USAGOLD Gold Discussion Forum Archive

Electronic reproduction sourced from
Black BladeBarron's Article by the Very Toothy Cheryl Strauss Einhorn#3795810/1/2000; 0:04:15

Much Ado About Little

Big bank pact to boost gold misses mark

By Cheryl Strauss Einhorn

A year ago last week, 15 European Central Banks announced their intention to boost gold prices by limiting official sales. Today, however, gold is down 2% from the date of their announcement, to $277 an ounce. It continues to trade near its lowest level in 20 years.

Nor do the prospects for the yellow metal look much brighter between now and yearend. Jeff Christian, head of CPM, a precious-metals research firm, expects gold to remain lackluster, trading in a range between $270 and $290 an ounce. "There isn't much liquidity in the market," he says. "London bullion trading is down." Indeed, trading volume has correction early 30% in the past year, to 25 million ounces per day.

There are several reasons for gold's continued troubles. To begin with, the European banks' self-imposed five-year sales limit actually exceeds the group's previous level of sales. The banks set a 2,000-metric-ton limit, intending to dispose of their gold in annual 400-ton installments. That's well above the average annual 320-350 metric tons the banks had been selling until now.

Out in the open

Too, by formally announcing their yearly sales limit, the banks legitimized the practice of official gold sales -- something that traditionally has been kept secret, and frowned upon by the gold industry. The 15 banks involved in the pact hold about 45% of the world's gold.

The group's disclosure has introduced an unusual degree of transparency into the gold market, which, in part, is what the Europeans intended. But the revelation also has made it easier for non-signatory banks to gauge the market and sell from their own gold holdings. During the past 12 months central banks in Brazil, Canada, Chile, Jordan and Malaysia, among others, have been selling.

Last year, gold demand hit a record, largely because of Year 2000-related fears. Demand climbed 20% from 1998 levels, which had been depressed because of the Asian crisis. But demand this year has fallen. "The absence of Y2K gold investment has made the market very depressed," says George Milling Stanley, at the World Gold Council.

Until fairly recently, at least, gold prices have suffered because of the strength of the U.S. stock market. As global investors have migrated to U.S. assets, the dollar has rallied. And since gold, like most commodities, is traded in dollars, the greenback's muscle has kept a lid on the metal's price.

The buck tops here

The U.S. dollar recently has been trading near its all-time high against the South African rand and the Australian dollar, both currencies of key gold-producing nations. The dollar also has been hitting highs against the euro and the Indian rupee, currencies of major consuming regions. In fact, India is the world's largest buyer of gold.

Such local-currency weakness often encourages producers to sell their production forward to lock in attractive prices. Conversely, for consumers, the dollar's strength has made gold too expensive. The Australians reportedly have been selling more gold than their South African peers, because it is more politically acceptable Down Under. In South Africa, only Anglogold is hedging, while other producers are afraid to get caught on the wrong side of a price spike. That's what happened last year to Ashanti Gold, in Ghana, which wound up having to unwind its hedge at great cost.

The multi-pronged attack on gold from the international currency markets, coupled with an absence of investor demand, may keep a lid on prices for a while. It might even counteract seasonal factors, which usually make the fourth quarter a strong period for gold sales. So what did the central banks' year-ago pronouncement actually achieve? In hindsight, basically nothing.

Black Blade: The usual drivel. The WA news has been out for a year and this is the best that Cheryl can come up with? What is the problem with the CB's selling gold? Well, they just transfer it to one another. Now if they would just sell to the public so we could get our hands on it, then that would be another story all together. I like these bargain prices. I just slowly acquire more as time goes on.

SHIFTYPPU#3795910/1/2000; 0:55:07

Periodic Ponzi Update

Nasdaq 3,672.82 + Dow 10,650.92 = 14,323.74 divide by 2 = 7,161.87 Ponzi

Down 163.71 Ponzi points from last week.


SHIFTYRossL#3796010/1/2000; 1:04:15

Periodic Ponzi Update

I was going to ask if you could update the Ponzi index chart and I see you have it up already.

Good Man


YGMBill Murphy's Latest "History" Report.....#3796110/1/2000; 1:15:03

Makes my heart swell to think GATA & the light of illumination/magnification that Bill & the "TEAM" have shed on the Manipulation Cabal is getting so bright of late, that Rubin & the gang must be very nervous. Pull the curtains boys, but that only keeps you in the dark. We see the light and you're about to be step out into it for good. The heady times of pay-back are near for those who cared eniugh to be part of the solution. Anyone know the words for F. U. G. S. ......... Good-bye crooked Willy, what a sendoff this could be for you.....YGM

"Go Physical & "GO GATA"

SteveHOPG (other people's gold)#3796210/1/2000; 1:56:52

from the below article by Einhorn:

"...During the past 12 months central banks in Brazil, Canada, Chile, Jordan and Malaysia, among others, have been selling...."

So this is last year's list of OPG. One must ask the question as to why have these countries sold their gold or some of it? First glance seems to be because they are strong dollar-linked currencies. Is that true for all of them?

A few comments about that article:

1. 45% is not the correct percentage of world's gold held by Central Banks. I believe it is much less than that now, at the most around 25% and probably less now. If memory serves, total gold in the world is estimated at or around 130,000 tons. CB's hold at or around 32,000 tons (before leasing and open sales).

2. She accepts the fact that consumer sales are down, banks are selling in the open (which she notes as unusual) and that the Washington Agreement constitutes a much higher open rate of gold sales, but she fails to delve into why these extraordinary events might actually be happening. Personally, I would think it would be that CB's don't want gold anymore, which is her unwritten assumption, or there was something unusual happening that would break with historical practices. I believe she is being short sighted when she fails to examine the underlying motivations and fails to examine the latter.

3. This is a propaganda piece that fits the negative press camp. It is an indication that the POG is not ready to break out for the buyers of gold continue to accumulate in the shadow of this article. The Gold Buyer's Shadow Index -- the amount of negative gold news stories divided by the number of positive main stream gold stories x 1.00. When the GBSI is negative that will be positive for gold.


SteveHOPG (other people's gold) -- correction#3796310/1/2000; 2:00:47

from the below article by Einhorn:

"...During the past 12 months central banks in Brazil, Canada, Chile, Jordan and Malaysia, among others, have been selling...."

So this is last year's list of OPG. One must ask the question as to why have these countries sold their gold or some of it? First glance seems to be because they are strong dollar-linked currencies. Is that true for all of them?

A few comments about that article:

1. 45% is not the correct percentage of world's gold held by Central Banks. I believe it is much less than that now, at the most around 25% and probably less now. If memory serves, total gold in the world is estimated at or around 130,000 tons. CB's hold at or around 32,000 tons (before leasing and open sales).

2. She accepts the fact that consumer sales are down, banks are selling in the open (which she notes as unusual) and that the Washington Agreement constitutes a much higher open rate of gold sales, but she fails to delve into why these extraordinary events might actually be happening. Personally, I would think it would be that CB's don't want gold anymore, which is her unwritten assumption, or there was something unusual happening that would break with historical practices. I believe she is being short sighted when she fails to examine the underlying motivations and fails to examine the latter.

3. This is a propaganda piece that fits the negative press camp. It is an indication that the POG is not ready to break out for the buyers of gold continue to accumulate in the shadow of this article. The Gold Buyer's Shadow Index -- the amount of negative gold news stories divided by the number of positive main stream gold stories during a fixed time period. When the GBSI is less than one that will be positive for gold. The longer the time period the less usefull the indicator.

SteveHDam#3796410/1/2000; 2:24:04


What kind of Dam is being built that would cause the temporary sleuce to have such a variable sized opening?

wolavkaWrong Direction#3796510/1/2000; 3:30:45

It never fails. Look at this and as you proceed, you here there it isn't.

Everybody expects it.

Gold broke out of the 20 yr down trend a year ago, retraced,
broke back over retracement 7 trading days ago, and now walks the line. Sideways to up, FMOC should raise rates but if they don't matters not cause gold already knows.

When you keep hearing there it isn't, you better pay attention.

Next major crisis which no one expects, NO WATER. Parts of U . S. are in bad shape. Water is going to be a big problem.

Black BladeAPI News Brief - Refinery Capacity#3796610/1/2000; 5:05:58

Oil and Gas Journal

API: US refineries running near capacity
The American Petroleum Institute said Monday that US refineries are running flat out to ensure that consumers have a readily available heating fuel supply this winter. John Felmy, API's policy analysis and statistics director, said while the Clinton administration's release of crude from the Strategic Petroleum Reserve (SPR) may reduce crude and product prices somewhat, it will not necessarily translate to increased production of heating oil. He explained that with the nation's refineries running at near capacity, their ability to process additional crude is limited.

Felmy said, "There is a limit to how hard refineries can run, consistent with providing for the safety of refinery workers." He said US refineries, as of a week ago, were operating at 95% of their capacity, which is higher than last year and well above historic levels. "It may be possible to push production higher for very brief periods, but the decision to do so must be made by individual companies, which will not compromise the safety of workers," said Felmy.

Felmy also said record amounts of gasoline and distillate fuel have been produced this year. Since April, building of heating oil inventories has been substantial, but stocks started at lower levels and remain at historical lows. He said stock building was restrained by the gasoline supply problems in the Midwest earlier in the year, when refiners focused on producing that product. He also said strong current demand for distillates has affected the volumes
available for storage.

justamereBearAritotle 37938 Nickle62 R Powell#3796710/1/2000; 6:10:55

Thanks to all three of you for your kind words

Coming from you that is high praise indeed.
Regarding your Shermag response. I have for some years believed that the US was exporting inflation, particularly to Japan who has a massive deflationary problem, and have been printing and publicly spending money in a last ditch Keynesian attempt to stave off the calamity that they are in. Japan has gone from large creditor to massive borrower in 10 years.

Leading up to Y2K, the US gov't printed some pretty huge amounts of cash, in case of trouble. Earlier this year they tried to sop up some of that, and the rate of money growth fell. However, as early as May last year, looking primarily at the money supply numbers, I began to wonder if the US had in fact switched from exporting inflation to importing DEFLATION. Sounds like it should be 6 of one and half a dozen of the other, but it isn't. Deflation is a much meaner beast. I am a bit uncertain because of the noise.

Regarding the switch from exporting inflation to importing deflation, What say you?

Nickle 62
This is strictly positive, no matter how it may sound. As an artist, there is a saying "Plagerism is the sincerest form of flattery". I was thrilled you found it worthwhile to copy and send my efforts to someone else. I also want to thank you for posting the Hathaway piece. I saved it for reread.

justamereBearwolavka 37965#3796810/1/2000; 6:27:43

RE water. the problem goes very deep (no pun intended)
Increasing salinization of aquafers, rendering them useless, seriously depleted aquafers, and now a drought cycle in parts of US.
Poor Canada can expect changing borders. After suitable posturing and propaganda, they will get invaded to supply water to the US, since they have the worlds largest supply of fresh water.

LeighTrail Guide - Outrunning the Government Man#3796910/1/2000; 6:40:19

Dear Trail Guide: Wouldn't the government have to make it worth the gold owners' while to turn in their legal tender gold coins? Wouldn't they have to offer something close to "street value?" Because I'd rather leave my Eagles six feet under the ground than accept a paltry $50 for them.

Thanks for your advice and warnings.

Black BladeNatural Gas: The Five Stages to Market Panic #3797010/1/2000; 6:49:31

source: The Coming Global Energy Crisis

by Ilan Goldman
Oil Crisis News from Around the World

•• Aug. 10, 2000 •• SolarQuest® iNet News Service •• (This report by Charles T. Maxwell, Senior Energy Analyst ( This email address is being protected from spambots. You need JavaScript enabled to view it. ) was posted by Ilan Goldman.)

The low natural gas reinjection numbers we have seen so far this spring in the US tell their own tale. We are not on our way to putting three trillion cubic feet of gas, or anything like it, into storage for use next winter. From a low of one trillion cubic feet (and nearly 50 % of that is facility and line "fill", i.e., is not usable), we would be fortunate now to bring stored supplies up to 2.3 Tcf by early next November, the start of the gas consuming season. Given the presumed retreat of the La Ni--a weather pattern, the strong US economy, and the substantial number of new natural-gas-fueled base-load generating plants using combined-cycle technology coming on stream over the next six months, I have had to revise my estimate for peak gas storage down a bit from the 2.5 Tcf number I was using two months ago.

In practical terms, unless the coming winter approaches the highly-unusual, +13% warmer-than usual season we have just passed through, US gas storage numbers are accumulating in a potentially disastrous pattern of insufficient gas to take this country through the full span of cold weather to April of 2001. There is the possibility that we will be forced to allocate gas supplies to private homes, government departments and public institutions, to defense installations and to schools, universities, hospitals, and so on. To the degree that is necessary, gas will have to be allocated away from manufacturing industry.

Hit hardest, in such a period, would be sectors of the economy that use a high proportion of natural gas in their fuel mix such as cement plants, glass works, heat-treating and metal-shaping plants, heavy chemicals, steel, copper and aluminum makers, and so on. Subsequently, problems of insufficient production of component parts and intermediate materials could quickly spread to car and aircraft manufacturers, commercial construction and machine assembly industries. In short, the use of natural gas is so widespread in our manufacturing system that shortages of it for, say, a two month period from late January of 2001 to late March would wreak havoc on many areas of our economy.

It would surely slow national GDP growth, and heavily penalize the profits of many industrial firms. However, all this is theoretical. It really couldn't turn out this way, could it? Yes, it could. And, unless the trends I see in place now of close to 3% incremental natural gas consumption in the US vs. flat or slightly down natural gas production are reversed for some reason I cannot now perceive, the "disaster scenario" outlined above must be considered the most likely one.

Perhaps the most intriguing part of the emerging outlook for a shortfall in gas supplies is not the fact that the crisis has arrived (after all it has been predicted for years, and, up to now, nothing serious has occurred), but rather the point that we are advancing deeper and deeper into this energy problem and no one, other than a few Wall Street analysts, are making any warning noises about it. The media is quiet.

It is either non-believing or unimpressed by the dimensions of what is visible. Government, at all levels, is complacent. There are no public outcries even from executive figures in gas consuming industries that are heavily dependent on the fuel. We are becalmed in a sea of silence on this issue as we pass into summer. The weather is fair, and the "livin’ is easy". And, when winter comes? It's just another season, following summer. Nothing to worry about.

However, a few important people in the system quite plainly see the outlines of what is to come. Their traders are bidding up the price of natural gas dramatically (now 100% higher than the last year's $2.10 per mm btu price at this season) in order to secure supplies for storage now - supplies that may not be available next February when many industries could be facing downtime. These gas buyers are doing their homework. And, it is their lead that investors should be following. Still, I am ahead of the story in my surprise that the media has not yet picked up on the coming crisis. For over the years (and I have a good many of them), it has been my experience that there is a repetitive cycle to how these "threats" to the system are understood and acted on by different parts of our society.

In the case of the emerging shortage of natural gas, to take the example before us, the first group to identify it was the industry specialists (apart from many natural gas production company managers who had spotted it years in advance), in particular a small group of Wall Street analysts who were doing their weekly storage sums and saw that behind the façade of last winter's warmth was a highly worrisome picture of an industry failing to convert its greater effort to find supplies (some 650 rigs drilling for gas this year vs. some 380 drilling for gas last year at the same time) into rising output figures. Across the board, analysts in the oil and gas industry are now convinced there is a substantial problem ahead.

This is Stage One, and it is nearly completed.

Stage Two is the tricky one. Analysts must convince their portfolio people that the problem is real, and direct them to what areas of the market to buy and what to avoid to maximize investment returns. But, portfolio managers are resistant to these arguments (they have heard them before). So, only a few comprehend and accept the fundamental story, then take action. But, those brave souls start building upward momentum into the limited group of gas producing stocks that can be bought in size by the institutions (APC-53, BR-45, UCL-38, APA-60, DVN-60, and EOG-32, in order of descending capitalization) . Then, that section of institutional portfolio managers which cannot yet grasp the play itself but which is attuned to moving into stock groups with rising upward momentum in the market (for whatever reason), can be expected to swing onto the story. In this case, the natural gas producing group has recently come up on everyone's charts as being in the lift-off stage.

Finally, the remaining portfolio managers, still not convinced, are forced to act in order to maintain their
performance rankings, and they belatedly enter the game.

We are better than halfway through Stage Two now, as I make it out. The fundamental players are "in", and the momentum players are starting to react. But, as to a general capitulation of portfolio managers to the natural gas shortage concept, that will be reserved for quarter-ending rallies in June and September yet to come, if I am reading the tea leaves correctly.

As I have previously noted, the media have not yet focused on this problem. That will be Stage Three.

There is a substantial story to tell here. Outages in industrial plants across (mainly) the Midwest and Northeast, with tens of thousands of workers staying home, is a major development. When TV reporters, newspapers and magazines eventually pick up the trend, perhaps several months will have passed and the situation may well be seen as more grave. Having professionally worked through the period of Energy Crisis I and II, it would not surprise me if the media termed the new "threat" as Energy Crisis III.

However, I don't think that this natural gas problem will have the public impact of the first two crises. Lack of gasoline (read mobility) and long waiting lines to obtain it may be more effective in influencing the American psyche than 100 industrial plants being shut down. However, Energy Crisis III is a convenient name, and at least it has the advantage of catching people's attention. Stage Three is a big step in the development of a crisis mentality in the market for gas-related stocks. But, we are not yet into this stage.

On the basis of widespread (future) media attention, Stage Four would involve governmental reaction to this, on all levels. By late summer and early autumn, we will be into the late days of the Clinton Administration's time in office. It certainly could be a political problem to admit that something this important had been allowed to develop, unbeknown to all, into a significant threat to the system.

On the other hand, the issue cannot be easily swept under the carpet because its effects are too close to breaking through into public consciousness. Moreover, the Gore-Bush pre-election debates should be in full swing by then, and Bush would be well guided to raise points, such as this, in which he has had some practical experience and for which no anticipatory consideration has been made in the non-existent national energy plan that President Clinton never formulated (nor did any other previous US president). As I see it, the Government will be forced to confirm the size and scope of the gas problem, and will further alarm industry by referring to the possibility of gas allocation on a national, state or local level.

Stage Four could well occur in September and October of this year. Its outcome would logically lead to Stage Five, the final rush to panic and overexposure. This would be the result of heightened media attention, followed by effective governmental confirmation that the problem was real and might not be easily fixed except through significant sacrifices on the part of the public. Stage Five would represent a general recognition that we could be entering a difficult period of fuel shortages and that the effects might be more serious than mere "inconvenience". It should be noted that under any allocation formula, those organizations and industries that could switch from natural gas to propane, butane, heating oil or residual fuel oil would be asked to do so. And, subsequently, these products might themselves run short under the impact of unexpectedly high demand. They might also advance dramatically in price.

Stage Five would also imply a highly visible case for investing in companies that might be best positioned to
assist in solving the natural gas shortage. The final run of small investors’ funds into the natural gas producers might represent a "tsunami" of money seeking entry to a play already suffering from limited capitalization, thus forcing gas producer share prices into the "blue yonder".

Stage Five, perhaps occurring in mid-to-late autumn, would, of course, be immediately followed by the actual onset of cold weather. By then, investors would also have full knowledge of the country's three-quarter-filled gas storage position. Early outages might start to occur, for coincidental reasons, in late January of 2001. However, the main weight of the shortfall would be expected to fall when different major storage points in various consuming regions of the country ran out of supplies in February and March of next year. That is when companies, facing closedowns for lack of fuel, should be most pressured to bid for gas to avoid the termination of output and temporary disbandment of their labor forces. So, we have assumed a peak to natural gas prices in February of 2001, probably in the $6.00 - 7.00 per mm btu range following a prolonged period of cold weather.

This could be the high point of fear, when many businesses could be driven to uneconomic decisions just to survive.This would logically be the exit point for experienced investors. With all five stages of the play completed, and the axe of cold weather fallen, this would be the time to collect your chips and leave the game. Conditions will likely not be so desperate or so uncertain again for some time, experience teaches us. Of course, the natural gas problem itself will not suddenly go away. It will take many seasons to find an answer to it. But, we will solve the problem, as we always do. And, as we move through the crisis and consider our options, all kinds of answers will present themselves. Meanwhile, the stock prices of natural gas producers would be expected to start down as early desperation gave way to later resolution.

What will be the eventual answers to the natural gas shortfall? Think about a higher range of prices, application of additional technology, new generations of sophisticated drilling rigs, more LNG receiving terminals, and what can come south from Alaska.

Black BladeHydro-Carbon Man and Natural Gas#3797110/1/2000; 6:53:57

A Follow-up to "The Rise and Fall of Hydro-Carbon Man" - A Greater Problem Than The Coming Oil Crisis?


Natural gas (NG), also known as methane is a colorless, odorless, fuel that burns cleaner than other fossil fuels. It is used for heating, cooling, production of electricity, and has many other uses in industry. Increasingly NG is being used in combination with other fuels because of its environmental performance and to decrease pollution. Other hydrocarbon gases are ethane, propane, butane, pentane, hexane, and heptane which are removed from the methane mixture and sold separately from NG.


NG processing gathers, treats, conditions, and delivers over 18 trillion cubic feet (tcf) of NG per year. This is equivalent to about 3 billion barrels of oil. This translates into about 61% of the US petroleum energy production, which emerges into marketable NG, liquefied petroleum gases, motor fuel components, and raw materials for petrochemicals. There are three principal forms of NG: 1) associated gas; 2) non-associated gas; and 3) gas condensate.

Associated gas is found along with crude oil, either dissolved in crude oil, or in conjunction with crude oil deposits. Non-associated gas occurs in reservoirs separate from crude oil. It is commonly referred to as "gas-well gas" or "dry gas." About 75% of today's production is non-associated gas and this includes coal-bed methane and oil shale gas. As with crude oil, there are varying grades of NG. There are varying amounts of heavy components such as propane, butane, pentane, and heavier hydrocarbons. Gas processors describe gas as "rich" (wet) or "lean" (dry) depending on the content of heavy components. NG may also contain water, hydrogen sulfide, carbon dioxide, nitrogen, helium or other components. Therefore all natural gas is processed to some degree to remove the unwanted components. Gas condensates are the heavier hydrocarbon component liquids. The natural gas liquids are part of a family of saturated hydrocarbons called paraffins.


August 27, 1859 was the date that Col. Edwin Drake (a former railroad conductor) struck oil 69 feet below the surface in Titusville, Pennsylvania. The discovery led to the first NG pipeline system in the United States. The pipeline ran 5.5 miles from the well to the village. Through the rest of the 19th century, NG was used as a source of lighting for city streets. NG producers shifted their focus to the thermal properties of NG, promoting it as fuel for space heating, water heating, and cooking. The NG industry was first regulated by the federal government in 1938 when the Natural Gas Act was passed. The NG industry was considered a "natural monopoly" and the government needed to protect consumers from it. To create incentives for the NG companies to invest large amounts of capital to build a distribution pipeline infrastructure for a given locality, the government offered exclusive licenses for certain regions of service. In 1954, the Supreme Court ruled that wellhead prices could also be regulated. There were shortages in the 1970's that signaled a need to make changes in how the government interacted with the NG industry. The industry began to move away from price regulation in the 1980's and 1990's. The result was increased NG supplies and lower prices. The Clean Air Act Amendments of 1990 increased demand for cleaner fuels in electric generation, industry, and transportation. Newer emerging technologies created new applications for NG. These include NG powered vehicles, and fuel cells. Meanwhile, there were political changes in government that addressed the issue of protecting the environment. These changes included placing many prospective NG exploration targets off-limits. The increasing demand for NG put stress on the NG exploration and production industry, and that is where this story of a developing energy crisis begins.


Acid rain occurs as a result of NO and SO2 emissions that are transformed in the earth's atmosphere and return to earth as dry deposits in rain, snow, or fog. The Clean Air Act Amendments of 1990 require that electric utility power plants reduce their sulfur dioxide emissions by 10 million tons annually and the nitrogen oxide emissions by 2 million tons annually. Coal-fired plants account for over 90% of SO2 emissions. Since NG combustion produces no SO2 and very little NO emissions, electric utilities are anxious to build NG-fired power plants. The dire need for excess electric capacity due to the "New Economy" has created a demand for clean energy. Virtually all new electric power plants will be NG-fired. Nuclear power, though clean and efficient, is politically unviable. Solar and wind are climate dependent and harms wildlife. So NG is going to be the power source of the future no matter what, or at least until a shivering populace in their darkened homes demand relief irregardless of the environmental consequences. The situation becomes more acute because the Clean Air Act Amendments of 1990 impose an absolute cap of 8.9 million tons of SO2 emissions in the utility sector after the year 2000. Another issue is the concern about "global warming" that is proposed by a few scientists, beautiful people (people from the entertainment industry) and the political establishment. They contend that the earth's average temperature has increased by about 0.03 to 0.06 degrees Celsius over the last 100 years. If the temperature is to increase to any real degree (and that is debatable among the more serious scientists), then NG consumption is likely to increase even further, in spite of the fact that NG-fired power contributes to CO2 emissions, the alleged primary source of man-induced "global warming" gases.


Utilities have warned customers that they can expect higher rates this winter. This is not because of an expected normal or colder than normal winter, but because of tight natural gas supplies. Storage levels are still far below last years levels in spite of having several months of warning. The Clinton-Gore Administration have released 30 million barrels of SPR oil in order to stockpile and refine heating oil for the northeast and midwest. However, most homes are heated with natural gas and no extraordinary precautions have been taken by the government to alleviate the expected shortfall. Of course there is nothing that the government can do. There is no Strategic Natural Gas Reserve. Hydro-Carbon Man is about to get a very cold wake-up call this winter as natural gas utility bills are delivered around the US. Natural gas prices have risen from $2.85 Mbtu earlier this year to a recent $5.40 Mbtu, and expectations are that prices could surpass $8.00 Mbtu this winter as demand increases.

These increased prices are not expected to increase inflation rates as determined by the Bureau of Labor Statistics (BLS) accounting for "seasonality" and other manipulative schemes designed to cheat the elderly and disabled out of their Social Security cost of living adjustments (COLA) and to keep the illusion that all is well with the economy. Businesses will need to continue heating their place of business, and manufacturing companies will still need to have natural gas for production activities. Many businesses are preparing to cut back production if natural gas price get too high, and many are preparing for service interruptions. At some point more and more industrial production could get choked off. NG accounts for as much as a quarter of energy consumption at many steel companies. Because manufacturers need clean-burning fuel for heating and conditioning procedures, they simply can't switch to other fuels when NG becomes expensive.

The situation is so serious that governors from 37 natural gas producing states recently convened the country's first natural gas summit in Columbus, Ohio, promising to study ways of avoiding infrastructure problems in the fields and pipelines that are being blamed for the price shock. Some deluded so-called industry experts still claim that there is enough NG stored in inventory and in the ground to meet the country's energy needs this winter. However, production is running at full capacity at a time when NG utilities are usually building up supplies ahead of the winter season. Part of the problem was the increased use of NG power plants that generated excess electricity this past summer as record electricity was consumed. The electrical grid is under severe distress as the "New Economy" is consuming electricity at an unprecedented pace. Virtually all new power plants are and will likely forever be powered by clean burning NG. EPA regulations make it politically impossible for new coal-fired and nuclear power plants to be built. Solar and wind power plants are economically unviable, climate dependent, and politically incorrect as they use too much open space and threaten wildlife.


NG producers have been ramping up production all summer, bringing back moth-balled drill rigs and offshore drilling platforms, and increasing exploration budgets. This is too little - too late. Many NG companies got caught with their collective pants down around their ankles. Companies that contract drilling rigs, equipment, and services are reporting soaring rates. In the third week of September, Baker Hughes Inc. (BHI) a Houston based oil and gas services company reported 808 NG drill rigs in operation as compared to 561 at the same time last year. Nevertheless, production is not keeping up with demand. NG companies are unable to find and produce NG fast enough as exploration budgets were cut drastically cut back over the last 2 years. Also as a result, drilling and production companies can't find experience people to replace those that left the industry over the last couple of years. Some companies have resorted to hiring felons and day laborers which has required a lot of training time. In the meantime NG producers are struggling to increase is productive capacity.

The EIA predicts that if this winter is a typical one, families could be spending as much as 40% more on heating because of higher NG prices. Because NG is difficult to transport, most of the gas consumed in the US is produced domestically. Banks are very conservative and it is difficult to get long term financing for NG production. Therefore increased production is likely to increase more slowly than the rising demand. It is expected that there is going to be a lag of at least two years to get the gas production up to levels to meet demand. Meanwhile, injection levels of NG into storage is static at best.

When NG reaches its destination via a pipeline, it is usually stored prior to distribution. This allows companies to withdraw from stores during peak periods to meet customer demand. The problem is that peak demand has stretched from the summer heat waves into the cooling fall temperatures. The stores have not been sufficiently replenished in case of a normal or colder than normal winter. We have been lucky the last few years as temperatures have been warmer than usual. There are more than 400 underground storage sites in 27 states in the US and Canada. There are 3 principal types of underground storage: 1) depleted reservoirs of oil and gas fields; 2) aquifers; and 3) salt cavern formations. Together, all these can hold 3 quads (tfc) of NG. Despite these high numbers, more storage capacity is needed to meet rising demand. Seasonal supply sites are generally filled during the 214 day nonheating season (April through October) and drawn down during the 151 day heating season (November through March). Unfortunately, here we are at the beginning of October and the storage reservoirs are far below last years levels.

NG is not a renewable resource. There is a finite amount of NG trapped in the Earth. However, there is sufficient NG to meet the needs of the US for quite some time, yet NG is being used faster than our ability to find, produce and distribute to the customer. Much of the land that has NG supply is off-limits to the NG industry. The Alaskan gas fields are likely exploitable, and even though the people of the state of Alaska would benefit from NG production, the people of the lower 48 know better what is in the best interest of Alaskans. There are several other off-limits targets as well. The newly designated Escalante Staircase National Monument in southern Utah is a target. The Rocky Mountain Front in Montana, the southern California coast, Florida Gulf coast are also off-limits. Imports from Canada could be restricted as domestic needs in Canada are also increasing. The method of Hydro-fracturing gas-bearing shales for NG is likely to be put on hold as environmentalist have lodged lawsuits in order to ban the practice in Alabama, and may be extended to other parts of the US. There is currently a NG-Boom in the coal-seam methane sources of north-central Wyoming which is coming under the scrutiny of the federal government.


There is much discussion about the "New Economy" and that hydrocarbons are not as important to the economy as in the past. This fallacy is about to catch some of these "boy-wonders" with their pants down around their ankles. The financial analysts, government parrots, and media drones continue to rant about the new economy and occasionally attempt to describe how oil is not very important in the world's economies and therefore rising petroleum prices are threat. They even continue to ignore the importance of petroleum when calculating core inflation statistics for the Producer Price Index (PPI) and Consumer price Index (CPI). They even use dishonest measures in these calculations by incorporating dubious valuations derived from "Hedonic" pricing. These buffoons overlook the big picture and the importance of petroleum in the economy (New or Old).

The claims are that Hydro-Carbon Man no longer needs petroleum because now he has communication through the internet and the invention of the computer. In other words, petroleum is not as a big part of the economy as it once was. Recently, the "Holy Site" of the "New Economy" - Silicon Valley was subject to voluntary shutdowns as the power grid was under severe stress during this past summers heat wave. Guess what? Next year isn't going to be much better! Not because I expect another heat wave, though that is possible. The voluntary shutdowns in Silicon Valley exposed a very serious problem. The problem is that even though the electrical power-hungry high tech Holy Site almost suffered a series of rolling black-outs, no one is seriously contemplating building more power plants to alleviate the situation. Nobody wants the unsightly power plant anywhere that they might see it. Their products that they create and build for mass consumption use vast amounts of power. There are ever more computers and peripheral equipment being built into this "New Economy" and it requires a lot of electricity. That electricity is coming from and going to continue to come from Natural Gas.

Obviously, petroleum exploration, production, drillers, and petroleum services company equities are good investments. Utilities are also a good investment. Of course the shortfall in NG production and the NG supply shortage will wear on the economy. The pull back in the economy will eventually be traced to the tight supplies of petroleum and all talk of how petroleum isn't important to the new economy will cease. The coming natural gas crisis will likely signal the beginning of a coming recession and investors will scramble about looking for a safe haven. As stock prices crumble on Wall Street and frightened investors no longer heed the flawed advice of the financial media drones they are likely to look for safe haven. Likely safe havens are hard assets like gold, silver, and platinum. Every postwar recession has been preceded by an oil price shock. This one is going to not only likely to be a temporary price shock but a permanent nuclear-blast in comparison. This could be the double whammy of high price oil and high price electricity. The recent electricity price shocks that hit San Diego, California this past summer are just a taste of what could happen across the US unless we are very lucky and nature cooperates. Precious metals have done well during prolonged recessions in the past. They are likely to very well again. The severe nature of both rapidly rising oil and NG prices bodes well for gold as prices should easily eclipse the $850.00/oz of 1980.


The natural gas squeeze is going to be a much more important issue this winter than the current shortfall in heating oil. There is a coming natural gas crisis, not necessarily from a lack of natural gas, but the inability to successfully exploit likely targets and the potentially crippling consequences of a cold winter. The increase in NG-fired power plants due to mandated environmental restrictions coupled with the increasing demands of the "New Economy" are squeezing NG supplies and current NG production. A rapidly expanding economy will add more stress to the NG-fired electrical power grid. A normal or colder than normal winter will lead to sharply higher NG prices as Hydro-Carbon Man either pays up or shivers in the dark. Petroleum price shocks have preceded every postwar recession. We are likely facing a coming energy crisis accompanied by a prolonged economic recession. Investors are likely to search for safe haven investments and some of those investors are likely to search out hard assets such as gold, silver, and platinum.

- Black Blade

Cavan ManAggie#3797210/1/2000; 6:56:09

You need to think for yourself long and hard about confiscation. There are some gold products you might want to consider. Call MK. 800-569-5115.
THX-1138Re: Black Blade - Barron's article (1st post of the day)#3797310/1/2000; 7:26:26

After reading through that article one glaring thing jumped out and caught my eye.

Gold is down ONLY 2% since the Washington Agreement!

Gold has done better than the stock market over the last year.

Have a former co-worker who's wife works for Lucent Technologies.
He has more than 10,000 shares of Lucent stock (LU).
I asked him last week how his stock was doing since I told him to sell it over a year ago at $62.
Said he had lost over half it's value (over $100k).
Asked me how my gold investment was. Said it was down in dollar value only about 3 to 5%, better than the stock market.

Yeah Baby, yeah!
Go gold.

JourneymanDevils, details, and where's the gold? @ORO, ANYONE#3797410/1/2000; 8:14:54

The devil's in the details, as they say.

Another poster awhile back asked if the CBs actually retained the
physical gold in their vaults, though it was "leased" to the
bullion banks. That is, of the gold leased out by the Central
Banks, how much do they still retain in their vaults (as part of
the "earmarked" gold but still under their control), and how much
was actually loaded on Brinks, etc. trucks and shipped out
somewhere (other than to another CB)?

Same question could be asked of the bullion banks as well: Of the
actual physical gold they sold or leased to others, how much of
it is still physically under their control and how much found
it's way out the door and into the open market?

In other words, who's got the paper and who's got the gold? -- A
very important detail, particularly at this stratospheric level.
Clearly any gold remaining in the CB vaults, well, remember
Roosevelt and 1933 -- they could just steal it by keeping it.

Or is the ASS-u-M[E]tion that ALL leased gold found it's way out
the door and into the open market?

It may be this question was already addressed and I just missed
it. If so could someone direct me to the pertinent post?

Thanks and regards,

canamamiReply to ORO (09/24/00; 11:29:23MT - msg#: 37373)#3797510/1/2000; 9:07:55

which was in reply to my

canamami (09/23/00; 22:22:29MT - msg#: 37348)


First off, you are a true guru, and I am a great admirer of your posts. I can't even try to reply re your discussion concerning pre-Depression banking, etc.

With respect to the POG increasing after the closing of the gold window ("CGW"), just a few points. First, your general point is well-taken. The POG is now about $275-277. Prior to the CGW, it was officially $35 (if my understanding is correct). Thus, the POG has increased notwithstanding non-convertibility.

The counterpoints: The POG may have increased in the period subsequent to CGW because (a) of the releasing of pent-up US demand when gold ownership was made legal, (b) this was the first time no major currency was tied to gold, so therefore people feared the fiat system would crash to be followed by a reversion to the mean - i.e, a gold-based currency - and thus bought gold to prepare for the eventuality; (c) fear of hyperinflation in the $US due to the de facto war economy plus expansion in the welfare state. The big super-spike in the Carter era perhaps arose because people thought the collapse of the fiat dollar was finally about to happen, as evidenced by the inflation/stagflation of the era, and oil prices, etc.

The bottom line: Will gold continue to be a store of value if it does not soon return to its role as the basis of legal tender currency? Perhaps its continued value is an inertia-based, received-wisdom phenomenon, which will evaporate as the older generation passes? In other words, if fiat doesn't collapse soon, can gold survive as a "non-legal tender, non-currency" wealth preservation asset unless it does, or is expected by economic actors to, return to its role as the basis of currency? (My own take, though subject to challenge: gold still has a future, its true value being suppressed by manipulative actors directly or indirectly backed by a or some official players).

Some musings:

Do people still fear the collapse of the fiat dollar system? In 1971/73, etc, the fiat dollar and currency totally divorced from gold was a new situation and concept, so people would feel it would collapse. Therefore, get your gold now! In 1979/80, people could believe that predictions of the end of fiat were true. But we are now in 2000, and the dollar holds it own. Also, we are only in this situation because the dollar "shook off" the direct hit that was CGW, and still carried the day against the rest of the world, so to speak.

There were periods of non-convertibility and non-redeemability in gold - i.e.. the Great Restriction in England flowing from the war with Napoleon. The cumulative effect of the expenses to fight the Cold War and related wars (e.g. Korea and Vietnam) meant that the US was maintaining a war economy for a lengthy period. Could the end of gold convertibility be viewed ion that light? If a genuine period of peace is among us, will we now see a reversion to mean, i.e., a re-embracement of gold in some form, to check monetary growth?

Oro, just throwing stuff out to you and others for possible discussion. I don't have the training or background to produce the big pearls of economic understanding or insight, but perhaps I can be the sand that provokes the creation of the pearls.

Good day, all.

aunuggetscanamami # 37975#3797610/01/00; 10:42:22


You bring up some very good questions and points in your previous post, most notably whether gold will lose it's basis value in preserving assets as the older generation passes the world on to the younger "desensitized" players. We can only hope they will either "discover" the wisdom of ages where gold is concerned, or find something as useful and rare to take it's place rather than depending on the paper push as their wealth basis in the days ahead.

I've often wondered much the same thing. Where will our following generations be 50, 100, or 200 years down the trail ? Will they still be following the better (golden) path, or will they have approached an impassable seaside cliff, unable to move on, having never gained the wisdom to turn around and go back ?

All we can do is hope and teach......Hope that the younger generations will grow to understand the wisdom of the past, and understand from our teachings that the basis of economics is a simple subject, no matter how convoluted or confusing "those in the know" try to make it at times.

Still, the value of gold, as any other substance, is based simply on "perception".....whether or not it is perceived as valuable, useful, rare, common, and so forth. It's "price" will always be exactly what is perceived as the "right price" in the market. If it were perceived as more valuable, sellers would cease selling. If it were perceived as less valuable, the price would come down to a "sellable" level......etc. But when perception comes into play, whatever the "cause" of that perception, whether it be CB selling or manipulation (perception that there is more gold available than is actually the case), the "market price" of that gold remains a matter of the perceived value by the big players. Whether the current perceived value of gold has any basis in reality or not simply doesn't hold much importance to most, even though it is of significant importance to those of us who have experienced these markets in the past and "remember".....and those of us who have the funamental wisdom to understand that if there is no physical (natural) restraint in "money" creation, then eventually it becomes worthless. Which historical form of "money" has proven to have the best track record throughout the history of mankind without being inflated into oblivion ?

Any civilization's "money" at any given point in time has always been considered to be that which is "most liquid"......most "spendable". Right now, that happens to be "fiat" in every nation of the world. Still, gold is an extremely liquid asset, "tradeable" or convertable into fiat cash in almost any place on the globe, while the different fiat currencies may or may not be tradable for other local currencies at any given location. Government action (the printing press) can devalue ANY fiat in short order. Not so with gold. And this is one of the reasons for it being closer to a "universal currency", even in todays hectic and confusing financial world, than anything else available. That speaks volumes for it's continued status as a monetary asset.

The "paper game" continues to be just that....a game. But until paper holders finally understand the importance of having a "wealth basis" in the form of something that cannot be devalued or made worthless by government decree, something that has inherent "value" beyond what a government or corporation says it is "worth", then the dangers of living in a financial house built on a sand foundation continue.

In the end, I think the following generations will understand these values, understand history, and understand the simple basics that have always applied to economic structure. Hopefully, these understandings will come about before the lessons of the self destruction of the pyramid systems now in place rather than after. But as in all of nature, it will ultimately amount to the survival of the fittest and best prepared.

Just a few thoughts......

Cavan Mancanamami: Your "bottom line"#3797710/01/00; 11:46:21

".....if fiat doesn't collapse soon...."

That's an excellent point and one which I wonder about myself. In addition to MK, I know a very large bullion dealer. My friend there reports of many instances where younger clients are selling gold they have inherited from either parents or grandparents etc.

I do believe the time to bring back gold into the mainstream of public and general understanding is now and; better sooner than later for those who have an understanding of matters monetary. Mankind cannot function in a stable macroeconomic context indefinitely without the use of precious gold. We cannot exist in a monetary vacuum defying immutable natural laws. (My .02 for Sunday)

JavaManCavan Man, aunuggets, and canamami...#3797810/1/2000; 12:15:20

It seems that the question of the value/place of gold is (if I may borrow from FOA) localized to "Western thinking". The rest of the world has no question concerning the place of gold as a store of and demonstration of wealth.

From the beginning of recorded history, gold has held a special place that uniquely made it universally accepted because of its unique properties. I don't think one generation of politicians and economists who have decided, in their folly, to wage war on the noble metal have much chance of success of removing it from its proper place as the constant by which all things monetary are measured. Sure, they will win some battles, driving the perceived value of gold ever lower, but there is a connection between gold and human nature...both are immutable. To wage war on gold is to wage war on our very nature. How can such an effort ever succeed? I believe it is our human nature that actually endows gold with its value and power and neither one is going away any time soon and neither one will be denied.

nickel62Ramdom Musings from a long time gold bull.#3797910/1/2000; 13:00:03

I have to wonder if the upward valuation in gold that we are all waiting for will really ever occurr until the last western world central bank has sold it's last ounce. I think as long as these financial powers of yesteryear have the surplus in their hands they will continue to rig the price to whatever value most enhances their own interests. The newly emerging central banks of Asia perhaps have a different view toward their reserves but clearly the western worlds central bankers have little apparent interest in their gold reserves except as a means of achieving market manipulation when necessary to achieve other political objectives that they may have. If there is an awareness of the need for the asset that is no one elses obligation it is a seldom expressed sentiment and one which they feel they are still serving since as basically bureaucrats they can not possibly imagine that their contractual obligations with the bullion banks to return the leased gold might not be honored. The question then is how much of their 32,000 tonnes of central bank gold is still left to be disposed of? Is the 12,000 to 14,000 tonnes of leased and sold short gold that we have heard so much about from Frank Veneroso and GATA to be subtracted from this total? How much longer before it is all gone? Is there a correct way to look at the holders and say that a certain portion of the total of 32,000 tonnes will never be leased or sold? Or is that all impossible because of the nature of these things is that the laws will change if the need arises and perhaps it already has. For example has the US who is prohibited from selling it's 8,000 tonnes alread used it in a lease program to effect the same end? We are a talented bunch who have access to much information, academic and corporate as well as the various governmental reporting agencies, what is the current status of the overhang? Any thoughts or suggestions on how to get a feel? Does anyone know how the total purchases of gold for Central Banks is calculated and reported. We all hear endlessly and repeatedly about the sales but very little about the buys.
AristotleSteveH--engineers and dams#3798010/1/2000; 13:01:52

You'd be surprised how ingenious a group of engineers can be when their project is threatened. Pumps will do wonders to hasten flow when gravity isn't enough.

With the project completed, these pumps can be switched off. In that regard, certain elements (such as the leasing curbs) of the Washington Agreement should come as no surprise now that the euro has enjoyed its own ribbon-cutting ceremony.

Gold. Get you some. ---Aristotle

JourneymanBlunting the energy crisis? @Black Blade#3798110/1/2000; 13:07:35

Black Blade,

I used to heat with oil when I was much younger, and I watched prices closely, filling my tanks in advance when the price was expected to rise. Could it be that in anticipation of a price run-up, sharp oil users have stock-piled "on site" so to speak, and this might blunt the heating oil shortage?

Also many folks in my area have wood-burners. I clued my son into the coming price hikes in natural gas, thanks to you, and he's going to heat mostly with wood this winter. Perhaps such adaptations and others will further blunt the severity of the "crisis." That's how it's supposed to work, afterall!

Just hoping, I guess.


auspecAttention Republicans- GATA Supporters#3798210/1/2000; 13:27:18

Rabble-Rouser's Rant Re Reality of Rusty Rose
{This is an excerpt out of an ongoing Le Metropole Cafe chat.}

Sorry Robert, I couldn't stay away as have decided there is more to this issue than academic verbal jousting & poking fun. First the disclaimer- Have never met nor spoken to Bill Murphy so this piece is only my responsibility and not of any other Cafe member. The way we are going Bill & I may eventually meet as Amerikan politikal prisoners. Please bear with me as there is a tendency to exaggerate and have fun while writing on a serious topic.
This rant is in regards to the refusal of the Bush Camp to consider the issues of GATA and the foulness in current metal's market. Rusty Rose is in the political hierarchy of GWB and was the point man for discussing this issue. "Robert" is connected to RR in some way and acting as his apologist. I am an individual acting as an apologist for the GATA cause to bring to light issues that are of grave concern. I will exercise my freedom of speech until am no longer able.
Robert, I believe you are hopelessly blind and/or conflicted and trapped in a maze of CIRCULAR unreasoning. Wish you the best in your gold bullion and shares investments but there are more important aspects to the gold market and it's manipulation than just protecting ourselves and making money. I fear,for Bush's sake, that all his managers are not as dense and "stuck" as Robert and by proxy Rusty Rose. You were given a message that there is serious peril in the gold market and you chose to shoot the messenger because of your arrogance and dislike of some of the terms that were used, such as conspiracy, etc. You would have been wise to look for an element of truth in the message. Are these the type of people, that have the would- be President's ear, that allow semantics and ego to cause a dereliction of duties? Robert, so far we've got you to admit to manipulation, fraud, and "possible collusion", are you passing this along to your friend RR or are you going to stay in the closet. Wouldn't it be nice if W understood that there is possible collusion?
I have no plans to vote for the status quo. Someone besides RR had better take an objective look at this gold issue, and make intelligent appraisals. Don't the Republicans understand that they may soon be responsible for this issue? If not we may be simply choosing the least offensive of two four letter words, Gore and Bush. If W is BAPF {bought and paid for} let's get it out in the open for all to see, the sooner the better.
When looking at people like RR and his elitist ilk I personally see nothing but VOIDS. HEAD-lots of intellect but malfunctions because of arrogance and ego. SOUL- still looking. PRINCIPLES- get out the scanning electron microscope. HEART- cardiac arrest. LOWER LIMBS- only a vacuum present between them. EYES- Myopic. Would love to know PRIOR to election that George W stands for more than Goldman Suchs {typo}, and the current business as usual with our present form of crony capitalism. The rant continues...Robert, do you think you could borrow some cajones and take this message to RR or better yet, a responsible member of the Bush camp? I don't duel so don't bother challenging me, typewriters only. When Midas spoke of RR as an SOB he meant Same Ol Bureaucrat or possibly Same Ol Bill, both of which are more derogatory than what you had in mind. The scary part of RR is that he is a proxy for GWB. Robert Rubin, Rusty Rose, Rich Rulers, Require Repudiation {am starting to feel better already}.
In football terms it's the Raiders vs the Patriots. Time to join a team, get dressed out, and prepare to play. Helmets, jock straps, nor chest protectors are required for the Raiders as there is nothing in those locations to protect.
I'm nearly done and don't bother telling me this is a childish piece. There are huge issues at stake and the "gloves are off" as is appropriate. Robert, please look for this message to come full CIRCLE back to you like a boomerang because it will be posted on multiple internet sites with forwarding requests.
Friends of the internet, we can bring light to dark places. Please take this rant, a result of frustration w the US crony capitalism , and post far and wide. Let's bypass RR and seek out more responsible Republican leaders. Anyone else have access to GWB? A fair gold market is not too much to ask.
Gold Advocates, GATA supporters, fair minded political activists, honest people, & interested parties- Can you help flush some decay out of the gold markets? Support GATA, shun those who shun GATA, & use any influence you may have to force political parties to declare an allegiance to honest markets.

Hill Billy Mitchell@ RossL, the Supergrapher#3798310/1/2000; 13:56:41

Sir RossL:

Could we impose upon you to graph this:

If you think it would help to show on a graph you could multiply The Crude Oil price by a factor of 10 and the price of Gasoline by a factor of 100. I haven't thought this through completely. Maybe the price change from year to year should be expressed in percentages. If so I will redo this in percentages upon your request or you could do it. I think this would be very informative. Maybe not. What do you think?

Prices in constant 1999 US Dollars

POG Crude Oil Gasoline


1970 158.7514.49 1.59
1971 170.1814.52 1.50
1972 232.5913.92 1.44
1973 376.7615.41 1.51
1974 580.5725.34 1.93
1975 528.8125.09 1.87
1976 375.7925.86 1.84
1977 420.2624.98 1.88
1978 516.1924.82 1.79
1979 761.4331.41 2.23
19801,364.0548.63 2.78
1981 902.5368.78 2.71
1982 668.2056.51 2.31
1983 710.7049.16 2.08
1984 585.0246.85 1.96
1985 493.6641.70 1.87
1986 552.1922.12 1.40
1987 658.0425.87 1.40
1988 621.6320.93 1.35
1989 521.3124.34 1.39
1990 500.1429.17 1.51
1991 448.0423.56 1.41
1992 408.2521.75 1.34
1993 414.7418.66 1.28
1994 429.7716.77 1.24
1995 419.0917.87 1.25
1996 412.7021.62 1.31
1997 342.0019.49 1.27
1998 298.9512.51 1.08
1999 278.8816.56 1.16


Hill Billy Mitchell@ RossL - followup on graph request#3798410/1/2000; 14:18:26

Year to year price changes by percent in constant 1999 US$

POG Crude Oil Gasoline

1970 - - -


RossLHBM - Chart#3798510/1/2000; 14:49:00

The first chart is up. It looks like a nice correlation when I multiplied the crude price in dollars by 20, and the gasoline x 500.
I'm not sure why, but doing this reminded me of an old ZZ Top song called "Blue Jean Blues"

JourneymanThe pushers among us @Aristotle, ALL#3798610/1/2000; 14:50:05

Hi Ari.

I just stumbled across that great exchange in the Hall of Fame
started by your brave posts on "free gold." I re-read the
following, and I finally figured out why it had kept tapping me
on the shoulder during that great series of posts.

((People want to consume or to own now that which they
have not yet saved enough to purchase outright. They
are willing to mortgage their future productivity in
order to have their house today--they seek sources of
loans. Meanwhile, those that already have a quantity of
money are seen to seek a source of income from their
wealth...and banks come to be actively sought and
employed by both sides to act as the middleman.)) -Ari

I believe there is important context missing from the suggestion
that "people want to consume or to own now that which they have
not yet saved enough to purchase outright. They are willing to
mortgage their future productivity in order to have their house

I financed a car I really wanted when I was 21. I didn't like
the consequences of having to make the payments. The bumper-
sticker "I owe I owe, so off to work I go" became all too true.
I have never financed a car since.

I did finance a condo in Vegas -- and didn't like that either,
but there were extenuating circumstances: I put the money freed
up to good use at the tables, returning, in combination with my
hard work, in excess of 60% return per year.

I have NEVER financed anything else.

What's that have to do with modern Americans, in debt to just
their plastic to the tune of what? An average of $5000? It's my
contention that like marijuana, cocaine, heroin, ecstacy, scotch
and beer, borrowing is an acquired taste.

Psychologically, and I suspect genetically, "owing" is an
uncomfortable situation, and like use of the substances listed
above, it is a habit that must be acquired -- I hate to admit it,
but I _still_ don't understand how anyone can stand the taste of

When I was growing up -- yea, I know. That was way back in the
dark ages. When I was growing up, you only borrowed when you
were fairly desperate or to buy something like a house or car
that it would take a long tome to save-up for. Even so, the
practice was somewhat frowned upon.

We certainly wouldn't finance groceries or restaurant meals or
Ninetendo games. And with August's personal spending increase of
.6% in combination with a personal income increase of only .4%,
American's savings is at an all time low since they began keeping
track in 1959. SOMETHING has changed people's natural aversion
to debt, it seems. What?

This has all the earmarks of someone somewhere making huge money
from promoting the practice of borrowing. Kind of like drug
dealers. And once the practice is culturally acceptable, it can
become an epidemic like cigarette smoking. (Relax, I'm not
suggesting legislation or law suits - - - well, no legislation
anyway and no _government_ law suits either - - - as solutions
for any of these problems.)

I can't deny that some people would seek-out scotch on their own,
but many would find both borrowing and scotch unpalatable.
Without the promotion and "pushing," that is. Or perhaps it's
just pandering.

Who's doing the "pushing" or perhaps just "pandering?" Those
middle-men fractional reserve bankers of course.

There is the pump effect of constantly depreciating fiat
currency. You MUST put it in action every year just to overcome
"inflation." You give it to a "professional (you hope) gambler"
middle-man -- like the loan officer at your bank -- to put it in
action for you. The bank MUST loan that money -- since it must
pay you interest and make it's piece of the action as well. The
bank is therefore highly motivated to find ways to loan that

I have a friend who is alcoholic. He doesn't like the hangover,
but he continues to drink. For the longest time, he wouldn't
admit he got hangovers - - - maybe he didn't really know they
came from drinking. Or maybe it was easy to hide it from

He's now having symptoms that suggest stomach ulcers, which can
be the result of long-term drinking. What are the long-term
results of borrowing? What are the symptoms?

Anyway Ari, I think, for what it's worth, people normally avoid
borrowing and owing, but SOMETHING (or things) in the current
culture have overcome this natural aversion to debt.

Or can everyone just make 60% "interest" in the markets with all
the money they've freed-up by financing their condos rather than
saving for them?

Or am I just old fashioned?


Humble Pie Trail Guide / Hike To-day ?#3798710/1/2000; 14:50:05

I am waiting by the trail , But I have not seen anyone yet.If it is much later I'll have to get a torch.Does the European Delivery by CPM help keep Eagles out of harms way?Or is that just for Non-residents only? I don't feel that the govt would try to grab our Gold without first disarming the populace ,and that is going to not go down very easy.For anyone that likes to read get "Unintended Consequences" by John Ross a very Compelling novel about Govt.harresment.
tedwThe corruption of the American Dollar#3798810/1/2000; 14:59:01

Ive been reading about the corruption of the American dollar. Our courts are wretched.

If interested, read Justice Fields dissents in the money cases,knox vs. lee and Julian v.Greenman:

"From the decision of the court I see only evil likely to follow. There have been times within the mmemory of all of us when the legal tender notes of the Unite States were not exchangeable for more than one-half of their nominal value. The possibility of such depreciation will always attend paper money. This inborn infirmity no mere legislative declaration can cure. If Congress has the power to make the notes a legal tender and to pass as money or its equivalent, why should not a suffieient amount be issued to pay the bonds of the United States as they mature? Why pass interest on the millions of dollars of bonds now due, when Congress canin one day make the money to pay the principal?
And why should there be any restraint upon unlimited appropriations by the government for all imaginary schemes of public improvement, if the printing press can furnish the money that is needed for them?-Field,J.

Every Judge who ever supported these decisions should be impeached for violating his oath to support the constitution. The current Supreme Court and the Congress (for allowing it to continue) are a NATIONAL SHAME.

Hill Billy Mitchell@Supercharter#3798910/1/2000; 14:59:38

Fantastic how you get that out so fast. I don't think it tells us anymore than ZZTOP. Could you please, please try it with the percentages. TIA.


Also delete that ZZTOP chart. It will make us look like frolicking frauds.(Giant smile)

Hill Billy MitchellZZTOP#3799010/1/2000; 15:05:19


I remember listening to ZZTOP in the 70's. Thinking back thier music always made me feel cool but I never new why. For that reason I see where you are coming from. Our ZZTOP graph does make me feel cool but I do not know why.


AristotlejustamereBear and 'flation#3799110/1/2000; 15:06:01

It was over a year ago at the forum that I confessed my ill favor for use of the terms inflation and deflation because they mean different things to different people--a condition that disrupts effective communication between the parties.

I treat the 'flation terms as applying to the supply of something (such as currency), not the price levels of something. In this regard, I certainly agree with you--"Deflation is a much meaner beast." A shrinking money supply tends to wreak certain havoc given our society's propensity to write contracts and to function on the reliable performance of these same contracts.

You indicated--"Leading up to Y2K, the US gov't printed some pretty huge amounts of cash, in case of trouble. Earlier this year they tried to sop up some of that, and the rate of money growth fell."

In truth, the physical money printing did nothing to affect the monetary supply. It simply sat in a vault until it was called upon to serve one-for-one in the place of the intangible yet spendable dollars that existed only as entries on bank ledgers prior to depositor withdrawal. Any growth in the money supply that you've seen would not be a result of this printing operation, but rather from additional borrowing (outpacing loan payback) that was (among other reasons) probably stimulated by the Fed's quick triple reduction of interest rates following the Russian default and LTCM meltdown in late '98.

Then you said--"However, as early as May last year, looking primarily at the money supply numbers, I began to wonder if the US had in fact switched from exporting inflation to importing DEFLATION."

My brain is wired to think this through in terms of supply, so I interpret this as saying that as of May, we might not be shipping our excessive dollars abroad, but are instead doing something that I can't possible get my mind around--that we are bringing in a shrinkage of dollars??? I have a feeling you are referring to price levels, not supply in your current usage of this term "deflation." Care to elaborate?

Since I don't know how long you've been reading here at the forum, to catch you up quickly on my view of all of this is that the trouble comes as the rest of the world turns from being a dollar borrower to a primary loan repayer. The resulting stall in the growth of the dollar supply leads to the climbing external exchange rate currently being seen for the dollar against other currencies--making it ever more difficult for these countries to service their past debts. So what do they do? They strive to roll out of these dollar obligations and into euro obligations instead.

That's all I have time for. I promised my father that we would grill steaks today, and I'm nearly running late to keep that appointment.

Gold. Get you some. ---Aristotle

RossLHBM - another chart#3799210/1/2000; 15:06:05

The percent data chart is up now. To all, please post your impressions of what all this means.
JourneymanWill gold hold value @canamami msg#: 37975#3799310/1/2000; 15:28:20

Sir Canamami,

Will gold hold it's value if fiat doesn't collapse soon? No problem --- fiat HAS been collapsing, regularly and all around the world.

Even here, in the west. How's the value of the Canadian dollar holding up? Even the mighty ;> U.S. dollar is dropping year after year. 1% to 2% (even admitted by the jiggered official figures) "disinflation" is STILL inflation.

That's the wedge in the door for redeemable digital E-currency on the internet first, then on plastic accepted in every swipe machine on the planet. -Speculation not for investment purposes (thanks Wolavka for the format!)

In the rest of the world -- Korea, Philippines, Thailand, India, Russia, Brazil, Ecuador, etc., people know the dangers of fiat --- and they'll pass it on at least to the next generation. Hyper-inflation is something you don't forget easily -- ask the Germans.

It's only here in the west, and particularly America, that we're so lucky to be stupid about fiat dangers. Unfortunately however, history and current events both strongly suggest that lucky stupidity won't last.


JavaManHello Journeyman, re: your msg# 37986...#3799410/1/2000; 16:27:39

I think you're on to something there regarding the threshold of tolerance to debt. I've been thinking about this lately myself and have concluded that much of this is probably the result of inflation. Couple inflation together with the "modern" attitude of "I deserve an SUV today" and, presto, you've got debt and, by golly, the banks are all too happy to accommodate them.

Inflation has been quietly eroding the purchasing power of many and they don't realize/care that they should adjust their spending/saving habits accordingly. In addition, I'm afraid the majority of the people in this country no longer possess those "old fashioned" requisite character qualities i.e. discipline, humility, common sense, etc. that would otherwise enable them to steer clear of the trap and, consequently, they stumble into the abyss. Certainly, they will be the ones who wail the loudest when they are forced to confront the reality of their circumstances. (Over) spending way up...personal savings at an all time low...yeah, that's real fashionable.

Hill Billy Mitchell@ RossL Re: percent changes chart#3799510/1/2000; 17:21:57


Thanks again.

What do we see in this chart.

First a few comments about the chart.

a) The price changes are expressed in constant 1999 US$

b) The price changes are year after year, and not cumulative from 1970

c)We do not get any sort of trend indication here because we are looking at one year at a time rather than over several years.

d) When we are looking at constant dollar prices we are looking at real changes in prices and the truth of what is happening becomes more clear or should I say, much less murky.

Just at first glance I see three facts in particular:

1) The real price of GOLD was much more volatile than crude oil for the first 15 years; then CRUDE OIL became more volatile than GOLD for the next 14 years while the price of gasoline at the us retail pumps was fairly level over the full 29 years. Strange when you look at these constant dollars that the retail price of gasoline in the US appeared to be refined from from something other than crude oil, for the retail price was not violently affected by the wide volatility in the price of crude.

2) Because the chart only shows the real % price change from one year to the next, about the only conclusions we can draw is that the comparative volatilities are distinctly different and that change in the price of CRUDE OIL has only a very small effect on the changes in the price of GASOLINE at the pump. Duh! we already knew that.

Now in my next post I will give the tables which I have been groping for for several months. I promise you that they will be quite revealing and more worthy of Sir RossL's talents than any which have been so far been submitted by me. The tables will follow in the next post.


Solomon WeaverOut of town but not out of mind#3799610/1/2000; 17:39:30

Just dropped in to read up on the trail and say hello to all my friends.....

Poor old Solomon

Hill Billy Mitchell@ RossL Re: charts#3799710/1/2000; 17:49:27

Sir Ross:

This is the chart we have been looking for. Much comment can be made upon these facts.

As Abraham spoke unto the LORD, "Sir, behold now, I have taken upon me to speak unto you which am but dust and ashes, oh lord, let thou not be angry with me. Peradventure wilt thou just this last time put up my worthy tables in chart form. Shall not the judge of all the charts and grapths do right?

Of course you will notice if you re-read the account of Abraham's encounter with God, that he had the audacity to come back again with continual requests after intimating that each request would be the last.

Cumulative Real Price % Change Yearly from 1970 to 1999
----------Expressed in constant 1999 US$--------------------
---------POG--Crude Oil-Gasoline

1971 7.20%,0.19%,-5.57%
1972 46.51%,-3.94%,-9.47%
1998 88.31%,-13.68%,-32.27%
1999 75.67%,14.30%,-27.05%


RossLMore charts#3799810/1/2000; 18:24:22

This one requires more explanation than the last one...
miner49erTrail Guide (9/30/2000; 20:17:31MT - msg#: 37946)#3799910/1/2000; 18:37:14

Trail Guide - first, thank you for your compliment the other day regarding my posts. I receive the compliment with genuine humility. Second, you said "we must talk." To this I smiled, and said, "No, more appropriately, I must listen."

Thank you also for taking the time to respond to my inquiries. And as is usually the case, when a question is well answered, it leads to additional questions.

The first comes from one of your foundational posts: FOA (2/28/2000; 10:18:13MT - msg#8)

It has to do with the U.S. coming to the understanding that they could effectively use the vast under-valuation of oil as justification to print more dollars. You mention first: "it was obvious they (USA) were pegging dollar printing to oil prosperity," and next: "the new found prosperity from cheap dollar oil was being used to justify mountains of dollar debt. As long as a barrel of oil could be used to produce more relative real wealth than the dollars used to buy it represented, dollar inflation worked in the only political measurement that counted. 'An increase in the standard of living!'"

