market account for the miner for as many years till he gets to the year where you sold the hedge, the price the Bullion Banker will pay you is the current spot price plus interest all the way out to the year you actually contracted to sell the future gold in. They then charge you interest at the gold lease rate for the number of years from now to the sale for lending you the actual physical gold that they sold into the market place for you to generate the proceeds to be invested in the money market fund.Since gold interest rates to someone who can be counted on to return the gold (like a mine) are quite low (currently 1-2%)and the investment vehicle they might buy such as a money market fund or a treasury bond might yeild 6-7% the amount of additional money or price they are willing to add to the price of gold that you get is the difference(7%-2%=5%)per year for ten years lets say the current spot price of gold is $308/ounce times 1.05 equals $323.40/ounce one year out, times 1.05 equals$339.57/ounce two years out,times 1.05 equals $356.55/oounce three years out etc. when you get to ten years out it is $501.70/ounce.So if you have 10% of your hedge book at ten years you multiple 501.70 times 10%, and twenty percent of your hedges at eight years (eight year number is $452.78/ounce)so 452.80 times .20 etc. add up all the numbers and take a simple arithmetic average price recieved and mislead your shareholders with it. It is a little like ignoring the interest you pay over the life of a mortagage when you buy a house except in reverse. They are neglecting to tell you that they really are just reflecting the time value of compunded interest and aren't really getting the same value that they claim because the gold hedge has certain risks that could effect the outcome over the life of the hedges which as you noticed is a long,long time.
USAGOLDStranger....#2441402/05/00; 07:11:50

Something came up last night before I could completely respond to your post about stock brokerage firm commissions on gold sales. We have never considered either the stock brokerages or the banks real competitors. Their commissions, spreads and other charges are way too high and like the fellow you mentioned in your post, most of the time they neither have the interest nor the knowledge required to properly assist a gold investor. They also encourage storage programs where they make an additional kicker. We have sold thousands of ounces of gold over the years and I don't think we have 500 all together stored at a depository. An overwhelming majority of gold investors want delivery of their metal. We in fact strongly recommend it. Most investors in the gold market do not seriously consider stock brokerages as a gold source, and I would have to say by and large that the stock brokerage industry doesn't have much interest in placing gold.

ALL: I would encourage any gold stock investor to get the buy-sell spread on the stock they are purchasing as well as a full disclosure on the commission rate IN and OUT before buying. I would also insist on a full disclosure of the mining company's current hedge policies and intentions, as well as disclosure of any other potential problems, particularly within their loan portfolio. Mining is a risky and dangerous business not just in the field, but as we now know, in the financial end of it. The people running these operations need to know what they are doing on several levels. I think it is interesting to note that some of the financial officers of these companies did not understand the hedge programs the bullion banks had put in place for them. I am sure that this will be part of the Ashanti defense since they have made public rumblings along these lines already. What else is going on in some of these mining companies that we don't know about? There are the good, the bad and the downright ugly in this regard and you don't want to be holding the ugly. As I have said in the past, gold stocks are stocks first and gold second, and need to be analyzed as a security not a proxy for gold, and that needs to be done by someone who truly understands the industry. Pick your broker well.

nickel62Journeyman I loved your "look out above" post#2441502/05/00; 07:14:58

I think that pretty well sums up the situation. How many times have we all been in an organization when the whole premise of the business changes and we slowly creep toward action. What scares me about Placer(I still own some of their stock)is that they apparently increased their hedged position by 4 million ounces since last September. And then started to bring it back dowm.Someone mentioned this in a post last night and I believe it is true. Before I sold almost all our postions I talked to their in house investor relations guy and he sounded still sold on the virtues of hedging and repeated how much money they had made in the past etc. Luckily having fallen off that bridge before I stopped arguing and acted with my feet and unloaded the stock but it was clear that the people in power in all these mining companies had gotten to where they are today by being believers in hedging and for them to admit it was no longer the way was going to take a long time and for some will never occur(Barick?). Monday's price action should see the majority of them either have the helm wrestled from their grasp by their boards of directors or many battlefield conversions.
Goldman God get you some! On a spit preferably.

Jason HappyThanks nickel62#2441602/05/00; 07:24:53

now I understand this hedging business a little bit better. Very clear explanation you gave.
nickel62koan The reason that Placer might well have decide to change their hedge#2441702/05/00; 07:26:26

program yesterday is that by thursday morning they would have known that Goldman Sachs and several other major hedgers were either in bankrupcy or close to it. This epiphany would have galzinized even the most recalcitrant hedger.The Placer management as has been pointed out earlier had been increasing their hedges since the Washington accord so the death of Goldman(okay probably just a financial restructuring)would have scared the **** out of them.
nickel62Jason Happy #2441802/05/00; 07:32:59

The fancy word for that selling at a higher price in the future is "contango"which you have probably seen bandied about. I used to go on many mine tours and exploration site examinations in the field and since I am really just a tenderfoot in the mining business as a generalist investor seldom had a clue what I was looking at when someone would shove a piece of ore in my face. One of the old timeres who did know what he was doing took me aside and gave me a $35 maginifying glass tied onto a piece of leather string and said look through this when they give you some ore and study it intently and they'll think you are a geologist. He was right my reputation improved immediately.So now when someone tells you what do you think of the hedges in the gold market you can tell them "It depends on the contango"and they will make you their advisor.
JourneymanThanx @Nickel62, 18karat, Goldfan, TC, FOA, & of course, Oro#2441902/05/00; 07:55:21

Thanx folks! Been reading (and archiving) all your stuff! This forum is indeed a great place for "continuing education," and the "instructors" often become the students, and vice-versa I think.

High Regards,

nickel62Are there any new lurkers or posters who have recently been drawn to this site by #2442002/05/00; 07:55:29

the recent gold market action. It is clear from watching the CNBC type media that no one is going to hear about the gold move from them but I am wondering if anyone has stumbled into this forum recently from the day trader type world.
RossLLast minute sell-off#2442102/05/00; 07:55:38

I'm still wondering what happened at the end of the COMEX trading day on Friday. The April contract sold off $5 in the last minute of trading Friday with 184 contracts traded in the last minute. I retrieved the one-minute and five minute charts from and saved them in my personal web space. See the link above.

The closing price was still well above the $308 spot price quoted by Kitco... So, I'm wondering if the last minute action was just day traders taking profits or an attempt to kill off the rally? The five minute chart also shows heavy volume in the last 5 minutes of Thursday, with the price off a little. A pattern?


USAGOLDRossL...#2442202/05/00; 07:57:49

I was on and off watching the screen all day yesterday and there were big swings ($4 to $5) the entire trading session. Were the volumes at the end out of line with earlier volumes?
Al FulchinoBlack Blade#2442302/05/00; 08:00:32


Black Blade (02/04/00; 22:41:22MDT - Msg ID:24399)
Al Fulchino
Your right! I haven't seen TomCat here for awhile, not to mention TurboHawg and Goldspoon - especially with the recent blast-off in PGM"s! BTW, do you have any inside scoop on the petroleum trade up there in your neck-o-the-woods?

Haven't seen any of them. Hope they are all ok.

As far as the petro industry up here, my wholesale prices have been steady the last couple of weeks. I do not sell diesel but prices bounce around 14 cents up a day then down 8 etc. Retail for diesel is 1.79. Heating oil is about the same price up here. In fact, the heating oil companies <the local joes> are complaining of several prices changes per day and from the time they send out a tanker to the rack, they often experience prices changes when they arrive to load. The local politicos have initiated investigations of "the usual suspects" for good measure, even to the point of increasing oil truck inspections for safety and measurment violations. An inspector from Mass., even admitted the increase was a response to the higher prices. I would say "go figure" <lol> but it wouldn't even be hyberole, unfortunately.

RossLLast minute sell-off#2442402/05/00; 08:10:07

MK, refering to the charts, (click the link) it looks like the typical volume was 15-25 contracts per minute in the afternoon yesterday, except there were none traded in the 2 minutes right before 13:30. The last minute has the huge spike.
TheStrangerCanuck and Journeyman#2442502/05/00; 09:02:15

Canuck - Re: "Did you see my post a few days ago? The Internet Implosion and post-y2K hardware blues. What do you make of my queries?"

Please give me a reference so that I can reread the original post.

Journeyman - I want to join in the praise of post #24412. It echoes my thinking exactly. Every great investor is, at his core, a psychologist, and your post is a good example why.

NewGoldRepost from Kitco#2442602/05/00; 09:30:28

Date: Fri Feb 04 2000 14:57
Rick (@ I found this on another forum.....) ID#413328:
Copyright © 1999 Rick/Kitco Inc. All rights reserved

reposted without permission, but very interesting indeed.

TZADEAK* @ Realities
copyright TZADEAK* all rights reserved.

@Near the Frontlines of the Currency wars......The Battle of Kapputt.....

As I stated before, this NEW Gold Bull is NOT for the faint of heart.....If you can't take the heat go on holiday......since the Alice ( Thatcher ) in "Euroland" shpeal by Brit Prof. Buiter proclaiming "wide"Euro prosperity and "anti" cyclical deficits the Euro had finally been on the march had to be "controlled".....
The US$, Jap. Yen and Brit Pound have opened at least 7 "fronts" vs the Euro....The first front of course is the famous, well "publisized" BOE Gold "sales".... the 4th front is the "Battle of Kapputt"
Helmut Khol "THE" symbol of European Unification , the Mastricht treaty, and the EURO had to be "discredited"....
Face it folks this Kohl "thing" is much bigger in Germany than the Nixon watergate "thing" was for the USA in the 70's, ( attack a nation's ( currency's ) pride.....I need not say more....The German Mark in particular has been especially hard "hit" along with the Euro.......Let's face it what "politician" isn't on the take? But why such scandal and why now?....In a recent speech in early January ,right in the US, a EC banker Noyer, proclaimed that the EURO's world "role" for trade, investment, and RESERVE CURRENCY, should be determined by the "markets"......An obvious direct challenge to the current world's reserve currency US$.... But the Battle of Kapputt is far from over, spilling over to the "Battle of Interest Rates".....more on this and the Battle of the Brit.Pound and others as well as and the Gold "card"....... later.....

@The MOTHER of all Bubbles.....This Thing has legs, wings, jets and fuel cell rockets.......
Those looking for a market "crash" very soon before Gold moves don't realise that this market
is the MOTHER of all Bubbles...."it" has formed numerous additional Bubbles on the top of
the MOTHER.....and the WIZZARDS are working double and tripple overtime refining "their'
smoke and mirrors US$ illusions....It' going to be around for a while yet....
also look for Congress to add fuel to the "NO" inflation talk by passing minimum wage hikes...
can you say "wage price inflation"......It is becoming "clear" to Gold that
"they" were/are monitizing.......the BIG problems will come when "real" interest rates drop sharply
as inflation picks up....."their" ability to raise interest rates much higher to support US$ is limited,
since the majority of personal, including mortgages, and corporate debt is short term and very high indeed.....Don't forget it took Rates of 21% to stop...BIG problems ahead as to how "they" are
going to deal with inflation ( OIL ) , if it stays here or worse, keeps on "movin-on-up".......

@ The South African Connection........."They" are going to "squeeze" SA PM's out, one way or another....
"they" are forcing a NEW SA policy on mineral rights the"use them or loose them" more than ever to
get as many tons of physical PM'S as possible to keep "their" game an example East Rand
was disolved about 6 months ago, and closed only to reopen last week, under the "use them or loose them" mineral program, with "mysterious" financing and low wage/slave labour to get as much physical Gold dumped on the markets as possible...."they" are doing this in other countries as well.....
But SA tried to fight back with Platimun and Palladium, making "noises" to the effect that these mines
were producing at complete capacity and talk of miners no more pt and pd available from SA and of course Russia, which drove those markets over US$500.00.... "they" retaliated and drove the value of the SA Rand down as a "warning"....The market seems to be convinced that the SA will "give in"
as usual, since the spot price of Platinum is over US$510.00 while the April/2000 contract is US$470.00, $40.00 discount.....while Palladium spot and futures are about the same.....

@ Shareholders Revolt.....Gold....
As I first suggested last year, shareholders are revolting against overhedged miners, Ashanti
is being sued, word is many others to come.... much talk today about miners covering Gold shorts,
in view of Ashanti lawsuit.....rumors of hedge fund buying.....
BUT in reality it is becoming clear that Summers is no "RUBIN"...and "con"fidence is starting
to shake a bit especially on this 30 year "thing', and markets are becoming "concerned" about
" Inflation ( OIL ) ".....
look for Iraq to soon stop Oil flow unless all US/Brit sanctions are lifted....

more later...

Return to Kitco Homepage

HenriTownCrier#2442702/05/00; 09:38:58

Thanks for the Link! RE:Msg ID:24334
canamamiBrief Post re Ashanti#2442802/05/00; 10:14:23

I acquired some knowledge re Ghana in a former employment, though I'm a bit rusty right now.

On Bill Murphy's site, there was a report a few weeks ago that a group of shareholders was going to the Ghanaian court, in Accra, re the Ashanti situation. Of relevance was that the 31st of December Women's Movement had a role in this, and apparently had some money managers lined up to run Ashanti. Now, the 31st December was the date of Rawlings coup in 1979, and the 31st December Women's Movement is (or was) run by Rawlings wife. During Rawlings' Castroite phase, the Movement was a bastion of his support, and continues to be a supporter of Rawlings after democratization. Thus, I infer that this earlier move on Ashanti is supported by Rawlings and the Ghanaian government, and that the Ghanaian government (which owns, I believe, 20% of Ashanti's shares)will determine to the greatest degree possible, the outcome of this matter. (Ashanti also comprises 90% of the capitalization of Accra's stock market). I have read that the executive now interferes with the Ghanaian judiciary, so the government may be interfering, to get the result it wants. I note that Rawlings has been rumoured to have had three former judges of the highest court murdered for rulings they made after he left power the first time, during the interregnum between his periods of rule, though the courts did show independence in the period after the new Constitution came into effect (ruling against the government), so who knows what will happen. Gotta run, but this will be an interesting conflict of laws problem, between the US and Ghanaian court. It's enough to drive one back into private practice.

Canuck@ nickle62#2442902/05/00; 10:16:45

I refer to Stranger's 1,000,000; I have fewer zero's. Do you refer to the same?
Canuck@ Stranger#2443002/05/00; 10:34:00

Edited version of post a few days ago.

I read a most interesting article late last week, perhaps Saturday, in the National Post. It is/was entitled the "The
Implosion Of The Internet". The general slant of the story is that internet users have been doubling every year or so and presently 139 million Americans and 12 million Canadians use the 'net'. This represents approximately half of the population of the respective countries. The author, claims that saturation is nearly upon us; very close in the USA, followed by Canada, England, Japan, etc., etc.

This raises a flag in my mind. The internet, arguably, is the genesis of the economic expansion in the last 2,3,4,5 years. When internet user GROWTH reaches equilibrium, what happens next? No wonder the AOL-Time/Warner merger; we have 'em on the net now, now we have to entertain 'em or lose them. I perceive when saturation occurs, that is to say, when growth stops, many a buck will leave and find a new home. This leaves the money 'sloshing' about, chasing too few goods/services (supply) and we have learned from our friends (ORO, ARI, Stranger, FOA, etc., etc.).

Another, (I like the word ANOTHER) concept I wrestle with is the massive computer/network/hardware/software expenditures pre-Y2K. Corporations have spent oodles of dough upgrading their systems to the latest and greatest and where will new sales be? (Lucent, Dell etc.) These companies, IHMO, will have 2/3/4/... bad quarters, yes?

Comments on these two concepts?

nickel62Canuck #2443102/05/00; 10:34:04

What do you mean refer to the same?
koanNickle 62 re PDG#2443202/05/00; 10:42:39

You may be right, but it is a pretty big coincidence that this happens just as platinum and palladium breakout out into all time historical highs after running for days. The problem I have with the Goldman Sachs theory is that it can't be tested. I mean no disrespect towards you at all, but I have read a zillion Goldman Sachs theories, as well as others that never went anywhere with regard to gold.

The platinum palladium shortages coupled at exactly the same time as inflation fears became their highest is a straight forward cause and effect relationship. I have not bought any metals stuff for a long time until a week ago and since then I loaded up. This move has been there to guess at for a week. PDG was watching these events unfold I am sure and they smartly caught the wave and rode it. But I think pt, pg and inflation fears were the catalyst. I usually invest and speculate with variables I can quantify to some degree. Having said all that you may well be right <g>-cheers.

18KARATRe: goldfan (02/04/00; 21:52:13MDT - Msg ID:24390)#2443302/05/00; 10:50:58

>>>>>what do you make of the possibility we could be looking at Aussie miners unwinding hedges like crazy Monday, pushing the POG up another ..who knows?<<<<

I went to an investment exhibition late last year in Melbourne and I got talking to this guy from Normandy Mining and he said that their hedging program did not expose them to any risk of margin calls.
Nevertheless I got the impression that he had been fielding a lot of questions from anxious shareholders.
Even if there are no margin calls there could still be a large loss of potential profit if they have sold a lot forward.
I hope that if any of them were dangerously exposed, they unwound their positions in the recent price dip while they had their chance - Because it's starting to look quite hazardous for the shorts.
Ashanti should serve as a warning to them all.


>>>>>What is true is that the shares cannot all be traded for goods, cars houses, etc. only those few which are sold while there is still cash available to pay for them. The rest have no value, or very little. So maybe we need some measure of wealth that multiplies the portfolio by some probability factor less than 1 that gives the expected return. This could be something like the true value of the currency, as I calculated in my post on risks. Today, it is 36 %. We could make it mandatory that all published figures of portfolios, stock indices, mutual funds etc. any "price" at all in connection with the idea of wealth, have to be accompanied by this figure, prominently displayed. Instead of the price of gold today, the news services would be obliged to give the price of the dollar today, ie. 38 cents. The closer we get to $800 gold, the higher this figure gets. Of course, in that case, the stock index would be a lot less than it is today! I guess, maybe you could pick a hole in this idea...? Fun eh!<<<<<<<

Oh no, I wouldn't pick a hole in it.
But I'll tell you what.
It would need a flawless justification in theoretical terms before you could sell such an idea.
Some sort of risk adjusted price estimate.
Perhaps it could take into account recent price volatility or beta or something.
Actually I have a vague memory from the many hours I spent trying to make sense of the capital asset pricing model (portfolio theory) that they do have something like that in the academic literature.
It's a long time since I've seen it though.

You're right about the time difference here on the other side of the Pacific.
I normally post late at night, our time, when the rest of the 18K household are in bed and I have the phone line to myself.
It's usually late-morning New York time.


nickel62koan#2443402/05/00; 10:53:07

I don't disagree that the markets in other metals are clearly moving. Nickel for instance is at $4.15/pound etc.,I was just trying to suggest they might have been moved to action by the rumours.Whether or not Goldman and several banks are in dire straits is still problematic.But it is a certainty that the rumour that they had gone bust was rolling the markets by early thursday. Again no knowledge but the fear was definitely there. The reason that I think it took a major shock to shake these guys is that they had clearly significantly added to their position over the last six months,as one of our fellow poaters pointed out last night and agrees with the amounts I was quoted in October. So these guys really didn't get it. Was it the inflationary moves in the other metals or pure panic? I don't know either,probably a little of both. But it is a very significant event. If I were a small hedged miner I would be really sweating that Barrick and/or Normandy will be in the market on Monday in Austrailia trying to close before I can.
goldfanThe Swinging Bridge and the Hedger#2443502/05/00; 10:53:15

First to Nickel62 and Journeyman and all... your posts today as usual are really entertaining and enlightening to read, thanks again and again.

For the story on how the credit bubble and the "swinging bridge" looks today, read Doug Nolan's latest (Feb 4) at

The Swinging Bridge and the Hedger

Imagine a suspension bridge in a strong wind. The pressure of the wind on the bridge is a wind load that the bridge must bear. Now imagine that a few really strong gusts get the bridge swinging a bit. As the upwind side of the bridge swings that way, it presents its bottom face somewhat to the wind, increasing the area of the bridge struck by the wind, adding extra energy to the bridge. The bridge swings down and back, (these are all very small movements, barely noticeable, at first), because it has more energy, it swings further on the downwind side, presenting an even larger area of its top surface to the wind, and getting even more energy, and so swings back even further this time.

The bridge begins to swing like a pendulum that is being given a stronger and stronger push at the top end of each swing. The resulting motion, is a series of steady swings getting wilder and wilder, a lot of twisting and torquing because the ends are fastened down, and finally a wild chaotic bucking motion and utter collapse and destruction of the bridge.

As I get it, this is the way hedging and derivatives strategies, added to stock markets, behave. They become the mechanism for adding wilder and wilder swings to the values, more and more volatility, until the structure breaks. A futures trader selling Puts to bond holders wishing to hedge against an interest rate rise, sees a worrying rise in interest rates (worrying to him, since he may have to make good on his promise to guarantee the price of the bond), he shorts some treasury bonds as a hedge to protect himself, borrowing the bonds, and selling them at today's price. (If the price continues down, he can buy them back at a lower price and use the spread to cover his upside payout.) In short-selling like this, he gives a "push" down to the bond price, thus adding "energy" of downward momentum to the price. This increases his upside risk, and he may have to short more, pushing the price down even more. If the bond price then swings back, he must buy to cover his short sale, or lose money, and in doing so, he adds a push of upside momentum to the price. And so it goes, a lot of these guys doing a lot of this, sets the bridge swinging, volatility getting greater and greater, until some, maybe many, can't meet their obligations. They default and the whole structure unwinds in a crash.

The moral is, if your promise of wealth is in the balloon when the bubble bursts, you can't protect it . Nobody will buy your stuff, no matter how "valuable" it is. Good luck in a lawsuit, you and 20 million others. Also, whatever the paper, it may be confiscated to pay off the broker's creditors. (Buy gold now for goodness sake, and store it outside any institution!!!)

I remember a trader talking about his situation in the 1987 shakeout. He said, "I had myself covered with puts. They were worth a fortune, on paper. But nobody would buy them. I couldn't get my money out. Then the market turned around and their value evaporated."

"So sue me," they say, as they walk away from you....

If this seems like teaching Grandma to suck eggs, I apologize. I'm writing to help myself and even more unenlightened people understand the mess we're in.


nickel62News article detailing panic in the long bond market last week.#2443602/05/00; 11:11:49

e Metropole members,

Rick Ackerman, writes the "Market Directions"
column in the Sunday San Francisco Examiner and
runs his own web site of financial commentary,

Rick is one of the few mainstream financial
columnists in the United States that has given
GATA the time of day this past year.

The Cafe thanks him for his kind words.

What follows below is an excerpt from Ackerman's
commentary for this coming Monday.

By Rick Ackerman
Commentary for Monday, February 7, 2000

There is an old saying that if you can keep a cool head
while those around you are losing theirs, perhaps you
don't understand the situation.

As much could be said of the investors and pundits who
have contrived recently to remain blithely bullish
amidst perilous turmoil in the financial and commodity

There is first of all the matter of the 30-year bond.
Just as Fed Chairman Alan Greenspan and his cronies at
the Fed are tightening short-term rates, Treasury
announces that it's going to drastically curtail the
supply of long-term bonds. This immediately drives up
their price and pushes down yields at the long end,
which in turn sends some big hedgers into a panic.

It's not rocket science to figure out why. Our biggest
banks are mostly in the business of borrowing short and
lending long. This works fine as long as short-term
rates stay below long-term rates. But when they become
"inverted," especially as precipitously as they did
last week, it plays havoc with interest-rate hedges,
not to mention with the portfolios of some of the
biggest players in global finance.

There is also the matter of Fed strategy, which lately
has looked less like a game plan than spin control run
amok. How else to justify a tightening of short-term
rates to "cool" the economy while plummeting long-term
rates promise to flood the mortgage market with fresh

Gold went nuts Friday, and even though we held a very
small position against the trend, I found myself
rooting for it to go higher. For the rally was most
clearly meant to punish the greedy and perhaps even
criminal excesses of some of the sleaziest players on
global finance.

Goldman Sachs is one of them, and whether you believe
in conspiracies or not, the evidence is overwhelming
that the firm has conspired with friends in high places
to profit by suppressing the market for bullion.
Supposedly they got caught with their pants around
their ankles on Friday and had to cover huge short
positions just above $300 an ounce. Somebody surely had

And if that isn't enough to rattle the markets, there
is crude oil, which looks to be staging a run at $30 a
barrel. The Wall Street Journal may think that the
broad growth of our "service economy" has reduced
America's exposure to rising energy prices, but my
feeling is that, at the margin, rising crude prices are
about to zap the airlines, the truckers, and just about
everything else in this world that either moves in the
air or on wheels, or that makes heat.

I could rant for a bit longer but will instead refer
you to a more knowledgeable source, Bill Murphy's Le
Metropole Cafe -- The site's
heavyweight commentators are so very far ahead of
whatever you might find in The Wall Street Journal, The
New York Times, Business Week, or all the rest that it
should be considered a must-read for anyone interested
in the markets.

<A HREF="">Le Metropole

All the best,

Bill Murphy
Le Patron

goldfanCanuck (02/05/00; 10:34:00MDT - Msg ID:24430)#2443702/05/00; 11:39:41

@ Stranger Sir Canuck... This is how I see the framework in which we have to look at the Internet consumer craze. Couple it to the fact that it apparently costs $26 of advertising outside the Net, to generate $1 of Internet sales. Internet companies have to sell below cost to generate revenue.

When currency and credit are being poured into a system, stuff has to be bought and sold at ever increasing rates to sop up the money. If there isn't any real stuff to be sold, then people will get very creative, and make up unreal stuff to be sold...Money pouring into the market via mufunds etc. Not enough stocks around to sell? easy, just make up IPO's as fast as you can, give them a .com name,and spend the funds you get on whatever you like, and the accompanying BS publicity. What's the difference from the phone calls I get, telling me I've won $1 million, and all I have to do is send them $1000 to cover the cost of getting me my prize???

The Financial Situation of the Average USA (also by Siamese twinning, Canadian) Citizen.

Wages for work = payments for current purchases + payments on loans for past purchases + savings.

income from wages + income growth+ credit = GDP +GDP growth + trade deficit + debt payments + savings.

GDP and trade deficit are all increasing much faster than wages. (People are still on a spending binge)
Savings is negative.

So growth in GDP plus growth in trade deficit plus growth in debt payments is offset by increased debt and decreased savings.

This is a recursive equation, in which debt climbs and climbs, and savings decrease.
If consumption drops, to make room for more savings, corporations lose income, equities drop, savings further decline, layoffs etc... downward spiral. Chaos country, eh!

..with thanks to Sean Corrigan at Gold_Eagle for the scheme.



Gandalf the WhiteRoss L & MK -- "The Last Minute" #2443802/05/00; 11:44:25

The Hobbits were watching the same chart all day long as some of them do each COMEX trading day! -- As the level of noise from the Screen Room increased throughout the afternoon, more and more Hobbits arrived, until the place was packed! -- IF you have watched the chart like many of them have, one would notice that the "last minute" contains the both minute 12:24 and 12:25 PLUS the "runoff" of trades beyond the 12:25 end time. THIS IS SOP !! --- BUT at the end of the session -- the bid - ask prices had a 0.5 point spread for the last few minutes and the high of 318.5 was hit during the 12:23 minute, and the price at exactly 12:25 was at 115.0 !! -- PROFIT taking occured at the bell in SPADES and the volumn of runoff seemed to NEVER stop. DID you see the VOLUME ? Estimated at 120,000 contracts!!! -- MANY, like The Stranger, had made more that day than they had made in months and closed the weeks books! --- The PROOF in the Hobbit's Grue, FOA, theory, of "ON the ROAD" will be seen MONDAY, and ALL the Hobbits will be there to cheer on the SHORTS attempting to find someone willing to sell them PAPER GOLD.

TheStrangerCanuck#2443902/05/00; 11:51:09

Okay, Canuck, thanks. I remember the post now. Yes, of course, you are right. In fact, it used to be that when a rapidly growing stock market darling began to experience decelerating growth, the stock would plummet. Witness Polaroid (instant cameras) in the mid '70s or gaming stocks in the early '90s. It was not the rate of growth that mattered. Rather, it was the acceleration or deceleration thereof.

Lately, because of the ceaseless inflow of baby boomer retirement money and online trading, the rules have changed somewhat. Online trading has allowed people to buy stocks without ever consulting a professional about its valuation. Buyers of Cisco, for example, often don't know the stock trades at over 200 times its earnings. They probably wouldn't understand if they did. They just want in on the new economy. Unfortunately, with scads of baby boomer money involved, it is pretty slim pickings for any tech buyer who does care about value or real earnings. Thus we get stocks like Intel, whose revenue growth dropped to about 10% last year, but the stock rose 50% or more. (Those numbers are pretty close, but they are off the top of my head, so please doublecheck before repeating).

This has not been an easy time for any value investor, let alone goldbugs. As you say, we all know that many stocks with high valuations will experience a decline in rate of growth. Yet, people continue to choose them over investments that we consider a much better value.

I hate to use the Titanic analogy, but, because it is familiar to us all and because it is so apt, I will anyway. The people on that ship were tranquilized by all the opulence and gaiety around much so, that when fate, like a magician, performed its cruel slight of hand, no one was prepared to react. In the two hours which lapsed between impact and sinking, most of the lifeboats were sent out half-empty, and, according to records, no attempts were made at building rafts. In short, fifteen hundred people died that night because of a lack of critical thought.*

Be that as it may, even good critical thinking won't guarantee success in the markets. But I wouldn't invest without it, and I assume it is what brings each of us to the forum these days. For that reason, I like to think of myself and the others here as raft builders...laughed at, perhaps, but still there when the sun comes up.