Finally: "In the eyes of our official thinkers then,,,, For the local US economy to mature we needed to get off the gold standard,,,,,,,, get the world to accept fiat dollars backed by oil,,,, and find more oil that could
deliver triple dollar value for every dollar we paid!"

My question is how prevalent was this understanding? Was this something that was at least "kind of" understood in Congress, or was this something that just floated around State? I ask this not out of irrelevant historical curiosity, but because I want to understand if U.S. oil/energy policy had/has any long range purpose, something that, even if only in academic appreciation, transcends the contemporary whims of any given Administration.

First my interest was piqued when I came across a paper by Matthew Simmons ( called The Oil World: 1973 Compared to 2000. In it there was an interesting paragraph regarding a possible acquisition for our SPR:

"This complacency was best illustrated in 1969 when the Shah of Iran visited the United States to attend the funeral of President Eisenhower. After the funeral, he visited with President Nixon who had just assumed office. In this meeting, the Shah proposed that the United States consider creating a strategic petroleum reserve in our depleted salt dome caverns, and offered to sell the United States a 10-year supply of Iranian crude, totaling 1 billion barrels, at a fixed price of $1 per barrel. After a six-month debate, the Nixon Administration decided there was no merit to the idea and politely declined the Shah's offer! How times have changed!"

I will assume the historical accuracy of the statement, as Mr. Simmons is a little more up to speed on oil than I.

If indeed official "thinkingdom" was conscious of its ability to tie dollar expansion to future productivity on the basis of cheap oil, in effect using oil as backing for the currency, was this a) a blunder of gargantuan proportions on the part of our politicians, b) in some intriguing way, a calculated step, c) a decision we were not free to make as others were already calling our shots, or d) none of the above?

To c) I want to add that I think it is important to point out in the political sphere, we are not, and have not been for many years free to make decisions on behalf of our country. "The borrower is servant to the lender." And although we were still a "creditor" nation in 1969, the vast expansion of our dollar caused us to have to tread on eggshells around those who held these dollars. If we did something, albeit in our sovereign best interests, that should cause panic to the holders of these dollars, and bring about a sudden repatriation of them, we would have quite a time on our hands. E.g., I think part of our reluctance to build a strong defense throughout the years of the Cold War was out of fear of scaring or angering the Europeans who were so graciously holding our dollars in their central piggy banks. Europeans who had to live with the bad breath of several hundred thousand Soviet troops breathing down their neck on a daily basis.

If at least in the hallowed halls of the State Department or U.S. Treasury think tanks, we grasp the realities of your assertion, then I would imagine that this has been conveyed to President Clinton. This brings us to the analysis of this Administration's energy policy.

Many say that this is easy - there is no energy policy. I am not so quick to make that assertion. It may be the case. It may not. They may have a policy, and it may be very misguided, or very self-interested. It may be guided by hands outside our government, not in so much a subversive way, but as a result of the very, very real truth that we are not our own; we are servants of our creditors.

My take on Clinton:

He is not stupid. He is very capable of distilling what is essential in a matter, and grasping a working knowledge of complex subjects. He surrounds himself with people who know what is going on. Unfortunately, he is too concerned with himself, and has too many favors to pay back that he cannot operate in the national self-interest. Consequently we have come to where we are now over the past 8 years. He uses his intellect, and charisma to advance short-term goals, chiefly to make Bill Clinton look good. But above all he hates to lose. This legacy stuff is just a smoke screen. He's perfectly willing to let people think that this is what he is concerned with. But he hates losing, and will ultimately do anything to win.

This is part of his success - just when you think you have him cornered, as his only option left is something unthinkable, be careful, if it can be thought, it may very well be done.

On this score, it is important to have some idea of what he knows about dollars, oil, and gold. I suspect, that while not a master of details, he has a working knowledge of the essential matters. I suspect that our energy policy is more or less ad hoc, for no other reason than this type of person does not concern himself with something until he must, because he is quite capable at coming up to speed quickly. Unfortunately, this does not work well at this level. As good a reason as any why he will be viewed in retrospect as a bad President. Ad hoc policy, dictated by a person that cannot lose will result in catastrophe. The important thing here is if he has a good grasp of the inter-workings of some of this, he might pull some incredibly clever maneuvers that outfox his opposition for a little while. This will look good to the masses at home that vote, but will only create a more agonizing destruction in the end.

For instance, I don't think the 30 million barrels are ever going to leave the SPR. Already it is being downplayed, and the timeline is being pushed back until after the election. But the desired effect was achieved: political gain. Did it tick off the Saudis? Perhaps, but I think the message also has gotten through to them that this is political wash. So while the Saudis may be affronted, they are not overly concerned. I feel they too have come to understand the type of man they are dealing with. Again, to see him as a horny old clown building a legacy is foolish, and a recipe for loss if you are a political opponent of his. He will be glad to let you think that. He is intelligent, and ruthless. And he hates losing!

Part of the announcement may have been a "touche" for being backed into a corner on Euro intervention. If there is anything to the assertion that higher fuel prices hurt us less than Europe, and could serve to weaken the Euro by causing some destabilization there politically (blockades, riots, etc.), as I mentioned in my post (9/22/2000; msg#: 37234), then just when things were getting good, the Euro block says: "Ok, if you want to play like this, we will ask you once, politely, 'Please intervene on behalf of the Euro.' They do this while holding a big golden club over our head… sort of like TR's talking softly but carrying a big stick.

Clinton knows he's lost this round, so he opts for intervention. He knows we are ultimately servants to our creditors. But he won't go down without a fight. And remember, Bill Clinton must win (not necessarily the U.S.).
By making the 30 million gallon pronouncement, he pressures the Euroland governments to do the same. Their people say, "see the U.S. did it, why not us also. And by the way, if you don't, how about lowering fuel taxes?" And since people when they start to panic are not likely to really "get" the fact that oil producer supply is not the issue, the desired effect is achieved. The Euro gains a few cents before leveling off, but the political problems of having to explain to your angry constituents why you don't open your SPRs are there for them to wrangle with, especially during the next round of supply shock tremors.

This I believe is a losing game, but the strategy is to discredit the Euro in the eyes of oil producers by destroying it politically on its own turf. The dollar somehow must remain the means of oil settlement. It is one of the last desperate arrows in our quiver, but desperate people do desperate things.

To bring this back around to where we started. I would like your opinion and elaboration on how fully we appreciated what we were doing in "pegging" dollar production to future oil based productivity back then. If it was well-developed strategy (even if very hidden), then it should have passed down in somebody's notebook to the current heads in the thinking rooms today, and would be influencing our Administration's actions. If not, then I fear our energy policy may be even more untethered than has been suggested.

Just opinions… I may be way off base, but it seems plausible to me.

I have other questions, but will ask them at a later time, unless you just say, "who is this guy? I wish he'd just go post at Kitco or something." [no offense, Kitco!]

Thank you for reading this,

Cavan ManNikkei#3800010/1/2000; 19:24:55

Currently well below 15.6. Markets appear terribly weak to me. At relatively high valuations, markets cannot tread water; they must move up. If not, action will be down. To me, that's common sense. (That's all the sense I have.)
Hill Billy Mitchell@ RossL (10/1/2000; 18:24:22MT - msg#: 37998)#3800110/1/2000; 19:38:13

Sir Ross

Re: More charts

No need for more charts tonite.

You are a veritable genius. You have hit the bulls eye.
That chart is worth a million words. I have much to say about it but would be content if our worthy forum contributors beat me to the punch. Gold looks mighty fine against oil and gasoline and I'll bet a host of other "Core of engineer" items.


Hill Billy MitchellThoughts on the current Interest Yield Inversion#3800210/1/2000; 19:45:46

Thoughts on the current Interest Yield Inversion:

I was reading an article in "Barron's", July 3, 2000, by Jacqueline Doherty, entitled, "Déjà Vu?"

A comparison was drawn between the current period of Fed tightening, so called, and "the last time the Fed slammed on the economic brakes."

The following is an excerpt from the article:

"Pundits often compare today's market with the 1994-95 period because that's the last time the Fed slammed on the economic brakes. Greenspan & Co. increased the fed-funds rate seven times, pushing it from 3% to 6%, between February, 1994 and February, 1995. Recall that after a lackluster 1.4% gain in 1994, the S&P 500 shot up 37.6% in 1995."

"In the current tightening cycle, the Fed has sent interest rates higher six times, but the moves weren't nearly as dramatic as 1994's. Fed funds rose from 4.75% in 1999 to the current 6.5%. That's a 1.75 percentage-point increase - far less than the three percentage point rise that doubled the fed-funds rate in the mid-1990's."

The whole point of the article was that market pundits expect stocks to take off when the Fed finishes, pointing to the fact that that is just what happened in 1995. Doherty does cover some the basis as she paddles in the water. The point is made that economic conditions are different now than they were then, ie. Inflation was not the threat that it is today, and that this cycle has not caused the pain of an Orange County type bankruptcy or the Mexican crisis.

What the writer fails to point out is that the Mexican crisis and Orange County were not brought on by the Fed but were only coincidental. When governments belly up a lot more is involved than a little tightening by the Fed.

The real important point is that in the 1994-95 scenario the yield curve never even came close to inverting. As we have said before when long-term rates fall below short-term rates, or better said, when short-term rates are forced above long-term rates by Fed action (an anomaly that only happens when the Fed causes it to happen) the end result is economic recession.

During 1994 Long Bonds averaged 7.34% while the Fed Fund rate averaged 4.06% and an average positive spread between these two rates of 3.15% resulted.

During the period of March 22 thru July 13, 2000 this rate spread turned negative and averaged a negative .33%. Political considerations to the contrary, this persistent inversion is ominous. An update on this situation reveals that the average negative spread from March 22 thru Sept. 26 has grown to .48%.

The spread has dropped in the last couple of weeks to the mid-.60% from a peak of the mid-.80% range.
As long as the Fed holds the line in this range and the long rate does not react logically by turning this spread right-side up we have great danger of a recession next year and if this plays out as it seems to be doing with much help from fuel supply problems, etc. stock prices will not "shoot up" as they did in 1995.

Stock prices go down, not up, when those in the know anticipate an economic turn-down. We are on the edge of a cliff and so many factors are coming into play that short of a miracle the US economy is going to plunge over that cliff.

Might want to convert some of that paper into some physical before the critical last two Tuesday's of October.


Hill Billy MitchellTHE CHART#3800310/1/2000; 20:02:27

@ RossL (10/1/2000; 18:24:22MT - msg#: 37998)

What do we have here?

1) The "REAL" price of Gold has done better than either oil or gasoline during the last 29 years.

2) The price of Oil and Gold go up and down in tandem in the long haul

3) The real significance in the price of gasoline at the retail pump has much more to do with delivery costs and governent imposed taxes on each gallon. Delivery costs, I say, including the cost of refining, inventorying, shipping to the retailer and of course supply and demand timing problems.

After seeing the above link-ed graph, I "dug up" a few eagles for perusal.

Centinnial can help you folks who are still considering accumulation at these bargain basement prices.


Solomon WeaverTRAIL GUIDE a few thoughts to you from an old philosopher#3800410/1/2000; 20:09:03

Trail Guide

I have been very busy in the world of creating genetic probes and medicines.(Selling things worth more than $1 million per ounce, by the way) so I have not read the forum much.

I repost a couple items and then ask you to ponder.....ponder the impact of the digital marketplace....perhaps oneday you might post on the trial how you think those digital thunderclouds will behave...creating floods that destroy...or waters that nourish...

Trail Guide (8/26/2000; 19:16:31MT - msg#: 35569)

Well, Cavan Man, one of the toughest problems investors have with following the Gold Trail stems from their perception of how our modern dollar money values things in the market place. I, we, all of us have discussed this extensively. Often from a somewhat different view than mine.

From my interaction with people of various far reaching world backgrounds, one thing is clear: Investors and regular workers with a Western slant do not grasp what wealth is. Overwhelmingly they see their currency and paper investment portfolios on an equal footing in value with the same
"real things" that raise our living standards. Yet, in real life, they cannot be equal because these paper assets are only an exercise able future claim on our "real things in life".

In this larger sense, after rereading my post to him,,,,, one can see where the entire dollar world itself has become a "futures pricing arena" that "undervalues" almost every real usable item we function with in daily life. The dollar asset system, as we know it today is used as a value setting
tool even though it,,,, like gold futures,,,, does not entail the removal of real goods from circulation.

Western society and Western influenced investors cannot grasp gold's value because they mentally must denominate it into currency first. To do this they turn to the "market place" as the undisputed tester of values. But, as shown above, our market place uses a currency system that is entering the end of it's timeline and therefore can no longer measure "things" on a simple supply and demand
value basis.

Trail Guide (08/28/00; 20:35:52MT - msg#: 35674)

When Joe buys one of five apple from the table of a vendor, he leaves only four apples left on the table to be bid on by the next buyer. This ages old act of "hard trading" demonstrates the whole human interaction with supply, demand, need and emotions. When the next buyer sees that only four apples are left, where there were once five, whether he likes it or not his mind will consider the above supply and demand possibilities. All the while personal need and emotions mix in his brain.


When we look at the average Joe....I think that we have to realize that more and more...that average Joe is living in a world where the "market" in anything is "leveled" by the internet (instantaneous digital connectivity). It is absolutely amazing that given the very large level of growth in the internet, that we have not yet seen the real emergence of "cyber cash" (a verified money which can be used anonomously) nor of "cyber currency" (a verified and trustworthy currency which is not a national fiat). My opinion is that Governments all over the world are strongly resisting the emergence of a fully enabled "cyber market".

Now lets look at the brain and emotions of the average Joe....

1. He goes to work and gets his "check"...which is usually a number on a piece of paper....or even an automatic deposit.

2. He wants the relationship between that number and the real things he can buy with it to be stable enough that he can buy what he needs, and save the rest. If the momentum is against him (prices rise) he wants to see a bigger number on his little piece of paper each month.

3. He uses a bank to keep these little numbers in, and wants to use a bank which will either issue him little colored pieces of paper which he can spend anonomously for small things, or will let him write down numbers on a piece of paper which the "sellers" of a good or service will accept because they need these number transfers to run their own businesses.

4. He has noticed over the years that computers move more and more of these numbers...and this is usually convenient.

5. He has never used a gold coin to pay for anything. And if given a gold coin as a "bonus" by his employer, he would probably be happy to sell it for some more numbers.

Now Trailguide..........

It is probably true that the creation of the Euro as a "transnational" money is drastically restructuring the way the global asset game is played.....and I too believe that it can dislocate the dollar....but, as the turmoil begins to settle in, we can begin to expect one thing to happen....

The creation of a trustworthy "cyber currency" by a large pool of corporations who are looking outside the banks for a stable currency to hold assets (the insurance world could be a big part of this). Since the "pooling" of capital always requires the "liquidity" of "ownership change", a "unit" of value is created...and that freegold..or perhaps even tied with able to trade against all other currencies....

Some might think that such a "cyber currency" could reduce the "need" for gold...but perhaps the very fact that this currency could rapidly gain worldwide status (far surpassing dollar and euro) would speak for a major role for gold in the "basket of real goods" that support the cyber currency.

It is my opion that no matter how well thought out the plans of oil dollar gold and Euro are, the power and interests of the masses will be spoken to through the cybersphere......why.....just imagine where the world goes to when most of the highest technologies from computers to modern medicine ask for payment in these new units. We are already almost there......the little shift we need is for people to simply abandon their own currencies....Europeans are being asked to do this officially, and Americans may need to do it soon unofficially.

And just like some folks were there to structure the internet...some will be there to structure the new world capital market.

Trailguide....if you decide to comment on this general issue of cyber influence..please do it on the trail...since I am not at the forum much now.

Poor old Solomon

714The Danes bite back...#3800510/1/2000; 20:10:19

"The countries of Europe used to fight wars with each other, and if you think that was ages ago, drive a few miles south from where I live in Brussels and look at the graves.

Look at those neat white crosses and you can see only too well why the leaders thought they should push the continent in another direction - towards harmony, towards ever closer union.

But the fact is that times have changed, memories have dimmed, and people are unwilling to be led.

The greatest message to come out of Denmark is the simplest: the European Union - in all its guises - is perceived to be outside democratic control.

It does things to us that we do not have any obvious way of doing things to it. Very few of us get the chance to make this point in a vote - the Danes seized their opportunity.

I don't think they've harmed the euro and I don't think they've done their own economy much good. But I do think they have done something much more far reaching. They have, in a dramatic fashion, kick-started the debate about who is in charge in Europe. In that they have done us all a service.

MariusJourneyman: Borrowing vs. saving#3800610/1/2000; 22:07:07


I agree that, in some respects, borrowing is an acquired habit, but I'd like to also suggest there are powerful, built-in incentives to borrow rather than save. I take my own example as a case in point.

I was raised in a strict pay-as-you-go family. My parents instilled a strong anti-credit bias in me, and with the exception of some modest college loans, I lived debt-free until I married in 1981. As my income and family situation became more complex, I began paying more attention to tax laws and acting in ways that seemed to be advantageous: I bought a home, financed cars, accumulated credit card debt, all the while writing off the interest on our taxes.

Even though inflation was gradually reduced in the '80's, the rate of inflation still exceeded the pittance in interest we could earn on savings. There was simply no rational incentive to save.

That all changed with the 1986 Tax Reform act. We were suddenly unable to itemize, and it took us years to recover from the sudden reversal of incentives. Already in debt up to what we could reasonably expect to service, we were suddenly, at the stroke of a legislative pen, on the hook for another $12,000 (over the phase-in peroid for the changes) or so we didn't have. There was no way, continuing to work in our (then) current jobs, we could make ends meet.

I eventually quit my job, started a business, and took advantage of the Schedule C in order to get out from under. It took about 5 years, but we eventually got back to being in the black.

My point in all this is that our behavior seemed rational, in light of the various incentives--it wasn't that we WANTED to live life in debt, but government provided the rationale via the tax system. During that period of time, I revisited the study of economics, and realized that this bias toward debt by our government was pure Keynes. He theorized that savings were a "leakage" from the monetary system of "inputs" and "outputs". Money, in Keynes' paradigm, must be spent and re-spent to the maximum, in order for the system to avoid recessions.

I guess the lesson in all this is that, as Tricky Dick said: "We're all Keynesians now". (Caveat: at least Nixon bit the big one before the bills came due!)


Black BladeRe; Journeyman post #37981#3800710/1/2000; 22:43:57

Journeyman: I see where you're coming from here. I remember when I was young that my grandfather did the same thing. He would fill his tanks in anticipation of rising prices as winter approached. I am not sure if this has changed over time and I imagine that many, even though warned about heating oil shortages, still put off filling their tanks hoping and praying that all will be well. It is a classic example of Aesop's fable "The Ant and the Grasshopper." That is human nature. The wildcard of course is will it be a warm winter, a normal winter, or a colder winter. We have had a few consecutive warm winters during the El Ni--o years. The El Ni--o cycle has passed, and we could at the very least be facing a normal winter. However, we still may luck out. Irregardless, the heating oil supplies in the New England states are down 45% from last year. The heating oil stores in the rest of the country are also far below last year's levels. The SPR oil is not going to help. First, this is loaned oil that must be swapped with oil plus an additional amount of oil at some future time. The problem isn't a supply of crude oil, it is a refinery capacity problem. Although supplies of crude are tight, the refineries are running flat out and also by delaying scheduled maintenance, this situation becomes even more dire as refinery workers health and safety become issues. Secondly, there is the issue of profit margins. Can a refiner take on the added risk of borrowing oil that is not needed, and refine low margin heating oil as compared to higher margin distillates such as diesel and gasoline? Maybe if the turn around is quicker perhaps. But if that is the case, then why not just refine heating oil from current crude production instead of taking on additional costs and unnecessary risk? I think that we could be in danger of a serious heating oil shortage, but as I have stated before, no one has really picked up on the coming crisis in natural gas. For some reason, natural gas has not shown up on anyone's radar screen as far as being a serious issue. However, look at how NG stocks and energy mutual funds have performed over the last year. The Wall Street pundits and analysts have really missed the party on this one. Everytime they set a price target for petroleum and distillates, the price has soared past. Recently there has been a short reprieve as the gullible accept that the government leaders have it all under control. We have heard that story too many times in the past.

BTW, I always pay in cash. I hate debt. I remember seeing relatives being hounded by debt collectors. I find that to be too humiliating. I buy everything with cash only. I save and invest every week with the philosophy that I get paid first and buy only what I can afford. Besides, I say screw the banks ;-)

Hill Billy MitchellFilling tanks in anticipation of price increases#3800810/1/2000; 23:01:08


I have done this with propane. Also have enough fire wood for two winters. However; I do not believe that such a significant amount of this is being done to have the affect which you suggest. From my observation post the vast majority have no money, no savings, no excess cash to do this and though they are, as you say addicted to borrowing they wouldn't even consider borrowing to beat fuel price increases. They only borrow to satisfy their appetite for goodies. I am afraid they will be begging bread some day.

I am not guessing here. I know a lot of people, a great cross section of them and I know of no one who would borrow money just beat the price increases of fuel. The only folk that I know of in general who have savings are elederly and have been left behind. I can't even have an intelligent conversation with those types, my father included. They cannot bear the possibilities and are in a total state of denial. For what it's worth.


PS: For those of you who would disagree with me on this and would cite yourself as an example, I would say, that your like me, an exception to the general rule. Exceptions to the general rules do not move markets, they only capitalize on them.

Hill Billy Mitchell@ Black Blade Re:Post #38003)#3800910/1/2000; 23:09:50


Click on the link. I am sure this chart would be of great interest to you.

Also your great effort to inform us is greatly appreciated. Especially on the fuel situation.



Black BladeRe: HBM#3801010/1/2000; 23:51:37

Those are interesting charts. I don't have access to my data on the POO and POG over the last several years, but I seem to recall that the POG lagged the POO by about 6 months to year, probably as a result of the effects of the higher POO working its way through the economy. Also, the last three recessions were followed by a sharp increase in the the POO, which was good for gold. I have just read a couple of new articles on GE that discuss the POG manipulation. As I look at your graph on perct change, I notice that the POG has broken it's usual pattern with respect to the POO. Interesting. Murphy's GE/GATA article was interesting that it had refreshed in my mind what most of us already know about POG manipulation, but it is well worth reading and setting things into focus. The link above is fromm theminingweb and is a short article on Nick Goodwin's SA Gold picks. Notice that the heaviest weighting is in the unhedged producers. I have a small amount invested in the Old Lexington Goldfund (now Pilgrim - LEXMX). I really did not pay much attention to the fund over the last couple of years since I hold only a modest amount in it. I notice that the largest position is in both unhedged miners and physical gold. It looks as if there may be a trend developing here. When the institutional Gold fund money goes to physical and highly leveraged unhedged miners, maybe - just maybe, we could be ready to experience a run on the POG in the near future. Note that Tocqueville and Vanguard Gold funds have similar equities holdings. Just a thought anyway. Thanks to you and Ross for the graphs.
Strad MasterHere's another one...#3801110/2/2000; 0:18:26

Here is tonight's Stratfor Intelligence report. Despite what they term a few "dark clouds on the horizon" they tend to be endlessly optimistic. I'd appreciate any knowlegeable commentary - especially from our dear friend Trail Guide. Many thanks.

Since petroleum is the key industrial mineral, without which
nothing works, there has been an economic consequence to the recent
rise in prices. The most immediately perceptible consequences,
however, have been political. Oil prices, which caused civil
disobedience in Europe, are now a centerpiece in the American
presidential campaign. Prices raise concerns about Asia's ability
to recover from the 1997 crash.

Embedded in the concern over oil is a deep, dark fear: Will the
rise in prices so disrupt the global economy that it will tumble
out of control and into a general depression? Certainly, higher oil
prices cause pain. But the real fear is whether these oil prices
will be the nail in the coffin in the expanding global economy. In
the back of everyone's mind is this question: Are we about to
experience 1973 all over again?

The 1973 Arab oil embargo created a massive price rise and economic
dislocation, from Tokyo to Paris to Chicago. The explosion in oil
prices ushered in a decade of "stagflation" in which inflation
soared while economies stagnated. By the end of the decade, the
United States experienced double-digit unemployment, double-digit
inflation and double-digit interest rates. For Europe, the
situation was worse. Even Japan, in the early stage of its
economic explosion, experienced derailment.

What few people remember is that the 1973 oil shock did not usher
in the stagflation period. It may have accelerated it and
intensified it, but the slowdown was in the works for quite a
while. President Nixon had imposed price and wage controls before
the 1973 crisis. The United States was in enough economic trouble
for the president to impose unprecedented controls on the economy.

What drove the global economy toward stagflation was a set of deep
structural and cyclical problems. The first of these was
essentially demographic. The global population explosion following
World War II took place as people entered a period of family
formation -- a time when consumption is highest and savings is
lowest. This wave of people created tremendous pressure on
commodity and money markets.

Then came an inevitable cyclical event. The massive post-war
expansion that began in the early 1950s was about a generation old.
By the late 1960s, it was, not surprisingly, out of gas. The time
had come for a cyclical downturn. Coupled with the demographic,
structural reality, a cyclical shift turned into a massive
economic, social and political dislocation.

Deep cyclical and structural patterns magnified the effect of the
oil price rise in 1973. Without these other factors, the prices
would not have had the effect they had. Alternatively, the rise in
oil prices would not have been possible. It could not have occurred
after the 1967 Middle East War. But it could take place in 1973,
because of a general rise in commodity prices; the rise in oil
prices was at most an exaggeration of something that was happening

Today, the real issue is not oil - not any more than it was in
1973. The real issues are the structural and cyclical forces that
underpin the economy. By themselves, oil prices are not
definitive. They are merely part of the general operating pattern
of global economies. The structural pattern remains in place, with
positive and negative consequences.

In the case of the former, the same demographic factors that
created stagflation in the 1970s are now creating powerful patterns
of capital formation, particularly in the United States. Much focus
has been on the very narrow measure of savings rates, which are at
a historical low in the United States. This measure ignores
aggregate and personal capital formation rates. The boomers are in
a period of low consumption and massive capital formation, fueling
tremendous growth in the capital markets.

That means that net worth-and even liquid net worth-is rising.
This inevitably depresses savings rates, since saving from current
income while net worth expands dramatically is unlikely.

Now, some ominous long-term clouds are out there. The first is that
the boomers cannot maintain this capital formation for more than
another decade at best. Indeed, they will begin liquidating
holdings at some point. At that point, capital markets will start
imploding, slowly at first and then quite suddenly. But that time
is not now.

The other very real cloud is this: The rest of the world does not
share the American boom. Asia is certainly not participating.
Europe shares in it only fractionally and unevenly. Russia is in a
massive depression. In short, while the aggregate global picture
remains structurally positive, when you break the picture down into
its component parts, you see that American expansion makes up for
much of the world's deep structural problems, which do not yet
parallel those of the 1970s.

However, there are some serious cyclical problems. Many people have
asked, "When will the bull market end?" By most definitions the
bull market ended many months ago. In some cases there were massive
declines. In others, there has been stagnation. But the period in
which all global markets reached new heights has been over for
quite a while.

The stock market is an important element, snapshot and, above all,
an important precursor of the economy. In that sense, there are
clearly cyclical problems.

Consider the following cases:

*United States: The Standard and Poors 500 hits 1553.11 in April
and has moved sideways since then, closing at 1436.51 on Friday,
about six months later, a decline of about 7.5 percent. The Dow
topped out in January, showing a similar pattern and decline.

*Japan: The Nikkei topped out at 20833 in April. It closed on
Friday at 15747, about its low for the year, a decline of nearly 25
percent. It was at nearly 40,000 in 1990.

*Hong Kong: The Hang Seng reached its high for the year in April at
18397.97. It fell below 14000, rallied to just below its high and
then plunged again, closing at 15648 on Friday, a decline of about
15 percent. Unlike other Asian markets, the Hang Seng did recover
from its 1998 lows before beginning the current decline.

*Singapore: The Straits Times Index peaked at 2582.94 in January,
and closed Friday at 1997.03, a decline of about 23 percent.

*Germany: The DAX fell from 8136.16 in March to 6798.12, near the
yearly low. This is a decline of about 8,4 percent, but like the
American markets, coming off historical highs.

*France: The CAC index has gone from an all-time high of 6367.25 in
September to 5944.77 on Friday. This is a decline of 6.6 percent,
but over a very short period of time.

*United Kingdom: The FTSE index peaked in late December at 6930.2,
moving sideways mostly and closing on Friday at 6294.2, a decline
of about 9.2 percent.

An extremely consistent pattern shows itself. Global markets have
begun to move down on a cyclical basis. From a long-term
perspective, this is not a big deal. After all, the American and
European markets, having risen extraordinarily for years, are more
than overdue for rest and regrouping. The Asian markets, however,
save for the Hang Seng, have failed to recover from the 1997
battering. Their structural problems remain untouched.

Thus we see the following three results:

*We are moving into a cyclical downturn on a synchronized
basis. Everyone is going in the same direction pretty much at the
same time. The downturn may be shallow-a mere sideways movement-in
the stronger economies. These cases may simply be a slowdown rather
than a recession.
*The structural de-synchronization remains in place. Asia's
cyclical downturn is a resumption of a long-term downtrend. The
United States cyclical downturn represents an interruption of a
long-term up-trend. The same may be true for Europe.
*Increased oil prices will therefore have disproportionate
effects. More vulnerable, Asia will be hurt more than the United
States. Europe, for social and political reasons will make more
noise than the United States, but still hurt less than Asia.

But the world's cyclical and structural shifts are not coinciding.
We expect, therefore, that oil prices will not affect the world as
they did in 1973, nor will they be sustainable for a decade. They
may participate in a cyclical downturn and some will blame oil
prices for the downturn. But equity prices already reflect this
downturn and have for about half a year on a global basis. Oil
prices will affect the depth and length of a downturn, but are not
the cause.

Instead, a weakening will occur across the globe, one that gives
the United States and Europe a healthy breather, but hits Asia very
hard. Russia will benefit marginally from increased oil prices, but
its deep structural problems are political rather than economic;
Russia will be cast further out of the international system.

In other words, for all the sound and fury, there will be a
slowdown or even a recession, but it will not be the end of the
world. Not for a while, at least.

SteveHHBM#3801210/2/2000; 2:00:02

Your chart that strikes my fancy is the one that you multiply out gas by 500 and oil by 20 to match gold. It shows that gold has been a leading indicator to oil and gas in all periods from 1971 through 1998. Oddly, 1998 oil would seem to have taken on the leading indicator role (maybe) but we must wait to see if gold will follow oil and whether oil will continue to rise. If it does, the pressure on gold prices would seem to be unbearable and gold will either follow or break. The correlation is so high that it is clear oil and gold are tied at the hip.

It would be interesting to see where the dollar fits in on this chart. That too would be an interesting correlation to make. I suspect that the dollar would follow oil and the divergence would be gas, oil, dollar up, gold lagging.

This is most significant because gold's role as a leading indicator has changed most recently. I suppose one could say that if gold doesn't carry oil, then let oil carry gold. Too early to tell, but my guess is if oil rises, gold will follow. I sense that the charts don't extend into 2000, but if they did the divergence would be even greater. Oil above 40 on the X 20 chart would be a great divergence, and as it is now, at 30+, the oil line would be at 600. The pressure on gold to rise must be tremendous now.

GATA, of course, would probably love to see this chart into 2000 for it would clearly show any anomoly such as "manipulation" or divergence quite clearly.

SteveH1996#3801310/2/2000; 2:22:19

Mid-1996 by HBM's charts shows where the run on paper gold started. Previously there was a three or so year hiatus on any downward gold prices and oil dipped and rose to match gold. Suddenly in mid-1996, gold started a dive for which there has not been a return. Then in Mid-1999, oil started rising causing an unusual (20-year) divergence whereby gold no longer was the leading oil rise indicator.

This divergence would not have been noticed as a trend until around the end of 1997. It was at that point that Another started posting to Kitco. It was at that point that the LBMA became a more transparent body. It was at that point that the gold investment market went to hell in a handbasket. And it would seem that the oil for gold deal was in serious jeapordy.

SteveH2001#3801410/2/2000; 2:36:19

Based on HGM's X 20 X 5 chart, $600 gold should be $30/bbl oil. Oil is $30/bbl and gold is stuck at $270/ounce. For gold to hit $10,000 per ounce, oil would have to hit, by his chart, $500/bbl. $60/bbl oil would be $1200/ounce gold though. $60 seems closer than $500.

Let's ask, does the concept -- based on HBM's chart above -- of gold and oil breaking from their last 20-year correlation seem likely over the next two years, if oil levels at $30/bbl? If oil rises to $40/bbl? If oil rises to $60/bbl. What events would likely to occur at each of these levels that might pressure gold higher? At what point would gold not be able to be held back any longer? What event(s) would cause it to become unstuck?

Black BladeHigher Petroleum, Higher Euro,and Gold just sits there. #3801510/2/2000; 2:41:46

Looks like Petroleum is on the move again tonight! The Euro is slightly higher against the dollar. Gold is up only $0.30. S&P Futures are higher +4.70.

Natural Gas5.29+0.104+2.01 %
Heating Oil0.942+0.0164+1.77 %
Crude Oil31.3+0.46+1.49 %
Unleaded Gasoline0.8575+0.011+1.3 %

So much for Al Gore's SPR oil releases.

wolavkaGolden wheat#3801610/2/2000; 4:16:05

Going to fill gap @ 285.

not investment advice.

wolavkaWHERE'S THE BEEF? Milk!!!!!!!#3801710/2/2000; 4:28:06

It's not gonna be in Michigan, they found TB in cattle.

No Milk either.

justamereBearAristotle#3801810/2/2000; 4:43:23

I type with one finger so it is very slow. I decided that a missive to you should also be of benefit to the rest of the gang, with some background and more detailed description than you need. I spent all the time (except for the 15 minutes or so needed to discover your post and to pick it up, and an hour or so for lunch, etc.,) till now, composing a reply.

When I say it is somewhere out there in the ether, but not on my computer, I hope you will understand when I say I will get back to you later.


Financial Post - Canada, Sep 30, 2000

Any film lover knows that Mafia dons are not keen to keep their money in the bank. They prefer to stash their cash -- often in the form of gold bars -- at the bottom of a deep well. Alas, any mobster holding precious metals for the past 20 years has lost money on his investment.

"Investment demand for precious metals has really dropped," says George Parrill, director of ScotiaMocatta, Scotiabank's precious metals division. "In days gone by, when people heard about a catastrophe around the world, people would come in and buy gold. You don't see that now.

"Times have changed," he adds. "People started to say, 'Why should I buy when I know the price is just going to come down again?' Those that are looking for an investment just to make some money ... obviously, you do it a few times and if it doesn't work, then you don't do it again. There are too many other investment alternatives these days."

Back in 1980, gold prices reached a zenith of US$850 an ounce and silver soared to US$50. Those heady days, when eager bullion buyers lined up outside the main branch of Bank of Nova Scotia in Toronto, are long gone. Ten years ago this month, gold was sold for about US$389, while silver fetched an average of US$4.80. Recently, gold has traded around US$273, and silver at about US$4.90. Nevertheless, metals aficionados are still out there.

"Those who buy bullion certainly don't advertise it," says John Ing, president of Maison Placements Canada Inc. "They buy bullion for investment, security -- some of them store it in safes or safety deposit boxes, some of them bury it in the back yard. But it's not a big group of people."

Adds Mr. Parrill: "Some people feel that gold is better than money. A lot of it is given as gifts, especially in the smaller denominations."

The most popular gold bar sold at the bank is the one-ounce size. The bank also sells five-ounce, 10-ounce and 400-ounce bars. Silver bullion is sold in small denominations but the biggest sellers are 50-ounce and 100-ounce bars. Coins and certificates are also popular.

Despite years of depressed prices, Mr. Ing -- a long-time gold booster -- believes that now is the ideal time to buy. "There is no doubt that we have seen the lows and prices are going to go up," he said. "Gold remains a barometer of investor anxiety, and there has been little anxiety about the North American markets in the last five years."

That will change, he says, because the economic boom in the U.S. is overshadowing the country's heavy debt. When the U.S. dollar suffers an inevitable correction, Mr. Ing contends, "gold will prove to show its intrinsic value again." Then again, some advisors were predicting gold and silver would turn around 10 years ago.

Black Blade: How flattering! To be compared to a Mafia Don or an extinct species. The bottom has to be

Black BladePetroleum Going Higher!#3802010/2/2000; 7:12:14

Petroleum still marching on!

Natural Gas5.33+0.144+2.78 %
Heating Oil0.9505+0.0249+2.69 %
Crude Oil31.54+0.7+2.27 %
Unleaded Gasoline0.8575+0.011+1.3 %

ETThe Euro#3802110/2/2000; 8:05:26

From the article;

"A British millionaire Eurosceptic last night said he would follow up the
Danish "no" campaign by sponsoring a wave of polls across Europe to
give voice to doubts over the single currency.

"Paul Sykes, who recently rejoined the Tory Party, helped to fund the
successful 'no' campaign in the Danish referendum which has sent
shockwaves across Europe.

"Mr Sykes, a Yorkshire tycoon, who paid for full-page advertisements in
the Danish press, called on William Hague to commit the Tories to holding
a referendum if they won the general election.

"He told The Independent on Sunday that he would be paying for polls in
the UK and other European countries on the euro next month, and if the
UK parties failed to provide a referendum, he would consider financing
one himself.

"I am hoping we can settle something. I am moving on and doing polls,
but we cannot leave the euro to the political elite. I want the people to
have a say," he said."

SteveHThe link#3802210/02/00; 08:31:40

Hill Bill Mitchell and ORO,

The link that keeps gold and oil together, what is it? How is it managed? What would happen if oil broke the link or that oil was priced out ahead of gold and rose apart from gold? What would the stress point be in the link?

Think gents?

SHIFTYBlack Blade#3802310/02/00; 08:42:13

Black Blade (10/2/2000; 7:04:21MT - msg#: 38019)

You left off the end of your thought. You said:

Black Blade: How flattering! To be compared to a Mafia Don or an extinct species. The bottom has to be


USAGOLDAnother Anti-Gold Diatribe/These Things Are To Be Expected#3802410/02/00; 09:14:13

The Financial Post article is not surprising inasmuch as it is the lead newspaper for country which has essentially sold off its gold reserves while its currency tanked and allowed socialism to run rampant through a crumbling economic and social system. I wouldn't suspect the top newspaper in a country with that sort of background to encourage its citizens to own gold for obvious reasons. I would expect precisely what we got -- another anti-gold diatribe.

Mr. Ing tried to set the record straight. He sounded very much like I do during press interviews, or used to, before I realized that most of the press will do to a gold advocate exactly what they did to Mr. Ing -- bury his positive message under the most negative and demeaning headline conjurable. I agree with Mr. Ing that the market for gold is as a portfolio hedge, but this is nothing new. That's always been its primary market. It is the mainstream financial press that tries to position gold as an investment then rant obsessively about the fact that it "hasn't gone anywhere." All with the sole aim of trying to keep the public in paper and out of gold. Take that away from them, as Mr. Ing has tried to do, and they go to one of the major anti-gold trading departments to find a gold trasher. These rants usually ramp up as the financial system labors under great stress -- as it is now -- and that something major in the negative might be brewing.

There was an interesting editorial by Charles Krauthammer publised in the Rocky Mountain News this morning detailing to what extremes the press has slid to the far left. A full 89% of Washington bureau chiefs voted for Clinton in 1992 -- a margin of victory so lopsided, Krauthammer says, it is "rarely seen this side of Syria." He goes on to talk about the New York Times manipulation of the news in the current election, in which that newspaper's bias is so entrenched in favor of Gore, that he called one headline the sort of thing "Pravda used to run for Breshnev's presidential campaigns."

I think we should simply understand what we are up against here, and that just because something appears in blazing headlines doesn't necessarily mean its the truth. My apologies to my Canadian friends. What I have described briefly above is an unfortunate reality.

USAGOLDOn the "Options" to Gold:#3802510/02/00; 09:32:29

I wanted to also make a point about the "options" to gold which are essentially currency options, or securities denominated in those currencies.

Which ones would the Financial Post recommend?

Euro denominated?

Dollar denominated?

Aussie dollar denominated?

How about Canadian dollar denominated?

Note that none are mentioned because all those options reduce to one -- the domestic currency competing with gold. Nearly all currencies worldwide are inflating against real good. In other words, they are being debauched.

The world's stock markets have been sideways to down for over a year now, and domestic inflation rates have taken the real rate of return in yield investments to at or below zero in most economies -- and that's using government numbers, not the real numbers. When will the press wake up to what's going on in the equities' markets worldwide? My guess is its not going to happen -- even though the obscure handwriting on the wall sharpens with age and public understanding. I think we should start preparing for some shocks because it appears that evil brew is bubbling that not even the sorcerers in the press can conjure away.

When you strip away the veneer and reduce this thing to a simple reality, the real reasons for diatribes like the Financial Post's become all too clear and that adds up the real reasons for the attacks on gold, gold advocates and gold owners.

wolavkaBoring#3802610/02/00; 11:08:17

Time to have some fun!!!!!!!!!!
Hill Billy Mitchell@ SteveH Re: #38012, 38013, 38014, and 38022#3802710/02/00; 11:16:41


Sir, I am unable to give a good response to your posts at this time. Maybe tonite I can respond fully. I would like to disclaim the X20 X5 chart. I do not think that the chart gives us apples with apples. I may be wrong but I must have time to study it. Sir RossL took my tables with real $ numbers and came up with the chart. It is not my chart or numbers. See my post # 37989 where I asked Ross to delete the X 20 X 500 chart. The reason I asked him to delete it was because I was afraid it might not have proper integrity and therefore subject the prior charts to question. The cumulative percentage change chart, the last one put up and the one at the top of the page is the one which, I believe, has integrity and does not in any way distort the facts. I am not saying that Ross's chart does not have integrity, I am just not able, at this time, to give it enough study and thought to give a favorable opinion. Possibly ORO, or someone out there could give an opinion on manipulation of the numbers in that fashion and being able to draw valid conclusions from it.

Very respectfully


wolavkaMARGIN CALL#3802810/02/00; 12:10:32

JavaManJourneyman, a followup from yesterday...#3802910/02/00; 12:14:16

From the link: << NEW YORK (CNNfn) - Sharese Long and Storm Mansell have two cars, a third on the way, and a ton of debt as a result. They owe $10,000 on credit cards. The crush of payments is hampering their plans.

"My husband and I are deep in debt, and we are so young," Long, 22, stated. "We're trying to buy a house, but it seems like an impossibility at the moment."

All told, they owe around $58,000. They've financed close to $35,000 on their used Chevrolet Blazer for Mansell and a new Mitsubishi Galant for Long. They have a PT Cruiser on order, which they also plan to finance. They have $10,000 in consumer credit on their plastic.

"Our debt is our main concern," Mansell, 21, admitted.>>

JavaMan: And they have a PT Cruiser on order!!!

BeowulfJavaMan#3803010/02/00; 13:56:58

It seems they have their priorities out of order.

From the article:
" a friend was mugged, an earlier car of theirs was stolen and they've had a stereo taken from their Blazer."

And they want to get a PT Cruiser? There nuts. Buy and old beater car for under $1000 and pay it off.

"At the moment, he is a database developer making around $35,000 at Severn Trent Services. The new degree could boost his income to $50,000-to-$70,000, the couple figures."

Don't you just love their terms here. He is betting on getting a raise but doesn't have it yet and he goes out and buys two NEW cars. Dumb is all I can say about that.

RS@ Javaman, Journeyman, ALL re: personal debt in America#3803110/02/00; 14:07:19

I've mentioned in months past on this forum a nationally-syndicated radio call-in show hosted by Mr. Dave Ramsey, originating from Nashville, Tennessee. (
Mr. Ramsey is a financial counselor who advises to "get out of debt".

I seldom have an opportunity to listen to the show, but on almost any day you can hear horror tales about the debt-load some people are carrying that will curl your hair.
Many of the callers are younger, but not many are also "old enough to know better".
It isn't unusual to hear a caller tell of credit-card debt equal to their annual family income.

I have always had an instinctive fear of debt, and that has led me to notice how casually many people seem to regard borrowing.
What I notice most often is an attitude that borrowing for both necessities and luxuries is considered to be a normal, even natural aspect of life. I've often heard the comment that "if you don't borrow, you will never own anything".

Coupled with this is the all-too-common belief that, after years of economic "expansion" and apparent prosperity, it will ALWAYS be that way.
Many seem to believe that after several years of "labor shortage" and the ready availability of jobs, that employment is somehow a certainty.
Younger people in particular seem to feel they are entitled to a certain level of comfort and material wealth. I have known people who borrow for vacations, year after year.

It's my personal belief that this is a natural consequence of inflated fiat currency.
There, but for the grace of God….

RSoops! correction.... (10/02/00; 14:07:19MT - msg#: 38031)#3803210/02/00; 14:10:18

should read:

Many of the callers are younger, but many are also "old enough to know better".

YGMExposing The Main Players in Gold Scams....."BANKERS"#3803310/02/00; 14:57:29


Moneypulation (Money Manipulation)...

This page is dedicated to exploring the hypothesis that a club of rich international bankers has infiltrated the monetary supply systems of many countries, and through the Federal Reserve banks in the U.S., to promote their own agenda of maximizing their control of worldwide assets. A less conspirational hypothesis contained here is simply the possibility that the Fed has an unnecessarily adverse or constricting effect on the U.S. economy, which could be solved through "money reform" or "alternative money" systems.
These files and links have been painstakingly collected from all over cyberspace in many hours of research and surfing so you don't have to hunt them down yourself. They've also been meticulously reformatted, organized, and summarized so you can find the presentation and angle that is most appealing and makes the most sense to you.

***Very comprehensive study......YGM.

R PowellWords from Peter Berstein#3803410/02/00; 15:04:08

Interview with Peter Bernstein, author of "The Power of Gold".
YGMLink Again....#3803510/02/00; 15:06:16

If I knew how to capture link from address bar I might not make so many errors when retyping to link bar for forum...
Sorry as usual....YGM.

TownCrierSirs Hill Billy Mitchell and RossL#3803610/02/00; 15:07:30

Unless I've missed the thrust of your efforts and intentions, for a visual comparison there is no harm done by applying a uniform scaling factor to a set of data. Its akin to making separate graphs with vertical axes chosen at various scales to facilitate a reasonable overlay.

Hope this helps.

YGMR Powell#3803710/02/00; 15:12:53

Thank You..

Excellent find....Back to my reading of it...Regards..YGM.
RossLSir HBM#3803810/02/00; 15:14:35

I believe the POG - Crude x20 - Gasoline x50 chart is valid. All the data reflects prices in 1999 dollars. Using a different scalar for each data set retains the percentage changes in the data. I don't see the need to delete the chart. I believe it shows a good correlation, as SteveH has mentioned.
HipplebeckSo you want to know what evil is?#3803910/02/00; 15:34:38

Do you want to know what evil is? Evil is when you flood the world with dollars so that you may rip off weaker countries and then when they catch on you blame inflation on them.

Evil is when you pretend to extend debt relief and pretend to feel sorry for the weaker people who are actually your victims.

Evil is when you lie so that you can cheat the elderly and the infirm.

Evil is the lust for control

Get it?

JourneymanCopying from the address bar @YGM#3804010/02/00; 15:35:08

If you're using windoze with netscape or explorer, simply right click on the address. It will darken, indicating it has been selected and the standard drop-down menu will give you choices, one of which is "Copy." Choose Copy, and you're off to the races.

If you're using another operating system or browser, naturally, the above may not work.


YGMTest....#3804110/02/00; 15:40:51

Thanks Journeyman....almost as simple as I am....Regrds...YGM.
HipplebeckWhat? you want to know more?#3804210/02/00; 15:51:11

How about bombs in the name of humanitarianism?

How about planting mines?

It is so embarrasing to be a human being sometimes. Are we stupid or what?

Please tell me I'm not the only one who sees this.

Hipplebeckhalf drunk heading towards the full monty#3804310/02/00; 16:01:10

I can't be the only one who knows that it is a great struggle for all of us to just retain some little semblance of dignity.

We,as a group, for our whole lifetime have been unable to avoid war. Is that dignity?

Our highest goal these days is to be able to build a business that exploits our brothers so that we may be rich. Is that dignity?

The true challange for real men is not to succeed in the material world but to succeed in the spiritual world.

The material world is easy if your needs are modest.

The challange is in the morals

Hipplebeckplease tell me there are others who hear me#3804410/02/00; 16:02:45

Hill Billy Mitchell@ TownCrier # 38036 and RossL#3804510/02/00; 16:07:54


If I am not mistaken the X 20 / X 50 chart, is based upon the prices expressed in 1999 dollars. The final chart, the cumulative real price chart, was constructed from the same tables with the price changes over the 29 year period expressed in the accumulated percentage of change in constant 1999 dollars rather than digital change in constant 1999 dollars. For this reason I believe that the final chart gives a very accurate picture of the price change relationships between Gold, Crude Oil, and Gasoline. My hunch that the X 20 /X 50 chart does not give an accurate picture is, in my opinion,confirmed by the fact that the picture presented by the graph does not match the graphic picture revealed by the chart with prices expressed in the percentage of price changes in constant 1999 dollars.

Of course my position is based on the premise that the cumulative real price chart is accurate. If that premise is wrong, then of course I would be wrong. If anyone sees a flaw in my premise please point out the flaw either in the numbers or in the reasoning. I am only interested in the truth of the matter. It seems to me to be a critical indicator assuming we can all come to a consensus as to what the chart is telling us.



Hipplebeckplease tell me there are others who hear me#3804610/02/00; 16:12:40

Look at the indignation we have when we consider that there are foriegn countries trying to influence our elections and then consider what we are openly doing in other countries
Journeyman"The people" DIDN'T want to abandon gold -- it was propaganda @YGM, Aristotle, T.G., ORO, ALL#3804710/02/00; 16:17:52

"It has been said that the draughtsman who was employed to write
the text of the Fed used a text of the Aldrich bill because that
had been drawn up by lawyers, by acceptance bankers of European
origin in New York. It was a copy, in general a translation of
the statues of the Richsbank and other European central banks.
OBLIGATIONS. Dr. H. Parker Willis had been employed by Wall
Street and propagandists, and when the Aldrich measure failed-he
obtained employment with Carter Glass, to assist in drawing the
banking bill for the Wilson administration. He appropriated the
text of the Aldrich bill. There is no secret about it. The test
of the Federal Reserve Act was tainted from the first."
-Congressman McFadden, remarks to Congress, 1934,


P.S. And thanks to YGM for the link. I normally wouldn't post this because the source is so vague. However, I remember seeing this decades ago with a more convincing pedigree. YGM, if you know these folks, they need to get their sources firmed up -- it's hard enough for modern government-school grads to read (billy-boy just made a speech admitting 45% of them can't), let alone believe the Federal Reserve is an agglommeration of private banks foisted on our ancestors by tactics that make even our billy-boy seem chaste.

Cavan Manhippleback#3804810/02/00; 16:33:35

I see it and feel it.
Cavan ManHill Billy Mitchell#3804910/02/00; 16:35:22

Dear HBM: For all the poor, dumb Irishmen among us (present company included), can you tell us what all this charting and scaling business is leading up to? Many thanks...CM
Hipplebeckplease tell me there are others who hear me#3805010/02/00; 16:37:36

Is it just me or does anyone else feel funny when Barney Frank is explaining morals to the American people
RossLcharting and scaling#3805110/02/00; 16:37:49

The two charts can both be accurate while telling a different story... If a picture of the absolute price relationship is desired, the it would be inaccurate to employ the different scalars on the data. If a picture of the price trend relationships is desired, then the different scalars are called for to try to match the curves.

Statistics. who was it that spoke that famous quote?

Hipplebeckplease tell me there are others who hear me#3805210/02/00; 16:38:06

Is it just me or does anyone else feel funny when Barney Frank is explaining morals to the American people
JavaManHipplebeck, I hear you brother...#3805310/02/00; 16:45:03

I recall the lyrics of a rock song from the 80s(?)..."I'm not sure what it is that I must have, so I guess I'll just take everything." Don't remember the name of the band.

Morals, you say. And where does one learn of these morals today? What is the basis for them? Who/where are the leaders and role models that are living examples of morality?

Look at the example of morality Clinton has set for the country and the world. Look at the example congress has set by failing to convict on his impeachment. It's the economy and the almighty dollar that is worshiped today, my friend. Had the economy turned down prior to his impeachment, he'd be toast. If the economy heads south in the next 4 weeks, Al Gore will be burnt toast.

Whoever wins the election may be appointing three or four Supreme Court jurists and dozens of federal judges. The implications of this could be enormous for our country.

RossLCavan Man#3805410/02/00; 16:45:27

You may wish to review the comments by SteveH this morning. The charts quite conclusively show a past positive correlation between the price of oil and gold. This correlation has changed in the last couple years. Feel free to speculate on the importance of this data.
JourneymanI hear ya @Hipplebeck#3805510/02/00; 16:50:44

I hear ya, Sir Hipplebeck. And may the @#$%%&^ scum rot in ****.

Unfortunately, most of the folks in countries those D.C. criminals mess with don't distinguish us citizens from the eliteist lame-brains who promulgate these things.

"We the people" will bear the brunt of any retaliation. Just as did the at least 200,000 Iraqis killed in lieu of their hated Saddam - - - who probably didn't miss a single meal.

And as did at least 7,000 Serbs in lieu of their hated Slobodan Milosovic.


If you've got the stomach, check out the link in the header for the hazards we Americans may face as a result of those who claim to be our leaders meddling in other people's business.


Gold Trail UpdateThe Gold Trail Discussion has been Updated#3805610/02/00; 17:03:29">The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
AristotleJourneyman and the Power of the People#3805710/02/00; 17:05:03

On your post yesterday about general attitudes toward borrowing, I'm sure you'll agree that much evidence attests to the notion that your aversion to taking on debt puts you in the minority. No, you're not old fashioned; just some happy combination of prudent and wise.

On your latest post, I'm still sticking to my guns that the People get what the People want over the course of time. Addressing your comments on the unseemly crafting of the Federal Reserve System, I ask you, why have we not yet seen a successful referendum to abolish the Fed during all these intervening years or a plague of constant attempts to do so?

Also, although it was not his intent to do so, ORO in his Saturday post ( msg#: 37908) showed indirectly the power of the people to direct the course of action. He wrote--

"It should be no surprise that the manner of operation of the power grubbers would be chaotic and their understanding and knowledge limited. After all, they are in their field of work because they feel unable to compete in the market; where people have the choice of turning them off. There are three major types, the charismatic leader, the machinating social climber, and the professional negotiator and analyst. ...
The charismatic leader says whatever will further his popularity and endow his public persona with the requisite halo, teflon, etc. though within the limitations of deals cut with the machinators and with the help of the analyst and negotiator. What his words mean is something that is often lost on him, these are mere formulae to elicit the desired responses from his surroundings.
Analysts and negotiators may be able to explain to some of two other types what it is they are saying, but will be relegated to subsidiary roles because of this ability. They are perpetual outsiders who do not see the "big picture"; meaning that they DO SEE A PICTURE of consequences and do not view the world through mirrors as does the charismatic, for whom the big picture is his reflection in the crowd's mind, nor through the "brownie points" scores tallied in the political game, where the big picture is which politico controls whom and how much he owes. Because of this, the analytical side is completely disilusioned fairly quickly..."

This was a lesson Tolstoy taught me years ago, and it has been very difficult to shake it off--as with most things that ring with truth. But having said that, the debate remains wide open, my dear friend.

Gold. Get you some. ---Aristotle

Hipplebeckplease tell me there are others who hear me#3805810/02/00; 17:07:02

Li Po

my hero for the night

Hipplebeckplease tell me there are others who hear me#3805910/02/00; 17:13:18

I saw Greenspan laughing today. I think it's because he heard someone on cnn say something about a rate cut.
Hipplebeckjourneyman#3806010/02/00; 17:16:25

thank you
Hipplebeckjavaman#3806110/02/00; 17:17:39

thank you
Hipplebeckjavaman#3806210/02/00; 17:23:38

One of the things that bugs me the most is that there is a delay in all things and that Clinton will get credit for the great times, and the next guy will get the fallout. If I borrowed to the hilt and showered all my friends with presents, and then passed that bill on to the next guy in line, who would look the hero to a nearsighted bunch?
Sometimes reality sucks. There must be a spiritual balance in the big picture, or it's all for naught. yes?

Peter AsherHippleback, CavenMan, Journeyman, Javaman#3806310/02/00; 17:25:18

All of that is so true and it has taken on a new meaning and impact today IMO.

I have thought, in the hours since I first saw this, how in some ways much of what we discuss here is far away from what is most importent.

Hipplebeckcavanman#3806410/02/00; 17:25:22

thank you
JourneymanThings are always simple --- once you know how they're done! @YGM#3806510/02/00; 17:34:27

I wasn't born knowing how to copy from the address bar either! And I didn't know how to drive - - - till I learned!

I don't know how to dredge gold - - - I'm sure from your viewpoint that's a lot simpler than it is from mine!

Regards, j.

HipplebeckMK and anyone else concerned#3806610/02/00; 17:43:19

thank you for your patience with me, I go to cry myself to sleep
TheStrangerThe Power Of Gold - Must Reading#3806710/02/00; 17:44:32

See the link above for an interview of Peter L. Bernstein, author of the new book "The Power Of Gold".
TheStrangerThe Power Of Gold Link#3806810/02/00; 17:45:57

AristotleFrom FOA's latest on the Gold Trail -- this is as concise and articulate as you will find anywhere#3806910/02/00; 17:47:50

"Expose a market dynamic that is delivering in your favor by taking more than can be supplied? You don't! You allow the broken system to expose itself first, then you move on. ...
The Washington Agreement was a signal as to what side of gold the ECB was on."

Buying Gold at lower prices over the years is easy and painless when done from a position of understanding. I feel that the trepidation that remains for most people who have gained the requisite understanding is that they lack confidence in their resolve to hold such a "losing position" (as the media is wont to remind them frequently) as is necessary during this time just to ensure you have it through the inevitable turn at the unknowable fateful moment in time. I hope this brief statement helps build both the additional understanding and confidence that some people may have found absent to individually guide them toward prudent portfolio adjustments.

Gold. Get you some. ---Aristotle

HI - HATHipplebeck#3807010/02/00; 17:50:19

The birds have their nests ; The foxes have their holes ;
The son of man has no where to rest his head.

Cavan ManPeter Asher#3807110/02/00; 17:55:31


My wife told me this morning of a video originating in the last 24 hours from the Jerusalem area; a 12 year old child was killed while standing next to their parent as it all was captured live; probably on CNN. Meanwhile, the pontificating and politicizing (sorry, spelling) continues.
How does 50K children dying per year in Iraq grab you for starters?

We were both in tears for a mere instant at 8:30 AM.

We're not at war???

ETKurt Richebacher#3807210/02/00; 18:06:20

From the article;

"So what is ailing the euro? Three things: statistics, perceptions and
propaganda. The main argument for dollar strength and euro weakness is
the perception that the U.S. economy is going from strength to
strength because it is enjoying peerless productivity gains from
vastly superior investments in the new information-technology. We have
seen that the apparent, big technical gap, suggested by the official
statistics, results overwhelmingly from the use of extremely different
yardsticks for computer output and investment. Hedonic price indexing
is grossly exaggerating the rate of U.S. economic growth.

"That' s the underlying fact. But in addition there is something that
plays perhaps the most important role in having created the glowing
perception of unprecedented American economic superiority, and that is
the enormous fuss that American propaganda has made of it. We hasten
to add that the person who has done far more than anybody on Wall
Street in this respect is Mr. Greenspan. While hardly ever mentioning
words like credit, money or debt, his speeches about the U.S. economy
abound with three words: technology, innovation and productivity.
Somebody noted that in his last 10 speeches, he used these words 281
times. In his most recent speech, at the Kansas City Fed's annual
symposium, he explicitly repeated again that Continental Europe has
benefited much less than from the new technology owing to a lower
level of high-tech capital investment and inflexible labor markets."

auspecRepost of GATA Support Message/Rant#3807310/02/00; 18:21:41

Rabble-Rouser's Rant Re Reality of Rusty Rose
{This is an excerpt out of an ongoing Le Metropole Cafe chat.}

I couldn't stay away as have decided there is more to this issue than academic verbal jousting & poking fun. First the disclaimer- Have never met nor spoken to Bill Murphy so this piece is only my responsibility and not of any other Cafe member. The way we are going Bill & I may eventually meet as Amerikan politikal prisoners. Please bear with me as there is a tendency to exaggerate and have fun while writing on a serious topic.
This rant is in regards to the refusal of the Bush Camp to consider the issues of GATA and the foulness in current metal's market. Rusty Rose is in the political hierarchy of GWB and was the point man for discussing this issue. I am an individual acting as a supporter {apologist} for the GATA cause to bring to light issues that are of grave concern. I will exercise my freedom of speech until am no longer able.
I believe some are hopelessly blind and/or conflicted regarding overlooking the fraud that has been transpiring for years in the gold and silver markets. Wish them the best in their gold bullion and shares investments but there are more important aspects to the gold market and it's manipulation than just protecting ourselves and making money.What paradise do you hope to live in once you make your fortune, but are stuck in a place no longer worth living. Free markets are becoming an idea of ages past. Bush's man, Rusty Rose- elitist insider, totally dismissed the GATA message of manipulatio, collusion, fraud, & conspiracy in a blatant act of "messenger shooting".For Bush's sake,I hope that all his managers are not as dense, and arrogant as RR proved himself to be. He is completely satisfied with his status quo and not particularly interested in investigating any of his peers. Republicans, RR,you were given a message that there is serious peril in the gold market and you chose to turn a blind eye because of your arrogance and dislike of some of the terms that were used, such as conspiracy, etc. You would have been wise to look for an element of truth in the message. Are these the type of people, that have the would- be President's ear, that allow semantics and ego to cause a dereliction of duties? Wouldn't it be nice if W understood that there is possible collusion? Maybe I'm a hopeless idealist thinking that one party might be interested in cleaning up a mess largely created by their rival political party. Are we that close to the "point of no return" with this once grand exrperiment, the USA? I have no plans to vote for the status quo. Someone besides RR had better take an objective look at this gold issue, and make intelligent appraisals before it becomes too large to masticate and swallow. Don't the Republicans understand that they may soon be responsible for this issue? If not we may be simply choosing the least offensive of two four letter words, Gore and Bush. If W is BAPF {bought and paid for} let's get it out in the open for all to see, the sooner the better.
When looking at people like RR and his elitist ilk I personally see nothing but VOIDS. HEAD-lots of intellect but malfunctions because of arrogance and ego. SOUL- still looking. PRINCIPLES- get out the scanning electron microscope. HEART- cardiac arrest. LOWER LIMBS- only a vacuum present between them. EYES- Myopic. Would love to know PRIOR to election that George W stands for more than Goldman Suchs {typo}, and the current business as usual with our present form of crony capitalism. The rant continues...Anyone able to take this message to RR or better yet, a responsible member of the Bush camp? I don't duel so don't bother challenging me, typewriters only. When Midas spoke of RR as an SOB he meant Same Ol Bureaucrat or possibly Same Ol Bill, both of which are more derogatory than what you had in mind. The scary part of RR is that he is a proxy for GWB. Robert Rubin, Rusty Rose, Rich Rulers, Require Repudiation {am starting to feel better already}.
In football terms it's the Raiders vs the Patriots. Time to join a team, get dressed out, and prepare to play. Helmets, jock straps, nor chest protectors are required for the Raiders as there is nothing in those locations to protect.
I'm nearly done and don't bother telling me this is a childish piece. There are huge issues at stake and the "gloves are off" as is appropriate. RR, please look for this message to come full CIRCLE back to you like a boomerang because it will be posted on multiple internet sites with forwarding requests.
Friends of the internet, we can bring light to dark places. Please take this rant, a result of frustration w the US crony capitalism , and post far and wide. Let's bypass RR and seek out more responsible Republican leaders. Anyone else have access to GWB? A fair gold market is not too much to ask.
Gold Advocates, GATA supporters, fair minded political activists, honest people, & interested parties- Can you help flush some decay out of the gold markets? Support GATA, shun those who shun GATA, & use any influence you may have to force political parties to declare an allegiance to honest markets.

wolavkaoil can drift #3807410/02/00; 18:22:55

she has done her damage, now just a matter of time.