*By the way, Canuck, I believe critical thinking works well between forum members, too. This is why I hope we all will remember that, sometimes, when light is created, so is a little heat. Proper respect for one another is certainly elemental to civil discourse, but, for getting at the truth, there is no word in the english language more effective than a loudly spoken "Baloney!".

koanGoldman Sachs#2444002/05/00; 11:51:33

Remember right before the last blast off in gold, Goldman Sachs, bought / tied up, 1/2 the Comex gold. Many were surprised that there was enough gold ( all of the conspiracies about there being no physical available) as you know there was plenty and then some. Still is. Goldman Sachs made a real smart investment and made a ton of money on it. They may have had inside info re the announcement by the central banks <g>.

With regard to Metropol Cafe. Remember they were predicting $9 silver by December 1999. Didn't happen. Actually the guy who has been the most right on has been Kaplan. He sold his entire model portfolio at the top of the last move. I remember because I sold mine shortly after he did and bought Canadian wireless. Smartest investment I ever made. so I am worried about kaplans bearish thoughts, but he sure didn't see this move.

I think the resaon he missed it is he is so technical that when a fundamental move takes place i.e. pt shortages - he gets lost. But I will still watch him. He has made a lot of smart predictions - sort of rambling now lol.

TomcatJoel Skousen's latest on the UN's push for world government#2444102/05/00; 11:59:29

The following is from Joel's Skousen's latest Newsletter. I know Joel Skousen personally and can vouch for his integrity.

WORLD AFFAIRS BRIEF February 4, 2000 Copyright Joel Skousen. Quotations with attribution permitted. Website:


I wrote at the end of 1999 that US citizens have been deeply probed about how much resistance they would offer to a variety of global agendas. By and large Americans have failed to provide any meaningful resistance. Already we are beginning to see the results. The NWO crowd is moving ahead with major proposals in earnest and aren't even bothering to be subtle about it. They are on a roll and the tidal waves
of change are sweeping in from multiple directions. Let me summarize what is happening.


On the front cover of the January 17th issue of The New Republic, an old left publication turned politically chic, dramatically proclaims, "America Is Surrendering Its Sovereignty To A World Government.
HOORAY!" The editors correctly assume that Americans know nothing about the devastating effects that such a loss of sovereignty would have on taxes, personal liberty, court procedures, property rights, religious
liberty and defense (both national and personal). The establishment is learning fast that as long as they shield Americans from confronting any direct effects of UN rule until after the US is irreversibly integrated into global legal structures there will be no resistance. The inability
of Americans to foresee the results and project the theory into practice is a direct result of a public education system that systematically denies anyone the essential information about how liberty is maintained and how majority rule in a democracy must be chained to constitutional
limitations by tight legal language.

Even though Conservative party leader William Hague is no trustworthy opponent of globalism, he let loose a barrage this past week against the secret agenda of Tony Blair's Labor Party. He charged that Tony Blair,
in league with Brussels’ EU leadership, is pushing ahead with plans to create a European superstate, without openly presenting the key sovereignty issues for a vote. Mr. Hague revealed that a series of
European Commission proposals published last week not only would further Britain's integration into the European Union, but would limit a member states' right to use their national veto. Hague loudly denounced Blair saying, "They are pushing for a European Union with its own government,
its own army, its own taxes, its own foreign policy, its own criminal justice system, its own constitution, as well as its own currency - in other words, a single European state....The submission is an integrationist wish-list - the blueprint for a single European state." Hague also correctly pointed out that the EU's strategy is to eliminate
national veto powers gradually by only applying it to carefully chosen "safe" issues, so as to get the people used to the idea. He said: "The national veto would be abolished in areas of social security, social policy, industrial and transport policy, financial regulation and the spending of the multi-million pound structural and cohesion funds."
Now, if you think this is only of concern for Europe, look at what the globalists have in store for the US in their upcoming New York Summit

The United Nations will convene a special millennium global summit on the future of the world in September 2000. This summit will be the culmination of 10 years of planning and maneuvering and is intended to begin the implementation phase of numerous structural UN changes aimed at breaking the UN loose from "voluntary participation" . The basic
document outlining the new objectives was published by the UN Commission on Global Governance in 1995. The latest document is called, "The Charter for Global Democracy" and was published on UN day, October 24th, 1999 and signed by influential leaders in 56 nations as well as most of
the "private" Non-Government Organizations (NGO). NGOs are, for the most part, contingencies of leftist lobbies formed to give the appearance of grass roots support, pressuring the UN to continue locking up the world in terms of environment, human dignity and other euphemisms
for population and property control. In reality this document is a charter for the abolition of individual freedom and all national sovereignty. Here are the principles enunciated:

Principle # 1: calls for the consolidation of all international agencies under the direct authority of the United Nations. This means no
more private Red Cross, Human Rights groups or other independent or national-based relief agencies. Virtually all the biggest relief organizations tilt to the left anyway, but this control system will ensure that no private charitable aid or relief will be able to by-pass UN bureaucracies. One aim is to make sure no anti-communist freedom fighters ever get relief. UNITA's struggle for liberty in Africa is the current target for UN strangulation.

Principle # 2: calls for regulation by the UN of all transnational corporations and financial institutions, requiring an "international code of conduct" concerning the environment and labor standards. I'm betting these controls will not be limited to labor and environment. After implementation, there will be no more safe financial havens to park money privately overseas. Every international financial institution will be regulated and controlled. Also, say good-by to private corporate rights. Any business crossing national borders will be automatically brought under the powers of international law on labor
and environment. All of our "right to work" laws will be over-turned within major corporations and the Kyoto treaty will be forced upon US corporations without going through Congress.

Principle # 3: demands an independent source of revenue for the UN, such as taxes on internet transactions, aircraft and shipping fuels, and licensing the use of the global commons (outer space, the atmosphere, oceans, and any crucial environment space that supports human life--what
a catch-all!) The worst thing about this proposal is that once the nations assent to giving the UN the power to tax (and it will, like all evil forms of taxation, begin very small) the UN will have power to raise rates without going back to the original nations for approval. Like our income tax, its growth will be inevitable.

Principle # 4: eliminates the veto power and permanent member status on the Security Council. This is the big issue. It is aimed exclusively at the US, even though it will be sold to Americans on the basis that it
will stop the Russian's and Chinese from stonewalling on human rightsissues, like Chechnya. Without a veto power, the only remedy for the US to protest any UN decision is total withdrawal from the UN. That would be wonderful except that the deeper America gets into participation with the UN, the less likely this becomes, politically.
In short, removal of the veto will make the US hostage to UN law without ever having to amend the US Constitution. Our leaders will tell us that, like our "voluntary" tax system, we must sacrifice some sovereignty to the UN in order to have world peace. Trouble is, there is no such thing as partial sovereignty. Either you are or you aren't.
Once we start down this road where we "must comply" with UN mandates, our own judges will begin enforcing UN law.

Principle # 5: authorizes a standing UN army. The UN wants this in place before the next war so that the structure is there to build a huge army quickly, without having US control as in past conflicts.

Principle # 6: requires UN registration of all arms and the reduction of all national armies "as part of a multilateral global security system" under the authority of the United Nations. Whatever the rhetoric, this means gun control to be imposed upon US citizens and unilateral disarmament nationally.

Principle # 7: requires individual and national compliance with all UN "Human Rights" treaties and declarations. You'd have to know all the fine print to know the full extent of this threat. In short, it's nothing but a social rights agenda to mandate socialist redistribution policies, world wide health care, and to ensure that contraceptives and
abortions are available on demand worldwide.

Principle # 8: activates the International Criminal Court, making the International Court of Justice compulsory for all nations, and gives individuals the right to petition the courts to remedy social injustice. The right to petition means right to sue any other person or group and cause them to spend huge amounts of money on lawyers in
foreign countries to defend themselves against a stacked legal deck.

Principle # 9, 10, and 11 are all part of the huge environmentalist agenda. #9 calls for a new institution to establish economic and environmental security by insuring "sustainable development." #10:calls for the establishment of an International Environmental Court. #11: calls for a declaration that climate change is an essential global
security interest that requires the creation of a "high-level action team" to allocate carbon emission based on equal per-capita rights. This wordage forces the Kyoto Treaty upon all nations. As in all Fascist systems, you and I will still own property but they will control
it and we will pay for the privilege of implementing their phony science mandates.

Principle # 12: calls for the cancellation of all debt owed by the poorest nations, global poverty reductions, and "equitable sharing of global resources," as allocated by the United Nations. Won't they have a heyday redistributing wealth world-wide with this language!

Summary: They won't get all this wish list in 2,000, but if they even get one or two key principles enacted into law (#4,5 or 8) they can get the rest by edict and majority rule.

RossLGandalf#2444202/05/00; 12:01:29

Thanks for the explanation. I hope all the Hobbits have a gold weekend!
koanGood piece Stranger#2444302/05/00; 12:03:54

I agree with all you have said. But let me provide another diminsion (looking for the right word <g>). I see two things happening simultaneouly. First you are right, there is Tulip Mania going on for the reasons you state - at the same time there is REAL value being created by companies around the world. The rate at which new products are being created and invented is just breathtaking. Software, bio tech wireless, encryption, mkteting, etc. I study this stuff 24 hours a day 7 days a week <g> - too much actually, but it is so interesting.

This is just going to increase. so my point is that some mkts will be greatly overvalued and others will be greatly undervalued and as I have said before the world financial mkts will be like a great weather pattern with everyone looking for some sunshine, but often they will be flying into the path of a great storm lol.

JourneymanTHAT'S no baloney!! @TheStranger#2444402/05/00; 12:14:29

"Proper respect for one another is certainly elemental to civil discourse, but, for getting at the truth, there is no
word in the english language more effective than a loudly spoken 'Baloney!'." -TheStranger (02/05/00; 11:51:09MDT - Msg ID:24439)

I second it!!

Regards, J.

koanworld government#2444502/05/00; 12:19:00

I would ask this question? Looking to the future from the past, what is the difference between the UNITED STATES of America and the UNITED STATES of the world. In 1776 people did not forsee the inevitability and necessity of a strong central government ( many still don't <g>). But I think most would agree today it was both inevitable and necessary.

The primary reasons I think we need some sort of world legal entity is first the danger of nuclear war. We just have to take that sword of Damacles away from our childrens heads before someone makes a big mistake and blows everyone up. And given enough time that will surly happen, especially with all of this new technology; and secondly for world commerce. But then I am an american that trades Canadian stocks, so you can see how loyal I am lol. and we in Alaska don't really even recognize those in the "lower 48" as having any true legal authority over us anyway lol.

TomcatStranger#2444602/05/00; 12:32:47

"Proper respect for one another is certainly elemental to civil discourse, but, for getting at the truth, there is no
word in the english language more effective than a loudly spoken 'Baloney!'." -TheStranger (02/05/00; 11:51:09MDT -
Msg ID:24439)

This forum provides daily examples of civil discourse getting closer to the truth without "a loudly spoken 'Baloney!". Perhaps you could provide examples in discourse where "a loudly spoken 'Baloney!" has been effective.

leonardbank of england & gold crisis#2444702/05/00; 12:44:42

The Bank of England and the Gold Crisis

by Sherman H. Skolnick, moderator/producer of Chicago public access Cable TV Show "Broadsides" since 1991, and chairman/founder since 1963, Citizen's Committee to Clean Up the Courts


Far too many people believe the common fairy tale that geniuses are in charge of financial affairs. History is riddled with the monumental blunders of the big money crowd.

If the price of gold goes up, it tends to discredit paper money. After all, some do consider gold the only real, independent money, separate and apart from Governments. The Bank of England has been part of a scheme to force down the price of gold. Up to about the summer of 1999, gold had been pushed down to just a touch over 250 dollars per ounce, a recent historical low. The best, most efficient Canadian mines have a cost of production at 285 dollars per ounce. So the Bank of England announced for September, 1999, another sale of gold supposedly from "their Reserves". This was joined with stories, not every one believed, that OTHER central banks were tired of having gold reserves and were and are likewise selling off and discarding their Treasures.

There was, however, a deep dark secret. The Bank of England does not really have that much "gold Reserves". They have used up their gold in two World Wars as well as numerous devaluation attacks on the British Pound Sterling which once was $4.80 for one British Pound. AND, all the while to the last minute falsely denying that the Pound was about to be devalued.

Some believe that the person using the name "Clinton" was ordered, by the secret societies that installed him as President,to start the war against Serbia which had not attacked any foreign country, least of all the U.S. A simple reason: The new Euro Dollar was declining against the so-called "U.S. Dollar". So the Europeans had a financial interest to get the U.S. into a financial disaster called Kosovo, to wreck the Dollar. When it is all said and done, WHO will have to pay for reconstructing the bombed out bridges, factories, and buildings in Serbia? You guessed it: the common ordinary U.S. taxpayer suckers. Not the Rockefellers, Mellons, Morgans, and other ruling families WHO PAY NO TAXES, hiding their fortunes through Foundations and corruption of the Internal Revenue Service.

So to try to force down the price of gold even lower than $250 per ounce, the Bank of England was selling gold it did not really have. Upon the downfall of the Soviets, the Dutch arranged to steal thousands of tons of Soviet gold with the help of criminals in Moscow, the newly rich open market "miracle" entrepeneurs, former Commissars. After all, there was a time when the Moscow government was the world's second largest gold producer. Maybe not longer true with the great decline in production in general since 1991.

In its simplest form, the Bank of England was selling gold borrowed from thieves in Amsterdam. NOTE: The Dutch have been a transit point for Vatican financial schemes. By the way, that nation which is forever fighting off the seas---the Netherlands being below sea level---has used strong-arm tactics to prevent ANY speculating against THEIR currency, the Guilder. Currency speculators know it is a death warrant to mess with the Guilder which remains stable in an unstable world.

Reputed currency gangster George Soros became reportedly aware that the Bank of England was playing a dirty, dangerous game with someone elses' stolen gold. To counter him, the central bank of Britain has reportedly instigated stories such as: Soros is a world-class gangster, which he probably is; Soros is using stolen insider secrets which he probably is; and to appeal to a growing number of Anti-Jew bigots, calling him, through other people's mouths, a "dirty,rotten Jew", thus defaming and slandering all Jews in general.

So Soros and other worldwide pirates joined with the Swiss--who never were sweet angels--to attack the Bank of England. There is a pertinent principle of commodity trading called DELIVERY. The commodity traders sometimes joke that the items you speculate in might someday be ordered to be DELIVERED, like to be dumped on your front lawn. The currency bandits reportedly have been ordering the Bank of England to DELIVER the gold they supposedly sold in auctioning off THEIR "Gold Reserves". That is where is the trouble started. So the price of gold began shooting up, for a number of reasons.

REASON NUMBER ONE: Could the Bank of England DELIVER stolen gold without unraveling the whole Dutch-Former Soviet Gold Robbery? Also, the Dutch through their bank octopus, Algemene Bank Nederland, ABN, have been buying up FOR GOLD, banks in 15 U.S. cities. For example, ABN bought up a long-known reputed money laundry for bribing judges called La Salle National Bank of Chicago, now the flagship in the U.S. for ABN. La Salle National Bank was one of only two out of 20,000 U.S. National Banks in 1964 that refused to disclose their 20 largest stockholders of record when demanded by the House Banking Committee under Chairman, Congressman Wright Patman of Texas. A populist, he caused a report of the national bank ownership to be published in 1964 the first and only time of such in U.S. history that National Banks were requred to list their major owners for a U.S. Government published Report.

REASON NUMBER TWO: It is little known that the U.S. has a contract arrangement with Saudi and Japan. THEIR vast ownership of U.S. Treasury bills, notes, and bonds, are subject to being paid, upon their demand, IN GOLD. No U.S. citizen is allowed to convert their U.S. bonds into gold upon demand. Further, the Persian Gulf oil producers have an arrangement that their sale of oil to the West is payable in so-called "U.S. Dollars", actually, Federal Reserve notes backed by nothing, not gold, not silver, just hot air promises. Upon demand, however, only the Saudis have the right to DEMAND payment in GOLD instead of "U.S. Dollars". So the world price of oil is pegged to the "U.S. Dollar". AND Saudi can get gold for THEIR oil.

Another secret, known to gold mining and marketing experts, is that the Federal Reserve has an unwritten policy of a trip-wire: $410 per ounce. For example, the Fed with the help of the monopoly press in the market crash of 1987, concealed for weeks and weeks that the Fed was lifting heaven and earth to keep gold from topping 500 following the Crash. Over the years, whenever gold even approached $410 per ounce, the Fed and the press-fakers started an attack on gold, such as: gold does not pay interest but lays dormant; gold is a barbaric metal from the past, no longer needed; gold is useless to own it; and similar fables suddenly circulated by the paper money crowd.

I find it interesting that over a period of years, I was the ONLY JOURNALIST to go to the annual meeting called the Chicago Gold Conference, gold experts from all over the world. The press-whores, fronting for the paper money cartel, never printed a single word of the all-day Chicago-based meeting.

Rumors are circulating, believed by savvy folks to have validity, that the Bank of England needs a rescue of 200 BILLION DOLLARS to bail out their blunders. If the Federal Reserve, circulating their Notes masquerading as "U.S. Dollars", has to send that many paper lifeboats to London, where will they get it? And will it sink the "U.S. Dollar"? And by having more so-called "U.S. Dollars", that is Federal Reserve Notes, printed? Of course, that inflation would simply cause gold to go even higher.

Do not be surprised, however, that the monopoly press says little, if anything, about the Bank of England or is it the BUNK OF ENGLAND, and the gold crisis. And no surprise if the press-liars start circulating stories about gold, that, after all, gold is no good to have.

Wags with gold teeth claim, that when gold is high in price, they have to hire a guard for their mouth.


For a heavy packet of our printed stories send $5.00 [U.S. funds] and a stamped, self-addressed BUSINESS sized envelope [#10, 4-l/4x 9-l/2] WITH THREE STAMPS ON IT, to Citizen's Committee to Clean Up the Courts, Sherman H. Skolnick, Chairman, 9800 So. Oglesby Ave., Chicago, IL 60617-4870. Office, 7 days, 8 a.m. to midnight: (773) 375-5741 [PLEASE, no "just routine" calls]. Recorded message: (773) 731-1100. website: {note "s" after my name]. E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

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Al FulchinoTomcat#2444802/05/00; 12:54:50

Good to see you back. How are things? You still sitting pretty with silver?
nickel62What do Vince Foster and Safra and Al Gore have in common?#2444902/05/00; 12:54:57

The answer is "nothing yet". But see the story from Bloomberg News about who James Carville wants to be Gore's running mate. Is Summer's a Republican? Maybe that explains his lobbing that time bomb into Goldman's bond portfolio.

Political Adviser Carville Sees Robert Rubin as Best Running Mate for Gore
By Tom Cahill

Strategist Carville Sees Rubin as Best Running Mate for Gore

San Juan, Puerto Rico, Feb. 5 (Bloomberg) -- Former Treasury
Secretary Robert Rubin might provide a winning edge for Democratic
presidential hopeful Al Gore if Rubin runs for vice president on
Gore's ticket, said political strategist James Carville.

Rubin, 61, was credited with helping rein in federal deficits
as Treasury secretary for President Bill Clinton and left office
last July regarded by many as one of the best Treasury secretaries
in the nation's history. He would be a visual reminder for voters
of the boom times under the Clinton-Gore administration, Carville
``You wouldn't have to say anything,'' said Carville, the
keynote speaker at The Bond Market Association's annual meeting in
Puerto Rico. ``It'd just be boom, right there in your face.''

Rubin probably has other ideas. He has campaigned for Gore,
but has ``100 percent'' rejected running for public office
himself. ``I have enormous regard for people who do it, and it's a
difficult business,'' Rubin said last September. ``But it is
really a world unto itself, and it's not a world I'm going to be
part of.''

Rubin, now chairman of the executive committee of Citigroup
Inc., says he is happy to be back in New York City and prefers it
over Washington, D.C.

Carville, campaign manager for Clinton in 1992, isn't
officially involved in the Gore campaign and said he had no
knowledge of whether Gore was considering teaming up with Rubin.
``It's just my instinct,'' said Carville after his address.
``I say that because he would be the best choice.''

TheStrangerTomcat#2445002/05/00; 14:57:50

My dear Tomcat, I was speaking figuratively, but, since you would like an example, take a look at post # 24446.

Say, where have you been lately? I was starting to think you were gone for good. You have too many friends here to just disappear like that, buddy!

jinx44Do we need a huge global politburo to live happily ever after???#2445102/05/00; 16:26:15


I think you are blinded by some far left social assumptions that may sound good and trendy but end up taking away all our rights. You say, "In 1776 people did not forsee the inevitability and necessity of a strong central government ( many still don't <g>). But I think most would agree today it was both inevitable and necessary." Where do you get the silly notion that it is good, right or neccessary for a strong centralized government to do ANYTHING AT ALL???? Nuclear war is no sword of Damocles. The UN is the spectre of global fascism and no one country will ever threaten the world like the UN does. "Given enough time, global nuclear war will happen"-- another trendy socialist mantra with absolutely no logical context or expectation. A couple of nukes going off isn't the end of the world. It would certainly be something to regret, but it isn't the boogeyman that the global fascists want us to think it is. Your words sound like they came straight out of the social democrats ideas for their brave new communist world. I despise the conceit of people or groups that want to regulate every facet of another persons life because they think that somehow, they are smarter and know better. Have you really considered what your post implies? For me it says that you don't trust me to make my own decisions about how I live my life and you would take away my freedoms and my recourse to privacy because of some nebulous socialist theory. I find that type of NWO sentiment barbaric and dehumanizing and people that espouse it are really the enemies of freedom and privacy. Your words are fighting words for folks who believe in individual sovereignty. Do you really believe what you said? I hope not.

beestingYawnn!! ...Come out of hibernation & Gold is up $25 per ounce...What a nice day!#2445202/05/00; 17:01:09

I second Gandalf the White's msg.#24178 concerning USAGOLD msg.#24162--Addition to required reading of forum guide-lines.We need one more second for it to pass....anyone??

To Lady Leigh msg.#24409 question to Zenidea.
<<How deep do we have to bury our Gold?>>

I had a local semi-survivalist explain this method to me for long term burial;
Get a 3" to 4" diameter peice of plastic plumbing pipe 12" to 24" long threaded on both ends....get 2 blank threaded caps to screw on the end of the pipe.Cost should be less than $5.00.
Dig a hole 3 to 4 feet deep. Put Gold in pipe and make as air tight as possible, secure-ing caps tightly, fill in hole after placing pipe in it.Plant something(Rose bush) or mark the spot somehow.
Than, round up as much worthless old metal as you can find big nails,tin cans,broken toys'small metal junk of any kind.
Drive all the junk to a depth( 6 to 8 inches??) where it won't wreck your lawn mower, or anybody elses,it's easy if the ground has been soaked with water'spread the junk thickly all around the area(the whole yard if you have a yard) Some one looking for something with a metal detector should get discouraged after digging up about 20 peices of junk. Good Luck!

Third--What If?? Euroland!!
I think Euroland is trying to copy the existing state structure of the United States.
What if, a person traveling in Euroland only had to show a passport one time?(entering and exiting)
What if, a 100 Euro "Gold" coin is minted and used in every day commerce, and accepted(sometime in the future)worldwide by merchants??
We can look for the good and bad in everything,but who said, "time waits for no man"??

Back to hibernation....Those in the Know, have already got Gold, but could use more.....beesting.

beesting@ Nickel62#2445302/05/00; 17:14:02

Posts to Goldfan-Who controls stock prices?
Posts #24200 and #24203--Great educational posts, all I can say is a loud "THANK YOU!!...beesting.

SHIFTYsecond#2445402/05/00; 17:37:47

I just got here but I will second it.
nickel62Beesting#2445502/05/00; 17:41:08

Thanks for the kind words.Glad it was of value.
Voxto beesting re msg #24162#2445602/05/00; 17:45:24

Skip's msg# 24191 already added another second for msg #24162
beestingVOX#2445702/05/00; 17:59:43

The way I understand it a nomination here at USAGOLD, needs "THREE" seconds to pass, and now we have them,for post # 24162....thank you for reading....beesting.
beestingWarning Red Alert!!!--Mutual Funds and Retirement Plans.#2445802/05/00; 18:58:07

I would suggest anyone reading this that has an investment in any type of "Fund"(retirement plans--whatever) that is under the control of managers or a team of managers to strongly suggest to the management of the "Fund" to immediately place 10% to 20% in physical Gold, or switch to physical Gold,fund guidelines permitting.(NOT PAPER GOLD).AS SOON AS POSSIBLE!!
Tell them you believe a stock market correction is imminent and a financial crisis may be close at hand.
Quote some of the information gathered here if pressed for a reason.
Spread the "Rumor" you heard about Goldman Sachs the worlds largest Investment Banking Company. See sir nickel62 posts yesterday.

Some big IF's:
If the rumor's concerning Goldman Sachs are true( they may be in financial trouble) there are two things that could happen:
First thing; The FED and the rest of the financial world bails them out-AH-LA-LTCM and everyone gets a reality jolt,or;
Second thing;Goldman Sachs goes into default, significantly changing the investment world as we now know it.

Remember so far it's only rumors, but better safe with your investments than sorry.
For What It's Worth.....beesting.

Solomon Weavermonetizing debt#2445902/05/00; 19:54:54

Jason Happy (02/04/00; 23:04:28MDT - Msg ID:24400)
Typically, the way creditors and debtors are put on the same plane is that governments end up monetizing their debt, so
everyone's a holder of dollars, and nobody holds bonds anymore. Then, everyone is left to fend for themself as the value of the currency drops rapidly to zero.
Hey Jason, and others here....please help me understand one small thing..."the definition of monetization of debt". In the way you used it last night it sounds like "paying back debt" is considered monetizing it.

I have always understood it a little differently. The debt of the USA Government is represented by bonds which are traded in the open market in a (normally) highly liquid fashion. Even though theses bonds represent an obligation on one side (US Govt) to the extent that the obligation will be met, they represent an asset for the owner of the prinicple they can function like money, i.e. they are monetized.

In an odd way, one can consider the "pool" of T-bills which is about $5 trillion and the "float" of USD (M3) which is also about $6 trillion, to be two "separate currencies". One bears no interest and is highly liquid, the other bears interest and is both less liquid, and more volatile in value based on changing market spreads.

Oro, perhaps you can flesh out this into a meatier analysis.

Poor old Solomon

TheStrangerMonetizing the Debt#2446002/05/00; 20:26:03

Solomon - "Monetizing" the debt means printing money to pay the debt off. It is what countries sometimes do when they get in over their heads, and it represents pure inflation.
adminALL: Please send these types of requests to sitemaster@usagold Randy will be happy to process them. Important requests like this need quick attention.#2446102/05/00; 20:32:16

Sorry, I don't have a password to post on the board yet. Thought someone may
be interested in this from Reuters of Jan 28.

Ecuador could sell gold reserves for dollar plan

QUITO, Jan 28 (Reuters) - Ecuador could sell its gold reserves to help fund
its plan to adopt the U.S. dollar as its national currency, the new president
of the Central Bank said Friday.

"We have to be liquid. That could mean we might eventually sell the gold
reserves," said Central Bank head Miguel Davila.

Davila declined to say how much gold the troubled South American nation's
Central Bank holds in its coffers and no official data was available. The
country's total foreign currency reserves are worth $1.27 billion.

The country of 12 million people, which last year defaulted on part of its
$13 billion in foreign debt, faces a raft of political and economic problems.

President Jamil Mahuad was deposed in a brief coup earlier this month,
although new President Gustavo Noboa promised to press ahead with the
dollarization plan and other economic reforms.

The country, whose economy contracted by 7.5 percent in 1999, needs to close
a long-delayed loan agreement with the International Monetary Fund (IMF) to
press ahead with dollarization, Davila said.

The IMF has said it was close to a lending deal with recession-hit Ecuador
before the government announced abruptly that it planned to introduce the
dollar -- and the parameters of the previous economic program had to be

The local currency, the sucre, lost two-thirds of its value in 1999, feeding
inflation of 60.7 percent.

Under the dollar plan, the sucre would be retained for minor transactions and
pegged at 25,000 to the dollar. The government is considering cutting zeros
off the value of the sucre to make calculations easier, Davila said.

Zenidea #2446202/05/00; 20:33:41

Hi Leigh, I guess when it comes to hiding gold, what I do is get someone else to go and purchase it, and then I follow the ol saying " The best way to keep a secret is to keep a secret of its being kept a secret". Oops thats Government. hehe.
Seriously if you had the average domestic house block
and wanted to hide Gold from me, depending on the quantity, I would say you would need to bury it depending on the mineralization of the soil at a minimum
of at least some 4 feet, otherwise one experienced in the signatures of the different signals the different metals give off would locate a tiny speck of it with absolute ease even amonsgt the metal dross. To add to what beesting said re: cummulatively confusing the prospector with the addition of junk. I guess the most frustrating element of all that would fetter my or anyones
attempts to locate it would be zinc, as the signals at least to my ears are bewitchingly similar. A handful of speck sized zinc granules stewn over the lawn would have me looking for the panadol in no time. To highlight just how sensitive a good machine and attuned ear can work togeather there are zinc coated pull tabs , and heaven only knows what microns the plating is, that one may retrieve
up to 3feet/1 meter beneath the earth thinking its Gold or Platinum. screeming out from inside the signal of the host it is plated to. :)

Solomon Weaverhow far down the dollar??#2446302/05/00; 20:55:29

FOA/A have long ago come out and tried to teach us that we are entering into a new time...a time when the financial structures of the world will shift into a new equilibrium.
They have taught us to keep our eyes open as to the "reality" which was always hidden behind the creation of the EURO.

Some of the more energetic posters on this forum have taken this to imply a massive implosion of the US economy, a severe devaluation of the dollar, and a "dethroning" of the USA from world leading status. Many hold forth the spectre of a depression much more severe than the great depression, as a crumbling dollar sucks the entire world into a deep black hole.

As I have said before, and will now say again. These will be tough times, and those who own gold are hedged against our foolishness. But!!! We should not underestimate the amount of wisdom which is left.

Unlike in the 30s, today we have immense abilities to communicate. Any major downturn has a great chance to rapidly stimulate new survival techniques which are actually the seeds for new things. As gold owners today, we are "contra" investors...when things crash, that is when we must remember that the seeds of recovery are already present in the crash.

Let's assume for a moment that over the course of 12 months, the dollar lost 75% of its value against a basket of currencies. Energy prices would be killing Americans. Massive debt defaults would be on books (but look at Japan, they have had non-performing loans on books for 10 years).

As an American who has lived in Europe many years, I make the following observations. Today, the "cost" of doing business is less in the USA than it is in most of Europe. With a major devalutation in the dollar, the cost of European goods would skyrocket. America is known to have "exported" a lot of factory jobs, but stop and think for a minute about the higher tech side. Imagine how much more competitive Intel, Microsoft, Allied Signal, Merck, Pfizer, Boeing, Corning, Kodak, and many other world leading American companies would be if they had a lower cost base.

One of the most surprising things to a lot of people, if/when the FOA/A scenario unfolds, will be that even if they take a big dollar hit, and the EURO rises as queen, America will have the chance to reemerge as the powerhouse exporting nation of the world. America will export massive amounts of high tech goods to a world just waiting to have internets and modern hospitals and with those exports, they will be paid in Euros which they can use to buy up cheap dollars and pay their debts.

There are two models going on is the American market, for the most part a homogenous mentality and for the most part a "free market". On the other side you have Europe which is heterogenous and "getting free" and Japan which is homogenous and "not free".

The Euro is obviously the "fiat" of the future, because it is born and raised to be a "bridging" currency, "owned" by many nations...perhaps the "dollar" will be "merged" with the Euro to form a massive "transnational" unit. In this new world, America may give up the benefits of being the "printers" of reserve currency, but they will still be one of the "strongest" economies.

Poor old Solomon

MariusShorts desperate for paper gold#2446402/05/00; 21:21:59


This is exactly what I am hoping for! I'll sell them mine, if the price is right. My broker was trying to get me to bail out on Friday, 15 minutes before closing. His floor guys/gals have been amazing in the past, but putting in a sell order 15 minutes prior to close on a Friday just didn't appeal to me at the time. Also, my target had not been hit yet.

Ah, hindsight! My Jun 00 290 calls went from $1,850 to $3,000 each in that period of time. I've been toyed with and let down before, so I'm trying to stay cool, but Monday can't get here fast enough to suit me. Even if it is the start of Another/FOA's scenario, it promises to be an exciting and fun week (unless you're short).


goldfanSolomon Weaver (02/05/00; 20:55:29MDT - Msg ID:24463)#2446502/05/00; 22:29:10

Sir Solomon Too much ale is a good proxy for rose colored glasses. I fear the chaos will introduce far more additional stress than you envisage, to a society not used to coping with deprivation, except among the poor where the coping mechanisms are mostly pretty dysfunctional.

America already has by far the highest proportion of its adults and children in jail, of any advanced country. Already has a murder rate far in excess of other's too. IMHO some of you may live to regret your liberal gunlaws. Not that shooting people is always wrong, just that it encourages them to shoot back. Also has among the greatest income gaps between top 10% and bottom 10% of any developed country. Nor is there in my country or yours, to my eye and ear, any large group of people able to work together to solve the crisis problems. We have become a nation of me first, as any drive on a busy highway would prove.

Probably 80% of Americans cannot afford the modern health care you would sell to others, where the proportion unable to afford it is probably even higher. After the crash, companies will no longer pay for these fringe benefits. And sales would be of equipment only. Who in those countries can run that modern hitech stuff? Hitech computer programming can be done anywhere, and the boxes are already all made in Taiwan,...oh dear, I'm discouraging myself.

Furthermore, our media, and our people consequently, are completely out of the loop on questions of economics as addressed by those at this August table. I fear the chaos when it strikes, will produce reactions ranging from terror to rage, and not much in between. I think our younger generation, the 12 to 20 year olds, could handle it. But they won't be deciding anything. Instead, it will become an opportunity for another yet another power grab by 30 year old shiny-assed bookkeepers.

Of course I hope you are right and I am wrong. My American grandfather used to say, "hope for the best , prepare for the worst, and in the meantime, get everything that's coming to you. "


Black BladeRE: msg 24461#2446602/05/00; 23:01:37

The last report I read stated that Ecuador's gold reserves totaled 13 tons. If a country ties itself to another's currency, then there is little need to determine monetary policy, however, it should also be noted that they would also have no control over that policy. In other words they are at the mercy of whatever country whose currency is in use (in this case the US). So they would'nt really need gold reserves since they effectively give up Sovereignty. The people understood this, and they run president Jamil Mahuad out of office. It is afterall only 13 tons and just "a spit in the ocean" so to speak.
canamamiEcuador - Another CB to Sell?#2446702/05/00; 23:06:45

How many tonnes does Ecuador's CB have? When will this c--p end? Why should gold investors and the gold industry be sacrificed at the altar of the bullion banks' and other manipulators' greed? Although it appears the Reuters report originated before the run-up, it seems no small country's gold is safe from those looking for physical gold to bail out their positions.
canamamiThx Blake Blade#2446802/05/00; 23:08:48

You answered my question before I asked it. I wonder what country will be bullied next?
JAPhysical Gold Only?#2446902/05/00; 23:24:00

There are those at this site that suggest that hold ing Physical gold is the only way one should invest in gold. That may be correct one day. However a quick review of how the market treated my gold interests yesterday are as follows:

Physical Gold Up 7.5%
Gold and Silver Mining companies Up 26.8%
Options on Gold futures Up 176%

I realize that if Gold goes in the opposite direction on Monday, the above numbers will likely be reversed. However, We do not yet seem to be at a point where paper gold is losing value while physical gold is gaining.

Black BladeLeigh, Zenidea, and Beesting (msg 24452)#2447002/05/00; 23:34:40

Interesting that you should bring up hiding gold. A few years back (pre +$800 gold), I had a relative who was an executive for IBM. I had noticed that he suddenly developed a passion for gardening. He planted flowers and shrubbery, etc. I mentioned this to his wife, and she said yes it was strange and I thought nothing of it. A couple of years later, I noticed that his garden had died except for some shrubbery. I asked my relative what happened. He told me the whole story: He bought gold and wrapped it in plastic, he then placed these packages into PVC pipe and capped it at both ends with PVC caps and sealed it with a rubber cement. He then buried it using his new found passion for gardening as a cover. He later dug it up and sold out for a nice gain. He never took up gardening again - until he was planted a couple of years ago :-)
SHIFTYGOLD STOCKS#2447102/05/00; 23:41:19

Thinking of getting in a bit deeper monday morning if it does well sunday night. Q: If a rush of sorts gets going, and the dot com folks, and others go to gold stocks does the market crash?
FarfelPoint of Information re: Ecuador Gold#2447202/05/00; 23:58:10

The Ecuador Central Bank announced it would likely sell its gold about two weeks ago.

The gold market expects the sale, priced the sale into gold's current price, and the gold sale's re-announcement by anti-gold mainstream media is not remotely surprising.

There will be more of this anti-gold stuff to come, but it seems that the investment pros are growing hard and cynical about these attempts to scare down the gold price. Thanks to articulate, astute writers like Reg Howe and Hathaway, it is becoming clear to all those involved in the metals markets that, contrary to assertions by certain market participants of the existence of abundant physical gold, it just ain't so.

There seems to be a definite shift in market psychology and, as I wrote previously on this board, the development of a most fearless new goldbug.

Watching the evolution of this new psychology has been a most remarkable experience.



JLVBeesting#2447302/06/00; 00:02:03

In the EU today, you only have to show your passport once, when entering and leaving.

When traveling between EU members, you neither have to show your passport or clear customs.

ZenideaKnowledge is invisable nature, nature visable knowledge#2447402/06/00; 00:05:38

I have worked in the petrolium refining and fertilizer manurfacturing industries inter-alia and as we probably already know substancial amounts of Platinum are used in the process for cracking and or catalyst persuant to the
production of its end product and anyone who has worked in these industries also knows that security is paramount. Hence I have this story that we in the industry sometimes laugh about and repeat to the new-bie's that come along that transpired about a decade ago. Its a story about a new employee who casualy wandered into what seemed to him a somewhat large storage container and saw what he innocently thought was a darn good quality flyscreen for the door of his family home. So he took it and trimmed the edges and consumately fitted it to his door and alledgedly tossed the unwanted scraps in the bin. Envisageing the area in which the container come safe were situate its not impossible to understand that such an event and given the terrain could happen. Well all panic broke loose when it was discovered that that thickly guaged flyscreen was missing !. It turned out that the employee owed up , the Platinum mesh for the most part was returned and he managed to keep his job . Knock knock.
. I am going get nervous at Au at $330.00 and start thinking about thinking at $350.00. Water sugar and yeast
are good for us individually but added togeather that makes alcohol, an explosive situation!. My understanding is that lightning strikes first and after that comes the thunder. Has the match been lit ?

ZenideaKnowledge is invisable nature, nature visable knowledge#2447502/06/00; 00:06:03

I have worked in the petrolium refining and fertilizer manurfacturing industries inter-alia and as we probably already know substancial amounts of Platinum are used in the process for cracking and or catalyst persuant to the
production of its end product and anyone who has worked in these industries also knows that security is paramount. Hence I have this story that we in the industry sometimes laugh about and repeat to the new-bie's that come along that transpired about a decade ago. Its a story about a new employee who casualy wandered into what seemed to him a somewhat large storage container and saw what he innocently thought was a darn good quality flyscreen for the door of his family home. So he took it and trimmed the edges and consumately fitted it to his door and alledgedly tossed the unwanted scraps in the bin. Envisageing the area in which the container come safe were situate its not impossible to understand that such an event and given the terrain could happen. Well all panic broke loose when it was discovered that that thickly guaged flyscreen was missing !. It turned out that the employee owed up , the Platinum mesh for the most part was returned and he managed to keep his job . Knock knock.
. I am going get nervous at Au at $330.00 and start thinking about thinking at $350.00. Water sugar and yeast
are good for us individually but added togeather that makes alcohol, an explosive situation!. My understanding is that lightning strikes first and after that comes the thunder. Has the match been lit ?

FarfelThe Ultimate Definition of Anxiety#2447602/06/00; 00:10:48

Imagine having written short term NAKED gold calls with strike prices of 310, 320, 330, then sauntering back from the golf course late Friday afternoon (as gold shorts are wont to do) to see the gold price at 308.

All the while knowing that the Asian markets have yet to get into the game...

All the while knowing that Australian gold producers are yet to react....

All the while knowing that certain deep pocket commodity speculators like Paul Tudor Jones have been sitting around for a lifetime just waiting for this type of opportunity to light a fire to the panic...

All the while knowing that political heat has been turned up against the gold shorts, the CFTC, and the Treasury, such that any overt manipulation to interfere with the allegedly free gold market will not be tolerated....

All the while knowing that physical gold availability is simply not nearly as abundant as the gold short-dominated Western media suggests....

All the while knowing that the only certain gold availability in quantity will occur at the next Bank of England auction...BOT NOT UNTIL MIDDLE OF MARCH!

It all spells A-N-X-I-E-T-Y, for the gold shorts, big time.



JLVFarfel#2447702/06/00; 00:17:35

Yes, the manipulators appear to have 'hardened off' the market rather well.

Likely, future lame attempts at manipulation will backfire as it points directly at the weakness of the manipulators.

In case you have never heard the term 'hardned off' it simply means putting seedlings (typically tomatoes) out of the hothouse when it's still a little cold at night. It increases the 'yield' of the plant significantly.

Jason HappyRe: Monetizing debt#2447802/06/00; 00:20:05

Solomon, I'd agree 100% with the Stranger. Sometimes, I'm not as clear as I'd like to be when I express myself. And, yes, part of this does stem from my own confusion. So, at the risk of confusing everyone, and myself even further, here's part of what I'm thinking about the U.S. debt.

First of all, we don't really have any surplus as Clinton claims. I believe the accounting rules have changed, whereby the interest to be paid on the debt is not counted as an expense. Thus, they look at the budget figures as if there were no debt, and no interest to be paid, and claim a $70 Billion surplus. Meanwhile, the interest on the debt is about $300 Billion. Under Reagan and Bush, and the first part of Clinton's term, that was seen as a $230 Billion deficit. As proof, you can visit the www.USTreas ("on"? or "ory"?) .gov website.

You can see that the debt has still been increasing at a rate of about $200 Billion per year, and is projected to do so well into the future, despite the magical claim of a surplus, for the last two years, 1998/1999, which are somehow still listed as "estimates"...

Now, we are not actually missing our interest payments, so I guess, the creation of money to make these payments is somehow taken out of the accounting loop. I'm unsure how it all works because of the lies surrounding the process. But, the "extra $70 Billion" under these accounting rules is supposed to somehow pay down the principle on the debt, instead of making the $300 Billion interest payment, yet the $300 Billion interest payment is still made???

My conclusion is that since they must be "printing money out of nothing/creating more bonds/however you call it" to meet the "still-there" $230 Billion deficit; thus, they are, in essence, running the printing presses to pay down the debt as well.

Thus, Monetizing the debt in the classical sense, as defined by The Stranger, which should lead to massive inflation.

Is it any coincidence that the totals of m1, m2, m3 in the entire domestic U.S. Banking system have risen from about $4 Trillion to about $6 Trillion in the last two years, when this accounting gimickry "budget surplus" becan to be claimed?

After all, if you don't have the money to even make the minimum payments on your credit cards, how are you ever going to come up with enough money to pay them off? But this is what we are somehow doing??? I'm sorry, if I don't understand it.

Scrolling to the bottom of this same "government fact sheet"
you will see that in 1950, we owed $250 Billion. This, of course, well before 1971, when gold was still valued at $35 an ounce. Now, how in the world can we owe $256,853 million x $35/oz. or 7338 million oz. x 1ton/32152oz. or 228,248 tons of gold, when all experts agree that there is only about 30,000 tons held by central banks, and only 120,000 tons of gold in all the world?

I can only assume that the people we borrowed the money from, the Fed, were somehow able to create dollars out of thin air, backed by nothing. Thus, would it really be so immoral to pay back this debt the same way it was created? Food to chew on.

Perhaps the immoral part was the initial creation of the debt, or the selling of the debt by the Fed to private parties. Or, maybe it was the war that caused the reason for the debt. Or, maybe it was the creation of the Fed. Or, maybe it was the majority of the people who wanted the free lunch handouts from the government in the first place?

Zenideaborn naked , die naked .#2447902/06/00; 01:58:29

Black Blade re msg 24470, ha ha ha you crack me up mate :). I was a philosolhy student once at a certain school and the only way we could become such a student was not by intellectual fortitude etc etc but by invitation to that school. Now the London School of Economics that someone spoke about in the last few days here I know belong to a special breed of wit , now
I see you mention IBM . How close are you to the round table my friend ?

Jason HappyGold news...#2448002/06/00; 02:26:08

Barrick hedges on gold prices, Placer bets on them February 4, 2000

Commodities-Gold and palladium soar, oil and grains up February 4, 2000

Gold Soars; Cocoa at 27-Year Low February 4, 2000

Battle Mountain Gold's hedging data; at end of article:

HipplebeckJason Happy#244812/6/2000; 6:04:42

I think you are right about the government flooding the system with money so as to pay off the debt.
In the last few years, they have also included the social security money in the budget, so this is the main reason we have gone from the big deficit scare to the magical surplus.

goldfanRight Thinking#244822/6/2000; 9:19:08

Right Thinking, Probability/Possibility Theory

Last night a friend, after asking me how the markets were doing, laughed and said, "you said that last year and it hasn't happened yet, maybe you're wrong."

This started me thinking about the difference between possible, probable and certain. And also, about why I do what I do, and whether investing or doing life, are different activities.

A Native Medicine Man, was urged "Hurry up Grandpa, they're about to start the ceremony" as he was gathering herbs, carefully cutting and placing them in his bag, saying the prayers for them. Turning to the boy, he said, "Grandson, I have always told you, that it is not the time in which you do things that matters, it is the order in which you do things that is important. It is not appropriate to start the ceremony until the sacred herbs are ready." At which he turned back to his work.

It matters not whether I correctly forecast the timing of the upsetting events. What matters is that I be correct in the order of my preparations, for this, and other possible events in my life.

If I do things in my life in the correct order, I will be prepared when possible events, appear to be probable, and then, certain.

If I insist I need not be prepared because possible events have not yet become probable, then I am saying I need not ever be prepared.

The preparation is part of right living. I do it anyway. No matter how long it takes for the possible to become probable. I don't water the plants because they might otherwise die. I water the plants because it is the "right" thing to do with this part of my life. I water the plants anyhow. I like watering plants.

You can see how this might apply to our work here, and the purchase of gold.

Nothing is good as gold


goldfanValue of Gold#244832/6/2000; 9:23:16

On Value

I see Au as something of apparently enduring value in human cultures. Much as I admire this material, I would be just as happy to use conch and abalone shells, as did the long ago pre-Ojibway people of this area.

The point is, to value something deeply, to the core of one's being and then, to use that sense of value as the deciding criteria in all our daily actions and interactions. So we value ourselves, our children, and friends, this way. Our work is a manifestation of ourselves, so we value our work this way. If we do our work out of this deep sense of our value, our work manifests in the world with our sense of value displayed in it.

This is how I want gold to be used in our trading systems. As means of outward display of the enduring value we place in the grace, beauty and harmony with the planet, of our daily acts and interactions.

For me, gold isn't an investment. It is an outward, visible, measure of the soul value I place on my acts of creation and endurance on this planet. I will gladly trade it for other's "gold", but nothing less.

FWIW in gold


beestingJLV # 24473 Passports!#244842/6/2000; 9:24:23

Thanks for the update on Passports, shows what a relic I'm becoming. How long have the current passport regulations been in effect in the Euro-zone? Thanks in Advance...beesting.
goldfanBarrick the Shark#244852/6/2000; 9:52:20

Shark Bait?

This clip from a piece by Bill Murphy at Le Metropole

>>>>Gold share prices soared on Friday. One has to wonder what has taken the producers so long to make moves such as
Placers? Do gold producer shareholders want their firms to reduce hedging and have their investments double in value -
maybe triple - because of soaring gold share prices. Or, do they want what they had the past couple of years: big hedges
on the books and share prices in the dumpster? Talk about begging the question!<<<<

Gold producer's shareholders do want their shares to double in value... but I wonder if the Barrick's want that? Seems to me, that if if it's power and control you want, you might ignore the share price for now, and concentrate on driving down the gold price so as to force more and more small producers and explorers to need a white knight to buy them out. Barrick being that "white knight" of course (really the white shark).

Personally, I hope Barrick keeps on with their hedging strategies. This will ensure they have the least chance of any of them, to participate in the upside celebration when it comes. And it will come. Other forces are at work , much bigger than the entire gold industry at the moment.


SteveHGoldfan#244862/6/2000; 10:18:10

Agreed that the order is important. Take your analogy though. The Grandpa knew of an event that was scheduled and prepared. The grandson knew of the same event and wanted to rush to it because he anticipated a great event; not realizing, of course, that the Grandpa was integral to the events success.

In the case of your friend, he doesn't see the potential crisis in the dollar as a planned event. In fact, he doesn't even see it as a possible event. You, on the other hand, see it as a non-schedule but likely event.

On the way to that event, it just so happened that a bubble alerted you to the potential dollar crisis, amonst other events, and you have now begun to prepare for the event. Since you place an urgency on preparation, you must have reason to believe that the event is close and warrants a greater portion of your time. Just like the Grandpa who is carefully preparing herbs, you too are conjuring your magic preparations for what you must see as close at hand.

Were the event years off as they must have been in the early 90's and before, why bother preparing? Why not try out the stockmarket, the bond market? Now that you have reason to believe that an event warrents you attention, eventhough you don't have a schedule of events speaks to the urgency. Otherwise, why bother prepare as many other events must always be attended to that might otherwise supercede the dollar crisis in implied and actual importance?

So, looking behind the intuitive prediction of your actions, what makes you prioritize you actions to place preparations for a dollar crisis higher than many other things that would be more fun, more productive, more fruitful?

I suggest that it might be the crescendo of financial news that does seem to backup your feelings. For example, unless you were paying attention you might have missed those events that lead us to today:

-- LBMA uncloaking.
-- FOA and Another posts.
-- Intro of the Euro
-- Bank of England auctions
-- Negative gold press
-- Negative effects of gold leasing
-- Negative Euro speak
-- Washington Agreement
-- Negative impact of rise in price of gold aka Ashanti,Cambior.
-- Anti-hedging sentiment
-- GATA and its impact.
-- No more hedging from gold miners
-- GS involvment
-- AG speeches
-- Bubble mania in high tech stocks while new lows continue in ernest.
-- US announcing the reduction of debt in 13 years.
-- CPI as a non-indicator of what it is supposed to indicate
-- ESF
-- IMF gold buy-back to reduce debt.
-- and much much more.

So, not only does your intuition screem, so do the events and the ever increasing rate of them occuring.

That said, we need to establish the scenario developing with the US allegedly buying back 30-year bonds and leaving GS, Deutsche, and BofA hanging. Did they really do this without prior notice, if so why? Is this event what it seems? If it is a rogue move by Treasury then what is the goal and why risk bankrupting the biggest banks and what gain would be greater than that? The answer to this may provide an even greater incentive to the rest of us to join you in your preparations. Thoughts?

goldfanORO What do you make of this?#244872/6/2000; 10:18:27

ORO I'd be grateful for you comments on this, related to the $US situation right now. Is Japan in danger of hyperinflation, given they're in a deflation right now?
In your 24319 you said they can't really afford a weak yen right now. How does this article square with that?
Can they be the catalyst to wreck the workd economy, How?
Thanks for your comments..

>>>Danger signals sounded for Japan

Wasteful spending, national debt could wreck world economy, academics warn


TOKYO—Japan's national debt made worse by wasteful public works spending, is a time bomb that could wreck the world economy, two Japanese academics say.

"We are looking at a danger signal blinking near and bright," said Akio Ogawa, a lecturer in the Graduate School of Public Policy at Tokyo's Chuo University.

Ogawa and Takayoshi Igarashi, a professor of law at Tokyo's Hosei University, spoke at the Foreign Correspondents' Club of Japan Friday about the need to slash both public works spending and the debt if Japan is to regain its economic might.

Attempting to jump-start the economy, the government has lavished funds on bridges to sparsely populated islands, concrete linings for rivers and roads to nowhere, the two academics said.

Rather than helping the economy or the people, the spending mostly benefits an "iron triangle" of powerful politicians, bureaucrats and businesses Ogawa and Igarashi said.

The second-richest country in the world is also the world's most indebted.

Japan's public debt exceeds 600 trillion yen (about $8 trillion), or 130 per cent of gross national product, Ogawa said.

Worse, the government may be hiding 100 trillion yen (about $1.5 trillion) in debt from a special coffer that the Ministry of Finance uses to make loans to public corporations for infrastructure projects, Ogawa said.

A ministry official declined to comment on the figure.

He did say that none of the loan recipients is in danger of defaulting.

Japan racked up debt mostly over the past decade as the government urged on by the United States, tried to spend its way out of its longest economic slump since World War II.

In 1997, Japan spent more than the equivalent of about $6 billion on roads, bridges, ports and other public works projects: more than the United States, Canada, Germany, France, Italy and Britain combined, Ogawa said.

Anger over high spending on public works boiled over last month when 90 per cent of voters in Tokushima, in western Japan, rejected a government plan to spend the equivalent of almost $1.5 billion to dam a river.

Opponents say the project would destroy the ecosystem. Construction ministry officials say it's necessary to stop possible flooding. The government says it will proceed despite the vote.

"Now we face a dire choice between huge tax increases or hyper-inflation to help reduce, if not wipe out, the debt that has already got out of control," Ogawa said.

But the last time the government raised taxes, in April, 1997, the economy sank into recession and dragged down the rest of Asia.

The alternative, printing more money, would reduce the value of savings and force up prices, hurting consumer demand and ultimately the economy.

From Toronto Star, Feb 6, 2000<<<


goldfanSteveH (2/6/2000; 10:18:10MDT - Msg ID:24486)#244882/6/2000; 10:58:45

Thanks Sir Steve I always enjoy your posts and particularly the lists you include, really useful. Check out my post today on Value, and you can see the trend of my belief. What I now know that I didn't a while ago, is that I buy gold over the years the way Grandpa gathers herbs. That is, because in itself, this is a "right way of living". So whether the ceremony or the disaster ever come to pass, I am prepared. I don't need the threat of an imminent disaster to lead me to live responsibly. I do it any way. And it helps to have the stories of elders like ourselves, to tell us what might be the result of our living in certain ways. So we can develop our own feel for what is "right living".

Myself, I have the in-built tendency to feel abundant in the midst of chaos, under the certainty of change, without certainty of direction. So I live always alert for upset, like an old time Indian Scout. Peering at the horizon, looking for sign. Noticing everything. This is probably why, when I started investing, (out of a need, didn't then know what I now know) I gravitated almost immediately to silver and gold, reliably the most chaotic markets of all when they're jumping. I find I'm not really interested in other markets, no matter how much I might profit from them. (And I do admire those like Koan and Stranger who seem so comfortable in all markets).

On to the news of today, I of couse am not well enough informed, nor close enough to any prime actors, to know what is "really" going on. I would guess though, from a lifetime of living close enough to such characters, that they are involved in some mafia-like shark activity, trying to gain at others expense, or maybe just "punishing to earn respect". They might also have made a mistake. Or, some clerk in the works screwed up big time( that's very remote possibility IMHO) .

Follow the money, follow the election. What Gore has going for him is the perception of a healthy economy and stock market. The other guys need to damage that image a little?? How could they get Summers et al to do this?

This just a fast response to you. I want to ponder it more.

I suggest that it might be the crescendo of financial news that does seem to backup your feelings. For example, unless you
were paying attention you might have missed those events that lead us to today:

-- LBMA uncloaking.
-- FOA and Another posts.
-- Intro of the Euro
-- Bank of England auctions
-- Negative gold press
-- Negative effects of gold leasing
-- Negative Euro speak
-- Washington Agreement
-- Negative impact of rise in price of gold aka Ashanti,Cambior.
-- Anti-hedging sentiment
-- GATA and its impact.
-- No more hedging from gold miners
-- GS involvment
-- AG speeches
-- Bubble mania in high tech stocks while new lows continue in ernest.
-- US announcing the reduction of debt in 13 years.
-- CPI as a non-indicator of what it is supposed to indicate
-- ESF
-- IMF gold buy-back to reduce debt.
-- and much much more.

So, not only does your intuition screem, so do the events and the ever increasing rate of them occuring.

That said, we need to establish the scenario developing with the US allegedly buying back 30-year bonds and leaving GS,
Deutsche, and BofA hanging. Did they really do this without prior notice, if so why? Is this event what it seems? If it is a
rogue move by Treasury then what is the goal and why risk bankrupting the biggest banks and what gain would be greater
than that? The answer to this may provide an even greater incentive to the rest of us to join you in your preparations.

So, looking behind the intuitive prediction of your actions, what makes you prioritize you actions to place preparations for a
dollar crisis higher than many other things that would be more fun, more productive, more fruitful?

schippiInvwstment Derby#244892/6/2000; 11:27:21

2000 Investment Derby ( Year to Date returns )

Gold Futures +7.2%

Small Growth Stock +5.3%

Long Term Treasury +3.6%

Large Growth stock +0.6%

Long Term Municipals -0.1%

Small Value Stock -0.7%

Foreign Stock -0.7%

TheStrangerGoldfan#244902/6/2000; 11:44:03

Hi, Goldfan. I enjoyed your post about shareholder's wanting their stocks to double and so on. I really think you put your finger on another reason why this latest rally ought to last (dare I even say that without jinxing things?). As stockholders see what a little hedge covering news can do for them, and with corporate annual meetings commencing fairly soon, I suspect directors and management will want to stress de-hedging as their main theme this year.

I differ with you on Barrick, however. This great profit opportunity of ours required the short sellers at the beginning just as it will benefit from the short coverers going forward and, hopefully, the greater fool theory at the end. As far as I am concerned, the sooner Barrick makes their announcement the better. Time is after all, money.

goldfanSteveH More on Fed vs(with) Treasury#244912/6/2000; 11:50:31

SteveH mofre thoghts...

(I'm really conscious of ORO looking over my shoulder, wondering when he will hit me with his "fact' stick).

Fact. Treasury is paying back 30year bonds, and creating more $ in circulation as a result. Unles they are paying it back with tax money, when they are removing $ from circulation. We don't know which it is, because the accounting is totally obscure. Maybe we'll know Feb 9, next government accounts publication date.

Fact . the above lowers interest rates for long bonds, hence for mortgages etc. '

Fact. The Fed Reserve has been raising short term rates, to dampen incipient inflation (that's what they say, maybe it's some other motive).

So one arm of the government appears to be acting against the other(quasi arm).

My question, what is the recursive nature of this? The seesaw action between the two, discourage borrowing, encourage borrowing. discourage short term, encourage long term, seems designed to kill some banks anyway.