Western world has not figured it out.

Who do you blame for 30.00 bu. for wheat???????????????

Hill Billy Mitchell@ Cavan Man # 38049#3807510/02/00; 18:38:51

You said:

"Dear HBM: For all the poor, dumb Irishmen among us (present company included), can you tell us what all this charting and scaling business is leading up to? Many thanks...CM"

My response:

From one poor dumb Irishman to another, I am afraid all the commotion has to do with the possible correlation between POG AND POO (Crude) that is. It seems that we have evidence that the price of these two items move in tandem with each other in the long haul. If you click on the above link you will see what we see. RossL has been kind enough to provide the technology to chart and graph certain numbers I dredged up which seem to tell quite a story. SteveH has made several posts concerning the graphs and I hope to respond to them in just a little while. I am afraid I may be out of my league with the cerebrals though. My logic causes me to question the accuracy of one of the graphs. RossL has tried to break through the thickness of my skull but, at this point, to no avail. I may be looking at the forest and missing the trees. I am going to tax myself a bit on this issue before I raise the white flag.

BTW you do not fit the description, "poor dumb Irishman.


wolavkaBottom line on gold#3807610/02/00; 18:44:12

Todays action confirms that they don't know which way this puppy is gonna jump.

Sitting on the fence, which way we gonna go.

I know.

Position limit in spot month 3000 contracts.

Limit move 7500 before expanded.

Now tell me where's the beef!!!!!!!!!!!!!!!!!

YGMSad Part of Evil & Hatred....#3807710/02/00; 18:45:53 they are both learned emotions....

the babe fresh from the Mother's womb has neither evil nor hatered in he or she's heart....Love and goodness are natural human traits....Sadly many cannot keep these same emotions when innocence is lost. I'm always aware and thankful that love and goodness still abounds among the scribes of these great halls and it is very refreshing to say the least.....YGM
Hill Billy Mitchell@ SteveH # 38012 and Black Blade # 38010#3807810/02/00; 19:03:53

@ SteveH # 38012 and Black Blade # 38010

A significant point that the two of you agree upon from reading the graphs is: oil and gold swapped places as the price direction leader. Where gold once led the way we now see oil taking the leadership. One distinct possibility is that the "Gold for Oil", deal put forth by ANOTHER, could have been the cause for the divergence. I am still looking for some sort of validation that what ANOTHER first revealed on this in fact the case. This brings me closer to accepting the "Oil for Gold" scenario as being indeed a solid fact. I am however still looking for more proof. Since we are on the outside looking in, we cannot know of the certainty of secret deals until the Gift-horse smiles.


Hill Billy Mitchell@ SteveH # 38013#3807910/02/00; 19:39:54


You said:

" Mid-1996 by HBM's charts shows where the run on paper gold started. Previously there was a three or so year hiatus on any downward gold prices and oil dipped and rose to match gold. Suddenly in mid-1996, gold started a dive for which there has not been a return. Then in Mid-1999, oil started rising causing an unusual (20-year) divergence whereby gold no longer was the leading oil rise indicator."

My comment:

The Cumulative Real Price (% change) Graph, the top chart, does not seem to indicate this to me; however I fear that I may not be very adept at reading graphs. When I go to the raw numbers I find your observations to be quite clearly correct. However I do not see how you determine from this information that the "oil for gold" deal was in serious jeopardy. What I thought to be revealed was that the "oil for gold" deal was the cause for the divergence and a bit of solid evidence that there was in fact such a deal struck.


PS: Please excuse me but could you explain what you meant by, "the run on paper gold".

SteveHImportant#3808010/02/00; 19:56:00

There must be a good explanation as to why oil has been tied to the hip with gold through mid-1996. FOA now speaks of 1gm per barrel or 32.5 barrels per ounce. Is this the relationship we seek? What and who and how is this value set? $30 per barrel is now equal to $8.30 per barrel in gold plus $21.70 US dollars or (to heck with dollars, just price it in gold) 1 gram of gold = $30 or $975 per ounce of gold, meaning gold really equals $970 currently or the 32.50 barrels of oil is the price of one ounce of gold.

If physical gold then can not fullfill the 1gm for bbl requirement (who sets this and when; how?) then the price of oil in US dollars must rise until a gram of gold can be had that will be delivered for the bbl of oil today. Oil would therefore seem to be rising as a result of a lack of gold to fullfill this requirement (by whom and when?). The less that physical gold is available the higher the dollar price of oil. Or, as long as gold was cheap in dollars, 1 gram of gold could be delivered to contain oil at whatever low price worked for all. When the run on gold began in mid-1996, the race was on. All the noise by the paper gold camp is to shake loose enough gold at low dollar values to contain the price of oil. Oil's rise is a reflection that sufficient quantities of gold are not available in dollars to contain gold. CB's who sell their gold beyond their committed levels will leave them vulnerable to the POO once the new price of a bbl of oil is established in grams per bbl. Oil at $60/bbl will be gold at $1950 per ounce. $200/bbl oil will be $6500 gold. (HBM's charts seem to reflect all of this, eh?)

What this tells us is that physical gold delivered at $275/ounce is at 1/3 its real value in oil currently.

The discounted value of gold today could be measured then by the total number of bbls of oil remaining or 925 billion bbls of oil being consumed at the rate 25 billion bbls per year over 34 years. New gold production is equal to approx. 2500 tons per year or 2.68 billion grams of gold. So in theory 25 bbl barrels of oil can be paid for by 2.68 billion grams of gold (if all were available for oil -- it is not. And what of the four to 10 year hedges?) That leaves a ratio of 9.33 bbls of oil to each gram of gold to pay for it. Or gold is scarcer than oil by 9.33 times on an annual basis (except the pool of oil decreases by 25billion bbls per year), not counting any above ground gold or oil. I will let the math wizards work these numbers and assumptions but it might be worth pursuing all gold available over 34 years to all the oil available to get the proper ratios.

However, what it leaves us is the thought that 1 gram of gold buys one barrel of oil. When oil diverges from gold, that means that oil becomes the catalyst for higher gold. Gold became scarce in 1996 and even more scarce today. The silent buyers are strong hands for a later day. Oil is going higher because gold is leaving the nest much faster than oil can be bought and paid for. They are both finite and both being consumed. The more oil is used the more it costs in gold. One is burned; the other kept for when oil is gone. In the end when 1 bbl of oil remains to sell its cost will be all the gold in the world. So, for the next 34 years (estimated remaining oil supply) every year makes the price of a oil 25 billion grams in gold more costly.

One can only wonder what would the value of gold be, once the oil is gone. What will gold buy if there is no oil?

Hill Billy MitchellSteveH # 38014#3808110/02/00; 20:10:34

Sir, You said:

"Based on HGM's X 20 X 5 chart, $600 gold should be $30/bbl oil. Oil is $30/bbl and gold is stuck at $270/ounce. For gold to hit $10,000 per ounce, oil would have to hit, by his chart, $500/bbl. $60/bbl oil would be $1200/ounce gold though. $60 seems closer than $500."

My comments:

The price of $500 /bbl oil would make plenty of sense to me. Should gold go to the $10,000 level or even the oft suggested $30,000 level, we must remember that the problem lies not in the real price of oil but in the value loss of the US $. This "horrible" price of oil expressed in dollars might not be nearly so bad when expressed in gold, Euros and other currencies. In US dollars the DOW might be $30,000 on a 1:1 par with gold and those holding the $30,000 DOW would be loathe to be holding such paper. All things being considered would not a loaf of bread cost about $50.00, but possibly only 5 Euros. Strange relationships will happen between the dollar and other currencies which will be the real cause of the upheaval, but the relationship between oil, bread, and elbow grease will still make some sense, wouldn't you think.

Your comments have been quite stimulating. Lots of us out here are scratching our heads and trying to see things that you see with ease. You have a good clear mind.


PS: Just noticed your # 38080

Will try to respond as soon as possible

SteveHImportant#3808210/02/00; 20:11:56


My take on the gold-oil correlation is that those who sell the oil control the gold price. Inversely those who sell gold could control the oil price but since once can't mine without oil, those who control the spiggot ultimately control the price of crude and therefore gold (in other words, paper gold temporarily controlled oil's price, until the price of gold went to production and below and that concerned some oil folks). It would seem that from 1991 and perhaps before, all was well (as could be expected) in that gold was cheap enough in dollars to keep oil flowing for SUV's. Then in 1996 something happened (Asian run for the gold -- paper and physical [per Another] and it became every person for themselves. Paper gold was sold in large quantity subduing (temporarily) the price of oil. Then once these runners were discovered and their purpose determined, the oil interests said, "enough!" That brings us to today. Oil is king. Those who control it (much like the joke of the sphincter muscle who ultimately wins over other body parts) can set their price and it would seem (per FOA) that is 1 gram of gold per bbl of oil in today's market. As more oil is consumed in the future, more gold may be necessary.

Now, the game has shifted to those who control oil have sent the message that 1gm of gold per bbl folks. Since you all have obsconded with the metal, the POO is a goin' up till we shake a bit of that loose.

megatronUSAGOLD#3808310/02/00; 20:14:19

No reason to apologise, me and exactly 23 other Canadians realize we are living in a socialist s%^&thole. People here honestly puzzle about the low Canadian ruble. Articles like this just reinforce it to the morons.
SteveHImportant#3808410/02/00; 20:16:25

Simply put, the run on gold that changed the oil for gold relationship may have been and still is an attempt to control the price of oil by controlling the gold. I think we are all finding out that it doesn't work that way. Oil in $ will rise to bring the gold back to equilibrium.
Cavan; 20:17:16

Simply remarkable!
SteveHImportant#3808610/02/00; 20:23:06

If oil said, "You know, we don't care what the $ is worth. We just want a gram of gold for a bbl of oil," a savvy person could have easily said, "You know, I have got a great idea. We can keep the price of oil down for a long time by setting up a few contracts for produced gold and future gold. We got these computers and we can figure out how to keep oil low in dollars and still get the gram of gold per bbl to the oil folks." This would work as long as gold was not accumulated en masse by any one or more parties. When others caught on to the rules, they changed the rules by accumulating in greater proportions than the oil interests thought prudent. It all makes sense, eh?
Hill Billy Mitchell@ SteveH #: 38084#3808710/02/00; 20:37:43

"...those who control the spiggot ultimately control the price of crude and therefore gold..."

The great question would be: "Who ultimately controls the spiggot." In the past the international bankers were able to make all the money that counts by supplying the parties they wanted to be in control just enough purchasing power to defeat those they did not want to be in control all the while collecting interest from both sides of the conflict. I doubt very much that the Arabs have ever been truely in control of the spiggots, nor will they ever be.


JourneymanMercy, please! @Sierra Madre, Peter Asher, Aristotle, Marius, Java Man, T.G., ET, HBM, many others#3808810/02/00; 20:39:56

I just don't have the keyboard speed to keep up with all the great posts that have been flying by.

Sierra Madre in particular, great answer to those three QUESTIONS OF THE DAY. I've filed that with my CLASSICS!

Sir Peter, you recently used the word "prolific," if I remember correctly. Well, look in the mirror -- so many great posts especially in the last few days.

Marius, ET, Java Man, Aristotle on the borrowing proclivities of modern Americans and related topics -- those all should have responses -- but lack of time & home matters. Maybe some day.

And HBM & RossL --- real eye-opening apparent confirmation of the connection of oil and gold!

I'm sure I missed many others, but, well, let's just say this is a VERY stimulating environment!!

Thanx & high regards,

canamamiMK, no need to apologize...#3808910/02/00; 20:40:19

Canada could have been pound for pound the greatest country in the world, certainly the best country in which to live. Roughly 35 to 40 years of mismanagement means it will not be so in my lifetime, if ever.
Hill Billy MitchellMajor Tom to ground control#3809010/02/00; 20:46:10

Houston, weve got a problem.

The oxygen is to thin for me at this high altitude. I am beginning to lose consciousness.

Please tell Sir Steve that I will try to digest his profundities after a nights rest.


714Historical perspective on gold-for-oil trade...#3809110/02/00; 20:55:38

Under the original contract with Standard Oil Company of California, King Saud received an ounce of gold for every 159.1 barrels of oil (4 gold shillings per barrel, or $0.22 US @ $35 an ounce of gold). Most often, this was traded out for US$ as gold didn't trade as well as currencies. Fwiw.

Question: If gold and oil are so closely linked today, why isn't gold moving up as the US$ devalues against oil?

megatroncanami#3809210/02/00; 21:03:34

What perplexes me about the Post story, and MANY of the stories/editorials is the unmistakable left wing bias, in a paper apparently owned/run by one of the last capitalist's
in Canada. Maybe he doesn't read it? Or care? I guess when you realize 3 out of 5 people here are on 'my payroll' they don't want to offend too many.

Al FulchinoStranger#3809310/02/00; 21:05:27

Thanks, that was good reading
Peter AsherSteveH (10/02/00; 20:23:06MT - msg#: 38086)#3809410/02/00; 21:13:21

This is what i was getting at in two posts of mine on 9/22

>>>> It's all a matter of how many ounces of Gold they get for X- number of barrels. If Oil begetting dollars which beget gold works best, then it aint broke.

I have long suspected that the REAL game behind Gold being held down is so the Saudi can accumulate it. That could be why Gold and Oil have gone in opposite directions these last two years.

Remember FOA and or Another pointed out that the Saudis have ONLY this one depleting scource and the only way to store genuine wealth inside their borders is by accumulating Gold.

The question has been raised occasional as to why they would want a constantly declining commodity? Well the answer is they aren't out of Oil yet and are still on the buy side.

Many have pointed out here that no-one ever reports on who buys these gold sales. But they transpire without much price drop every time It is the News ABOUT the sales that drops the price and the manipulators know that news of an impending sale drops the price more that an after-the-fact report and of course creates the better buying opportunity.

It has also been asked often here why some big player doesn't make a buy run and trigger the short squeeze panic to make a killing. My answer is that the BIG players are in it to Buy And Hold! If they pop the price up the "Cat would be out of the bag."

I posted last winter that GS, the Bullion banks and even the Central Banks could be being set up to be the "Fall Guy's." This"Gold hold down" is a very big game and one of these days we are going to see "The Sting" occur! <<<<


Peter Asher714 (10/02/00; 20:55:38MT - msg#: 38091)#3809510/02/00; 21:20:00

I hope the post I just put up gives you a plausible answer.

As Oliver stone says in his introduction to "Nixon", much of this is based on conjecture and supposition."

714Mr. Asher...#3809610/02/00; 21:20:52

...I would suggest that the Saudis possess a far greater wealth than gold within their borders.

And that is...Mecca.

Gold doesn't trade in world commerce like currencies, does it? And before it ever does, we'll see the scourge of war.
Then, and only then, does gold truly trade.

megatronPeter Asher#3809710/02/00; 21:33:37

Yes, certainly someone is setting someone up, but who is buying behind the scenes. I have yet to see/read 'non-anecdotal,non-guru' information defining who the purchaser was and the volume. This is obviously EXTREMELY critical data and not to be revealed otherwise it would be reprinted everywhere on these pages, which it never has. Charts showing the sellers are always reprinted with the volumes in tons. Actual data on the buyers would be fairly juicy, don't you think?
Peter AsherJourneyman (10/02/00; 20:39:56MT - msg#: 38088#3809810/02/00; 21:41:44

Thank you for the compliment.

Re- "Marius, ET, Java Man, Aristotle on the borrowing proclivities of modern Americans."

I think the majority have come to see purchases as "How much a month does that cost" as much, or more, then the actual price. Least of all is the conscious awareness of the fact that the $30,000 car costs $50,000 and the $300,000 house will come to over a million across the 30 years.

The way things are bought is seen as a function of monthly payments rather than reducing a bank balance.

There are three big "Bubbles" out there. The US Stock Market, Big Float and American consumer debt. This latter is the most likely one to burst, the one AG can do the least to handle, or, if one of the other two pop first, the demise of the credit one will guarantee total disaster.

RockgrabberAllow me to ask?#3809910/02/00; 21:53:04

Does it cost those head manipulators anything to sell the hell out of paper gold?? Especially when they have a hedge by buying the physical. I am getting this from trail guides arena. Why not sell the hell out of paper gold with nothing but dollars, the same things that can then be used for buying cheap gold. The extra leverage of selling gold through futures has created a unique opportunity to depress the POG more then could ever be done in a physical market, I suppose. And to beable to sell GOLD FUTURES WITH PAPER DOLLARS is even more unique. The people that have all the money are able to buy gold for look at what price (Actually soon then they will have near most all the money, they just need a bit more time. The more pysical gold we buy now is the less they will beable to have for pretty much free (they are stealing it)
Black BladeRe: SHIFTY post #38023#3810010/02/00; 21:55:48

The bottom has to be "in." Sorry about that. It was on the last line of my "cut, paste, and butcher" job and the word "in" got cut off. The more the financial media gets anti-anything, the more likely that the bottom is "in." The anti-gold article was so geared against gold, I thought that I would post it to illustrate the point that the anti-gold rhetoric can't get much worse, so IMO the end of the gold bear is in. If anything, the gold-bear is about to go extinct as California's Gold-Bear did. Yes, there actually was a Gold Bear that went extinct and now it's profile graces the state flag. The last known living Gold Bear was stuffed and mounted, and now is on display in the capitol building in Sacramento. Besides, I say "What the hell" it's actually a good sign in my perverted way of thinking ;-)
Peter Ashermegatron (10/02/00; 21:33:37MT - msg#: 38097)#3810110/02/00; 21:58:16

It may well be the only way to SEE this data is the way astronomers ‘see' the planets around other stars. They measure the gravitational anomalies of the star caused by the planets mass, and from them compute the fact of the planets existence.
megatronPeter Asher#3810210/02/00; 22:06:10

Could a study of currency strengths be somewhat useful? If countries who are selling are dropping could not the inverse be 'inferred' for those who happen to be rising? Juxtaposing them against one another,and time, with TradeStation would be interesting. Maybe someone here has done it already?
JourneymanSafer driving through chemistry @Black Blade#3810310/02/00; 22:21:31

"The same test was performed later except with cannabis and the
results were withheld from the public. It took a lawsuit and a
court ruling for the video and test results to be released. It
was no wonder that the CHP did not want the results released, as
the driving performance not only did not decline, but rather it
improved! This strange result was attributed to the theory that
the participants were supposed to be paranoid and therefore were
much more careful than they normally would have been. The Swedes
and the Belgians performed similar tests with similar results."
-Black Blade (9/30/2000; 22:22:01MT - msg#: 37954)

You wouldn't happen to have specific sources -- or perhaps some
leads -- for this would you?? A libertarian friend of mine is
running for Congress in Iowa with decriminalization as his single
issue. This might actually give him a chance of keeping the LP
on the ballot!!

Thanx for whatever you can come up with,

Black BladeRE: Journeyman, these are just a few links, but don't have the CHP study or the Belgian study.#3810410/02/00; 22:50:25

I don't have a specific source for the CHP study, though it may be found somewhere on the net. I recall this was a "flash in the pan" issue at the time. Is was in the early 1980's. It had to be between 1978 and 1986 as I was in the Bay Area at the time. It was almost comical as the real issue seemed to be that the test results had to be extracted through the courts in a lawsuit similar to the "Freedom of Imformation Act" since tax dollars were used. Interestingly no one really seemed to be questioning the test however, and it all quietly went away. I remember references to the european studies over the years and that the results were somewhat similar. I don't think that the government would perform the same tests again after that fiasco. However, the link above outlines a DOT study and some european studies that I was not aware of that have some interesting results, as well as those below. I don't condone using cannibis or driving under it's influence, however, there should be some realistic scientific approach as to how we americans abuse these ridiclous drug laws. I don't think that sending a toker to prison under mandatory sentencing laws and making room for him/her by the early release of a child molestor, rapist or murderer helps anyone.

JourneymanOlson for Congress @Black Blade#3810510/02/00; 23:03:05

Thanks, BB,

If your interested, you can check out my friend's website, to which you undoubtedly will have contibuted once I forward your info, by clicking on the link above.

Thanks and regards,

P.S. One of these days I'v gonna have to do a post on these ridiculous drug "laws." They certainly don't befit a so-called free country!

Simply MeI smell set-up#3810610/02/00; 23:40:29

RE: The French photos of 12 year old Palestinian boy who was killed.

Take another look at the picture and ask yourself, "If that were my son and me in the picture, which side of me would he be on.....the exposed right side?...or on the left next to that substantial looking hunk of metal or concrete, with me doing my best to cover up the rest of him." That guy had 45 minutes to realize that his kid was more exposed than he was.

A tear for the boy...but none for his parents.

When you're looking for world sympathy...dying kids make great stories, ie: Kuwaiti babies being thrown out of incubators (the Kuwaiti woman who started that story later admitted it was a lie to gain sympathy), and Sadam piling Iraqi women and children into military bunkers for cover (not a lie, just a matter of priorities).

simply me

Peter AsherSimply Me (10/02/00; 23:40:29MT - msg#: 38106)#3810710/3/2000; 0:23:10

I had the exact same thought the second time I looked at the photos. Even Clinton just said he thought the father could be doing more to protect the boy.

I tried to rationalize that the object isn't solid concrete, that the father in one photo is looking towards firing coming from a direction that puts the boy a bit behind him, but I shared your observation. It seemed to me he would have tucked the boy into the recess and covered him with his body.

1) They did not actually think they were in the line of fire, and were just terrified.

2) The father was rendered senseless by fear but that makes no sense because what you and I feel should be happening is instinctive.

If it's possibility 1) I have a hard time thinking about who actually fired those shots!

TownCrierIt is called...Best International Management Practices...or some such#3810810/3/2000; 0:32:19

Central banks conducting regular revaluations of gold assets to market value, that is.

Last Friday the ECB remarked the euro-system gold assets to start the latest quarter, and this excerpt from Bridge News shows the Swiss are following that path.

SWISS GOLD: SNB revalues reserves upward
Zurich--Oct. 2--The Swiss National Bank announced Monday it had revalued its gold reserves at 15,245.65 Swiss francs per kilogram at the end of the third quarter. This led to a book profit on the remaining reserves of 201.5 million francs.

Simply MeHipplebeck, Trail Guide, HBM Charts and Contest Results?#3810910/3/2000; 1:15:55

Hi All, I've been out of town for about a week and trying furiously to catch up on all the "heat and light" this forum has been putting out lately!

Hipplebeck: I hear ya, bud. Although you're probably asleep right now (at least I hope so for your sake), all you said is true but you can't wash the dirty laundry while you're wallowing in it. Wake up fresh and energetic tomorrow and DO something about it. Write to a congressman. Research candidates and then go help the best one you can find get elected. Buy some gold (it'll help if some folks with a conscience are left standing after the S-H-T-F-). And if you can't get up the energy to do anything yet, read something Ghandi leading India to Lec Walesa (sp?) leading Polands revolt against Chile's non-violent overthrow of the cruel dictator General Pinochet. When you realize how much God-given power the people actually do have, you'll realize why the cockroaches in power have to hide their dirty dealings in the dark. Their power is in fear, isolation and fight it, talk to someone, learn something, have some fun!

The great thing about our country is that Barney Frank has the freedom to talk about morals...and I have the freedom to laugh at him for it.

Trail Guide: I don't know whether to be jubilant or scared out of my wits over your promised "October Show-Time". What should I be watching for a signal? A hike in the price of oil? A straight-line on the Kitco graph (sort of a code blue
for the LBMA)? The rise of dollar value? All of the above?
Or another announcement out of the blue, a la The Washington Agreement, only this time about the Euro?

I've been watching HBM's Inversion of Fed Funds vs 30 yr. Note (sure hope I got that right). I noticed it revert to nearly positive after the Euro (actually Dollar) intervention, and watched it jump right back up over -.70 in the week or so after. I remember some mention of doomsday if it ever hit got close to -1.

My head is simply spinning with all the information that's been spread out here lately. I can't even see the game, let alone the ball. There are too many balls in this game to follow unless it's your full-time job to play or report on the game. And I imagine I'm not alone. Notwithstanding all the fine financial minds who post here, folks like me are in the majority in the real world.

Hill Billy Mitchell: Loved the charts. Anything that helps to put oil/gold/dollar in a one-picture perspective is very helpful to those of us trying to get a handle on this situation. As someone who's better with words than numbers, my favorite was the X 20 / X 50 chart because it seemed to show the connection and then divergence of gold and oil so clearly. It also seemed to point to the current true value of gold as $600 US Dollars right now.

Town Crier and ALL: I've been gone for a week and missed the results on two of the three USAGold contests. Can you point me to where I might find out who to congratulate?

Thanks to all! Journeyman, Peter Asher, Oro, CoBra2, Shifty,
Megatron and so many more that I can't remember them all. I seldom have the wit or the time to join the conversation, but I read every post and love it!
simply me

TownCrierComment for Sir 714 on global gold trade#3811010/3/2000; 1:20:52

In consideration of your comment:

"Gold doesn't trade in world commerce like currencies, does it? And before it ever does, we'll see the scourge of war.
Then, and only then, does gold truly trade."

We offer you this food for thought from The Tower:

The bullion banking system of banks allied throught the LBMA last month cleared, on average, over 600 tonnes of gold in financial operations each and every day. And although that figure may seem staggering (huge) in light of annual global mining of gold that produces only 2,500 tonnes for an entire year, these August values actually represent a low for the LBMA, an association that in the not-too-distant past regularly cleared volumes nearer to 1,000 tonnes of gold per day (for a nominal value of $10 billion per day).

We'll leave it to you to decide if this LBMA-subset of total world gold trading represents anything approaching the "trade in world commerce like currencies" that you were wondering about.

TownCrierSir Simply Me...results#3811110/3/2000; 1:49:06

The official results for contest #2 (the "archery" price contest) was announced on the afternoon of the target settlement date...that being our Birthday, Friday September 22nd. The gold winner was Sir Canuck Gold, with canamami and VanRip each claiming the runnerup silver prize.

The official tally for the longshot Olympic medal contest #3 was announced the next day, Saturday (23rd), when the results were made public. France was the spoiler, but actually nobody came close on the medal count, so the two gold kroners held in reserve will only be going out the door in the conventional way...someone will have to buy them. (see link)

Contest #1 resulted in a collection of entries totaling over 100k in file size. Tasked with the preliminary round of judging, I can tell you I feel like I'm taking a graduate-level literature/composition course in addition to a full work load that always provides many unexpected events which require attention. My goal was to have the announcements prepared for last Friday (a week for entries should allow a week for judging, right?). Or so I thought. A project or two put me off that original pace, so I'm hoping to have the results available later today. There were some excellent entries, and the awards have been extended beyond the original offering of the grand prize quarter-ounce Uruguayan gold coin and the two tenth-ounce gold bullion coins. Some silver eagles have been added to accommodate some honorable mentions. Thanks for your patience.

TownCrierSir Rockgrabber,#3811210/3/2000; 2:00:22

I see from your (10/02/00; 21:53:04MT - msg#: 38099) that you apparently have a view from a tower to match the one we enjoy from here...
Simply Me@Peter Asher RE: Palestinian Boy Killed#3811310/3/2000; 2:01:49

I went back and looked very closely at all the pictures. It's impossible to tell which side the Israelis are on but the boy is more exposed than the father from any angle, even if the Israeli's are on the father's left. Look at it like a shot on a pool table. Wherever you shoot from around the 180 degree area on that side of the block wall, the child is more vulnerable than the father. Heck, even from over top of the barrel, the child would be hit first. And the father had 45 minutes to figure that out, even if it wasn't an instinctive move.

Your last thought was the most chilling of all. Who fired at the child? Because I think it's entirely possible that either side could have done it. Maybe both sides did. Revenge/hatred...martyrdom/manipulation of world opinion. They ALL had motive.

simply me

Simply MeThank you, TownCrier!#3811410/3/2000; 2:17:31

Thank you, honored TownCrier, for your update on the contest results! My, you're up late! I'll wait as long as it takes, I just didn't want to miss it. Thanks for all your hard work.

Congratulations to Sirs Canuck and VanRip!
"Birthday Contest, Friday September 22nd. The gold winner was Sir Canuck Gold, with canamami and VanRip each claiming the runnerup silver prize."

I consider myself at least a partial winner because at least this time my guess wasn't $0!
simply me

Simply MePlease, excuse the faux pas!#3811510/3/2000; 2:25:36

Congratulations to Sirs Canuck, canamami and VanRip for winning Contest #2!

My apologies for leaving out Sir canamami in my last post.
simply me

nickel62For anyone who might have missed the new book by Peter Bernstien!#3811610/3/2000; 2:43:49

This type of lucid and very well argued presentation by a major thinker who has written the seminal texts on derivatives and stock indexing might just wake up even the bubble heads, nah!

Peter L. Bernstein puts most Wall Street economists and money managers to shame.

He's been a proven money maker, managing billions for institutional investors until he sold his firm in 1967 to Sandy Weill and what we know today as Citigroup. He has advised Fortune 500 corporations and the biggest nonprofits on where to invest and how to stay out of trouble. He's a big picture guy at a time when so many analysts are specialists. He's also an independent thinker when many sell-side analysts are in the pockets of the investment bankers and their underwriting clients. He knows his history when most know only last quarter. He lived through the Depression, served in economic intelligence in the CIA's predecessor, the Office of Strategic Services, or OSS, in World War II and has observed numerous bull and bear markets. And most importantly for readers, he can write. Peter has written seven books on economics and finance, including such well-reviewed texts as Against the Gods: The Remarkable Story of Risk and Capital Ideas: The Improbable Origins of Modern Wall Street.

And Bernstein has a new one just out: The Power of Gold: The History of an Obsession. He sat down recently with's chief markets writer, Brett D. Fromson. In a wide-ranging conversation, they discussed the rise of gold, the role of the dollar as today's gold standard and the scary chance that a sharp decline in the dollar could trigger within five to 10 years the next great financial crisis. You won't want to miss what this wise man of Wall Street has to say.


Brett D. Fromson: Peter, why has gold played such a prominent role in history?

Peter L. Bernstein: It was easy to get out of the water, out of the rivers, or to mine in eras when slavery was commonplace and you had people that would go in and do this really horrible digging process. And because gold is chemically inert, it doesn't ever tarnish, it gives people a sense of being in touch with eternity. I think this is the magic of it. It stands for security and assurance.

Brett D. Fromson: In an impermanent world.

Peter L. Bernstein: And it's also wonderfully beautiful. It's nice to have gold jewelry on. It gives you something. It's also malleable and easy to shape, so even in very primitive times, people made works of art out of it, decorated themselves with it and because of its unusual qualities it conveyed a sense of power to the person wearing it or the statue that was adorned with it. That's why the Egyptian Pharaoh Ptolemy II, every time he went on parade, had a 150-foot phallus made out of gold to march in front of him. This was a really special power.

Brett D. Fromson: Gives new meaning to, "Mine is bigger than yours." Moving on, when did gold become a store of wealth?

Peter L. Bernstein: It was owned originally only by rulers or by the ruling class. And this gave it further value and therefore it became a form of money, where, if you gave it to somebody as a gift or in exchange for something, you were giving that person something that purportedly had some value. It has another quality that's important: It's very dense.

A little bit of it goes a long way, or a little bit of it has a lot of value. So it has naturally lent itself to money. It has survivability. It's hard to tear apart or blow apart or crack. It has the magic associated with it and the density. So starting about the middle of the sixth century B.C., Croesus, the guy who was literally as rich as Croesus, sat by a river full of gold in Eastern Turkey and made the first gold coins.

Brett D. Fromson: He was king of the Lydians, right?

Peter L. Bernstein: Yes. He had a little empire in Eastern Turkey that was on the main trade route between the western Mediterranean and the East. So he was very strategically situated, and when he developed this currency, this kind of money, it was the first money that was acceptable in a number of different countries. Sort of like the euro. It was carefully stamped, so when you got each coin you knew exactly what it was worth. Until people started playing games with it, you didn't even have to weigh the coins. You knew the value right away.

Brett D. Fromson: Of course it was stronger than the euro.

Peter L. Bernstein: (Laughs) It was gold. This is about 550 B.C., very early. And then it was taken up by everybody, the Greeks and the Romans used gold coins throughout their empires. Before the Romans, Alexander went through Asia with gold coins. Most of the gold at that point came from Nubia, in darkest Africa, south of Egypt, although there were deposits throughout Europe and in Turkey. And we're talking about small numbers of people then, so there didn't have to be large amounts of it. The idea of coinage was developed further in the Middle Ages. Silver began to be used for smaller transactions, and gold for larger transactions. You had this kind of two-track monetary system going on.

In the 13th century, after the Dark Ages came to an end, Genoa and Florence and Venice had genoins and ducats and florins, a monetary system more like what we know.

"And because gold is chemically inert, it doesn't ever tarnish, it gives people a sense of being in touch with eternity."

Brett D. Fromson: Which is to say what?

Peter L. Bernstein: Well, with these generally accepted monies and growth in international trade, a huge amount of trade was going on both north and south in Europe, and beginning with the East.

Asia is a tremendously important part of the story. Asia had stuff that Europeans wanted, particularly spices, because they were necessary to preserve food, but also textiles and lovely works of art. So developing trade with Asia was very important in those markets. Marco Polo in the 13th century went and came back with all of these fabulous stories, and the Asians have always coveted gold.

There's not a great deal of gold there, although Marco Polo came back and talked about houses in Japan that were roofed with gold, there was so much. Whether there really was, we don't know, but they have always coveted it.

Brett D. Fromson: Even more so than the West?

Peter L. Bernstein: Well, they haven't used it so much as money as kind of a hoard against insecurity. We know still, today, that people in India get their dowries in the form of gold jewelry, and jewelry was a means of keeping gold, and even in Europe, but also in Asia there were literally hoards kept underground. We keep finding them. When archaeologists dig, they find these hoards of gold.

Gold was very acceptable to the Asians, and although the Europeans complained because they had to give up their good gold to the Asians, they were getting something useful in place of it.

Brett D. Fromson: What were they getting?

Peter L. Bernstein: Spices were the most important thing because they preserved food.

Brett D. Fromson: So when did gold segue from coinage to actually being the underpinning of a paper-based monetary system?

Peter L. Bernstein: Nobody planned this. This wasn't something where somebody woke up one day with a vision and said, "Hey, this would be a great way to run the world." It just developed by a series of accidents.

We get now into the 17th century, when you have the real beginning of capitalism -- substantial growth in finance, insurance was beginning to develop very rapidly. Ships and navigation methods were improving and so trade was growing very rapidly. When you think 1688, the Glorious Revolution in England was the turning point of the modern world.

Brett D. Fromson: When the English overthrew James II?

Peter L. Bernstein: Yes. At the end of the 17th century the religious wars had come to an end; we witnessed a lot of technological development during the Renaissance. The scene was really set for 100 years later when the steam engine was developed, and we were really off and running. But, at that time, because gold was expensive and valuable, silver was also very much a part of the monetary system.

If I could digress for just a minute: The Chinese had long since developed paper money. I think it was in the 13th century. They thought it was silly to use stuff you might have some other use for. Why not use paper? And for a long, long time, a number of centuries, they were able to do this without yielding to temptation. It's easier to print paper than mine gold. So paper money was also beginning to circulate. It's important to mention that at the end of the 17th century, money was ceasing to be something that you could bite into. Because trade and finance were developing so rapidly, there were private pieces of paper that were really promissory notes. They were called bills of exchange and were growing very rapidly as people traded not only within their countries but across international borders. The money system now begins to look like that of today's world.

They were moving pieces of paper and pieces of metal rather than computer bits, but the process was very similar to today. But the thing was that a promissory note by me to you is OK if somebody knows who I am or if there's something to suggest that I'm a reliable source. There had to be something that that this paper was convertible into to make the paper acceptable. And so just by usage they began to say, well, it has to be convertible into gold, that somehow it has to be something that you get in the end.

"Asia had stuff that Europeans wanted, particularly spices, because they were necessary to preserve food, but also textiles and lovely works of art."

Brett D. Fromson: Other than another piece of paper?

Peter L. Bernstein: Other than another piece of paper. The pieces of paper grew much more rapidly than the pieces of metal.

Brett D. Fromson: So you end up with gold underpinning the paper.

Peter L. Bernstein: Yes, gold underpinning the paper. Also, silver becomes convertible into gold. Gold and silver were competitive, really competitive for a very long time. Can I tell you about Isaac Newton?

Brett D. Fromson: Sure.

Peter L. Bernstein: Late in the 17th century, late in the 1690s, Isaac Newton was the director of the Mint in Britain. Newton had been the world's greatest scientist, who discovered the law of gravity and had been the nerd's nerd teaching at Cambridge. He lectured regularly, yes, even though there was often nobody in the classroom.

Brett D. Fromson: I had professors like that.

Peter L. Bernstein:A totally withdrawn, introverted, strange man who in his rooms was practicing alchemy. He was trying to use chemicals to create synthetic gold. Anyway, he suddenly got interested in politics. He decided he wanted a job in the government, so he gave up science, gave up Cambridge, gave up a celibate life and began to go out with women and became fascinated with economics. He got in the mainstream in London and was made director of the Mint, which was a much more powerful job in those days than being head of the Bureau of Printing and Engraving in Washington is today.

At that point, there seemed to be more gold coming into England than silver. The result was that gold was getting cheaper relative to silver. Part of it was trade, but part was also the relative prices between the two metals. Gold was cheaper in England than in other countries.

Brett D. Fromson: So they would bring silver in and exchange it for gold, and take it out of the country to resell at a profit?

Peter L. Bernstein: It was a real arbitrage process. But this was a concern for the British government, because there was a shortage of silver in England. So they turned to Isaac Newton, and he had studied economics and discovered the law of gravity and knew the answer to everything.

He set a great tradition for economists of the future because he made a famously bad forecast. He said if you just leave things alone, the price of gold will fall and then people won't want it as much any more and after, silver will go up, because it will look more valuable. But what actually happened was that the market, without anybody saying anything, had decided that gold was the standard, not silver. So while it was true that the relative price of gold and silver changed in the way that Newton predicted, it was the price of silver that went up rather than the price of gold that went down. So gold became the standard against which everything else was measured.

In those days, the wealth of a nation -- and I use that expression purposely -- was determined by its gold stock. And because Britain was a very powerful trading nation, they had a lot of gold at that point. It was 100 years later that Adam Smith rose up and said, "This is stupid. What's the point of piling up this useless stuff? That's not wealth. Wealth is what you can eat and wear and enjoy."

Brett D. Fromson: And this was 1776?

Peter L. Bernstein: 1776. And if the wealth of nations is determined by how productive they are, and therefore how much they can get in exchange for what they export, then this is what life is really about, not piling up money.

Let me talk about Europe now. This was where the fixed-rate currency system developed. Your currency was always exchanged at the same rate with other currencies among the major European countries.

The devotion to this fixed-rate system was so great, and the credibility was so great, that if a country got into trouble it would raise interest rates even if it created unemployment. I'm talking about the 19th century world, in which unions were not yet strong and even democracy was not yet fully developed. A ruler did whatever he could to protect the currency, regardless of the human cost involved. So the credibility was very strong.

Consequently, if a country began losing gold -- was having difficulty because they were growing faster than other countries and therefore importing more and gold began to go out -- they could borrow from one another extensively. In fact, speculation at that time was stabilizing rather than destabilizing. If the value of sterling began to go down in the foreign-exchange markets, speculators would buy it because of their conviction that Britain would get its house in order again. That is so unlike today, when a currency that's under pressure from speculation just gets worse. The speculation is self-fulfilling. In the old gold system, speculation was stabilizing.

"So they turned to Isaac Newton, and he had studied economics and discovered the law of gravity and knew the answer to everything."

Brett D. Fromson: What was going on in the United States at that time?

Peter L. Bernstein: We were much more democratic than Europe. In addition, the silver lobby was very powerful because they produced silver in addition to the gold found in 1848 in California.

And silver was seen as the money of the common man, the small denomination stuff. Americans distrusted bankers, foreigners, all those kind of people. So we didn't have the kind of credibility the Europeans had. It wasn't that easy for us to borrow in a pinch when gold started to flow out. So if we got into difficulty, and gold began to move out, it moved.

Brett D. Fromson: Let's move to the 20th century.

Peter L. Bernstein: The U.S. came out of World War II with most of the world's gold. But we were very generous to Europe and then Asia. These countries began to get their economies in order and to grow very rapidly and become serious competitors. The gold began to go out.

Brett D. Fromson: What was the mechanism by which it went out? Through trade deficits?

Peter L. Bernstein: Trade deficits were settling in gold. Under Bretton Woods, exchange rates were fixed, but only the U.S. dollar was convertible into gold.

Brett D. Fromson: So it was a dollar-based international monetary system.

Peter L. Bernstein: Yes, much like today, really, except that the rates of the other countries didn't change. We maintained millions of troops outside the U.S. because of the Cold War. We were importing more and more, and we were investing very heavily because Europe and Japan were getting under way now. It was the opposite of today, when everybody wants to invest here.

Foreigners were owning more and more dollars and beginning to cash them into gold. So we were in a real bind, and finally, in 1971, Richard Nixon shut the gold window, which meant the dollar was no longer convertible into gold.

This is the last gasp of the gold system, the gold standard. The issue involved there -- and this went all through the 20th century up to 1971 -- was the same as the issue that William Jennings Bryant was talking about in 1890: Do you tie yourself to the rest of the world in this very fixed way, or are you the master of your own fate?

Brett D. Fromson: We now have a dollar-based floating exchange rate monetary system. Are we any less, are we any more masters of our fate than we were in 1971, when we had the old gold-supported fixed exchange rate system?

Peter L. Bernstein: This is one of those economist questions -- on the one hand, on the other hand. It depends on who you are.

On the one hand, if the United States of America has one set of problems, Malaysia or Thailand or even Brazil has a different set of problems. These smaller countries have had terrible problems of adjustment as it is, but it would have been much more difficult for them without floating exchange rates. We see Asia reviving today, coming back really strong from what happened in 1998, and one of the main reasons is that their currencies were devalued, and therefore their goods are cheaper in world markets. Their goods and services are cheaper in world markets than they were before.

And imports to them are more expensive than they were before. And so the dramatic change in their balance of payments in their international financial relationships is very important. The U.S., in a funny way, doesn't have the same freedom of movement. If the dollar were to become weak, I think we would be in a very frightening situation.

Today, speculation is not stabilizing, but destabilizing. The dollar has an aura of strength in world markets that is valid, but this is where people want to keep their money. But were we to have an inflation rate that's higher than that of the rest of the advanced countries, or if the Europeans and the Japanese ever get their act together ...

Brett D. Fromson: Economically?

Peter L. Bernstein: Economically, and began to develop in the same way that we have in the last five, six, seven, eight years -- technologically and rapid growth and low unemployment and high productivity and all the wonderful things that have happened here for reasons we don't quite understand.

"So we didn't have the kind of credibility the Europeans had. It wasn't that easy for us to borrow in a pinch when gold started to flow out."

Brett D. Fromson: The euro and the yen would give the dollar a race?

Peter L. Bernstein: The euro and the yen would give the dollar a race. If the movement were in the opposite direction, it could gather momentum and history suggests there are only two ways to go, so what would be so terrible about that? Suppose this began to happen.

Brett D. Fromson: An incipient flight from the dollar.

Peter L. Bernstein: Yes, if there were flight from the dollar, what would this do to us? Why should we be worried about it?

Only within the last couple of weeks or at least within the last month, [Federal Reserve Chairman Alan] Greenspan himself said this is something that could happen eventually, and that we have to be concerned about. And he's the guy with his hand on the trigger, so it's going to be his job to try to take care of it. It's a very different kind of crisis from the kind he's used to dealing with.

Why should we care? A weak currency is inflationary. Otherwise, it really doesn't matter a hell of a lot, but it means that instead the pound is now $1.40, that instead of an Englishman wanting to import something from the U.S. ... Then he'd get $2 for his pound. So that one pound would be $2 worth of stuff instead of $1.40 worth of stuff. Then we'd see our exports going up, and we'd have to pay $2 for a pound's worth of English merchandise. To go over there to have dinner in London is expensive enough now, but it would be that much -- 50% -- more expensive than it is now.

So, we would be exporting more, and we'd have less import competition. And the consequences would be inflationary. The only way to prevent this is to raise interest rates sky high, and that certainly makes the stock market go down and the bond market go down.

Brett D. Fromson: And the real economy?

Peter L. Bernstein: And then this hits the real economy. And that's really the classical medicine, you see. Then the real economy gets weaker and we don't import so much. Because we're now importing about $30 billion more than we're exporting. That would change.

Brett D. Fromson: Are you concerned about the dollar flight question in the near term?

Peter L. Bernstein: Near term, no. I have a basic philosophy -- I guess because I'm a child of the '30s -- that anything can happen. And that economic conditions change and that good times develop maladjustments and lead to bad times. Bad times can lead to readjustments that lead to better times and this is how the world works, and there's absolutely no reason to believe that's ever going to change. So, while I'm not concerned about this near term, all the necessary ingredients are there for something of that nature to occur.

Brett D. Fromson: Meaning a dollar crisis?

Peter L. Bernstein: Meaning a dollar crisis.

Brett D. Fromson: How important is the federal budget in a currency crisis?

Peter L. Bernstein: In every case where a country's got into currency trouble, the fiscal position is in trouble. They were running into or moving toward the red.

"But if the surplus begins to shrink, that could be a

wolavkaEast meets West and North /South#3811710/3/2000; 3:16:16

Horizontal And Vertical Come together right now (song)
@ 274.


OilmanA different angle on the US money supply#3811810/3/2000; 3:27:29

Does anyone out there have any feel for the possible impact of US dollar counterfeighting operations on the US money supply? I recall seeing in our local newspapers a few months back that a counterfeighting operation had been busted in the Far East. Intitially I didn't pay much attention to it, till I read further down in the article that the size of the operation was US$500 billion (that's right, US$0.5 trillion!). Since the US GDP is approximately $8 trillion, with money supply of a similar magnitude, I suspect that possible counterfeighting operations, if they do exist on such a large scale, could have an impact. Any comments?
OilmanA different angle on the US money supply#3811910/3/2000; 3:28:00

Does anyone out there have any feel for the possible impact of US dollar counterfeighting operations on the US money supply? I recall seeing in our local newspapers a few months back that a counterfeighting operation had been busted in the Far East. Intitially I didn't pay much attention to it, till I read further down in the article that the size of the operation was US$500 billion (that's right, US$0.5 trillion!). Since the US GDP is approximately $8 trillion, with money supply of a similar magnitude, I suspect that possible counterfeighting operations, if they do exist on such a large scale, could have an impact. Any comments?
SteveH714 response#3812010/3/2000; 3:36:16

714 (10/02/00; 20:55:38MT - msg#: 38091)
Historical perspective on gold-for-oil trade...
Under the original contract with Standard Oil Company of California, King Saud received an ounce of gold for every 159.1 barrels of oil (4 gold shillings per barrel, or $0.22 US @ $35 an ounce of gold). Most often, this was traded out for US$ as gold didn't trade as well as currencies. Fwiw.

Question: If gold and oil are so closely linked today, why isn't gold moving up as the US$ devalues against oil?

*** My response:

This proves the original oil-for gold deal and the propensity of OIL to want gold in payment for oil. TG spoke of a gram of gold per barrel now. Per my post, I alluded to a diminishing supply of oil would require an increasing supply of gold per barrel. The one gram of gold versus 1/3 or so gram of gold per barrel for above does show this ever increasing gold for oil relationship in the works. Two points a line make, but confirmation of more points is always nice.

ANOTHER spoke of 69.5 tons or he said "20 million ounces per year" of gold for oil since 1991 but that it was greater now.

In order for oil to track as closely to gold as it did, some mechanism must hold it there. This gold-oil gram for bbl concept seems to explain it. Could the major oil companies actually be large players in gold-oil contracts and be involved in paper gold?

To stab an answer at your question about why gold doesn't move up against the $? My opinion is that it can't so long as lease rates and paper gold contracts continue to sell gold naked or short without gold to back it. This is the point of countless discussions here. When will the paper selling end. This is the point of GATA. When will the CABAL as they put stop beating down gold with paper?

GATA doesn't see or want to see the gold-oil relationship. Bill is privy to this information, I know. His focus is on gold, the commodity, should be freely traded and any manipulation is taboo. I don't disagree. Yet, gold, the currency, seems to be open for hunting season, and all the stops are off to contain it -- thus the alleged ESF and BOE involvement. This is the effect of having demonitized it but yet secretly keeping it as a CB reserve and underlying currency. It really is a kind of fraud, to say gold is a commodity but also a currency and money of sort -- the underlying tendancy is to manipulate gold to control currencies, especially the dollar and oil. It is this link that GATA knows, but doesn't tell. It is too hard to explain and prove the link even though all the players know it including Congress. Otherwise, how does one explain Congress's lack of apparent concern over such a large derivatives market in paper gold contracts where all the gold in Fort Knox would be needed to square the deals? The ESF must report monthly their transactions to Congress. They know gold is part of the internation monetary system. That is why they didn't approve the IMF sale of gold recently.

So, the GATA v hedged mines and bullion banks takes place at the commodity demarkation whereas gold as a currency is "don't ask; don't tell."

I again ask the question, when the oil is gone, what of gold? Since the desire of gold by OIL marks gold to oil and all other currencies must vie for dollars for gold, what will be the motivator or the glue that ties currencies to gold when oil is in near depleted status? Remember at current consumption rates, this is only 34 years hence. That will be in many of our lifetimes (or so we hope). This will be a different world in the last 15 years of oil.

Obviously, technology will be relied upon to provide alternative fuel sources and the commodity of oil will likely be rationed to delay the 34 years out much further. Perhaps we are seeing that trend start now. Higher prices encourages less use. Less use stretches the supply lifecycle. But what of gold then? If this big pile of gold sits in a bank or vault(s) and there are no takers, then what? Does gold only have value because of oil's value? If it does then what will sustain that value as well as OIL's desire for gold for oil?

What is now certain, though, is OIL wants gold -- not dollars. The run on gold by other "gold" interests has put the physical gold market in jeapordy and so gold supply is now being controlled by oil supply, thus the rising price of oil -- gold must soon follow under this change.

SteveHRepost orginally posted at Kitco by Sharefin#3812110/3/2000; 4:12:47


Mark J. Lundeen
October 2, 2000

Conspiracies: The Last Word

So many "Conspiracies". Conspiracies to kill JFK, communist conspiracies, conspiracies to fix prices. They've sent people to jail for conspiracies, John Gotti ( sp? ) can tell you about that, he didn't pull the trigger on "Big Paulie" outside the Sparks Steak House but he's doing the time because he conspired to have that trigger pulled. For all the talk of conspiracies I've never seen is what the definition of a "Conspiracy" is; so I think I'll start there as it will be useful to define my terms.

I have a copy of the 1924 edition of the "New Dictionary of the English Language", I got it at the Salvation Army book store for $.25. Ya I'm cheap. In it, it says that a conspiracy is:

1 ) a plot,

2 ) two or more persons engaged together for an unlawful or evil purpose.

There may be more definitions in a newer dictionary but for my purposes these two will do as I think they are descriptive of what is going on in the financial markets today. Note that in 1924 an evil intent was all that it took to label two or more people as conspirators and make their activities a "conspiracy". Back in 1924 the issue of legality was not required, it also recognized that acting with an "evil" intent was not necessary illegal. This is wise if you ask me as what is considered "evil" really is a slippery topic. Ask many liberals in our congress today what is an "evil" person and they would tell you that people who make more money that most and want a tax break is a sure sign of what one Democratic congressman
described as "Nazis with a power tie".

So I do agree that labels in this area should be used with care if for no other reasons but for my own selfish, personal, and possibly "evil" reasons. Also its obvious to me that depending upon who one would ask, certain actions at certain levels of society could either be prudent management of public affaires or an evil conspiracy. In this paper I want to lay out my case of why I think the gold market has been victim of an "evil conspiracy" as opposed to being a beneficiary of the "prudent management of public affaires". I'll
let the legalities of this evil conspiracy to be discussed by lawyers as my opinions are not legal. I also need to go into some political theory and history to make my points, that point being that there is more involved here than just a free market price for gold. I can not do that unless there is historical context for what is going on, so I hope the reader is patient with me.

It has been stated by various members of this forum that to charge the actions of various people, organization, or agencies activities in the gold markets as a "conspiracy" is some how lazy, the easy way out in an attempt to explain what is happening to the price of gold. Well that may or may not be true, but what amazes me is how easily people in the first year of the third millennium discount conspiracies altogether, they would have me believe that a conspiracy is as rare a critter as a blue Maine lobster. Well that is not true, Caesar was not assassinated by ten angry blue Maine lobsters! I would say that the history of mankind reeks with conspiracy if looked from the perspective of the average joe working the fields
or earning his daily bread in honorable commerce. Since man first planted a seed with the expectation of it yielding a crop, there has been the state. And since the state was invented there has been two kinds of people, people who farm the earth and people who farm people.

I want to make a point here, that being that the state has no interest in abiding by the same laws that they apply to the people who they rule over. This is true with any big bureaucracy, any one working in a Fortune 500 company or for a family business can see it. The hourly wage workers must come in on time or get docked some pay, however at a certain point in the organization, one can come in late, be greeted by the CEO or Uncle Ed with a smile and no questions asked. Machiavelli noted this in his famous volume "The Prince", that in fact there are two sets of laws in society, one for State and one for every one else. His reasoning for this is that the peace of the people lays in the fact that they can appeal to the state for justice when wronged, but in the hurly burly of international affaires, who can the state appeal to if wronged by another state except by guile or force. I know that this little snippet from Machiavelli may not apply to Uncle Ed's plumbing supply store, my intent is to establishing the fact that within human society, in either business or government or even in the family, there are degrees of immunity or outright exemptions to the established rules in every organization. There is nothing wrong with this. Just because big brother can come and go as he pleases doesn't mean that little sister can. It does make a difference being in college or being in the eight grade.

However this can pose problems for people who don't have the ability to rise to the top. People being people when given an inch want a foot, this is especially so with gifted people who typically become the privileged few, and in politics or finance this will lead to injustices if not checked. This was recognized in the American Constitution, that being the human urge for more. The desire for more power, more privileges by ambitious people in public office needs to be checked if the individual is to remain free. Hard to believe it today but the American Constitution's intent was to limit the Federal Government power
and the scope of its authority. Read it, there is not one limit on the people, we were to be born free and live with in the context of the English Common Law. The American concept of "liberty" was for the people, not the state. The Founding Fathers of The United States would have answered Machiavelli's point on a dual legal system as follows; that when dealing with foreign matters his point can be true, but when the state is dealing with its own citizens it is absolutely necessary that the law be binding upon it also or a tyranny will result. The lessons of the English Civil War was very much present in the minds of the founders of the United States. To be King or Lord Protector was sweet, to be subject to the King or Lord Protector's decrees could be very bitter.

In the Federalist Papers ( I can't remember which ) it was stated that where the state fears the people, liberty rules, but where the people fear the state, tyranny rules. Ben Franklin when coming out of the constitutional convention was asked what kind of government did you give us, he replied "a republic, IF YOU CAN KEEP IT. ( my emphasis added ) . And what did they talk about so long ago, in that stifling hot, humid room in Philadelphia for weeks on end? In a nut shell, all the different ways the little guy has been screwed by the big and powerful during the course of human history and how they could stop it from
happening to the people in the new country they were inventing: The United States of America. By
today's standards there is a strong case for calling the US Constitution the product of the combined minds of hard core, paranoid, conspiracy theorists. They were so sure the government they were creating would come into the control of "ambitious" people who would make life unbearable for all but the connected few. There are books on the constitutional deliberations, they are well worth the time and effort to read, and in them all the fear of being oppressed by powerful, privileged people who might gain control over a Big Federal Government is the major theme of what they talked about. Their watch word for future Americans was "Eternal Vigilance". Eternal Vigilance from what? Well speaking for myself that is the essence of what the issue of what GATA should be all about.

In one of the Sherlock Holmes novels, Doctor Watson is amazed at how Holmes knew the owner of the house was the murderer; "how did you know Holmes". Sherlock answers " the dog didn't bark". Watson is confused "the dog didn't bark"? Holmes a bit exasperated by his friends inability to see the thing says to Watson "but the dog should have"!

Allow me a little literary liberty to make my point.

In one of the Sherlock Holmes novels Doctor Watson is amazed at how Holmes knew the precious metals markets were manipulated; "how did you know Holmes". Sherlock answers "the prices kept falling". Watson is confused "the prices kept falling"? Holmes a bit exasperated by his friends inability to see the thing says to Watson "but the prices should have risen"!

So why does Sherlock look so smart while Watson came up short? Well Sherlock knew that supply and demand are not theory or learned opinions, they are laws, they apply all the time in every situation when commodities are allowed to be bought and sold in a free market. For prices to appear to defy the laws of supply and demand are by definitions, manipulated prices. Watson knew this too, and in an examination he would have gotten this question correct but could not apply the facts it to the situation at hand. By the way, there are many more Watsons than Sherlocks in the world, sad but true.

Now if your still one of those who is of the mind that gold and silver prices reflect the reality of a free market after years of demand larger than new supply, and with productions deficits to demand by significant amounts, well then my last shot at converting you is to look at how the Bank of England ( BOE ) has been selling its gold, if nothing else this should at least give you pause for thought. Do you think it normal for any central bank to sell gold and not allow the price to be set by the highest bidder? Look at the way the BOE has handled its gold sale, it is my understanding that they do not accept highest but the lowest bid and that sets the price for every ounce of the 25 ton consignment of British gold sold at each auction. Now its more complicated than that and due to space concerns I'm not going to explain the process in detail but in each auction there are parties willing to pay, for example, $310 an ounce for lets say 15 tons. Yet as the bids are screened, if the last gold bar goes for $275 an ounce the BOE then prices the entire consignment of 25 tons of gold at $275 an ounce and it will refuse to take more than the $275 an ounce from people who were willing to pay $315 for 15 tons of it. What am I to make of that? Any bum on the street could get a better price for the English people than what the BOE is getting them for that gold. Yet incredibly from people who would have us believe that they are experts in the gold industry there are no protests or even a single serious question of why have an auction were the highest price is refused.

I hear a dog NOT barking!

But then that is just me an admitted "conspiracy nut". You just know that these "gold experts" would never shout conspiracy as gold is sold too cheap with the whole world watching. Well I'm no "gold expert" so this weird auction force me to be judgmental, and I can only think of two possibilities to explain it, One possibility is that somehow all of these people can somehow control such vast amounts of gold and who boast of such outstanding academic achievements are so stupid that they are incapable of running a proper auction. The second is that the English people are being denied the best price their gold could fetch at auction due to an evil conspiracy with the BOE as a co-conspirator to drive the price of gold down. Is it possible for there to be a third explanation?

If you can think of it don't keep it a secret. I doubt if Christies in London would even allow such an auction to occur at their establishment, like I said my opinion is not legal but I think the possibility of exposing themselves to a legal action could result from such an auction at their establishment. And why not, what owner wants to sell to complete strangers a Picasso or rare Persian carpet at any price but at the best bid which is the highest offered price. I think I made a strong case that the gold market is manipulated. If I'm wrong how? And don't go tossing no rare blue Maine lobsters at us evil conspiracy nuts unless you can answer the questions posed to you from above, because then you'll be the lazy one taking the easy way out.

So the next item to discus about what I think is an undeniable manipulation in the precious metals markets is; is it a result of an "evil" conspiracy, or the prudent management of the public's affaires.

If you're of the "prudent management of public's affaires" school of thought I insist you make your own points as I'm a boy scout at Camp Evil Conspiracy.

As I used my $.25 1924 dictionary to define "conspiracy" I think it wise to do the same with "evil", and remember being "evil" is not the same as being illegal.


A ) morally bad, wicked
B ) unfortunate
C ) mischievous
D ) disastrous
E ) worthless
F ) badly
G ) unkind
H ) moral depravity
I ) injury
J ) affliction

Well most of these definitions are "E ) worthless" for my discussion so I'll pick the one I think best fits what I'm trying to say, and that one is "A ) " morally bad, wicked.

I think school yard bullies are morally bad and wicked, the reason for me saying so is that bullies refuse to accept any risk as they go about what one would think a risky business, fighting. Bullies manage their risks by the careful selection of their victims, they select targets that don't have much of a chance to effectively fight back. They also pick the place and time of the fight so that the victim is alone and the bully has his friends with him. Hence the bully experiences all of the pleasure of the encounter while the victim is exposed to all of the risks. That is the point of being a bully; there is no risk to it, only satisfaction. I ask the reader now if you also agree that being a school yard bully is a morally bad, and wicked, which is to say an evil way to treat people? Well no matter what you think, I can form my own opinions and I say that this is evil, and that the bully and his friends are conspirators and by definition, they guilty of an "evil" conspiracy against the victim. Like I said earlier evil conspiracies are not necessary illegal but they are conspiracies none the less.

Now can I apply this to the gold markets? I think I can and thus prove a "conspiracy" in the depressed prices of gold.

I brought up the issue of the avoidance of risk as a key point in my discussion of what an "evil" conspiracy could be. I would say that an "evil" conspiracy would be one where a group of people manipulate a risky financial situation to where they have a total lock on a profitable out come but lay off all of the risk to a third party who is not even aware that he is being exposed to a particular financial risk. That anyone could work hard all of their lives, playing it by the rules to raise a family and only wanting some sense of security, could lose all their material possessions due to no fault of their own but to the irresponsible actions of greedy people can only be described as evil.

Is there anyone that would argue this point and offer a counterpoint that this is somehow acceptable or if in fact this were to happen it would not be an evil conspiracy? Now how could such a thing be accomplished, the shifting risk to one group and the profits to another. I could do it to a small town lets say, with a check book if I could somehow get the town to accept my paper as readily as a Federal Reserve Note. Everyday the town goes to work; farmers are producing food, merchants are bring goods into their stores and all I see is mine for the having, all I have to do is write a check. Remember in this example my signature is money. With enough checks and a twenty five cent ball point pen I can have my fill of the best the town has to offer and still afford to be very generous to the city counsel and chief of police. Gee, I'd be what the major would call "a leading citizen".

Life is good, at least for me it is. You see after a little visit from me to a store, the store owner deposits my check, which for this example is as good as a Federal Reserve Note, in his bank which dilutes the town's wage earners dollars purchasing power. More money in circulation, with fewer goods for them to buy as I got the best of it over at my house. Bless them all, the wage earners are all working more for less and no one blames me, it's the store owners that are raising the prices, right?

Now there are those reading this who recognize that I'm describing how the US money supply works. Well not exactly. How it really works is that Alan Greenspan is the guy who writes the bogus checks that has no funds to back them and no he doesn't buy wine, women and song with it, he buys US Bonds and all the stuff you see published in Barron's each week in their "Federal Reserve Data Bank". He became the Chairman of the Fed in around Aug 1987 since that time his hand has written checks for 305 billion or so for US Bonds. They don't keep it a secret, its been reported in Barron's since the 1920. How do I know?

I spend a lot of time in libraries putting numbers into my spreadsheets. Now when does he do this? Well the key is the Fed Funds interest rate, it is a manipulated interest rate, but still, the law of supply and demand can not be avoided even by the Fed. My description of the following is imperfect but very adequate for the purpose of this discussion. The Fed states a target Fed Funds Rate, and the Fed Funds rate oscillates around it. So lets say Alan Greenspan pegs Fed Funds at 6.5%, the Fed will then monitor the interbank system where the banks will put up their spare cash up for sale to other banks. By looking at the "cost of money" that being the going interest rate for a bank lending to another bank, the Fed will or will not take action. If the Fed Funds rate goes above the Fed Funds target rate the Fed will buy US bonds from a primary bond dealer, who will deposit this new "money" in a bank who will then add the new funds to the interbank system there by adding supply to satisfy the demand for debt at the Fed Funds rate. By the way primary bond dealers and the big NY banks are really one and the same, they are also the bullion banks, its all so convenient. Any problems so far with what I'm saying? This week's Barron's ( 02 Oct 2000 ) it reported that the Fed bought 2.14 billion in US Bonds. That meant that if the Fed Funds targeted interest rate was to be maintained, Alan Greenspan had to write a check for 2.14 billion to add the required "liquidity" to the banking system. OK so what is wrong with this? The same thing that was wrong with someone buying everything in sight in a small town with an endless check book with no funds behind it. People who don't do anything to add to a nations wealth get rich and the people who give value to the money being created by producing something of value to buy get hurt. No banker every gets into any kind of trouble for this but I still think this is evil if not illegal.

The banking system is like one of the old cowboys movies with the gun fights where no one ever ran out of bullets and you could tell who was going to get it and who wont even get a scratch from all the flying lead. The banking system has access to the unlimited credit of the Federal Reserve at the Fed Funds Rate and if your a big NY bank, the system never says no to you as your one of the share holders of the Federal Reserve. Yes the Federal Reserve is a quasi private bank, it is NOT a US Government agency. And its not possible to have a free market when people like you and me are limited in our bidding by how much money we can earn, which is the honest way, are forced to compete with a money machine with unlimited access to credit ( money ) from the Federal Reserve! Do you notice how your working more and getting less?

Also with all of this "money" at their finger tips the big banks have since the creation of the Fed lent money to such worth credit risks Latin American countries in the 20's, 60-70's, 80-90's, the Leverage Buy Out mania of the 80's all of which have come to grief to either investors or the tax payers. I suspect that the "Dot.Com" boom and now bust would not have been possible with out the assistance and cooperation of the Federal Reserve and the banking system with the Internet company's IPO underwriters. Guess who they were? Ross Perot, in 1992 when he was running for office, was talking about the "December Surprise". Well I'm working on rumor here but supposedly the" December Surprise" was that a big New York Bank was insolvent, broke, bankrupt.

That is why Alan Greenspan lowered Fed Funds to near 3% for a few years creating the dollar carry trade where all the banks that had a hang over from the old LBO days with their bridge loans or what ever else ailed them, could "reliquify" in the US Treasury debt markets on the spread between the Fed Funds rate and the long bonds. As the average American does not have access to money at the Fed Funds Rate we were not invited to this party. That retired people were being squeezed by these low interest rates meant nothing to these privilege people who only see money as a game to be played to win.

That is what I have against the big banks, they take these big risky positions where they might make a killing. If it works out they keep the profits, if it goes against them, no matter how bad it gets, they are bailed out at the expense of someone else. And what do they have to offer us in return for us being forced fed their waste? Bad paper money if you ask me. And I see what they are doing as an "evil" conspiracy as in the course of their daily business are taking enormously foolish risks that could very well destroy the world of billions of people.

Their malign fingers touch every continent, no nation escapes their services. They would not do this except that the system provides them with the mean to do this and then protects them when things go wrong. I'm not going to mince words here the whole world is flipping a coin with these guys and its heads they win, tails we lose.

Look at the stock market, the derivative markets, the mortgage markets and yes the gold market. These are all their monstrous bubbles. It's not a if but when will these bubbles will pop, and when they do my friends we shall all be expected pay the bill for a dinner we were never invited to. The investment bank's traders call it "ripping someone's face off". Real cute. I expect a depression bigger than what we had in the 30's. With low interest rates on savings who has much money in a bank? The "roaring" stock market that everyone is in, when it collapses people will

wolavkaMusical chairs or marbles#3812210/3/2000; 5:17:10

Age me, remember the circle with the cats eyes and along comes butch with the big "Steelie."

Circle is much smaller now .

Churn and burn or hold'em .
Hold your marbles, wait to roll your own chunk of metal, soon.

wolavkadec wheat#3812310/3/2000; 5:26:16

if you take out 272 , limit up. not investment advice
tedwAre we a nation of laws?#3812410/3/2000; 5:30:06

I was reading worldnetdaily this morning. An article entitled "High Court upholds assault weapons ban". Now in fairness to the Court, they did not exactly uphold as assault weapons ban; THEY REFUSED TO HEAR THE CASE. The end result was the same: 2 manufacturers of assault weapons are out of business and I am sure there are some good Americans somewhere with heavy fines or prison sentences for assertint their rights.

I suggest to you that we are no longer a nation of laws. The High Court does the same thing with the money issue. THEY REFUSE TO HEAR THE CASES. Check out Reginalf Howe's site, The Golden Sextant, and his petition for certiori with the Supreme Court to hear the constitutionality of Federal Reserve Notes.PETITON DENIED.

There are other examples too. Did you know that if you are charged with a Federal Crime and the potentia; sentence is less than 6 months, you have NO RIGHT TO A JURY TRIAL. Its true.

Try claiming your 5th amendment right next time you dont want to file an income tax return and see what happens. The right is illusory.

Howabout NAFTA AND GATT treaties which were not ratified by the required 2/3 of the Senate, yet the Courts say thats ok.

What happened to your right to a jury trial in a traffic offence in many of the states?

Time does not permit me to give other examples 'so you feel in the blanks.

The truth is we are no longer a nation of laws. There is a charade going on. And there are none so enslaved as him who falsely believes he is free.

Permit me to tie this to Gold. GATA will never prevail in the courts. Its a stacked deck. When rich and powerful interests (especially the interests of the Banks) collide with the law, the law loses.

Shame on you all for letting this happen without a fight.

Goodbye America, it was nice knowing you.

wolavkaswiss go full circle#3812510/3/2000; 6:04:13

To smoke or not to smoke? Currency and country go Banana republic.Nah, it's a front!!!!!!!!!Tax money.

How about we make it illegal to lease gold , cause you can grind it for smokin or downers.

justamereBearAristotle#3812610/3/2000; 6:11:09

After reading your response to my question, I was very inclined to ask you if we could take this to email. I abhor the spotlight, but decided that there was a constituancy at this site to whom I owed a duty, and to whom it would be a useful learning experience. With that in mind, I will probably sound as if I were lecturing, and I certainly will be entering some bits that I know you personally to be familiar with. So on with the (Geraldo???) show. (I don't own a TV and don't expect to.)

You asked "how I got here", so first some personal background, then some definitions, which is the purpose of this post (so we can have a common language, and as I see it, really the subject of your post) and finally an analysis of why I asked the question. And again everything is way oversimplified. Please excuse the typing and spelling errors.

In about 1966 I attended a speech by Dr. Kenneth White who was economic advisor to Kennedy. He was advocating what would become SDR's. (special drawing rights) As usual the polititions picked up on the half of the plan that suited them and left the half that was inconvenient, and would make it actually work. If they had, we certainly would not have had the inflationary and other degradation of the currency that brings us here today.

I had a family, and was fighting my own battles, but as time went by, I noted some of the stupidities that were being perpetrated in an absent minded way. In Febuary 1987, a small newspaper article jiggled the puzzle enough that the gruesome picture became clear. As with all hoary new truths recently discovered, I was sure "the event" would happen tomorrow, or at the very latest the day after. I always had a propensity toward being a goldbug, but within 48 hours I were one.

I started considering what course of action would be the best, and quickly realized that I did not have enough resources (gold, information) to do what I thought necessary.

It is important to remember that in 1987, that derivitives, as we know them today, did not exist. It is also important to know that the smart money viewed the market even at that time as wildly overvalued.

In the 80's I was lucky enough to be a headhunter to some of the more exotic banks such as the then Bankers Trust, and J.P.Morgan, and they were just getting into derivitives in an organized way. A plain vanilla interest rate swap was just being invented, and at the street level, a futures contract was pretty heady stuff. Of course the banks needed people in those fields, and since I was doing a lot of people like FX interbank traders, I got a shot at the new swaps traders. I pretty quickly had to learn what Black Scholes was, how it worked and when it should be used as opposed to say Cocks Ross Robinson so I could determine whether the candidates I was interviewing were real.

The 1987 crash taught me that no matter how good my plan was, it wasn't going to cover all of the eventualities, and in fact covered damned few. Certainly I would have been better off than the average bear, but it didn't go far enough.

In 1989, despite the nice "Glasnost" spin that the USSR government put on it, AND the deliberate misinformation that our own governments put out, I was able to observe the bankrupcy of a superpower. There has never been in recorded history, a war that finished without one or both of the protagonists going broke. It is my opinion that, if you look at Russia today, you will see elements of a milder version of our own situation 8-10 years from now. However the equation has been altered somewhat since that time. (eg oil and progress in the computer chip.) But that is why I was interested in this forum, to get intelligent arguments as to why I might be wrong.

In the early 90's some personal problems screwed up my plans royally, but I was able to continue to observe, albeit somewhat after the fact, the progress of that fall from power.

The Y2K event brought out some short sighted survivalist ideas and thought.

Despite the fact that I taught machine operation and programming for some years, I got out of the computer field, and it was only in the spring of this year that it became necessary to get back in by purchasing a computer. I probably discovered Kitco in June, and made my first posting in Aug., in order to goose the discussion in the general direction I needed to go. It was also probably early in Aug. that I discovered USAgold, and began lurking here.

So that pretty well brings us up to date.

Now to some very oversimplified definitions. I will leave out some very important parts, such as the very important role of the velocity of money in inflation, but I think (or hope) the general gist will will be clear. In order to simplify, I will start by assuming the US system in isolation, which it of course is not.

Money Supply
M1; is essentially cash and cash eqivilents. This is where, if the government "prints money", it shows up. (and it is the only place in the system, other than interest rates, where the government can directly influence the system) In the runup to Y2K the government printed a lot of extra bills, because the common wisdom was that people were supposed to draw out a certain amount of money in case all the computers went down.

In fact it is my understanding that all the bills that they printed up were not stored in a warehouse somewhere, but with some offsetting concessions, were largely handed over to the banks to get the money closer to the people, so that they would be able to react more quickly, if a problem should develop. It is also my understanding that, while the magnitude of the cash withdrawls did not reach the level that was feared, there was indeed some extra withdrawls. Certainly, in the months preceeding Dec. 31, M1 numbers jumped. So M1 represents, crudely, the amount of money in peoples pockets, or easily and legally able to be put in peoples pockets on less than 24 hours notice. It is the cash in the system. Of course Y2K turned out to be a non event.

M3, or 3A, or whatever one you choose, is essentially M1 multiplied by a "fractional banking factor"

M3 and fractional banking is easiest to explain if we go back to days of yore when each village had its own goldsmith, who was in fact acting like a banker, by storing everyones gold because the robbers were having a fair degree success of parting the local citizenry from its holdings of gold, but not much success doing the same thing with the goldsmith. So for safety, people stored their gold with the goldsmith, for a high fee of course.

Lets say the village has a hundred golds in it. (M1) This is all stored with the banker. As time goes on the people come in to get some gold to buy groceries etc., and the grocer deposits his excess gold. The banker has got to keep some gold up front in the till, but the bulk of the gold is never touched. So he keeps 10% or 10 golds in the till (and in peoples pockets) and 90 in a hidey hole.

One day a would be pirate comes along and wants a loan of 90 golds to build a pirate ship. He convinces the greedy banker that they will both get rich. The banker reasons that he never touches the 90 in the hidey hole, and besides, if he doesn't have the 90, it can't be stolen from him. So he makes a loan of 90 to the pirate, also with high fees, now called interest.

Well the pirate buys lumber, and swords, and sails, and pays in gold. (IN THE VILLAGE) The villagers rush to deposit their new gold with the banker.

The banker now has 190 golds on deposit, a loan on the books for 90, 10% or now 19 up front in the till, and 81 in the hidey hole. This is real creative accounting in a system with only 100 golds in it. It is called fractional banking. In theory at least, each loan becomes a deposit. The banker loans out the 81 and it is deposited, and so on until the banker has 100 up front in the till and 900 out in loans. So now there is 1,000 golds in the system. (M3)

So in this case the "fractional banking factor" is 10 times M1 which is the money (golds) in circulation. (or an additional 9 if you prefer.)

Note that as M1 (100 golds) grew to to M3 (1,000 golds) the money supply inflated, and this would be highly inflationary. Spain, when it sent out successful pirate ships, and they brought back tons of gold, was brought to its knees through inflation. Combined with the foolishness of its monarchs (read politicions) and it never was able to regain its former glory.

INflation is essentially to many dollars chasing to few goods and services. We wind up trading $50,000 cats for $100,000 dogs. Inflation usually arises because; 1) The government prints to much money, (which goes into M1) and of course the bankers, who want to make as much profit as possible, start loaning it out using the fractional banking system, so it multiplies. 2) the bankers get greedy and instead of keeping 10 up front in the till, keep only 9,and lend the extra 1, so the multiplier goes way up. Most jurisdictions have laws to keep the bankers in line, but none to keep the politicians in line.

DEflation is essentially a massive asset destruction. For example, if the stock market crashes from 10,000 to 5,000, a great deal of wealth is destroyed. Sure, individual investors may get out intact, or even make money on the way down, but in total the wealth has been destroyed. This is a deflationary event. It is the stuff 1929 was made of, and currently what is happening in Japan, Russia, etc.

Usually deflation starts with a milder version now known as a recession. But it gets out of control. What happens is that **CONFIDENCE** is destroyed.

Lets look at our average banker. When (s)he makes a loan, the first law of lending is TO GET YOUR MONEY BACK. So when times are good, and jobs are plentiful, both the banker and the borrower are confident that the loan will be repaid. Now things start down. First thing that happens is sales go down, and when sales are down, business cuts back on its labor. If the company wants to stay alive it has to.

Unemployed people who borrow a lot can not make the payments. If it is bad enough they declare bankrupcy. Given enough bankrupcies and the banker starts to wonder whether he will stay solvent, or at least whether the bank will get its money back. So (s)he starts to be more selective about just exactly who gets a loan. Borrowers, too, or at least those who have something to lose, don't want to get in debt because a small thing could wipe out all their other assets, so they don't even approach the bank for a loan. AND they start spending less. Add that to the bunch who are unemployed, and spending is down quite a bit. So are loans. (M3) More people are out on the streets, spending falls, which puts more people are out on the streets etc etc. Bankers are losing confidence, and while fewer loan applications are coming in, as a percentage they are approving less and less. Quite aside from the possiblity that the bank may go under, the banker is relearning the first rule of banking. And they always seem to have to relearn it. Bankers aren't very bright that way.

In the last 50 years, government has learned to borrow some money and start public works programs to get that downward spiral stopped. (from Mr Keynes) However if a trigger event, such as a stock market crash, or an oil crisis comes along, destroying peoples pension plans, etc, it also destroys their confidence to a much greater degree than can be tolerated by the system, and the downward spiral continues. It would be fine if the government borrowed during the lean years and paid back in the good years, but they don't pay back.

At this point, it doesn't matter how much the government prints and gives away money. (M1) If the bankers aren't going to lend the grease that lubricates the economic machine, it is going to grind to a halt.

Now, at last we come to the point of all this, to talk about the question at hand, importing and exporting of inflation and deflation. We will try hard not to, but we're probably going to lose some people here.

The essence of my question to you was; For some years the US has been exporting inflation. In May of last year, after looking at the money supply numbers, I began to wonder if the US was no longer exporting inflation and had begun importing deflation. What say you?

We will use Japan as the example because it is a major player.

First the exporting of inflation. (and M3 has been growing fast enough that we should be showing more signs of inflation)

Japan is in the midst of a deflation. I described it more fully in a previous post, but to recap. On Dec. 31 1989 the Nikki stock average was at 39,000 and change. Say 40,000. Everybody was investing (speculating, gambling) because, they all knew that in the long run the market always went up. (And the long run was getting down to a few hours, or days, at best, in peoples minds.) By mid 1991 the Nikki was down to its nadir of about 12,500. Currently it is mucking about at the 15-16,000 level. This was probably a, or one of, the trigger events above, and it certainly was a massive asset destruction.

But it was not alone. For reasons a bit lengthy for here, recession was setting in, unemployment was up, (even if the government statistics did not show much) and people were not bidding silly amounts for real estate, so house prices fell, Dramatically. Then companies, who had an implicit contract with their workers that they had a job for life, got rid of some of their labor costs by chopping bonuses all across Japan. Bonuses that on average equalled equalled 50% of the annual takehome pay. Banks were underwater on every mortgage in Japan, and as well in nearly every other loan they had out. Everybody who had anything to do with the banking system got super cautious. Every bank in Japan was bankrupt, and nobody had any confidence that loans would be repaid. In short, a massive asset destruction.

Meanwhile the government, which in 1989 had a huge surplus of assets, was being forced to do battle on several fronts. Japan had gotten to be a powerhouse by being a superior trading nation, and its balance of trade was forcing the yen up. This was having a negative effect on jobs because the Japanese were pricing themselves right out of the international marketplace. The government similtaneously started printing money, started some massive public works spending which would get people back to work, and at the same time force the construction industry to go to the banks and take loans, thus raising M3. Their already low interest rates went effectively to zero.

Well it didn't work, because the banks, worried about their own solvency, were not about to make any loans they were not absolutely forced to. Confidence was way down. Zero interest rates meant that they could have piles of cash sitting around with no incentive to get it out and working because it was zero interest rate or no cost.

It didn't take long for the government to go through the accumulated assets because they gave it a massive dose, in hopes of killing deflation fast. Nor was their hoped for result of printing money and having some of that get out onto the international market, thus weakening the yen, effective.

Now they start borrowing. While the following is not true directly, a number of other factors, among which was the yen carry trade, made it so practically. Assume the Japanese government goes to the US banks and borrows US dollars. What does that do from the US perspective? Extra dollars that might have gone towards creating inflation in the US are sopped up. However M3, because it was a loan, stays up. In practice the Japanese were buying US treasuries and sticking them in their Central Bank reserves. But they were buying it from their trade surplus which was already in dollars and not in yen, so all they did practically, was to finance the US spending, with no payback specified. That and keep the US dollar from weakening, which was for them desireable.

BINGO The US is exporting inflation.

Importing deflation.
In the time leading up to May last year, two major events took place, the advent of the Euro and the Japanese ran out of money.

While I would expect that the advent of the Euro would likely have some effect on the system, I haven't been able to detect any. After all, if we have a Chevy and a Toyota, and a Ford, and we start calling them collectively, automobiles, it doesn't really change anything.

As I said, in 1989 the government of Japan was sitting on a pile of assets. Then they started borrowing. By last year(**10** years later) their debt, both on a per capita basis, and as a percentage of GDP, was worse than Canada, and swiftly heading toward that of Italy. It is true they still are on the plus side in terms of a trade surplus, and they do have a sizable pool of funds available in the postal savings accounts, so while they did not have a huge need to borrow internationally, there was a finite limit to how much they could borrow and/or spend. They are still spending large amounts on public works, and they are still buying US treasuries for their CB, but the rate has slowed.

In about May I noticed how quickly the rate of growth of M3 was falling. At that point on a year over year basis, it was pretty close to zero. In fact for the whole year, if you subtract out the Y2K operations part, it is down as much as 1%. M1 on the other hand was banging along at a merry rate, even considering Y2K operations. (which took place largely in the last 6 months of the year) Considering how aggressively the finacial system was marketing loans, in all forms including credit cards, M3 should have been jumping. GDP was growning at a reasonably fast rate so there should have been M3 growth. The stock market, and margin debt were both growing, so M3 should have grown. Everything pointed to M3 growth, but it wasn't growing.

There is a time lag between pumping money into M1 and its appearance in M3. Takes a while to work through the system. By Feb this year, M1 growth had slowed, which I surmise was the government moving to bring the total dollars pumped into the system over the longer term back to a more reasonable rate. (ie. sopping up the massive infusion of cash they made for Y2K purposes by not adding their usual amount.) M3 was growing at, if you disregard Y2K operations, a more usual rate. If you consider Y2K, it was dead in the water.

One possibility is statistical error. M3 and the physical census are about the most accurate statistics we have. Every Wednesday every bank reports their cash and loan balance to the Fed, and they simply add them up. Sure sometimes the postman does not deliver the report by cutoff time, so an adjustment has to be made, but by and large it is pretty accurate. M1 on the other hand is not nearly so accurate because it has some estimates such as seignorage (how much cash has been lost, or eaten by the dog, or whatever) in it.

To my mind, M3 is showing us some pretty massive deflationary forces at work. Either the US is importing deflation, or somebody, and they have to be huge somebodies because the absolute numbers are staggering, are are moving loans out of the US system, which would have the effect of reducing M3.

When the US's dearest friend, and staunchest ally, Taiwan, decided it didn't like the US creditworthyness, and moved 10's of billions of dollars out of the US, (except only that which was needed for day to day FX transactions,) I didn't notice any effect on the money supply numbers. I'm sure it was there but it wasn't glaring.

I am trying to consider, in practical detail how this might play out. Any errors of fact or logic pointed out would be greatly appreciated. So, What say you?

I am doing this by memory because I have stopped reading all those things I used to read on a regular basis for what sounds like a pretty silly reason. When I read these things I think about them, get all uptight, and start to work on a heart attack. So from March or April this year I have not looked at the numbers. I came to the conclusion that all the factors were in place for a negative "event", and mother nature would correct these imbalances in her own time whether I worried about them or not. Still, to plan as to how to avoid landmines in that negative event is smart, so hence the question.

If as I expect, there are a number of questions, I will try to get to them as quickly as possible, but that may not be as quickly as the askers might like. I do have some other obligations like food I have to pay attention to.

Black BladeBush to attack Gore over oil in Tonights Debate. How about we have Tipper Gore and Laura Bush get into a cat-fight instead?#3812710/3/2000; 6:47:55

By Richard Wolffe in Washington
Published: October 1 2000 20:03GMT | Last Updated: October 2 2000 20:26GMT

George W. Bush, the US Republican presidential candidate, intends to use Tuesday's televised debate to challenge vice-president Al Gore over increasing foreign ownership of the US oil industry. It will be part of a broader attack on the energy policy of the Clinton-Gore administration. A senior Bush campaign official said the Texas governor hoped to respond to Mr Gore's criticism of "big oil" - and Mr Bush's close links with the oil industry - by blaming the administration for allowing "big foreign oil" to control strategic energy assets.

Both campaigns believe the series of televised debates, starting on Tuesday, could prove decisive in what has become the closest presidential race in a generation. The Bush debate strategy aims to develop two lines of attack. One is to paint Mr Gore as a tax-and-spend liberal on issues such as healthcare. The other is to launch a detailed assault on his energy policy, blaming the administration for high fuel prices and questioning its economic competence.

"We hope we get to talk about oil because there have been some mega-mergers under this administration," said a Bush aide. "They have left a lot of our offshore drilling under foreign hands such as Royal Dutch/Shell and BP." In April BP Amoco completed its $28bn acquisition of Atlantic Richfield, making the US its largest territory, after months of fraught negotiations with antitrust officials.

The Bush campaign also hopes to challenge Mr Gore's plans to move towards universal health insurance, starting with coverage for 11m uninsured children and a prescription drugs benefit for senior citizens. Republicans are hoping for a re-run of the argument over President Bill Clinton's ill-fated healthcare plans in 1993, arguing that the Gore proposals would give too much power to bureaucrats.

"If he talks about moving step-by-step towards universal healthcare, we are going to say it's a hop, skip and a jump to nationalised healthcare," said one Bush official.

Mr Gore spent the weekend preparing for the first head-to-head debate in Florida, alongside 12 voters he met on the campaign trail, highlighting his key policy areas. The voters include Winifred Skinner, a 79-year-old who collects cans to make extra money to pay for her prescription drugs.

Black Blade: Tonight's debate has the potential for a lot of comedy as these two buffoons go at each other. Al Gore is likely to make some outrageous claim about creating or inventing something, while George Dubya is likely to lay claim to Daddy Bush's accomplishments. Nader and Buchanan would perfectly round out this circus with just as unusual antics. Instead of an election, why don't we just give them weapons, lock them in an arena, put it on "pay-per-view" and the winner is president. Not only do we clean up the gene pool, but the possibility of a social experiment based on natural selection should be quite entertaining as well ;-)

BTW, the API inventory numbers come out this afternoon. The expectation is that inventories will rise while refinery capacity should drop. They said that last week too.

HappyGoldLuckydanger ahead?#3812810/3/2000; 7:20:12

Picture this: we are cruising at high altitude surrounded by a huge mountain range. so far the trip has been good, but the conditions are getting a rougher. air pockets and wind surges are tossing the plane around. what, it's also begun to snow! now the left engine is sputtering! oh dear, nightfall is approaching. sos, but the radio is dead. In the movie shangri la, this is what happened. what seemed like an idyllic trip turned into a crash, and a struggle for survival among the cruel elements. It is true, a lucky few made it to safety.

are we in a similar situation in terms of the stock market? maybe share prices will soon go into a tailspin? if we look at some factors, there is reason to worry.

1. the price of gold remains low, with the dollar at an incredibly high level, considering the amount of money owed to foreigners.

2. the dollar has risen as $710 billion of foreign money flowed into the US economy in 1999 and an estimated $860 in 2000. Will foreigners continue to believe that us stocks, bonds and the dollar will remain strong forever?

3. euro politicians got a swift kick in the butt last week with the danish euro - no! vote, and may start doing something about their funnymoney. Japanese business confidence is at 3 year high. So all this foreign money could start to flow back home. This spells problems for the buck.

4. share and bond prices have benefitted and remain high. However, after 18 months of stock price churning, investor may be getting nervous about the continuation of the bull market

5. gloom is actually gradually spreading in the new tech world -- with Apple Computer being the latest in a long string of victims.

6. the Fed has to keep interest rates low before the election, even if the latest data points to a growth pick-up, of all things.

7. opec is the big nasty and inflation is simply rising, data-jigging or no such thing.

8. world hot spots: the mid-east peace process in jeopardy, raising the spectre of still higher oil prices, and balkans unstable with a madman still at the Serbian helm.

9. us presidential elections offer a choice between two eminently unispiring "insider" candidates: a stiffnecked detailsman and a howyadoin backslapper. will these politicians be able to keep investors confident the us is still the place for their money?

add this up, and "fear" may begin to vy with "greed" over investor's hearts and minds on wall street. the coming months could prove interesting.

nickel62Justamerebear#3812910/3/2000; 7:29:56

Thanks for your clear and understandable post. As you well know a large part of all posts here is to educate and communicate to others the subtler points of the economic picture and have others begin to understand the dynamics so perhaps the outcome will be altered somewhat. Your piece went a long way toward educating and enlightening this reader. Thanks.
justamereBearnickle 62#3813010/3/2000; 7:57:47

I don't think you need a whole lot of educating, but you seem open minded enough that new ideas or new ways of looking at things seem to be valuable. Hopefully I share that attribute.
Thanks for the kind words.

ChristopherSteve H-repost, tedw#3813110/3/2000; 8:15:08

Steve, that dog not barking has been keeping me up nights. I would love to feed him an antifreeze hotdog.

Sir ted, I firmly believe that there are patriots among us waiting in the wings for the final act. With muskets charged and pans primed, their hats seated firmly upon their weathered brows, and their jaws set with the determination of ages to once again form the skirmish line and defend the Concord bridge. The same command has been given to these men of iron today-"don't fire men, until you see the whites of their eyes.," as was given on that fateful day so few years ago. And still, the call goes forth to all able bodied men to rise and take up arms, just as it did at the beginning. So it does at the end? But maybe not an end. Maybe another beginning. Maybe a picking up of what was once left off. Is it our fate to heed the call our forefathers rallied to? Will the familiar words "Don't tread on me," or "Live free or Die" once again grace our banners? Who knows? Perhaps we may escape the conflagration. But if not, if worst does come to worst the patriots are there- are here. Living in our selves, coursing through our veins, crying out "Who will stand the watch with me, Who will fight for liberty?" Will we answer their call? Will you answer their call? Will I?

"By the rude bridge that arched the flood,
Their flags to April's breeze unfurled.
Here once the embattled farmers stood
And fired the shot heard 'round the world."
(with apologies to that venerable poet whose words I have borrowed)


RockgrabberTrail Guide thanks#3813210/3/2000; 8:44:50

Trail guide is giving it away. He is giving up major info. The things that one can wonder, he is exposing. USA gold holds contests often to name the catalist for the gold market. Trail Guide asks, " Do you expose a market dynamic that is delivering in your favor?" That would be stupid if you did. that is exactly what he is doing anyhow. Apparently they have put the writing on the wall for us to see. They are ready for the game to be exposed, cause they are exposing it now. He is always talking PHYSICAL, PHYSICAL, PHYSICAL, Now I see why. Then he says that the ones that know are buying gold the "Currency" not gold the commodity. That made it click, now I see. These son of a guns are using junk fiat dollars to sell the heck out of paper gold in order to buy pysical gold for a major discount then it would be otherwise. I cant believe you can sell paper gold with paper currency, in order to buy cheap physical gold. WHAT A SCAM!! I see where this is leading...... If you are to ask why does this 26 year old kid with no education seem to know this? I have something in my heart that is worth more then any education (The FEAR OF JEHOVAH) I wont go there but to tell you I already know that, that is the biggest scam of them all(relgion), and that that will fall to. I just want to give credit where I feel it is due. Thanks to all who post there thoughts here for me to read. You can learn fast here.
Rockgrabber(No Subject)#3813310/3/2000; 8:49:09

Ooopps I forgot to mention that I think now that the catalist is just plain old exposure of what is going on. How will it become exposed?? It already is now, just takes time now. The thing that will set it off is a bit more time. hahaahha (cant go wrong with that anser huh?)
wolavkawould like to see#3813410/3/2000; 9:13:14

dec gold trade in this short 2.00 range and close @ 275.80 on comex, greenspan should help mkt.
Mr GreshamRichebacher#3813510/3/2000; 9:47:10

Thanks, ET! Repeating your link of last night. Don't miss the rest of the European picture we never get to see...

Isn't it wonderful to live in such "hedonic" times?

(Hmmm, I wonder if I could bill my clients hedonically -- "Yes, I did your tax return on my 500mhz HP rather than the 233 Compaq, so I'm doubling my rate.")

KnallgoldECB and gold,a Trail Guide post#3813610/3/2000; 10:07:20

Dear Trail Guide,you recently wrote in a hike

"Today, the ECB can use not only it's excess dollars to buy physical gold sold from other banks, they could use Euros printed outright to buy physical spot delivery. If their currency continues to fall before the dollar begins it's terminal phase, this option
is wide open to them. "

Why should they buy Gold in the open (as I understand "physical spot delivery") when they still have sell programs running?Or did I just answer my question?(in case,big smile)

Cavan ManTrail Guide: "Penultimate Knowledge Worker"#3813710/3/2000; 10:07:32

"Knowledge work is all about how we use one another's time and attention. Given just a few minutes, good leaders can affect how we think, what we decide, and ultimately what we create".


Midas MulliganThe coming Gold Rush#3813810/3/2000; 12:07:56

As the business cycle eventually turns down, ie. production falls, I see the markets falling causing inflation as money flows out of paper and into goods and services. This will cause the mass of investors to put their money in gold making the price of gold soar. Objectivists, ie. laissez-faire, or pure/real capitalists, own most of the gold today so they will rise to power since their gold will be worth many times what it is now, overturning the subconsciously envy ridden mediocrities who control the establishment(Big Business and Big Government) and whose power will vanish with the price of it's paper. So Gold will do what junk bonds couldnt, which is overturn the establishment. Milken tried to help true capitalists (Hank Rearden-"scabs") overtake and drive out mediocrities (Orren Boyles & James Taggarts) by using the junk bond as leverage but it only worked relatively/short term and failed absolutely/long term. Gold, not junk bonds, is the only way to drive out ("clear the road"(Galt) the mediocre establishment and replace it with a gold standard overseen by normal/perfect people like John Galt and the strikers. You don't fight paper with paper like Milken tried to do. YOu fight it with gold.
Midas MulliganThe coming Gold Rush#3813910/3/2000; 12:08:29

As the business cycle eventually turns down, ie. production falls, I see the markets falling causing inflation as money flows out of paper and into goods and services. This will cause the mass of investors to put their money in gold making the price of gold soar. Objectivists, ie. laissez-faire, or pure/real capitalists, own most of the gold today so they will rise to power since their gold will be worth many times what it is now, overturning the subconsciously envy ridden mediocrities who control the establishment(Big Business and Big Government) and whose power will vanish with the price of it's paper. So Gold will do what junk bonds couldnt, which is overturn the establishment. Milken tried to help true capitalists (Hank Rearden-"scabs") overtake and drive out mediocrities (Orren Boyles & James Taggarts) by using the junk bond as leverage but it only worked relatively/short term and failed absolutely/long term. Gold, not junk bonds, is the only way to drive out ("clear the road"(Galt) the mediocre establishment and replace it with a gold standard overseen by normal/perfect people like John Galt and the strikers. You don't fight paper with paper like Milken tried to do. YOu fight it with gold.
wolavkaresponsibility#3814010/3/2000; 12:12:09

The circus continues. SEC and CFTC throw in the NFA, all are quilty .

Stocks then commodities which became futures and are now derivatives.

They have turned a stock into a commodity and this is the largest derivatives of them all, the stock market.

Midas MulliganThe coming Gold Rush#3814110/3/2000; 12:21:07

As the business cycle eventually turns down, ie. production falls, I see the markets falling causing inflation as money flows out of paper and into goods and servicesie. consumption rises. This will cause the mass of investors to put their money in gold making the price of gold soar. Objectivists, ie. laissez-faire, or pure/real capitalists, own most of the gold today so they will rise to power since their gold will be worth many times what it is now, overturning the subconsciously envy ridden mediocrities who control the establishment(Big Business and Big Government) and whose power will vanish with the price of it's paper. So Gold will do what junk bonds couldnt, which is overturn the establishment. Milken tried to help true capitalists (Hank Rearden-"scabs") overtake and drive out mediocrities (Orren Boyles & James Taggarts) by using the junk bond as leverage but it only worked relatively/short term and failed absolutely/long term. Gold, not junk bonds, is the only way to drive out ("clear the road"(Galt) the mediocre establishment and replace it with a gold standard overseen by normal/perfect people like John Galt and the strikers. You don't fight paper with paper like Milken tried to do. You fight it with gold.
Peter AsherExcellent1 Black Blade!#3814210/3/2000; 13:50:45

>>>> Instead of an election, why don't we just
give them weapons, lock them in an arena, put it on "pay-per-view" and the winner is president. Not
only do we clean up the gene pool, but the possibility of a social experiment based on natural
selection should be quite entertaining as well ;-) <<<

It's not for entry into USA Gold Hall of fame but I'm putting it in my private one.

Peter AsherSemantic perfection#3814310/3/2000; 14:06:38

Once in a while a single statment appears on this Forum that gives me the 'chills' because it is so perfect for encapsulating a concept in a sentence or two.

This today was one of those.

SteveH (10/3/2000; 4:12:47MT - msg#: 38121)
Repost orginally posted at Kitco by Sharefin

Since man first planted a seed with the expectation
of it yielding a crop, there has been the state. And since the state was invented there has been two kinds of people, people who farm the earth and people who farm people.

Gandalf the WhiteWOWSERS !! -- Someone SHOT the NAZ (duk)#3814410/3/2000; 14:22:30

Nice "pump and dump" day for the stock markets ! The NAZ dopped like a rock in the last two hours and looks as if the Crystal Ball is even looking more violent after today. SPARKS are shooting around inside it like the Fourth of July fireworks. HOLD on TIGHT to the Yellow.

R PowellThe Pirate and the Goldsmith#3814510/3/2000; 14:48:16

Mr. justamereBear, good work! You have the gift of explaining through examples (short stories).
I think I understood most of what you had to say and thought that maybe we have avoided greater price increases in goods and services because we exported dollars. Some countries value our currency above their own. IOUs given out but not yet redeemed. I thought the article in the link might pertain here.
One question please, did the pirate ever repay the goldsmith or did he get bailed out by the Resolution Trust?
Take care of your health! We are occasionally visited here by one Mr. Farfel who sometimes has problems with his blood pressure when he percieves certain economic events that are not favorable toward gold.

AUgustUSSteveH (10/3/2000; 3:36:16MT - msg#: 38120)#3814610/3/2000; 14:55:26

Hi SteveH and everybody else contributing to this forum. Perspective splitting material to say the least these past few days.

SteveH : in your post mentioned above; you say "I again ask the question, when the oil is gone, what of gold? Since the desire of gold by OIL marks gold to oil and all other currencies must vie for dollars for gold, what will be the motivator or the glue that ties currencies to gold when oil is in near depleted status? "

To me, it is always necessary to try and make an idea as simple as possible. All great truths seem to be so simple that they go unnoticed. Although my answer to your question may seem too simple an answer - here goes.

You state : OIL <interests> marks gold ("real money") to oil (their country's product sold as an export) and all other currencies (a fiat currency) must vie for dollars (a fiat currency) for GOLD. In other words, from what you are saying - all fiat currencies (the dollar included) vie for GOLD ("real money") in exchange for "final" settlement of a debt.

All fiat currencies, debt instruments, iou's etc are nothing more than a promise to make "final" payment. Originally, a fiat currency bank note reflected a corresponding asset holding in the form of gold held in a bank. You could go and redeem your paper note for it's corresponding weight in gold. i.e. you exchanged "your" assets for title to "another" asset.

Today, the rest of the world is subjected to a "legislated" US dollar reserve currency financial system. The world is in reality exchanging "real" assets (e.g. Oil) for "paper" assets (US dollars). This is obviously a ridiculous situation benefiting the US at the expense of the rest of the world. As such, in terms of exchanging "real" assets - for "real" assets between different countries of the world - the individual countries "paper" assets will have to vie for a "real" asset to settle International trade balances. This real asset will be gold.

Therefore, my simple answer to your question is that the glue that will tie currencies to gold when oil is in near depleted status will be its' use as "final" payment between countries to offset any trade imbalances.

We won't have to wait for oil to near depleted status for this to occur. Once the US dollar is no longer the reserve currency of the world - it will no longer be necessary to maintain the "illusion" that the US dollar is in fact "good" for "final" settlement. Behind the scenes - it is apparent that the US dollar and ALL fiat currencies are not "good" for "final" settlement - hence the necessity for them ALL to vie for gold before "final settlement" takes place between two parties.

From all the thought provoking topics discussed on this forum these past few days, one can but only really watch from the sidelines. Keep it coming.

JourneymanAn updated link @R Powell, justamereBear, ALL#3814710/3/2000; 15:04:13

I agree with R Powell! Excellent post -- if we're to straighten things out at all, it's easy to understand material like this that will do it.

There is a slightly updated version of BIGfloat right here at USAGOLD at the above URL.


P.S. justamereBear, are you the poster that claims to type with one finger? If so, your stuff is too good to be so handicapped! There are now programs that let you do voice input. Check dragon software for one.

AUgustUSThoughts of ANOTHER#3814810/3/2000; 15:13:00

Thanks to those "reviewing" some of the Thoughts of ANOTHER. It occurred to me that some of our questions may have been answered in those early wonderings. To everybody who has not read the Thoughts of ANOTHER (myself included - Blush) - it may well be a good thing to do so now.

Since Trail Guide has started taking "bigger steps" - (along with other posters on this forum, and with events unfolding down there in the valley) it certainly seems like a good time to take a careful look at our maps.

Bring your torches (and compass) !

RossLImporting deflation - justamereBear (msg#: 38126)#3814910/3/2000; 16:08:18

Excellent post! Your "importing deflation" corresponds closely to a process that ORO has described here in the past. That process is one where the Euro supplants the dollar in overseas lending and also as a reserve currency.

Follows is a very quick and simplified summary of that process of what happens when outstanding loans denominated in dollars overseas get rolled over into the Euro. If I understand all this, it goes something like this:

Overseas dollar loans being paid off by new Euro borrowing creates a short term demand for dollars and an increased fractional reserve supply of Euros. This causes a short term weakness in the Euro exchange rate. The demand for dollars overseas is then increased because when the dollar loans are terminated, the dollars go to money heaven, reducing the supply. This demand for dollars is what keeps the big float balanced. Meanwhile the FED pumps money domestically to keep the dollar from deflating.

The long term effect after a lot of the dollar loans have been rolled over is: reduced demand for dollars to pay off loans, and nowhere for the current account deficit to go except to come back home. At some time FED has to switch gears and start soaking up money domestically to keep the dollar from inflating.

You stated in msg# 38126:
"While I would expect that the advent of the Euro would likely have some effect on the system, I haven't been able to detect any."

If all this is correct and I haven't misconstrued something that ORO described, the advent of the Euro could very well be the cause of your "importing deflation" scenario. Comments?

auspecMoral Hazard#3815010/3/2000; 16:19:58

Can anyone help me out with a clear definition of the term "moral hazard". It comes in murky to me. Thanks in advance!
TownCrierSir auspec...moral hazard#3815110/3/2000; 16:41:28

While not a strict definition as I'm sure you'll receive from others aplenty, a moral hazard is the condition that exists when an institutional program (usually governmentally sponsored) temporarily undermines the natural forces (such as market discipline) that would otherwise be dictating free choices to be made to the a more prudent manner. Existence of a moral hazard generally encourages those who are risk-adverse to participate in risky behavior due to the perception of a "safety net" which is actually of dubious reliability over the long term.
CoBra(too)@TG/FOA's latest Essay-#3815210/3/2000; 17:25:13

Friend & Mentor, TG, I would humbly like to beg one answer to a question, I've been contemplating for so long.
You are postulating a 30% inflation rate of the US $ vs the world's price structure ( in US $ contractual prices, as I presume), as may be seen in the recent run up of the $ vs other currencies -including the euro - and even in euroland and elsewhere inflation seems "still" begnign?
There are some pieces not falling into place in the old equation of price/wage inflation ... despite, as it is anticipated by AG, exponential productivity growth-apparently in the US only ... as in the R(apidly) C('losing)' of A's of the 20's... or the POO in the 70's, where lessons have been abandonded, before learned!?

* For how long can you fill the gap with exponential growth of monetary aggregates, even being the currency of seignorage reserve status?
* It's a self destructing scheme/scam by corrupt administrations - and is the latest concerted "intervention" on "behalf of the euro" and the POO not designed to aid the $ and its financial markets?
- again to keep the virtual double credit bubble alive and kicking - for the rest of global eco machine to go on ticking - over?
* And finally, for how long can you keep up the pretense
of paper markets, pricing real goods (and services, after 'a' thought), which may be detrimental to your 'health' and to the wealth of the producers of such, my not care about the BS of the BLS for much longer?
* Denmark's referendum - a warning sign - or would you (FOA)rethink your position?
* So How Does A 30% Inflated $ Fit Your Scenario? ...
vs Gold - a currency not accepted by the corrupt -
and the euro another fiat currency, already corrupted
by politics?

Regards - a still s(c)eptic (e-ver-uro-), though eternal
GOLD BUG - Tom, Mix in some proven reserves, as it has payed to shut in some O&G Y not au/ag -cb2
PS: Derivative or paper pricing - ending, unwinding at expexted "soft" landing? ...

JourneymanAnother cartridge for defending gold @SteveH, ALL#3815310/3/2000; 17:28:37

From the article:

"In defending themselves with their firearms, armed citizens kill 2,000 to
3,000 criminals each year, three times the number killed by the police. A
nationwide study by Kates, the constitutional lawyer and criminologist,
found that only 2 percent of civilian shootings involved an innocent person
mistakenly identified as a criminal. The "error rate" for the police,
however, was 11 percent, over five times as high."

Regards, J.

CanuckTo correct a statement;#3815410/3/2000; 18:10:54

There have been a couple posters congratulating me on my 'Contest' winnings.

It is in fact Mr. 'Canuck Gold' not I 'Canuck' who has been so fortunate to collect the prize from our most esteemed host, USAGOLD.

Thank you, T.C. for a most entertaining contest; it is most like you.


wolavkaWorm Turns#3815510/3/2000; 18:13:31

globex tonite low 274.40

high 278.break over 279, then 282.

The break above 282 within next 3 trading days will take gold much higher.

9 day breakout on 9-21 still start of the next leg up.

CanuckFrom the last couple days.#3815610/3/2000; 18:31:48

Gold Accumulators;

I 'cut and pasted' a few posts together this am; they are not necessarily in order but they follow a train of thought on the 'oil-for-gold' deals.

I am following this to a degree; can someone in the know put this together in an easy-to-follow text.

I again go back to FOA's statement (to the effect of) "...the increase in POO had nothing to do with supply and demand..." And again I go back to my statement of the EIA admission that '99 escalations in the POO was a Y2K storage buildup and not a supply/demand deficit.

There IS a middle-east/OPEC/oil situation here. IMHO, oil is putting the screws to the dollar. Is this what it is in a nutshell? Oil is putting the screws to the dollar!!

"Yes, Mister Western Man, your dollar is too high, it is not that our oil is too high... gold is always the same price Mr. Western Man... give me gold, I give you oil, you value your dollar whatever you want."


My take on the gold-oil correlation is that those who sell the oil control the gold price. Inversely those who sell gold could control the oil price but since once can't mine without oil, those who control the spiggot ultimately control the price of crude and therefore gold (in other words, paper gold temporarily controlled oil's price, until the price of gold went to production and below and that concerned some oil folks). It would seem that from 1991 and perhaps before, all was well (as could be expected) in that gold was cheap enough in dollars to keep oil flowing for SUV's. Then in 1996 something happened (Asian run for the gold -- paper and physical [per Another] and it became every person for themselves. Paper gold was sold in large quantity subduing (temporarily) the price of oil. Then once these runners were discovered and their purpose determined, the oil interests said, "enough!" That brings us to today. Oil is king. Those who control it (much like the joke of the sphincter muscle who ultimately wins over other body parts) can set their price and it would seem (per FOA) that is 1 gram of gold per bbl of oil in today's market. As more oil is consumed in the future, more gold may be necessary.

Now, the game has shifted to those who control oil have sent the message that 1gm of gold per bbl folks. Since you all have obsconded with the metal, the POO is a goin' up till we shake a bit of that loose.

There must be a good explanation as to why oil has been tied to the hip with gold through mid-1996. FOA now speaks of 1gm per barrel or 32.5 barrels per ounce. Is this the relationship we seek? What and who and how is this value set? $30 per barrel is now equal to $8.30 per barrel in gold plus $21.70 US dollars or (to heck with dollars, just price it in gold) 1 gram of gold = $30 or $975 per ounce of gold, meaning gold really equals $970 currently or the 32.50 barrels of oil is the price of one ounce of gold.

If physical gold then can not fullfill the 1gm for bbl requirement (who sets this and when; how?) then the price of oil in US dollars must rise until a gram of gold can be had that will be delivered for the bbl of oil today. Oil would therefore seem to be rising as a result of a lack of gold to fullfill this requirement (by whom and when?). The less that physical gold is available the higher the dollar price of oil. Or, as long as gold was cheap in dollars, 1 gram of gold could be delivered to contain oil at whatever low price worked for all. When the run on gold began in mid-1996, the race was on. All the noise by the paper gold camp is to shake loose enough gold at low dollar values to contain the price of oil. Oil's rise is a reflection that sufficient quantities of gold are not available in dollars to contain gold. CB's who sell their gold beyond their committed levels will leave them vulnerable to the POO once the new price of a bbl of oil is established in grams per bbl. Oil at $60/bbl will be gold at $1950 per ounce. $200/bbl oil will be $6500 gold. (HBM's charts seem to reflect all of this, eh?)

What this tells us is that physical gold delivered at $275/ounce is at 1/3 its real value in oil currently.

The discounted value of gold today could be measured then by the total number of bbls of oil remaining or 925 billion bbls of oil being consumed at the rate 25 billion bbls per year over 34 years. New gold production is equal to approx. 2500 tons per year or 2.68 billion grams of gold. So in theory 25 bbl barrels of oil can be paid for by 2.68 billion grams of gold (if all were available for oil -- it is not. And what of the four to 10 year hedges?) That leaves a ratio of 9.33 bbls of oil to each gram of gold to pay for it. Or gold is scarcer than oil by 9.33 times on an annual basis (except the pool of oil decreases by 25billion bbls per year), not counting any above ground gold or oil. I will let the math wizards work these numbers and assumptions but it might be worth pursuing all gold available over 34 years to all the oil available to get the proper ratios.

However, what it leaves us is the thought that 1 gram of gold buys one barrel of oil. When oil diverges from gold, that means that oil becomes the catalyst for higher gold. Gold became scarce in 1996 and even more scarce today. The silent buyers are strong hands for a later day. Oil is going higher because gold is leaving the nest much faster than oil can be bought and paid for. They are both finite and both being consumed. The more oil is used the more it costs in gold. One is burned; the other kept for when oil is gone. In the end when 1 bbl of oil remains to sell its cost will be all the gold in the world. So, for the next 34 years (estimated remaining oil supply) every year makes the price of a oil 25 billion grams in gold more costly.

One can only wonder what would the value of gold be, once the oil is gone. What will gold buy if there is no oil?

A significant point that the two of you agree upon from reading the graphs is: oil and gold swapped places as the price direction leader. Where gold once led the way we now see oil taking the leadership. One distinct possibility is that the "Gold for Oil", deal put forth by ANOTHER, could have been the cause for the divergence. I am still looking for some sort of validation that what ANOTHER first revealed on this in fact the case. This brings me closer to accepting the "Oil for Gold" scenario as being indeed a solid fact. I am however still looking for more proof. Since we are on the outside looking in, we cannot know of the certainty of secret deals until the Gift-horse smiles.

Mid-1996 by HBM's charts shows where the run on paper gold started. Previously there was a three or so year hiatus on any downward gold prices and oil dipped and rose to match gold. Suddenly in mid-1996, gold started a dive for which there has not been a return. Then in Mid-1999, oil started rising causing an unusual (20-year) divergence whereby gold no longer was the leading oil rise indicator.

This divergence would not have been noticed as a trend until around the end of 1997. It was at that point that Another started posting to Kitco. It was at that point that the LBMA became a more transparent body. It was at that point that the gold investment market went to hell in a handbasket. And it would seem that the oil for gold deal was in serious jeapordy.

Your chart that strikes my fancy is the one that you multiply out gas by 500 and oil by 20 to match gold. It shows that gold has been a leading indicator to oil and gas in all periods from 1971 through 1998. Oddly, 1998 oil would seem to have taken on the leading indicator role (maybe) but we must wait to see if gold will follow oil and whether oil will continue to rise. If it does, the pressure on gold prices would seem to be unbearable and gold will either follow or break. The correlation is so high that it is clear oil and gold are tied at the hip.

It would be interesting to see where the dollar fits in on this chart. That too would be an interesting correlation to make. I suspect that the dollar would follow oil and the divergence would be gas, oil, dollar up, gold lagging.

This is most significant because gold's role as a leading indicator has changed most recently. I suppose one could say that if gold doesn't carry oil, then let oil carry gold. Too early to tell, but my guess is if oil rises, gold will follow. I sense that the charts don't extend into 2000, but if they did the divergence would be even greater. Oil above 40 on the X 20 chart would be a great divergence, and as it is now, at 30+, the oil line would be at 600. The pressure on gold to rise must be tremendous now.

GATA, of course, would probably love to see this chart into 2000 for it would clearly show any anomoly such as "manipulation" or divergence quite clearly.

Cumulative Real Price % Change Yearly from 1970 to 1999
----------Expressed in constant 1999 US$--------------------
---------POG--Crude Oil-Gasoline

1971 7.20%,0.19%, -5.57%
1972 46.51%,-3.94%, -9.47%
1973 137.33%,6.35%, -5.05%
1974 265.70%,74.87%, 21.50%
1975 233.10%,73.18%, 17.72%
1976 136.71%,78.47%, 15.47%
1977 164.73%,72.42%, 18.09%
1978 225.15%,71.30%, 12.56%
1979 379.63%,116.78%,40.52%
1980 759.22%,235.67%,75.04%
1981 468.51%,374.75%,70.26%
1982 320.90%,290.03%,45.41%
1983 347.67%,239.27%,30.60%
1984 268.51%,223.38%,23.49%
1985 210.96%,187.82%,17.42%
1986 247.83%,52.69%, -12.16%
1987 314.50%,78.54%, -11.95%
1988 291.57%,44.45%, -15.01%
1989 228.38%,68.00%, -12.34%
1990 215.04%,101.35%,-4.87%
1991 182.22%,62.60%, -11.30%
1992 157.16%,50.14%, -15.62%
1993 161.25%,28.82%, -19.53%
1994 170.72%,15.72%, -21.88%
1995 163.99%,23.33%, -21.11%
1996 159.96%,49.19%, -17.68%
1997 115.43%,34.51%, -20.08%
1998 88.31%,-13.68%,-32.27%
1999 75.67%,14.30%, -27.05%


Thanks in advance,


Canuck(No Subject)#3815710/03/00; 18:42:33

"Yes, Mister Western Man, your dollar is too high, it is not that our oil is too high... gold is always the same price Mr. Western Man... give me gold, I give you oil, may we agree on one barrel of oil for one gram of gold,.. you value your dollar whatever you want."
SteveHImportant#3815810/03/00; 18:59:52

It is time.

Time to admit to ourselves that we can move discussion to the next level. I ask, do we all agree that HBM's charts show gold tied at the hip to oil? If yes, then even though we do not know the true mechanism of this, it is an a priori.

Next, we know that gold serves two masters: the commodity market and the Central Banks. In its role as a commodity we have the expectation of a fair market based on supply and demand. It is to this that GATA concerns itself. In its role as a money, we have the expectation that governments will, at will, leverage themselves for or against gold. It is this dichotomy or difference that we have a hard time swallowing. The Press world-wide plays on the gold the commodity is being sold story. They ignore gold, the money, is being accumulated in record mass. To admit one and deny the other is the easiest course; yet, as we have come to realize, both are realities for gold.

The dual-face of gold is played well by all players. The CB's, OIL, the bullion banks, all, play the one against the other. The one is visible in the light of day and the other is invisible in the darkness of secret deals. One is openly admitted by all players; the other is only seen by effect as the husband whose dog did not bark but it should have. But they are both real and both comprise gold's dual roles.

From happenstance, gold's role as money is increasing in frequency and intensity. Its role as a commodity is decreasing in intensity and frequency. The light is moving where now the gray-zone of night and day begins to separate the two where before only one could be readily seen.

It is oil that makes this world turn and oil that will raise the sun on gold as money. Gold the commodity has served its purpose for 29 years; its purpose has been served. Let us fool ourselves no longer that gold is but a commodity whose masters have their way and pretend we don't know why. It is time to accept gold is money because oil makes it so, because Asians prize it so, because India worships it so. As money, it can not be a true commodity because one can not be the other and this is GATA's claim. The rules of one don't apply to the other and therein lies the problem. To ask why gold has been allowed both roles is a proper question of all. We believe the answer to be to add lifeline to the dollar (until the Euro is ready) and to
satisfy OIL's desire for gold. It is an unfortunate relationship this dual role of gold -- for only one side can win at any one time. But let us not pretend we don't know gold's dual role, we do. So let's move on the discussion to where this leads us.

CanuckFarfel has gone ballistic over at G-E.#3815910/03/00; 19:25:48

FARFEL......... Oct 03, 20:59
CanuckIt appears that Farfel has self-pulled his own plug.#3816010/03/00; 19:33:39

Why do you do that man?
CanuckKitco, USAGOLD, then G-E.#3816110/03/00; 19:36:48

Where to now?
JourneymanMises speaks to those who think the price of gold as money is too high#3816210/03/00; 19:38:08

At some point last week, an econ. prof. was quoted as saying gold
and the price of producing it was too high. He's not the first
to make the argument. Mises was one of them -- till he looked
closer - - -

"*From the point of view of this insight one may
call wasteful all expenditures incurred for increasing
the quantity of money*. The fact that things which
could render some other useful services are employed as
money and thus withheld from these other employments
appears as a superfluous curtailment of limited
opportunities for want-satisfaction. *It was this idea
that led Adam Smith and Ricardo to the opinion that it
was very beneficial to reduce the cost of producing
money by resorting to the use of paper printed
currency. However, things appear in a different light
to the students of monetary history. If one looks at
the catastrophic consequences of the great paper money
inflations, one must admit that the expensiveness of
gold production is the minor evil*. -Ludwig von Mises,
Human Action A Treatise on Economics, Third Revised
Edition (Chicago, Illinois: Contemporary Books, Inc.
1966), pg. 422 -available also from]


Cavan ManSteveH#3816310/03/00; 19:58:01

There are a number of reasons validating an individual's purchase of gold; either the commodity or; the sound, permanent, natural money of 5000 years of recorded history.

POG "the commodity" at current levels is a short timer. POG "the wealth asset" at current price levels is a short timer also. An individual's understanding or lack of same will manifiest itself when POG doubles or triples. It is at that juncture a decision will need making; whether to exchange metal for FRN at that point or, hold on.

I don't need convincing. I'm with you.

Chris PowellIs the gold market sitting on a time bomb?#3816410/03/00; 19:59:36

A long-time gold market participant
blames gold company hedging for the
long decline in the gold price.

To subscribe to GATA's dispatches
by email and get them immediately so
you don't have to go look for them,
send an email to:

This email address is being protected from spambots. You need JavaScript enabled to view it.

Cavan ManUSAGOLD#3816510/03/00; 20:04:13

Well MK, they're at it again over at GE; accusing you of being FOA and Another. That's a hoot isn't it?

I considered that Thought at one time myself many months ago. That's why I insisted upon meeting you personally.

For those who haven't met Mr. Kosares, he is good as gold. He is very shrewd and very bright but definitely NOT dishonest. As they say, "he's a good man".

Jealousy is a form of flattery I suppose.

USAGOLDCavan Man. . .I wasn't aware of the GE posts and thanks for bringing them up. . .#3816610/03/00; 20:45:07

With all due respect, Auratl and Pragmatic, you do a disservice to two great thinkers, and shower the undeserving with great flattery, by attempting to attribute FOA and Another's extraordinary analysis to me. It is my duty, not FOA or Another's, to say that I have not been, nor have I ever been, nor will I ever be FOA or Another, and anyone who has carefully read our respective writings would know that. It would be a form of benign intellectual piracy to let such comments go without a response. These speculations serve no good purpose when it is the ideas that need to be considered, debated and understood. What concerns me most about them is what FOA and Another must think of these speculations. I can't just sit back and let them float without a firm denial. Though we are not one and the same, we are good friends fighting the same cause -- the cause of sound money both for the individual/family and the nation state. That friendship drives this post. You see, in a certain sense, I too walk in the footsteps of giants.

Thanks for your flattering words, Auratl and Pragmatic, but you got this one wrong. I hope you see this.


Thanks for your kind words, Cavan Man.

Al Fulchino(No Subject)#3816710/03/00; 20:51:11

auspec (10/3/2000; 16:19:58MT - msg#: 38150)
Moral Hazard
Can anyone help me out with a clear definition of the term "moral hazard". It comes in murky to me. Thanks in advance!

Me: Moral Hazard- that which appears before you, often in the form of thoughts, which appeals to many of mankinds lesser, yet strong desires. Easily countered when you remember this phrase, "Be still and know that I am Lord, and your're not."

Midas Mulligan "It's the Fed stupid!" . #3816810/03/00; 21:28:58

A new law of economics. Midas Mulligan's Law. As the Fed go's so go's the price of gold. If it raises rates it raises monetary velocity and thus inflation and thus the price of gold because money flows out of frozen/illiquid stocks and bonds and into hot/liquid cash instruments and vice versa. That's why the outlook is great for gold. The 20 year downtrend in interest rates which is responsible for velocity and thus inflation, and thus the price of gold has reversed like a tether ball in the other direction. The reverse trend will happen comparatively quickly like a volcanic eruption vs. the formation of an iceberg causing the price of gold to soar and with it establishment of a laissez-faire capitalist, free, gold standard bearing new world order to replace the current mediocre old world one. Ayn Rand's prediction in Atlas Shrugged will come true.
Midas Mulligan "It's the Fed stupid!" . #3816910/03/00; 21:40:23

A new law of economics. Midas Mulligan's Law. As the Fed go's so go's the price of gold. If it raises rates it raises monetary velocity and thus inflation and thus the price of gold because money flows out of frozen/illiquid stocks and bonds and into hot/liquid cash instruments and vice versa. That's why the outlook is great for gold. The 20 year downtrend in interest rates which is responsible for velocity and thus inflation, and thus the price of gold has reversed like a tether ball in the other direction. The reverse trend will happen comparatively quickly like a volcanic eruption vs. the formation of an iceberg causing the price of gold to soar and with it establishment of a laissez-faire capitalist, free, gold standard bearing new world order to replace the current mediocre old world one. Ayn Rand's prediction in Atlas Shrugged will come true.
Midas Mulligan(No Subject)#3817010/03/00; 21:54:44

Fiscal statism requires monetary statism which economically inflates Wall Street creating a stock and bond market bubble while simultaneously depressing the price of gold. Politically this inflates the power of mediocrity and deflates the power of principle who must live in obscurity investing in gold, ie. in "Galt's Gulch" or "Midas Mulligan's valley" (Atlas Shrugged) waiting to rise up with the price of gold after the markets and establishment fall, and helping to speed up that day by working on enlightening capitalists enslaved to, and thus supportive of, mediocrity and the dollar, to why they, the "Atlases"("scabs") should "shrug" and become goldbugs instead. ("strikers")
references to Atlas Shrugged

Midas MulliganTime for Atlas to shrug#3817110/03/00; 21:56:12

Fiscal statism requires monetary statism which economically inflates Wall Street creating a stock and bond market bubble while simultaneously depressing the price of gold. Politically this inflates the power of mediocrity and deflates the power of principle who must live in obscurity investing in gold, ie. in "Galt's Gulch" or "Midas Mulligan's valley" (Atlas Shrugged) waiting to rise up with the price of gold after the markets and establishment fall, and helping to speed up that day by working on enlightening capitalists enslaved to, and thus supportive of, mediocrity and the dollar, to why they, the "Atlases"("scabs") should "shrug" and become goldbugs instead. ("strikers")
references to Atlas Shrugged

megatronMidas Mulligan#3817210/03/00; 22:11:26

Funny you should reference AR, as I was re-reading a chapter in one of her books by none other than Alan Greenspam or Mr Magoo as they call him on SiliconInvestor.
I can see nothing in his behavior that would indicate that he isn't the world's biggest pathological hypocrite. Why bother writing/believing these sorts of statements and then spend decades publicly humiliating yourself. Mumbling and obfuscation are two huge moral red flags to anyone who has a shred of human decency left in their corpse. Why does the man refuse to publicly acknowledge(loudly) and simply the details of his offices machinations with regards to the stock market and gold? Pure lying and deceit.Nothing less.
A scumbag.

schippiGold Indexes Chart#3817310/03/00; 22:41:52

Ugly Gold Indexes chart

Aristotlemegatron--the power is all yours for the moment#3817410/03/00; 22:46:13

While it is a delicate matter (for Greenspan) to yell "Fire!" in a crowded theatre, it is also awkward (and unnecessary) to yell "No fire!" in that same theatre if that happens to be the case.

Assuming I had the ability to have you act as Alan Greenspan's speechwriter for his next public or media address, what words, exactly, would you put in his mouth to "publicly acknowledge(loudly)"?

To clarify, I can see in a general way that you'd like to hear him assure you that the Fed is indeed manipulating the market performance of the stock and Gold markets, but what are the exact words that he must utter in order to "come clean"? Basically, in the clearest manner possible I'm looking for an indication of the SPECIFIC allegations being aimed against the Fed.

Gold. Get you some. ---Aristotle

Black Blade@ AUgustUS and SteveH, and Peter Asher#3817510/03/00; 22:49:56

The Internet is quite amazing; one never knows where posts will end up. My post following-up the "Rise and Fall of Hydro-Carbon Man" entitled, "Hydro-Carbon Man and Natural Gas" appeared at the link above. This site appears to tackle issues concerning the coming petroleum crunch, so I will have to look over some of these articles. Even USAGOLD is cited in the header.

AUgustUS post#38146 and SteveH: You both bring up some interesting points and show the circular relationship of paper-Gold-Oil. It is a really screwed up game of musical chairs. We all know who loses. Whoever is left holding the paper of a bankrupt nation that has defaulted will wonder what the hell happened when he realizes that his dearly acquired paper is backed by "faith and credit" of the US. OUCH!