Maybe this is the beginning of trying to position the Fed to be in charge of all banks, after the crash, and also pay off some old scores within the fed ownership structure?? Some kind of dirty deal between certain members of the Fed, in collusion with the Treasury to whack other members of the Fed, or their acolytes?

I'll bet the Arabs are in here somewhere too. As FOA /Another revealed, Arab oil in $US is the US only world class asset at the moment, or likely in the future as well. On saying that, I realize that the European members of the Fed, might well be interested in a swift bifurcation to the Euro for oil, so willng to sacrifice the $US to gain that end. Maybe the Treasury guys were just conned by them somehow.

My personal favorite right now, if the opinon of an amateur is worth anything,

If (make that because) the Treasury gave prior notice to the Fed, then the members there would have a chance to profit greatly by their knowledge. (load up on Treasuries, low priced after they've been whacked down by Fed actions recently). Aftrer all, Treasuries have been selling off because of Fed actions, and maybe overseas moves into the Euro. Who's been buying them? Next, we will see someone is selling off the long bonds, driving the prices down again, accomplishing the Feds aim, meantime with big profits for the member banks.)

As an aside;
I've found that the best way to explain all this to sceptics is to ask 1. do you trust the bank system and the government system to look after your money? If not, then buy some gold as insurance. If yes, why? Look at the purchasing power of the $ over 50 years, compared to Au. What do you think the purchasing power of the $ is going to be in 10 years?

I look for your thoughts


goldfanJason Happy (02/06/00; 00:20:05MDT - Msg ID:24478)#244922/6/2000; 11:57:20

Thanks Jason for your investigations of government accounting. Some of my conversation with SteveH today could maybe be cleared up if we knew the stuff you are referring too.So.. please keep us all posted on what you dscover re whether the debt is actually being paid down or not.


Jason Happydebt numbers for goldfan#244932/6/2000; 12:19:08

I tried to investigate a bit further since my last posts, following the url at the top of the page of yearly debt figures. Found some .pdf files (shocker!) which were extremely hard to read with very fine print. According to what I read, according to the latest accounting standards (to make things uniform and comparible with previous years) the largest the deficit had ever been was in 1992, when the deficit was 290 Billion dollars.

However! If you look at the chart I posted earlier,

The difference between the debt between 1992 and 1991 is
$4,002,136 million and $3,598,498 million.

Does this look like 290 Billion or more like 400 Billion?

4002 - 3598 = 404

So, obviously, the new accounting figures don't let the "annual deficit" match the annual increase of the debt. Funny, I always thought that the increase of the debt was due to the annual deficits. Oh well, I guess... when you think you are powerful enough to define "is" to mean anything... sigh...

JLVbeesting#244942/6/2000; 12:48:51

The EU non-restrictions have been in place for three years that I know of.

Yes beesting, you can drive from Rome to Amsterdam by way of Paris, and never once go through customs, or be asked for your passport.

goldfanSteveH a little more#244952/6/2000; 12:56:12

The stuff between the Fed and the the Treasury, if that is what it is, and not some collusion between them. Reminds me of two thieves fighting in front of a jewellery store, over whose turn is it is to rob the place tonight. Meanwhile, the store is being looted by a third thief, out the back door.


Jason Happydebt figures#244962/6/2000; 13:01:07

At the above link, you can find files of:

Federal Debt at the End of Year: 1940-2004

I don't know if the information is the same or not, I can't view .xls files or lotus files, which is the form the info is presented. Maybe I can download a free program somewhere to decode this esoteric information.

SteveHProtecting gold (various posts)#244972/6/2000; 13:02:52

Protecting gold has to do with rights. The right of seizure of property and the right to bear arms. The significance to this forum is the gold confiscation of 1933. Protecting gold remains an important element of acquiring gold.

Various posts I wrote with quotes and one retort from a respected poster:

We all have seen there are 1500 accidental children's deaths due to firearms each year in the US.

Is there or has someone done or seen a study that shows:

-- The statistical increase or decrease in gun related deaths due to mandatory trigger locks? Mandatory registration?
-- The statistical increase or decrease in gun related deaths due to a possible ban on all hand guns?
-- The likely net affect of the above on the reduction of the number of children accidental gun fatalities?

If the statistic is correct that 2,000,000 people annually use a gun to deter a crime, assume that 10% of those result in actually saving one life or more. To remove or impede the ability through the use of a safety lock or storage in a gun safe a weapon such that it can't be ready at hand for life-threatening events might have the effect of not saving whatever lives are attributable to the above 10% of 2,000,000 deterrence or 200,000 lives. The net effect of saving 1500 children would be at the cost of 200,000 adults. Now, the above numbers are purely speculation but the logic is clear. The irresponsible use of public health statistics to justify any reduction in the right to bear arms will have unintended consequences that would likely cause more hardship immediately and also make the US citizen more vulnerable to criminal attacks, cause significantly more deaths owing to quick availability of defensive weapons than children's' lives saved, and finally threaten national security by having a non-regulated (non-armed or under armed) Militia or population -- the very items that the founding fathers didn't ever want to happen in the USA ever again.

In other words, the blatant attack of politicians and organization against Second Amendment rights will have unintended consequences short and long term that will ultimately cost more lives than ever saved and will make this country less strong. It is ultimately the most unpatriotic act any citizen can make -- blaming guns on the family break down and claim that by getting rid of guns all will be better. This is absolutely incorrect logic and threatens to undermine the foundations of this country.

Politicians need to reverse the spiraling down course that these unpatriotic underminers of the Second Amendment have taken us. Give back the rights that have been lost. Reverse the spiral and return the stigma of guns are good when responsibly used. Any other course of action is NOT patriotic and is not productive to the long-term health of this great nation.

The gun laws that are in place today only serve the function of making arrests easy when the real crime can not be proved or is not existent. As unpopular as that might sound, think about it. The Seranac, MI person recently arrested in New York New Year's eve who had a loaded rifle in the back seat of his car was not guilty of any crime. The mere presence of a weapon in a car should be an innocent (perhaps stupid in NY City) display of a constitutional right. By today's tough gun law stance the crime is a possession of an arm that by the Constitution says shall not be infringed. The crime is in the law that made that act a crime. Any gun law that makes it a crime to possess a gun, hidden or in plain view, at home or in public, is simple a cop out and a legislative act of unconstitutional ill-will. Legislatures need to be true to their oaths and return the right to bear arms to the people. Vermont has set the standard and anything less is simply a compromise of a Constitutional right. Where there is compromise of rights there are not rights.

I say vote for no legislature that says no to guns or no to CCW carry or no to reversing the trend Second Amendment infringements. It is time to stop blaming guns and put the blame on not giving people back responsibility and accountability.

To reverse the trend:

-- Release all offenders of any possession law and expunge all records of same, for mere possession of a weapon is not a crime.
-- Immediately pass CCW carry law that is broad and comprehensive in the freedom to carry. Not that it shouldn't be responsible carry but that it should allow for uninhibited carry by law-abiding citizens.
-- Repeal any law that allows or permits the arrest of a citizen for the possession or carry of a hand gun or rifle.
-- Do away with gun registration.
-- Find alternatives to accomplish what those laws intended without making criminals out of law-abiding citizens for exercising constitutional rights and without infringing on the Second Amendment.

The above is merely the unmitigated or unleashed extension of what the Second Amendment means and what are commitment to it should be. Anything less means that people are picking and choosing the rights that suit them while ignoring or suppressing those that don't appeal to them. This is not healthy and not true to being a patriotic American. Patriotism means accepting the Constitution and living to its high standards. Anything less is a comprise of principals.


It seems that the state can have a CCW board but the board must accept self-defense as a valid reason for a CCW, nothing more. Anybody else read this differently? Why then does State unequally apply a higher standard by placing degrees of threat and of only known threats. Is this not unreasonable and too broad? I say YES.

a. West Virginia's "Non-Absolute" Right . In State ex rel. City of Princeton v. Buckner , [315] West Virginia's Supreme Court of Appeals considered the constitutionality of a statute that proscribed the carrying of "dangerous or deadly weapon s " without a state license. [316] When a Princeton City police officer arrested a drunk driver on March 10, 1987, he searched the driver's jacket and found an unlicensed pistol. [317] The officer sought a warrant for the driver's arrest from the county magistrate. [318] The magistrate refused to issue a warrant against the driver, concluding that West Virginia Code section 61-7-1, which proscribed the carrying of a "dangerous and deadly weapon" without a license, [319] violated the state constitutional right to keep and bear arms. [320] After the prosecuting attorney filed a writ of mandamus in the county circuit court to compel the magistrate to issue a warrant, the circuit court concluded that section 61- 7-1 violated the right to keep and bear arms. [321]

In response to the circuit court's two certified questions, the Supreme Court of Appeals held that section 61-7-1 unconstitutionally infringed on the right to keep and bear arms, since the statute prohibited the carrying of a dangerous or deadly weapon without a license for any purpose at all, including constitutionally protected "defensive purposes," namely, "defense of self, family, home and state." [322] Although the state had "a long history of statutory provisions regulating the use of weapons," [323] the court noted that several states had struck down statutes infringing on constitutional provisions "guaranteeing a right to keep and bear arms for defensive purposes." [324] Since the language in article III, section 22 provides a "sweeping" [325] right to keep and bear arms "for the defense of self, family, home and state," [326] but section 61-7-1 "is written as a total proscription of the carrying of a dangerous or deadly weapon without a license ; . . . . Section 61-7-1 operate d to impermissibly infringe upon the constitutionally protected right to keep and bear arms for defensive purposes." [327] Thus, the court held that section 61-7-1 was unconstitutionally overbroad. [328] The court next considered whether West Virginia could reasonably regulate the right to keep and bear arms. [329]

b. Reasonable Regulation . Like the Maine court in State v. Brown , [330] the Buckner court stated that the right to keep and bear arms is not absolute. [331] Rather, the state has "police power" to "enact laws, within constitutional limits, to promote the . . . peace, security, morals, health and general welfare" of its citizens. [332] Thus the court held:

[T]he West Virginia legislature may, through the valid exercise of its police power, reasonably regulate the right of a person to keep and bear arms in order to promote the health, safety and welfare of all citizens of this State, provided that the restrictions or regulations imposed do not frustrate the constitutional freedoms guaranteed by article III, section 22 of the West Virginia Constitution . . . . [333]

Like the Maine court in Brown , [334] the Buckner court recognized West Virginia's legitimate state purpose to protect its citizens from the "unfettered" use of constitutionally protected arms. [335] Although the court did not expressly require that a given regulation bear a "rational relationship" to the state's legitimate purpose, [336] the court implicitly adopted this standard: " T he legitimate governmental purpose in regulating the right to keep and bear arms cannot be pursued by means that broadly stifle the exercise of this right where the governmental purpose can be more narrowly achieved ." [337]

Thus the court, in dicta, approved more common state regulations that prohibit (1) handgun possession by individuals previously convicted of a felony, [338] and (2) the carrying of a "dangerous or deadly weapon." [339] Like the Maine court in Hilly , [340] two years later the Supreme Court of Appeals would uphold a concealed weapons regulation.

c. Other Limitations . In re Metheney [341] involved several applicants for licenses to carry concealed weapons. [342] The county circuit court denied the applications on the grounds that the applicants did not state a valid reason for carrying concealed weapons. [343]

On appeal, the Supreme Court of Appeals affirmed. The court denied the applicant's contention that Buckner had recognized a constitutional right to carry a concealed deadly weapon, [344] and held that the state's concealed weapons licensing statute was a valid exercise of the legislature's police power. [345]

3. Summary . Both the Maine and West Virginia constitutions provide a broad, personal right to keep and bear arms. Neither state's right is absolute; both states subject the right to reasonable regulation under their legislatures' police powers.

West Virginia's constitutional provision specifies the uses for the right to keep and bear arms; Maine's constitutional provision does not. Even though this difference might allow the Maine courts to exclude certain arms uses [346] from constitutional protection; [347] the broad right to keep and bear arms in both Maine and West Virginia offers citizens refuge from the Second Amendment's narrow conditional, individual right. [348] This refuge is beneficial for at least two reasons. First, individuals who keep and bear arms may be secure in the knowledge that their conduct, such as hunting or other recreational activity, is engaged in pursuant to a lawful, broad-based state constitutional right. Second, individuals who are denied firearm licenses, [349] or defendants who are charged with crimes for firearm use in self-defense, will be able to raise state constitutional arguments and defenses.


The below is a review of a Maine Supreme Court look at a felon in
possession and a CCW carry issue. Strewn throughout the article this comes
from is that the Second Amendment isn't as broad as the State Amendment to
keep and bear arms. It seems that the State Constitution is stronger than
the Federal in the case of firearms.

"b. Reasonable Regulation . The court first noted that the legislature has
" 'police power' to pass general regulatory laws promoting the public
health, welfare, safety, and morality." [295] But the legislature must
exercise its police powers reasonably: "Reasonableness in the exercise of
the State's police power requires that 1 the purpose of the enactment be in
the interest of the public welfare and . . . 2 the methods utilized bear a
rational relationship to the intended goals." [296] The court first
recognized Maine's legitimate state purpose to protect the public from "the
possession of firearms by those previously found to be in such serious
violation of the law that imprisonment for more than a year has been found
appropriate." [297]"

"Next, the court explained the rational relationship between prohibiting
convicted felons from possessing firearms and the goal of protecting the
public: "One who has committed any felony has displayed a degree of
lawlessness that makes it entirely reasonable for the legislature,
concerned for the safety of the public it represents, to want to keep
firearms out of the hands of such a person." [298] Since Brown, as an
"habitual motor vehicle offender," operated a motor vehicle after his
license had been revoked, Brown demonstrated such a disregard for the law
that, as applied to him, the legislative determination that he is an
undesirable person to possess a firearm [299] bore a rational relationship
to the legislature's interest in promoting the public safety. [300] Thus,
the court concluded that Maine's possession-by-a-felon statute constituted
a reasonable regulation of the state's constitutional right to keep and
bear arms. Eight months later, the court would uphold one more regulation
on the carrying of concealed weapons."

"c. Other Limitations . In Hilly v. City of Portland , [301] the Supreme
Judicial Court held that the state can regulate the carrying of concealed
weapons by requiring its citizens to complete a concealed firearms permit
application. [302] When James Hilly failed to complete the entire form, his
application was denied. [303] Hilly then filed a complaint and later moved
for summary judgment that the concealed firearms statute unconstitutionally
infringed the right to keep and bear arms. [304] After the trial court
denied his motion, [305] Hilly appealed. The Supreme Judicial Court
affirmed the judgment, [306] holding that the concealed firearms statute is
rationally related to the state's "justifiable public safety concern" posed
by the carrying of concealed weapons. [307]"

"Even though article I, section 16 of Maine's Constitution provides a
broader right to keep and bear arms than the Second Amendment provides,
section 16 does not provide an absolute right. Under article IV, part 3,
section 1 of Maine's constitution, the legislature may exercise its police
power to reasonably regulate the right to keep and bear arms. The
legislature has enacted statutes that (1) prohibit convicted felons from
possessing firearms and (2) require a license in order to carry a concealed
weapon. Even though the language of West Virginia's constitutional right to
keep and bear arms differs from the language of Maine's constitutional
right, the State of West Virginia has enacted similar statutes regulating
the right to keep and bear arms."

The Second Amendment would appear to mean: A well-trained in firearm
population being necessary to a free state and all that entails including self defense has the right to keep and bear arms and it is an individual right.

Most Circuit and Supreme Court rulings seem to have misinterpreted the
meaning of militia as having to do with military. It seems it originally
meant "all able bodied people." Well-regulated didn't mean organized,
rather, it meant well-trained in the use of firearms.

US v Emerson currently in appeal will ultimately define where this will go

State Constitutions including ours do give the right of the person to bear
arms for self-defense. The right is considered to be limited and not
absolute in that the legislature can restrict the right for the purpose of
reasonable police power. In the case of felon in possession, the right
seems to not apply. Any felon in possession cases have pretty much been
lost in favor of the state's right to have reasonable restriction on the
right to bear arms. However, in CCW cases it seems that the state does have
a right to regulate carrying of concealed weapons by means of a permit. It
doesn't have the right to be unreasonable nor to create laws that can be
interpreted to be unreasonable. Our law, if it weren't interpreted
reasonably by the boards would be Constitutional. But because it gives too
broad an interpretation to what is good cause fails to be reasonable. This
is exhibited by the board's letter to me that said 'extreme' need. This is
unreasonable. The issue at a State Constitutional level (and as a Civil
Right case) is the unreasonable interpretation by the board of where their
right to restrict permits begins and ends. They have a right to determine
good character and proper person, but not to look beyond self-defense as a
reason. Since they state my reasons where not good enough and my reason was
self defense, they are saying that self-defense isn't good enough reason.
Since the state Constitution says self-defense is a right guaranteed by its
own words, the legislature has written a law that has given a broad scope
to what should be a narrow scope, to wit: the board only has a narrow
charter to determine if character is sound, the person is proper (non-felon
nor mentally ill), and if self-defense is the good cause or other proper
reason. To judge a degree of urgency in self-defense is beyond the board's
charter and is not constitutional because the Constitution says a person has
a right to self defense. It doesn't say in anticipation of a known threat.
Self defense by its definition is also the anticipation of unknown danger as
well as known danger. The board seems to restrict its charter to known
threats. It is equally conceivable that unknown threats are equally if not
more dangerous. In my case I have had four occasions where my life-style
has put me in harms way. In the boards opinion, they were events that could
have happened to anyone. That is exactly why the board doesn't have a
reasonable right of police power to look beyond self-defense.
Life-threatening events do and can happen to anyone and are beyond the
board's right to say only known threats require approval, unknown threats
don't require approval.

It is obvious that the Supreme Court of our State and of the US need to actually
resolve the meaning of the Second Amendment as it applies to self-defense
and where reasonable police power begins and end. It would seem there is a
right of the state to require permits for CCW's but not to distinguish
between degrees of self-defense.

It is unfortunate (or in my case fortunate) that the major Second Amendment
cases have misread what Militia really meant to our founding fathers and
misinterpreted well-regulated as not meaning well-trained. It is quite
clear, in my mind, that the County board is using unreasonable
standards by applying only known threats as to the mean of good cause or
other proper reason -- an extreme and not reasonable view of the board and
one that speak of political agenda and not upholding a Constitutional right.

Finally, the Legislature, does have a responsibility beyond political
posturing to put this issue to rest and stop the CCW board's abuse of
police power. Bearing of concealed arms is the only way a modern citizen
can exercise their right to self-defense in an urban environment. That
they have resolved this issue through a reasonable and far reaching statute
is irresponsible. Clearly, the right thing to do, no matter how unpopular,
is to enact a broad-based CCW law that gives every law-abiding, non-crazy
person the right to carry a concealed weapon in all places. No one knows
where lightening will strike, nor does anyone know where self-defense will
be needed. That Columbine was a school and having a few teachers with
weapons would have stopped a slaughter before it become one. Everybody
knows that lightening can strike in the same place.



Agreeing with court decisions like this is what puts us, as gun owners,
on the defensive every time.
Absolute Right vs. Reasonable Regulation A Right is absolute, a Privilege
is subject to regulation. That is the short of it. And though in a
practical application we have to deal with how the courts rule on the
subject, we should never stop insisting that the rights we enjoy under the
2nd and under Article 1, Section 6 are absolute. For those who disagree,
allow me to explain. To explain, lets look at a different right to bring
perspective. The 1st amendment right to free speech. Now many have said the
the 1st is not an absolute right, because you do not have the right to yell
"fire" in a crowded theater if there is not a fire. But that is not true.
It is not that you don't have the right to yell "fire", its that you don't
have the right to endanger the lives of the people in the theater (by
causing a panic) and that you don't have the right to interfere with their
right to enjoy the show (also covered under the 1st). You also don't have
the right to interfere with the theater owners business. The bottom line
is, your rights end at the point where they infringe on the someone else's
rights. Bringing that reasoning back into the gun rights argument. If you
subject the right to bear arms to "reasonable regulation under ......
police powers", you soon wind up with no right to bear arms at all. You
start with an absolute right to bear arms, in the manner of your choosing
(concealed or openly), without having to get any permission to do so. Then
you go to a place where you can carry openly, but to carry concealed you
must first inform the government and get their approval. Then to a place
where you cannot practically carry openly and you have to show cause (and
prove yourself worthy enough) to be allowed to carry concealed. Then to a
place where you are not allowed to carry openly, your transport to and fro

SteveHProtecting gold (last)#244982/6/2000; 13:04:18


Agreeing with court decisions like this is what puts us, as gun owners,
on the defensive every time.
Absolute Right vs. Reasonable Regulation A Right is absolute, a Privilege
is subject to regulation. That is the short of it. And though in a
practical application we have to deal with how the courts rule on the
subject, we should never stop insisting that the rights we enjoy under the
2nd and under Article 1, Section 6 are absolute. For those who disagree,
allow me to explain. To explain, lets look at a different right to bring
perspective. The 1st amendment right to free speech. Now many have said the
the 1st is not an absolute right, because you do not have the right to yell
"fire" in a crowded theater if there is not a fire. But that is not true.
It is not that you don't have the right to yell "fire", its that you don't
have the right to endanger the lives of the people in the theater (by
causing a panic) and that you don't have the right to interfere with their
right to enjoy the show (also covered under the 1st). You also don't have
the right to interfere with the theater owners business. The bottom line
is, your rights end at the point where they infringe on the someone else's
rights. Bringing that reasoning back into the gun rights argument. If you
subject the right to bear arms to "reasonable regulation under ......
police powers", you soon wind up with no right to bear arms at all. You
start with an absolute right to bear arms, in the manner of your choosing
(concealed or openly), without having to get any permission to do so. Then
you go to a place where you can carry openly, but to carry concealed you
must first inform the government and get their approval. Then to a place
where you cannot practically carry openly and you have to show cause (and
prove yourself worthy enough) to be allowed to carry concealed. Then to a
place where you are not allowed to carry openly, your transport to and from
a range is restricted and only those with political connections are allowed
to carry concealed. Then to a place where you are not allowed to carry
(openly or concealed) or transport at all. And then the question comes up:
"If you are not allowed to carry or transport a pistol, then why are they
allowed to be sold." Now at some point along this line your "right" changes
to a "privilege". And if it is not as soon as it is restricted at all, then
please tell me where that change takes place. From The Second Amendment
Primer I find the following: "William Blackstone (1723 - 1780, British
jurist and legal scholar)" (pg 248), "placed the right to arms among the
"absolute rights of individuals at common law" (pg 89). "His Commentaries
on the Laws of England (4 vol., 1765-9) was for more than a century the
foundation of legal education in Great Britain and the United States. As
such, his commentaries was one of the major influences upon the thinking of
the Founding Fathers, most of whom were lawyers trained in the English
common-law tradition." (pg. 248). After reading this book, and much of the
other information regarding the Founding Fathers views on the right to keep
and bear arms, I have to wonder where in the world the courts got this
inane idea that they were subject to "reasonable regulation under ......
police powers". There was no police in America before or immediately after
the writing of the bill of rights. In fact, "the first American police
force was not organized until 1845" (emphasis added, Second Amendment
Primer, pg. 87). So, tell me again how the rights enumerated in the Bill of
Rights are subject to "reasonable regulation under ...... police powers"?

Respected poster

Ahh, I got a great response. The purpose of my earlier diatribe was to show
how the courts reviewed the Second Amend. and the State RKBA Articles. I
didn't intend to have you believe that was my thought. Rather, that based
on the courts the right to bear arms was treated as a limited right and
that even in that limitedness, if you will, the County gun board still
exceeds its charter by relativizing self-defense.

In fact, and for the record, and per my previous article last night, I
believe that the RKBA is an absolute individual and natural right too. It
is for that reason that the Emerson case is so unique in that it has
rejected the notion of limits and said as much. This is progress.

What we witnessed in the diatribe was how one might counter the limits that
our courts have upheld.

I find it unacceptable that a CCW board can act with impunity in
virtually complete denial of a Constitutionally guaranteed right.


goldfanWorld Wide Mess#244992/6/2000; 13:08:55

World Wide Mess

re ORO (02/04/00; 11:40:09MDT - Msg ID:24319)
ORO has often, in different ways, pointed out that the problems of economic and standard of living distortions caused by the unprecedented flood of $US in circulation is not a problem confined within the borders of the US where some sort of government and/or citizen action might be able to clean it up. It has spread to the rest of the world, where behaviours of foreigners are now able to dictate the way Americans and those tied to them, live.

Under the Yen carry trade, every 100 Yen created to reflate the Japanese economy, created also a US dollar, which for a while went to balance the trade deficit with Japan. When the trade died, it left in its wake a flood of Yen, including debt on which yen must be found to pay interest, and which are getting scarce, especially in trade for increasingly suspect $US. The flood of Yen has created no discernible inflation in Japan, they remain in a deflated economy, because the Japanese are putting their Yen under their mattresses.

When financial stuff doesn't move and circulate, we have a depression, as found in Japan today, the US in the '30's. When stuff really moves, buying and selling at an increasingly frantic pace, we have an inflation, maybe a hyperinflation. The floods of $US are not being kept from circulation, except where they are held by world CB's as reserves. The fear is, that the continued creation of this paper currency to fund the US trade deficit, and the explosion of demand for all sorts of goods real and spurious (such as Internet stocks and others) where there is no possibility of US citizens earning enough to pay the debt in this growth, will very soon create rampaging inflation.

There is no apparent inflation in the US because the dollars are being traded into stock market and real-estate bubbles, and foreign goods-buying bubbles in bubble pumping factories like Wal-mart. As long as the government printing presses keep rolling, the bubbles are sustained. But the money spinning machine, because of overseas demands for interest $ on the debt they owe, the replacement of dollar debt with Euro debt, constant increases in trade deficit, is spinning out of control. Probably is out of control.

If in all this the bonds stop circulating, the stocks stop circulating, corporations get into cash flow problems, consumers stop buying, the currency stops circulating, a major deflationary crash will ensue in all countries tied to the $US.

On the other hand, if money and purchased stuff continue to circulate at an ever increasing pace, an inflationary crash will ensue in all countries tied to the $US.

The Euro, as I get it, has no such problem yet, because there aren't yet enough of them in circulation to cause trouble.

The way I can save something for myself and those I love and care for, out of this mess, is to buy as much physical gold as I can.

The way I can contribute to those around me, is to endeavor to educate them as I have been educated at this serious and sometimes irreverent table.

I would be happy to be corrected in any of the preceding summations.

an aside...I am having great diffficulty managing my impatience to get to 6pm today to see what transpires when the gold market awakes in Sydney!!! NOT a very Zentered attitude.


MidEastGoldChina Connection#245002/6/2000; 13:33:49

I always enjoy reading the posts from USAGold. I'm not sure how it all fits together, but it seems that the start of the Chinise New Year might play into the increased demand for physical.

Another point is that there should be an increased demand for physical in the Middle and Far East due to the improvement in national economies (our local currency has strengthened against the dollar by 5% over the last 2 months), continued sales in India, and the beginning of the China New Year.

BeowulfOnline Trading Analysts View for Gold Sector#245012/6/2000; 15:28:14

Just for giggles and grins I clicked on the Analysts Views for Gold Shares and Gold in general button on my On-line Trading web page. Here is what they had to say. Check out how old this is and it could be why we haven't even seen real people jump in yet.

18) PRECIOUS METALS-Gold................11/30..............(-)

Comment: As we suspected the gold bug didn't last long, as investors quickly lost interest in the metal once
the stock market came back to life. Another round of central bank selling also depressed the metal and the
sector. However, doesn't expect the sector to suffer through another horrendous year, as a
number of factors continue to work to the industry's favor. Most significantly, the Asian economies have
turned the corner and are ramping up once again. The Asian economic recovery is stronger than expected,
which is good news on two fronts. First, the region is one of the world's biggest buyers of gold jewelry. And
as the region's economies improve, discretionary spending will rise, meaning demand for gold will rise.
Second, as the Asian economic picture brightens the yen will continue to firm relative to the dollar. As we
noted during gold's precipitous decline, the metal has become somewhat of a proxy for the yen/dollar
relationship. A weak yen (relative to the dollar) reduces demand, while a strong yen increases demand for
precious metals - particularly gold. In case you haven't noticed, the dollar has declined sharply against the yen
in recent weeks and is now testing its lows in the 102 area. A break of psychological support at 100 yen
would be bad news for the dollar but potentially very good news for gold. Asia's economic recovery not the
only good news for gold bugs. The rebound in long-term interest rates (back above 6.3%) also giving the
metal a lift, as it raises concern over inflation. Though gold no longer a true proxy for inflation, the sector
tends to get at least a short-term bounce during most inflation scares. If nothing else, lease rates are on the
rise. Finally, mining companies have been scaling back production thereby reducing supply - at least modestly.
The confluence of these factors suggest that the worst is over for the sector and that it should do no worse
than keep pace with the market short-term... Longer-term, expects the group to remain a
laggard due to ongoing anxiety over central bank selling and the relative attractiveness of other investment
options. We also maintain that inflation fears are exaggerated. Stocks: Barrick Gold (ABX), Battle Mountain
Gold (BMG), Coeur d'Alene Mines (CDE), Echo Bay Mines (ECO), Hecla Mining Co. (HL), Homestake
Mining (HM), Newmont Mining (NEM), Placer Dome (PDG).

Golden TruthTO F.O.A#245022/6/2000; 15:29:50

Dear F.O.A i sure miss reading your "comments". I just finished reading your 9/19/99 again and it just makes it all the worse, that i don't see you here anymore :-((
You are missed by me, Believe it! Please post again.