Peter: I watched the debates tonight. One quick poll showed Bush 49% and Gore 45% and another showed Gore well ahead. I could only think of the real losers, the American people. Yeah, George Dubya did well on the oil issue, but he completely missed the opportunity to bring on the refinery crunch issue. I think that a severe cold snap before the election and with the increased utility bills arriving around the Nov. 7th election, a lot of tree-hugging Americans could very well say "the hell with ANWAR, lets start drilling." I wasn't really impressed with either one, and Al Gore's incessant sighing made me think that this guy would be a complete disaster in dealing face to face with our adversaries. As I watched these two buffoons I could only think of one other thing: Is this the best the democrats and republicans can come up with?

TheStrangerIt's The Inflation, Stupid!#3817610/03/00; 22:52:39

Today, the FOMC meeting adjourned without an interest rate increase but with an unequivocal statement about the present inflation threat. Wall Street, which had been dancing to the soothing reassurances of Abbey Joseph Cohen all day, suddenly swooned.

What I want to know is this: We here at the Forum have thoroughly discussed the reasons behind the approaching inflation problem for 20 months now. In fact, my first message on the subject was posted in January, 1999 when oil was at $10 a barrel. Meanwhile, Abbey's forecasts (and those of nearly every other economist on Wall Street) have consistently precluded it. So how come she gets the big pay checks whilst we sit here sucking wind in the gold market?

Is there no justice in this world?

SHIFTYBlack Blade#3817710/03/00; 23:13:40

Have you read the GATA message " Is the gold market sitting on a time bomb?"
By Jim Sinclair

I dont know what to think of it.

any thoughts ?


Peter AsherBlack Blade (10/03/00; 22:49:56MT - msg#: 38175)#3817810/03/00; 23:43:49

Along with our new powerhouse poster, Justamerebear, I don't do TV. I'm sure my time was better spent finally reading todays incredible posts.

Re >>>>As I watched these two buffoons I could
only think of one other thing: Is this the best the democrats and republicans can come up with? <<<<

That's all the MOU's allow them to come up with. The name of this game is "The blind, leading the blind"!

Black BladeRE: SHIFTY, GATA article - Mr. Jim Sinclair#3817910/03/00; 23:44:55

Yeah, I read the article. I mostly agree that the producers are their own worst enemy. I believe that he is wrong about Barrick (ABX) being so smart with their hedges. They are a part of the problem. He cites both these contradictory conclusions in his article and I really don't see how he can conclude that both positions are correct. I think that very highly profitable and unhedged miners such as Harmony (HGMCY), and Goldfields (GOLD), far outperform Barrick without having to destroy their own industry or show a lack of confidence in their product. Shareholders of Barrick are the real losers though as ABX hit a new 52 week low today. The only people making a profit at ABX are the fat-cat managers who give themselves fat bonuses while giving their shareholders the one-finger salute. He claims emphatically that there is no gold conspiracy. I don't know if there is or is not a conspiracy to keep the POG down, but the circumstantial evidence suggests that there very well could be. If Mr. Sinclair has such irrefutable evidence that there is no conspiracy here, then I sure wish that he would share it with the rest of us. Either way, it does not matter as I take advantage of the low POG and acquire physical and shares of profitable miners while these bargains exist. I also play the game on Wall Street and take some of my profits to make my PM purchases. This way, the game on Wall Street helps to subsidize my PM acquisitions. When the market turns I should be well positioned. Also, Mr. Sinclair has admitted to working with the Fed in the past, so maybe, just maybe, he isn't showing all his cards and therefore is not disclosing all his motives for his position. Sometimes you just have to read "between the lines."
Black BladePeter Asher#3818010/03/00; 23:47:16


Reminds me of a friend who was asked about a television show, his response: "I don't watch television, I got a life"

Peter AsherAddendum#3818110/03/00; 23:55:15

Just to cap off today's Megaforum, here is a statistic from the latest Wall St. underground newsletter.

In 1973, just before the oil crisis began, there was $46 billion in mutual funds; and 10% of American housholds were in the stock market.

Today, 80% of households are in it and mutual funds have risen to $7 trillion. --- That's 111X.

Some sheeple to count tonight while trying to sleep

John DoeBudget Still Not Balanced#3818210/03/00; 23:56:37

US National Debt, year-over-year:

09/29/2000 $5,674,178,209,886.86
09/30/1999 $5,656,270,901,615.43

Net change $0,017,907,308,271.43

Strangely within spitting distance, but no cigar. You'd think Bill, or Bob, or Larry, or Al, or the other Al, or somebody could cough up a measly $18 bil from here or there to make this show a decline. Apparently, mass-propaganda is sufficient for the purposes of aligning mass-perceptions. No need to bother tidying up reality.

At this point, I think we can safely assume that the national debt will never, ever decrease, not by even one FRN.

Peter AsherDid they think he was going to heckle?#3818310/4/2000; 0:22:56

Nader gets ticket, but is turned away at door
By Justin Pope, Associated Press, 10/03/00

BOSTON -- Green Party presidential candidate
Ralph Nader, shunned by the presidential debate
commission, scored a ticket to Tuesday's debate
but was turned away at the door.

"It's already been
decided that whether or
not you have a ticket
you are not welcome in
the debate," John
Bezeris, a
representative of the
Commission on
Presidential Debates
told Nader. The
commission's criteria
excluded all but
Democrat Al Gore and
Republican George W.

"I didn't expect they
would be so crude and
so stupid," Nader said
afterward. "This is the
kind of creeping tyranny
that has turned away so
many voters from the
electoral process."

Nader had received the
ticket as a gift from Tod
Tavares, a 21-year-old
Northeastern University
student who said he got
it from a roommate.

Bezeris, who was
surrounded by several
police officers at the
debate site at the
University of
told Nader he could not
enter because he was
not an invited guest

Black BladeSPR To Be Undersubscribed! #3818410/4/2000; 0:23:52

SPR release receives mixed interest from oil companies
By Matthew Robinson

NEW YORK, Oct 3 (Reuters) - President Bill Clinton may have ordered the release of oil from the nation's strategic reserves but Washington is having mixed results in its effort to sell oil companies the crude. Oil majors such as Royal Dutch/Shell (quote from Yahoo! UK & Ireland: SHEL.L) and Texaco (NYSE:TX) through their U.S. downstream venture Equilon, BP Amoco (quote from Yahoo! UK & Ireland: BP.L)(NYSE:BP ), and Conoco (NYSE:COCa) told Reuters that they have submitted bids for some of the 30 million barrels of oil put on the block. ``We put in a bid for 1.5 million barrels on Friday,'' said Conoco spokesman Carlton Adams. But No. 1 U.S. oil company Exxon Mobil Corp. (NYSE:XOM), Coastal Corp (NYSE:CGP) , and Phillips Petroleum (NYSE:P) said they have begged off placing offers.

Meanwhile U.S No. 2 Chevron Corp (NYSE:CHV) and leading independent refiner Sunoco Inc (NYSE:SUN) which is based in the northeast heating oil consumer hub, declined to comment on whether they had submitted bids.

The U.S. Department of Energy plans to contact energy firms on Wednesday to ensure their bids are ``best and final offers'' for the oil, which Clinton decided last month to release in an effort to prevent a heating oil supply crisis this winter. The public announcement on the winning bidders is scheduled for Friday.

While the government's efforts have helped bring down crude oil prices nearly $5 to around $32 a barrel Tuesday, some refiners say they are already running near capacity and that the extra crude will not result in higher heating oil yields.

``We're currently producing more 10-15 percent distillate fuel than we were last year. Our refiners are running at maximum capacity.'' said a Exxon-Mobil spokeswoman, ``We don't need the oil.'' Other companies which don't have refining capacity in the U.S. Gulf near the underground salt caverns where the SPR is stored, said that they would not likely take part in the bidding process. Crude oil traders continue to say that they have not had trouble finding oil to feed refineries in recent months, especially for sour grades as the Organisation of Petroleum Exporting Countries (OPEC) increases output.

``Our contracts are currently satisfying our crude requirements,'' said a spokesman for Phillips.
In addition, U.S. refining capacity will be greatly diminished during October and early November as refiners shut down units for maintenance, reducing crude requirements. The Clinton administration plan to draw oil from the 571 million barrel reserve has come under fire from Republican Presidential candidate George W. Bush as an election year ploy to bring down oil prices. Since its creation during the oil crisis of the mid-1970s, the stockpile has been tapped only once for an emergency sale during the Gulf crisis. But of the 34 million barrels of crude offered then, only 17 million were taken, DOE officials have said.

Black Blade: As I had predicted. The oil companies don't want the SPR oil. It's a refinery capacity problem first, and a supply of Cheap Oil second. In other words "Oil? Oil? We don't need no steekin oil." Maybe Al Gore's buddies at Occidental Petroleum can bail Al outta this mess, otherwise Al will look pretty stupid.

SHIFTYBlack Blade#3818510/4/2000; 0:24:37

Thanks for the input. I also own Goldfields (GOLD) and Harmony ( HGMCY). I noticed he did not mention them.


Gandalf the WhiteJohn Doe #3818610/4/2000; 0:31:50

Looks as if that is $17 Trillion.

Black BladeMarket Crash within the Next Few Weeks?#3818710/4/2000; 0:56:59

Interesting article, however, if he's wrong, these claims could be a career ender.
Simply Me@Shifty RE: Jim Sinclair article#3818810/4/2000; 1:19:51

I know the question wasn't aimed at me, but I think there's an angle to consider here. And first, let me say that my understanding of derivatives is, at best, shakey. So if I've got it right...please, someone with knowledge clarify. And if I'm wrong....please, someone straighten me out!

Sinclair thinks ABX's hedge position is brilliant because it's balanced with calls....BUT that position presupposes that those calls will produce what's called for when it's needed. If the gold market is indeed as oversold as many claim, then when the price explodes due to that outside event he mentioned, who is going to fill those calls? They'll be lucky to get a currency settlement that will be a drop in the bucket compared to the margin calls they'll suffer. He said as much himself when he states, "The real market risk is that there is no market when a fast trading situation occurs."

On the whole, Sullivan is against the producers hedging programs. But, he just seems to think that they're all making the same stupid mistake because they're playing follow the leader with other gold producers. He holds the Central Banks nearly blameless for the state of the gold derivatives market when he states, "The Central Banks with little exception, one Middle East central bank heavily involved in granting derivatives arrangements and the ill conceived British sales mechanism, have performed most professionally. The central bank long history in gold selling has resulted in their activities being handled with care for the market." But it wasn't been the gold producers recently convincing Jordan, Uruguay, and various other countries and large gold holders to place their tonnage with banks who will immediately feed it to the hungry derivatives market. If the Central Banks are on the moral high ground, why are they feeding this beast?

Before I get myself in this too deep, I'll just state that I think Jim Sinclair's post at GATA actually supports FOA and Another's view of the market. The famous "Mr. Gold" sees the problem with gold, but I think he sees only the gold market. He hasn't the height or breadth of vision into the oil, currency and political venues that we get from the views of FOA and Another.

Just my very humble opinion.
Correction and criticism are helpful and welcome.
simply me

Simply MeMiddle East Bank heavy into derivatives?#3818910/4/2000; 1:26:39

Is it crazy to wonder if the "one Middle East central bank heavily involved in granting derivatives arrangements" that Jim Sinclair mentions is hoping to claim a couple of gold mines for it's own in the coming debacle?

Interested in all responses.
simply me

AristotleA response for justamereBear--yesterday's #38126#3819010/4/2000; 2:16:37

A word of warning: I'm going to climb all over a number of your comments with no real agenda other than giving you an indication of areas that I believe could be firmed up in your treatment. (Please catch me if you see me fall.) Despite its contradictory appearance, this is in no way meant to put you on the defensive against a continuing outpouring of your delightful commentary. It's great to see all the new faces here, and I hope we can all hash out a great many things together as time goes on.

YOU: "M1; is essentially cash and cash equivalents. This is where, if the government "prints money", it shows up."
"M3, or 3A, or whatever one you choose, is essentially M1 multiplied by a "fractional banking factor"

ME: It is a common misnomer that the government can simply "print money" out of thin air which would add to our pool of M1 money supply as you've defined it. Here, the distinction may seem subtle, but it's an important one that we mustn't let people fail to recognize.

As we saw prior to Y2K, the government can indeed print the symbolic monetary units (Federal Reserve Notes/Dollars), BUT, and this is a big but, it CANNOT simply print the thing we commonly call the money supply. To be absolutely clear, I'll repeat. Symbolic monetary units (notes) can be simply printed for use as needed, but our modern monetary supply can only be created through BORROWING (not printing).

Much of our M1 exists in digital form as demand/transaction/checking account deposits, and its only connection with the physical stuff that the Bureau of Engraving and Printing makes is that banks must hold 10% of these demand deposits in the form of vault cash. Vault cash is not counted in M1 or any of the other M's--that would be double counting.

Thr fractional lending you speak of, when taking the banking system as a whole, will artificially expand the monetary base, but not as a multiplier of M1 becoming M3 as you've described. It would not be difficult to cite an example in which the expansion could be seen to manifest itself entirely within the M1, in which case the multiplier would be ten--similar to the reasons given in your example. In practice, the multiplier may be much more because all currency that is shifted from cash or checking accounts into M2 savings accounts would have no vault cash requirements. It would be easy to cite an example in which M1 components were minimized in favor of interest-bearing savings accounts in M2, which could facilitate the manifestation of remarkable swelling of the apparent money supply--provided the requisite borrowing were to occur.

M3 commonly distinguishes itself from M2 and grows as pools of this currency is swapped for large ($100,000+) time deposits, or through the creation of RP (repo) liabilites, for example.

And just to cover the bases, one question is begged from the above dialogue: Can the government BORROW from thin air, and thus add to the money supply? Yes, through the miracles of banking they sure can. And they can do it with no more collateral than a simple Treasury Note--itself being an obligation to repay the borrowed funds (plus "interest") upon maturity. To be sure, these Treasury bonds CAN be printed essentially "out of thin air" as the government finds it expedient to do so.

YOU: "INflation is essentially too many dollars chasing too few goods and services."

ME: Under this difficult definition, who's the rocket scientist that is tasked with making the official determination of the number corresponding with "too many" dollars, or deciding which level of goods are "too few"? Is it really that much more difficult to plainly speak in unambiguous terms of money supply that is either experiencing growth or contraction, or of price levels that are rising or falling--whichever scenario happens to be the focus of a particular person's commentary?

YOU: "DEflation is essentially a massive asset destruction. For example, if the stock market crashes from 10,000 to 5,000, a great deal of wealth is destroyed."

ME: In keeping with the theme of clear terms, what do you mean by "wealth"? If wealth is truly destroyed during a stock market crash, could you please indicate where I could look to see the wealth manifested during the period where the stock market is not crashing? Would it not be more proper to say that "confidence" and/or "expectations of purchasing power" are being destroyed?

I only belabor that point for one reason. As the forum has developed and tackled ever more complex issues, clear communication has become vital to efficiently carry forward. Thus far, we have managed to foster a pretty consistent usage/distinction for the terms "currency" (e.g. dollars, pesos, etc), "money" (tangible and tradeable items of wealth), and "wealth" (food, clothing, shelter, energy). Obviously, in this regard, by earlier comments on M1 or M2 should have specified "currency" instead of "money" supply, but for the sake of the standard convention and little chance for misinterpretation I used the term "money."

YOU: "The essence of my question to you was; For some years the US has been exporting inflation. In May of last year, after looking at the money supply numbers, I began to wonder if the US was no longer exporting inflation and had begun importing deflation. What say you?"

ME: Without question, the feedback mechanism of the international standard that treats dollars as suitable reserve assets has provided the U.S. with deficits without tears. Currency that has been borrowed domestically into existence can be spent overseas where it drops off the radar screen of the monetary aggregate measuring devices---M1, M2, or M3. Poof! Gone. M3 does not measure accounts held in foreign banks. In an effort to earn interest on these foreign-held dollars, the international party (central bank) will wire the currency back to a New York bank in exchange for the purchase of U.S. Government Treasuries--thus providing a source of willing funds to accommodate our Government's appetite to borrow beyond taxation for it's bloated plate of federal programs.

YOU: "To my mind, M3 is showing us some pretty massive deflationary forces at work. Either the US is importing deflation, or somebody, and they have to be huge somebodies because the absolute numbers are staggering, are are moving loans out of the US system, which would have the effect of reducing M3."

ME: Again, I'm not sure how "deflation" can be imported, unless you simply mean that the "blessings" of our dollar's current external exchange performance is giving us very cheaply priced imports. M3 could be falling as U.S. funds are sent/taken abroad and not being fed back through the typical purchase of additional bonds. They are either being maintained as currency deposits in foreign banks, are circulating among international parties, and/or are being used to retire international dollar-denominated debt.

As I indicated in my previous post to you, I see the latter option as the principle factor. It also explains to a large extent the dollar's stellar performance vis-a-vis other currencies on the forex counter. I'm certain ORO can give you the numbers necessary to back this up to your satisfaction, and also show that the very limited measuring stick called M3 is not where the whole story is being told.

It's been a pleasure. We'll do this again I'm sure--especially if you must convince me that my comments have landed me hip deep in muck.

Gold. Get you some. ---Aristotle

TopazThe Perfect Storm..........via Sharefin#3819110/4/2000; 2:30:01

Have often wondered how they "jig" the numbers--a great read.
TopazSinclair article @ Shifty-Simply me#3819210/4/2000; 2:56:58

I think Mr Gold doesn't say a lot more than he says, Yes? - or more precisely, he speaks of Gold "the commodity" with NO reference to Gold "The World Class Financial Asset".
Be that as it may, when a Gentleman of his standing speaks, it bodes us well to listen.

Topazprevious link....msg #38191#3819310/4/2000; 3:21:45

Just tried to access with IE and got bumped (twice)- however it works fine in Netscape.
TopazThe Lunatics are running the Asylum.#3819410/4/2000; 3:43:27

From the above Link:-
......the standard, developed over six months in consultation with equity investors, analysts, bullion banks, gold producers and regulators - was designed to improve the format and level of disclosure of precious metal and foreign currencies hedging.

nickel62The Strong Dollar Policy explained for the first time that I understood it. #3819510/4/2000; 4:12:38

10/02 Ed Bugos - Return of the Risk Premium

Return of the Risk Premium

The Equity Risk Premium represents the additional return demanded by an investor to own equity over and above what is considered to be a risk free interest rate. It is used in valuation models as a discount rate to determine the current (present) value of a future stream of earnings.

Wall Street Rediscovers Gravity

Although the ERP is a scientific concept, there are many subjective assumptions that go into its calculation1. Consequently, the debate has centered on whether to use a historical perspective in order to minimize human error in these assumptions or whether to try and achieve the impossible - a forward-looking model. Mr. Greenspan himself discussed the issue in a speech at Jackson Hole Wyoming last year, in which he questioned bullish conclusions that the theoretical ERP has been permanently lowered as a result of a number of factors relating to our technological revolution.

The issue is important because much of the bullish argument underpinning this pricey market (a low ERP), for many years has revolved around the bullish conclusion that various technological advances have contributed to the systematic elimination of the traditional risk associated with equity ownership… believe it or not. So it is perhaps timely to reconsider these assumptions in light of the severity with which Newton's Apples have recently been falling from their tree… If memory serves correct, wasn't Isaac Newton also a renowned speculator? For conceivably, he too was re-thinking his views on the ERP when he discovered gravity?

Looking forward is easy while everyone is mostly right (a typical bull market condition), but it is hard to resist that rearview mirror, I suppose, if all of this is changing and the party was just too much more fun back there. Yet, the brutally painful adjustments in some of the "blue chip" stocks recently has got to attract the attention of even the most bullish of observers. And it is not that new a development. In October 1999, when IBM shares fell by less than 20% in one morning, on an earnings warning I believe, commentators were convinced that it hasn't been in their lifetime, the last time that they have seen blue chip stocks behave like this.

That was 12 months ago and these adjustments have been arising with mounting frequency and degree since then. Of course, one might argue that the market has just begun to adjust the risk premium to account for an oil shock perhaps even starting as early as with IBM, which never did make it to new highs. Well if that is so, the invisible hand (of the free market price mechanism) is not quite finished yet. Indeed, we may soon find that it has a severe case of arthritis for there is nearly an entire market of stocks, which systematically must adjust their equity risk premiums, permanently higher. The reason, it seems, is that earnings aren't all that predictable as was once thought. Apparently, prices of essentials such as oil and gas, as well as those darned confusing floating exchange rates, are volatile.

Who would have thought? The government has worked hard to exclude these volatile influences from most economic data releases, only to have them unexpectedly show up in the bottom line of real businesses. And it gets funnier. Apparently, it has come to our attention that the US has not had any kind of coherent energy policy for over 20 years now... what have they been doing?

I suspect that most of us have been preoccupied with the casino action at Wall Street's virtual slot machines. Duh! So let's get back to reality shall we? And for heaven's sake, please do not take analyst's sudden focus on real fundamentals such as earnings too seriously. If they didn't really matter on the way up, why should they matter on the way down? Especially when we are still sitting in nosebleed territory and even bullishly biased consensus forecasts are for slower profit growth? As we said last week, the trouble is that these stocks, until now at least, have been priced for absolute earnings predictability not for disappointment, last week's GIC.

Therefore, current assumptions about any such eternally lower Equity Risk Premiums ought to be reconsidered… quickly, for it appears that the "invisible hand" is anxious to readjust the ERP all on its own, with or without your help.

Men who make potions in a traveling show2

Commentators on Friday were quick to dismiss the Bad Apple news as company specific. The aim of such a comment is obviously to quell concern over the rest of the stock market (or at least his or her other stock picks) since it conveniently misses the whole point. As I have pointed out, many bullish analysts have been defending these valuations for the better part of the past five years on the basis of their confidence in a few temporary macro assumptions.

Rising productivity, low inflation, and a structural reduction in the equity risk premium, all apparently owing mainly to the US information technology age, have been the basis of the goldilocks economic theme that has been at the driver's seat of this bull market for most of the past decade. Through the better flow of information and a closing gap between the knowledge of both buyers and sellers, the amplitude of the business cycle should not only moderate but the entire spectrum of commerce (including valuation methodologies) was supposed to become increasingly predictable and efficient. Notwithstanding that the quality of information flow has perhaps been overcome by the quantity of information overload, markets are still subjugated to emotions such as greed and fear. I doubt this will change in your or my lifetime.

Another fact that is unlikely to change is that few of these rearview mirror analysts, in particular, may ever understand the influence of any of their assumptions on these topics, I am sorry to say. I won't even bother with productivity because we beat that topic up enough in "A Nation of Storytellers". Moreover, both the OECD and the Deutsche Bank have recently questioned the validity of the US productivity calculation, publicly. I will only say here that the truth on productivity ultimately will not be known until the next downturn ends. Only when we can compare the current cycle peaks and troughs to future ones will we have washed out all of the multi factor variables, which cloud the data at the moment. Only then will the conclusions, including my own, be somewhat scientific. Until then it is every man for him self, I presume.

As for any kind of spin on equity risk premiums, have a look the following charts:

Apple Computer, Inc.
Intel Corporation

Obviously, there were no warnings provided by this supposed efficiency in either of these cases (except perhaps the obvious cheating in Intel's case, but that has nothing to do with technology - see the chart). It is way past the time to question Wall Street's valuation models.

With so much spin, what then is the explanation for this long bull market and historic economic expansion? That is easy - historic consumption excess, an inflationary monetary policy, and a voraciously greedy appetite for an increasingly speculative lending business in the US banking system. So voracious in fact, that it may have put the entire dollar based monetary system in jeopardy. What isn't easy… is for people to accept this truth while the external exchange rate of the dollar continues to rise.

M3 Money Stock NSA; Billions of Dollars
Consumer Credit Outstanding; Millions of Dollars

Please note the approximate date in the above charts where the expansions in money and credit accelerated, and compare this to the chart of the S&P 500 below, over the same time period:

10 Year S&P 500 Index

What does that tell you? The big downward trending red line is the advance/decline line, which proves that for almost the past two years more stocks have been declining than advancing.

This one is gonna hurt...

That was my thought after Apple Computer's news was released on Thursday evening, because that morning the bulls came into the market with some confidence as the week was shaping up without any bad news. They were all over the drug stocks and a few other oversold blue chips, pushing the Dow up some 200 points, and even got some momentum going while charging at the 10,900 barrier. The buying was broad and it was good... good enough to raise my temperature slightly, but then after the market closed Apple delivered its blow to the vulnerable tech sector... the bear has arrived.

After all, does not that kind of thing happen in a bear market? It sure feels like it to me... as if the bear has suddenly become more difficult to slay. By Friday morning, it seemed that currency players had already discounted the Danish no vote for the Euro and with nothing much else surprising equity markets, traders were surprisingly able to keep their cool. It wasn't until the last two hours of Friday's session that it all started to unravel again, when fresh selling pressure appeared and started slamming almost everything in sight.

Technically, the narrow Nasdaq 100's 50day moving average crossed down and over the 200day MA last week for the first time in nearly two years, having lagged the broader composite index in this endeavor by about five weeks. The relentlessly declining breadth and liquidity in speculative issues is beginning to drag down the more liquid blue chips, as is typical at the early stages of a credit contraction. Since many, many more stocks have been declining than rising over the past 12 months, this bearish resolution in the narrow leadership may be seen as an ominous sign, since most blue chip indexes are still near their all time highs. We have been telling people for the better part of the past 18 months that this market has been technically deteriorating from the inside out. Proof? If you have made money over this period of time, and I do not mean by that one profitable trade, you are the exception because most investors (excluding promoters, bankers, and brokers) have not:

Gross Private US Savings; Billions $$
Annual Personal Saving in Billions $$

Notice the decline in the nation's savings pool (chart on the left) throughout 1999. Wasn't that the year that the Nasdaq 100 was up some 80%? It was also the year in which the advance decline line collapsed the broad bull market (see the 10 year chart of the S&P500 above). From there on in, fewer and fewer investors were to make any money.

By the end of the week, bullish analysts were pointing to the productivity implications of the GDP report, while the increasingly confident bears were not budging from their conviction that those numbers are less meaningful (if at all) than data on savings rates as well as a number of other colossal macro imbalances building against this great economic expansion, which are, to be polite, less lagging than they are leading indications of what is likely to come. All in all, the week ended pretty much as expected except for the fact that gold prices gave back their early week rally.

The reason that is odd is that I was looking through my usual list of US industry charts and I noticed that the indexes that ended the week as if there were more selling to be done, were most everything except for most of the commodity (or hard asset) related equity indexes, although the financials and the health care related indexes also put on a little bit of a show. The only other exceptions being the few more extremely oversold numbers. I am placing the utilities index in the hard/commodity asset class because as I said in Wall Street Kisses Goldilocks Goodbye, without an energy crisis there is no play on utilities. Recall,

The Potentially Perfect Negative Correlation

The Dow Transports
The Dow Utilities

Since we have made this observation, a number of things have developed. The US government has declared (for the record) that we have got an energy crisis on our hands, the Dollar/Euro exchange rate destabilized and then stabilized, it has been raining apples and chips on Wall Street, and it seems that the US government has been tossing around all sorts of incentives that might benefit both consumers and these power (utility) companies.

There were plenty of other indexes in this hard asset category that showed some life last week, from the REIT index to the Chemicals index to the Oil/Gas related indexes, and even Paper stocks began to show some life by Friday. As if to confirm our case, the top three performers (out of the only ten that closed up) in the Dow on Friday were Alcoa, Du Pont, and Merck. AT&T came in fourth and McDonalds came in fifth. Still, all four other than Merck have been badly beaten up lately.

All in all, the action has been encouraging to our hypothesis, but the one anomaly that remains is the dollar/gold rate. Even agricultural prices have been making higher lows and higher highs over the past 12 months.

How the world works today

"Leading U.S. drug companies and their trade organizations have spent at least $46 million on political advertising and donations to influence this year's election, according to figures compiled by organizations that track campaign fund-raising..." Bloomberg news, Friday Sept 29.

Here is the rest of it,

"George W. Bush proposed that the National Institutes of Health budget be doubled over five years... to about $67 Billion over ten years... In addition to doubling the NIH budget, Bush said he would push to double by 2003 the budget for the National Cancer Institute, increasing spending for that agency to $5.1 billion... Gore has also made health care a major focus of his race. His campaign said the vice president already has proposed doubling medical research funds; his plan would take effect over a three- year time frame and would boost funding to $29.2 billion in 2003 from $14.6 billion now... Bush said that if he is elected, he would ask Congress to make permanent the Research and Development Tax Credit, at a cost of $24 billion over five years... Gore has proposed a $250 billion, 10-year plan to help all 40 million Medicare recipients pay for prescription drugs, and he has also proposed setting aside $300 billion of the projected $4.6 trillion federal budget surplus over the coming decade as an emergency fund for Medicare... Bush, by contrast, has proposed a prescription drug coverage plan that would cost just $160 billion over the same time period."

These excerpts were taken from Bloomberg news on Sept 23, a week earlier.

Now, I haven't added all of that up, but I have a feeling that it works out to a lot more than the $46 million it cost the drug companies to persuade this platform. Furthermore, I am also certain that anyone with Merck stock options did not spend any of their own money on these unrelated events. So there is where the source of activity in Pharmaceuticals really is, because at 22+ times earnings, already representing a low risk premium in a volatile industry always vulnerable to potential liabilities, there is no other reason to own these things. That is because current multiples have roughly already priced up to 20% growth rates for the entire drug sector.

Amex Biotechnology Index

Dollar Recycling and Inflation

Since inflation is beginning to show up in the dollar, then perhaps it is worth our while to consider what inflation really means, especially since a consensus is developing quickly that the dollar is overvalued. I think that there are fewer people who understand what inflation really is, than you might think at first glance. Mostly, we are taught that it means rising prices. If we get to an intermediate level of economic understanding, we know that inflation is too much money chasing to few goods. But even this might imply that inflation is somehow a function of demand. I beat this topic up in grave detail in Inflation versus Deflation. I will try to sum up my conviction on the topic.

It is simply the loss of purchasing power in a currency. According to Austrian economic thought, this can only happen when you expand the money supply, period. In other words, inflation is just too much money. Once this condition begins, history has shown that it will eventually end the day in currency ruin, and it will result in a permanent loss of purchasing power. Although the prognosis might have been different at each point in history the ultimate diagnosis is as correct today as it was at any other point, with retrospect of course.

Indeed it has little to do with demand. Generally, two factors, the changing relationships between supply and demand, and changes in the general purchasing power of the currency determine prices.

The latter may be viewed as either inflation or deflation. The former, however, is not inflation if the demand for something suddenly outgrows supply and prices rise. In this case, the price mechanism is working properly as it signals producers to produce more products. When I talk of inflation, I talk of the latter factor, the one that causes distortions in the ability of the price mechanism to function properly. Although we have not seen the inflation in the way that we presently understand it to exist, we may observe its existence in the highly visible degree of malinvestment and general credit excess.

As with prices, there are also many variables that influence purchasing power. For instance, historically it has happened with currencies whose marginal utility is too low - most non-luxurious goods fall into this category, which is why Gold is a favorite for currency theorists. In today's global economy where currencies float against one another, purchasing power may rise or fall against the goods priced in another fiat currency. Hence, trade deficits and oil crises. Let me try to explain the concept of purchasing power through the eyes of Ludwig von Mises, the preeminent Austrian economic scholar.

Specifically, Mises showed that, just as the price of any other good was determined by its quantity available and the intensity of consumer demands for that good (based on its marginal utility to the consumers), so the "price" or purchasing power of the money-unit is determined on the market in the very same way.

In the case of money, its demand is a demand for holding in one's cash balance (in one's wallet or in the bank so as to spend it sooner or later on useful goods and services). The marginal utility of the money unit (the dollar, franc, or gold-ounce) determines the intensity of the demand for cash balances; and the interaction between the quantity of money available and the demand for it determines the "price" of the dollar (i.e., how much of other goods the dollar can buy in exchange). Mises agreed with the classical "quantity theory" that an increase in the supply of dollars or gold ounces will lead to a fall in its value or "price" (i.e., a rise in the prices of other goods and services); but he enormously refined this crude approach and integrated it with general economic analysis.

For one thing, he showed that this movement is scarcely proportional; an increase in the supply of money will tend to lower its value, but how much it does, or even if it does at all, depends on what happens to the marginal utility of money and hence the demand of the public to keep its money in cash balances. Furthermore, Mises showed that the "quantity of money" does not increase in a lump sum: the increase is injected at one point in the economic system and prices will only rise as the new money spreads in ripples throughout the economy. If the government prints new money and spends it, say, on paper clips, what happens is not a simple increase in the "price level," as non-Austrian economists would say; what happens is that first the incomes of paperclip producers and prices of paper clips increase, and then the prices of the suppliers of the paper clip industry, and so on. So that an increase in the supply of money changes relative prices at least temporarily, and may result in a permanent change in relative incomes as well.

Mises was also able to show that an early and long forgotten insight of Ricardo and his immediate followers was eminently correct: that, apart from the industrial or consumption uses of gold, an increase in the supply of money confers no social benefit whatsoever. For in contrast to such factors of production as land, labor and capital, the increase of which will bring about greater production and a higher standard of living, an increase in the supply of money can only dilute its purchasing power; it will not increase production.

If everyone's supply of money in his wallet or bank account were magically tripled overnight, society would not improve. But Mises showed that the great attraction of "inflation" (an increase in the quantity of money) is precisely that not everyone gets the new money at once and in the same degree; instead the government and its favored recipients of purchases or subsidies are the first to receive the new money. Their income increases before many prices have gone up; while those unfortunate members of society who receive the new money at the end of the chain (or, as pensioners, receive none of the new money at all) lose because the price of the things they buy go up before they can enjoy an increased income. In short, the attraction of inflation is that the government and other groups in the economy can silently but effectively benefit at the expense of groups of the population lacking political power.

Inflation-an expansion of the money supply-Mises showed, is a process of taxation and redistribution of wealth. In a developing free-market economy unhampered by government-induced increases in the money supply, prices will generally fall as the supply of goods and services expands. And falling prices and costs were indeed the welcome hallmark of industrial expansion during most of the nineteenth century.

-- From the Essential von Mises by Murray N. Rothbard, Libertarian Press, 1980.

Understanding it in this way the diagnosis becomes easy. But it is…

The prognosis, which is difficult

By "persuading" foreign interests to buy new dollars, particularly in enormous quantity since 1995, the US financial sector has been successful at bullying its way to the top of the global financial system by creating all sorts of innovative uses for the rapidly printed dollar, as well as the fueling the delusion that rising fiat exchange rates indicate a true rise in purchasing power. Though this may be more accurately referred to as "Dollar Recycling."

And since inflation is most likely to occur where there is already some price pressure, it is understandable as to why it has shown up in US asset markets as the baby boomer promotion geared up earlier this decade, and why it has suddenly shown up in oil prices.

Putting aside the issue of why most commodities are priced in dollars in the first place, it is important to understand that were it not for the relative size and liquidity of US capital markets (growing in sync with money supply), the condition of so many excess dollars would manifest in many other kinds of more detectable

Simply Me@Topaz#3819610/4/2000; 4:47:35

Awake at the same time on opposite sides of the world and having a conversation...ain't electricity wonderful!

Hi Topaz,
You said, ".....when a Gentleman of his standing speaks, it bodes us well to listen."

So true! My post was not meant to be disrespectful...just questioning and testing his words.

You said Sinclair spoke of Gold..."the commodity" with NO reference to Gold "The World Class Financial Asset".

Hit the nail on the head, again! You said in one sentence what I was chewing over in my post. But I wonder WHY he was speaking of gold only as a commodity when I would think anyone with the title of "Mr. Gold" would know better!

It's almost dawn here...G'day, Topaz. It's time for me to catch a few zzzzzzzzzz's.
simply me

wolavkaWalk the walk#3819710/4/2000; 5:11:10

We wait while they hang themselves at 274 dec, drop thru to 271 false move.

watch todays close.

rate hike europe.

TopazSimply me - re: Mr Gold#3819810/4/2000; 5:15:32

G'day Simply,
Sure is wonderful mate, don't let all this gold gibberish keep you up all night tho <smile>.
Just for fun let's call Mr Gold "Mr Cormorant"
Now all the residents of birds-ville are well aware of Mr Cormorants fishing prowess and when he speaks of fishing they all listen, cripes, he's been fishing many years and knows all there is to know about fishing, fish, seaweed, waves etc. The birds an expert!
The limiting factor is (you guessed it) Mr Cormorant's knowledge is limited to the Ocean surface and (say) 15ft below. what happens in the murky depths is as alien to him as it is to any of his band of admirers. Occasionally he may catch a glimpse of activity far below his diving ability but he chooses to ignore it - after all, who's going to dispute him?
What say you?

Simply Me@nickel62#3819910/4/2000; 5:17:57

Was going to sign off when I ran across that great article you posted. Is there more?
simply me

KnallgoldMichael,FOA/ANOTHER issue#3820010/4/2000; 5:18:06

I would be lying when I said I had never any doubts about the genuineness of this two posters (but I ruled out they are you).Yet,I have read it all carefully,and now ,looking back,I would describe my inital skepsis as the denial phase.I had a short anger stage,but am now in the acceptance phase.I suspect many are still in denial of the ever more possible scenario offered by these two posters.

It is not so a matter of who they are,the important thing:can I see any reasoning in their arguments?I do!
In fact,one must be blind if one cannot see it now.I just don't wanna be right in all my forecasts (Dow down,Gold up ect.) and yet losing as much money as John Q lately does.

Topaznickel62#3820110/04/00; 05:31:41

Hi nic,
Can you please cut/paste the rest of the article below - a good read so far;

wolavkaRUBIN SANDWICH#3820210/04/00; 05:37:10

It's black on two sides
slab of swiss with the holes
corned beef

Got all the parts: commodities and countries.
The yellow part IS holy.

Simply Me@Topaz#3820310/04/00; 05:42:16

The forum gives me something challenging to think about while I do the same ol' boring work at the computer. And like most folks who work at computers, night is my optimum time for concentration and creativity.

I see your point about Mr Cormorant. He may have heard whale-song, but he doesn't know the tune and therefore doesn't sing along. But I think he gives a false report if he doesn't at least say...there are these things called whales. How could he be in the water and not know!


SteveHTopaz#3820410/04/00; 05:44:02

You hit the nail on the head. Any gold "expert" that doesn't discuss or embrace gold's dual role of finanacial asset and commodity is not telling us the true story or the the word expert is not apropos. It is almost as though there is some secret handshake here. We have read again and again that there is no conspiracy. No, folks, I suppose there is not a conspiracy: the whole Central Banking system is using gold as a reserve currency of unofficial standing and buy and sell gold to that end using gold as a commodity to control the price. Is that a conspiracy? Hell no. It is calling a duck a chicken. Got glasses?
OROAn interesting article, take a look#3820510/04/00; 05:54:29

This paper deals with the breaking of a currency peg. It deals with the "self fulfilling" speculative attacks that bring the destruction of the "peg" once market confidence in its sustainability is lost.

One of the points I have been arguing is that there possibly is a "peg" of sorts in the dollar-gold market where long term contracts set a gold price and an interest rate to maturity. The paper gold price behaves according to the dollar market interest rate, rising with the interest rate. The "supporter" of the "peg", however, is not necessarily one country (US), but often the one with the lowest nominal interest rate among the G-7, the one who is exporting big time and accumulating dollars as a result.

This paper touches on the dynamics and modeling of the process of breaking a "peg".

Another set of interesting articles from quantitative international macroeconomics from the team Obstfeld and Rogoff, can be found at Obstfeld's site.

Particularly interesting is:
"The Six Major Puzzles in International Macroeconomics: Is There a Common Cause?" with Kenneth Rogoff [PDF]

The model they offer is quite sensible, remarkably simple, and answers some odd questions on the relationship between the current accounts balance, prices, exchange rates, and real interest rates. All is derrived from the inclusion of an estimated "trade cost". The paper is rather techinical and mathematical and may not be to everyone's taste.

The following article, however, maintains focus on practical implications rather than the derivation of the models.
"Perspectives on OECD Economic Integration: Implications for US Current Account Adjustment" with Kenneth Rogoff [PDF]

The following are more technical too.
"New Directions for Stochastic Open Economy Models" with Kenneth Rogoff [PDF]

"Risk and Exchange Rates" with Kenneth Rogoff [Postscript] or [PDF]

Topaz@ Simply me#3820610/04/00; 05:59:18

Anything below his sphere of influence is irrelevant "there is no whale" (conspiracy) - no Bird can disprove him - Yes? He can't eat a whale so he goes into denial and lives out his days oblivious to all manner of lifeforms not 10 ft away in the depths. Methinks there goes Mr Gold.
On the other hand such a well connected spokesperson, as you concluded, could be a put-up for the Naysayers.

justamereBearR Powell 38145 Jouneyman 38147 Ross L 38149 ORO#3820710/04/00; 06:10:53

Try as I might, I can't put my hands on the bookmark I want, however this one has some interesting food for thought. Undoubtedly, as soon as I get off here it will come to light.

R Powell: You certainly got to a point that scares me half to death. What happens when all those IOU's are presented for payment? What happens if they are presented somewhat all togeather? I definitely think the existence of them will be, at minimum, a factor in, and possibly one of the causes of, any financial meltdown.

I read the BIG FLOAT thing, and agree with the general intent, but, as extreme as the view is, there are areas that I don't think goes far enough. One of the things that does not seem to be receiving much attention anywhere is the Euro dollar. And here I go with another oversimplified story.

What is a Euro dollar? The Eurodollar got a big push during the Vietnamese war. The US spent something over 3 Trillion dollars on the Vietnam war, and to be sure, a good deal of that spending was done within the US, so we will just consider the paychecks of the soldiers who were present in Vietnam. And we will use Charlie the drug dealer as our example.

Charlie did quite well, thank you very much. First thing you know, he had these huge piles of cash. US dollar cash. Conditions in a war zone are a bit unstable and unpredictable, so he decides it is best to get it out. A numbered account in Switzerland beckons. So he loads up his Sampan and paddles round to Switzerland.

Of course the Swiss banker has to make some money off this deposit by loaning it out, so he does. Mostly back into the US but also in some trade and investment oriented deals. So what basically is a Euro dollar? It is a dollar (loan) that origionates in Europe, (not the US).

It does not take our devious Swiss banker long to realize that there is going to be nobody coming up to the counter for golds for groceries, and that the up front only needs to be very small. He also realizes that since he is in Switzerland, US rules don't apply. Then it comes to him that, because these are US dollars, the Swiss laws do not apply either. Whoopee!! He can use whatever multiplier he chooses, 10, 100, 1,000, 10,000. And does he ever.

The Eurodollar market is ESTIMATED to be in the TRILLIONS, but nobody has a good handle on it. Trillions starts to get into a goodly percentage of the US GDP. Trillions sloshing around without any control or accounting of any kind. And mostly in the hands of that hairtrigger group referred to in Big Float, the interbank traders, who are trained to react, and move around massive amounts of money at the speed of light, or at least in split seconds.

The interbank traders are the ultimate momentum "investors", assuming that if something is moving, that they may not have information, and having had bitter experience that the momentum is going to continue for a while, and if they hold their position, even with good reason, they are going to lose their shirts, or at a minimum will have, in their terms, a long wait to break even.

What happens if this situation starts to unwind?

Re the Pirate etc. One forum I have seen has a shorthand- LOL meaning Laugh Out Loud, and I did.

Actually, I cribbed the examples from a homework that I did one or two years ago, which dealt with a number of issues I felt were facing mankind today. Included were food, population, disease, hydrocarbon products, etc. It continues the tale of the pirate.

I'm sure the secretary has them on file, and if there is an interest, AND if I can figure out how to cut and paste, I could probably post them near the end of the week. Interested?

I made them up as a series of letters to my mom (who is deceased).(one for each week of the assignment) Her formal education was not as great as mine, but she had several degrees from the school of hard knocks, and was a pretty squinty eyed old biddy.


Yes I am the one fingered typist. I worked on the origional post about 9 hours, and lost it in the ether. The one you see cost an additional 8 hours. However I am not sure I want to make posting any easier, because I can see this place would be damned addictive for me.

ROSS L 38149

It has been some while since I "studied" economics, just followed my own train of thought. What you posit seems to me to at least, be a factor worth considering. If I saw ORO's posts, they did not register, but then that is why I am here, to get clubbed over the head about my usual stupidities.

This following of money flows is a pretty complex issue, and I can see at least 3 things that make any statement made, at best, a guess, and sometimes downright misleading.
1) The Eurodollar (above)
2) Investment flows
3) The variety and various intents of the central banks, including, or perhaps especially the US, and their postion on the the how and why of inclusion of the Euro in their reserves.
4) The accuracy of the data that is available. Most of what one sees are at best, an estimate. (and often based on some pretty shakey theory) For example, do they or do they not include drug money flows. If you look at some of the published reports on drug busts, I suspect that some of these estimates of the value of the drug seized are more about headlines than about reality.

Finally the field is beyond the capacity of any one person or group to even estimate well, even if you had the details of every single transaction on your computer. In the tax world, say I as an entrepreneur, want to travel to another city to do something personal. And say that something will take 1 "after hours" hour to accomplish. If I arrange a business trip, and I work hard all day at the business, is that trip a legitimate business trip, and if so in what percentage?

Having nattered on, I think your, and what I understand of ORO's line of thought should be pursued, and I intend to spend some time in that regard.

Do you have any idea when the posts referred to by Ross L were made? How does one find them? I would like to review them. Thanks

Also thanks to all for your kind words.

TopazSteveH#3820810/04/00; 06:14:30

Great to see you back and hitting your straps of late Steve -clear and concise as per usual, Good luck to ya!
nickel62Sorry the BURGOS article keeps getting cut off of the last ten paragraphs they are here below.#3821010/04/00; 06:39:47

The prognosis, which is difficult

By "persuading" foreign interests to buy new dollars, particularly in enormous quantity since 1995, the US financial sector has been successful at bullying its way to the top of the global financial system by creating all sorts of innovative uses for the rapidly printed dollar, as well as the fueling the delusion that rising fiat exchange rates indicate a true rise in purchasing power. Though this may be more accurately referred to as "Dollar Recycling."

And since inflation is most likely to occur where there is already some price pressure, it is understandable as to why it has shown up in US asset markets as the baby boomer promotion geared up earlier this decade, and why it has suddenly shown up in oil prices.

Putting aside the issue of why most commodities are priced in dollars in the first place, it is important to understand that were it not for the relative size and liquidity of US capital markets (growing in sync with money supply), the condition of so many excess dollars would manifest in many other kinds of more detectable inflation. A collapse in capital markets then, could undermine global confidence in the dollar as the preferred global investment medium of exchange.

Iraq has already threatened to price its oil in Euros or whatever. The day that the dollar ceases to function well as a global medium of exchange, the problem of too many dollars will suddenly surface everywhere as (what many people understand to be) inflation. That will be the day when its ability to function as a store of value is compromised. Demand will have little to do with it, just the same as it had little to do with the inflation of the seventies. And it will again be called stagflation, for most analysts will be unable to explain the combination of rising prices and falling demand through their modern (mis) understanding of what inflation is.

It has been shown that the perceptible loss of purchasing power may be delayed until the day that the prevailing use for that currency no longer exists, at least relative to its supply. So far, the US consumer's propensity to spend dollars in foreign countries has made it useful for our foreign interests to invest in, or recycle, those dollars in wonderland. But as I mentioned in the Politics of the Dollar the consumer is the Achilles Heel for this whole dollar buying cycle.

Without trying to figure out which came first, the chicken or the egg, consider how this process works. Consumer A buys a PC in Country B with dollars. Country B has the option to both exchange those dollars for its own currency B, and therefore keep the profits, or to keep those profits invested in dollars. If country B keeps those profits in dollars, central bank A promises to never allow its money (dollar) supply to grow faster than credit demand so that the external exchange rate (which is simply a price for dollars, not a value by the way) of the dollar continues to inflate consumer A's global purchasing power. Consumer A thinks that this is wonderful, and private bank A has learned how to recycle those foreign profits and spin them into not only a further credit expansion, but an asset price spiral, adding to consumer A's purchasing power and encouraging consumers in country A to compete for who has more toys.

As long as this goes on, our foreign interests have a use for the dollar. It enables US consumers to buy their goods and services, historically a process by which they (the countries generating a trade surplus) would accumulate US gold. So what is the price? None in the short run because private banking system A has helped create as many speculative uses for the currency at home as it has created currency, none of which has anything to do with its reserve role as a store of wealth, however.

The Strong Dollar Policy at Work

Let me define the strong dollar policy for you. It is a policy where the US seduces foreign countries to export their excess capital to them or to inflate their own money supply faster than them, in exchange for a national agenda that promotes consumption and maintains the international reserve currency. It seems, however, that consumption has been pushed to the edge, and the nation has abused its privilege as keeper of the international reserve currency.

his is what this bull market has been all about. It is not about productivity gains, which are really still many years away. It is not about a more sophisticated financial community that has been able to apply its technological know-how to create a risk free speculative environment. That will never come. It is not about the success of a central banking system that has cured the world of its inflationary ills… it really hasn't. It is about the success of a global banking system in creating a monetary delusion on a scale heretofore never seen… perhaps unwittingly, but nonetheless certainly. Let us not delude ourselves as to what is at stake here.

Ed Bugos

SteveHHere is what I mean#3821110/04/00; 06:41:15

The below is a repost. Here it says the dollar has "replaced" gold. This is misleading. The dollar is tied to gold vis-a-vis oil. We have seen the charts. To say all is built on the dollar and to stop there or to say as it says below that the "...The dollar plays the same role as gold in all of the rest of the world at this moment, because the dollar is perceived to be as good as gold..." is simply subterfuge because it doesn't acknowledge gold's dual-hatted role. It is nonsense like this (although many valid points are made) that misleads all of us regarding the role of gold. The closet door is being held shut (against its will, I might add) by anaylysts' who fail to see the proper role of gold. If gold is part of every oil purchase either directly or indirectly then this must be factored in to any analysis of gold, both as a commodity and as a money. IMO.


Date: Wed Oct 04 2000 08:19
gwyz (The Dollar) ID#44161:
Copyright © 2000 gwyz/Kitco Inc. All rights reserved

"Brett D. Fromson: Has the dollar replaced gold? And can any currency ever replace gold in its role as the means of exchange?

Peter L. Bernstein: The dollar has replaced gold vis-a-vis the rest of the world because it's the standard that every other currency is expressed in terms of dollars. The ultimate reserves that other countries hold are dollars. They pay their obligations in dollars. Huge amounts of world trade are denominated in dollars even between country A and country B, where the U.S. doesn't even come into it.

So that, in this instance, the dollar is playing the role of gold. But the dollar is also the currency of the United States of America and its value is subject to what happens in the U.S. economy. Gold stood outside the system. It was a stateless currency. It therefore played a different role from the dollar.

The dollar plays the same role as gold in all of the rest of the world at this moment, because the dollar is perceived to be as good as gold. But the gold standard was a rigidly enforced system of exchange rates that didn't vary, and where speculating against a change in exchange rates would be a losing proposition. I don't think we'll ever go back to such an arrangement. It puts each country in too much of a corset. You crucify the world on a cross of any standard. Each country gives up a certain amount of domestic freedom.

Hipplebeckbiotech#3821210/04/00; 06:41:32

I've noticed that the last refuge of the tech bull is in the biotech stocks. When those break, look out below. You've heard of raining cats and dogs, How about raining bulls?

To all those angels out there, THANK YOU!!!


Topaz@Simply me........last one, I promise <smile>.#3821310/04/00; 06:48:44

Bird:-....but Mr Cormorant, what was that strange black long thing we could see far below in the depths. Is it a UFO? (unidentified fishy object)
Mr C:-....thats deep water weed, see! some of it's up on the beach.
Human:-...but Mr NASA, what was that strange disc shaped object in the sky last evening. Was it a UFO?
NASA .....thats a weather balloon, have a nice Day!

Experts are often (a) in denial (b) peddling a position.

It's been fun Simply, Off to Bed!

justamereBeararistotle#3821410/04/00; 06:56:43

Wow, there are times when I get into this kind of discussion that I get the feeling I am swimming in lots deeper water than I intended. But then, masochistic me, that is why I asked you the question, not the local high school economics teacher, not that I probably know as much about economics as (s)he does.

I just noticed your post, having been occupied with the post I made a few minutes ago. While I am going to have to defer responding in detail, two things jump out at me. 1) Some of the words I used are not suitable. 2) Are you argueing that my basic thrust is totally wrong, a little bit off, or what? I will spend some more time thinking about your response and get back.

Plagerism is the sincerest form of flattery-- Gold get you some.

Oro; nice post.

nickel62I just loved some of the main points on the Strong Dollar Policy of the US that ED BURGOS makes in his article.#3821510/04/00; 06:57:39

By "persuading" foreign interests to buy new dollars, particularly in enormous quantity since 1995, the US financial sector has been successful at bullying its way to the top of the global financial system by creating all sorts of innovative uses for the rapidly printed dollar, as well as the fueling the delusion that rising fiat exchange rates indicate a true rise in purchasing power.

And since inflation is most likely to occur where there is already some price pressure, it is understandable as to why it has shown up in US asset markets as the baby boomer promotion geared up earlier this decade, and why it has suddenly shown up in oil prices.

it is important to understand that were it not for the relative size and liquidity of US capital markets (growing in sync with money supply), the condition of so many excess dollars would manifest in many other kinds of more detectable inflation.

The day that the dollar ceases to function well as a global medium of exchange, the problem of too many dollars will suddenly surface everywhere as (what many people understand to be) inflation. That will be the day when its ability to function as a store of value is compromised.

Demand will have little to do with it, just the same as it had little to do with the inflation of the seventies.

It has been shown that the perceptible loss of purchasing power may be delayed until the day that the prevailing use for that currency no longer exists, at least relative to its supply. So far, the US consumer's propensity to spend dollars in foreign countries has made it useful for our foreign interests to invest in, or recycle, those dollars in wonderland.

Without trying to figure out which came first, the chicken or the egg, consider how this process works. Consumer A buys a PC in Country B with dollars. Country B has the option to both exchange those dollars for its own currency B, and therefore keep the profits, or to keep those profits invested in dollars. If country B keeps those profits in dollars, central bank A promises to never allow its money (dollar) supply to grow faster than credit demand so that the external exchange rate (which is simply a price for dollars, not a value by the way) of the dollar continues to inflate consumer A's global purchasing power.

I think a clearer way of saying this might be to say that in exchange for keeping your trading gains in the US we have implicitly agreed to keep the dollar steady and appreciating against all currencies, Rubin's Strong Dollar Policy.(Editors note only)

Consumer A (the American Consumer) thinks that this is wonderful, and private bank A (US based mega banks) has learned how to recycle those foreign profits and spin them into not only a further credit expansion, but an asset price spiral, adding to consumer A's purchasing power and encouraging consumers in country A to compete for who has more toys. The idea here is that the flow of money into the US caused by the reinvesting of the Foreign Trade earnings of our trading partners is used to hype the financial market and engage the consumer in a big stock market speculation.

As long as this goes on, our foreign interests have a use for the dollar.

"The Strong Dollar Policy at Work"

Let me define the strong dollar policy for you. It is a policy where the US seduces foreign countries to export their excess capital to them or to inflate their own money supply faster than them, in exchange for a national agenda that promotes consumption and maintains the international reserve currency. It seems, however, that consumption has been pushed to the edge, and the nation has abused its privilege as keeper of the international reserve currency.

"This is what this bull market has been all about. It is not about productivity gains, which are really still many years away. It is not about a more sophisticated financial community that has been able to apply its technological know-how to create a risk free speculative environment. That will never come. It is not about the success of a central banking system that has cured the world of its inflationary ills… it really hasn't. It is about the success of a global banking system in creating a monetary delusion on a scale heretofore never seen… perhaps unwittingly, but nonetheless certainly. Let us not delude ourselves as to what is at stake here."


Ed Bugos

HipplebeckBUDGET SURPLUS#3821610/04/00; 07:02:04

Isn't it hilarious to hear those guys talk about the budget surplus?

I think it's kind of like if I borrowed everything I could against my house, and then projected my future earnings on that basis. Like I got a hundred thousand this year, so now I can project at least a hundred thousand each year for the next ten years. Yeah, that works, in fact, based on these projections I can probably get a loan for a million next year.

nickel62Now if you take all of Ed Burgo's insights and think what would Rubin have to have done to guarantee that the US dollar would continue to appreciate against all major currencies?#3821710/04/00; 07:17:04

You probably have the answer as to why they began to manipulate the gold market! The US Strong Dollar Policy could only work if they could guarantee that there was always a use for whatever amount of money they created in the credit markets. By stating that they would force the US dollar up against gold the benchmark of all currencies they could attest to all the foreign trading partners that reinvest the US dollars you earn in trading with us and we will give you a stock market or bond market that we will orchestrate up because we can control there direction with the unlimited credit we are creating. We can force the interest rates down just as Greenspan had done in the early nineties to bail out the banks. Rubin by implying that that could be done again could attract the foreign money and heip force it down. If that ran out they would then use the budget surplus to buy in the bonds and thus creating more demand for a shrinking supply and now Summers can continue the same game. The demand for US Treasury securities is a function of the size of the Trade deficit and as long as they can assure the trading partners that the US dollar will appreciate they can attract enough foreign US dollars to keep it going. If an individual money manager fights the trend he will be destroyed and lose all his clients so soon the US based managers of bonds have to follow the edicts of the insiders or be destroyed. He becomes a follower of direction determined by those who are controlling the process or he is fired and replaced by someone who asks fewer questions.. THe same is true of the stock markets in the US the direction is set and then the money flows are determined by the manipulators and the "independent" stock managers either follow the trend or they are underperformers and replaced. Momenteum is the only fundamental. THe free markets in bonds and stocks are completely coopeted. And it all starts by the ability to guarantee that the US dollar will continue to appreciate against all major currencies.,Once that is established then the worlds money will flow to the US markets simply because the currency appreciation is so much of a part of the total return of the investment decision for international investors. So the first mover of the rigging of the markets of the last ten years is the ability to control the external value of the US dollar-You have to control the value of gold in terms of dollars and that is why the whole thing starts with GOLD. THat is why Barrick is so smug and why the other producers management don't have the guts to speak out about the situation. They know that they are but a small but crucial sacrefical lamb in a much bigger story.
nickel62Pieces of the Puzzle now fall into place. Eureaka If the pieces all fit it just might be correct.#3821810/04/00; 07:52:10

If the insghts in the ED Burgos article are put together and are correct it would also explain why a huge hedge fund with heavey ownership of foreign central banks LTCM Long Term Capital Management would have been short 300 tonnes of gold. They new that that position was a crucial part of the currency rigging. The fact that the Italian Central Bank was a direct investor was nothing compared to the large 30% ownership of the large government influenced national banks that used their ownership to give their traders a "window" into what was going on in the various markets. Of course if you no longer have a free capital market but rather a quasi government rigging of capital flows then it is very important to know where the money is supposed to go. Second it would explain Greenspan's often quoted remark about foreign central banks all around the world would be ready to mobilize their gold reserves to stop any appreciation of the price of gold. Most likely Rubin had had one of his subordinates explain this to Greenspan when he asked the question himself. And this would also explain the reticence on the part of our politician and our regulators to say or do anything. It was too hot to touch.
USAGOLDOctober -- As Scheduled or Postponed? And Changes. . .#3821910/4/2000; 8:42:24


(10/4/00) . . .Lest one
forget, we have now entered the tenuous
month of October -- the cruelest month for
investment markets. And it seems the Fed
Open Market Committee set something of a
haunting tone yesterday with its warning
about inflation. The equities markets know
all too well that October carries with it
unpleasant events, so those with their hand
at the lever do their best to create a
positive tone. And then there's the
debates: Correct me if I'm wrong, but I
can't recall that the subject of oil came
up once during the proceedings ( I have to
admit I did not pay close attention as I
was starting the latest Clancy), though,
one has to say that both candidates looked
spiffy in their dark suits and reddish
ties. Oil preoccupies the consumer mind,
but fictitious budgets and tax cuts
preoccupy the campaigners. Gold, laboring
under the intense scrutiny of the shorts,
takes note in terms of physical demand but
not the price. As we start the month, one
wonders if October hasn't been put off
until November (after the election of
course) -- at least if some would have
their way -- but then again maybe we should
give this witches' brew a little time.
Anything's possible in the tenth month of
the year. Those looking to add to their
gold holdings might want to do so at the
present price. If October has been delayed,
I would guesstimate its arrival for
sometime in November, but no later than the
winter solstice.

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JourneymanDollar as good as gold? @ALL#3822010/4/2000; 8:47:47

From the above link:

Peter L. Bernstein: "The dollar plays the same role as gold
in all of the rest of the world at this moment, because the
dollar is perceived to be as good as gold."

I believe Mr. Bernstein has said EXACTLY what he means. Remember awhile back when, T.C. was it?, did a series of posts on deciphering banker/politician speak for what it REALLY means. Kind of Clinton's "it depends on what 'is' is" type of thing.

Can you interpret Bernstein's statement above? From my viewpoint, there is one three-word phrase and one word later that should be CAPITALIZED for emphasis. Anybody else see this?

FWIW, I'll post my interpretation later.


Cavan ManJourneyman#3822110/4/2000; 9:00:46

Too easy...."at this moment" and...."perceived"
Cavan ManFirst Call announcing......#3822210/4/2000; 9:05:15

2/3 of companies interviewed reported missing earnings.
WAC (Wide Awake Club)(No Subject)#3822310/4/2000; 9:32:01


good as gold!!
WW OracleOdd...#3822410/4/2000; 9:32:55

Isn't it just a wee bit strange that the POG is steady at almost exactly ten million euros a tonne?
nickel62In Honor of the Denver Gold Show and Ed Burgos article on the Strong US Dollar Policy!#3822510/4/2000; 9:34:27

And it all starts by the ability to guarantee that the US dollar will continue to appreciate against all major currencies.,Once that is established then the worlds money will flow to the US markets simply because the currency appreciation is so much of a part of the total return of the investment decision for international investors. So the first mover of the rigging of the markets of the last ten years is the ability to control the external value of the US dollar-You have to control the value of gold in terms of dollars and that is why the whole thing starts with GOLD. THat is why Barrick is so smug and why the other producers management don't have the guts to speak out about the situation. They know that they are but a small but crucial sacrefical lamb in a much bigger story.
nickel62Where does all this manipulation lead? #3822610/4/2000; 9:47:35

The end result of all this manipulation is the confiscation of the value created by ) ID#404252:
Copyright © 2000 hollins/Kitco Inc. All rights reserved
the worlds workers into a financial profit that is allocated in the hundreds of billions to the perpetrators of the manipulation. They use a small portion to support both major candidates in the US election and then continue the game as long as they want. The profits that would have gone to all commodity producers can be effectively stolen by manipulating the market price to whatever level they feel is adequate at the time and then buying the hollowed out industry at cents on the dollar as Barrick is about to do to the gold industry, or you can shift the production of goods to whatever country has the cheapest currency so that the profits that would have gone to the manufacturers and their employees are now sent to the financial markets by moving the price of the currencies of those countries to whatever level they target. It is the use of derivatives to confiscate the value creation of an entire generation. And it is done with the unknowing cooperation of millions of savers who have had their retirement assets used as a tool in the manipulation and will watch them disappear as they are left holding the bay as "long term investors" in a market that has been inflated to two or three times it's normal value while the politicans, regulators, and Allan Greenspan watched. The greatest thieft of all time. Brought to you by the best Presidential office holder and congress money could buy.

SteveHPair of dimes shifting#3822710/4/2000; 9:48:13

Note the quote in the repost below by J. Cross.

Odd how on Sunday, the view of gold changed at the Denver Gold show. Gold the commodity has one set of rules; gold the money has another. Investors play in the former; governments the latter. When the effects of one cross the boundry of the other then the rules of each affect the other. In the case of investors it is gold the money that ruins gold the investment -- only now is the really coming to light, sort of.

Governments would almost (and they do believe they do) have the right to intervene in money affairs and do. In the case of gold, they have, are, and will intevene. Can we blame them? Yes.

Naive investors in COMEX gold who know nothing of gold the money have been led to the water that can't be drunk. This is the experiment with gold from 1976 (perhaps earlier) that has made many fortunes but at the expense of the naive.