Chris PowellThe Year of the Golden Dragon#245032/6/2000; 16:09:46

Latest "Midas" analysis from GATA
Chairman Bill Murphy.

nickel62China connection Mideast gold#245042/6/2000; 16:49:43

Please clarify where you are writing from when you say that your own local currency has strengthened by 5% against the US dollar in the last 2 months.
CoBra(too)Australia Gold market begins with 15 -20% gains in #245052/6/2000; 16:51:29

The major mining shares Reolute, Lihir Delta up arund 20% - gold mining Index +12% - Let's see what Barrick yas to say monday -
Best CB2

Golden TruthGOLD UP $6.20@ 316.50#245062/6/2000; 17:15:33

Prices on C.T.V NewsNet here in Calgary Alta.

Golden TruthOH MY GOD GOLD UP $11.70#245072/6/2000; 17:21:52

GOLDS NOW $332/oz Alllllrrrrrrriiiiigggghhhhttttttt :-))))
Golden TruthOOOOPPPPPPSSSSSS#245082/6/2000; 17:24:05

Make that $322/oz Not $332/oz YET THAT IS!
Igot excited what can i say (:-))

SHIFTY(No Subject)#245092/6/2000; 17:45:06

I am watching Kitco graph and also Metalsman, and I have not seen it move at all. Where else can I watch.?
CoBra(too)GT - I see 326 - getting closer to your typo - or is it forcasting?!#245102/6/2000; 17:45:16

Who understands the large producer hedgers - now all scrambling to declare suspension of future hedging - how will they be able to sort out the mess of their hedge books, ever?
It seems PDG's management was happy to add 3moz to their
book at the last spike - a total of 7.4moz plus 2.5 million
calls at prices in excess of $400 p.ounze with a total mark-to-market value of $350million. This was yesterdays valuation.
Take 10moz hedged, mark to market $-value of hedge position $350million(as of feb. 3 according to their release)vs todays POG $326 (+40 $), lost $400 million in my book - Am I oversimplifying or they; I don't get it!

SHIFTYhelp#245112/6/2000; 17:50:11

R PowellCEO of Barrick on CNBC#245122/6/2000; 17:52:03

Squawk box closed it's Sunday night show by announcing Monday and Tuesday's guests. Tuesday's quest and the only one mentioned for Tuesday is the CEO of Barrick Gold. That's Squawk Box on CNBC on Tuesday. Might be interesting!
SkipMedia fails to mention POG increase#245132/6/2000; 17:52:15

Yesterday I purchased the Saturday (Feb.5) edition of a metropolitan newspaper, and found it interesting that there was NO MENTION of Friday's runup in gold and silver. So I turned to the financial section...and there was still no mention. Furthermore, the price of gold (and commodoties) was strangely MISSING ALTOGETHER from the financial section! Don't you find that somewhat interesting? Check yesterday's paper for your own area and see whether your local newspaper mentions the increase in the POG.


SteveHPOG APRIL#245142/6/2000; 17:55:16

Gold(CMX) Apr 318.0 326.9 318.0 323.2 +10.2 2/6/00 16:40 323.5 323.0
Silver(CMX) Mar 557.0 558.0 553.5 557.0 -0.2 2/6/00 16:40 556.0
Copper(CMX) Mar 82.75 82.80 82.75 82.80 +0.05 2/6/00 16:24 82.95 82.75
Platinum(NYM)(Access) Apr 479.5 479.5 479.5 479.5 2/6/00 16:17 482.9

dragonflyDrugs and counterinsurgency#245152/6/2000; 17:57:02

Useful reading. Anyone familiar with singer-songwriter Bruce Coburn? I heard him sing "If I Had A Rocket-Launcher" awhile back in a small venue in Ann Arbor. He saw some of what Stan Goff writes about on this link. The reason I look forward to a gut-wrenching collapse of the financial markets and the U.S. dollar is not so my gold can make me wealthy relative to others but in the far-flung hope that the 'Crimes of Patriots' will cease or at least be brought home where they need to be fought. How about a little heart-pounding tough life and death decisions here in the land of the free and the home of the gamblers?? How bout a little overdue karma come home to roost. Let us sort out the men from the boys right here on U.S. soil. As many have said in the past - Enough is Enough! It isn't just about GOLD and real money. It's about murderers and criminals operating with complete abandon in our names. I am far more angry with them for murdering peasants than I could ever be for them stealing my labor. Just as I am far more intolerant of my idiot countrymen whose penchant for gain and entertainment overrides their personal need to discover the truth about important matters. Just had a therapeutic massage today. Must have stirred up some stuff. What'dya think.


SteveHYou folks awake?!!!#245162/6/2000; 18:03:29


Le Metropole members,

April gold trading at $327 in Asia.

Good nite.


SHIFTYsteve H#245172/6/2000; 18:10:24

Thank you
CoBra(too)@SteveH#245182/6/2000; 18:10:39

At POG 327 add another $1million to my Placer equation - that adds up to $51 million net loss from 350 mill. positive value since Thursday's POG 286.

I can't help thinking those guys are nuts- wait for ABX tomorrow's relevations - may be fun.
Golden dreams CB2

longjsteveH#245192/6/2000; 18:12:26

sure is pretty...
FarfelPsychological Trend Shift#245202/6/2000; 18:12:53

If we are truly witnessing a psychological trend shift in the markets, then throw away the technical theory that has guided gold for the past several years or that which has guided the equities and bonds markets.

Where gold is concerned, the rules of COT and other such guideposts become meaningless when a mass psychological shift occurs. The rules are then "made to be broken," just as happened in equities this past decade.

When a manipulated condition is ended, then the leaps and drops can be astounding versus the formerly controlled perpetually level state.



Cavan ManPOG @360#245212/6/2000; 18:13:26

Our friend FOA has said at least 3-4 times that the $360 threshold is a point at which a new round of troubles could begin according to Another. It is a shame FOA is not posting at this time.

Was it Marshall or Holmes that said you cannot cry "fire" in a crowded theatre.

Good nite to all!

R PowellShifty#245222/6/2000; 18:17:34

Try www. crbindex. com then click on quotes when it comes up. I was just there, Gold's at 323.3, that's +10.3! Yahoo without any ....s or coms.
longjsteveH or anyone#245232/6/2000; 18:18:50

whose got a URL for POG in asia....I saw the CRB link earlier from kitco. Is there ANOTHER?
LeighCavan Man#245242/6/2000; 18:21:44

Hi, Cavan Man! I believe ANOTHER promised to come back and visit us when gold reached $360. Maybe tomorrow?
Cavan ManHello Leigh#245252/6/2000; 18:29:34

The paper market for gold is so fouled up we will see what the rise in POG brings. As regards equities, the news might be good and bad. I wish I had more stocks than I do now because truly, that is where the leverage is! However, with the well documented condition of the gold market, perhaps this will be a market, "not as before". No telling. All bets are off on conventional wisdom with regards to investing in this day and age. IMO, anything goes.
USAGOLDCritical Juncture....#245262/6/2000; 18:30:58

London is going to have to make a big decision. Make a stand in front of this freight train....or the big "OLE!" We'll see later.......My guess: "OLE!"

Talking to FOA...We're working toward a separate page, but with the unprecedented developments, I would encourage him to post his comments here until we can get the new page set up. We have to over-come technical inertia to get it set up. This move was unforeseen. The word we got last Thursday is that Barrick is already moving to square its forwards (even though it hasn't been made public) and it is taking a similar tack to Placer. That will make deCrespigny and the rest of Australia cover if I'm reading this right. Then you've got the Hong Kong specs who will have to do something but sit there and hope that London can hold the line.......I suspect that Australia has alot of Hong Kong business to straighten out........I'll be here for the evening.

SHIFTYR POWELL#245272/6/2000; 18:32:55

I got it! Thank you
TheStrangerGold Price Soars in Asian Morning Trade (From Yahoo)#245282/6/2000; 18:37:24

Sunday February 6, 8:27 pm Eastern Time
(Note: this article is ``in progress''; there will likely be an update soon.)

Gold price soars in Asian morning trade

SYDNEY, Feb 7 (Reuters) - Gold continued to power ahead on Monday morning in
Australian/Asian trade after Friday's strong rise.

A strong run brought spot gold to quotes of US$318.00/$322.00 an ounce by around 11.45 a.m. (2445 GMT), well up on Friday's
spot bullion New York close of US$301.80/$302.60 an ounce.

Brokers said gold's powerhouse rise could not be explained solely by Placer Dome Inc's (Toronto:PDG.TO - news) announcement
on Friday that it was suspending its hedging programme.

A leading U.S. investment bank was rumoured to be covering short positions, either for itself or for a major producer, brokers said.

Monday's spot gold price was up by about US$30 on Thursday's New York close of US$287.00/$287.75.

Monday's price surge accelerated as morning trading continued, after opening ahead of New York's Friday spot market close.

``Everyone's trying to work out just why gold is running up,'' broker Keith Goode of Bell Securities said.

All Placer Dome had done is stop forward selling, after increasing the size of its hedge book in the fourth quarter, he said.

Some major Australian producers already had stopped forward selling or stopped increasing the size of their hedge books, he said.

``Placer Dome is one of the issues,'' he said.

Brokers also said Ghanaian mining group Ashanti Goldfields Ltd said on Friday that its hedge counterparties had agreed to roll
over a Thursday deadline for it to pay for derivative contracts.

Attempts to cover losses in Ashanti's hedge book was another major influence on gold prices, brokers said.

``Everyone's trying to second-guess what's going to happen here and then what will happen in the U.S. and Europe tonight,''
Goode said.

``The market is trying to second-guess whether its going to continue going up or ... whether it should be taking profit.''

USAGOLDThe first few graphs from Chapman's latest...Just received#245292/6/2000; 18:55:42

A class action lawsuit has been filed against the Board of Directors and
officers of Ashanti Goldfields Co. in Ghana, Africa for shareholders that
purchased the stock between July and October of 1999. The suit was filed due
to excessive hedging policies. This means all gold company managements are
on notice that they are next. We have asked shareholders for 14 years to
file suits against management and now finally someone has. They are about to
be held accountable. We know of no reason a mining company should be hedged
out over two years. Banks may demand hedging to protect loans, otherwise if
a company is going to hedge over 2 years production they should register as
a hedge fund. As a result of the Ashanti action we'd expect Goldman Sachs to
be enjoined in the suit. As LeMetropole says, "This is big news for the big
picture. With 10,000 tons of gold loans outstanding, what are the shorts
going to do if a bond market run up like today's occurs in the gold market
again." What do they do if gold runs up $100.00 an ounce? Will the
government print money to bail out the big brokerage houses? Will the US
Treasury come up with 10,000 tons of gold to cover the short? Do they have
10,000 tons in Fort Knox? They haven't allowed an audit since 1956. There is
no way the public will buy such a bailout for rich speculators. The dollar
would collapse as a result and needless to say, the event itself will cause
a market collapse. As Bill Murphy of GATA says, "Hello Barrick Gold. I have
a question. When is your hedging seminar planned for your Board of
Directors." That is brilliant. Thanks LeMetropoleCafe.
Ashanti's 1999 gold production was 1.56 million ounces versus 1.54 million
in 1998. Cash operating costs were $206 an ounce. At present gold prices
their hedge book has a negative mark to market value of $270 million and
they would only break even if the gold price went down to between $260-$265
an ounce. Company shareholders are still battling each other.
Late word is Placer Dome is going to cut back their hedge program and we
hear a rumor Barrick is on the verge of also doing so. Barrick's
capitulation will close the door on nearly all gold hedging. This is
extremely bullish for gold.

Robert Chapman's E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Al FulchinoThe Stranger#245302/6/2000; 18:57:53

Could be an equally interesting week in PM stocks.
BonedaddyDragonfly - Msg 24515#245312/6/2000; 19:12:11

Very well stated my friend. Our nation is horribly compromised from its financial institutions to its schools.
There will be some sorting out to do alright. It won't be long now. Pity, most citizens won't ever know the dogs who ate their "American Pie." Perhaps the internet will break the news monopoly and start a second American Revolution?
Dangerous times lie ahead. That's O.K. by me, I've been sharpening the knife for a long, long, time.

Cavan ManUSAGOLD#245322/6/2000; 19:14:53

Do you have any plans of adding cufflinks?
USAGOLDHi Cavan Man...#245332/6/2000; 19:24:33

It's been awhile, good buddy. Congrats to the Rams. That was a great game. On the cufflinks, try Marie in the morning. We've got a catalogue of various things. Don't remember if cufflinks were in there or not.

You know this situation in Austria has my attention. What's your read on that. I'm not trying to support any move in Austria towards the Nazi Party, but it seems to me a country ought to have the right to self-determination. Let's look at from the other side of the issue: What if you deny the Freedom Party its legitimate, democratically won position in the legislature? Then do you deny the people the will expressed by that election. I seem to remember a large number of leftist intellectuals in this country arguing at the time of the Clinton impeachment proceedings that Congress had no right to overturn an election. Seems there is a bigger question here and that has to do with states rights within in the European Union. Here you have a currency without a country; a country without a foreign policy; and conflict over the state of the Union before that Union has held its first real legislative session. Interesting. The political question is wrapped up to me in a much larger constitutional issue. Seems Europe needs a constitutional convention if they are going forward with this. Right now, they are operating in a legal vacuum...

CanuckPOG#245342/6/2000; 19:28:38

Good evening everyone.

What was the high end-of-Sept./early Oct.; around $330/335?

Hope we don't see resistance/profit taking and blow right thru!!

Good luck to all

haroldVarious#245352/6/2000; 19:32:22

I trade futures and since some on this forum have expressed doubt re the future quality of some of the gold derivatives, I called my brother's broker (at a major wire house) to open an account so that I could purchase some gold mining equities....her comment - "well,(my brother) certainly wouldn't want any of those in his portfolio" I then asked if it were indeed her recommendation to sell BMG, PDG, NEM, and CCH. She proudly exclaimed her company's stance was to avoid that sector. Interesting.
TheStranger Rally in Gold to be More Explosive than the 30% Run Up in September#245362/6/2000; 19:37:48

Wondering what to expect next, I reread John Hathaway's marvelous essay from a week ago. Below I have abridged a few pertinent remarks:

"Gold is poised to make its second significant move to the upside in less
than a year. Gold shares and the gold price are in a deep funk, the same
as the despondency that preceded the September 1999 rally of 30% from
a twenty-two year low in the space of three weeks.

This watershed event caught the overly short market by surprise. More
important, it provided a fundamental basis for stating categorically that
low point in gold for the next decade is in place. The downside price risk
is no longer open-ended. It is only a matter of time before additional
upside materializes. How long will it take? The next strong upside move
will be driven by another fundamental development, which will also come
as a surprise to this excessively short market. That development will be
widespread gold producer hedge book buybacks combined with high
profile statements that promise to de-emphasize the importance of
hedging. Buybacks are already underway. However, anti-hedging
statements, which will probably come later this year, will alter negative
market psychology by removing still another argument in favor of the
bearish case for gold, the expectation of ceaseless and expanding
producer hedging.

To recall the three reasons for gold's protracted decline, official sector
central bank selling and lending plus producer hedging have been the
most visible. The combination led to the "piling on" variety of short
selling by hedge funds and other speculators. To them, gold was just a
cheap source of funding, first because the borrowing costs were lower
than any other currency, and second, because gold was expected to
decline in value.

The third, most important, and least discussed reason for the gold bear
market has been the twenty-plus year bull market in financial assets. It
has banished gold to investment Siberia. Interest has vanished for all but
a few diehards with long memories. However, long dormant investment
demand seems ready to awaken in 2000. If so, it would provide the basis
for a sustained, much higher price level that would destroy all hope for
shorts to cover at a profit. Investment demand is the most potent of all
forces that could drive gold higher, but has been absent for twenty years.

There are two reasons to expect the next rally in gold to be more
explosive than the 30% run up in September 1999. First the short
position still remains very large ( for more information, see The Golden
Pyramid ) . It stands at 5,000 to 10,000 tonnes, or two to four years’ mine
production. Lending appears to have expanded during the fourth quarter,
despite the Washington Agreement, as Kuwait, the Vatican, and other
stragglers were recruited to put out the October short squeeze fire. Since
mine production is more than absorbed by fabrication, short positions can
only be covered by new borrowings, or by central bank sales subject to
the 400 ton per year limit under the Washington Agreement.

The second reason to expect a sharp, sudden rise is that markets do not
adjust slowly to changes in psychology. Complacency built upon the
assumption of tame inflation, the new paradigms of e-commerce, and
masterful Fed leadership is overripe. We live in an age of unprecedented
financial euphoria. The dollar is considered to be unassailable.
Valuations that have never been seen are considered reasonable.

The climate of opinion in the investment market is that inflation will
ever reappear. This credo, repeated ad nauseam by investment gurus in all
the media, is the foundation of financial euphoria. What if we couldn't
resort to this mantra? The year 2000 will provide the answer."

Cavan ManUSAGOLD#245372/6/2000; 19:38:48

Agree. History is not on the Euro side. They have a lot of work to do.

If the Austrians vote the Freedom party into power then, the electorate has spoken. Here in the US, we have our own freedom parties; they're just not in a position to broker for public office because of the entrenched two party system. Hatred is the real issue. Hatred knows no geographic boundaries. IMO, the Austrian event is media fueled. I am not surprised nor do I feel a sense of outrage. No one's skirts are clean.

Some days I am a Libertarian, some days a Republican, Some days, an anarchist (HA!).

I will call Marie. I am looking. Although cufflinks are uncommon and perhaps not in style, like Aldo Cella, I am not a slave to fashion.

I am very glad to hear you had a good year last; same on this end. It couldn't have happened to a better guy.

Cavan Man"Power Shift"#245382/6/2000; 19:42:02

This from the Cavan Man's dusty bookshelves.....

"One thing seems clear. When the battle to reshape global finance reaches its climax in the decades ahead, many of the greatest 'powers that be' will be overthrown."

Alvin Toffler

Solomon Weavermorning action in asia...silver first to fall back#245392/6/2000; 19:42:15

Here's a pretty good link to watch futures through the night. Doesn't seem to show any volume though.

Just noticed that Soybeans, corn, and wheat are all up by 0.5 - 1.5 % . Can anyone tell me if it is good to bury soybeans in a PVC pipe too??? They are not detected by metal kidding aside...this seems like a pretty big jump too. It seems like the manipulators are awake this morning wiring funds across to keep gold in line.

Remember, silver is their whipping boy....when you see that little red down arrow next to silver you just start to wonder if the PMs are ready to turn down....the cost to short silver back down fast is a lot less than doing it in gold....

Again, my prediction, the paper contract lock-up will happen in silver first. And pray for the poor fools who have to sit across the table from Warren Buffet when he says he wants his loans paid back in metal.

Poor old Solomon

CanuckGreenspan selling out??#245402/6/2000; 19:48:27

. Mr. Greenspan reportedly said out of the blue, "You know, I have always been in favor of a gold standard". At that point, my friend asked him, "Well, why have you not pushed harder to return our system to a gold backed system". Mr. Greenspan reportedly said, "Because no one would listen".
TheStrangerMore from Yahoo#245412/6/2000; 19:48:53

Sunday February 6, 9:02 pm Eastern Time

Gold price soars in Asian morning trade

Gold analyst Gavin Wendt of Intersuisse said gold's latest surge had to be seen in the context of the European Central Bank's
(ECB) September decision to cap gold sales at 400 tonnes a year for five years.

A cap on producer selling, added to the ECB cap, allowed the latest price surge to outpoint the six percent rise sparked by the
ECB's September decision, which at the time set $300 an ounce as the metal's next target.

``That's the important thing. The really weak link has been the supply side. The demand for gold has been extremely strong,''
Wendt said.

Central bank sales had been exacerbated by producing selling, with producers not showing faith in their own product, he said.

``Why should anyone else have any confidence when producers themselves are taking this negative pessimistic view, locking in
prices at (low) levels?''

Wendt believes that the gold market will show a lot of volatility at present prices.

Hedge funds may wish to revert to covering short positions but may now face a fundamental change through not being able to
rely on an artificial cap on prices from producer forward selling.

``Now there's more opportunity for the gold price to go up so I think they'll be more cautious about entering into short selling. If
anything it might just start to get them thinking the other way and maybe start taking some long positions,'' Wendt said.

Cavan ManUSAGOLD#245422/6/2000; 19:50:47

MK, while you're at the table, I have made a couple attempts to get FOA's "overviews" in the HOF. I have complied by posting the seconds etc. Would you please put this on your "to do" list? Thanks.
MatrixAustralian Market Update#245432/6/2000; 19:54:23

Very aggressive buying out of Sydney this morning, with reuters falling over on the opening , and failing to give up to date live prices. Gold stocks up strongly, however "the market" does not yet believe in the sustainability of the rally. Alot of the stock buying coming in from offshore. The majority of Australian producers hedge through the purchase of put options, and generally speaking forward sales make up a smaller component of there hedging operations. I would expect DeCrespigny and company to join in with Placer Dome, given that it will be largely symbolic if they do so. Hope this is of use!
PH in LAOff the charts!#245442/6/2000; 19:54:38

The Kitco chart has been redrawn with the lines real close together. Nevertheless, the line is clear off the chart.

One of the most interesting sights on the gold trail/journey and where is FOA? We sure do miss you. (My new unfinished site would be happy to host your comments until Michael gets USAGold retooled. E-mail me at: This email address is being protected from spambots. You need JavaScript enabled to view it. )

What about that PermaClown? Where are his/her misguided superficial stupid comments when we need them most?

Seems like I saw some trash in the garbage can this afternoon. Must be some of his stupid remarks. Right where they belong. Where they can do the most good!

Solomon Weaveris winter really the season for shorts??#245452/6/2000; 19:59:37

Small lesson which seems to be appropriate here.

I once had bought 1000 shares of a small Boulder based biotech called Nexstar...because I liked their technology and they already had strongly growing sales...the stock ran up and down between $9-14 for about a year...then there was an announcement that they were being bought out at $16 per share in 3 months. When the stock hit $15.75 I sold. Then I watched in dismay as it rose further to $18.00. Now who in the world would be interested in paying $18.00 for a stock which was on the block for $16.00 (friendly bidder in a thin market...not like the telecoms). Well, as it turned out, the short position on the stock had been about 15% of the float.

It seems to me that what we are seeing in gold is "only" the action of short covering...I wonder what it will take to get new long energy into the game???

Poor old Solomon

Cavan ManDear FOA#245462/6/2000; 20:06:59

Well, I tried the old "every man has his price" tactic and it failed miserably I see. Only myself and Golden Truth put our chips (your ransom)up although I know all here are painfully aware of your absence. Your thoughts are good as gold. Hope to see you here this week.

Bon soir

JourneymanWho's running this show?#245472/6/2000; 20:24:11

@goldfan (2/6/2000; 10:18:27MDT - Msg ID:24487) @SteveH (2/6/2000; 10:18:10MDT - Msg ID:24486), Aristotle, ALL

There's been talk today of the U.S Treasury being a maverick to the
FED, and conspiracies by this or that group to cause this and that effect.

Don't over estimate these guys. Remember, Greenspan only claimed ~60%
accuracy for the FED's predictions. Goldfan, particularly with your
posts on chaos theory (now morphed into "complex phemoemnon" theory,
I believe) you may be aware that major effects are "caused" by effects
too subtle to measure or anticipate. Thus what's happening now isn't
under anyone's control. To give give the FED, the U.S. Treasury, FOA's
folks -- or anyone -- this power in your thinking grossly overestimates
their powers and will ultimtely distort your thinking.

NO ONE's "in control." And NO ONE knows exactly how this will all turn
out. As Ludwig von Mises points out:

"We may assume that the outcome of all events and changes is uniquely
determined by eternal unchangeable laws governing becoming and development
in the whole universe. We may consider the necessary connection and
interdependence of all phenomena, i.e., their causal concatenation, as the
fundamental and ultimate fact. We may entirely discard the notion of
undetermined chance. But however that may be, or appear to the mind of a
HIDDEN." -Ludwig von Mises, Human Action A Treatise on Economics, Third
Revised Edition (Chicago, Illinois: Contemporary Books, Inc. 1966),
pg. 105 [I added capitalization emphasis -j.]

We humans are all to apt to attribute powers to control complex phenomena
such as the economic system to humans and human institutions, when in effect
such attempts, inescapabley made with less than adaquate knowledge, lead to
additional instabilities, not less. BUT having made such attribution, our
tendancy when things go wrong is to demand more such control attempts,
usually by the same bodies that screwed things up in the first place.

A prime example is found in the literature of conservation. It seems like
a good idea to prevent forest fires. Right? I mean Smokey The Bear and
all --- But it turns out that only a very small percentage of forest fires
are caused by man. Nature causes most of them through lightening strikes.

Now it may seem strange, but nature has been around much longer than Smokey,
and she likes forest fires. The trees and animals in the woods evolved
in a context where forest fires happened, and obviously have survived. They
can handle normal forest fires. In fact, from the tree viewpoint, normal
forest fires clear out underbrush, helping to break it down to what becomes
humus, and clear out old, dead trees and any over-growth of smaller

But in our infinite wisdom, man decided ALL forest fires were bad, and
got very efficient at stopping them -- all the forest rangers in their
look out towers and all. So the brush builds up and up, and when a fire
breaks out, it spreads faster because there's more fuel available for
the fire, which now threatens to become a confligration. When such a
fire gets going it burns hotter and further than nature ever allowed,
and destroys mature trees as well as the undergrowth. That's just what
happened in Yellowstone Natl. Park a few years back.

Can you think of any parallels to such a situation apropos to this forum?
To the Austrian economists, "malinvestment" is equivalent to underbrush.

Regards (and keep the water handy)

Solomon Weavera little bit out of control#245482/6/2000; 20:42:36


Great post....even if the right hand (Treasury) had known what the left hand (FED) was doing....

Humanity faces a great conundrum....with our massive numbers and very powerful physical technologies, we have created a globe where, although mother nature is still queen, we live more and more in "systems structured by humanity". We take responsibility to "control" them.

I think Goldfan would do well to study some "systems theory" to add to his chaos interests. It is probably impossible for humans to invent a perfect economic system, but assuming we can come closer, is it not strange that we seem to continue sailing forward with the wrong map?

I remember a good stock broker friend telling me once "I have been in the business for over 20 years, and the most facinating thing about each market at each moment is that there are always people willing to stand on both sides of the trade."

Poor old Solomon

Solomon WeaverGOLD EAGLE SITE OVERWHELMED#245492/6/2000; 20:49:57

The following lifted from the TimeBomb2000 Forum

It seems that a whole lot of people are sitting up tonight thinking about Gold.

Or could it be a concerted effort to "jam" gold info for a while??? Let's hope it is only the former.

Poor old Solomon


(vronsky) Feb 06, 22:03 About an hour ago the GOLD-EAGLE traffic soared to heights never before experienced. We were running at a rate of more than 300,000 hits PER DAY ...AND IT'S SUNDAY! Again our Server was temprarily overwhelmed, shutting it down for an agonizingly long period of about 30 minutes. I say 'agonizingly,' because gold was soaring in the Far-East.

To remedy the problem - especially in anticipation of tomorrow's avalanche of burgeoning traffic - we are increasing the Gold Forum cache, and will shorten the periods to One-Hour segments. This will speed-up your access rate, while diminishing the server load. Therefore, to see previous posts, use the "Select Previous Periods" function at the head of the column of postings. A more convenient solution will be forthcoming later in the week.

It all goes to show, rapid progress brings problems. Nonetheless, it's encouraging to recognize today's hit rate of 300,000 accesses/day translates to 9,000,000 hits per month...the ranks of goldbugs worldwide are swelling and amassing, which means MUCH HIGHER bullion prices are on the horizon! Gold-Eagle.Com Link

-- Zdude ( This email address is being protected from spambots. You need JavaScript enabled to view it. ), February 06, 2000

LeighPH in LA#245502/6/2000; 20:50:36

PERMAFROST melted in the heat of the cyber-barbeque. Actually, he went over to Kitco and told them that he voluntarily quit our site because his life was being threatened (?). He found lots of hugs and sympathy over there.
VoyagerUSA GOLD#245512/6/2000; 20:52:11

Please explain LeMetropoleCafe. Have see referenced other times. Thanks.

p.s. Please keep an eye on Platinum for me.

Solomon Weavergo here and walk forward#245522/6/2000; 21:04:37

Lots of great material inspired by the gold discussions at LeMetropolCafe

Poor old Solomon

PH in LAVoluntarily slinking away like a coward#245532/6/2000; 21:13:15

would be a better way to put it in my book. But your comment is well taken, Leigh!

Voluntarily? Sure! And I guess Chris left here "voluntarily" too.

Yes, I also saw some of Perma's whining over there a few days ago. And naturely, there was no serious discussion offered to his/her absurd contention that he/she had "debated" with FOA because anyone capable, willing and/or interested in the whole monetary discussion thread left Kitco long ago. This was the price they all paid over there for insisting that everyone has the right to sling intellectual mudballs whenever and where ever they please. Kitco is nothing but a shell of what it once was. I guess that makes them all very happy there. Funny how some of the very lightest of the intellectual light-weights (such as LBG) also disappeared from the radar screen at about the same time.

Solomon Weaverchart showing dramatic growth of derivatives in 90s#245542/6/2000; 21:19:25

Particularly of note...the majority of derivatives are OTC (not visible) and are interest rate big surprise that the bond moves have got some in trouble...

Soooooo....tomorrow, Summers will hum and haw and announce that the plans to buy back 30 year issues is being "delayed" a bit....

Poor old Solomon

goldfanVoyager (2/6/2000; 20:52:11MDT - Msg ID:24551)#245552/6/2000; 21:30:58

Saw your question, the link above is their front page, tells you about them. One of the best places for really up to date knowledge on gold, investments, economics, world wide. Mr. Murphy is the leader of GATA, the gold Anti-Trust Action Comnmittee that has done, is doing, maybe more than any other group to get the gold manipulations out in the open.



Black BladeRE: USAGOLD msg. 24526#245562/6/2000; 21:46:24

OLE! indeed. Esta precio de oro, es buen, verdad? Tal vez un precio de $400 esta semana! The Aussies held tight, the Asians are wavering a little. Gold pulled back slightly, but is still up +$7.50. You are right though. The Brits may try to step in front of a frieght train on this one. Maybe this sudden rise may convince them to cancel the march 21st auction. I only wonder what the rumored Barrick conference call will be about (2pm EST). Barrick could call an end to hedging like Placer Dome and push Au higher, or they could restate how hedging is good for Barrick, (while horrible for shareholder return), which would probably slow down the AU advance. There has been a grass-roots email campaign to Barrick over the last couple of days in an effort to convince Barrick that hedging only destroys shareholder value, even if the profit margin is OK. The shareholder is the owner of the business. I think that this point should be put across to Barrick management before they make their conference call tomorrow. Mucho suerte! Black Blade.
goldfanJourneyman (2/6/2000; 20:24:11MDT - Msg ID:24547)#245572/6/2000; 21:58:26

Journeyman (2/6/2000; 20:24:11MDT - Msg ID:24547) Sir Journeyman I am honoured by your attention to these posts of SteveH and mine, and thank you for the mathematical reference.
You said:
>>>Remember, Greenspan only claimed ~60%
accuracy for the FED's predictions. Goldfan, particularly with your posts on chaos theory (now morphed into "complex phemoemnon" theory,I believe) you may be aware that major effects are "caused" by effects too subtle to measure or anticipate. Thus what's happening now isn't under anyone's control.

NO ONE's "in control." And NO ONE knows exactly how this will all turn out.<<<<

and I certainly agree. And I guess I was only speculating that the apparent divergence between the Fed and Treasury, was maybe not an accident, but something they cooked up to profit themselves and their friends. It is fairly predictable I believe, that interest rate tightening by the Fed will cause short rates to rise, and bond buying by the Treasury will cause long rates to drop. Surely somebody with prior knowloedge of the moves could profit?. I have come to believe that few really big moves, big mergers, big government actions, are taken with the best interests of the people or of the ordinary shareholders, in mind. I don't imagine Summmers or any of them except maybe AG and the banksters, have the least clue about the topics we discuss onthis forum.

and I know you're right, it will be the breath of a butterfly that blows this thing apart, unexpected by everyone....


Black BladeBarrick email addresses for anyone interested (Thanks 1912 at GE)#245582/6/2000; 22:03:17

Let your views be known:

Barrick managers:

This email address is being protected from spambots. You need JavaScript enabled to view it.


This email address is being protected from spambots. You need JavaScript enabled to view it.

and, important:

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tedwGold Rise#245592/6/2000; 22:10:51

As somebody mentioned, I too noticed very little press about Fridays Gold move, just a few short blurbs. Interesting.

The Bank of England has egg on its face again. A few short days after they sell gold at the $290 range it explodes upward. How long will the Brits let them do it?

And how does this bode for future auctions there and elsewhere?

Gold:Real Money!!
I like Al Fuchinos reference to the manipulators as "The Evil Surpessors". Thats what Im going to call them.

Jason HappyA letter sent to all barrick email addresses posted:#245602/6/2000; 22:35:23

Dear Barrick Management,

Last year, I convinced my father to buy gold and gold stocks. He decided on Barrick
and Homestake. During October '99's run, I quickly convinced him to sell his $10,000
worth of Barrick and buy DROOY instead. The next day, Barrick faltered, while
DROOY soared.

On Thursday last week, Feb 3rd, DROOY increased in price more than any other gold
stock, 30%, because they are strongly positioned to profit from upside moves in the
POG, because of their lack of hedging.

Why should I buy a gold mining company that bets against a future rise in the price of
gold through hedging, when the major incentive to own a gold mining company in the first
place is if the price of gold rises in the future?

I understand you have hedged in the past to stay in business. Good for you. Will you
avoid forclosure if gold soars to $600/oz? Perhaps your mine holdings will be acquired
by unhedged companies like DROOY, Harmony, and others?


on behalf of my father,
"Annonymous Happy" (real name inserted in real letter)
former stockholder


Black BladeFrom Aussie Assoc. Press#245612/6/2000; 23:16:10

Aust dlr stronger at noon on strong gold price, bonds_2 Sydney

Australian gold stocks soared today after bullion prices surged to four month highs on Friday. In New York, gold closed Friday up $US23.20 at $US310.40 per ounce thanks to producer buybacks amid massive short covering. The rally was triggered by anticipation and later confirmation from some gold producers that hedge books would be unwound ahead of higher gold prices. At 1220 AEDT, gold was trading at $US318 an ounce in Australia. Mr Volanakis said the volatility in the Aussie of last week was not over, with the market thin due to a lot of Asian players being out of the action because of Chinese New Year last Saturday. But he said the local currency looked very strong today and was set to test the 64.10/20 resistance level. At noon, the Australian dollar was at 0.6514/6519 euro from 0.6377/82, 1.2849/72 New Zealand dollars from 1.2793/16, and 0.4017/22 British pounds from 0.3942/48. The US dollar was at 107.26/31 yen from 107.58/63 at the close Friday. The euro was at $US0.9816/9821 from $US0.9896/01 and 105.31/36 yen from 106.46/51. MORE 07-02 1232

Chris PowellWho sold Barrick those calls?#2466902/08/00; 00:58:04

Who sold Barrick those gold calls? Maybe,
Reginald H. Howe says, it was the U.S.
Treasury Department's Exchange Stabilization
Fund. Nobody else would have the bucks or the

Chris PowellHow the Exchange Stabilization Fund fights gold#2467002/08/00; 00:59:23

Here's a summary of how the U.S. Treasury
Department's Exchange Stabilization Fund
is probably being used to suppress the price
of gold, and an explanation of why it is so
dangerous. Send this essay to your
representatives in Congress and ask that
it be frankly confirmed or denied.

nickel62Stranger I just spent an hour reading over yesterdays posts.#2467102/08/00; 01:23:37

And I think your is the best. If you don't mind I would like to repost it so we all remember this is a bull market.I know I keep forgetting it, I 'm sure others do as well.

TheStranger (02/07/00; 17:34:51MDT - Msg ID:24636)
The Gold Bull Market
Just a reminder that this gold bull market is only 9 months old, yet it has already risen 21% in dollar terms. Sometimes, it seems like we forget that.

jaydeeveeSir Farfel . . . I'v been at the Office . . . am back at home now . . . .#2467202/08/00; 01:53:59

Sir Farfel (sorry about the Sir! You indicate that you're not too fussed with the 'Sir' bit; and further, you point out to the forum that the frequent use of 'Sir' in a posting is a characteristic of Kaplan's posts.)

Let us assume, Farfel, that you are a great teacher. I don't really know whether you are a great teacher or not as I don't know you. From the little I'v read of your posts you certainly are a very knowledgeable and articulate person.

Why then would you, the 'teacher' react to me (a student of gold - a learner!) by continuing to indicate that I must be someone else?

I find it totally incredulous that you offer as evidence (that I am Kaplan) in that I used the word 'Sir' frequently in my recent posts.

I thought the theme of this forum was 'knights of old'; and I have witnessed the word 'Sir' used many, many times by different 'posters'.

I use the word 'Sir'; and I'm Kaplan! Very odd!

Let me now take an opportunity to say that I have developed a deep respect for the creator of this site, Mr. Michael J. Kosares; and ALL 'posters' at this site. Most of the time I didn't feel 'worthy' to post in such company; but being a follower of GOLd, maybe - just maybe, brings out the best in a person!

I believe history is being made here at USAGOLD FORUM. We are witness to an experience (this magnificent internet! this immediate flow of information!) that in future years will surely be regarded as a quantum leap in the evolvement of humankind. This IS pioneering stuff! History!
Eat your heart out Columbus! We GOLDBUGS are explorers, risk takers ALSO!

I'v learned so much here - about GOLD and myself. I'v been a student many years of my life but have not had a learning experience of the QUALITY that I have had reading this site. I'v learned about GOLD & LIFE! Who ever imagined that reading USAGOLD would be a life changing experience! Yet it is! Where else can you get this type of education? Where can you intelligently question the awesome powers that be?

I'm not posting here to upset you Farfel, or to upset anybody else, in any way whatsoever; but I do find it strange, after reading this site every day for months, that I get a reaction such as yours.

It certainly isn't a 'welcome to the site' reaction from you; and I feel that other 'lurkers' might well be intimidated to NOT post! A loss to the site!

I have posted on this site as 'jaydeevee' about six times over the past five months; and believe that my posts were quite boring stuff relative to the great work that is posted here! Yet we all need to start somewhere! We need encouragement to post here in such august company.

On the other site, one can search a 'poster's postings over time. Collect all the 'postings' of the one person and examine them at the one time. USAGOLD does not seem to have this facility; and I'm certainly not saying that this 'search' facility is a good thing.

If USAGOLD FORUM had this 'search' facility, you could look at all my postings, you would not/could not make the assertions that you have made.

To finish off, in the first of my recent posts, I referred to Kaplan's advice in gold ONLY; and his advice over the past FEW (ONLY) months.

I am, and was always aware that Kaplan's statements regarding internet stocks, platinum, paladium & crude etc. have not, as yet, come to pass.

Anyway, peace to ALL for now!

Black BladePalladium up +$18.00 to $553.00#2467302/08/00; 03:39:08

Platinum down a couple of bucks and Gold barely budging. The PGM's still moving up overall.
Black BladeHarmony has no hedge what does this mean for Aussie Goldfields Ltd.#2467402/08/00; 04:17:20

SYDNEY (Dow Jones)--South Africa's Harmony Gold Mining Co. (HGMCY) has bought a 19.95% stake in Australia's Goldfields Ltd. (A.GOL). Harmony bought the stake from Hanson PLC (HAN) of the U.K. for A$1.25 a share or A$41 million in total, Goldfields said in a statement.

Aparrently Goldfields has over 600,000 oz sold forward.

The Goldfields investment is subject to approval from Australia's Foreign Investment Review Board and the South African Reserve Bank. The price paid by Harmony compares with Goldfield's closing level Monday of A$1.10 a share. Harmony later said the transaction marks its entry into Australia, and is in line with a strategy to pursue growth opportunities outside South Africa. "We have been investigating the Australian gold sector for some time as it contains several highly prospective regions and offers a number of attractive opportunities," said Chief Executive Bernard Swanepoel in a statement. The Goldfields stake will be a "base from which to investigate further opportunities in Australia," he said.

Black BladePalladium screams higher!#2467502/08/00; 04:21:26

The fun isn't over yet:

Palladium up +$23.00 to $558.00 this morning, Pt down only -$0.50, Au down -$0.25, Ag sinking fast -$0.22.

Canuck@ Al F.#2467602/08/00; 05:18:28

Sorry about the mis-read yesterday.

Got my 'chips on/chips off' messed up.

My sincere apologies.

SteveHESF repost from Cleveland Fed site#2467702/08/00; 06:05:21

The Exchange Stabilization Fund:
How It Works

by William P. Osterberg and James B. Thomson

Increasingly controversial, the Exchange Stabilization Fund is
used to influence the international value of the U.S. dollar and to provide aid to foreign countries. The debate surrounding the Fund will become more informed, suggest the authors, when observers understand how to calculate the total amount of resources available to the Fund. This Economic Commentary explains how the ESF's balance sheet figures must be adjusted to produce an accurate account of those resources.

The increased turmoil in international financial markets, starting with the Asian crises of 1997, has led to calls for financial assistance from the wealthier nations. In December 1997, the United States announced a $5 billion commitment toward an international package of financial assistance for South Korea. Two months earlier the United States pledged $3 billion for assistance to Indonesia. In both instances, the Exchange Stabilization Fund (ESF) was to be involved.

Established by Congress in 1934 to help stabilize the international value of the dollar, the ESF received little public attention until it was used in the provision of financial assistance to Mexico in the wake of the peso crisis of 1995. Indeed, greater scrutiny may have been inevitable given the ESF's expansion beyond its original mandate.1 Despite the recent attention, the full range of ESF activities and the actual amount of available ESF resources are not well understood. This impedes an informed public discussion of ESF operations.

A major goal of this Economic Commentary is to facilitate accurate assessments of the amount of resources available to the ESF. First, in order to understand the uses of ESF resources, we provide an overview of ESF operations. Second, we examine the ESF balance sheet to show how "total assets" is a poor measure of the resources available to the ESF for one of its major activities, foreign-exchange intervention. Third, we discuss how any measure of ESF resources must take account of warehousing and swap lines. Finally, we suggest a better procedure for assessing the amount of resources available to the ESF.

An Overview of the ESF

The ESF began operations on April 27, 1934, with capital of $2 billion. Initially, $1.8 billion of the ESF's reserves were maintained in the Treasury's gold account. The remaining $200 million was deposited in a special account at the Federal Reserve Bank of New York as the working balance for investing in gold and foreign exchange.2 The working fund of the ESF has expanded over time, reaching as high as $42 billion in mid-1995.3 As documented by Schwartz (1997), most of the growth in ESF assets has occurred since 1960 and has comprised increases in foreign exchange and securities. As of June 30, 1998, almost 60 percent of the asset total had been financed by cumulative net income, mainly reflecting interest earnings and capital gains on foreign currencies.

The Gold Reserve Act of 1934 excluded the ESF from the congressional appropriations process and explicitly authorized it to operate without congressional oversight and accountability. In other words, Congress gave exclusive control of the ESF to the executive branch. All decisions regarding the ESF are made by the Secretary of the Treasury, subject to the approval of the President.

Legislative changes in the late 1970s reduced somewhat the secrecy under which the ESF operates and made it more accountable to the Congress. For instance, since 1979 the administrative expenses of the ESF have been subject to the budget process. Moreover, a 1977 amendment to Section 10 of the Gold Reserve Act provides that:

"… a loan or credit to a foreign entity or government of a foreign country may be made for more than 6 months in a 12-month period only if the President gives Congress a written statement that unique or emergency circumstances require the loan or credit be for more than 6 months (31 U.S.C. 5302(b))."

Finally, 1978 legislation requires the Treasury to provide monthly statements of ESF activities to the House and Senate Banking Committees. Nevertheless, none of these legislative changes has reduced the discretion of the Treasury Secretary in operating the ESF. All of his decisions are final and not subject to approval by the Congress.

The Size of the ESF

A common misperception about the ESF is that its size is adequately measured by the "total assets" number reported on the ESF balance sheet, published quarterly in the Treasury Bulletin (see table 1).4 This might seem to be a reasonable presumption since the ESF cannot unilaterally issue debt in financial markets. However, several important aspects of ESF operations are not apparent from its balance sheet. In particular, since many ESF operations use dollar assets, any limitation on the conversion of nondollar assets to dollar assets is relevant to an assessment of available ESF resources.

Intervention, the purchase or sale of foreign currencies to influence the international value of the dollar, is a major use of ESF resources (see box, opposite). The other is the provision of financial assistance to foreign countries. Whenever the ESF sells foreign currency, it produces a crediting of the ESF's (nonmarketable) U.S. government security account with the Treasury, which is equivalent to "dollar" cash assets. When purchasing foreign currency, the ESF first obtains dollar balances—possibly by selling some of its Treasury securities to the Treasury (with the Federal Reserve [hereafter, the Fed] acting as agent). The subsequent purchase of foreign exchange with dollars leaves the ESF with a lower level of Treasury securities but an offsetting increase in "foreign exchange and securities."

Thus the relevant measure of resources available for ESF interventions depends on whether foreign exchange is being bought or sold. Dollar assets are needed to buy foreign-currency-denominated assets. On the other hand, purchases of dollars are financed from international reserves, which include official holdings of gold, foreign government securities or deposits at foreign central banks, the reserve position in the International Monetary Fund (IMF), and special drawing rights (SDRs).5

ESF accounting for SDRs provides another example of why total assets is a poor measure of available resources. The SDR is an international reserve asset created by the IMF (under the First Amendment to its Articles of Agreement) to supplement existing reserve assets. The value of an SDR is determined by reference to a basket of currencies of the five largest industrial-economy member countries of the IMF. Pursuant to the Special Drawing Rights Act of 1968, SDRs allocated to the United States or otherwise acquired by the United States are resources of the ESF.

There are three SDR entries on the ESF balance sheet (see table 1). The SDR asset entry and the SDR liability entry, "SDR allocations," pertain to ESF linkages to the IMF. The allocations represent the current value of the provisions of SDRs by the IMF to the U.S. Treasury, which were transferred to the account of the ESF.6 The SDR asset entry reflects the dollar value of SDR allocations to the United States plus interest earnings, valuation changes, and sales and acquisitions of SDRs from other IMF participants.

The third entry, "SDR certificates," equals the portion of the SDR assets which has already been "used." As noted earlier, all SDRs owned by the U.S. government must be held by the ESF. In other words, the ESF cannot engage in transactions with either the U.S. Treasury or the Fed that would result in a reduction in the ESF's SDR holdings. Thus, in order to convert SDRs to dollar-denominated assets, the ESF issues a claim on its SDR assets to the Fed—SDR certificates—in a process called monetization.7 While this does not decrease the SDR asset entry on the balance sheet of the ESF, it does increase the certificate number by the amount of the monetization. By law, the certificate entry cannot exceed the SDR asset entry. However, up to the limit imposed by the SDR asset total, monetization increases the size of the balance sheet, since the certificate amount increases dollar for dollar with the eventual purchase of assets (for example, foreign-currency-denominated government securities).8

Since the monetization process increases the total asset number while decreasing the amount of SDRs available to be monetized, the certificate total must be subtracted from total assets to arrive at an estimate of the ESF's available resources. Thus, although total assets of the ESF on June 30, 1998, were $39.7 billion dollars, a slightly more accurate measure of available dollars would be $30.4 billion. This is the sum of the nonmonetized portion of the SDR total ($10 billion SDRs minus $9.2 billion SDR certificates), the entry for U.S. government securities with the Treasury ($15.7 billion), and the dollar value of the German mark and Japanese yen items ($13.9 billion).

Off-Balance-Sheet Financing

Congress limited the ability of the ESF to issue liabilities on its own and thus, perhaps intentionally, limited the ESF to financing new interventions through the sale of assets, a practice known as asset management. However, beyond the uses of SDRs and securities as described above the ESF can obtain additional dollar resources by moving foreign-denominated assets off-balance sheet through an arrangement with the Federal Reserve System. Thus, the $30.4 billion on-balance sheet asset number is still a flawed measure of the dollar assets available to the ESF.

The first problem is that, once the Treasury securities ("dollars") are exhausted, the ESF cannot use its German mark assets or Japanese yen assets to purchase additional mark or yen items, respectively, without first converting them into dollar-denominated assets. This conversion of the ESF's foreign currency portfolio into dollar-denominated assets requires an off-balance-sheet financing arrangement with the Fed, referred to as warehousing.

Warehousing is a swap transaction in which the Fed buys foreign exchange from the ESF in a spot transaction and sells it back with a forward transaction —that is, the ESF agrees to exchange dollar assets for foreign exchange on the date the forward transaction comes due. The ESF balance sheet would thus record a decline in "foreign exchange and securities" but an increase in the "U.S. government securities" total, which could be used to purchase foreign currency or implement dollar loans to foreign countries (the forward transaction would not appear). In other words, the Fed warehousing arrangement allows the ESF to take a leveraged position in foreign assets that is not reflected on the ESF's balance sheet.

Two factors complicate the ESF's ability to use the Fed warehouse. First, the size of the warehouse is determined by FOMC deliberations. Although the size of the warehouse was increased to $20 billion to help finance the Mexican financial assistance package in 1995, it is currently limited to $5 billion with no balances currently outstanding. Second, although the currencies currently eligible for the warehouse are indicated in the Authorization for Foreign Currency Operations, they are not necessarily the same as the currencies that the ESF needs to exchange.9

Since about 1978, warehousing has been controversial. Goodfriend (1994) argues currency-warehousing agreements between the ESF and the Fed provide the ESF with additional funding that circumvents the congressional appropriations process and statutory limits on Federal borrowing.10

The second problem with the on-balance-sheet asset measure of ESF resources is that it ignores swap lines. Swap lines, formally called reciprocal currency arrangements, are credit lines between governments (or central banks) stipulating terms which, usually for a short period of time, allow either country to borrow the other's currency.11 The mechanics of drawing down a swap line are similar to that of warehousing—offsetting spot market and forward market transactions—except that our swap lines do not provide us with dollar assets directly but rather provide dollar assets for the other country. As in the warehousing arrangement, the forward market transaction does not appear on the balance sheet until the expiration of the swap line.12 Drawings might be renewed once routinely, but statutes require that the executive branch report subsequent renewals to Congress. Both the Fed and the ESF maintain swap lines the sizes of which are indicated in the quarterly summary of ESF and Fed foreign exchange operations published in the Federal Reserve Bulletin. As of March 31, 1999, the only authorized ESF swap line was with the Bank of Mexico for $3 billion.13

Finally, any measure of ESF resources available for intervention needs to take account of any stated commitments by the U.S. Treasury to provide financial assistance to foreign governments via the ESF. For instance, the commitments that had been made to Korea and Indonesia would have reduced the total resources available for intervention as reflected on the June 30 balance sheet by $8 billion.14


The Exchange Stabilization Fund, under the U.S. Treasury, is now routinely involved in efforts to stabilize currencies and to provide financial support to foreign countries. However, the amount of resources available to the ESF and its range of activities are perhaps not well understood by many observers. In this Economic Commentary we correct the misperception that "total assets" is a good measure of available ESF resources.

First, "total assets" ignores the fact that the monetization of SDRs does not decrease the SDR asset entry even though the total amount of monetization is limited by the SDR asset number. Consequently, total assets must be reduced by the outstanding amount of monetization, measured by the SDR certificate number. Second, estimates of resources available to the ESF for intervention must take into account the warehousing arrangement with the Fed. The current limit on the size of the warehouse is relevant to whether the foreign-currency-denominated assets could be converted into dollars for use in purchasing foreign assets. Third, outstanding swaps and any existing commitments of ESF funds should be reflected in estimated ESF resources. An understanding of these points is a prerequisite to an informed debate regarding any change in ESF funding.

The Fed and the ESF in Foreign-Exchange Intervention

Since the ESF's inception, the Federal Reserve Bank of New York has been the officially designated agent for the ESF in intervention operations. In 1962, the Federal Reserve System's Federal Open Market Committee (FOMC) authorized open-market transactions in foreign currencies for the account of the Fed, and since then, the Federal Reserve Bank of New York has acted as agent for both the Fed and the ESF in such transactions. Starting in 1978, the ESF and the Fed have almost always intervened jointly.

Although the decision to intervene is usually made jointly by the Treasury and the Fed, it falls primarily under the Treasury's purview. While the two entities routinely intervene in the same direction and amounts for their individual accounts, formal independence is maintained. In other words, the Treasury can instruct the Fed to intervene on behalf of the ESF but it cannot force the Fed to intervene for the Fed's own account.a

a. One exception to this would be a declared national emergency.
See also Owen F. Humpage, "Institutional Aspects of U.S. Intervention," Economic Review, Federal Reserve Bank of Cleveland, vol. 20, no. 1 (Quarter 1 1994), pp. 2–19.

Table 1 ESF Balance Sheet, June 30, 1998
($ millions) Liabilities and capital
($ millions)
Held with U.S. Treasury: U.S. government securities

Special drawing rights (SDRs)

Foreign exchange
and securities:
German marks
Japanese yen

Accounts receivable

Total assets




39,727 Current liabilities:
Accounts payable
Total current liabilities

Other liabilities
SDR certificates
SDR allocations
Total other liabilities

Capital account
Net income gain
(+) or loss (–)
Total capital

Total liabilities
and capital





a. The column sum does not equal this number because of rounding error.
SOURCE: U.S. Department of the Treasury, Treasury Bulletin, December 1998, p. 108.


1. See Anna J. Schwartz, "From Obscurity to Notoriety: A Biography of the Exchange Stabilization Fund," Journal of Money, Credit, and Banking, vol. 29, no. 2 (May 1997), pp. 135–53; Walker F. Todd, "Disorderly Markets: The Law, History, and Economics of the Exchange Stabilization Fund and U.S. Foreign Exchange Market Intervention," Research in Financial Services Public and Private Policy, vol. 4 (1992), pp. 111–79; and C. Randall Henning, "The Exchange Stabilization Fund: Slush Money or War Chest?" Institute for International Economics, Washington, D.C., 1999.

2. Although originally authorized to deal in both gold and foreign exchange, the ESF has tended to deal primarily in foreign exchange and, to some extent, in the securities of sovereign nations (including U.S. government securities).

3. See Schwartz (footnote 1), pp. 136–7.

4. For example, a December 4, 1997, article discussing the proposed rescue plan for South Korea states that "the U.S. money, if needed, would come from the Exchange Stabilization Fund…. The fund contained $40 billion as of the end of March…." See "South Korea, IMF Finalize $55 Billion Bailout Plan," Los Angeles Times, p. D1.

5. The U.S. drew on its IMF quota in
1964– 66, 1968, 1970–72, and 1978 for amounts totaling $6.5 billion. Treasury securities denominated in foreign currencies were issued in 1962–74 ("Roosa" bonds ) and in 1978–79 ("Carter" bonds) for $11.1 billion. See Schwartz (footnote 1), pp.143–4.

6. These IMF provisions of SDRs to the U.S. Treasury occurred in four separate actions between 1970 and 1981.

7. The last big cash-in, or conversion of, SDRs was in the third quarter of 1995 to fund part of the financial assistance offered to Mexico.

8. The conversion of SDRs first augments the asset-side entry for U.S. government securities. This entry, plus "foreign exchange and (foreign government) securities" more directly permits the funding of ESF activities such as the purchase and sale of foreign currencies. For example, U.S. government securities can be used to purchase foreign currency as part of an effort to depress the international value of the dollar. This would then add to the foreign exchange total, which is largely held in the form of foreign currency government securities, rather than cash.

9. The authorization is published annually in Annual Report of the Board of Governors of the Federal Reserve System. See also Owen F. Humpage, "Institutional Aspects of U.S. Intervention," Economic Review, Federal Reserve Bank of Cleveland, vol. 30, no. 1 (Quarter 1 1994), p. 5.

10. See Marvin Goodfriend, "Why We Need an 'Accord’ for Federal Reserve Credit Policy: A Note," Journal of Money, Credit and Banking, vol. 26 (August 1994, Pt. 2), pp. 572–80.

11. See Humpage (footnote 9), pp.7–8, for further details on the accounting associated with swap lines.

12. Because a forward transaction commits the ESF to exchange foreign currency for dollars at a fixed price in the future, the true exposure of the ESF to foreign-exchange risk is not reflected on its balance sheet.

13. In the last quarter of 1998, Federal Reserve System swap lines were reduced from $32.4 billion to $5 billion ($2 billion with the Bank of Canada and $3 billion with the Bank of Mexico), and the ESF eliminated its swap line with the German Bundesbank. There are no outstanding swaps for either agency. Reasons stated for the reductions included history of disuse, formation of the European Central Bank, and the existence of other arrangements for monetary cooperation.

14. The commitments to Korea and Indonesia and also to Thailand have since been rendered inoperative. However, as of June 1999, the ESF still provides backstop to the Bank of International Settlements’ $7.5 billion dollar support package for Brazil.

SteveHAfter having read the ESF doc...#2467802/08/00; 06:08:28

I would say that if thought gold was a currency or had an effect on the dollar as a currency, they might believe it within their realm to buy and sell gold or gold-based securities, options, or futures in order to control it.

That is abominable.

The ESF can be sued as an entity? Hmmm? Class-action?

Al FulchinoCanuck/Tomcat#2467902/08/00; 06:19:44

Canuck, No need to apologize, I knew it was a misread, but still thought it was funny. Actually I am more of a bull than my wife would prefer.

Tomcat, Hope you are not losing much on the tranfer from silver to gold. I am sticking with my current ratio, which is about70% gold and 30%silver as far as physical goes.

lamprey_65After a little thought...#2468002/08/00; 06:26:43

Seems to me that Barrick tells us at least two things:

1. Someone "owed" them a favor - why else would a sane entity sell them calls so cheaply in this volatile environment? I get the sneaking suspicion that Barrick has been providing its gold to whoever sold them these calls. Is there a way to find out who Barrick sells gold to? is a public company.
2. Barrick sees the possibility of sustained POG above $319 as early as March 1, otherwise they would not have made the changes or bought the calls. Notice POG fell back well below $319 very dramatically right as Barrick announced - we're not in March yet.

Seems that this move above $300 was allowed by the manipulators to coincide with Barrick's announcement...they've given up the defense of $290 (it probably has less meaning now as January is over and those calls have been taken off the table). Is $290-300 the new floor with an upper no-fail defense line of $360? Seems that way to me, we'll see. The last no-fail was line was $335, which is also an important resistance level that will become support on the way up - I noticed it is also the level above which Barrick can buy gold from the calls purchased beginning in 2001. That would make this year's likely target range 319-335 and next year's 335-360? All I've got to say about that is - Good Luck.

It looks like the bullion banks have thrown in the towel only in that they now concede that gold is going up...however, they want the rise to be completed in controlled stages. I am now convinced that Barrick is their "Stooge" much history there to ignore - especially with Bush and Mulrooney (sp?) having ties to the company. Ever wonder about those 79 tons from Kuwait? I have.