The questions of GATA now come to a different light. If governments can legally (since they make the rules) control the price of monetary gold in the commodity market, should it really be a commodity? NO! Unless everybody knows the rules. Since it would seem that only a privledged few have been drinking the water because of the relationship to the "in-the-know" then have these people (not members of government) been given special privledges or immunities for their roles in managing money of gold in the commodity of gold market? GATA believes so. Is this right? NO!

But, one can plainly see, why "hands off" or "too hot to handle" seems to be the nom de jour when it comes to Gold manipulation. It is not that GATA's claims fall upon deaf ears. They fall upon ears who already knew the claims or who were informed upon inquiry into the claims, but whose hands are tied because the ramification of the "dual role of gold" when it is advertised only as a commodity, is just too big.

The paradigm has shifted now. Gold is official money and official commodity and they can't be that unless full disclosure is made. Another has done this dislosure but not officially nor to all. But disclosed it is.

Gold is money. Gold is a commodity. They don't mix because the rules of one supercede the rules of the other. The great gold run for the money is on.

Date: Wed Oct 04 2000 10:14
Netpi (More news from the Denver conference) ID#389193:
Copyright © 2000 Netpi/Kitco Inc. All rights reserved
DENVER, Oct. 4 ( Reuters ) - Is gold a currency, a monetary
standard, a mere commodity, or all three?
That was the question de jour as international mining
companies and investors attending the annual Denver Gold show
plugged gold's historic money role as a key to eventually
restoring the embattled industry's prospects.
But the sad irony is that the once-venerated yellow metal
is behaving too much like a currency -- one that has been
mercilessly devalued in recent years. That means that after a
year of wrenching ups and downs, bullion's fortunes are tied to
the whims of the foreign exchange markets.
"Gold is trading as a currency," Bruce Hansen, chief
financial officer at Denver-based gold Giant Newmont Mining
Corp. ( NYSE:NEM ) , told Reuters as the conference got under way
Sunday. "Fifty to sixty percent of the weakness in gold since
1996 is attributable to the rise in the dollar."
The gold business is a relic of the old economy contending
with a high-tech world of low inflation and, until recently,
booming stock and bond markets. Paper money, specifically the
unsquashable greenback, has supplanted bullion as the backbone
of the financial system and fanned stubborn negative sentiment
toward the metal.
The 325 conferees at the Mining and Investment Forum are
pinning their hopes on an end of the dollar bull run. When the
greenback is inevitably knocked from its perch, they say
wishfully, it is to the rock-hard asset that investors and
governments will again look for security.
"To me the dollar is over-owned right now. It's almost 80
percent of central bank reserves, which strikes me as something
of a high-water mark," said gold fund manager John Hathaway of
Tocqueville Asset Management.
For history-conscious gold bugs, the only certainty is that
good times will come to an end, and that years of euphoria
about the U.S. high-tech economy, low interest rates and the
end of the cold war is certainly overdone.
"Such progress as we have in finance is not cumulative, as
in science, but cyclical," said journalist and market
commentator James Grant, an avowed gold bull and publisher of
Grant's Interest Rate Observer.
"I am a believer in the long-dormant value of gold,
unlocked by monetary monetary developments," he said in a
keynote luncheon address on Monday.
Central bank sales of their low-yielding gold to buy assets
denominated in dollars, euros and yen contributed to the gloom,
which pushed spot bullion prices to two-decade lows last year.
Not only has the strong greenback created an aura of
despondency around dollar-denominated bullion, but it has had
even more measurable consequences for overseas demand.
Spot bullion prices fell to 12-month lows in recent weeks
as the dollar stormed to record highs against the euro.
Also hitting new lows were the currencies of
top-gold-producer South Africa and third-ranked Australia,
where some producers have a reputation for actively managing
their hedge books from both the bullion and currency sides.
The weak Australian dollar, which recently hit its lowest
levels since flotation in 1983, has lifted the Australian gold
price above A$500 an ounce, a level that in the past was seen
as attractive for Australia's mining companies to lock in spot
sales prices for hedges of unmined gold reserves.
The euro has recovered somewhat from record lows two weeks
ago, steadied by concerted intervention by the major central
banks. But by that time, its fall had made the local price of
gold for European jewelry fabricators and investors too
The depreciating rupee has also hurt demand in top consumer
India, where a lack of rain has already reduced rural incomes
and seasonal gold hoarding.
"In terms of investments, there is a role ( for gold ) to
play," said Jessica Cross, director of Virtual Metals research.
"You then have to weigh the currency/commodity argument -- Is
it a currency? Is it a commodity? It behaves like both."

wolavkaYou be the Judge#3822810/4/2000; 9:50:47

dec gold holds , those shorted last 4 days come out before close. Analysis shows ecb rate increase +.
wolavkastops gone#3822910/04/00; 10:19:13

for last 8 days, buy orders @ 271
Cavan ManShow Me State @SteveH#3823010/04/00; 10:25:39

Wholeheartedly concur. However, as I am becoming more cynical with age and despte the "high drama" and entails etc., where's the beef? Where's a scap of beef; a tiny morsel?
DaveCEd Bugos Can be found at#3823110/04/00; 10:47:09

It's easier than pasting the whole article, and you get the graphics.
TownCrierEuropean Central Bank revalues its gold assets upward#3823210/04/00; 10:52:38

As is always the case now for the first week of each new quarter, the ECB delays the release of its weekly balance sheet from Tuesday until Wednesday to allow for the extra time needed by the euro member CBs to make various quarterly adjustments. Of interest to us here is the quarterly mark-to-market revaluations of the euro-system gold assets.

With that operation now reflected on the books, the ECB balance sheet for the week ending September 29 reveals yet another in a continuing string of upward gold revaluations. This time, the book value for the gold assets were increased by 4.037 billion euros to 124.948 billion as a result.

And in other Euroland news, Bridge reports that the European Commission does not anticipate lower oil prices over the short term, however, the EC is seeking open and permanent dialogue with OPEC countries for the sake of maximum transparency and price stability.

Sir Journeyman, I'm pleased to see you remembered my delivering a lesson long ago on the art of scrutinizing the comments of upper-level officials.

TownCrierHEADLINE: Making a Federal Case for Inflation#3823310/04/00; 11:20:18

This article provides a good interpretive lesson to accompany yesterday's FOMC statement, which I've reprinted below for the record.
Federal Reserve Press Release, Sept. 3, 2000

The Federal Open Market Committee at its meeting today decided to maintain the existing stance of monetary policy, keeping its target for the federal funds rate at 6-1/2 percent.

Recent data have indicated that the expansion of aggregate demand has moderated to a pace closer to the enhanced rate of growth of the economy's potential to produce. The more rapid advances in productivity also continue to help contain costs and hold down underlying price pressures.

However, the utilization of the pool of available workers remains at an unusually high level. Moreover, the increase in energy prices, though having limited effect on core measures of prices to date, poses a risk of raising inflation expectations. The subdued behavior of those expectations so far has contributed importantly to maintaining an environment conducive to maximum sustainable growth.

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

MO VER MEGWOLAVKA#3823410/04/00; 11:44:53

I have been following your interest in wheat. I am curious about your back ground in grains. I am involved in corn/soybean production and trading. Corn is the only yellow resource working for me at this time.


TheStrangerNo Output Increases Planned By Opec#3823510/04/00; 11:54:09

October 4, 2000


OPEC Expects 70% Revenue Increase,
But No Output Increases Are Planned

High oil prices are expected to lift OPEC revenue by about 70% this year, but so far, members of the Organization of Petroleum Exporting Countries aren't plowing back the proceeds into increasing production.

Relatively high oil prices and continued strong demand often prompt producers to invest to boost capacity. For OPEC, though, there are only "bits and pieces here and there, but nothing substantial" to increase production in the short term, says Leo Drollas, deputy director of the London-based Centre for Energy Studies.

Join the discussion: Will rising oil prices put the brakes on the global economy?

* * *
Europe Pleads With Russia to Open Its Oil Reserves

A big reason: OPEC member countries aren't as rich as in their heyday 20 years ago. The cartel's expected revenue of about $227 billion this year will be only about 40% of its peak earnings in 1980, after adjusting for inflation, according to the Energy Information Administration, the statistical arm of the U.S. Department of Energy.

Moreover, the economies of several important OPEC members are troubled. Saudi Arabia, OPEC's biggest producer, is crawling out from under a domestic debt of more than $100 billion. Venezuela, the largest oil reserve outside the Middle East, saw its economy shrink by 7% last year as oil prices touched 20-year lows. And other producer countries such as Nigeria and Indonesia are fraught with social and economic ills.

Saudi officials say much of this year's oil-export revenue will go toward hospitals, schools and the like. "The money has not yet started to trickle down" to the oil industry, says one Saudi government official.

To be sure, industry experts expect OPEC, which produces about 40% of the world's oil, to begin substantially boosting production within five years. But in the near term, most of its member nations are pumping as much oil as they can, and even Saudi Arabia's once considerable excess capacity has grown thin. In response to demand, the cartel already has boosted its output three times this year, eating away at reserve capacity.

World oil consumption is expected to rise to 84 million barrels a day in 2005 from the current 75 million barrels a day. While OPEC's production capacity in the short term isn't expected to grow, the Department of Energy's EIA expects OPEC's output to rise by some seven million barrels a day by 2005, roughly maintaining or even increasing its current share of world output. Various exploration and production projects are under way from Kuwait to Venezuela; those projects could add nearly a million barrels a day in the next few years.

This year, Saudi Arabia will see revenue rise by about 76% to some $67 billion, the EIA says. But the country hasn't embarked on a major crude-oil project since it developed the Shayba oil field several years ago.

The nation also must deal with the debt it accumulated as it made weapons and other purchases during years of low oil prices. The Saudis, says Mr. Drollas of the Centre for Energy Studies, spent "more money than they earned on things they didn't need to impress people they didn't like."

They are expected to increase capacity to about 13.6 million barrels a day in 2005 from 11.4 million barrels this year, according to the EIA. The Saudi oil ministry, however, says this year's capacity is lower, at about 10 million barrels a day.

Meanwhile, Venezuela is mired in crisis. Oil-export revenue is expected to jump about 65% this year to $22 billion. But half of Venezuela's work force is unemployed or working in the informal economy, while more than two-thirds of Venezuelans live in poverty.

Venezuela predicts crude-oil capacity will rise to four million barrels a day by year's end and close to six million barrels a day by 2009. Currently, though, industry analysts say, Venezuela produces just under three million barrels a day. The country is betting heavily that foreign oil companies, which are involved in four major projects in the so-called Faja oil belt, will help it build capacity.

But industry analysts, citing the Venezuelan economy, question whether Venezuela can meet its projections. "We think the political demands will be too great," says Eduardo Lopez, a Venezuela expert at Petroleum Finance Co., a Washington consulting firm.

Indeed, President Hugo Chavez cut production at Petroleos de Venezuela, the state-owned oil company. PDVSA planned to produce as much as eight million barrels a day by 2005 under the previous administration, but Mr. Chavez cut production in 1999 and convinced other OPEC nations to follow, largely to drive up oil prices. Today, a sizable chunk of oil revenue goes toward social programs.

A larger supply question may be whether countries such as Saudi Arabia and Kuwait open their borders to oil exploration and production by foreign companies. Saudi Arabia is talking to oil companies about natural-gas projects, but oil remains off limits.

Says John Kingston, global director for oil for Platt's, an oil trade journal: "You have to wonder what spare capacity might be today if, say, Texaco had been able to drill a well in Kuwait five years ago."

TheStrangerFed Cites Threat Of Inflation#3823610/04/00; 11:57:17

October 4, 2000


Fed Officials Leave Rates Untouched
But Refuse to Set Aside Inflation Fears

WASHINGTON -- The economy slowed sufficiently over the summer for the Federal Reserve to leave interest rates alone yet again Tuesday. But rising energy prices and continued tight labor markets prevented officials from formally ending their yearlong anti-inflation vigil.

"The expansion of aggregate demand has moderated to a pace closer ... to the economy's potential," the central bank said in a statement explaining its current outlook, the most definitive declaration to date that policy makers are satisfied that growth is under control.

But while the central bank left its short-term interest-rate target unchanged at 6.5% for the third meeting in a row, Fed Chairman Alan Greenspan and his colleagues declared that they still believe "risks" to the economy are "weighted mainly toward ... heightened inflation." For the first time since oil prices began their rapid ascent a year ago, the Fed cited that trend in its policy statement as a serious threat that could push rates higher.

wolavkaMo ver Meg#3823710/04/00; 12:03:54

Remember richard Dennis back in the early 70's

Guy started on Mid am in pits and scalped moc trades for 1/8 point on side no one wanted. ran a couple grand into 200 million.

C& D commodities.

Well guy has fallen on some hard times but in his prime he worked up stats. on how all markets function.

I followed some of his work and than developed what I like.

Certain markets won't be manipulated AS MUCH AS OTHERS.

Don't believe news media, make your own contacts.

Wheat needs to take out 275 area in dec or we will float sideways to down.

HipplebeckTO JOURNEYMAN#3823810/04/00; 12:06:18

TheStrangerInflation Update#3823910/04/00; 12:11:59

I found the two stories posted below juxtaposed against one another in today's Wall Street Journal. As frustrating as it is seeing the begrudging way Wall Street is accepting the inflation story, I find it fascinating to watch as the story unfolds.

In 23 years on Wall Street, I don't remember ever seeing so much denial. That goes for the inflation story, of course, but it also applies to the wishful thinking surrounding the Nasdaq. No one on CNBC seems willing to use the words "Bear Market" anymore. (This morning, Al Goldman, chief investment strategest at A.G. Edwards, said we are in a correction that has been way overdone).

Give me a break.

wolavkaneed 274#3824010/04/00; 12:13:28

dec. good # for close
Midas MulliganWhy invest in gold?#3824110/04/00; 12:28:02

Gold is a store of value, or a safe haven for the wealth created by thinkers and producers. If you think and produce you profit and create wealth. You use your profit to consume in order to live and then pay taxes and invest the rest. By paying taxes you are investing in the state at the expense of your personal freedom to think and act/produce for yourself. It's a trap with gold being the only way out. Thinkers and producers should avoid paying taxes by refusing to think, produce, and profit (engage in mindless low pay, thus tax-free, labor if you must support yourself) and invest all of their wealth in gold where it grows in objective, or real, value while falling in subjective, or apparent, value, which is it's price. Only a thinker can buy gold now. Non thinkers, or emotionalists, are turned off by gold's low price and will only buy at the top after gold soars later. Trying to sell gold to them is like trying to pimp Marilyn Monroe to a blind and deaf person. You see it's value because you think, or conceive that gold's worth at least 10,000 an ounce, but they can't because they don't think or conceive, thus they only can perceive it's 270 an ounce and why would they buy something so unpopular. The good news is that they, specifically central bankers, are eager to sell it to you now at 270 and the public will eagerly buy it from you when it's 10,000. In the long run justice prevails by rewarding the absolute mind of a goldbug. Atlas Shrugged, by Ayn Rand, was right on the money!, gold money.
SteveHSent this to a friend#3824210/04/00; 12:32:57

(excuse the grammer errors -- it was a quick note. Also, I believe there is no longer any doubt of the oil-gold-dollar-Euro quad-nova. There may not be a lot of meat to show for it but Sherlock Holmes would be proud of us):

As it turns out gold is linked to oil whereby 1 gram (or so) of gold is guaranteed (in some unknown manner) to a barrel of oil. In this manner, the Arabs don't care what the value of gold or the value of oil is. It appears that there was an agreement to this in 1976 and that is why oil and gold have stayed steady [or gone down]. I saw a chart that showed the last 30 years of gold v oil and they were nearly 100% correlated, whereby each move in gold preceded a turn in oil. This link to oil for gold is the same reason that all the world's Central Banks still have gold in their coffers. It also explains why gold doesn't go up. The G-7 nations don't want it to and so they have invented a series of derivatives designed to hammer gold everytime and I mean everytime gold approached 290. It is this dual role of gold (commodity and money) that is really pissing off the Arabs and others who want gold, the commodity to rise. Two sets of rules are being applied to gold and have been; nobody in the commodity end has been told this, but the cat is out of the bag now. Gold is being treated like money by G-7 and holding it down for the sake of a strong dollar. This is being done to the chagrin of all gold investors world-wide, including the Europeans whose currency is marketed marked to gold quarterly. In other words, should gold go to $800 per ounce the Euro gold in the reserves of the Euro would be marked at the end of that quarter to the value of $800 per ounce or in effect doubling (or more) their reserves.

The above mentioned chart of oil v gold shows a divergence in mid-1996 whereby oil is starting to increase whereas gold was always the first. That means there is a break in the gold-oil relationship that shows that many nations are now running for gold and divesting themselves of the dollar. The reason for all the negative press on gold is meant to keep people focused on gold the commodity and how poor of an investment it is. In the meantime all the gold sales by CBs are going to honor defaulted paper gold contracts to keep the gold market from defauling, lest the whole house of gold comes tumbling down.

The question that one must ask, is if gold has been treated by nations as money and yet traded on commodities, is this an honorable thing? I say not. Many investors who have bought gold have been terribly burned by this. Why? Because they didn't know. has evidence that shows certain special bullion banks have had insider info into this oil v gold v money thing, knowing that gold would never rise as long as the house of gold was held together to keep oil cheap in dollars. In 1996, it seems that the Asians broke with protocol and started a buying spree that sent shock waves through the London Bullion Market Exchange in London. That is why England is selling its gold in open auctions to the cheapest offer.

This is why the US just started talking about paying off the debt and has been serious as of late and is the same reason for the bond yield inversion.

wolavkaSteve H#3824310/04/00; 13:05:08

This is true. When dec comex gold broke out on 9-21 and rallied up to 282 by 9-27, they hammered it down and todays close under 274, is negative. We need to see a close tomorrow back over 274.

Unless Europe raises rates tomorrow, more dollars will flood the paper gold market driving down physical price so the scumbags can purchase and force foreclosure in the industry.
I myself never short paper gold, I will take profits as on 9-28 then reenter long side on fast track. The problem with gold has been the worthless dollar being used to corner the gold market.

dec 271 low tonite but pray the europeans put a cap on this.

oil or war other options.

Midas MulliganThe Best Website, and book, About Gold#3824410/04/00; 15:32:34

is created by James Turk the world's number one gold expert, and "Gold and Liberty" by Richard Salsman, the world's best economist. The book is available at 18007296149 from 2nd Renaissance Books. Help me convince Louis Rukeyser to have Mr.Turk on his show as a regular commentator to provide balance. All his commentators are "elves" or paperbugs. I want him to have a "gnome of zurich" or goldbug also. Email him at This email address is being protected from spambots. You need JavaScript enabled to view it.
Midas MulliganWho was responsible for the legalization of Gold ownership#3824510/04/00; 15:48:30

Ayn Rand whom I call Mother Rhea. Greenspan(the rock) was her disciple and was responsible for getting gold legalized to provide those who think (Olympians) a safe haven and a means of justice from those who choose not to.(Cronus-Titans)
Midas MulliganA hypothetical discussion with Bill Gates and Warren Buffet#3824610/04/00; 15:58:12

Yall are worth 200 billion dollars on paper but I can show you a way of making much more. Sell all your stocks and buy gold. Your selling will make others sell and thus make the markets fall sharply. When markets fall money flows out of paper and towards the purchase of goods and services. This causes inflation which causes the price of gold to rise. Thus you can make a fortune. You wait till inflation and the price of gold peak and stocks and bonds bottom then you sell your gold high and buy back stocks and bonds low. As a result those who think and really want to live will replace those who don't as rulers of our society.
auspecFour Letter Words#3824710/04/00; 17:32:57

Which of the following 4 letter words are least offensive: BUSH or GORE??? It is a fairly easy question for me in general but would appreciate an answer as it relates to our common interest- GOLD!!
Have a hard time believing that we can do much worse than recent years with market games/dishonesty and lack of respect for free markets. Am I dreaming? Will things be any better if we change our figurehead? If not......

R PowellMO VER MEG #3824810/04/00; 18:07:42

I've been talking about cotton and corn at the above and at Just click on discussion/forum and share some knowledge with us.
I also left some "golden" thoughts at the above. Alas, they are unbelievers.

beestingSteve H Check This Out.#3824910/04/00; 18:34:10

WW Oracle (10/4/2000; 9:32:55MT - msg#: 38224)
Isn't it just a wee bit strange that the POG is steady at almost exactly ten million euros a tonne?

Many Thank You's Sir Oracle!

Steve, what this also confirms is an ounce of Gold priced in euro's right now is about $310.30!!
If we divide this number by grams in an ounce...31.103 we come up with $10.00 in Euro's will buy one gram of Gold! I thought Sept.22, 2000 there was some correlation between POG and Gold and now we have it.
$10.00 in Euro's=1 gram of Gold=1 barrel of oil!
Coincidence, I think not! Oil and Gold is being priced in Euro's!
Remember the metric system is used in most of the rest of the world.
We watch together.....beesting.

beestingCorrection to last post.#3825010/04/00; 18:42:37

Should Read:
Correlation between POG and Euro's!
Not between POG and Gold.
Thanks for reading....beesting.

ZenideaCurrency requires long term view PM#3825110/04/00; 19:15:13

11.00 (AEDT) Prime Minister John Howard today said Australia should hold its nerve on the value of the Australian dollar.
The Prime Minister said it was important to take the long term view of the dollar , and not to react to day to day movements.
He said the current value of the dollar was caused by the strong US Currency, rather than any weakness within the Australian economy.
The one thing that you dont do is you dont react to the level of it from day to day , you have to take a long term view of the Australian dollar, you dont take a short term view " Mr Howard told Adelaide radio 5DN.
The local dollar recovered from yesterdays record low overnight , but still was well below the 54 US cent mark in early trade today . Mr Howard also defennded Australia's floating exchange rate.
If you have a floating exchange rate you allow it to find a level on a day to day basis that the market suggests it ought to have , he said.
You are living through an era where everything American is fashionable with international investment and that is resulting in our dollar falling against the American dollar, not because our dollar is weak , but because the American dollar is ultra strong.
These things come and go .
He said Australia's flexible exchange rate had helped the country through the Asian economic downturn.
You certainly have to hold your nerve , he said .

wolavkaglobex tonite#3825210/04/00; 19:19:10

If we try hard tonite maybe we can catch them sleeping,

4.00 -5.00 pop up to 278 in dec, come on .

Black BladeA little Petroleum news#3825310/04/00; 19:19:59

Source: Oil and Gas Journal

No SPR counter coup

Congressional Republicans are irate about the Clinton administration's political ploy to draw down 30 million bbl from the Strategic Petroleum Reserve over 30 days, but they clearly are powerless to stop it. Vice-President Albert Gore, the Democratic Party's presidential nominee, had urged that part of the 571-million-bbl stockpile be used to produce more home heating oil and other products. Almost immediately, the administration complied. And this is an administration that previously had steadfastly maintained that the SPR was not to be used to manipulate market prices.

Last week a frustrated Rep. Joe Barton (R-Tex.), the House Energy and Power Subcommittee chairman, demanded
the Clinton administration explain its legal authority to sell the crude. Barton said, "I can find no controlling legal authority that gives them the power to use the reserve." But despite the legal uncertainty, he said he would not file a lawsuit. Barton and other Republicans at a Capitol Hill press conference said the SPR law clearly states that the reserve is meant to be used only in the event of a severe supply interruption, and not as a tool to control market prices. Barton said Clinton's action "was a decision made in a political campaign for political purposes."

Richardson testifies
Earlier, Energy Sec. Bill Richardson defended the action to a skeptical Sen. Frank Murkowski (R-Alas.), the Senate Energy & Natural Resources Committee chairman. Murkowski said, "The timing of the request from candidate Gore and the announcement by the president cannot be overlooked when one seeks out intentions behind this release." He said selling the SPR crude would do little for consumers because refineries are already operating at or near capacity.

The senator blamed the Clinton administration for recent gasoline and home heating price spikes, and high oil prices. Murkowski said, "The US is in the midst of an energy shortage -- if not an outright crisis -- with US demand outpacing supply in almost every sector. Clearly there is an energy policy train wreck on the horizon." He again predicted that US consumers may suffer natural gas price spikes and shortages this winter, warning Richardson that "There's no SPR for natural gas." Richardson insisted that releasing the SPR crude would have a positive impact on home heating oil and diesel transportation supplies. He stressed the administration's policy has been to let the market dictate prices. He said when the president and cabinet officials decided to draw down the SPR, "We didn't do it for price."

Industry's outlook
Representatives of US oil and gas associations testified at the hearing that they are more confident about supplies than prices as the winter heating season nears. John Felmy, the American Petroleum Institute's director of policy analysis and statistics, said although distillate stocks were below the historical average at 116.3 million bbl for the week ended Sept. 15, they were still 31.3 million bbl greater than National Petroleum Council's estimate of 85 million bbl for minimum operational inventories. "Time remains for these inventories to build before the beginning of the heating season, and more than 90% of the home heating oil is shipped directly from refineries to consumers -- it does not come from inventories. In addition, the industry has shown it is able to produce substantial amounts of distillate when the need arises. Accordingly summertime distillate inventories are not necessarily a significant indicator of fuel availability once the season begins," he said. Felmy said the industry is producing record or near-record levels of distillate fuel in preparation for winter demands. "Inventory builds have been substantial, but because they started at lower levels, the current level of primary inventories is low by historical standards."

Larry Downes, New Jersey Resources Corp.'s chairman and CEO, testified for the American Gas Association. He said gas utilities will meet their supply contracts this winter. "Utilities traditionally plan to have enough supply available to meet the demand on the coldest winter day and for the duration of the most severe winter season. This winter will be no different." He said utilities do not appear to be having any difficulty in obtaining gas, although prices are higher because supplies are tighter. "National storage figures indicate that although aggregate levels of working gas in storage are about 10% behind the 5-year average, volumes in storage are currently ahead of the pace of the 1996-97 winter heating season. In that year, the pre-winter storage level peaked at 2.725 tcf of working gas relative to a potential 'full' level of 3.294 tcf. AGA believes that storage levels will be adequate again this year."

Cavan ManBut beesting....#3825410/04/00; 19:33:20

See your point but oil and gold are still settled in USD. Are you implying an arbitrage strategy?
RS@ auspec (10/04/00; 17:32:57MT - msg#: 38247)#3825510/04/00; 19:41:15

"4-letter words"

(I hope those who may have seen my posting of the following a couple of weeks ago will excuse me for repeating it.)

Sir auspec, I share your sentiments, and offer the follwing quotation:
"When officials abide by the United States Constitution, the vote is our way of selecting the best persons and the best government. But if our officials are breaking Constitutional law, or allowing it to be broken without lifting a finger, your vote is literally their license to steal. You are giving them your permission to take your property and control your life. If you give them that permission, many will take you up on it, because lots of folks enjoy controlling others and amassing property. If you vote for anyone that allows Article 1, Section 10 to be ignored, don't you deserve to be ravaged by inflation?"

F. Tupper Saussy, from the book "Miracle on Main Street" (1980)

I personally don't see any difference between the "choice" we are offered for the upcoming election, and those of elections past, at least in my lifetime.

Cavan Man"Ben" is back at GE#3825610/04/00; 19:48:06

See him at 21:10.
megatronnickel62#3825710/04/00; 19:50:25

sir, would you please retract your post about the brave,noble, mis-understood,pro-gold,anti-inflationist free non central controling,money printing crazy banker of gold lovers, Alan Greenspan!!! what possible reason could you have to dishonor him? Please explain.
TownCrierA model strategy for the stays while paper (credit) goes.#3825810/04/00; 20:00:14

Bridge News reports on the reserve assets of the central bank of Turkey:

Ankara--Oct. 4--The Turkish central bank's foreign exchange reserves fell U.S. $72 million to $24.222 billion in the week to Sept. 29, the Anka news agency reported Wednesday. The agency said gold reserves were unchanged at $1.1 billion while the net foreign currency position fell by $679 million to $7.8 billion.

Gresham's law in action?

SteveHBeesting#3825910/04/00; 20:05:13

There are 25 billion barrels ...

per year of oil consumed. If you took 1 gm of gold per barrel that would be approx. a three year supply of gold. So what part of 25 billion does gold buy?
John DoeRE: Fed Policy#3826010/04/00; 20:17:09

Simultaneously raising rates and expanding credit is equivalent to one foot on the gas and another (for bipeds, anyway) on the brake. This is an "interesting" driving style, from which one may deduce that either the Fed is extremely nervous or it doesn't know how to drive a vehicle properly (or perhaps a bit of both).

On the one hand, driving with one foot on the brake allows for a quicker stop at a given speed. Grandma used to drive this way, much to the consternation of the other drivers. On the other hand, the brakes may burn out just when most needed, and, depending on the speed, this implies either a very long, unobstructed distance in which to coast safely to a safely reduced speed or a collision will stop the vehicle violently and quickly. Further, the continuous drag on the engine to overcome the friction of the increased braking will lead to premature engine burn out, as if continuously towing a heavy trailer or boat (uphill).

A fast-moving vehicle with no or very worn brakes is dangerous. A vehicle with a broken engine is useless to those that depend on it and very expensive to repair.

Stupid analogy or irrational policy? Is the Fed being overly cautious or is the Fed being reckless with our economy? Can brakes and engines be replaced while in motion? Or maybe certain parties see the vehicle as a rental?

TownCrierQuick Math#3826110/04/00; 20:23:12

SteveH, wouldn't that be closer to TEN years of gold production required at the suggested exchange rate?
SteveHTC#3826210/04/00; 20:26:47

I stand corrected, but the question remains, at one gram per barrel, what barrels are these grams buying of 25,000,000,000?
aunuggetsOkay, so what if ......#3826310/04/00; 20:27:11

What if the Euro is being linked to gold at e10.00 per gram, or to oil at 1 gram per bbl, or to the dollar at $270 per ounce.

Then why, with things so out of balance, doesn't one purchase undervalued gold with $270 U.S. and trade it for 31.1 bbls of oil valued at +- $933.00 U.S. ?

Or perhaps the question answers itself ?

Just a thought.....

auspecAnother 4 Letter word#3826410/04/00; 20:39:52

Sir RS,
Thank you for your kind, but discouraging response. Still, one of the 4 letter words gives me a tiny amount of my favorite 4 letter word- HOPE. Otherwise it is really getting LATE.

TaurusWhat am I missing here....?#3826510/04/00; 20:53:21

Several postings in recent days have mentioned that 1 gram of gold = 1 barrel of oil. At least 2 postings from today (#38242 and #38249) have said it and postings from previous days as well. And the more something is repeated without challenge, of course, the more it is taken as gospel. But…

1 Troy ounce = 31.10348 metric grams

1 Troy ounce of gold = US $275
1 gram of gold = US $275 divided by 31.10348 = US $8.84

Oil does not sell for US $8.84 per barrel, does it?

Or are we talking about Euros when we say "$10"?
How many US $ per Euro are there? Answer: .87 or thereabouts; one Euro = US $.87
So how many Euros per US $? Answer: 1.15 (the reciprocal of .87; that is, one divided by .87).
Now, if oil was US $8.84 what would the price be in Euros? Answer: 10.17 Euros (8.84 x 1.15 = 10.17).

Does a barrel of oil really sell for 10.17 Euros? Seems like the price should be more like 40 Euros per barrel (US $35 per barrel x 1.15 conversion factor = 40.25).

What's being claimed is that one gram of gold = 1 barrel of oil = US $8.84 = 10.17 Euros.

My arithmetic shows that 3.96 grams of gold = 1 barrel of oil = US $35 = 40.25 Euros.

What am I missing here?

Peter AsherJohn Doe (10/04/00; 20:17:09MT - msg#: 38260)#3826610/04/00; 21:01:29

"Simultaneously raising rates and expanding credit is" how they increase profits for the Bankers. I's just like Oil; get everyone into needing lots of it to survive and then raise the price. The game will expand until there is no more ‘blood in the stone' and then it will be either 50 year mortgages @ 2% or a nation of ‘Banklords' and tenants. Maybe the whole credit card industry will go up in bankruptcy smoke and it will be the dawn of a new age!
OROIs it a matter of semantics?#3826710/04/00; 21:02:16

"Too much money chasing too few goods"
This pop definition for price rises, or currency depreciation we commonly encounter when we hear the word "inflation" contains more truth and depth of insight than the professional economist would like to admit.

The statement has the operative word "chasing", meaning that there is a process by which some people that have that money are using it to purchase goods rather than something else, say bonds or stocks. Needless to say, the former declining trend in interest rates that ended in 1998 has shown where some of the "too much money" has gone; bonds, and with them stocks. Needless to say, the thing that matters here is that money has been "chasing" these assets, that is the holders of these assets were more reluctant to let go of them than the prospective purchasers were excitedly raising their bids.

Obviously, where there is a seller there is a buyer and the money does not go away. It merely changes hands. Thus we do not put our money "into" a physical or financial asset, but we put it "through" the asset. The money is then free, in the hands of the former holder, to flow elsewhere - to chase after other goods or financial assets.

Another sharp insight of the statement is that "too much money" is the precondition. Though there is no mention of what "enough" money is, the statement recognizes that it was more money than there was before. Which is definitely the correct precondition.

"Too few goods" would indicate that the supply of goods had not risen to the level of the money, meaning that money balances grew more quickly than production capacity, or even more quickly than the accumulated stock of goods clogging our houses, driveways and closets. The lack of an indication of whether productive capacity or the current stock of goods are in too short supply is rather a smart omission. That is so because either would cause prices to rise at a higher rate if the money creation persists at a higher rate than the growth of the marginal utility of the goods and services produced. However, all this is naught compared to the change of spending patterns and money balance preferences implied by "chasing".

So long as money flows towards paper assets, one expects some of the funds to go into investment in productive capacity. So long as productive capacity expands in the directions providing supply to match consumer preferences, prices may rise but slowly. However, the investment itself creates demand for non-specific factors of production that competes with consumer induced demand for producer goods and services. At some point, the markets will raise prices of these common factors of production (particularly labor, natural resources and energy - both "finished" and raw) to the point that consumer demand and investment demand conflict to the point of making further investment unprofitable, since producer goods and services have risen in cost to eat the margin between consumer prices paid and producer costs that we call cash flow. The margin contracts as prior investment commitments result in further capacity coming online. Producer prices climb and with them climbs labor income resulting in further consumer demand. Further capacity ceases to come online some time after the cessation of new investment. However, the money created to fund investment remains in the monetary system. The contraction of margins eliminates profits and lowers the return on stocks while lowering the credit quality of bonds, causing their values to drop, or at least stop rising. At this point, though new investment decisions have ceased in prior areas popularly thought to be attractive, investment demand in out of fashion industries experiencing price rises is limited because of the destruction of prior expertise and capital during the "famine" period before (which made the industries in question unprofitable and unnatractive to investors), and the lack of investor expertise in the newly profitable industries that have the highest potential payoff. Thus we have a condition in which prior investment decisions have created demand for non-specific producer goods and have stoked consumption demand, while eliminating profitability of productive endeavor in general, and putting in place the conditions for both new demand and less supply.

The run from declining assets pushes the investor to prefer spending and tangibles, particularly if monetary authorities attempt to maintain the solvency of the monetary system by injecting excess fresh money to maintain liquidity.

ShermagMoral hazard, a definition#3826810/04/00; 21:04:39


I dredged this up from within the deep recesses of my poor old noggin.

Moral hazard: A danger created when an authority protects individuals or organizations from the consequences of imprudent or risky behavior, resulting in the undertaking of enough of this behavior as to risk a large scale manifestation of the initially avoided consequence, possibly leading to systemic failure.

Mr GreshamJohn Doe -- Joyriding?#3826910/04/00; 21:04:47

"Or maybe certain parties see the vehicle as a rental?"

Wall Street's in New Yawk, isn't it? Maybe some of these guys grew up boosting cars for fun and abandoning them on the Cross Bronx after stripping them.

beestingCurrent approx. POG=$10.00 per gram "Euro"=1 barrel of oil!#3827010/04/00; 21:13:08

Hi Sir Cavan Man,
What POG in Euro's seems to be suggesting is, the "biggest" players at LBMA,who set the daily price of Gold, and who trade in "Large" daily volumes of paper Gold, are also some of the "Same" big players in the paper oil markets. Some of the "Tonnes" of Gold traded maaayyy be being exchanged for paper barrels of oil,priced in grams of Gold.

Hi Steve,
Your post:
SteveH (10/04/00; 20:05:13MT - msg#: 38259)
There are 25 billion barrels ...
per year of oil consumed. If you took 1 gm of gold per barrel that would be approx. a three year
supply of gold. So what part of 25 billion does gold buy?

I can't answer that question, but remember not every oil producer wants to be paid in Gold, maybe only 10% do, I don't know.
So, if we use the 10% number 2.5 billion barrels may be paid for in Gold, the rest in U.S. Dollars.
If my math is right there are 1000 grams in a kilo-gram and 1000 kilo-grams in a tonne, so that would be 1,000,000 grams in a tonne.If we divide 2.5 billion(barrels of oil) by 1,000,000 grams(one tonne of Gold) we get 2,500 tonnes(of Gold) not an unreasonable figure when we realize it's "paper"Gold.
We watch together.....beesting.

beesting@ Sir Taurus....You're right with all your calculations.#3827110/04/00; 21:48:18

We got the 1 gram of Gold for 1 barrel of oil from FOA on the "Gold Trail" at the top of this page. Message # 40.

<<This past inflation of paper gold would not only produce circumstances that only strengthen the
exchange rate value of our dollars, but somewhat lower the price of gold in relation to our local
goods prices instead of against oil. This position generated buying at the constantly lower levels this
new ratio generated. Even though gold would later be priced in dollars using oil at 1gm per barrel.>>End.

If you have the time,please try to read all of his words, to more fully understand what "MAY" be happening in the world right now. We Watch and Learn Together....beesting.

ShermagORO, Your recent 38267#3827210/04/00; 21:49:20

That was a nice synopsis of where we have recently been. Thank you for turning a few more lights on to help me see the way through the fog of these interesting times.

I have a request for a clarification. Your last sentence was: "The run from declining assets pushes the investor to prefer spending and tangibles, particularly if monetary authorities attempt to maintain the solvency of the monetary system by injecting excess fresh money to maintain liquidity."

This seems to state the opposite of what we are told to expect from a declining stock market. That is, the inverse wealth effect in which investors, becoming poorer, reign in their spending. What am I not seeing clearly?

AristotleORO, it's definately a matter of semantics--little else#3827310/04/00; 22:12:39

With the goal of effective communication being the pot at the end of the rainbow--and an opportunity for unbiased thinking as a result.

While you did an excellent dissection of the "pop definition" (loved that phrasing) of inflation, my own nit-picking was that the phrase might lead a person to believe that "too much" and "not enough" might be conditions that should be somehow brought to the singular "right" levels through some kind of central planning. A free market shouldn't see things in terms of "too much" or "not enough" because the relative price of one item in terms of the other would simply exist and adjust accordingly.

Futher, this pop definition of inflation hinders the layman's recognition of the growth in money supply that might simply occur in tandem with an expanding economy. Whereas, they will be lead to see that the "right amount" of money continues to trade for the "right amount" of goods under a period of stable prices, they will not be inclined to see that their currency's purchasing power should have increased but was nevertheless sacrificed through the growth (inflation) of the money supply.

I realize it is just a subtle point, but hey, that's what we've come down to now that the rest of the forum has caught on that Gold is and has been in use as "real wealth money" even while it traded in the disguise of a commodity. (I'm not trying to launch a crusade to convince anyone that one definition should be used for a term over another. I'm only trying to raise awareness that certain pitfalls can be avoided in effective communication if the writer lets his phrases carry his meaning in place of certain individual words which can be equivocal and ambiguous.)

Gold. Get you some. ---Aristotle

AristotleGrams for oil#3827410/04/00; 22:30:25

As some of you consider oil prices in terms of Gold grams in the past (and projected into the future,) please pause to be aware exactly what is the larger context. Are the Gold gramsthat are being offered and accepted couched within the framework of an expansive bullion banking system, or are they FreeGold grams?

To my mind, at present times, one gram of PAPER Gold per barrel of real oil seems cheap, whereas one gram of solid FreeGold per barrel of oil seems like price gouging by the oil producers. How about one gram of FreeGold for TWENTY barrels of oil---that seems about right to my simple mind.

Gold. Get you some. ---Aristotle

John DoeShermag#3827510/04/00; 22:55:47

If I may inject an attempt to your query, I believe it depends on who, i.e., which investors, control the "excess" dollars and what they do to cover their exposure to the potential inflationary effects. In other words, what is the exit plan? IS there an exit plan?

For the really "big" players, inflation finds a good parking place in the stock markets (especially US) or various US$ instruments for these funds, as "inflation" in these areas is deemed "desirable", more or less, regardless of valuation levels, or "benign" at worst. Observe how the Fed, Gov, & Media attempt to invent and propagate whatever bogus rationale is necessary to contain the inflation within this sphere.

Moving the results of inflation to the commodity markets or other competing currencies, as we have seen, is an absolute, obscene no-no. Gold is a double whammy because it is both commodity AND currency. The same trio above will invent any "plausible" reason to keep the results of inflation out of these areas. Perhaps the simplistic reason is that there is a limited supply of physical "things" (hence, highly reflective of inflationary effects), while the supply of stocks, not being physical "things", is infinite -- "virtual" inflation effects as opposed to "real", tangible inflation effects. Furthermore, the "virtual" inflation has the considerable potential of never being made "real", as the exit door is far too small, especially for the vast majority of unconnected players. And the ongoing siphoning-off of capital gains taxes and trading "real" wage gains for "virtual" birds in the bush is a nice kicker, too.

Yet, the little guy, over-exposed to debt as he is, will almost certainly be forced to retrench, if money flees to tangibles. For the "small" players, moving the inflation into residential real estate is apparently encouraged. The local taxing authority certainly prefers this. Japan found this avenue to be most preferable, even extending to commercial real estate and general land values. And, as with the "big" players, but certainly on a lesser scale, the "small" players are urged at every turn to hold whatever residual potential inflation they possess in the form of equity shares.

However, whether by past experience, dumb luck, or over-consumption, on net, the "small" players don't really have ANY asset exposure to inflation. On net, they "own" very few assets and even less cash (exhibit 1, the current negative savings rate, exhibit 2, the very low or negative net worth of a great many US households), and they hold record levels of debt which is more easily serviced with each jump in inflation. The trick is keeping their jobs while all this is going on. And this has pretty much been the case in numerous past inflations. The small players would come out ahead, at least up to a certain level of inflation, providing their wages can keep up with prices. Under massive unionization, as in the 50s and 60s, this was a given. Now, with the decline in unionization, I'm not so sure.

In any event, it's the "big" players and the need to safeguard their net cash and asset positions that will drive and sustain future inflationary effects, if any. They started it, and they will bring it to full fruition if they lose control of it (and that is, perhaps, not a given). The real fun starts when these entities begin to panic in order to save their assets by moving into other currencies and commodities and by exiting the declining US$ and equity markets.

Of course, further and further consolidations of wealth have the potential to allow for an arrangement where this is not necessarily the ultimate outcome. If few enough entities control a large enough slice of the total, US and global pie, they may just stand pat, leading to a general ossification of the whole system in lieu of resolving the imbalances -- sort of like super-duper Japan maybe? In summation, the banks of the big players, and therefore the big players themselves, are more "on the hook", at least in terms of assets, whereas the small participants are essentially at risk for their very livelihoods...a classic, and unfortunately potentially enduring Mexican standoff.

AristotlejustamereBear#3827610/04/00; 23:11:13

----"While I am going to have to defer responding in detail, two things jump out at me. 1) Some of the words I used are not suitable. 2) Are you argueing that my basic thrust is totally wrong, a little bit off, or what? I will spend some more time thinking about your response and get back."----

In reaction to item one, I hope you take note of my recent post to ORO. It's not that I personally find any particular author's choice of words "unsuitable" per se, but that sometimes the effective conveyance of a message's meaning can suffer unnecessarily thereby. Certain words in ecomomics discussions are atop the list -- having multiple interpretations among different individuals. Some stress the cause, and others the effect.

On item two, please be sure that my earlier post to you was primarily intended to straighten out the explanation of the various money supplies (M1, M2, M3), the mechanism for their expansion, and hint toward the merits of any conclusions that one might attempt to draw from those stats.

And more importantly, I strive to maintain a clear, clinical picture (for myself and others) of the business of modern currency creation and banking (sans the usual accompanying rhetoric on fiat currencies), because anyone who grasps THAT big picture is right on the doorstep of understanding the current situation for Gold.

But back to your point. Don't let my inability to understand your phrase "importing deflation" stand in your way of progress. If, having digested my comments/alterations to your underlying money-supply premise, you are steady in your interpretation, then how about simply continuing onward with describing whatever consequences you then anticipate from this latest importation?

Gold. Get you some. ---Aristotle

SHIFTYSimply Me / Topaz#3827710/04/00; 23:46:33

Thanks for your input on the Jim Sinclair article. I also feel my understanding of derivatives is, at best, shaky. I think the thing that was bothering me was his stance on Barrick (ABX) . I was surprised to see that from GATA and could not find the words to be critical of Sinclair and not have it sound like I was being critical of GATA.


TopazShifty re: GATA#3827810/05/00; 00:04:40

G'day Shifty,
Just home from the "coalface"....good timing wot?
If you recall GATA in it's infancy, the JC article would have fitted like a glove. The currency implications are a later crusade and as such JC's article seems a little out of place or more precisely out-of-time on the GATA e-groups board, Yes?

Turnarounddefining money and worshiping the state#3827910/05/00; 00:14:12

A quite different perspective from what is usually voiced on this forum. A few excerpts:

Stephen Zarlenga, (ZAR)

"…ZAR: The answer may seem obscure but has bottom line value investors dare not ignore. It's whether money is a power, embodied in a commodity like gold; or a creation of the law. That is, does its value come from its "intrinsic" (commodity) value or from sponsorship or legal requirements of government? Or a combination?

GNL: And your view is?

ZAR: History shows money is an abstract institution of society and government. As far back as 340 BC Aristotle wrote: "Money exists not by nature but by law." He's saying true money is a fiat (decree) of the law. Of course, say fiat to a hard money advocate and it's like waving garlic in front of a vampire.

[Note- It would be interesting to dig up this reference, and what Aristotle's context for "law" was. The alternative theory on the origins of government - "people farming people" appears to have a great deal of scientific validity, as e.g. recent Russian history shows. It's hard to get public funding to study this issue.]

GNL: Are you saying paper money can be real money?

ZAR: Certainly. In 1994, I issued a paper disproving (challenging actually) Carl Menger's "Theory Of The Origin Of Money," the foundation of Austrian Economics hard money philosophy, but try as I might, I can't get them to seriously debate my stand.

"… ZAR: Yes. Take the belief gold is a depression/deflation hedge. That overlooks gold did well in the Great Depression because it was officially money -- and its official value was raised from $20.67 to $35 an ounce by law in 1933; while other commodity prices collapsed. "

[Note- the purest Keynesian doublethink. George Orwell would be proud.]

ZAR: Unless the official price is raised, it'll probably act like a commodity rather than money, and fall. The U.S. price is $44.22. Perhaps more important, the world's largest depository of gold, the Bank for International Settlements in Switzerland, uses $208 per ounce in its accounting which, I think, may prove to be important downside support. It will be the same basic story for silver.

GNL: But what about stagflation or inflationary collapse?

"ZAR: An inflationary depression is theorized to occur when the government rescues banks, with the liquidity created to bail them out causing runaway inflation, but it doesn't have to happen that way.
Panics are caused by fractional reserve banking, where banks create money in the form of bank credits. But these credits aren't the same as money because they depend on the bank's staying liquid. Paper money in hand is more secure. In a crisis this leads to cash runs on banks. Von Mises and the Austrians insist a crash is inevitable, but this conclusion has been out of date since the 1930's when Henry Simon created the 100% Reserve Solution.

GNL: What is the 100% Reserve Solution?

ZAR: It avoids collapse by changing outstanding bank credit into actual cash. First, banks (including the Federal Reserve Banks) are required to establish 100% reserve backing for all deposits. To do this, the US Treasury loans them (at interest) freshly printed US currency to bring their cash reserves up to 100%. Treasury paper held by banks, gets credited against these borrowings; canceling an equal amount. Banks are then confined to lending existing funds.
This elegant reform transforms the private bank credit money created out of thin air for decades, into US legal tender -- real money. All US debt held by the banking system is canceled out by the banks borrowings from the Treasury. Banks become panic proof, with cash to pay all claims.
This reform wouldn't be inflationary or deflationary - it simply makes tangible what had been thought to be the existing money supply. This reform removes the money issuing power from private banks and places it in the US Treasury. [It's] not paper money [that is] immoral; its the private issuing of it. …"

[Whoa! I wonder what having a few extra trillion show up in M1 do to the public perception of price inflation?]

"ZAR: There may be some games being played, for example by the Bank of England (it its strange announcement regarding gold in mid 1999). But much of what appears as a conspiracy - especially the central bank selling - is really a continuing move away from dependence on gold as the sole international monetary reserve toward an eventual demonetization of gold. In retrospect this trend began at the 1922 Genoa Conference and continued at the IMF in 1946, where legally based money became acceptable as international reserves, along with gold. In 1969 the IMF adopted SDR's (special drawing rights) as a kind of "paper gold", though they have only created $21.4 billion, and none since 1981. The IMF gold sales of the 1970's began an actual demonetization of gold. Central bank sales are continuing it."

"…GNL: How does this view differ from the Austrian School?

ZAR: They can't imagine this solution because they view money as a commodity -- or an economic good -- that can't be brought into existence out of thin air. But if you understand money as an abstract legal power, then a nation can successfully create and substitute cash for the already existing and suspect bank credit…."

As one new poster (Christopher?) noticed some time ago, he came to this forum looking for some information about gold, and found how quickly the subject can turn to larger matters of economics, banking, history, politics, philosophy, law and so on. The question of what money is- hard, fiduciary, fiat, commodity, is (or appears to me to be) answered very differently depending on one's view of what government is. Mr. Zarlenga, for example, implies that government is a mostly benign entity striving for the greatest good for the greatest number- the underlying socialist assumption.
This is quite in contrast to the welfare/warfare state so eloquently described by for example, George Orwell ("1984"),
Lew Rockwell,
Joseph R. Stromberg:

and M. Rothbard:

"The State is almost universally considered an institution of social service. Some theorists venerate the State as the apotheosis of society; others regard it as an amiable, though often inefficient, organization for achieving social ends; but almost all regard it as a necessary means for achieving the goals of mankind, a means to be ranged against the "private sector" and often winning in this competition of resources. With the rise of democracy, the identification of the State with society has been redoubled, until it is common to hear sentiments expressed which violate virtually every tenet of reason and common sense such as, "we are the government."…"

"…The great German sociologist Franz Oppenheimer pointed out that there are two mutually
exclusive ways of acquiring wealth; one, the above way of production and exchange, he called
the "economic means." The other way is simpler in that it does not require productivity; it is the
way of seizure of another's goods or services by the use of force and violence. This is the
method of one-sided confiscation, of theft of the property of others. This is the method which
Oppenheimer termed "the political means" to wealth.

"…We are now in a position to answer more fully the question: what is the State? The State, in the
words of Oppenheimer, is the "organization of the political means"; it is the systematization of the
predatory process over a given territory.[4] For crime, at best, is sporadic and uncertain; the
parasitism is ephemeral, and the coercive, parasitic lifeline may be cut off at any time by the
resistance of the victims. The State provides a legal, orderly, systematic channel for the predation
of private property; it renders certain, secure, and relatively "peaceful" the lifeline of the parasitic
caste in society…."

I think "state-olatry" or "UN-olatry" is like a cherished religious belief or a market mania- held for as long as it appears to produce desired results, and then for a little while longer….

SHIFTYTopaz#3828010/05/00; 00:24:03

TopazIs it just me?......or?#3828110/05/00; 00:43:41

Does anyone else find it coincidentally perculuar that the A$, the Can$ and the Rand are all in steep decline vis-a-vis the $US now our collective Gold flows have slowed?
From Oz's pos'n these last 5 yr's have seen the CB divest itself of all but a meagre 40 odd tons, and Miners generally forward sold to the Max up to 10 yr's out.
So basically we've been propping up our standard of living with future Gold production and selling reserves to the point of exhaustion. Now our currency is beginning to reflect that fact. Most assuredly some of this future effort has gone to support present US lifestyles also as you guy's provide the "clout" that keeps the wheels on (you scratch my back etc).
This jig is well and truely up now though....where to from here?

Simply MeHiya Topaz! Howz your Cormorant?#3828210/05/00; 01:41:56

I'm here and I'm reading but we'll have to wake up someone smarter than me to answer your question.


Black Blade@Topaz, there is likely to be a day of reckoning for many Aussie miners.#3828310/05/00; 01:42:18

I used to have a list of Aussie miners and their hedge positions. It listed most as forward-sold about an average 8 years. That was about 3 years ago. I would think that with all the producer selling that the Aussie producers are eating-out their hedge-books. Many are so forward-sold that they don't have proven reserves to cover and are hoping and praying to develop their "inferred" resources. These producers would do well to examine this issue and look to the old Australian mine formerly owned by Pegasus Gold - "Mount Todd." They thought that they had enough gold in resources and the "faith" that there would be more. They believed it so much that they built the mine and facilities without proving it out. They poured in a lot of development capital and hoped and prayed that there would be satellite deposits to carry the mine. Guess what? There were no viable satellite deposits to the main discovery deposit. Guess what? Pegasus Gold doesn't exist anymore, the remnants are owned by the bankers and it is now called Apollo Gold. Yeah, forward sales and the hope of discovering deposits to meet the obligations is a very risky business. I wonder how many other Aussie producers (or any producer) will be fall prey to the bankers like Pegasus Gold. Anyway, gold has outperformed the Aussie and Kiwi pesos, SA Rand and Canadian loony. As a form of currency, gold is better than most nations currencies.
AristotleStephen Zarlenga -- Sheeeeeeeeesh#3828410/05/00; 01:44:28

GNL: Are you saying paper money can be real money?

ZAR: Certainly. In 1994, I issued a paper disproving (challenging actually) Carl Menger's "Theory Of The Origin Of Money," the foundation of Austrian Economics hard money philosophy, but try as I might, I can't get them to seriously debate my stand.

It's no wonder the Austrians won't debate his points. Even I would hesitate to commit the time necessary to try to set Stephen straight, and I genuinely enjoy discussing these issues.

Does anyone think he managed to score a point or two that warrants a legitimate rebuttal--similar to the one I offered to Professor Triffin about week ago? I stand ready at the gate as needed, as I'm sure others here at the forum do, too.

Gold. Get you some additional perspective, Mr.Zarlenga. ---Aristotle

Black BladeSPR Oil Lease is Earily Similar to the Gold Lease, But Some Players Won't Play Ball!#3828510/05/00; 02:13:37

US to announce winning bidders for oil stockpile
October 4, 2000
By Patrick Connole

WASHINGTON (Reuters) - The U.S. Energy Department will announce, after the New York oil futures market closes on Wednesday, the winning bids for borrowing crude oil from the Strategic Petroleum Reserve, Energy Secretary Bill Richardson said. Richardson, speaking to reporters before delivering a speech at the National Press Club, said the Energy Department would make the announcement at 3:30 p.m. EDT . He declined to provide any details, such as the number of bidders or names of companies who made offers to borrow the crude oil.

The DOE had previously said it would release information about the winning bids on Friday. Last month, the White House ordered the loan of 30 million barrels of oil from the nation's emergency reserve to boost supplies of heating oil and ease prices ahead of the winter heating season. Under the plan, winning bidders must promise to replace the oil borrowed, plus additional barrels, next year when prices are expected to be lower.

The release of the crude oil was blasted by Republicans and their presidential candidate George W. Bush as a political ploy to win votes for the Democrats in key Northeastern states facing tight heating oil supplies. The White House has defended tapping the stockpile as the best way to help consumers, refiners and oil distributors lay in supplies for the winter. Since the administration announced the plan two weeks ago, U.S. crude oil prices have eased from nearly $38 a barrel to $31.50. The reserve holds about 570 million barrels of crude oil in salt caverns on the U.S. Gulf Coast. The stockpile, created by Congress after the oil price shock of the mid-1970s, has been tapped only once for emergency use, during the Gulf War.

A Reuters survey of oil companies showed Royal Dutch/Shell Group, Texaco Inc, BP Amoco Plc, Amerada Hess Corp and Conoco Inc made offers for the stockpiled oil. Exxon Mobil Corp, Coastal Corp and Phillips Petroleum Co said they did not bid.

Chevron Corp, Marathon Oil and Sunoco Inc refused to say whether they participated in the bidding. Earlier Wednesday the world energy watchdog, the International Energy Agency, said global crude supplies were adequate but energy companies should try to squeeze more heating oil into the market. Heating oil inventories in the Northeastern United States are about 70 percent less than one year ago. That region is more heavily dependent on heating oil for warming homes than the rest of the nation.

Black Blade: You don't suppose that Occidental Petroleum bid on the oil do you? They got a good deal on the Naval Reserve oil in S. California under the current administration and the Gore family owns a nice chunk of stock in the company. You don't think that they might give Al a helping hand by bidding on the oil do you? Nah, Al Gore is too ethical for that ;-)

SteveHAristotle#3828610/05/00; 02:18:10

What kind of vitamins you been taking to be alive after so many years?

-- snippet --

ZAR: ... As far back as 340 BC Aristotle wrote: "Money exists not by nature but by law." He's saying true money is a fiat (decree) of the law. Of course, say fiat to a hard money advocate and it's like waving garlic in front of a vampire.

Topaz@Simply me @BB#3828710/05/00; 02:25:00

Gidday Simply,
Hope you got enough sleep today - dem birds keep you up?
Just remember:- Park benches the World over are littered with x-experts and Pidgeon's and there but for the grace of God go we.
Night shift suit you?
Sterling job of late with the Oil info Mate, I think we've (Oz Gold) been bilked into acceptance of the US$ myth and will come to regret it shortly. "Privatise the pleasure - share the pain around"

AristotleHi Black Blade--we don't talk as much as we should. I enjoy your posts.#3828810/05/00; 02:34:50

Your latest comment caught my eye, so I'll seize the opportunity to float an idea that some may find harder to swallow than others. You said--

"As a form of currency, gold is better than most nations' currencies."

In the interest of peace and harmony, I could easily agree with this and drop the issue, but offering a different perspective may help some people adjust better to what is coming down the pike. The key is to focus for a moment upon what is at issue (namely, currency) and what society's expectations are for their currency.

This is distinctly a different concept than the issue that has seemingly tripped up Stephen Zarlenga who claims that paper can adequately replace Gold as money. It cannot, because "money" involves a definate body of characteristics serving form and function that paper currency units can't fulfill.

"Currency" on the other hand implies a circulating medium that is suitable for facilitating commerce. In this strictest sense, what we are all familiar with in use as modern currency can probably be said to have the edge over Gold as circulating currency.

There are other factors involved that I've covered in depth before with regard to the interaction of the particular currency with the underlying support framework of the banking system that affects its suitability for use, so I won't get into this again here. This same context, however, argues persuasively and conclusively that Gold serves better as a reserve/savings asset than any national currency ever could. International monetary policies and practices are aligning to recognize and fully exploit these natural strengths.

Currency. Earn you some, spend you some.
Gold. Save you some. ---Aristotle

Topaz@Ari and BB.#3828910/05/00; 02:50:50

Yup Ari - too true - I must say it's a lot easier to grasp this Wealth/Asset quality of Gold from pretty well ANY other place on the Planet other than the US of A at this point in time.
All physical Au holders of late have seen a marked (tax-free) increase in Asset value (in local currency terms) and the time is nigh for you Guys too I feel.
Apparition? I don't think so.

Black BladeAristotle, Thanks for the input. I'll pass along what I find amusing in all this....#3829010/05/00; 02:58:11

I note that the Wall Street crowd and the Financial media deride Gold as a terrible investment, a barbarous relic, a wasting or sterile asset, etc. When we consider Gold as a form of currency (in our view - "money"), then we could look at it in their perspective for a moment. As Gold is generally considered a form of currency (AKA "Money") that pales compared to the USD, then these same individuals are making the claim that the lower valued currencies whether it be the Mighty Brit Slider (Pound), The new-born Euro (fast becoming - "zero" as proposed by a poster on another forum), the Aussie and Kiwi pesos, The Canadian loony and toony, or any number of world currencies are crap compared to the USD and GOLD. That's right, they say that the USD is best and that the barbarous relic, the sterile asset - Gold is still better than the world's other currencies which are crap compared to the USD and the barbarous relic GOLD. An interesting thought. I must get some ZZZZZ for now - cheers, Black Blade
wolavkaMarkets to watch today#3829110/05/00; 03:19:38

swiss franc

overnite gold a + 274

downdraft running out. bigger range 271 -78.

take out 282 and you go someplace.This market is going up!!!!!!!

not investment advice.

SteveHOil for gold#3829210/05/00; 03:26:42

Per FOA (10/02/00; 17:03:27MD - msg#40)
Show Time!

"...This past inflation of paper gold would not only produce circumstances that only strengthen the exchange rate value of our dollars, but somewhat lower the price of gold in relation to our local goods prices instead of against oil. This position generated buying at the constantly lower levels this new ratio generated. Even though gold would later be priced in dollars using oil at 1gm per barrel."

Per ANOTHER from the "In the Footsteps of Giants," he said [and I paraphrase] that from 1991 20 million ounces of gold per year from 1991 has been used in gold for oil and now [then] even more. Twenty-million ounces is 62.5 tons. What much more is now, I don't know.

Since we really have no idea what the extent of gold for oil amounts are, we can only go on what is said above or some other more obtuse indicators. We do know that if all oil was bid for gold at 1gm per barrel that would mean too much gold for too little oil or not enough gold can be mined to cover annual oil production for 10 years (fuzzy math). [note: strikingly, some have reported that the gold market is sold forward 10 years in some instances or 14,000 plus tons short.] So, the least amount of gold for oil could be as little as zero. That is a wide expanse. Factoring the 62.5 tons of Another with the 1gm per barrel of FOA, we now have more questions than answers but taking the 62.5 tons as a minimum, that represents 622,069,600 grams of gold or bbls of oil (which is 2.5% of annual oil consumption). Even if we factored Aristotle's (USAGOLD's) 10X factor or as he (or she) put it 1/10th gm per bbl, that would equate to gold for oil amounting to 25% of annual production.

As sketchy as the gold for oil info is, it seems that if what ANOTHER said is accurate and this tonnage speaks to Saudi oil, then we know their oil represents (if memory serves me correctly) 37% of annual world production and this is no the riss to be about 58% by 2008, 62.5 tons of gold (physical) for 9.25 billion bbls of oil per year equates to 0.067 gms of gold per barrel.

So are we to assume that we don't really have a clue how much gold speaks for how much oil. It does seem are range is from 0.067gms of gold per barrel to 1 gm per barrel. It may be that the 14 x difference in values (1/.067) is the relative appreciation in oil or in gold to be expected. One gm per bbl based on the 25 billion bbl per year consumption figure shows there isn't enough gold in the world for the next 10 years and to have this go on for 34 more years or 340 years worth of mine production. Even dividing 340/14 (the lower figure) is 24.2 years of mine production for 34 years of oil consumption.

Our strongest indicator of gold for oil is the HBM charts. The correlation is near perfect. Gold is somehow and in some real quantity bidding for oil and that would seem to be driving the gold-cart. The influence of gold on oil, to be strong as it seems though would have to across boundries and universal in its demand, enough so to power this whole concept. Oro, what is your take? Aristotle, Beasting, others?

The question remains, what is the

Simply Me@Topaz#3829310/05/00; 03:32:16

Self-employed. Work nights by choice, when the only distractions are the ones I choose. My self-deprecation is not the result of an inferiority complex; my expertise is in areas not covered on this forum. Before I found this site, my interest in economics went no further than balancing the monthly household budget. I'm even surprised at myself for grasping as much of this as I do. I'm simply here to learn, that's why I don't post much. Nothing to teach. But I've found that I learn more if I post occassionally and expose my ignorance! It's a humbling but very rewarding experience.

I think I like my new name! Thanks!

wolavkaInnuendo#3829410/5/2000; 3:44:21

Italian suppository.
AristotleSteveH--it's not vitamins, but eating garlic that keeps me going! Hah hah!#3829510/5/2000; 4:04:19

"History shows money is an abstract institution of society and government. As far back as 340 BC Aristotle wrote: "Money exists not by nature but by law." He's saying true money is a fiat (decree) of the law. Of course, say fiat to a hard money advocate and it's like waving garlic in front of a vampire."
We need not accept something just because Aristotle says it must be so. <big smile>

In offering us a view of this post, Turnaround was sharp to question the larger context behind Aristotle's thought. How did he define "law", and more importantly, was his concept of "money" perhaps more similar to the concept for "currency" that I offered in my previous post?

There is no disputing that the desirability of an item is found in it's usage value, and that true monetary usage of an item can naturally develop based on the convenient combination of qualities that include high desirability and ease of circulation. Once this good has been sufficiently elevated to a primary monetary usage through natural selection based on its convience and wide acceptibility, this monetary usage adds further to its desirability, entrenching its value use as money to exceed its value use as anything else. It is at this point that many economists and philosophers become easily confused regarding the true nature of Money--as it seems to take on an arbitrary life of its own at a high value that is disconnected from its obviously lower usage value as a raw material.

Skipping ahead, in a modern context we readily see that a dollar bill in use as money is indeed worth more than its paper usage. And in this modern context, the value witnessed in the circulating currency unit is seen to exist on the basis of the lawful loan contract that added these currency units to the money supply--coupled with the national custom to circulate these units as currency. However, it is a fallacy for contemporary thinkers to take a tempting backwards view in order to draw a conclusion (erroneous) that the original Monetary asset found its high value as a result of similar lawful contracts or by decree. To repeat, its value was found in its suitability for Monetary use, and grew higher from expansion of the custom.

Gold. Get you some. ---Aristotle

OROSteveH - tonnes#3829610/5/2000; 4:06:33

1 mil oz
are about
31 tonnes
(each tonne is 1 mil grams)

Your sum is 600 tonnes per year.

Though 1 gr per bbl seems alot, the reserve value replacement on a relative scarcity basis is 7 bbl per gr gold.

The 1 gr per bbl is workable only if they spend a minimum of 85% of their intake.

OROAristo - what he means by law#3829710/5/2000; 4:10:17

It is common law he reffers to.

Meaning that he indicates money is defined by custom. This means simply that it was defined by the market in its natural way.

wolavkaSimply Me#3829810/5/2000; 4:42:26

Best things in life are simple. Keep it up.

The secret to this game takes a complex trip but arrives at a simple answer.

The power above works in a strange way. Enjoy today, it should be a good one.

OROShermag - 'flation#3829910/5/2000; 5:03:00

The Fed had attempted in the aftermath of the crash of 29 to reflate the economy by lowering interest rates. But it also increased reserve requirements for banks, which made it impossible for them to make new loans. Without new loans there was no new money with which to make payments on existing loans. The result? Till the election of FDR and his paper money and "peoples republc of the US" brigade was all but certain (which caused an additional massive run on banks as people "hoarded" gold) the US money supply had fallen by 15% and 20% of banks had gone belly up - in 31, by the time FDR confiscated gold, the banks lost 30% of the money supply and perhaps 60% were closed.

This is the condition the Fed desires to avoid. Unlike that time, when most transactions were done by check and cash, today we have most transactions done electronically through credit and debit cards with many - if not most - pay checks going straight into accounts through direct deposits. Anything like that kind of contraction would bring the economy to a complete halt. They would never let that happen.

The run from paper assets to tangibles is a result of monetary base growth (today it effectively includes money markets on top of demand deposits, as shown in "MZM"). The money that bids for the "running" paper seller comes from this monetary expansion. Otherwise, asset prices would have simply crashed as none had enough funds to buy them without the fresh money.

The run from financial assets into tangibles is only possible because of the Fed induced printing of money. Whether it is inevitable that they do so is a different issue. Most likely, the standard reason would apply; asset markets are hedged by large investors with put options and a smallish number of short futures. When the banks that issue them are stressed because of the losses on these options, they will come to the Fed with waving hands demanding "lending of last resort" to avert "disaster"; i.e. trading desk losses, and therefore - no bonus.

The Fed complies, as it ever does, and allows the bankers to borrow up a storm which quickly bids for SP futures, which raise the market back to "acceptable" loss levels at option expiration. The arbitrageurs that arbitrage the futures' "excess" premium into the stock market (and into bonds too) need to borrow heavily during the arbitrage process, and end up paying much mullah in margin interest, which defrays the cost of borrowing from the Fed. So far as I have seen, this is equivalent to having infinite credit behind the stock market. Though the interest rate does not make a difference in this SOaS activity, it does matter to investors seeking comparative returns in bonds and stocks.

The Fed is trying to keep "M9" (M3 + aggregate debt + stock market capitalization) from growing "too rapidly" so that the "wealth effect" is reduced. However, it is not wealth effect that is the main cause for driving funds out of stocks and into spending, it is ESOP maturation, which is not really dependent on 10%-20% moves in the stock market, because the directors allow the holders to "reprice" their options, that is lower the strike price so that the current value of the options is commensurate with the employee's initial expectations and he does not leave for greener pastures. Second, executive suite insiders are selling their stock at record levels in order to get out before the rest of the market beats them to the doors. They are so avid to do so that they have burned bridges to some very important money bags, such as Prince Alwalid (recent private placement from Priceline and a purchase of fetid Apples).

What the Fed is trying to do right now (and too late) seems to be focused on twin objectives - keep the system afloat with new money, and raise the quality of new credit by raising the interest rate above the market's rather low risk premium (hence the inverted treasury yield curve).

Topaz@Simply <wink>#3830010/5/2000; 5:14:12

Just managed to chase Daughter 2 off the machine, whats this world coming to - these days the only way to get a response from your Kids is to say "o-oh" in a high-pitched ICQ mimic <smile> (kidding of course)
Most of the stuff here passes well over my head too mate, (I'm in Air-con) kinda like "in the keystrokes of Giants" sometimes - and by jove,(whoever JOVE is) some must be rubbing off.

wolavkaDon't get caught on wrong side#3830110/5/2000; 5:26:16

Two wars coming!.
Topaz"D-oh"#3830210/5/2000; 5:41:46

...kinda like "following" in the keystrokes etc
justamereBearAristotle#3830310/5/2000; 5:52:14

I am a simple kind of guy. The world works the way it does, and all the whining that this is not honorable or whatever is of little avail. Nickle 62 asked what I view as the key question "Where does all this lead?". Ultimately, I would like to think about "where" on the basis of how it effects the mundane life of the guy on the street.

The forces that act on a given situation, if properly identified, will allow an, at least, somewhat accurate prediction of an outcome.

Certainly manipulation exists (in all areas of life) both as a deliberate collusion, and as similiar interests acting in similiar ways. However if the manipulation acts against the natural forces of the marketplace, sooner or later the pressures generated will overcome the resistance and mother nature will have her way.

Mr. Soros, whatever you may think of his personal traits, was good at identifying, and more importantly predicting the timing of these explosions.

Many of the western governments have, in their own minds, (or perhaps in the minds of some of their subjects) become omnipotent. They seem to feel they can manage economic immortality. In medicine too, we have new tools that make us live longer, but we don't kid ourselves that we are immortal.

It is interesting to note that in the very next post after yours the link posted
contained a good deal of argument that could be used in our discussion.

I have developed 2 + 2 economic indicators that I pay attention to. Retail sales, with a bit of emphasis on same store sales, and the price of copper. If retail sales start to fall, there will likely be unemployment soon. If copper goes below $1.00 I watch for a construction slowdown. (The copper price one has gotten a bit messed up because of the recent huge, low cost producers in South America coming on line.)

Once both of them go negative, I go to the next 2.
There is a small gift shop located in a downtown office complex. He has been in business for years and years, and certainly knows customers. A goodly percentage of his sales are geared toward the type of gift that you get when Jim marries Jane, and the office takes up a collection for a gift. In good times everybody chips in $10 and my friend has no discounts. In bad times, everybody kicks in $5 and he is running discounts galore. I find it a really good indicator of peoples confidence to watch his sales levels and his levels of discount. The product is so discetionary.

The second is an area of town that is largely marginal, but hard workers. Most are immigrants, with emphasis on mediterranian and eastern europe. Most of these people have, in their lifetime, witnessed poverty and turmoil. Are they ever quick to pull back on their spending if they lose confidence. I just go along a 2 block stretch and count the number of vacant shops and the for rent signs, or go in and ask how their sales are, year over year.

Where is all this leading? Well basically I am arguing that one should look at economic prognostication from the point of view of the job that needs to be done.

To many times we accept a theory or definition, and then try to cram the economic facts into the definition, rather than modifying the definition to fit the facts. On one hand, as the economists say, we have to keep the things the same so that meaningful comparisons can be made. On the other hand the world is changing at its fastest rate ever, and the old ways may not be adequate to describe the new reality.

In my oversimplified example of the goldsmith, I looked at only one force, that of gold as money. It is reasonable to assume, since he was a goldsmith, that he fabricated some of the gold into jewellery. Do we count this jewellery as money or not, because it did reduce the number of golds available for money.

In the modern context, the money market account has many, but not all, of the attributes of a demand deposit account, which is classified as M1. Should it be classified as M1 or what, because it fits nowhere. Unfortunately the modern world is changing fast enough that we are having to recognise these conundrums and we are getting a plethora of Ma's and Mb's and Mc's.

Understand, I am not claiming my over simplistic example was in any way complete.

Starting from the point that the dollar is the worlds ultimate derivitive product, ie that peice of paper represents something that is based on an abstract concept, "The full faith and credit of the US government", the mechanism to make this abstract work could take various forms.

It, as you pointed out, is true to say that the government cannot simply print money. It must be blessed in an appropriate way with due ceremony. The government prints some notes, which are then recognised as having value, by having the treasury, an intregal part of the government machine, issue the government an IOU. (which are issueable at will) Now that is how double entry bookkeeping works. It doesn't matter whether I overpaid or underpaid for an item, we have recognised the value, by making these entries, WHICH IS ASSUMED to be fair value.

In fact the ritual the central banks go through is simply a way to get the bills recognised as value, and into the system. That is its only job. So I do not have a problem with the idea that the government can or cannot simply print money. In an extremely narrow, not even legalistic sense, it cannot. In practice they do whatever they want, and the ritual is simply an exercise in double entry bookkeeping. I think we have been fed a load of propaganda.

Similiarly, M whatever, is simply a definition of a point in the mechanism, which may or may not reflect reality. I chose, in my very oversimplified (and therefore highly suspect) example to mark those particular points in the mechanism as M1 or M3. These points may not necessarily reflect the current politically correct definition, but they do seem in the right ballpark. We do seem to agree that there is a multiplier in the banking system. One might get the impression I don't have a very high regard for the politically correct.

I am quite willing to use your definitions in this debate; admittedly they are much closer to the current wisdom. You will recall my post was about defining some common ground, and this sub debate grew from there. However I must insist on a cavaet that our current methods of cramming the facts into the politically correct theory is putting the cart before the horse. The theory has to fit the facts, not visa versa. And of course there is the question, "What exactly are the facts?" This could go round and round.

Regarding the Flations (which is your word, and I love it)
You post;
You-(now me) Inflation is essentially to many dollars chasing to few goods and services.
ME-(now you) Under this difficult definition, who is the rocket scientist that is tasked with making the official determination of the number corresponding with "to many" dollars, or deciding which level of good are "to few" ETC.

To some extent that is my point. There is no rocket scientist or anyone else, that can accurately name that figure, and if they do, a second later that number is out of date. The point is that the government (and I don't regard them as rocket scientists) DOES try to name/predict and manage, by managing the money supply. (with what I see as an abysmal record) While market forces are far more evident in M3, there is a whole lot more noise, in the form of government "management" intervention in M1, which in turn does influence M3.

However your point is taken; My choice of words was not suitable.

It seems to me that the thrust of government is to reduce its obligations through the debasement of the currency. This debasement has to take place at a rate that is within the tolerance levels of the populace. One way we can increase the level of tolerance is to "prove" that the situation is not as it appears. We take food and energy out of the inflation rate and call it core inflation. It is not as if food and energy were on everyones shopping list. Give me a break.

Your deflation comment shows up the same weakness in my arguement. Bad choice of words. However, strictly as debate, wealth is like beauty, strictly in the eyes of the beholder. To some it is "money" in the bank, others an art collection. Your phrase "expectations of purchasing power" is much more accurate, however I find it a bit more awkward, particularly when used in such a simplistic example.

Regarding deflation being imported.
I do have some half baked ideas on how that might be accomplished, but I suppose the question might have been; What the #@** is going on with M3? Which would have lead us off in another direction. I am not unhappy with the direction this debate has taken.

I have seen reasonably made arguments, and some dimly remembered experience, that money supply need not grow at all to be effective. I'm not sure that I agree totally, but it is food for thought.

I had seen Oro's posts, but somehow they did not register. Since my origional post to you I have had my nose rubbed in them, and I like it. But then that is also one of the major benefits, and goals I had in posting, other lines of thought I had overlooked. I'm now trying to go back on what he has done, if I ever get away from this addictive debating.

Enjoy your thought provoking. Thank you for taking the time to respond, and in such a thorough manner.

wolavkaComing shortage#3830410/5/2000; 5:53:50


Baby Boomers will get unqualified nurses aids, set up for legal profession, again election talks about education, wake up creatures.

Canadian nurses being imported.

wolavkalet's go#3830510/5/2000; 6:22:58

alittle help please, time to break this to the upside now!!!!!!!
wolavkapushing on it#3830610/5/2000; 6:45:01

they're trying to hold it down, gotta break 275 now.
OilmanThe pending impact of AIDS#3830710/5/2000; 6:57:24

In South Africa, we are facing a very real impact from the HIV/Aids pandemic in the near term (say next two years). The pandemic has spread far wider than most people predicted a few years ago. Already, it appears from unofficial sources that infection levels in the at-risk- population are well over 50%. The high levels are probably only applicable to the local context, and are most likely to be both currently and in the future far lower elsewhere in the world. the high levels of infection indicate that in the absence of an effective cure being found, the population could decrease.

From an investment point of view, the issue becomes more than academic, due to both the severity and the short time horizon. Assuming that the economy continues to grow, ie real growth in GDP, the GDP per capita ratio should improve. Consequently, one would expect the upper end of the market to fare relatively better than the bottom end of the economy. There should be a relative switch from Volkswagens to Rolls Royces! Furthermore, labour-intensive industries should be adversely affected by both a relative lack of labour and a fall in productivity. This is probably the conventional view, but I am concerned that markets work at the margin, rather than at the average, which should lead to a relatively higher impact on teh economy. I have studied the effects of the Black Death on the economy of Europe, but the HIV/Aids pandemic is totally different in that it is taking out the most productive people of the economy. These are the same category of child-bearing people who should be the powerhouse of the consumers. Should the disease spread globally, South Africa's exports of commodities could be further impacted, both in volume and price. The potential impact may or may not be positive, depending on the possible extent of the spread. Could the HIV/Aids pandemic be big enough to impact the global financial markets at all?

justamereBearBlack Blade Aristotle Oro#3830810/5/2000; 7:19:21

Black Blade 38180

Re 38179
I heard in passing that Barrick has apparently been working the greed and stupidity of the bankers. It seems that their treasurer/CFO, (Oliphant, as I recall, anyway I have a lot of time for him) was recently quoted to the effect that the majority of their forward contracts now did NOT have the (Ashanti Gold??-- Getting very senior here, or maybe not enough sleep) RISK . They seem to have negotiated contracts with a floor but no risk or upside limits. Such contracts are possible but usually expensive. Apparently he sounded smug. If so this has Very wide ramifications
Do you know the details?

Aristotle 38276
I used unsuitable to say they did not accurately convey to my audience, my intent. (Obviously or you would not have brought it up)
Unfortunately, like the Queen in Alice in Wonderland, my words meant exactly what I meant them to mean, no more no less.

Oro 38267
Loved your analysis. Unfortunately I did not have the benefit of it before I posted my last post

To anyone; Apparently the results for contest one have been released. I am most interested in the winning thinking. Does anyone know where they can be located?

wolavkarepeat#3830910/5/2000; 7:37:03

could be a repeat of 9-22, dec gold.
Humble PieAristotle post #36295#3831010/5/2000; 7:43:49

Glad to see that one of our more prolific posters eats garlic ,I have just planted next years crop of elephant garlic. It's easy to grow,good to eat ,and very good for you.Follow the wisdom of Aristotle,on Gold and Garlic.Get you some.
nummus aureusOilman: Wool gathering..#3831110/5/2000; 8:01:30

Oilman, you raise an interesting observation. The best records of the middle ages come from England, and indeed, you are correct that the death rate of 30% from the Plague lead to substantial changes in wealth, ownership, travel, social customs, wages, and industry. The most obvious change was in the conversion from grain based agriculture to pastorial. The wool industry became so important that even today, the wool sack is a part of the seal, and the head of Parliament is symbolically seated on a wool pelt.
My own observations in Africa lead me to believe that the threat of HIV/AIDS poses less danger than the inter-tribal conflicts being played out on the continent. After 50 years of intermurals and pre-season, it appears 48 of the 51 countries are about to make a deadly run for the Gold.
I personally have seen sealed CON-EX containers and medical boxes marked UNICEF, opened, to reveal small arms and ammunition.
One can only presume the world's banks are funding more than the financial slughter of the Gold and Mine owners.

OROM9 savings and the grabit surplus#3831210/5/2000; 8:15:25

Business Week ran a short blurb on the savings rate in the US and mentioned Ricardo's controversial proposition that savings rates decline when governments reduce their outstanding debt.

The article gave the presumed cause to be expectation of a lower future tax burden allowing people to spend the money now.

I think the issues are a little more complex than this. And that the explanation given in the article is, for the most part, off the mark. First, the heavy preference given by congress to equity investing must be considered as partial cause for moving the cash balanc preference away from conventional savings and to bonds and equities (where the reduced capital gains taxes would apply). Second issue is that there is a large chunk of non-wage income from ESOPs that is not reported in the statistics and is not available to offset spending. This way, we lose whatever portion of savings has come out of ESOPs from the statistics.

The lower capital gains rate has also pushed up the stock market so that the US investor has greater incentive to both invest new funds and liquidate older holdigs.

Finally, I think that it is the restraint of government spending that has the direct effect on savings, as is the corresponding decline in debt issuance. First, the government is not competing with the consumer for goods, thus lowering the effective prices for these goods relative to where they would otherwise have been, the consumer responds to the lower prices by purchasing more items - hence the rise in spending. Second point is that government is removed from issuing fresh assets for people to save in. - Since all monetary savings are in the form of debt, it stands to reason that having less fresh debt issued would correspondingly reduce asset volumes in which savings could reside. So, the "surplus" is split between higher spending and less saving.

wolavkaLook how it has traded#3831310/5/2000; 8:16:20

Globex knew, strength prior to n.y.
ran it up but not enough to set off stops
played it back but not below yesterdays' low .
NOW, you tell me, sucker them in and drop it to stops @ 271
or hold it for inside day?

Matters not, cannot hold it down much longer.

wolavkaDow & Duck#3831410/5/2000; 8:27:54

Humpty Dumpty.
wolavkabeans and wheat#3831510/5/2000; 8:37:47

Watch for buy in, not investment advice.
nummus aureusOro: M9#3831610/5/2000; 8:54:54

Oro, I have long felt the best way to insure long term growth would be the elimination of taxation on interest from savings.
If I have followed your observations correctly to a finite conclusion, the world's economy now only works if funds, (actual and borrowed), are immediately spent.
We may have achieved 'spontaneous gratification' with each transaction. I now envision future ATM's with sound effects, when "Enter" is pressed.

Hill Billy MitchellOfficial release#3831710/5/2000; 9:05:14

Official: Federal Reserve Statistical Release

Release Date: October 4, 2000

Rates for Monday thru Friday, Sept. 25, 26, 27, 28, 29 and Monday and Tuesday, Oct. 2 and 3

Federal funds 6.54, 6.50, 6.50, 6.59, 6.60 and 6.68, 6.46

Treasury constant maturities:
3-month 6.18, 6.18, 6.20, 6.25, 6.23 and 6.27, 6.32
10-year 5.84, 5.81, 5.83, 5.82, 5.90 and 5.83, 5.87
20-year 6.16, 6.12, 6.15, 6.14, 6.13 and 6.18, 6.20
30-year 5.90, 5.86, 5.90, 5.89, 5.88 and 5.93, 5.94

Spread - FF vs long bond:

(0.64%),(0.64%), (0.60%), (0.70%), (0.72) and (0.75), (0.52)

Spread - 10 yr vs 30 yr:

+0.06%, +0.05%, +0.03%, +0.07%, (0.02%) and +0.10%, +0.07%

Spread - 3 mo. vs 10 yr

(0.34%),(0.37%),(0.37%),(0.43%), (0.33%) and (0.44%),(0.45%)

Clint HPPT????#3831810/5/2000; 9:09:28

Watch the charts today. All the markets get the same boost at the same time. Trying to get some momentum going? This is not normal. It must take a lot of money to get an average up.
Cavan ManPOO#3831910/05/00; 09:54:31

Below $30. We live in interesting times.
Hill Billy Mitchell@ SteveH # 38022#3832010/05/00; 10:14:06

Sir SteveH

Your question:

"The link that keeps gold and oil together, what is it?"

My simplistic answer:

While both can become de facto currencies neither can be brought in to existence via printing presses.


Hill Billy Mitchell@ Town crier and RossL#3832110/05/00; 10:16:57


I have been meditating. I do not deny the fact that the X20 X50 graph gives fairly good picture of what has happened in the relationship with the POG and the POO. As you say Sir Town Crier we do have a reasonable overlay, however; if we can have a precise graph why would we want to look at something which is only a reasonable approximation. A comparison of the change in prices by percentage is precise. I say that if the precise graph gives a different picture from the reasonable approximation, then the reasonable approximation of necessity has to be distorted. Though the distortion may be minor it is still a distortion and distortions can lead to false conclusions.

I would also like to stress that what we see in the last 12 months or so does not indicate a trend. It could be an anomaly. For example Oil leading the way may be very temporary. Oil has not exactly shot to the moon. If Gold were to shoot to the moon I believe that Oil may very well do so also but as a follower and not the leader. This would establish that the trend we have seen for the last 20 years has not changed but is only temporarily hidden from view.

One other point if I may. Since we are looking at Both Oil and Gold in US$ terms would it not be fair to say that the real price trigger for moon shots is the US$ itself? When the US$ takes a dive then we will see both Gold and Oil go to the moon in terms of the US$. If the US$ does not take a dive then Gold and Oil will not shoot to the moon. My definition of a moon shot is POG somewhere between $6,000and $36,000 in terms of 1999 US$. The POO will not much matter to me because I am not accumulating Crude Oil.

wolavkafinally#3832210/05/00; 10:17:40

reality is setting in for gold!!!!!!!!!!!!!! Pit knows it!
Hill Billy MitchellReal prices of Gold, Crude, and Gasoline#3832310/05/00; 10:19:28

Some interesting facts revealed by comparing the real price of GOLD, CRUDE and GASOLINE:

In 1970 about the time the world began to change drastically 1 Ounce of GOLD would buy:
----------11 barrels of CRUDE and 100 gallons of GASOLINE----------

In 1980 the year when the average real price of GOLD peaked at $1364.05 (1999 US$) and the average real price of GASOLINE PEAKED at $2.78 (1999 US$) 1 Ounce of GOLD would buy:
-----------29 barrels of CRUDE and 490.67 gallons of GASOLINE----------

In 1981 when the average real price of CRUDE peaked at $68.78 (1999 US$) 1 Ounce of GOLD would buy:
-----------13 barrels of CRUDE and 333 gallons of GASOLINE----------

In 1990, the year prior to "Desert Storm", a relatively boring year in economic terms, the average real price in 1999 US$ was $500.14 per ounce of GOLD, $29.17 per barrel of CRUDE, and $1.51 per gallon of GASOLINE, one ounce of GOLD would buy:

-----------17 barrels of CRUDE and 331 gallons of GASOLINE----------

In 1999, by general consensus, a terrible year for GOLD, 1 Ounce of GOLD would buy:

-----------17 barrels of CRUDE and 240 gallons of GASOLINE----------

After we get the facts in and determine how these relationships play out in the year 2000 there are those who will say that the link between Gold and Oil has been broken. I submit that the uppermost graph on the above web link provided by RossL presents the most accurate picture of the trend in the price relationships of GOLD, CRUDE, and GASOLINE.

One year does not a trend make! Two years do not a trend make! Folks, just relax and you will see that the link in the price of GOLD and OIL has not been broken and will endure during the coming upheaval. The upheaval that we are about to endure will not be caused by the break in the link between GOLD and OIL, but rather the break in the link between the US$ and OIL. This is what I have learned by studying these price relationships and by lurking here. USAGOLD has given us the ball and all we have to do is run with it.

The ball is physical possession of GOLD and or OIL and the shunning of the paper dollar holdings at all costs. It is not practical for me to take delivery of or to store PHYSICAL OIL. For this reason I have opted to limit myself to PHYSICAL GOLD. When the "Thunder in the night" does occur it will be much too late to protect one's self. Many posters on this forum have sounded the alarm. Let's get physical!


Hill Billy MitchellGold, Crude, and Gasoline relationships#3832410/05/00; 10:22:09

I have developed a one-page spreadsheet that provides a good clear view of these price relationships. A perusal of the spreadsheet would absolutely blow your mind. I will be faxing the spreadsheet to RossL in hopes that he will be able to make the spreadsheet available to the forum as I lack the technical ability to post this sort of thing and make it appear in the proper format. I will fax the spreadsheet to others upon request. Any one who would like me to provide a copy of the spread sheet via fax at this time can make his or her request and provide a fax number by a posting on this forum
Hill Billy Mitchell@ Simply Me #: 38109#3832510/05/00; 10:25:50

Simply Me,

First of all let me try to develop a term that I am sure you might be aware of but may be helpful for all who might be lurking or want to comment or ask questions along this line. When we speak in terms of 1.00 we mean 1%. A dialog along these lines flows more smoothly if we change our description of these fractions of percentage points to 'basis points', ie. 1.00 % = a positive 100 basis points, -.94% = a negative 94 basis points, -.71% = a negative 71 basis points, 1.26% = a positive 126 basis points and so forth. In other words each 1/100th of a percent = 1 basis point. Having said that I will use the term basis points from now on when discussing the interest rate changes and the spreads among the various interest rates.

At the very end of August and into very early September the inverted spread (Fed Funds rate vs. the 30 Yr Treasury Bond) began to hover close to a negative 100 basis points. Then the inversion began to steadily narrow until on September 18th and 19th the inversion dipped to negative 48 basis points, the narrowest negative spread since June 23rd when the spread was negative 47 basis points. After September 20,the spread began to widen again to around negative 72 basis points 9/29. On Monday, Oct 2 the negative spread widened to negative 75 and on Tuesday it narrowed back to negative 52 basis points.

Simply me, you said: "…I've been watching HBM's Inversion of Fed Funds vs 30 yr. Note (sure hope I got that right). I noticed it revert to nearly positive after the Euro (actually Dollar) intervention, and watched it jump right back up over -.70 in the week or so after. I remember some mention of doomsday if it ever hit got close to -1. …"

My comments on this:

Negative 100 basis points do not mean doomsday in my opinion. Negative 300 to 400 for over a month would be scary but I do not think that Greenspan has the guts of a Charles Volker. Negative 100 or more would certainly spell contraction in the economy if the Fed holds it there long enough. I do not even think negative 100 basis points would be needed to cause economic contraction. The of size of the spread coupled with the duration is the key. No one knows what combination of these two factors would cause contraction nor how much contraction would occur nor when it would occur nor how long it would last. Hence we have the debate about Greenspan's ability to engineer a soft landing. It is too big for him and he knows it. He just has this tiger by the tale and can't afford to let it go.

Watching the spread between the 30-year bond and the FF rate is, on a continual basis, very informative in that it reveals the ongoing affects of the Fed actions. There are times when the spread will move significantly in a couple of days and then settle back to where is was and progress in one direction or another slowly scissoring but in a certain direction. The sudden moves for just a few days are a normal part of TEMPORARY liquidity situations AMONG the New York banks. These short-term liquidity situations are readily accommodated by Fed Brake and Peddle actions. The key here is that they are TEMPORARY liquidity needs within the New York banks and do not reflect any change in direction. The money market needs are so complex and hidden from view that we can only see the picture after the fact as to what Greenspan and Co. are doing by watching these spreads.

When the Fed halted the periodic upward tightening moves, apparently for political reasons, we saw a slow narrowing of the inverted spread which I believe will continue slowly until the Fed makes a move in one direction or another.

What happens, I believe, is that when the Fed stays pat over time the inversion will disappear as the general market begins to catch up with the true cash liquidity environment brought on by Fed actions. As long as the inversion persists even though the Fed is standing pat, we still have an abnormal situation. For example for the FF rate to be at 6.50% the long bond should be somewhere between 7.5% and 9.5% not the present 5.80% to 6.00% level. That would give a normal positive spread of 100 to 300 basis points. Again should this abnormal situation persist long enough, there is no doubt in my mind that we will have a recession. The market knows that and will head downward in anticipation of the coming decline in economic activity. There is a time lag between the slow and persistent Fed actions and a time lag between the down turn in the stock market and the ensuing economic contraction. We little people will always be behind the curve in information but the best we can do. This is proven by the fact that the market knows about the coming contraction before we do. I believe our best hope for timely warning lies in watching what the Fed is doing and the best way to do that is to keep a close eye on the Treasury yield curve.

The market will crash before significant economic contraction in my opinion because the market knows what is coming before it finally gets here.

Do we not see that very scenario appearing be for our eyes at this time?

They key to the inversion picture is the completeness of the inversion curve. By completeness I mean that each maturity offered by the Treasury would be inverted against the nearest maturity. Oro commented upon the completeness of the inversion some time back. I believe he said that we reached a "full" inversion of the Treasury rate curve. It may not be fully inverted at this time but is still mostly inverted. There are supply and demand situations on availability of different maturities which cause distortions but generally we can depend on the fact that the curve is still in inversion mode. The 20-year bond rate seems to be a meaningless factor, but comments on this will have to await a future post.

This subject is so complex that once in a while, when he has time to address it, ORO, gives us his thoughts and comments which are more technical but more informative. ORO, would it be possible for you give us a short update on what you see from your perspective?


Hill Billy Mitchell@ Simply Me #: 38109#3832610/05/00; 10:30:24


You said:

"…Hill Billy Mitchell: Loved the charts. Anything that helps to put oil/gold/dollar in a one-picture perspective is very helpful to those of us trying to get a handle on this situation. As someone who's better with words than numbers, my favorite was the X 20 / X 50 chart because it seemed to show the connection and then divergence of gold and oil so clearly. It also seemed to point to the current true value of gold as $600 US Dollars right now…"

My response:

I still want to caution all on the reading of the X20 / X50 chart. The uppermost chart on the link is precise (RossL has labeled it "CUMULATIVE REAL PRICE") in my opinion and the X20 / X50 does not match it precisely, therefore the X20 / X50 chart is not precise. At this point I am by myself on this point. RossL and Townie have not concurred with my pickiness on this point.

Also the true value of Gold is not $600. That conclusion is based on at least two premises which are in question. Premise # 1 is that the true value of crude is $30, a very questionable premise. Premise # two is that the X20 / X50 chart is accurate, also a very questionable premise in my opinion only, it seems. If the true value of gold is $600 and the true value of crude is $30, we should all be in paper and we have been mislead by ANOTHER, and a host of other very brilliant folk who post on this forum. I doubt very seriously that very many physical holders of Gold will sell @ $600. I can assure anyone out there that if you do sell at that price I will be one of your buyers because I will still be accumulating by converting each and every one FRN left over after feeding, clothing, and sheltering my family.

I only offer this in concern. I feel very strongly about this. I admit that I could be highly mistaken and certainly do not have the credibility to be followed.

I do hope that what I have said has not appeared mean-spirited or abrasive. If so the cause is my lack of ability to communicate.

Very Respectfully,


PS: It would helpful for you to see where I am coming from if you had a copy of my one-page spread sheet which I offered to fax in a prior post today.

RS@ Hill Billy Mitchell (10/05/00; 10:14:06MT - msg#: 38320)#3832710/05/00; 10:30:35

re: the link between oil and gold-
Hill Billy, we both know the truth is often simple...
I think your answer contains a great deal of truth.

(Thank you, M.K/USA Gold for this forum, and many thanks to the those here who share so much insight and wisdom. My understanding of monetary truth grows proportionally.)

miner49erOil-as-reserve-currency policy ramifications#3832810/05/00; 10:37:40

Trail Guide, and others...

As I've seen no interest in my inquiries about oil as a reserve currency, I would like to pose the issue in a slightly different way, as perhaps I was not clear regarding my concerns. I believe it is a matter of some importance in how we analyze the events of the coming days, and how we prepare for them (ref. my post: miner49er (10/1/2000; 18:37:14MT - msg#: 37999)).

The basic inquiry revolves around whether the U.S., even at a low and discreet level, was consciously aware of the use of oil as a de facto "reserve currency," or whether the effort was more an ad hoc exploitation of an apparent advantage to be had in a cheap-oil-high-productivity-ratio.

The premise of a deliberate effort would have implied some kind of transferral from the dynamics of the linked gold-dollar standard, and a systematic deployment of the new relationship.

In the gold-dollar link, the convertibility factor provided the foreign banks a check over how we managed our monetary policy, in that their ability to exchange gold and dollars could alter the composition of our reserves. There indeed was a system in this arrangement, and however faulted, provided a framework in which to develop policy.

If such a system could be provided in an oil-dollar link, then, despite the rushing of the waters sideways, hither and yon, in the microcosmic perspective of day-to-day politics, an overall purpose could have at least been worked towards as a defined system would have provided a framework for explicit policy initiatives.

The methods would be different to be sure, in that the gold-dollar standard had differences vis-a-vis an oil-dollar link, e.g., actual above-ground AU reserves vs. future in-ground oil; under-valued and irregular valuation of gold, vs. a regular, basically marked-to-market valuation of oil; and that the reserve itself was, in gold's case, completely under the control of the country whose currency was linked to it, vs. oil wherein it is not (thus an external oversight of the exchange).

It seems that from my understanding of Another/FOAs writings that a system did evolve, and that its current (and last) permutation has become the present state of the paper gold markets.

Without recounting this history, the purpose was essentially to keep gold stable and available, so oil producers could acquire it as partial payment for their oil. In return, they would continue to provide oil inexpensively for payment in U.S. dollars. This would keep the dollar, now unlinked to gold, as a viable world reserve currency until a replacement could be developed.

(Please forgive me for going over the elementary parts of this, but I feel it necessary since a) you don't know if I really have an understanding or not -- in fact, I don't know if I have an understanding oftentimes... and b) new people to the forum can be afforded a brief overview of the discussion, so they can play along at home -- I always appreciated this when I first started my education.)

So, if the U.S. had a part in this (albeit for a different purpose -- not to buy time to build an alternate reserve currency, but hopefully to fix the dollar), then this should be carrying through to the present in some form.

If it is, then the developed interests in such a system would by now be very powerful, and could certainly influence the political actions of the players currently holding office. If not, then, although an awareness of the relationship may be present, the pattern of a pillage/plunder exploitation of the relationship would be the habit, and there would probably be no organized constituency to govern it.

Hence, there would be no policy behind our "public" energy policy, and it, itself, would be haphazard and up to the narrow, politically influenced whims of the current office holders.

This is where the concerns set in. In the scenario involving a conscious policy, this game of chess would be at the point of resignation by the U.S., indeed they would have resigned long ago (although the game would continue to be played so that the viewing public would feel they were getting their money's worth...).

The U.S. would have played along with Europe/Arabs calling the shots, and the course of action would attempt to be in the best interests of all parties concerned. In the tradition of classical diplomacy, stability, not destruction, is the goal, and it is arrived at by first acknowledging the legitimacy of powers and their spheres of control. It does not necessarily mean these powers are in place by just or moral right, but they are for practical purposes "in place." For the sake of stability, an equilibrium among these competing powers is pursued. Conflicts are sought to be mitigated inside of acknowledged boundaries, rather than unrealistally eliminated. Accommodation is sought to promote stability, rather than risk backing a power into a corner where diplomacy might break down, and other undesirable measures taken.

Therefore, it is clearly not in the best interests of Europe, Arabs, China, or anyone to see the U.S. shattered into pieces. TRUE, there are revolutionary forces that do want to see this, both as sovereign entities (Iraq for instance), and parties within the otherwise stable powers. And TRUE, there are cunning self-interested players who wish to exploit the situation big-time for their advantage without regard to anyone else. And TRUE, the U.S. would naturally rebel at this, but it would be constantly brought to bear upon them, that the borrower is servant to the lender, and their debts are being called in. Now, do you want to work with us, or must we pursue these other measures.

The problem, as I see it, is that the longer the struggle hopelessly continues, the more people, parties, powers will ultimately become so aggrieved, that more revolutionary minded forces will gain influence, progressively decreasing the possibility for any semblance of an orderly unwinding of our affairs (and the more entrenched and mature the expoitative self-interested forces become as well -- further aggravating the situation).

These aggrieved powers may be overtly challenged (e.g., Iraq's embargo), voluntarily submitted to (gold holding nations that have chosen to absorb an uneconomic amount of dollars, thereby importing inflation to their countries), or non-voluntarily submitted (3rd world countries having IMF policies thrust upon them to "convince" them it is in their best interests to hold dollars in reserve). All these powers have had their citizenry suffer unnatural hardship by these unnatural policies for a long time.

Europe now says, it's time to move on. If the U.S., absent the controls established by having some sort of articulated oil-as-reserve-currency policy, becomes unpredictable, and only goes down kicking and screaming, then other measures must be taken, because the onward flow of the river must (and will) continue.

Back to the nature of my inquiry, with a different question posed: What measures can Europe take to bring this to as much of a graceful close as possible?

It seems that they chose one, in requesting the U.S. to intervene on behalf of the Euro. Without the selling resistance to this intervention, the Euro would have shot up perhaps to 95(?) to the dollar on this action alone, with gold rising commensurately. Raising Euro rates could have some "mild" effects, but hurts the Euroland economies, and establishes a precedent of linking the Euro unnecessarily to the US Dollar. Buying Euros with Dollars is another one, but temporary and proven to be ineffectual historically -- and also harmful to Europe as well.

Another WA pronouncement could be a financial Hiroshima, and any public outright purchases of physical gold in quantity by Europe, Arabs, or China would be Hiroshima x 1000. Hence it seems to me that there are no mild options left for any diplomatic denouement.

Can anyone make any suggestions here?

I truly do appreciate any of you who have read this in its entirety. If this has been addressed elsewhere in the past, forgive me as there are so many posts, it is hard to catch everything. Offered, genuinely and as always, IMVHO...


Gandalf the WhiteMANY thanks to SIR ORO !!!#3832910/05/00; 10:54:04

I and the Hobbits sincerely appreciate your continuance of the illumination of truths in the attempt to increase the level of knowledge on what is really happining in the art of finance. Hurry up with the book, but then you shall have to send out updates to everyone that purchases one.

Gandalf the WhiteSorry == WAY OFF subject --- BUT I could not believe it !#3833010/05/00; 11:16:20

The following article on "dumbing down" appeared on the MSN Homepage for a FEW MINUTES this morning ! -- I could not believe it and copied it, and after saving it away in my slow style, I went back to get the LINK -- and WOWSERS -- IT had been pulled !
Question -- Is this a planned attempt to lead young folks into thinking that a college degree is something of no value and the new cyberworld will take care of everything ? OR, JUST LIKE GOLD is a worthless relic of the past ?
Oh, My oh My, as a older baseball announcer of the "Seattle Mariners" pronounces. (There, that is my off subject items of the year, I promise.)
Leaving School Early
Do you really need a college degree?
By Claudine Williams
Bill Gates didn't do it. Neither did William Faulkner, F. Scott Fitzgerald, or Ted Turner. None of these highly successful individuals finished college. You might be wondering if it's worth it. Do you really need to go to a four-year institution to be successful? Well, the answer is … maybe.
Companies are looking for people with a baseline of technical knowledge.
In 1997, the U.S. Census Bureau reported that the average college graduate earned $40,478. Compare that figure to the $22,895 income of the typical high school graduate and the difference is clear. Grads earn a whopping 76 percent more. However, if you have tenacity and a little technical training under your belt, you could do very well without a degree.
Alternative Success
Even a college degree is no guarantee of success. Scott Lane is CEO of Oxford Lane, a Colorado training center that specializes in networking certification. He claims that many college graduates still need training in order to have a fruitful career. "We have noticed that a lot of the students coming out of college--although they have information system technology degrees--they still need to come in and get certified," he said. "Companies are looking for certification."
A student who may have just graduated from high school, Lane adds, can get into the computer industry by entering a computer certification program. You can get your certification in six months. If you decide to go on to college, not only would you have a job waiting for you, but you may very well be able to go for free. Many technology companies are so eager to hire certified computer specialists that they offer tuition reimbursement.
"With a Cisco networking associate certification," Lane believes, "you can come out of school making about $50,000 a year. If you have no hands-on experience you can make about $40,000." And you don't need any experience for these certification programs. "One thing that's so appealing is that you pay a lot less for the certification," according to Lane. Certification for some Cisco networking programs run about $4,000.
Electric Youth
Current high school graduates are lucky because time is on their side. They are entering the computer industry just when the demand is high and supply is low. The explosive growth of this industry began about four years ago, when companies like Microsoft and Cisco needed to find qualified people who knew their product. These corporations and others came together to start certification programs to fulfill that need, according to Lane.
"Companies are looking for people who have a baseline of technical knowledge," he said. "A lot of times colleges that provide a four-year degree are teaching outdated skills. In the certification program, they are teaching the latest technology that people need."
Cisco system experts administer routers and switches. Any company with more than 30 computers needs to have a router or switch to segment their network. Lane's technical school, which offers hands-on experience and a free internship program, is the largest Cisco training facility in the state of Colorado. "Right now the industry is lucrative for somebody to go out of high school and get a certification to have somebody else pay for their college." Lane is also quick to add that students should get a four-year degree.
"They don't have to," Lane admits, and they'll still make great money. "But there will come a time in about four or five years when the IT industry begins to catch up with itself again with enough workers. Having a college degree will be very important."
A Case in Point
Students who plan to enter liberal arts fields can also find good jobs without a college degree, provided they are hardworking and willing to enroll in a trade school. Chris Watts, a public relations professional who worked in the Washington news bureau of the Associated Press, has a bias against college. He changed his major four times in a single semester at the University of Connecticut.
"After two semesters, I had second thoughts about going to college," he admits. Watts experimented with majors in music education, journalism, music theory, and Middle Eastern studies. "I went to my parents and said there's no reason why we should throw money into this situation and try to fix it. My parents said this made sense." So Watts dropped out of school and, instead, went on a month-long backpacking trip through Europe.
Upon his return, Watts enrolled at a trade school to learn broadcasting. Although he'd changed his major frequently in the past, he discovered that he liked journalism and could make a living at it. He ended up working for two of his hometown radio stations earning about $7 an hour. Watts later tried out for a job at the Associated Press, but failed the writing test.
Determined to pass the exam, Watts studied the AP style manual and retook the test. He passed it the second time and was offered a job in Washington, DC, at $35,000 a year. "I really tried to take in as much as I could," he said. "My dream was to be a correspondent and I worked the White House. I was there and covered the 1996 election, and that was pretty cool."
Watts, now 27, went on to work for a radio news service in Connecticut, where he managed 18 employees, before finding his present job at a small public relations firm. He says that he was successful because he worked hard and learned all he could on the job to move up in his career.
"A lot of companies would not look at you if you don't have a degree," he laments. "Companies are passing up a lot of good hard workers. You don't have to go to college if you have the drive and if you are willing to sacrifice."
Claudine Williams is a full-time freelance writer in metro Atlanta. Her previous work has appeared on, and she is currently developing a project with Essence magazine.

Gandalf the WhiteDon't look now ! -- BUT like my Crystal Ball said -- Gold Stocks are --#3833110/05/00; 11:31:21

GETTING KILLED !! This may be the last "fall out of bed" action that means that the start of the GOLD BULL is now VERY NEAR !! -- Hold on tight to the YELLOW !!

JourneymanWere you a QUANT head hunter?? @justamereBear#3833210/05/00; 11:51:00


Did I read you correctly? Did I understand you to have made money as a quant head-hunter?

If so, I'm very curious what the criteria and experience for a good "trader" (lower-level quant?) are. A friend of mine in the gambling business was "rushed" by a school chum for that job maybe seven years ago, specifically because he had experience gambling professionally. (Ultimately he declined the offer.)

At my urging he queried his chum on how one advanced in the business. It amounted to, to over-simplify, "if you're successful with small fundlets (several million dollars) you get to play for bigger stakes." BUT we determined there was little "long-run" in this method -- being lucky was more important than being good in terms of advancing to managing larger capital pools.

I beleive someone, ORO? yesterday posted the equivalent, essentially that even prudent fund managers had to go with the momentum or be replaced. Does this jibe with your experience?


P.S. Enjoying your exchanges with Ari and Oro. Don't get TOO caught up in the details though. Yea, I know - - - I have to clamp my hands in a vice at least ten times a day to keep from posting on intriguing but time-consuming subjects!!

Peter AsherOn-line Harris poll#3833310/05/00; 12:00:40

Thursday, October 5, 2000

Today's Poll • Instant Results • Previous Polls • Discuss Other Polls

If the election was held today, for
whom would you most likely vote?


56% => 31434 votes


4% => 2453 votes


33% => 18999 votes


1% => 616 votes

None of the above

2% => 1667 votes

Not sure

1% => 835 votes

Current Vote Tally: 56004

RossLNote to HBM#3833410/05/00; 12:25:46

I will be very busy until Saturday.
Peter AsherOn the general underlying subject of Life#3833510/05/00; 13:58:54

Don't know who the original writer is

Subject: Long ago....Information please

When I was quite young, my father had one of the first telephones in our
neighborhood. I remember well the polished, old case fastened to the wall.
The shiny receiver hung on the side of the box.
I was too little to reach the telephone, but used to listen with
fascination when my mother used to talk to it. Then I discovered
that somewhere inside the wonderful device lived an amazing person - her
name was "Information Please" and there was nothing she did not know.
"Information Please" could supply anybody's number and the correct time.
first personal experience with this genie-in-the-bottle came one day while
my mother was visiting a neighbor.
Amusing myself at the tool bench in the basement, I whacked my
finger with a hammer. The pain was terrible, but there didn't seem to be
reason in crying because there was no one home to give sympathy. I walked
around the house sucking my throbbing finger, finally arriving at the
stairway. The telephone! Quickly, I ran for the foot stool in the parlor
and dragged it to the landing.
Climbing up, I unhooked the receiver in the parlor and held it to my ear.
"Information Please," I said into the mouthpiece just above my head. A
click or two and a small clear voice spoke into my ear.
"I hurt my finger..." I wailed into the phone. The tears came readily
enough now that I had an audience.
"Isn't your mother home?" came the question.
"Nobody's home but me," I blubbered. "Are you bleeding?" the voice asked.
"No," I replied. "I hit my finger with the hammer and it hurts."
"Can you open your icebox?" she asked.
I said I could. "Then chip off a little piece of ice and hold it to your
finger,"said the voice.
After that, I called "Information Please" for everything. I asked her
for help with my geography and she told me where Philadelphia was.
She helped me with my math. She told me my pet chipmunk, that I had caught
in the park just the day before, would eat fruit and nuts. Then, there was
the time Petey, our pet canary died. I called "Information Please" and told
her the sad story. She listened, then said the usual things grown ups say
to soothe a child. But I was unconsoled. I asked her, "Why is it that
should sing so beautifully and bring joy to all families, only to end up as
heap of feathers on the bottom of a cage?" She must have sensed my deep
concern, for she said quietly, "Paul, always remember that there are other
worlds to sing in." Somehow I felt better. Another day I was on the
telephone. "Information Please." "Information," said the now familiar
voice. "How do you spell fix?" I asked. All this took place in a small
in the Pacific Northwest.

When I was nine years old, we moved across the country to Boston. I missed
my friend very much. "Information Please" belonged in that old wooden box
back home and I somehow never thought of trying the tall, shiny new phone
that sat on the table in the hall. As I grew into my teens, the memories
those childhood conversations never really left me. Often, in moments of
doubt and perplexity I would recall the
serene sense of security I had then. I appreciated now how patient,
understanding, and kind she was to have spent her time on a little boy.

A few years later, on my way west to college, my plane put down in
Seattle. I had about half-an-hour or so between planes. I spent 15 minutes
or so on the phone with my sister, who lived there now.
Then, without thinking what I was doing, I dialed my hometown
operator and said,"Information Please."
Miraculously, I heard the small, clear voice I knew so well.
I hadn't planned this, but I heard myself saying,
"Could you please tell me how to spell fix?"
There was a long pause. Then came the soft spoken answer, "I guess your
finger must have healed by now."
I laughed, "So it's really still you," I said. "I wonder if you have any
idea how much you meant to me during that time."
I wonder," she said, "if you know how much your calls meant to me.
I never had any children and I used to look forward to your calls."
I told her how often I had thought of her over the years and I
asked if I could call her again when I came back to visit my sister.
"Please do," she said. "Just ask for Sally."

Three months later I was back in Seattle. A different voice
answered "Information." I asked for Sally. "Are you a friend?" she said.
"Yes, a very old friend," I answered.
"I'm sorry to have to tell you this," she said.
"Sally had been working part time the last few years because she was
sick. She died five weeks ago."
Before I could hang up she said, "Wait a minute.
Did you say your name was Paul?"
"Well, Sally left a message for you. She wrote it down in case you called.
Let me read it to you.
The note said, "Tell him I still say there are other worlds to sing in.
He'll know what I mean."
I thanked her and hung up. I knew what Sally meant.
Never underestimate the impression you may make on others.

Parsifalminer49er: Oil-as-reserve-currency policy ramifications#3833610/05/00; 14:29:25


you said:

The problem, as I see it, is that the longer the struggle hopelessly continues, the more people, parties, powers will ultimately become so aggrieved, that more revolutionary minded forces will gain influence, progressively decreasing the possibility for any semblance of an orderly unwinding of our affairs (and the more entrenched and mature the expoitative self-interested forces become as well -- further aggravating the situation).

And that is exactly the process failing large enterprises go through. I have watched closely two medium-to-large enterprises proceed to advanced states of decay as you describe above.

wolavkaGIVING UP.#3833710/05/00; 14:32:15

Most have quit, discouraged, crushed; now the metal is ready.

Follow this trade: dec gold should open globex session @ 273.80.

They have the option to range play from that point down to 272. stops resting @ 270-71.

new york will break 274 then you can enjoy the week-end.
again 282 needs to be taken out.

What's left? nothing but GOLD. not investment advice.

wolavkaMistake on todays range #3833810/05/00; 14:45:25

Todays dec gold should have replicated 9-22, tomorrows range should fill that area and first test 279, if broken than 282 which is critical break out282.60 exact.

xau stocks will follow pog this round.

TheStrangerThe U.S. Temporarily Closing All Embassies In The Arab World #3833910/05/00; 15:16:26

Well, this ought to put to bed any notions that OPEC is about to rescue the west.

Oilman - appreciated your ruminations on AIDS. I don't recall that being discussed here, though, like you, I am sure there will be plenty of economic ramifications.

TheStrangerThe Human Spirit#3834010/05/00; 15:21:19

The human spirit is alive and well today in the streets of Belgrade.

Note to Al Gore: I hope you are watching CNN, today. The only way to make human beings equal is to hold them down.

Hill Billy MitchellCorrection of Post # 38321#3834110/05/00; 15:49:37

I previously posted the following statement:

"My definition of a moon shot is POG somewhere between $6,000 and $36,000 in terms of 1999 US$. The POO will not much matter to me because I am not accumulating Crude Oil."


I should have said $6,000 and $36,000 in nominal dollars not in terms of 1999 dollars.


RasboraSoon I will return to lurker status...#3834210/05/00; 16:24:23

Greetings to this fine forum. I do not want to waste too much of anyone's I will be brief. I have lurked for nearly a year now and I have nothing much to add to the going ons here except a thank you to our host and to all those who post here. You have changed my view on everything that transpires or is reported. I can now avoid the verbal diarrehea that is all around me and counter (when required) with facts and with HARD arguments. This forum is a saviour for some of us as the quality and breadth of the discussion is inspiring, educational and admittedly addictive. I have turned on more than a few friends, family and colleagues to you all, and hopefully improved the offtake of physical as well. Again thank you to all!

I believe we are at the point that this battle may turn. A day like today is very disheartening for us all, especially those like myself who invested nearly everything in gold mine shares. That has changed since last September and my slowly increasing physical holdings do keep me positive but I cannot help but feel loss, disappointment and some anger at my situation. I own some "high quality" unhedged firms but they too are getting caught in this downdraft.

A lesson learned (hello FOA / Trail Guide) but one that came too late I guess.

As a Canadian, Quebecer and Montrealer the recent loss of Pierre Elliot Trudeau does not help the present emotions, but his passing and the rememberance of his life (through rose coloured glasses of course) does remind me what values we all should have in our lives and what we can aspire to.

My stash of physical gold reminds me of them as well. Especially my pre 1933 coins...with their inspiring messages like "Gott Mit Uns" or "Fraternite et Liberte"

I hope that the recent market actions are not indicators of a light slowly flickering, as was the case for Trudeau in his final peaceful days in Montreal, instead I hope that these are the days that finally represent the turn that others speak of.

Even it means my losses continue on the paper side.

It is time, I am ready, please deliver us all to the values this world needs more than ever.


I hope our gracious host allows me one comment to Wolavka...I own major shares in GLDR, and have since 1995. Not exactly proud of it these days...however volume today was a whopping 35 times the average...was that you out there? If not who was it?

wolavkarasbora#3834310/05/00; 16:35:57

you better believe it> hold on we will make it.
Cavan Manminer49er#3834410/05/00; 16:43:26

TG says it is "Showtime"; remember the movie "New York, New York"? I would assume all the insiders are taking positions in order to benefit. In fact, FOA did make that point some time ago. It sure seems like time to fish or cut bait for many. Watching and waiting....
wolavkaGreat englishmen#3834510/05/00; 17:07:37

once said, to thy own self be true and it must follow as nite the day thou cannot be false to any man.
JavaManFrom the Fleckmeister...#3834610/05/00; 17:19:37

Interesting twist on the SPR...

From the link above:

<< Lastly, turning to the oil market, late yesterday the DOE released information about who will receive barrels of oil. The most interesting aspect, besides the fact that more sweet crude was released than was expected, was the fact that Morgan Stanley came away with 2 million barrels -- not that they are in the business of refining it, for it appears this oil will be headed overseas (I am indebted to Joanie for pointing this out). Obviously the SPR, besides being used for political purposes, is now being used for speculative profits. To quote Joanie:

This is infuriating isn't it? Sure, we all like to see lower prices at the pump and in the furnace, but is there anything -- anything whatsoever -- that this current administration hasn't rigged, lied about, twisted, conspired or otherwise made a mockery of? You'll be hard-pressed to come up with anything, so don't get too worked up about it, OK? >>

Galearis@ Rasbora#3834710/05/00; 17:29:21

Greetings to a fellow Canadian. I share your sadness for the loss of a great Canadian. You said:

"I hope that the recent market actions are not indicators of a light slowly flickering, as was the case for Trudeau in his final peaceful days in Montreal, instead I hope that these are the days that finally represent the turn that others speak of."

Slowly flickering (down) is the likely course we follow. But we do so with feelings of anger that on the one hand that these markets are not free, but somewhat relieved too that prosperity is also the result. Ambiguous, yes.

But I think they will keep these markets (and gold too) under control for another year and a bit. Read January, 2002. Manipulation of currencies is rampant on both sides of the pond, and all the big players on these hemisphere stages are in (on) the fix. The markets will flicker and hopefully not falter without our safety net of the EURO to catch us all up. The alternative will be painful and unthinkable. In the meantime we accumulate the yellow and masticate the nails, yes? At least WE know!

wolavkaJesus!!!#3834810/05/00; 17:42:29

"Father forgive them for they know not what they do."
justamereBearjouneyman 38332#3834910/05/00; 17:49:39

Yes I suppose I was a "quant" headhunter, altho I never heard that phrase till recently and am not really sure what it is. If someone roared up to me and announced breathlessly that they were a quant trader, I think I would be pretty suspicious tho.

In every field the real professionals are pretty low key. They know they are good. They don't need mystique and buzzwords and all the other things to impress their friends. The only people they want to impress is themselves, and once in a while, their equals.

Traders are ultimately a personality. One that doesn't get very emotionally involved in their positions, have a good mind, and intuitively calculate probabilities.

Since these qualities probably fit a professional gambler, I'd say it was a good choice.

As far as the junior level traders, there is no real criteria. All the bright types in these financial institutions can imagine how their friends will react when they casually mention that they traded 2 billion dollars today, so they all want in. So it would be unusual for a headhunter to go after a junior, because they are already breaking down the door, and the training can be VERY expensive. I've seen a junior lose 1/2 a million in less than a week. I only ever went after 1 partly trained one, and 2&1/2 years later his new employer shipped him off to London where his first year bonus was 7 figures US. He had all the right stuff.

Particularly in the Foreign Exchange (FX) market, where profits and losses are made on 1/1,000 of a cent move, the pressures are enormous. If you are at risk for 1 or $200 million, you don't sleep well because there is so much that can go wrong overnight. Top of the line FX interbank traders tend to burn out in less than 10 years, not so much in Money market traders, CB traders, and institutional, because the positions are smaller or really -- there is not so much at risk, hanging on a hairtriggers. It is easier to make money, and you can turn off occasionally.

Sticking with the FX interbank traders, because thats where the pressure is, there are 2 basic personalities who reach upper levels. Those who go to Vegas (sp) (the big swinging Dicks) and those who don't. The Vegas boys are compulsive gamblers, and bet on anything as a way of life. Sooner or later everyone of them craps out because their lucky streak ran out.

The ones who don't gamble, plug along, and if they are lucky enough to be in the right place at the right time, they get to advance, same as the rest of us. But thats about the only luck involved.

Your professional gambling friend, if he is professional, does not gamble. In common with money managers of all ilks, he has learned that the first three rules are CUT YOUR LOSSES, CUT YOUR LOSSES, CUT YOUR LOSSES. If you hold bad cards with poor odds of winning, GET OUT. No matter what the other nuts at the table may say, there is no obligation to stay in a losing situation. Your friend also knows he can stand a number of small hits and still come out a winner when things turn in his direction big time. Ultimately it is a 51% game, win 51% of the time.

I'll bet he seldom bluffs either. Just enough to keep the opposition off balance and feeding money into the pot.

Because of the necessary cut your losses, ride your profits nature of the mentality to be a successful trader, the net effect is; huge momentum player, altho I doubt that many of them think of themselves as momentum players.

In short, to the successful ones, it's a job.

Many thanks for the PS's. They have been right on the money. While this has been a worthwhile exercise (I got 1 new angle, and polished an old one) I think I'll have to largely go back to lurking.

Off to get my exercise.

Best regards

Golden TruthTo Wolavka#3835010/05/00; 18:01:55

Howdy, just wanted to let you know, you're a HOOT :-))
Thanks, for being here!!!

SteveHNice read#3835110/05/00; 18:27:00


What do you mean my "number is 600 tons?"

SanchoWolavka#3835210/05/00; 18:27:03

That great englishman no doubt was Shakespeare. Another
one you and others might like is: "Our doubts are traitors,
and makes us lose the good we oft might win by fearing to

JourneymanStephen Zarlinga @Turnaround, ALL#3835310/05/00; 18:28:54

This guy, and I think I know who he is, can't tell Austrian economics from astrology.

One quick example. He claims of the Austrian School that, "They can't imagine this solution because they view money as a commodity -- or an economic
good -- that can't be brought into existence out of thin air. But if you understand money as an
abstract legal power, then a nation can successfully create and substitute cash for the already existing
and suspect bank credit…."

Clearly he hasn't done his home-work. Austrian School economists know ANYTHING can serve as money, just that gold evolved to be the preferred medium of exchange for very good reasons, Adam Smith and David Ricardo not-withstanding:

"*From the point of view of this insight one may
call wasteful all expenditures incurred for increasing
the quantity of money*. The fact that things which
could render some other useful services are employed as
money and thus withheld from these other employments
appears as a superfluous curtailment of limited
opportunities for want-satisfaction. *It was this idea
that led Adam Smith and Ricardo to the opinion that it
was very beneficial to reduce the cost of producing
money by resorting to the use of paper printed
currency. However, things appear in a different light
to the students of monetary history. If one looks at
the catastrophic consequences of the great paper money
inflations, one must admit that the expensiveness of
gold production is the minor evil*. -Ludwig von Mises,
Human Action A Treatise on Economics, Third Revised
Edition (Chicago, Illinois: Contemporary Books, Inc.
1966), pg. 422 -available also from]

Mises admits elsewhere to once having subscribed to the Ricardian notion himself.

The reason no serious Austrian Economic STUDENT will bother debating him, not to mention anyone with a degree, is simply that he doesn't know what he's talking about. And I'm being kind.

There aren't very many Zarlingas around, and fewer named Stephen. If this is the S. Zarlinga I know of, he ripped off two folks I know quite well, one of them Howie Katz, author of "The Paper Aristocracy" and publisher of "The Gold Bug" many years ago, and the other, one of his backers.


JourneymanCurrency @Aristotle, Black Blade, ANY#3835410/05/00; 18:46:52

I seem to remember reading somewhere the term "currency" was originally banker lingo for outstanding bank notes that were "currently" redeemable, referring specifically to "REDEEMABLE IN GOLD ON DEMAND" notes the banks had issued. The "ON DEMAND" part is what made them "current."

Correct me if I'm wrong,


JavaManminer49er, your msg#: 38328#3835510/05/00; 18:48:22

I find myself wondering from time to time what the attitude toward each other is amongst the nations as they watch the candle growing dimmer with time. Are we all in this together, or will it be "just business" as they say just before one gets a bullet behind the ear?

I too would be interested in hearing what others think about your questions. Perhaps this may shed some light on the question or, at least, jump start the's a post from ORO, I believe, from some time ago though I don't have the ID #.

<< The central bank may attempt to slow the rate of damage and extend the "reckoning" to a later date, however, it has not the option of avoiding the damage, nor of preventing the "reckoning" at the end of the process. Failure of debt money systems is structurally assured, what remains uncertain are the timing, the rate of change, and the ultimate degree of damage.

The "near end" in the 70s was not quite as intense a crisis as it had potential to become because of the support granted the dollar on international markets by the central banks of nearly all nations [...] Today, international support on this scale is not available. Like the man at the grocer's who has accumulated too high a credit balance and is asked to pay in cash. "You are my best customer, but you pay off such a small portion of your outstanding bill that keeping your custom is just not enough of a reason to accept your credit. I would do just as well if I closed shop and we were both ruined- because I can't afford you, and you can't afford yourself." >>

Somehow, I just don't see the rest of the world "closing shop" to keep us company...

Rasbora, welcome to the forum Sir. Don't be so quick to rush off...pull a chair up to the Table and stay for a while and make yourself comfortable.

You said "A lesson learned (hello FOA / Trail Guide) but one that came too late I guess." And I say, better late than never! Sometimes, learning about the topics discussed here can instill a sense of urgency to act but I think there is plenty of time to implement a plan of regular acquisition of physical gold over time with "disposable income" of course. I have often found each purchase to be at a better price than the last. So, when the next "installment" comes around, I suspect it may even be at even better prices. No need to rush anything. No stress. Given that gold is at a 20 year low, I can live with that...

CanuckDark deep blue nothing#3835610/05/00; 19:23:12

Just checked the POO and the POG. The USG has this thing tighter than a drum. Nothing will stir and nothing will seem out of control for a month.