I noticed some mention yesterday that the DOW was having a hard time of it BECAUSE OF HIGHER GOLD PRICES!
People are scared of gold - they are scared of the truth a price rise would tell.


tedwMiscellaneous#2468102/08/00; 06:36:58

First of all, I know Jaydeevee is NOT kaplan. By his rythmic
prose I can tell without a doubt that Sir Jaydeevee is really Jimmy Hendrix!!!

All eyes seem focused on the ESF thanks to Reginal Howe.
I would suggest its time Freedom of Information Requests are sent to the ESF asking about those Gold Calls sold to Barrick. The ESF is a part of the Federal Government and would be obligated to respond to such a request. There very easy to make and perhaps Gata will act in that way. Perhaps Ill do it myself. (PS: If my body is found floating down a river you will know who to suspect).

It looks to me like this bull market has stalled a bit. I think the long term outlook for Gold is very bullish but with uplegs marked by periods of corrections and doldrums.
I also think there are powerful money interests that dont want Gold to rise too fast too soon, but the market forces may dictate to them.

Central Bank Auctions. Are these price surges in Gold enough
to cause the Bank of England or the Swiss to re-think their
sales of Gold? If I was English Id be a little perturbed about them giving away the national treasure.

What do you all think? Is the market going to press on a bit, stay where its at, or slump back down?

My feeling, based on nothing, is that we will see Gold bounce around in the $300-$3100 range like it did in the $290-$300 range for awhile, then jump up later when the stock market crashes or some Bank auctions are cancelled.

Remember: its not money thats the root of all evil,its the
LOVE of money.

SteveHGuess what?#2468202/08/00; 06:37:34

Gold down 4, now at 300.50 (april).

So what else is new.

ESF sucks!

JourneymanGreenspan's POG goals#2468302/08/00; 07:15:35

Somewhere awhile back (POG ~$400/oz.), Greenspan said he wouldn't be happy till gold was below $360. (No time to locate specific details, this is strictly from memory -- Greenspan's number is rock-solid however -- made quite an impression on me at the time.)

Regards, j.

Golden BoyThe MISSING link to Barrick's Hedge#2468402/08/00; 07:31:22

I attended Barrick's meeting in Toronto yesterday. The key point which i haven't seen discussed in any write-up is theat the calls Barrick bought are NOT deliverable in Gold. The specifically said that if the calls were in the money, it would only lead to a CASH settlement. THIS IS HUGE. Why? The bullion bank does not need to go out and buy gold to deliver aginst the option, it only needs to transfer cash, preventing the bullion bank from being squeezed. Point #2. Barrick sold forward an additional 600,000 ounces in the 4th quarter. They had 14 million ounces at the end of Q3, delivered agianst the 1 million ounces they produced and ended up with 13.6 million, therefore they added 600,000 ounces. Barrick continues to feed the bullion banks. The only positive out of the Barrick announcement is that Barrick has set itself up to take advantage of them potentially buying back their hedges. The calls will make them a lot of money if the decide to buy their hedges back and announce that at a later date to the market.
TownCrierSir Solomon Weaver's question#2468502/08/00; 07:33:02

Solomon Weaver (02/07/00; 19:54:18MDT - Msg ID:24651)
dollars dollars everywhere and not a ....
>>>>>TownCrier (02/07/00; 15:19:06MDT - Msg ID:24621)
>>>>>Fed adds $6.26 billion to banking system reserves
>>>>>Three-day repos were the flavor of the day.
Hey TownCrier, is there ever any days when the FED drains back these reserves???
Poor old Solomon
Yes, but they are few and far between.
In the past 10 months or so the Fed drained reserves maybe half a dozen times...most of those coming in the wake of Y2K. The Fed has taken no action at all on only a handful of days. Every other day (which is most of them), including many of them this year, have been operations to add reserves.

lamprey_65Golden Boy#2468602/08/00; 08:17:58

Thanks for the info about the calls being deliverable in cash only...this clears things up. Now I KNOW that 319-360 is expected through next year.


tedwHow to make money in a manipulated Gold Market#2468702/08/00; 08:20:45

There is a subject worth discussing.
lamprey_65tedw#2468802/08/00; 08:59:53

If you're talking about stocks, I'd say you buy now and sell this year when $335 POG is hit and the price stalls. You then buy back at the end of the year near $335 and wait for $360 next year before selling.

Sounds like a plan anyway.


BillGold Calls not deliverable in Gold?#2468902/08/00; 09:00:42

Golden Boy / Town Crier

Correct me if I'm wrong but calls could NEVER be repaid in gold anyway. One needs to exercise his option to enter into a contract, then call for delivery. I know it sounds like a technicality though, I don't put it past them to use this play on words to lower market psychology. What do you think?

Golden BoyBill#2469002/08/00; 09:22:33

If the calls Barrick bought were 'ordinary' why would they not just net out the Short-term calls they sold. I know they might have different excersize prices but they shouldn't show them seperately. The reason why they show them seperately is because they have different covenants to them. The calls they sold are deliverable in gold and the calls they bought are deeliverable in CASH. And for the last time, Barrick manipulated the media into thinking their hedge book decreased, it didn't. Hedging is negative to the gold market because future production is sold at spot sprices driving the spot market down. Barrick continued to purchase 600,000 oz. of forward contracts in Q4. They want us to believe they're helping the gold market now, we are all brainwashed to believe that.
lamprey_65My view on gold stocks...#2469102/08/00; 09:26:49

1. You never try to trade them short term
2. You only buy every 3-4 years when the market is turning up from a major bottom (like now!)
3. You only buy those stocks leveraged to higher prices...i.e. you do NOT buy a hedge fund like Barrick. Current earnings are not the goal when bouncing from a bottom, you want those stocks that have the most to gain from an increase in POG. Buy either non/low hedged miners or mines with large reserves only minable at higher prices (such as the South African Mines). This is a bet on higher prices, you're either right or you're wrong...hedging your bets with something like Barrick is a waste of money (and distasteful considering the circumstances).

If you look at the history of gold, these opportunities arise only once or twice a decade. I made a nice gain in '93 in a similar to pick your spots on the stocks. You can buy the physical ALL the time :-)


lamprey_65Correction#2469202/08/00; 09:28:54

Make that buy every 6-10 years!


OROChris Powell - The calls#2469302/08/00; 09:42:52

The calls sold to barrick are part of their current blackmail operation against their banks.
The bullion bankers were faced with two options: (1) Barrick buys as much bullion on the markets as it can - up to the 4 years estimated production they have sold forward, bringing up the price of gold and putting both barrick and its bankers in peril. (2) The banks issue calls settled only in dollars, knowing full well that the respective central banks behind each bullion banker will bail them out.

I suggested to FOA, some time back, that the bullion banks would have bought such dollar settled calls from the Fed. However, that is not the way the Fed operates, nor would it take upon itself to issue this dollar for gold pumping equipment, this stupidity is reserved for the bankers themselves. What the Fed does, as it always has, is bail out the banks when the options go into the money and cause the banks to sell assets. The Fed will buy or swap these assets as necessary to keep them afloat. The bankers get their way by doing the usual schtick; while dancing the Tango the bankers dip and threaten their Fed partner with falling to the floor and creating a great embarrassment.

What the Fed does not manage to monetize, the Fed will reorganize with the help of a Federal government banking agency like the FDIC, or create an RTC. The flailing bank's liabilities to the lenders that set it up to fail are covered by the Fed.

The issue of such calls en masse by the bullion bankers would imply that the corporate structure above them is going to be shifted so that the failure of the bullion bank would not reach the corporate parent. Expect such action soon, if the owners can find the appropriate legal loophole - because this is an illegal move.

Golden BoyDONT BUY BARRICK#2469402/08/00; 09:48:52

To all the senior executives at Barrick:
Your premium sales program has netted you $1.5 billion in the past. If you divide that amount by your $300 million shares, it has added $5 to your share price-congratulations.
How high would your share price be if you never hedged?
In september when gold was trading around $320, your share price was $25 ($7 higher than it is today). At $350 gold your share price should be trading around $35. Myself and most other people on this site belive your hedge book has depressed the gold price to the sub-$300 levels causing your share price to be around $17. You can babble all you want how your hedging gains has allowed you to buy Bulyanhulu and Pascua but your shareholders would much more greatly appreciate a share price at least double what it is today. You might not think you have that big of an effect on the gold market but you do, just look at yesterday when your company single-handedly droped the gold price $15 with your announcemnt. My advise to you would be to drop your ties with the bullion banks and start supporting your industry. The assets you have are the best in the business, unfortunately the management discount being applied to you far offsets the true value of your properties.

P.S. You might want to follow the Ashanti class action law suit very carefully because you might receive one as well.
How does this sound. Barrick being tried for conspiring to manipulate the gold price downwards so they can acquire assets at a fifth of their true value. Example - purchasing Sutton shares for approx. $10 when back when gold was $375 they were trading at $50. I hope everybody listens to Bill Murphy and his followers and buys every other gold shares other than barrick.

R PowellGolden Boy #2469502/08/00; 10:01:54

Thanks for the info. and idea. It certainly makes sense to me that Barrick knows an announced anti-hedging policy will move market sentiment and prices higher so....why not load up on calls before moving the POG higher? Then they won't look quite so foolish at the next shareholders meeting. Reminder to all--- CEO of Barrick is tonight's guest on CNBC's Squawk box! Perhaps more propaganda, perhaps not. Jaydeevee MAN are you really Elvis!!
R PowellLamprey 65#2469602/08/00; 10:07:53

Maybe Barrick plans to make big bucks with those calls. maybe?
lamprey_65R Powell#2469702/08/00; 10:18:18

Yes, that is my take on it...Barrick restructured this way for a reason -- I also think the bullion bank(s) - and whoever else was involved in structuring the deal - owe Barrick for "favors rendered"...I can't prove it, but it makes sense from the facts.

I do not own ABX shares. I am beginning to think, however, that a class action law suit is in order here by gold shareholders and low/non hedged miners. It's worth some thought. It's probably the only way to get to the bottom of this thing - work in conujuction with GATA. It would also put more pressure directly on Barrick. The charge - price fixing and collusion.


TownCrierToday's Market Report#2469802/08/00; 10:31:26

Market Report (2/08/00): To better understand what happened yesterday, we need to take one step back to see the big picture. To read the standard North American press reports one is given the distinct impression that we live in a world where the gold market is dictated by the actions of gold producers Placer Dome and Barrick to the exclusion of all else....crediting Placer's announcement with the rise and Barrick's announcement with the fall. (However, the price has not fallen back to its mid-280 starting point so what we've got so far is essentially a healthy retracement.) Seemingly lost in the shuffle is the role of the world's second-largest producer, Gold Fields. Setting the stage much earlier in the year with bids at the UK gold auctions in order to unwind their own hedge positions, Gold Fields chairman Chris Thompson then announced from Johannesburg on Thursday in the strongest of terms that gold miners must ween themselves from the self-defeating practice of hedging future production due to the depressing impact such action has on prices. (By way of example of the extent of this activity, Reuters reported that recent statistics by industry consultant Gold Fields Mineral Services showed producer hedging effectively added 445 tonnes to world supply last year, up from 88 tonnes in the prior year.) As we say, that set the stage, but the gold traders likely took it with a grain of salt. Then when the very next day arrived with news that Placer Dome (world's fourth(?) largest producer) was suspending its hedging program, traders likely panicked, a new paradigm to be imminent in which all producers would promptly renounce gold derivatives and unwind their positions. Overseas follow-through trading when their markets opened Monday added further to New York's Friday action. With a Barrick announcement scheduled for Monday afternoon, traders were positioning themselves for what would surely be Barrick's confirmation that a new era had dawned. It wasn't to be....Barrick Gold Corp simply announced that it had made adjustments to its hedging program, revealing among other items that the number of ounces committed had been reduced by nearly half in the fourth quarter of 1999, down to 9.8 million from 18.8 million ounces. Barrick claimed to have 100% of production hedged through 2001 with 25% hedged in later years. Obviously, this wasn't what the market was expecting to hear, and although it gave up much of its exuberantly speculative-based gains.

Reuters indicated that analysts are saying that over the next several days gold could be extremely susceptible to news or announcements coming from other producers and central market participants try to come to terms with the likely future direction for the price. Largely lost in the standard news was yet another South African producer, this one being the world's largest. Bridge News reported that Anglogold yesterday said it would be lowering its own remaining hedge position going forward with intentions to begin delivering into its existing hedges...rather than waiting for a rainy day. Nice work there, guys. (Anglogold has also been an active participant in the past UK gold auctions in order to unwind hedges.) Despite the supportive role for the industry played by these two important South African producers (Gold Fields and Anglogold), Bridge News offers us this insight that the chairman of Canadian producer, Barrick, may be falling victim to his own publicity....meaning that he believes it. Take a look...

"HEADLINE: Chairman of Canada's Barrick says firm is carrying gold sector.
Toronto--Feb 7--Peter Munk, the chairman of Canada's
Barrick Gold Corp., said the company has been instrumental
in carrying the gold industry through its prolonged price
slump in recent years. Although the company continues to
hedge all its gold production at a time when other major
producers are opting to suspend hedging activities, Munk
feels poorly managed gold producers that sell gold into a
falling gold market are a much greater detriment to the industry."

All together now...."Gimme a break." And finally, the regularly scheduled release of the weekly balance sheet of the European Central Bank revealed that the Dutch Central Bank is drawing ever nearer to completely their program to move 100 tonnes of gold prior to September 26th this year. Another 5 tonnes was moved last week through the BIS, lowering the ECB's total gold assets by a small 47 million euros, leaving a total of 116.248 billion euros on the books. We'll have to see if the gold market can react intelligently to this latest step in what should already be a well-known Dutch phenomenon.

A we go to fetch this report to the server, we see that spot gold has stabilized near $296. After all the volatility and post-Barrick disappointment, we're still up $12 from where trade began on Friday morning. Four percent gains in two full trading days seems pretty impressive in my book....especially on a financial instrument that is typically revered for its stability.

That will do it for today, goldmeisters. We'll see you here tomorrow.

PH in LAMore and more stupid.#2469902/08/00; 10:44:49

Date: Tue Feb 08 2000 06:33
PERMAFROST (My friends...) ID#230273:
Copyright © 1999 PERMAFROST/Kitco Inc. All rights reserved. "Please consider these thoughts...

"The entire fiat currency supply of the world is not worth ONE ounce of gold! Because the paper or digital tokens of Big Brother have absolutely no intrinsic value. Their only marginal value lies in their "convertibility" to toilet paper... Fiat IS A CRIME! under the constitution of the United States. Alan Greenspan belongs in jail!"

Well, here we have about as near as what our friend Permafrost can get to what for him passes for "thoughts".

Nothing but a lot of shouting from atop a soapbox. "Greenspan belongs in jail!" he yells, because "The entire fiat currency supply of the world is not worth ONE ounce of gold!"

This is plain and simple stupid!

It belongs in the same category as jabbering gibberish about "illuminati" and"goddess venus".

Most rational human beings know a nut when they hear one. The best a rational person could say in his defense is that friend Permafrost is indulging in hyperbole. Because if "all the fiat currency supply of the whole world REALLY is worth less than ONE ounce of gold", then no doubt Permafrost would be willing to exchange all the fiat currency he posseses for one ounce of gold, a business proposition he would be very stupid to accept; unless of course, by gathering together all his fiat money, the sum would total less than $300. If that is so, and his dumb idea has merit in spite of our rational collective rejection of his stupid premise, certainly there would be someone else who might be interested in "exchanging all their Federal Reserve Note (fiat) dollars" for an ounce or two of gold. I assure you that I don't know anyone who is even half that stupid.

"...the paper or digital tokens of Big Brother have absolutely no intrinsic value. Their only marginal value lies in their "convertibility" to toilet paper" says Permfrost.

Here we have the simple statement of a lie that even a simple-minded birdbrained fool can see right through. Because, first of all, fiat IS convertible to gold. Anyone who has any fiat currency at all knows that this is so. But the underlying even more stupid premise of Permafrost's "thought" is that "nothing has any value whatsoever but gold". This is a foolish idea. Beyond its appearance... a nice shiny yellow color, ductibility, permanance (it doesn't tarnish) gold has value only for its convertibility!!!!!! Because you cannot eat it. It has no value as food at all. It can only be exchanged for food. The same way that fiat currency can be exchanged for food. The same goes for shelter. Gold is not a house. It can only be exchanged for a house (like fiat currency can be exchanged for a house). A house to live in. Or to raise a family in. And gold and fiat currency can both be exchanged for entertainment (to overcome boredom). Neither one is the least bit entertaining. (Even Chris's drivel is more entertaining than either Federal Reserve Notes or gold. The same goes for automobiles and transportation (to overcome the boredom of staying in one place). Ever hear of oil, PermaStupid? It can be exchanged for either gold or fiat currency. In fact, millions of barrels of it are exchanged every day. This is value.

Only a nut thinks that gold is the only valuable substance in existence. Because in fact, it gets its only value for its exchangeability to other far more valueable commodities. Any rational person knows this without even thinking about it.

And anyone with even an ounce of rationality knows a maniac when he hears one. Idiots like Permafrost give the friends of gold a bad name: "Stupid" is the reputation he gives us. If FOA wants to persist in his self-imposed exile because of the irrational hyperbole of nuts, he weakens his whole premise. These lunatic fringe morons are celebrating a victory of stupidity over rationality over there at Kitco at this very moment. By letting them influence even one among us to stop posting, we sink a little closer to their level, abysmal as it is. They must be ignored. Even giving them just the appearance of engaging in what they call "debates" with us is a lose/lose endeavor. They will never be convinced by rationality. All they understand is stupidity.

For the sake of rationality, ethics, and honor, FOA should think long and hard on his position. If he lacks time and/or energy to continue posting in the selfless manner he has shown, that can be understood and accepted. But that he validate the forces of stupidity by withdrawing because of them? This can never be accepted!!!

TownCrierTypos: can't live with 'em, can't type without 'em#2470002/08/00; 10:48:40

Click the link to see a somewhat more error-free Market Report.
FarfelSELL BARRICK GOLD: A Trip Back in History, Two Years Ago#2470102/08/00; 10:56:32



December 12, 1997

Re: "Munk Pans Knee Jerk Reaction Against Gold."

Dear Editor:

Mr. Peter Munk of Barrick Gold has some gall to blame World Central
Banks for the horror story unfolding in the gold mining industry. In
fact, he is one of the leading contributors to the malaise afflicting
the precious metal. Barrick's shareholders ought to fire him summarily
along with his entire executive board of sycophantic ducks.

Yes, it's true that, owing to forward hedging, he locked in most of
Barrick's production at $410 an ounce. Most observers would consider
that a shrewd tactic. However, it is a Pyrrhic victory at best. In
reality, forward sales of gold by self-serving mining companies like
Barrick contributed to the over-supply of gold in the market. When gold
reached $410 an ounce and the world's largest mining company sold
forward such a huge position in gold, is it any wonder that Central
Banks decided they ought to follow a similar course...especially given
gold's stagnant price over the last decade?

Mr. Munk further feigns concern about the possible social disruptions
that might unfold in a major gold-producing country such as South
Africa. When he dumped Barrick's gold supply upon the market at $410 an
ounce, was that an act of social conscience where South Africa is
concerned? Hell, was Barrick acting in its own selfish
interest, oblivious to the perceptions and ramifications this huge
forward sale would have on the world gold market.

If gold mining companies really wish to convince Central Banks that gold
stands any chance of future appreciation, then they better skip the hot
air and pursue immediate, tangible strategies in addressing the
over-supply problem.

First, they must immediately cease all forward sales of gold. Secondly,
they must announce to the world that all future exploration of gold is
ending today and they will only work the existing mines. Third, they
must consolidate their industry so that it is similar structurally to
other major oligopolistic/monopolistic commodity suppliers (such as
OPEC). Fourth, they must mount a concerted propaganda campaign to
convince Central Banks and major global financial institutions that gold
truly is a financial reserve and not merely another commodity. In other
words, they must shift their focus from supply to demand. It seems
everytime we open a newspaper or turn on the TV today, we see a constant
assault on the value of gold mounted by disciples of the so-called "New
Paradigm." It would make a great deal more sense to forego opening a
single gold mine and use the monies saved to finance pro-gold lobbyists
and media exponents who can reverse the negative psychology that's
developed around the metal.

If the foregoing measures are adopted quickly, then I predict you would
see a short squeeze on gold that might send it back into the
stratosphere. In doing so, tens of thousands of hard-working miners
still might have jobs by the time Christmas rolls around.

The most unnerving aspect of the current gold crisis is its potential
spillover effects. Weakness in gold is spilling over onto other metals
such as platinum and copper. In effect, if counter-measures are not
enacted swiftly, we soon might witness numerous mine closures in
virtually every metal industry. Can you just imagine the devastation
this phenomenon would wreak upon the resource-dependent Canadian
economy? Already, various financial analysts are attributing unusual
weakness in the Canadian dollar to currency speculator concerns over
future, pandemic weakness in Canada's resource sector.

In conclusion, I would ask Mr. Munk one final question: if he is truly
bullish on gold as he claims, then why the hell is he shifting
significant amounts of assets into Trizec-Hahn, the commercial property
developer? If he truly believes in the gold mining industry, then he
is sending the wrong message by simply buying back his own company's
shares. The only message the buyback sends to the world is that Peter
Munk believes in Peter Munk. Instead, he should acquire another major
gold mining company (like Battle Mountain, Placer Dome, TVX, Homestake,
Royal Oak, or Kinross). In doing so, he will put the entire gold market
on notice that short sellers best beware because mining consolidation is
in the works.

TownCrierSir Bill and gold call options#2470202/08/00; 11:03:27

Bill (02/08/00; 09:00:42MDT - Msg ID:24689)
"Gold Calls not deliverable in Gold?
Correct me if I'm wrong but calls could NEVER be repaid in gold anyway. One needs to exercise his option to enter into a contract, then call for delivery."
If the call options are trading through New York in association with COMEX, then "you are correct, sir!" (ala Ed McMahon to Johnny Carson) The instrument underlying the option would be a COMEX futures contract.

In the European markets, all bets are off. I have no knowledge of the variety of ways in which their gold derivatives might be structured.

nickel62Journeyman I remember the discussion where Greenspan said #2470302/08/00; 11:31:25

he wouldn't be happy till gold was below $360 an ounce. It was quite a while ago and I remember it shocked me at the time. Sorry I don't remember any more of the details either.
FOA(No Subject)#2470402/08/00; 11:55:06

PH in LA, Cavan Man, and ALL,
I'm waiting on some possible new structural changes to this website. If it works out it will be very interesting. Also, I will receive a new handle for this forum and for the first time post representing myself only (not anyone else). Give it some time, this will all work out very well.

Only market events can change the opinions of "hard" gold bugs that are looking too much into the past for guidance. No amount of human logic or our discussion will sway them to view the future in a different context. Many of them only see the here and now plus 3 steps in front of them.

Later, god willing, all of us will "walk the gold trail" as a group (FOA included) with an eye on the future, not the past.

Thanks all,,,for your many comments ,,,,,, I'm taking this time to complete several projects. Will
return later (a number of days).


Golden TruthGOLD AND SILVER.#2470502/08/00; 12:10:17

Take a look at the Gold And Silver charts over at Kitco Exactly at 1:00pm, they both started to head down.
Coincidence? i think not. Then exactly 1 hr later Platinum came falling down, but today is now right back up at $515/oz.
This is a historical high folks if you would of bought in Jan of 1999,(back in the good old days)@ $342/0z you would be up 33%, thats 33%. Thats alot of money and still bought GOLD today, thanks to the MANIPULATORS (Barrick), by the way you guys are TRUE SCUM! I,am certain you will be hated by all non hedged Gold miners and worshipped by Cambior and Ashanti Gold mines, enjoy it while it lasts, because the WORD is out! BUDDY and your dirty little secrets are now being shouted from the rooftops of the common man on the street and we are feeling real HUNGRY for BLOOD.

Good luck Mr Barick you are going to need it!

FarfelSELL BARRICK GOLD, BOYCOTT TRIZEC HAHN: Nothing has Changed#2470602/08/00; 12:12:02

The facts are this:

1.On Monday, Barrick had the opportunity to set fire to the gold market and really run the price up. IT DID NOT DO SO.
Only a gold short, when presented with such a "golden" opportunity, would deliver bad news to the gold market.

2. Instead, it announced a 30% increase in future gold production, thereby implying that there would be tons more gold available to the market.

3. It claimed it had dropped its hedged gold position to around 9.8 million ounces, BUT THERE IS ABSOLUTELY NO TANGIBLE EVIDENCE IT HAS BOUGHT BACK A SINGLE OUNCE OF GOLD.
Instead, it bought call options and, in the incredibly sleazy manner in which this company operates, it seems to have determined that these call options are an effective offset to its total hedge position of around 19 million ounces. In other words, by the company's esoteric calculations, its seems their call options cover around half of their hedged position.

However, Barrick's hedge requires it deliver PHYSICAL GOLD to the counterparties, NOT cash received from paper call options. Therein lies yet another Barrick deception.

4. As long as people like Vernon Jordan, one of Clinton's closest friends, sit on the Board of Barrick, it is simply preposterous to think that Barrick is anything other than a vehicle acting on behalf of an extremely anti-gold administration.

5. As long as Goldman Sachs acts as corporate investment advisor, it is impossible to imagine the company is anything other than a vehicle acting on behalf of an extremely anti-gold administration.

I will reiterate this fact once again: if you hold any other gold stocks besides Barrick gold, then you are most likely betting against their appreciation by also owning Barrick.

When I first wrote a public letter attacking Barrick Gold, I received a very intimidating phone call from their investor relations representative.

Back in 1997, she phoned me at my house and ripped me an asshole for DARING to question Barrick's motives. There was much innuendo that if I dared to continue such attacks, there would be a legal corporate response aimed my way. Well, here we are over two years later, and the gold industry is virtually destroyed while Barrick picks up property after property.

Maybe I was on to something back in '97, don't you think?

Barrick's management thrives on fat salaries and bonuses while its brain dead, moronic shareholders eat shit, watching a forever deteriorating share price, all the while thinking there is a big payoff awaiting them at the end of the rainbow.

Barrick does NOT want the gold price to rise. That is categorically obvious, and so there is only one logical solution if you wish your gold assets to appreciate:

SELL BARRICK GOLD, and BOYCOTT TRIZEC HAHN, its major affiliated company.

If you belong to a gold fund, call up the gold fund manager and DEMAND he sell BARRICK ASAP.



Golden TruthTO F.O.A#2470702/08/00; 12:18:19

HI F.O.A :-) I,am very happy to see you here again, and yes i to am excited to see you return. Also it will be kind of neat to see you in a fine "new" form!! You are the best F.O.A thankyou so much for not giving up on your true fans.
All the best and see you soon, i now i can hardly wait!
Thanks again G.T (Big Smile to you) :-)

jaydeeveeDoesn't taste TOO bad when you get used to it.......#2470802/08/00; 12:58:56

Farfel, you posted:

"Barrick's management thrives on fat salaries and bonuses while its brain dead, moronic shareholders eat shit, watching a forever deteriorating share price, all the while thinking there is a big payoff awaiting them at the end of the rainbow."

Right on Farfel! Great post!

That's EXACTLY what we (me) investors in gold stocks have been eating!

JourneymanThe most excellent & long awaited event is a hit, but masked by the "game." @Aristotle, ALL#2470902/08/00; 13:20:04

Hey folks, I know the "game is afoot," but don't miss Aristotle's latest, posted yesterday! I'm still digesting it, but let me tell YOU, it's a tasty meal!!

Just go to the archives for yesterday, February 7, 2000 and SEARCH for "Msg ID:24589", "Msg ID:24593", "Msg ID:24602", and "Msg ID:24610" in that order!

Bon appetit!


Cavan ManTo ORO#2471002/08/00; 13:30:47

Can you explain the relationship between today's announced "productivity gains" and the government's inflation numbers? Are these productivity numbers in any sense real?

Do you think we are looking at another full year of "goldilocks"?


LeighZenidea and beesting#2471102/08/00; 13:46:32

Many (belated) thanks for the gold-hiding tips! Beesting, I thought of your PVC capsule idea when I saw the shipwrecked gold coins on CNBC yesterday. They had all kinds of yukky mineral deposits on them. Too bad there was no PVC to protect them back in 1857!

Zenidea, where are you from?

Zenideajust me#2471202/08/00; 13:58:04

Leigh, Western Australia. :)
Usul@jaydeevee, farfel#2471302/08/00; 14:25:44

It's a Gold Bug's Life!

Hey! Who ordered the poo-poo platter?
jaydeeveeRight on! usul ......#2471402/08/00; 14:47:34

Gotta find another restaurant to eat in....

USAGOLDBarrick Comment...#2471502/08/00; 16:20:21

Gold up $3 in overnight market.

The one thing that is getting lost in all the
discussion about Barrick is the rock bottom fundamental change in the carry
trade/forward business. It used to be that all the majors were forced
to play along with Barrick and the bullion banks as a matter of survival. Now the split
between the quasi-hedge funds like Barrick and the traditional producers
has widened to a public chasm. Barrick stands on one side of the chasm
and Gold Fields, Placer Dome, Euro Nevada and to a certain extent Anglo
stand on the other. Each will try to pull the other into the chasm in an on-going tug of war. At
least now we have combatants -- that alone is a major breakthrough we
all need to incorporate into our thinking. As physical gold owners we
are no longer alone in this battle. We have recruited some stalwart
public allies in the real producers and the European Central banks. Over the course of the past week, that fact of life has become evident to the chagrin of the bullion banks and the Bank of England, and to the delight of gold advocates all over the world.

JourneymanA note on Barrick, Ashanti, derivatives, evolution, etc. #2471602/08/00; 17:04:10

@Aristotle, Goldfan, Farful, Oro, 18Karat, ALL

One way to view Barrick and Ashanti is that these companies
are just in the early stages of an evolutionary path
peculiar to business organizations in modern fiat-based
economies. Bear (or for that matter, bare) with me a
little, I think you'll find this interesting, maybe even

Today we think of economies as being separate. Each
separate economy has it's own separate "national brand" of
fiat currency. As a result of no longer having a universal
standard of value, formerly provided by the old gold
standard, (there was no longer even a second-hand value-
standard once the connection of the dollar to gold was
broken and Bretton Woods broke down), each currency
fluctuates in value vs. the others on a day to day, even
minute to minute basis. Such fluctuations wouldn't happen
with a gold standard. But that's another story, right Ari?

This ceasless fluctuation created problems for trade across
borders. Suppose you just bought a load of VCRs from Sony
of Japan to retail in the U.s. and agreed to make equal
monthly payments for these VCRs over the next year.

Sony doesn't want to be paid in dollars; it want's yen. You
don't have any yen and likely won't get any in the normal
course of your business. This means you'll have to go out
and buy yen in the foreign exchange markets. Over the next
year, if the yen goes up relative to the dollar, you'll have
to spend more dollars than you thought to buy those yen - -
- on the other hand, if the yen goes DOWN, you'll spend
fewer dollars to buy the yen and get an unexpected "windfall

But you're an electronics retailer not a gambler. You're
not really interested to speculate on such fluctuations, and
you don't know how to build such uncertainty into your
business equation.

Cut to ......

People now talk of the "real economy" and, separately, the
"financial economy." Just 15 or so years ago, the term
"financial economy" wasn't in common usage and at that time,
still existed mainly to service the needs of "real economy"
businesses doing cross border trades. These financial
economy organizations, mostly banks, quickly discovered that
most of their customers, just as the electronics retailer,
didn't want to gamble on currency fluctuations either.
These mostly banking institutions learned to take the
"gambles" for their customers instead - - - at a nice
profit, of course. This was the beginning of the now huge
market in interest-rate-based derivatives, which now
comprise some 60% of notional value of all derivatives.

Today what was the tail has become the dog. As of about
1989, economist Kenichi Ohmae estimated that only about one
dollar of every 32 traded in the foreign exchange (fourEX)
markets was traded to facilitate cross-border trade; the
other 31 of the 32 dollars, Ohmae thought, was traded in
various types of short-term speculations. Things have only
gotten more lopsided on the side of the "financial economy,"
read "gambling economy" since. Today for example, the total
world-wide value of all derivatives is currently estimated
at $80 trillion by the BIS (Bank of International
Settlements.) Clearly, if you consider the that the "real
economy" is the dog and the "financial economy" is the tail,
the tail is now wagging the dog - - - regularly and
VIOLENTLY! Right goldfan? ;)

What's this have to do with Barrick and Ashanti, etc.?
Well, banks weren't the only organizations to discover the
lure of the forex and derivatives casinos. Especially
businesses that had large overseas import/export operations
discovered them too, and some of them mastered the game.
For example, those special low-interest deals you get from
Ford (Ford Credit Corporation) and GM (GMC Credit) are based
on the "financial economy" arm of these erstwhile "real
economy" businesses. In fact, the economic viability and
competitiveness of these companies depends as much on their
financial operations as on their manufacturing prowess.

Some even more surprising evolutions from "real economy" to
"financial economy" were performed by companies like GE.
About 40% of GE's income is produced by the GE Credit branch
of the company. Why is this surprising? Because GE stands
for "General Electric" - - - which has divested itself of
it's electrical business to focus on the more profitable
financial division.

Possibly even more surprising is Primerica, now a purely
gambling, ah, financial economy company. Care to guess what
it started as? Did you guess it started as the country's
largest container company, American Can Corporation? Didn't
think so, but that's the correct answer.

Again you ask, what's all this have to do with Barrick,
Ashanti, etc.? Well, just as did American Can, General
Electric, etc., these companies are on the trail to
discovering they may be able to make more money gambling on
derivatives than in producing their primary product, in this
case gold. Barrick is further along in this discovery
process than Ashanti - - - Munk and his crew are beginning
to think they can beat the game. Ashanti is just a neophyte
sucker, but if they watch others like Barrick, they may get
the idea they can win too - - - or at least become a little
better at playing. Other miners just learned the game's too
tough and aren't so anxious to play anymore.

The problem is, of course, the "financial economy" games
(stock markets are the most visible and commonly played of
these games) are quite seductive. If you play right, you
can make big bucks and never have to get dirt under yur
fingernails. There are other apparent advantages too
numerous to mention, and that's why we've lost GE, American
Can, etc.

On the bright side however, the seductivity of these games
has kept a lot of money circulating in these "casinos" which
keeps it from bidding for "real economy" goods and services
- - - which keeps "inflation" in the "real economy" low (so
far) and has saved us (so far) from the massive general
currency depreciation which would almost certainly otherwise

The following clip is an excellent example of how these
games distract money from competing for many "real economy"
goods and services, thus slowing currency depreciation
(relative to these "real economy" goods and services at

If there is a homey artifact of the bull market, it is
Bort Carleton's white 1989 Range Rover. Carleton, 54,
is a footwear consultant in suburban Los Angeles who
first got into the market five years ago. The Range
Rover, a present from his wife, is an object of
conspicuous practicality--just the thing for shuttling
around his {eight}-year-old twins. But lately he has
come to reconsider the vehicle. "I've had my Yuppieness
with it," he concedes. Now he has lost interest in
flaunting his wealth in a garishly expensive
automobile, especially when the money can go to a more
worthy cause. *"I'm going to sell the Range Rover," he
declares, "and invest the money.*" -John Leland,
Blessed by the Bull, Newsweek, April 27, 1998, pg. 51

I believe there were other examples cited on this forum - -
- the couple who bought an expensive new home but weren't
going to furnish it because they would have to take money
out of their stock investments to do so, etc.

A brain teaser for your consternation and edification: Can
the "financial economy" hoover so much buying power that it
drys-up the "real economy?" What are some symptoms you
might look for?


P.S. The above URL link is an old post from my colleague, L.
Reichard White, that includes some direct quotations from
Kenichi Ohmae, etc. and from which I have liberally borrowed
in this post.

motor mandrooy#2471702/08/00; 17:50:41

JAMichael#2471802/08/00; 17:54:51

From time to time I try to make note of the number of hits reflected in the counter on your home page. My observation is that you are going to get your second million hits much faster than the first. There seems to be a correlation with gold's increased volatility and number of hits at this site. I think it might be interesting for you chart hits per month since the inception of this site either in your newsletter or somewhere on this site. . I have for sometime thought of the Internet's great potential as a knowledge equalizer. If enough people come to utilize the Internet's potential for providing information and knowledge, it will become difficult for those who would manipulate markets or conspire against their fellowman to succeed. Since such programs only work under cover of darkness. Now if one were to recognize the growth and knowledge shared at this site is also happening at a hundred other gold sites, there is a lot of power in that. It's like a small pebble that starts to roll down from the top of a mountain that eventually will be instrumental in moving many massive boulders as it progresses along that downhill path.
lamprey_65motorman#2471902/08/00; 18:22:22

Let me preface by saying I do own DROOY.

It's a moderately hedged, high cost South African miner with very large reserves. The stock is HEAVILY leveraged to gold above $325.


nickel62Journeyman as usual a truely great post!#2472002/08/00; 18:46:41

The division between the real and the financial economy is so elegant that it is possible for the first time to see why the rate of "thing" inflation has remained so low. Thanks
PhosFederal Reserve Radically Expands Money Supply#2472102/08/00; 18:48:12

Pardon me if this has been posted already.

Don McAlvany (Intelligence Report) has a Real Audio interview from Jan 31 (see link) on what the Fed has been doing with the money supply. I think FOA would smile if he heard this as it agrees with what he has been predicting for some time now. McAlvany talks about the gold price suppression in the interview. It merely confirms what many have been saying here but it is nice to hear someone else say it as well. I recommend a listen. It sounds grim as he sees no solution or alternatives to either hyperinflation or massive deflation.

goldfanJourneyman (02/08/00; 17:04:10MDT - Msg ID:24716)#2472202/08/00; 18:51:12

Sir Journeyman Interesting thoughts. I've been groping along the same trail myself today. First , You said:

>>>On the bright side however, the seductivity of these games has kept a lot of money circulating in these "casinos" which keeps it from bidding for "real economy" goods and services
- - - which keeps "inflation" in the "real economy" low (so
far) and has saved us (so far) from the massive general
currency depreciation which would almost certainly otherwise
My understanding is just the reverse, that the money games being played by the financhal sector are in fact creating piles of excess money whicd is the inflation. Just because the air is calm, doesn't mean it doesn't harbor a hurricane!! (ORO or someone else might correct me here) Anyway ,IMHO i'ts not calm...

Just Imagine!

Imagine a society where the money earners in "essential" goods and services are:
-buying stuff as fast as possible
-not earning more
-dis-saving in order to buy more
-increasing debt in order to buy more


-where "savings" are being removed from most stocks, (and bonds?)

-where a few stocks are attracting voracious buying and and higher prices,
using credit money spun into the system from governments to corporations, who get money from the sale of manufactured "essentials", and use it to enhance stock prices.

-where anew kind of brokerage firm, the "" has found a way to market their own stock, as a business, by selling other people's goods below cost.


-Where governments, to get elected, continue to spin the money for this scam, and bleed the essential business and societal structures, to make it possible.

The "crash" comes when the in-flow of money slows, so that the outflow of money (energy) is greater than the in-flow, and the structure of the mania, the vortex, implodes and dies.

So we move from the extreme of the "momentum" attractor, the mania, to the extreme of the "buy-and-hold" attractor, depression.

With thanks to ORO, Nickel62,SteveH, Aristotle, All.



goldfanA Poem For a change#2472302/08/00; 18:54:35

Getting Rich

No one of sense believes
We get rich
Flinging handfuls of our money
Into the streets
Expecting the beggars
To come rushing back
With handfuls more for us

Or pouring our savings
Gold coins into bottles
Floating them offshore
With notes our name and address
Imploring the finder
To send the gold back
With much more to boot

Why then do you believe the Stock Market
Is such a generous ocean
That Poseidon become
God of Lotteries
Will rise up out of that sea
His chariots full of gold
The Pearly Gates
Wide open for you and me?

Dec 30 1999

Just Weight & MeasuresUp we go!#2472402/08/00; 18:54:44

It's not over until it is over! Palladium up to $580. Gold recovering some of it's earlier losses! In the long run paper always burns, but the interim is sometimes disconcerting.
Cavan ManUSAGOLD 24715#2472502/08/00; 19:09:34

Thank you for pointing out the forest through the trees.

Now, how 'bout those links? I emailed Marie.

goldfanStrange Attrractors, Currencies and Economies#2472602/08/00; 19:17:02

In what follows for what works, I owe a complete debt to ORO, Aristotle, many others, and the errors are all mine.

Strange Attractors, Currency and Economies

Part 1. Market Trading and "Strange Attractors"
Goldfan (02/07/00; 15:14:53MDT - Msg ID:24619)

Part 2. Fiat and Gold strange attractors

The pattern over time of the purchasing power of any fiat currency is apparently, a repeating pattern, a strange attractor with a recognizable pattern differing only in scale from one economy to another using any form of fiat dollar. It starts high in purchasing power at the beginning of its life, and trends up and down, but mostly down, from then on, until at the end, it disappears in a wild chaotic burst of hyperinflation.

In catastrophe theory, it would be called a "fold", one of the seven types of catastrophe, a continuously inflating balloon, or, someone living, then dying. (Interesting the mathematicians use the same word as the poker player, "to fold," as "to get out".)

The Purchasing power of gold appears to have, over the centuries, a characteristic stable pattern that rises and falls, but never disappears, much like the way gold itself behaves as a a physical substance.

Part 3. Economies

My simple picture of a"Domestic" economy is as follows:

1. Domestic Structures for making/building and selling "essential" goods/services,
same structures generate .....................Earnings(wages)

2. Foreign structures selling/buying essential goods/services in "domestic"

(Activity patterns of making, selling, spending , borrowing, that are a mix of the "strange attractors" for each of these)

$$$$ flow into:
Capital Mediating structures

3. Brokerage Firms, Banks, Money market funds, etc. all deposit takers including pseudo businesses like and other .com's,
Financial Intermediaries like Fannie Mae, Stock and Bond markets, Currency and options markets, all speculative financial structures, etc.

4. Government Treasury and CB (the FED)

$$$$ flow into:
5. Structures for Saving

6. Non-profit structures for
maintenance of society

Each of the above structures has somewhat standardized patterns of ways of doing their core activities that are the "strange attractors" for that structure. Many of these are the same, even if on a greater scale, as they have been for centuries.

4. Liquidity and the Combination of Strange Attractors for Greater Stability

4.1 The notion of Liquidity is related to acquisition energy, or demand energy and how much supply energy there is to match it.

The mathematics of Chaos Dynamics predicts that when energy is oscillating between two "opposite" patterns, two strange attractors, the system may break down in chaos and then emerge with a new pattern, a third "strange attractor" which importantly, will display more symmetry than either of the two, and thus be able to "contain" more energy than either.

So, for example, the two strange attractors of buying and selling stocks can generate wild oscillations, threatening to wreck the system, unless they are combined in one operation that includes the introduction of "liquidity" through "market making", and arbitraging. Of course, as we well know, even this new container, the third strange attractor, may not hold the energies in a mania, but it is a definite improvement on the two originals alone.

4.2 Gold and Fiat currency, a Combination for Stability?

It should be possible to use the gold attractor, its trading pattern and purchasing power over time, to ally with the Fiat Currency pattern to avoid the inevitable decline and extinguishment of the fiat. The idea here would be to convert the the "fold" catastrophe climax of the fiat, to something like what is in maths called a "cusp". This is a catastrophe which is less severe than death. In a cusp, the system just drops to a lower level of energy, then climbs back up again, over and over. Examples are a diving board, or a resettable mousetrap.

Better heads than mine will understand how this might be set up in our currency system and banking systems. Nevertheless, a bigger task will be to get the vast mass of the people to understand and adopt the new attractor, Maybe it would be easier in the Far East say, where gold has always been part of daily trading in some way.

4.3 There are four "Strange Attractor" patterns for Liquidity.

4.3.1. High Demand, High Prices..... the typical inflation pattern, high liquidity increasing the energy in the container... high growth

4.3.2. Low Demand, High Prices....wide bid/ask, low liquidity
no energy flowing into the container...stagnation

4.3.3.High Demand, Low Prices..... the energy is just passing through,
maintaining the energy in the container, static, low growth.

4.3.4. Low Demand, Low prices.....deflation, energy flowing out of the container, not being replaced.

5. The "Containers" of the Economy and the Liquidity of their Energy (currency) Flows.

In part 2. above, I charted the various containers of the economy.

Assessing their energy flows, we see the situation today in the US is:

The Domestic Economy of "essential" goods/services and wages is in Liquidity stage 3. Just passing the energy through. The growth and capital assets created are being mortgaged to supply energy to the capital mediators. and the savings structures. The structures for essential goods/services are barely being maintained.
Wage earners are not earning more, are drawing down their savings and increasing debts in order to increase consumption.

The Import/Export of Goods and Services sector is in deficit, so it is just adding energy to the Capital Flow Mediator sector. Liquidity stage 3.

The Capital Flow Mediator Sector is in Liquidity Stage 1. High Demand High Prices Inflation and Growth in contained energy.

The Savings Structures sector is the same.

The Non-Profit Structure, Maintenance of Society and Environment is in Stage 2. Low Demand High Price, like stagflation. I guess???

6. Problems

The oscillation between strange attractors in the capital flow mediator and savings structures and the continuous flow of energy into this sector from government actions threatens to (or maybe already has) spill over into a mania blowoff of the fiat money attractor which is the energy of this system.

A buy and hold mentality would normally be the counter balance to a momentum mentality here, but the momentum mentality has taken over to the extent that it appears to be so single minded as to be a mania.

We need a lot more symmetry and we're not going to get it, without deflating the capital mediators and the savings sectors.

Next , I have to try to get ORO's assessment of the role of Demographics into this.....

7. Story of a Hurricane

The day is calm, air and sea each containing their own energy within the their own strange attractors of "calm air", "calm sea".

This sea has a current of very warm water though, encountering cooler air.
Warm air over the sea is rising, drawing cool air into the center, with increasing wind velocity.

Increased wind makes increased waves.

Soon the waves are very large, the strange attractors for wind and sea are the same though, just on a vastly increased scale. The fractal dimension has not changed yet.

The in-moving wind forces, and the up-moving warm air, conspire to transmit a twisting, rotating motion to the column of air over the sea.

As the energy is transferred from the warm sea to the column of air, the rotation becomes fiercer, its velocity increasing rapidly.

The waves of the sea, meanwhile, have grown huge, and are starting to get so steep,their tops break and tumble down the steep sides. The howling wind grabs thousands of tons of water off these breaking tops, and hurls it horizontally.

The fractal dimension has changed drastically.
Chaos has entered the realm of the sea, waves combine and crash against one another, so much water has been flung into the air, the two have become almost indistinguishable.

Meanwhile, the up-flowing column of warm air, and the in-flow of cooler air, each with their own pattern, their separate "strange attractors", have combined their two attractors to make a third with more symmetry, containing enormously more energy than when this whole episode started.
A miles-high rotating vortex of ferocious wind energy, with the power of a thousand hydrogen bombs, tears itself loose from its birth pad, and goes raging over the water, creating chaos on that sea wherever it moves.

It can only be extinguished by rubbing off its energy on everything, sea, land, structures, that it encounters.

Eventually, it will lose energy and subside. Let us hope not too many living creatures were in its path. (Including treasure hunters.)

In the Economies of our history, we have gone in this analogy, from the Depression of the 30's to the Mania of our times.


USAGOLDJA#2472702/08/00; 19:19:51

Thank you for your observations. I will try to get this idea of yours into the next newsletter (or possibly somewhere here) because I think you are correct. What you say is very important. There is a correlation between the amount of traffic on sites like this and the amount of knowledge required to facilitate political action, not just in the gold realm (in which most of us have an acute interest) but other areas as well. Jefferson understood the correlation between knowledge and freedom well that's why he made sure the First Amendment was added to our constitution.

I think the big factor all three political parties are underestimating in this election is the power of the internet. Today we had two politicians from the Republican Party vying for the label of "Reform Candidate" when neither represents anything close to "reform." Both believe that there is a budget surplus, neither believes in term limits, neither has exhibited even a rudimentary understanding of economics, and thus far I haven't heard a single word about how we are deal with "rising Europe" and "collapsing Japan." All they can talk about are marginal tax cuts which no American seriously believes will have a credible impact. The internet, as this thing goes on, is going to have a major impact and I think that impact for the most part will be positive. It may create a surprise in the general election that any of the major political parties foresaw.

FarfelConfirmed: BARRICK Announces No New Hedging. LOL#2472802/08/00; 19:21:29

Michael, today's late announcement should send gold up a minimum of $30-$40 an ounce in a spate of panic buying and if it does not rise at least 30-40 an ounce tomorrow, then we can all rest assured that this gold shorting corporate shark is lying through its teeth once again, and has simply released a statement aimed at trying to assuage its own gold shareholders that it really does wear a white hat. In other words, "Let's put out a nice press release and get these guys off our backs. In another week, they will have forgotten about us."

Michael, the proof is in the pudding, and the market insiders will know whether or not Barrick is sincere. They will scramble to cover hedges and wet their pants along the way if they are certain Barrick is sincere; if they know it is another Barrick con job, the price will hardly respond.

Personally, I doubt this company's sincerity on any matter.

But if Barrick is sincere, the gold market MUST have an EXTREMELY strong rally tomorrow. Failing that, we will know that this press release is a diversionary tactic and nothing more.

If that is all it is, then I URGE GOLD INVESTORS to remain steadfast in pursuit of justice and continue in the path of filing a class action lawsuit against this company for all varieties of malfeasance, not limited to breach of anti-competition statutes, market rigging, antitrust collusion, and a litany of other transgressions.

You can get in touch with MILBERG WEISS, as I am doing, and
do your part in creating a Class to file against this company and its entire Board of Directors on both a corporate and personal level.

But MOST IMPORTANTLY, SELL BARRICK, BOYCOTT TRIZEC HAHN, and invst the proceeds in other gold companies that WANT a rising price of gold and do not collude to destroy an entire industry.



USAGOLDCavan Man...#2472902/08/00; 19:27:50

She was trying to get you some quotes this afternoon. In process.............I did see the pictures. They are really neat and I think cufflinks very stylish (so did she) -- pandas, eagles or maples.

We can also get tux pins. Yes, tux pins for those who go to the black tie events........I think all the meisters ought to be thinking about taking this gold thing to the next level......

USAGOLDFarfel...#2473002/08/00; 19:35:31

It appears that Barrick made its announcement yesterday, the phone rang off the hook with stockholder complaints today and they altered their public position to keep stockholders from marching on corporate headquarters.

Lesson learned. Keep up the pressure. They respond to stockholder complaints. They're wrong. Everybody knows it. They need to change. Too many now understand the connection between the Barrick business plan and gold thwarted.

You are right in your campaign, Farfel.

ALL: Keep up the pressure. They hate it but means more to them than the value of their stock and whether or not stockholders are going to dump it.

tedwManipulated market#2473102/08/00; 19:40:47


Where did you come up with the buy and sell prices of $335 and $360.

USAGOLDSorry....Left out a word in post to Farfel...#2473202/08/00; 19:40:50

ALL: Keep up the pressure. They hate it but means more to them than the value of their stock and whether or not stockholders are going to
dump it.

Should read:

ALL: Keep up the pressure. They hate it but NOTHING means more to them than the value of their stock and whether or not stockholders are going to dump it.

Chris PowellBarrick embarrasses itself#2473302/08/00; 19:48:32

Latest "Midas" commentary from
GATA's Bill Murphy.

motor mandrooy#2473402/08/00; 19:49:47

Lamprey, Thanks for the info! I own mucho Rands of DROOY @1.50. Hope we see 3.00 soon! I need to pay my good uncle Sam too soon!!
SteveHPlatinum is leading the way#2473502/08/00; 20:37:13


Date: Tue Feb 08 2000 22:29
Khan (Platinum Correction) ID#90199:
Platinum is now up 46 backaroos CRB

You know, I remember some poster here or at kitco, from whence the above came, that said (was it preacher or prechter???) platinum would be used to move gold higher. Seems like he might have been right. Like for all of us though, timing was a little early.

koan(No Subject)#2473602/08/00; 20:38:09

Platinum up $46 to $544 -

Palladium last I heard at $595! - Good luck all.
koanplatinum moving gold higher#2473702/08/00; 20:41:38

If you check last week, here, you will see that was me, I think. I wasn't sure if it would move gold higher, but I thought it was headline news!
UlyssesABX#2473802/08/00; 20:59:27

If ABX announced a suspension of hedging and no increased gold production ,gold would have shot thru the roof, thus making MANY more mining cos profitable, something that ABX does not want.They want huge cash flow for themselves from mining their cheap stuff so that when t hese other miners go bankrupt they'll have the cash to pick them up for a song. I believe ABX is just another arm of U.S. Govt-GS, etc.After all, George Bush,Brian Mulroney, et al sit on the B.O.D. They'll do nything to keep the price of gold down. Boys, we're dealing with the smartest'shiftiest gold mining co around.
JourneymanMoney, money, who's got the money? @goldfan, Nickel62, ALL#2473902/08/00; 21:01:45

"My understanding is just the reverse, that the money games being played by the financhal sector are
in fact creating piles of excess money whicd is the inflation. Just because the air is calm, doesn't mean
it doesn't harbor a hurricane!! (ORO or someone else might correct me here) Anyway ,IMHO i'ts not calm..." -goldfan (02/08/00; 18:51:12MDT - Msg ID:24722)

Sir goldfan, you're absolutely right! But we don't really disagree here. The question is always "where IS the money supply NOW?" It's relatively "calm" here in the "real economy" but not "there" in the "financial economy" where the "money" and inflation are living for the time being.

Of course, there IS the "wealth effect" working in the opposite direction. Simple models of all kinds, are, well, simple afterall. Talking of my model mostly.

Anyway, the key question is always, "Where is the money NOW?" And of course, you'd like to know where it will be later, and exactly when that later will be, but as von Mises observes, the future's always hidden to acting man.

And as Yogi puts it much more elegantly, "Prediction is very difficult, especially of the future."

More about difficulties with the idea of "money supply" later!


P.S. Nickel62 -- thanx for your positive comments!

UlyssesABX#2474002/08/00; 21:03:23

If ABX announced a suspension of hedging and no increased gold production ,gold would have shot thru the roof, thus making MANY more mining cos profitable, something that ABX does not want.They want huge cash flow for themselves from mining their cheap stuff so that when t hese other miners go bankrupt they'll have the cash to pick them up for a song. I believe ABX is just another arm of U.S. Govt-GS, etc.After all, George Bush,Brian Mulroney, et al sit on the B.O.D. They'll do nything to keep the price of gold down. Boys, we're dealing with the smartest'shiftiest gold mining co around.
UlyssesABX#2474102/08/00; 21:03:25

If ABX announced a suspension of hedging and no increased gold production ,gold would have shot thru the roof, thus making MANY more mining cos profitable, something that ABX does not want.They want huge cash flow for themselves from mining their cheap stuff so that when t hese other miners go bankrupt they'll have the cash to pick them up for a song. I believe ABX is just another arm of U.S. Govt-GS, etc.After all, George Bush,Brian Mulroney, et al sit on the B.O.D. They'll do nything to keep the price of gold down. Boys, we're dealing with the smartest'shiftiest gold mining co around.
THX-1138Barrick share price#2474202/08/00; 21:40:56

The increasing backlash from Barrick shareholders due to the outrageous hegging pratices of this company are driving the companies stock price down.
It would be funny to find someday that one of the largest gold mining companies in the world someday having a share price below a dollar.
Keep that up and they might get thrown off the NYSE and onto the OTC stock market.
Imagine Barrick being threatened with a hostile takeover because their share price goes down the tubes.
What would be even be funnier is if a former penny stock company ends up buying them out.

Yup, that would be really funny if the hegging practice they endorse to drive other mining companies out of business backfires and gets them instead.

Solomon Weaverlet bygones be bygones#2474302/08/00; 21:42:13

PH in LA (02/08/00; 10:44:49MDT - Msg ID:24699)
More and more stupid.
Sir PH in LA....MK was kind enough to banish Frosty from our concerns me that if we go to Kitco, pick up his comments there, repost them here with critisism, we are only inviting the spirit of his kind to re-enter here under a different disguise.

Not that I agree with him...just think it is only civil to leave our hands free from the banished ones.

Poor old Solomon

Adrianmedia 'objectivity'#2474402/08/00; 22:01:46

A first poster here,
I appologise about the delay, but time differences and the requirement for USAGOLD registration has made this slightly stale, although I feel no less poignant. The following is from the leading financial paper in Australia, coming out when gold had just run through the $US310 mark and BEFORE the Barrick announcment. The paper did not run a clarrification later after the error had been pointed out.

"However, in a briefing note to its clients yesterday, Credit Suisse First Boston noted that Placer's 2 million ounce, or 62-tonne, drop in its hedging book was "dwarfed by the anticipated 500 million tonnes of official sector sales that we can expect in 2000"."

The 500 million tonne quote sort of sums up the lack of concise reporting required to allow golds value to be seen by all.

Strange that only bearish mistakes are made in this paper, which is bearish in extremes to the gold sector.

Anyway, now that I have the registration matters sorted out, expect a more rapid posting in future learned ladies and gentlemen.

koanPGM's and gold and silver#2474502/08/00; 22:05:16

I posted several times last week (here) that I thought the movement in the PGMs might move gold up ( and might be the cause for the PDG hedging NR) - I mentioned this before there was any movement in gold (glad it is on record). I was sort of surprised that so few were reacting to it (the PGM story) and as of today still were not. I finished all of my buying of the PGM mining stocks just today and there was still almost no activity (bought all last week posted here)? I was flabergasted. I have felt for a long time that what was missing from the metals mkts was SPECULATION. When I saw that speculation, plus what I perceived as supply demand fundamentals rising in the PGM's, it seemed logical that gold and silver might react, especially as all of the other variables were in place i.e. inflation fears, a crazy bond mkt, and an overinflated speculative stock mkt and tons of cash sloshing around, high oil and a recovering Asia. We shall see what tomorrow holds. I mostly just bought PGM's and will traverse if I see the others follow.
JLVKoan#2474602/08/00; 22:15:49

I'm looking for a good PGM stock, mind telling which ones you picked up?

Thanks in advance

PH in LALetting Bygones be bygones#2474702/08/00; 22:21:12

Mr. Weaver:

Amen to that. I couldn't agree more with you.

On the other hand, I was really addressing FOA with reasons that he should consider before allowing their kind to have their way with him. At the same time, since I long ago renounced posting over there, there is no other way to address some of the issues (and non-issues) that they revel in there except by bringing it up here. Rest assured that they read the posts here with far more interest than we read theirs there. Earlier, I had offered to hold Permafrost's feet to the fire for his unreasoned comments. That still seems like a worthy intention, since he persists in airing them, even parading them around as if they had more merit than they do. (ie, any merit at all.)

That said, I will be probably even more happy than you, yourself to leave them alone, and not stir up their hornet's nest, although sometimes being civil does not mean turning the other cheek.

goldfanJourneyman (02/08/00; 17:04:10MDT - Msg ID:24716)#2474802/08/00; 22:53:02