Apres Nov.7 we wait for a murmour. I have a feeling this garbage will continue or it will stop. Kind'a agreeing with Steve H. from a year ago, "... nothing will happen until after the elections..."

auspecTWIG-- THIS WEEK IN GOLD#3835710/05/00; 19:32:01










ADEU {sp?}


wolavkasancho#3835810/05/00; 19:43:17

I'm with you brother, check out globex tonite,we will win!!!
Chris PowellRubin still at center of market manipulation#3835910/05/00; 19:52:06

Dispatch from GATA Chairman Bill Murphy.

To subscribe to GATA's dispatches
by email and get them immediately so
you don't have to go look for them,
send an email to:

This email address is being protected from spambots. You need JavaScript enabled to view it.

CanuckFrom the SI link below#3836010/05/00; 19:54:32

Read this statement and get blown away.

If this statement is true, the SM's are REALLY in a toilet bowl freshly flushed!!
"The problem is we have 87 percent of trading controlled by local individuals and many of them bought shares on margin in speculative trades or day trading."


RockgrabberYep, this place is unique.#3836110/05/00; 20:05:10

How funny is Mr "Donkey" Clinton?? OK let me see if I can do this into perspective. Donkey Clinton ask OPEC to please give more oil, it is very important for us, as well as OPEC. Then at the same time he is asking congress to pass any bills possible to get our needs off OPEC.

Wolavka keep showing how persistance pays off.. heheheheh

Midas MulliganIt's time for goldbugs to walk their talk#3836210/05/00; 20:22:25

By which I mean tell wealthy producers to quit, "shrug", and invest their wealth in gold. Take a mulligan on their past life. It's in your own, and thus theirs as well as everyone's rational self interest to do so.
Cavan ManHey, ET#3836310/05/00; 20:33:33

Don't follow the PB site anymore but always wondered about the rants about Fannies (not at those bars mind you)and the securitization of debt, creating money in the new economy etc. Well, believe it or not, I finally got it straight! There was an article in a local paper here the other day about Fannie Mae; they are "comin' to town" (just like Santa right?)! Those good times they gonna roll for all kinds of projects that have been impossible to finance. In this economy you would have thunk that anybody who wanted to own would well, hang onto your wallet; they ain't through yet. There is a project being financed by FM that was "TURNED DOWN BY BANK OF AMERICA" among other foibles. This project is in a questionable yet temporarily trendy part of town and "lofts" are the ticket don't you know. Securitization of debt; got it!

Also, true story: I used to do business with a guy who, after many years had gone out on his own, started a small manufacturing company and, after five years, was pretty successful. Trouble was, the hours were terrible. I suggested he sell the business. He did. Got a good price. I spoke to this guy about a year after he sold the business to catch up. Seems he had taken one of those courses on selling puts, options, calls, and all the other financial esoterica (crapola) and was making a fortune. He had made so much money he had forgiven a large part of the debt he had financed for the fellow who bought his business. I hung up thinking what a schmuck I was; 'cause here I am in contrarianville buying all this contrarian stuff and being real cautious. Guess what? Today my friend called. He is looking for a job. He lost a bundle. I am helping him the best I can. Regards....CM

Cavan ManFX#3836410/05/00; 20:39:42

Aussie dollar and NZ issue are at record lows versus USD. The ratio is fundamentally irrelevant--wrong benchmark anyway. What's wrong with this picture?
gidsekTopaz ... "By Jove!"#3836510/05/00; 20:45:19

"Jove" is Jupiter (Jovian gravity, Jovian moons etc.).

Jupiter was a Roman god... I think the equivalent to Posiden (sp? Greek?)

One can also say .. "By Jupiter!"


LeSinSTAGE SET - SHOW TIME#3836610/05/00; 22:13:26

From 'Singlion' @ GE- Thanks 'Singlion'

Tora! Tora! Tora!
(singlion) Oct 05, 15:37

The $ is going higher to its ultimate failure.

Oil distribution companies say they are responding to a request from International Trade and Industry Minister, Takeo Hiranuma to release 6m barrels of heating oil to drag down surging crude prices down to US$25 a barrel.
Trade Ministry's oil planning division expects 11 Japanese oil Japanese oil companies to take part in the release.


The stage is set for the euro to raise its golden club or else world-wide interventions against the $ have to begin
(singlion) Oct 05, 20:15

beestingSept.22,2000 Manipulation results, from England!#3836710/05/00; 22:15:30,3604,377554,00.html

UK cashed in on euro intervention!

Traders believe Treasury profited as G7 drove up single currency.
Money Unlimited Larry Elliott, Economics editor Thursday October 5, 2000.

The Treasury cashed in on Britain' involvement in the concerted G7 intervention to support the euro last month by selling the single currency for an instant profit after it rose on the foreign exchanges, it emerged yesterday.

Official figures detailing Britain's stock of gold and foreign currency reserves reveal that the government bought €85m (about £50m) on September 22 as its part of an agreed rescue bid for the ailing euro,but offloaded large quantities of the single currency later the same day!

Click URL for full story.

If these guys(Gorden Brown,and friends)can manipulate currencies so easily,it stands to reason they can also manipulate other forms of value.....GOLD!!!.....beesting.

Midas MulliganThe Five types of people in this world.. which are you?#3836810/05/00; 22:27:09

1. Saints...common sense,healthy egos, good as gold-hearted but limited minds. emotionally positive mystical martyrs
2. Mediocrities... subconsciously envious of thinkers whom they legally control. small minded power lusters- "Cronus"
3. Sinners... pleasure seekers with clever rationalizing minds, emotionally negative skeptical satyrs-Titan "Prometheus"
4. Thinkers... seek the pleasure of being productive. small ego thus rational martyrs supporting 1,2,3 (non thinkers) Titan "Atlas" or "scabs"
5. Thinkers... same as 4 except healthy ego and thus unwilling to support 1,2,3 thus on strike saying, "why bother?" and investing in gold.
Olympians or "strikers"

SHIFTYPeter Asher#3836910/05/00; 23:17:18

Are you on tonight?
OROSteveH - re tonnes#3837010/05/00; 23:22:40

The post from a couple of days ago equating 20 mil oz with some 60 tonnes. It is 20 mil oz are about 600 tonnes.

This is the figure you took out of "Giants" for the presumed annual Saudi payoff up to 1997.

OROminer49er - oily dollars#3837110/6/2000; 2:54:17

We have gone through this before in a number of posts between myself and FOA. I poured some rather acid criticism over the workability of the idea. The approach is monetarist in that monetary expansion is matched to growth in output. The measurement of output in this scheme receives heavy attention in finessing the measures to allow quicker rates of monetary expansion. The monetarist target of some 2% price inflation is met by adjusting Fed interest rates to restrict credit when currency depreciates at a quicker rate, and to lower it when price inflation is near 0 or when the debt markets become stressed.

The productivity of oil was in the low cost of its use relative to coal, its relative ease of refining for production of plastic precursors which permeated our life in everything from styrofoam to PE and PP bottles and other packaging, textiles, car parts, electronics enclosures and casings for parts etc.. You show a PE mixing bowl and a Sevres porcelain serving bowl to a quantitative economist and he could easily classify them as having the same utility, though a consumer would be willing to part with $2 to buy one and would only buy as many as needed for mixing while he would pay $300 for the other bowl and would buy more of them whenever he could. One would go into hiding in a kitchen cupboard and the other would go into a display case and taken out on important occasions. Marginal utility is something they can barely deal with, nor the fact of consumers making subjective decisions, nor with the fact of consumers willing to pay for rarity.

The point here is that the approach to answering "how much money", the question itself being stupid and a false issue, has different answers depending on one's interests. The debtor wants "as much as possible" so long as he doesn't get charged a higher interest rate. The saver wants "as little as possible" so that he can be clear of the fear of losing purchasing power, but not so little so that he can't collect interest. Bankers want "as much as possible for us and our clients, and as little as possible for our competitors and their clients". The quality of money is a lost issue altogether.

In monetizing the productivity of oil, the US Fed and government measured the numbers of plastic bowls produced and allowed bankers to lend $2.02 into existence for each $2 plastic bowl produced in the country. As time went on and it could be claimed that new plastic bowls were "better" because they had some measurable improvement in successive generations of bowls, they allowed the bankers to lend into existence $3 for each $1.50 bowl because it is 2 X "better". The fact that no one will pay more for this "better" bowl than the old "unimproved" bowl struck no one as odd or indicative of a mistake on their part - not only in performing the measurements and understanding of them, but in that they are making the attempt at all. The absurdity of their activity was lost on them.

As usual, bankers got their way in allowing them higher rates of return through expanded volumes of credit at lower outgoing interest rates and higher incoming interest.

The expansion of dollars with oil productivity was one of the more idiotic answers to the stupid question of how much money there should be.

Did the economists and policy makers at Fed and Treasury, not to speak of congress, know of the marking to dollars to "oil productivity"? Not really, they looked at it as "general productivity". That much of it was attributed to oil use was not a direct consideration but an indirect issue. The Arabian oil that was available at $1.80 per bbl of gold dollars and even offered at a political discount to $1 in large quantities was not of interest within the US, where prices were doubled because of the Texas Railroad Commission and the strategic need to keep oil supply sources within the US, or at least within its reach.

The Chinese takeover of the Panama canal may have something to do with this strategic oil from Venezuela and Mexico. Giving the Chinese power of denial of access to it for the US must have been a condition for a concession for the US. Though we can't know what the concession is, I would venture to guess that the status of "protector of oil" and the holder of the commensurate privelege of printing oil backed money in the Persian Gulf was in question, and the Chinese were among the candidates for the role, in competition or together with the French/EU. The US got to keep this role for a while longer in return for "fair" international access to all the oil not within the US. Part of this deal may have been the unloading of China's silver reserve to keep that market liquid. But this is all highly speculative.

There was the question of who pays for the non-economic production of oil where the US can put its hands on it. The answer was "everyone". OPEC share of oil supply went from 35% to 18% through the 70s in order to maintain the global dollar price at a value at which the US could be self-supporting with its own oil, as well as Mexican and Canadian oil. By 1986 US oil imports from OPEC were at 0.

Today, oil from OPEC is some 50% of imports to North America, but only 35% is from OPEC countries other than Venezuela. Which comes out to 22% of consumption and 14% of consumption, respectively.

Europe gets 37% of its oil consumption from OPEC (down from 40% in 98). 16%-20% from X USSR, which should rise within the next 5 years now that the "new" oil fields are available. (I don't believe they are new discoveries but old ones from the days of the old Shell corporation that initially developed them.)

The Pacific Rim, though is very much dependent on OPEC (77% of imports), and has been the great supplier of goods that make US living standards so high. These countries were the target of the dollar-gold-oil deal, it is they who are the holders of the proverbial bag (of dollars).

wolavkaI'll try to get this right#3837210/6/2000; 3:03:34

Since yesterdays comex close, access mkt, dec gold opened @ 273.80, ran down 272.10:

Waiting for new york , employment report excuse to move market.

week end warriors a factor, shorts moved stops down from 282 toward 274 which factor a run towards 279, take it out then 282, then more stops over 282.

Kinda like levels of pain and/or reward.

support 270-71 dec. not investment advice.

OilmanCost of Crude#3837310/6/2000; 3:15:47

I am not sure whether the issue of the cost of crude oil production has been addressed in this forum. It could, however, shed some more light on the debate over the linkage between crude oil and gold.

Although the Middle East is by far the cheapest player in the crude oil game, I suspect the marginal player currently is the West African oil province. The crude oil deposits are mostly located off-shore, in shallow to ultra-deep oil plays. The size of these exploitable deposits lies typically between 20 to 50 million bbls in shallow waters, to over 1 billion bbls in the ultra-deep fields. as a basic rule-of-thumb, it costs US$3 per bbl to find and develop the fields, $3 per bbl to produce the oil, and an additional $3 per bbl for capital reward (say, depreciation). This gives an allin cost of approximately $9 per bbl for a typical West African oil play. However, the costs don't end there, as most crude oil is produced under a production sharing agreement (PSA) with the local government. One can think of the PSA as a substitute for corporation tax, with the government getting its cut in the form of a share in the crude oil output, on some-or-other negotiated basis (highly confidential, of course). Assuming the mathematics is correct, the cost of crude oil from the marginal player should put some floor under the price of crude oil, below which it becomes too risky to invest in the development of crude oil fields. It would appear reasonable to estimate this in the range between possibly $14 to $18 per bbl (my guess!).

The analysis becomes clouded by the issue of the availability of crude oil. If the "Hubbert Curve" is correct, and global crude oil output peaks in this decade, indicating a potential short to medium term tightness in the crude oil market, fundamental oilfield cost analysis becomes irrelevant in determining a reasonable price (as against cost) for crude oil. One is then forced to look at other alternatives, can range from fuel cells and batteries to the production of synthetic fuels from coal, natural gas, oil shales and ultra heavy hydrocarbons. I do not want to be too limiting in determining the range of possibilities.

As an intial start, I include some information about the Sasol synthetic fuel process (, which is based on natural gas. Using Sasol's economics, the cash cost of production for a 10 000bbl per day plant is US$10 per bbl of white oil product (note: not crude oil equivalent!). Assuming it costs $250 million to build a 10 000 bpd plant (say 3.3mn bbls of product per year), the capital reward required is approximately $15 per bbl of product, giving a total cost of $25 per bbl white oil product. The equivalent crude oil price should lie in the range $18 to $20 per bbl, before allowing for any quality premiums, transportation costs, etc. The process is fully proven and low risk. Two production plants are under consideration, one in Nigeria (with Chevron as partner) and one in Qatar.

A single module of the Sasol Slurry Phase Distillate plant that converts 100 MMscfd (110 000 mn3/h) of natural gas into 10 000 barrels a day of liquid transport fuels can be built at a capital cost of about US$250-million. This cost equates to a cost per daily barrel of capacity of about US$25 000. This capital cost includes utilities, off-site facilities and infrastructure units.

If priced at US$0.50/MMBtu, the gas amounts to a feedstock cost of US$5 per barrel of product. The fixed and' variable operating costs (including labour, maintenance and catalyst) are estimated at a further US$5 per barrel of product, thereby resulting in a direct cash cost of production of about US$10 a barrel (excluding depreciation). Due to the superior environment-friendly quality of the products emanating from the Sasol Slurry Phase Distillate process, speciality markets could be entered at premium prices, thereby enhancing project economics further.

As with any investment in petrochemical plants economy of scale is critical. A plant with a larger capacity can be built with two or more modules in parallel thereby reducing costs per barrel of capacity and improving economy of scale. Further capital savings are possible if the plant is built alongside or near existing infrastructure.

By virtue of being a new (rather than a mature) technology - and given Sasol's excellent technology development track record - the Sasol Slurry Phase Distillate technology has significant scale-up potential. Sasol has long applied the philosophy of continuous improvement and recognises that extensive process improvements can be achieved as its plant process insights' and experience evolve.

These, and other focused actions, are a further commitment by Sasol to ensure the robustness of the economic viability of the Slurry Phase Distillate process.

wolavkaSun#3837410/6/2000; 3:51:07

Dr. Wong say: sun rises in East.
wolavkadec 273.90#3837510/6/2000; 4:22:44

well they're making a run at it tonite, let's see.
SteveHHeard on CNN#3837610/6/2000; 4:41:05

that the ECB is holding an emergency meeting today.
HI - HATORO________Further Absurdities#3837710/6/2000; 4:43:46

ORO, "The absurdity of their activity was lost on them"

Further absurdity lost on them in their qwest to capitilize
all percieved "good", is the complete disregard for the increasing complexities and "costs", to put real food in the improved bowls.

Maybe the hedonist end of the rubber band in no way justifies accounting gimmicks for expansion, but, for sure the costs of societal complexities are stretching the band tight on the other end. SNAP.

OROHBM - inversion#3837810/6/2000; 4:48:08

The inversion is supposed to prevent bank lending, which is structured as borrow short lend long (and from which arises the need for the lender of last resort function of the Fed, as Antal Fekete's friend pointed out). As we have seen, the markets are seeing bank lending growing at a higher rate than debt securities markets. While the bond market is near comatose at a 5% growth rate, the banks are rushing in at a 9% growth rate.

How can they do this in the face of inversion and not raise interest rates paid on CDs? Well, let's see; (1) Someone is draining Yen from Japan's credit markets pushing up rates from well under 1% to well over. Could it be that the US banks are borrowing there (through Japanese banks)? (2) EU rates are also rising while capital flows are very obviously going state side, also made obvious by the fall of the Euro. Could it be that they are borrowing there? Fannie Mae is, why shouldn't they?

I say yes to both.

The Fed is playing a losing hand in trying to restrict lending this way. If anything, they are raising the driving force for lending out of Japan and Europe into the US. Some American borrowers are being shut out of the markets, but not the consumer, who has the various new capital investments bidding for his labor. For the corporations this high interest rate is a cost which they will eventually have to pass on to the consumer or go broke (i.e. stop operation and reduce supply, which has much the same result).

It should be noted that Yen exchange rates started eroding the minute after intervention "for the Euro". The borrowing simply moved to Yen sources instead of borrowing in Euro.

Korean rates are 7% on the short end. Canadian loonies go for 6%. Australian rates, Aussies being in 80% external debt relative to GDP (US is at just over 20%), are paying 6.25% at the short end. Swissies are up from 1% to 3.6% because of this borrowing (also some local borrowing and a couple of other changes - including removal of gold backing).

So...inversion is not working that well here, and it is getting undone as long rates are rising again.
I don't believe the Fed will do that much more raising for now because of the dangerous default rate in junk bonds nowadays. Banks putting up new loan loss reserves are going to demand a lower discount rate. I would be surprised if they didn't get what they ask for.

Trail GuideThe Show Has Begun!#3837910/6/2000; 6:27:50

The dollar must fall to help the US continue it's end time march. First move done. Next one is in the pipeline!

Paris, Friday, October 6, 2000

--FRANKFURT - The European Central Bank surprised markets Thursday by raising interest rates--------

---'We see no threat to growth'' from this rate increase, Mr. Duisenberg said. He said the euro-zone economy was at ''cruising altitude.''-----------

-----The move stunned economists----------

------''They keep raising rates into a slowing economy, '-----''It is hard to see why they would have done it today other than to try to prop up the euro.''-------------

------The ECB seems intent on crushing any inflation that stems from high crude oil prices and the weak euro. It cannot afford to appear soft on inflation, analysts said, when its own credibility is on trial and the euro under pressure.------

------Still, Mr. Duisenberg said, ''We had the maximum possible degree of consensus on today's decision.'' ------------

I'll skip the hike this weekend and show up here to discuss and clarify.

Trail Guide

The Invisible HandOffens(iv)e on the dollar vs. Defense of the euro#3838010/6/2000; 6:28:48

www. FOA, our Trail Guide, argues that the dollar is being driven up (vis-a-vis all currencies, and thus the euro) in failure..
Still the G7 and the ECB want to defend the euro.
Why is the dollar not being attacked instead? Agreed, by buying euro the G7 lowered the value of the dollar, but why is Greenspan then not lowering interest rates for example? That would drive up Wall Street? Ah, that's not possible, so can this quandary only be solved by gold?
Or perhaps one should take example from the Bangko Sentral ng Pilipinas. The Philippine Daily Inquirer reports today that the BSP moved yesterday to defend the Philippine peso by raising the reserve requirement on banks by 2 percentage points to mop up excess cash being used by banks to speculate against the peso.
Let's kill all the speculators, those villains who buy when prices are low and sell when prices are high and thereby level prices off.

justamereBearNummus Aureus 38311 Oilman 38307 Oro 38378#3838110/6/2000; 7:03:10

Oro 38378
Great assembly, analysis and presentation of info.

Oilman 38307
I have been looking into disease, particularily the superbugs and AIDS. Most of the stuff I have found is mostly politically oriented. Sort of; "King X was touched and ordered the court jester to investigate and report back. Meanwhile the opposition...." But I never did see anything with any meat as to what the effect of the plague had on the day to day life of the guy on the street, or WHY the society changed to pastorial. Obviously I am looking in the wrong places. What sort of keywords (library or internet) would you use in that context? Do you have any sources that are apropos. I know for example that the city dweller was far more effected than the rural, because of the concentration of people, rats and pollution.

I think this subject has extremely wide ramifications for humanity over the next decade, and has been largely ignored. Thanks

Nummus Aureus 38311
Last but certainly not least. I have been most anxious to make the aquaintance of someone who has hands on experience with the situation in Northeast Africa, particularly the Lake Victoria area, and while any experience will do, preferably long time, so that a better sense of the changes that are taking place are available and to be able to seperate out the effects of disease from the cultural differences.

If you, or if you know someone who, wouldn't mind having their brains picked, I would be most appreciative. My email is This email address is being protected from spambots. You need JavaScript enabled to view it. . I am located in Toronto Canada. 416 410 4716 anytime. This Aids question has, in my mind gigantic ramifications.

I was in touch by phone with a lady (doctor??) with medcin sans frontiers, in Uganda. In the short conversation I garnered that her private estimate of HIV positive people was far and above the official estimates, and that in an area which fights a pretty constant battle with famine, that a good number of farms in the area were lying fallow, because the experienced farmers were dying off, and there was nobody with the skills to do the farming.

Any stories you might have as to the practical effects of disease, (which probably includes the power struggles of war) would be greatly appreciated by me, and I suspect, this forum. In basic terms, what happened (and WHY) to the guy on the street as a result of the "thin disease", how did the authorities react to a declining population base, how do you see this playing out there, and to consider the cultural differences, assuming the same percentage HIV positive, how would you see the scenario playing out in North America.

Finally, where else would you go for information? What aid agencies are operating in the area? What (news agency) reporters are covering thev area?

Sorry this is pretty all encompasing, but as I think I once posted, it is easy for an Eskimo to advise an African on how to deal with a heat wave, however it won't be very realistic. And I don't believe the average North American has any concept of how the average North Afican lived, never mind the effects of such a disease on that lifestyle.

Anxiously awaiting your response, and with thanks.

OilmanjustamereBear 38381#3838210/6/2000; 7:43:01

You are 100% correct in suspecting that the whole issue on HIV/Aids is politically hot. Nevertheless, there is a surprising amount of data available on the internet, on sites such as Aidsline. A search on plagues, such as Black Death, should also bring up a lot of useful information. In South Africa, researchers such as Dr. Alan Whiteside, have been active for many years. Quite often, the data needs to be modified to take into account the very rapid spread of the disease in sub-Saharan Africa. From unofficial sources, I have found that the doubling period is closer to 6 months in sub-Saharan Africa, probably due to the socio-economic conditions prevalent in the area. Consequently, the time between the collection of data and the publishing of it becomes important. Because of the low GDP/capita ratio in sub-Saharan Africa, resources to fight the spread and treatment of the disease are problematic. The latest reports indicate that the life expectancy in the region should drop to below 40 years, making capital formation more difficult. I think it is very positive that the economic implications are starting to receive more attention, in spite of the very short time frame.
wolavkascumbags#3838310/6/2000; 7:49:59

gonna spike it down before up.
RockgrabberThe Gilded opinion is great!#3838410/6/2000; 8:35:11

AM I wrong in thinking this, in thinking that Banks like to lend people money at low rates, and then make the rates higher so they can forclose on businesses, property, and such.
The recent oil article in the gilded opinion did me good. To see the rise of Hugo Chavez. I see into his mind a bit from that article. Good time to once again go long FEB 29.00 Crude calls. Thanks for such a great place to do research. I am going to go read somemore

wolavkadow & duck#3838510/6/2000; 8:36:16

major drop will force them into gold
wolavkago grains#3838610/6/2000; 8:40:13

higher!!!!!!! not investment advice
Golden TruthTTIIMMBBEERRRR!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!#3838710/6/2000; 8:52:57

Markets selling off sharply, here it COMES!!

HappyGoldLuckyTurnaround (10/05/00; 00:14:12MT - msg#: 38279)#3838810/6/2000; 8:59:01

"defining money and worshiping the state"

Thanks for very stimulating interview with Stephen Zarlenga, Director of the AMERICAN MONETARY INSTITUTE, on the nature of money and the future of gold in a depression.

Zarlenga sounds like the inverse of Wolanchuck, who sees boomtimes as a source of growing demand for gold and much higher gold prices. Zarlenga offers $208 as possible important support in a crisis.

This is the exact opposite of what most of us seem to be expecting. Most think central bank infusion of money to save the financial system will be highly inflationary. This should be true if the economy doesn't sink into another 1930s style "liquidity trap". Now, if the system gets hit with a real financial whammy, gold may need to be pulled into some offical role, resulting in its revaluation, even if commodity prices become severly depressed. This would be the saving grace if Zarlanger is right. He, however, doesn't discuss this option.

Possible conclusion: it may be harder to predict what will in case of a stock market meltdown than goldsters have assumed so far.

JourneymanThanks! @justamereBear (10/05/00; msg#: 38349)#3838910/6/2000; 9:06:22

Hi justamere,

Thanks for the enlightening info on the quants, particularly the FX interbank traders. It was indeed an FX position that my friend was being recruited for.

By the way, I'm not applying for a job as a trader!

Thanx & regards,

wolavkaThomas Moore#3839010/6/2000; 9:17:36

Bullionist, ceres goddess of grain
TownCrierA hard lesson in the catching of falling knives#3839110/6/2000; 11:02:14

Bloomberg News Headline: Gold business far from glittery

Companies come along when prospects are good, some languish when the trend turns against them or simply stalls for a period of time, and some fade away into bankruptcy before they may get to capitalize on the return of good prospects.

On the other hand, we've never seen a gold coin go bankrupt. Not even the gold coins of empires and nation-states that are found only in the history books these days. The many political/social/economic organizations and operations of mankind come and go over the ages, but the physical gold that passes through their hands has never failed to maintain its integrity and value in the hands of those that remain to tell the tale.

Hard assets...Easy accessCentennial Precious Metals, Inc.#3839210/6/2000; 11:17:21

COMEX prices rise, and COMEX prices fall, and with them so travels the emotions of many. But for the acquisition-minded, many contract sell-offs is cause for joy. Our physical bullion prices reflect these lowered futures contract prices, and so does our assortment of pre-1933 semi-numismatic gold coins. Call us at (800)869-5115 to discuss the prudent addition of gold to your wealth portfolio.

And when office hours or phone calls don't fit your schedule, feel welcome to stake your own gold claim with our offering of selected coins made available for on-line purchase...24 hrs, 7 days a week.

Let Centennial assist you with all of your precious metals needs. It is your decision to do business with Centennial that makes this website possible. Thanks for your support--past, present, and future.

miner49erOilman - Sasol#3839310/6/2000; 12:08:49

Oilman - thanks for your information. Always glad to get some different perspectives...

Sounds like this NG derived process for producing a synthetic also addresses one of the problems inherent with natural gas, that being the logistics of transport to distant markets.

Sort of like the American frontier farmer making whiskey out of his grain harvest... although I think I'll pass on doing shots of white oil, thank you.

Do you see an effort to develop this kind of process driven more by the need to do something economic with natural gas that otherwise faces these geographic limitations, or is the incentive more of a race to find crude oil alternatives, and this just happens to be one development that incidentally involves gas?

miner49erORO - oily dollars#3839410/6/2000; 12:12:02

Thanks for taking the time to respond to my inquiries. I plan to respond back, but will probably do so over the weekend sometime.

1) Most if not all of us will never experience such a severe financial catastrophic disaster unfolding as we enter a whole new era. This will be rated as bad as the dark
ages due to careless/reckless credit expansion that
fueled this recent boom. In several years we are faced
with great economic disparities. No politician or government
can stop what is about to take place.

2) The CABAL will try everything in it's power to stop
the carnage. However, they are only exasperating
the problem as time goes on. The markets are manipulated to extreme limits by the Clinton administration. The people
will suffer dearly due to his egotistical policies.

3) Gold may suffer intially as events unfold. The CABAL
will sell into this market every ounce they have to
discourage anyone into GOLD. But, they will fail
miserably when buying overwhelms the market.

4) Keep cash/gold/food/fuel close at hand. Banks will
fail and grocery store shelves will be wiped clean.
No one alive today can say exactly how the out
come will be, but use everyday common sense to
protect yourself. The government will not be there
to help you. Anything you use on an everyday basis
stockpile, because you won't be able to when the
dam does finally break.

5) Don't listen to friends or relatives. They will only
discourage you from protecting yourself and family.
Very few will survive this coming financial debacle.
The public has been trained to believe that nothing
can go wrong. Don't believe it for a minute. Everything
is about to go wrong.

6) Have faith and don't let anyone deter you. In the long
run all of us will be better off. But, we would have paid
a huge price. That's the cost of freedom I'm afraid.
Our country needs a huge awaking, if we our to
continue and survive. Otherwise, we as a people
will fail much worse if we continue on with the current


Best of luck to everyone here and I will continue to
value your informative material all of you have to
offer here.

JavaManBut...but...I thought Al Gore, saved the day... #3839610/6/2000; 12:46:44

From the link above: <<WASHINGTON (Reuters) - American consumers should brace for a 25 percent leap in prices of heating oil and natural gas this winter, with an even bigger rise possible, the U.S. Energy Department predicted on Friday.>>
TownCrierSir JavaMan, you have a way with words...#3839710/6/2000; 13:00:15

And, 25 percent increases! My...that will certainly serve the population an effective wake-up call to a new season overcast with inflation.
MarkeTalkThe Bear Comes Out of the Closet#3839810/6/2000; 13:20:00

Today's action in the stock market is further validation of a warning which I (among others) gave last Friday in message #37891. We have had more than one "bear market delight" since then, as we have seen one high-tech stock after another slammed. The bellwether high-tech darlings--Cisco, Intel, Microsoft, Micron Technology, etc--are now all below their moving averages. This is very bearish market action. Now add to that another fact which I just learned yesterday from a good client and friend of our firm. He told me that his friends who are in stock mutual funds are receiving notices from the mutual fund companies that they owe taxes on gains which were generated earlier in the year. But now the value is not there. These investors are in the worst of both worlds. They owe taxes on phantom gains. But the value of their portfolios is down, so they will have to sell stocks at a loss just to pay their taxes. Just imagine if this kind of thing is happening nationwide. Here come more redemption notices. Some people are telling me that we are near a bottom in stocks. I disagree. You ain't seen nothing yet--as the colloquial saying goes.

My indicators are still pointing to a major upset in markets before the election takes place. My sources have confirmed this again. Keep a watchful eye out for some type of military event involving U.S. troops over the next 2-3 weeks. From a technical point of view, stocks topped last month on the full moon and have declined ever since. Not even a bounce occurred as we entered the next lunar phase, which happened to coincide with Rosh HaShanah. Instead we have seen a continued slide. Now add to this the political tensions in the Balkans and Israel, especially the strife between Israelis and Arabs. One of our favorite newsletter writers, Adrian Van Eck, has gone on record as saying that a shut-off of Middle East oil to the West (America and Europe) is now imminent. I have posted this same message earlier last month and have told clients on the telephone as well. Oil hit $30 per barrel yesterday and has now bounced up. I believe that $30 is the bottom and we could be looking at $40 per barrel before we see $25 per barrel again. Such an event will further exacerbate the squeeze on stock market profits and raise inflation. Can a major rise in the gold price be far behind? I answer emphatically "YES." And my clients and lurkers at this site tend to agree. Calls are coming in from all over. Prudent minds see the dangers and are now taking action.

Midas MulliganProducers prevent inflation#3839910/6/2000; 13:37:15

Dont blame the politicians. They ride on the backs of the producers using monetary and fiscal force to prod and stimulate them into increasing output because the producers allow them to. Now that energy costs are rising the politicians will simply use legislation to stimulate an increase in productive activity by the producers in order to neutralize and offset these rising costs. Our world is "Beyond Freedom and Dignity"
wolavkaChurchill on women#3840010/6/2000; 13:43:48

Woman like a good cigar, you gotta lite em up, before you smoke'em.

Gold has no place left to go but up. Did not sell off into support @ 270-71. Buy more, and hold. not investment advice.

grains to break higher gap fill before crop report 10-12, not investment advice.

PeteHedgers and forward sellers diminishing the mining industry?#3840110/6/2000; 14:12:55

I apologize if this article has been posted previously. According to this gentleman, there is no cabal, but a serious problem in the mining industry by selling forward, hedging and the use of derivatives. Comments appreciated.
TownCrierA snapshot of stockmarket sentiment from 30 minutes prior to market close#3840210/6/2000; 14:40:28

15:30 ET Dow -192, Nasdaq -150: [BRIEFING.COM] "It was bearish earlier in the session, it turned ugly and now it is getting scary... This has not been the massive sell off related to a particular event, this is worse... Despite the dramatic declines over the last month, the indices have yet to reach a level low enough to bring investors back into the fray... Over the last two weeks the Dow had remain confined slightly above its 1998/2000 trendline while the Nasdaq slowly began to catch up... Today both of the indices have staged a bearish breakout through their respective trendlines... Volume has been very heavy but there have been no signs of capitulation yet, merely a constructive meltdown... "

Does that sound like a place you'd like to spend your weekend? (As it turned out, at the close the Nasdaq had lost 3.2% while the Dow finished only 1.2% lower. It's October...are the market participants getting jittery?)

It calls to mind a couple of notable quotes:

"It is extraordinary how many emotional storms one may weather in safety if one is balasted with ever so little gold." --William McFee (1881-1945)

"The possession of gold has ruined fewer men than the lack of it." --TB Aldrich

OROTrail Guide - ECB rate hike#3840310/6/2000; 14:54:46

I take it that the WAR is going out into the open. Is that so?

Some mention has been made that Eddie is dumping Euro and that the hedgies got a green light to resume shorting the Euro from the Anglo camp. Does this mean the UK has finally decided to go with the dollar camp after Labour stating for years that the EMU membership is "inevitable"?
Was this presumed turn of events the cause for the escalation?

Is the ECB intent on pulling the rug from under the Euro carry trade into dollars and to spring the debt trap?

The scariest thing is what will happen to Japanese interest rates now that they bear the full brunt of US borrowing. Is a 5% JGB on the horizon? I remember Jimmy Rogers talking of short JGB as one of his top 5 trades for 1999 (indeed was a good one as the JGB tanked with yields jumping from 1% to near 2% and getting ready for another jump as short rates are closing in on the long rate). I imagine that the current Yen weakness is related to renewed strength in Yen Carry as the Euro carry has had the door slammed in its face.

I gather the silence on the Iraqi proposal to take Euro for payment is of the "thundering silence" type. Have you heard anything about higher ups taking positions on the issue? Do you know how strong the Russian commitment is to accepting Euro for their oil and natural gas (near 20% of EU supply)? Is Norway on the EU side? Will the rest of OPEC go along on Euro settlement now that the cat is out of the bag and no big noise was made over it (publicly at least)?



HI - HATjustamereBear______AFRICA#3840410/6/2000; 15:32:54

This site is what you are looking for and much more.
Scroll down until you hit your interests.

BeowulfGS Down#3840510/6/2000; 16:34:37

Any day Goldman Sachs goes down $6 is a good day in my book. We should have more days like these soon.
Black BladeThe NG Issue Could Be Pipeline Capacity!#3840610/6/2000; 16:43:22

The developing natural gas crisis is going to be the big story this winter should there be an early cold winter. We do not have a Strategic Natural Gas Reserve. The Heating oil shortage is definitely a problem due to a lack of refinery capacity. However, consider that only about 10 million homes are heated with heating oil. There are about 56 million homes heated with natural gas. But there is another issue that has been either ignored or overlooked. That is the lack of natural gas pipeline capacity. The natural gas producers are scrambling to increase their storage. It is a bit late in the year to get sufficient natural gas inventories built up should we have a normal or colder than normal winter in the US. The pipelines will have to pass on natural gas to storage, to current usage, and for electric power generation. On top of all this there is political and environmental opposition to building new pipelines. This whole issue has been overlooked! It shall be an interesting winter.
TownCrierPriceline Founder Loses Millions on Paper#3840710/6/2000; 16:52:53

From Reuters:
"Underscoring the fragility of paper riches in new-economy companies, a Buck Consultants study shows Walker has seen the value of his holdings fall to $242 million from $1.17 billion since Sept. 15."

Company executives are seeing their cool oasis of stock options turn into nothing but a shimmering mirage in the heat of the moment. That ought to teach them a lasting lesson about the value of paper promises versus something tangible like gold.

Coulda...woulda...shoulda asked for some gold.

TownCrierStocks Hit Lowest Point Since May#3840810/6/2000; 17:04:54

From Reuters:
"...government data showing the tightest labor market in 30 years reignited fears that the Federal Reserve's drive to raise interest rates may not be over. A fresh batch of warnings from companies that profits would lag estimates also spooked investors, who fear a combination of high interest rates, firm oil prices and a weak euro could eat into Corporate America's bottom line."

One senior market strategist is quoted in the article saying, "This market is treacherous. You are seeing indiscriminate selling."

Commenting on the fear of the Fed potentially boosting rates higher due to the decline in unemployment figures, together with market rumors that one or more Wall Street firms had taken large junk bond trading losses, another analyst said, "The confluence of both events is just whacking the financials."

Meanwhile, Paul Cox, manager of the Commerce Mid-Cap Fund at Commerce Bank, told Reuters, "You are getting a lot of fear built into this market. There is no bottom in a lot of these technology stocks. They just want them out of the portfolios and they are just selling them."

And October has only just begun...

Black Blade"Working Group on Financial Markets" is losing it's grip#3840910/6/2000; 17:07:24

It appears that the "Working Group on Financial Markets" (AKA PPT) could not keep a lid on Wall Street today. Unemployment dropped to 3.9% even with the loss of over 270,000 manufacturing jobs. Can you say recession? I knew you could! The negative stories on earning continue to dominate the market news. We could very well see the NASDAQ drop below 3000 next week. This could be "Black October." The ridiculous stratospheric valuations of the tech sector are sure to revert to the historical mean for equities, and that means we could see a NASDAQ of about 600 perhaps. Then again, maybe the PPT could pull it together and be cheer-leading with their hypnotic "Buy-The-Dips" mantra as dazed and confused investors go further into debt in their mind numbed state buying equities of companies not likely to ever see a profit.

BTW, William Shatner (Yep, Captain Kirk) sold 39,000 shares of his (PCLN) at $85/share before his spilling the beans on national TV that he never uses the service. Today it closed at $5.50/share. No PE, it doesn't make a profit.

miner49erBlack Blade - NG#3841010/6/2000; 17:18:31

And pipeline capacity is another wonderful story in itself!!
Something we can all read about as we shiver this winter...

Actually, what I was trying to refer to are the limitations on natural gas insofar as its ability to be more than a regionally marketable commodity. I.e., gas found in the bowels of Canada will be marketed in North America because of its transport medium limitations (pipes). Canadian gas is not purchased for use in, say Singapore.

With vast amounts of reserves, they are limited in their traditional markets by, as you mention, pipeline capacity for one, and have no exposure to distant markets hungry for this relatively inexpensive, plenteous energy source because of transport problems.

So if someone can turn gas economically into a synthetic oil product, it should more than offer a crude oil alternative, it could provide vastly larger markets for a valuable resource heretofore somewhat contained by its unique physical properties.

Black BladeAnalysts are trully amazing people#3841110/6/2000; 17:24:40

Just heard this on the news from a "brilliant" stock analyst: "We're not done with the selling, but we are getting closer to a bottom."

Black Blade: You really think so? ;-)

Giovanni Dioro@justamere, An Excellent Book on AIDS#3841210/6/2000; 17:24:50

There is a book written in circa 1994 called "Full Disclosure". It is ghost-written by former MI6 agent Dr. John Coleman, but because Dr. Coleman is not a medical doctor it was decided to officially credit the authorship to Dr. Gary Glum .

This book delves into the behind the scenes aspects of the AIDS virus. How it was developed and spread, who is vulnerable, the ways that it can be transmitted.

It is available from:
World in Review
2533 N. Carson St., Suite J-118
Carson City, Nevada 89706

1 800 942 0821

Personally I would think that an AIDS epidemic would be deflationary and in spite of the suffering, those who survive could very well be better off.

Generally speaking, when death rates are high, then usually so too are birth rates. For example during the plagues in Europe, farms were abandoned because of the disease. You could walk right in and take over. So in times of suffering and death there was prosperity for the people who survived it. I guess you could say that this comes from fewer people enjoying the assets of the world, inheriting the whole lot instead of sharing it with siblings, etc.

TownCrierSir Black Blade...#3841310/6/2000; 17:29:20

Yeah. Kinda like when Apollo 13 rounded the moon. They weren't done with their trip, but they were getting closer to Earth.
Midas MulliganIf I were Bill Gates, or any other wealthy successful producer, what would I do#3841410/6/2000; 18:09:20

I would sell the public as much paper stock and bonds as I could via ipo's and then invest in gold with the liquidity raised. I live in Atlanta and thus I'm trying to get as many Atlanta's best and brightest to do what I'd do if I were them since what they do affects me. I'm just a mobile billboard driver who owns a .10 ounce gold eagle coin and 25,500 warrants of Cusac Gold mines which have expired last January, and I just sold 250 shares of Canyon Resources gold co because I needed the 125$ to live off of.
ETLance Lewis#3841510/6/2000; 18:09:51

From today's market wrap;

"Internet stocks were blitzed. By now, everybody
knows about William Shatner's PCLN and its death-march
to zero. It fell another 4 percent today. After the
close, a class action shareholder lawsuit was
announced against PCLN. So, it appears Scotty may have
been telling the truth for once when he told Captain
Kirk, "She's breeeakin apart, Kaptin! I can't hold her
together!" Expect a lot more of these type suits, and
unfortunately quite a few of them have a lot of merit,
although I know nothing about the merits of this
particular case. A lot of games have been going on for
quite a while, and we can only hope that the guilty
parties can be found when the dust settles before the
files make their way to the shredder."

"Traders' commitments were released today and continue
to show the commercial traders (the "smart money")
with a record net short position in the spoos,
although down ever so slightly from two weeks ago.
Commercials were also net short the NDX after being
net long two weeks ago. Gold's commitments slipped a
little although commercials are still net long.
Commercials were heavily long every foreign currency
except.... (you guessed it)... the zero, where they
actually increased their net short position. So, that
indicator would argue that a plunge in the euro is
still on the way."

JavaManNow here's an energy policy for you...#3841610/6/2000; 18:16:25

So let me get this straight...we tap the SPR for 30 million barrels of which 20 million barrels displaces imports from OPEC...and of the 10 million barrels left...we export some unknown amount. This, is unbelievable

From the link: WASHINGTON (AP)- Only about a third of the 30 million barrels of oil being released from the government's emergency reserve will result in additional oil going to refineries, an Energy Department report acknowledged Friday.

The rest will displace 20 million barrels of imported oil that refineries will not buy because of the availability of the government oil, said the winter fuels report issued by the department's Energy Information Administration.
Energy Department officials as well as some members of Congress expressed concern that refiners may be exporting heating oil to Europe, where the supply crunch is even more severe and prices are higher.

Mazur said analysts are puzzled why refineries are operating at top capacity but inventories of heating oil is remaining low, and he did not rule out that some heating oil may be being exported.
Murkowski, who has been critical of the decision to use the emergency oil, said he was concerned that "we are going to release oil from our (reserve) to provide product for a European market."

ETCavan Man#3841710/6/2000; 18:41:12

Hey CM - congrats on those Cards! Super Bowl and World Series wins in the same year?

Saw your note concerning the government sponsored lenders. You can relax in St. Louis as help has arrived in the nick of time. Old Dickie G still knows how to bring home the bacon. I'm sure the Dems will spare no expense the last few weeks, particularly in the swing states.

I was in the Detroit/Toledo area this week and couldn't fail to notice the lots full of new vehicles at the rail heads. I haven't seen this many cars on the lots in ten years or so.

We actually had a great August following a lousy June and July, but September went right back in the tank. The truck industry isn't showing any signs of recovery yet as equipment prices keep going lower. Truck service is strong but parts sales are weak. It looks like we are setting the stage for a serious shakeout amongst all the players with those with the least debt holding the cards. There are some great buys out there if you've got the green.

ETDoug Noland#3841810/06/00; 19:03:33

From the article;

"First of all, you may have noticed that New Paradigmers
usually don't discuss profits, choosing instead to focus on
productivity and the notion of "creative destruction." Yet,
profits are THE critical underpinning of capitalist economies.
Profits are the oil that keeps the machine running. Profits are
the mechanism that effectively directs scarce capital and
resources - the foundation for the market pricing
mechanism. Profits, as a proxy for cash flows, provide the
basis for rewarding innovation and sound investment. Profits
are the rewards reaped by astute risk-taking shareholders.
And, importantly, profits are what ensure that an enterprise
will be able to service its debts. Without profits, there is no
sustainable economic prosperity. An economy with its
financial and business sectors intent on rewarding consumers
at the expense of economic profits is destined for a problematic
misallocation of resources, instability, and inevitable
stagnation. Indeed, a system without a profit motive is one of
inevitable financial and economic fragility.

"The fact that McTeer would admit that "economic profits are
temporary at best" is quite remarkable. That this in no way
reduces his sanguine view of future economic prospects is as
unbelievable as it is disconcerting. It certainly indicates an
incredible lack of understanding of the dynamics of capitalism
and economics generally. As such, we doubt the concept of
financial fragility even enters into the minds of the New
Paradigmers. Certainly, we have heard nothing from the likes
of McTeer or Kudlow that lead us to believe they have a clue
as to the root causes of the unsound boom, and certainly not
the dark consequences now unfolding. We are in full
agreement that economic profits are today in most serious
jeopardy. But this is not part of some "New Economy" but is
instead terrible news for our economy and financial system -
the ugly but inevitable consequence of years of runaway credit
excess and reckless overspending. But, then again, this is
precisely why the Federal Reserve was created and given the
momentous responsibility of carefully guarding our credit and
financial system. To be a central banker is to err on the side of
conservatism because the cost of erroneously interpreting a
"New Era" is devastating. The Great Depression was not that
long ago..."

ETTechnology#3841910/06/00; 19:39:52

From the article;

"Dan Topscott, who is chairman of Digital4Sight, a thinktank investigating the ways technology is transforming society and
government, concludes that "Our research at Digital4Sight shows that without fundamental change, the legitimacy, authority,
and role of governments will diminish precipitously."

"The primary reason for this decline is the emergence of a new majority of tech-savvy citizens. Governmental authority will be
undermined because networked technologies make it easier for this digital citizenry to establish their own networks to
represent their interests or resolve issues. These activities will be created outside of - and in spite of - government.

"The creation of products like Napster has fundamentally challenged the authority of governments. Michael Ascroft, RedChip
senior site producer, recently asked the important questions. Can the United States even enforce its own copyright laws,
given that decentralized peer-to-peer technologies make copyright violations possible on a massive scale?

"If a law is unenforceable due to resistance on the part of the governed, will the law have to change? And finally, if citizens of
the United States can easily flaunt the law from their desktops by simply linking to servers based in another country, has
national sovereignty been compromised?"

"The questions alone are enough to warm a libertarian's heart."

tedwThe Middle East and Oil#3842010/06/00; 19:44:51

Things are heating up in the middle east. 10000 Iranians in the street protesting, Syrian Mob storming US Embassy, and 8 more Palestenian Deaths.Arafat announcing Jersualem will be the Capital of a Palestinian state whether the Jews like it or not. More battles on the Temple Mount.

One thing you can count on is the depravity of human nature. The level of hate is high in the mideast,and personally I dont see a solution. There is a good chance we are seeing the beggining of the next middle east war (I hope not of course).

All of the above being true, I would expect the middle east oil producers to begin using oil as a weapon for blackmail.

The message to the US might be pressure Isreal into giving up the Temple Mount and parts of Jerusalem or the price of oil is going higher. Much higher.

Remember we are not dealing with sane people here. We are dealing with people consumed by hate.

Cavan Mantedw#3842110/06/00; 19:47:44

My friend, pick your country. There's plenty of hate to go around. No one region has cornered the market. Respectfully....CM
Cavan ManET#3842210/06/00; 19:50:19

Ha! I was in Detroit and Toledo today. Had lunch at Real Seafood across the Cherry Street Bridge. Know the place?
Cavan ManET, furthermore....#3842310/06/00; 19:52:13

How 'bout PALM at 350 X PROJECTED earnings? Was reported in 10-5 WSJ. Handspring is just a tad lower!
Cavan ManStranger#3842410/06/00; 19:53:49

Wouldn't you suppose it might make a little sense for "value" funds to buy some gold stocks?
SHIFTYFar eastern economic review#3842510/06/00; 19:54:11

Riady Invites Clinton to Lippo Board
Indonesian tycoon James Riady has invited U.S. President Bill Clinton to join the board of Lippo Group when he steps down from office early next year, according to business people who have met Riady in Jakarta recently. Riady has been telling business contacts in Jakarta that he expects Clinton to accept, even though the U.S. president has been dogged by allegations that Riady funnelled illegal foreign donations to Clinton's 1992 and 1996 election campaigns. A former Lippo Group employee reports that as far back as the mid-1990's Riady was said to be trying to recruit Clinton to the board as soon as he left office. Jakarta police are currently helping the U.S. Justice Department in its investigation of the alleged campaign contributions.

ETMoney#3842610/06/00; 19:55:17

From the article;

"Can the gold standard be restored? There are considerable political obstacles to overcome; others involve technical issues of
finance that were addressed by Greenspan in a Wall Street Journal essay (Sept. 1, 1981). Given the Fed Chair's remarks, and
the approaching 30th anniversary of Nixon's grievous mistake, it is time to consider a new political agenda for gold that
addresses the prospect of inflation.

"Two schools of economic thought in the 20th Century shunned a role for gold. These were the Keynesians, whose founder,
the British economist John Maynard Keynes, termed gold "a barbrous relic;" and the Chicago school monetarists led by Nobel
laureate Dr. Milton Friedman.

"But intellectual support for a golden role emerges from two schools of economic thought: the venerable 125-year-old
Austrian school of Carl Menger, Eugen Böhm-Bawerk, Nobel laureate Friedrich Hayek, Ludwig Von Mises, and Murray
Rothbard; and the modern supply-siders, who trace their roots to Say's Law, and whose major advocates have been Dr.
Arthur Laffer, former U.S. Rep. Jack Kemp, R-N.Y., author Jude Wanninski (The Way The World Works) and The Journal's
editorial page.

"The supply-siders began to argue in the late 1970s for a gold price rule to stabilize prices. Under a price rule, commodity
prices, including gold, would be stabilized by the Fed within a target range. If commodity prices declined below the range the
Fed would ease monetary policy to bring them within the target. If prices increased above the range the Fed would en to bring
them into the target. Supply-siders contend gold is the most important commodity, a sort of North Star for monetary
authorities to follow. There is some evidence the Fed, under Paul Volcker, used an informal price rule in the early 1980s.
Former FOMC members such as Manuel Johnson have also publicly disclosed they followed commodity prices in setting
monetary policy.

"After Republican Ronald Reagan was elected president in 1980 the supply-siders aggressively promoted a formal gold price
rule. The Fed would have the power to stabilize the dollar, a fiat currency, by fixing the gold price. Dr. Laffer and colleague
Charles Kadlec wrote:

"The purpose of a gold standard is not to turn every dollar bill into a warehouse receipt for an equivalent amount of gold, but
to provide the central bank with an operating rule that will facilitate the maintenance of a stable price level." (Wall Street
Journal, Oct. 13, 1981). Gold could be one of many commodities in a basket index, or even be excluded; one reason the price
rule proposal was not welcomed by Austrians. Nor was it adopted by many Republican politicians in the 1980s; the idea quietly
disappeared from public view. But the gold price rule could reemerge as a policy idea or platform plank within the Republican
Party if inflation returns or the U.S. dollar falls.

"The political obstacles to gold are clear: the classic gold standard, or any variant such as a price rule, are anathema to career
politicians because it restricts their ability to spend taxdollars and engage in wasteful spending. There are no references to
gold in the 2000 Democratic and Republican platforms. This is not surprising given the relative disinflation--falling inflation
rates--of the last two decades. Only the Libertarians formally promote the idea, noting a gold standard would give the
American people veto power over Fed monetary policy by giving them the means to demand the precious metal as redemption
for dollars declining in value. By contrast, the current fiat money system gives central banks and politicians that power."

Cavan ManORO 38403#3842710/06/00; 19:59:52

About a year or so ago, I pointed out that Russia announced a sort of levy of X Euros (a small amount) to be collected with every Bbl of oil sold from Russia into Europe. I asked TG about this and he said it foreshadowed coming events or words to that effect.
TateECB and $camp. Are they at war?#3842810/06/00; 20:03:12

1. Head of Homestake Mining mentions Peruvian gold loaned in to market as part of 1000 tons that are outside of ECB control. He considers this gold to be the main detriment to a price rise.
2. Gore openly declares having Rubin as adviser and would seek his advise during financial crises. In his words "We scraped old plan and implemented a new one which brought all prosperity.
3. Rumors of unofficial attack on euro by funds and bank of England.

Interest rate hike. Will it be enough to defend euro?
Since attack against euro comes from Dollar camp it appears that war will be fought between these two camps. Somehow
I think oil and gold will be effected drastically.
Back in 1997 I had some Russian oil dealers visiting Canada. They did oil price calculations using Euro units. I have
no doubt Russians are quite comfortable with Euro.

Cavan ManHello TG #3842910/06/00; 20:15:40

I own a very small amount of AU equities. I am a physical kind of guy. My metal is dead even; my stocks are under water (all unhedged).

In your opinion, is there any chance gold equities might recover to their levels even 90-120 days ago?

ETJim Grant#3843010/06/00; 20:16:34

From the article;

"Given the recent campaign rhetoric in which both major parties are advocating legislative
programmes that would tap into the ever-growing budget surplus," comments William V. Sullivan
Jr, money-market economist at Morgan Stanley Dean Witter, "most voters would no doubt be
surprised to find out that the federal government's overall debt loan continues to expand.
Indeed, despite huge liquidations of outstanding securities in the secondary market, total
indebtedness remains on an upward trajectory as non-marketable issuance continues to soar."

"The facts are in the public domain. The big government trust funds - notably, the social security
trust fund - currently take in more than they pay out. However, the government relieves them of
this surplus and spends it, courteously leaving behind a marker, the aforementioned
non-marketables. As these claims are not negotiable outside government channels, they
constitute no visible burden on the public markets. Out of sight, out of mind.

"Actually, not quite out of sight. The non-marketable part of the debt, at about $2,600bn, is
almost as big as the marketable portion, at about $3,000bn. Over the past two years, as Mr
Sullivan notes, non-marketables have climbed by more than the marketables have declined: a
$439bn rise versus a $328bn fall. The significance of the cumulative debt, $5,600bn, is that it is a
scant $350bn below the statutory debt ceiling.

"It is not unthinkable, Mr Sullivan goes on, that the next administration may have to ask for a
higher ceiling. It would possibly frame the request in this vein: "In view of the virtual
disappearance of the marketable debt, this country stands on the brink of a fiscal crisis . . . ."

Cavan ManORO#3843110/06/00; 20:20:01

I'm just a small fry but I do think it would ultimately be a huge, tactical error for the Brits to become dollarized; even indirectly.
Cavan Man@ Trail Guide#3843210/06/00; 20:24:11

Whither Russia? Russia is a land of many troubles but also a land of many natural resources. That fact would have significance for the future of the EU wouldn't it?
TheStrangerCavan Man's Question#3843310/06/00; 20:38:39

Yes, Cavan Man. I would think value funds would be snapping up the goldminers. Unfortunately, however, the fund industry is presently caught in a bear market with very low levels of cash relative to historical standards. Furthermore, the industry is beginning to experience net redemptions. That doesn't leave many of them in any position to do much of anything other than sell. On top of that, if funds wish to create a loss applicable to tax year 2000, they must unload their dogs before the end of this month. That puts all of this year's poor performers at risk for the next three weeks. Then, after that, of course, you've got public tax-loss selling to contend with.

Of course, if what's going on on Wall Street nowadays succeeds in cracking the dollar, then we've got a whole different situation.

Can you see the St. Louis Arch from where you live?

ETtedw - Cavan Man#3843410/06/00; 20:49:19

Hey tedw - it seems to me the Middle East thing is awfully convenient at this time. This 'war' like the Serbian and Iraqi deals seem to be turned on and off at will. More or less Rent-A-Crisis.

CM - sorry I missed you. Did you notice the cars?

Black BladeWhat's Wrong With This Picture?#3843510/06/00; 21:10:57

I was watching George Dubya giving a campaign speech today. He was criticizing Clinton for cutting the Drug war advisory staff at the White House. Then he went on to explain why we need smaller government. Hmmmmm……. The real losers in this election is the American people.
The Invisible HandThe Drug War and the election#3843610/06/00; 21:18:19

Black Blade,

One candidate, Harry Browne, want to simply end the drug war and free all non-violent drug prisoners.


To: LibertyWire subscribers
From: Perry Willis, Campaign Manager
Subj: New "War on Drugs" TV ad

We've just finished a new TV ad. This one deals
with the third of Harry's major issues, "The War
on Drugs." We believe this ad is the most powerful
of the five we've created. It will be our
workhorse ad for the remainder of the campaign.

We've come a long way in persuading people that
drug prohibition is an unmitigated evil. When I
began work in the LP nearly 20 years ago drug
legalization was the main reason people gave for
not supporting us. No longer. Today, millions of
Americans agree with us and millions more are
giving our position serious consideration.

Our new ad gives a human face to the invisible
victims of the drug war. It provides hope for
the millions of Americans who have family members
serving long sentences for non-violent drug offenses.
This is a huge group of people who may be persuaded
to vote for us because of this issue alone. And the
ad also provides an interesting hook for the media
by pointing out the hypocrisy of George Bush and Al

But that's all I'll tell you. Go see the
ad for yourself by using the link in the P.S.
below. (You'll need RealPlayer software to view
the ad. If you don't have it you can download it
for free).

Then, if you like what you see, please go to
and make a contribution to help broadcast the ad.
We plan to use funds received from this appeal
to immediately begin buying broadcast time for
this spot. We think you'll be pleased with what
you see.

P.S. -- Since we are anticipating heavy traffic
on the website to view this ad once it is publicized,
we are providing LibertyWire subscribers with a
special advance sneak preview at this address: .
After 12:00 noon EDT Saturday, a link to the ad
will be featured on the home page.


Giovanni DioroEuro Weakness#3843710/06/00; 21:49:49

This idea of a war between the Euro and the Dollar is a joke. I mean the European Central Bankers don't want the Euro strong for the time being. They may be somewhat frightened by its precipitous fall and are taking steps to slow the bleeding, however they have done nothing to support the Euro.

There appears to be collusion amongst the world's central bankers to keep the dollar strong. Even with the ECB's meagre ¼-point rate increase Thursday, the Euro's discount rate is only 4.75% compared to 6.5% in america. There is still a big enough differential to keep the carry-traders in business.

Also, American reports said the rate hike was a surprise move, but in fact it was expected in Europe, and to those who look closely, the puny ¼ point rise was a disappointment in that it was not bigger, and it makes it hard to believe the ECBankers are serious about having a strong currency.

Moreover, america is running a big trade deficit with Europe, but the ECB prefers to purchase and hold billions in US paper than let the dollar fall its course, which is what should happen when countries run big trade deficits. Note that this type of action has been going on for decades regarding Japan and America, with the Japanese Central Bank buying billions of US Treasuries to prevent the dollar from falling to a much lower equilibrium level.

The bankers pretend to be at war, but judge them not by their words, but by their actions.

Black BladeNG and Heating Oil set to rise#3843810/06/00; 21:54:53

Just released IEA calculations are for a normal winter with Heating Oil at $1.22/gal., and NG at $8.58 Mbtu. I'm looking for confirmation on this and to get details. I had calculated a price of $8.00 Mbtu a while back, but this is an interesting development.
Black BladeCorrection!#3843910/06/00; 22:07:10

It's the Department of Energy and heating oil expected to be at $1.37/gal.
Black BladeIt was the EIA numbers.#3844010/06/00; 22:18:03

Price of heat to rise
A 25% leap in heating oil and natural gas prices is expected this winter
October 6, 2000: 1:09 p.m. ET

WASHINGTON (Reuters) - American consumers should brace for at least a 25 percent jump in heating oil and natural gas prices this winter, with an even bigger leap in store if temperatures are colder than usual, the U.S. government said on Friday. The new predictions for the coming winter fuel season were issued two days after the Clinton administration finalized plans to loan 30 million barrels of the government's own stockpiled crude to energy companies. Release of the crude oil from the Strategic Petroleum Reserve is aimed at helping U.S. refiners replenish their inventories and inject more supplies into the market. Republicans have criticized the move as an attempt to influence voters in next month's presidential election.

The White House action will add between three and five million barrels of heating oil stocks to the market, the U.S. Energy Information Administration said in its latest supply estimates. The amount is relatively small compared to total winter demand for heating oil, but it does "improve the buffer" against any demand increases, the EIA said. U.S. government energy experts warned consumers that prices will be higher regardless of what fuel they use to heat their homes.

Natural gas prices paid by consumers will average $8.58 per thousand cubic feet (mcf) this winter, up more than 29 percent from last year, the EIA said. Heating oil will cost an average $1.37 per gallon, compared to $1.18 per gallon last winter, the agency said. And propane, a fuel used by mostly rural American households, will average $1.16 per gallon, up from $1.02 last year. "In contrast to those of previous winters, fuel market supplies cannot be described as adequate to ensure a high probability of supplies meeting the demands of a very cold winter without difficulty," the EIA said.

If winter temperatures are colder than normal, there is "enhanced risk of significant upward price shocks" due to low inventories of heating oil and natural gas, the government said. The government also said it expects U.S. crude oil prices to remain above $28 a barrel for the rest of the year, easing to an average of $25 a barrel in 2001. If achieved next year, that price is squarely in the middle of the range that the Clinton administration and Republican lawmakers have said is a good balance for producing and consuming nations.

U.S. crude prices soared to a 10-year peak of nearly $38 a barrel in late September before the White House announced it would tap the Strategic Petroleum Reserve. Since then, prices have fallen sharply and were trading at about $30.85 a barrel on Friday morning. The stockpile holds a total of 570 million barrels of crude oil, and was created by Congress in the mid-1970s after the first Arab oil embargo.

LeSinRussian Oil Sold in US$ - Tax Export Tariff in EUROs #3844110/06/00; 22:45:56

Weak Euro Forces Russia to Adjust Oil Export Tariff

MOSCOW, Oct 5, 2000 -- (Reuters) Russia plans to peg its export tariff on crude oil to changes in the rate of the European currency against the U.S. dollar, a senior trade ministry official told Reuters on Wednesday.

"The oil we export is paid for in dollars, while we collect duties in euros," said Andrei Kushnirenko, the head of the tariff policy department at the ministry.

"The euro has fallen against the dollar by some 25 percent in the last year and a half, so we have to take this into consideration."

He said the government commission for protective measures in foreign trade had to elaborate the new scale within two weeks.

But he did not say when the new scale would become effective.

Currently the export tariff on crude oil is set in euros once in every two months, and its rate is pegged to the price of the Russian Urals crude blend.

Russia will raise crude oil export tariffs from the beginning of November to EUR 34 per ton from the current EUR 27, following an increase in world oil prices.

(C)2000 Copyright Reuters Limited

Black BladePGM's back in the news, another developing run on PGMs?#3844210/06/00; 23:11:43

US DLA sees platinum sales later this month; awaits Mint deal

New York--Oct. 6--The U.S. Defense Logistics Agency expects to begin platinum sales sometime later this month after finalizing arrangements with the Mint for the return of 75,000 ounces of platinum. The DLA is exploring the possibility of a paper transfer between the two agencies, but has not yet determined if such an arrangement is possible, a DLA official told BridgeNews Friday.

Black Blade: The Mint to return Pt back to the DLA? Hmmmmm, Also there wasn't much Russian PGM supply this last month even after all the hype about Russian deliveries. There was a 17 day strike at AngloAmerican Platinum in SA. PGM supplies still look very tight.

US DLA sold 2,074.466 oz palladium on Thursday

New York--Oct. 6--The U.S. Defense Logistics Agency sold a total of 2,074.466 troy ounces of palladium from its Web site sales Thursday.

Black Blade: DLA is really scraping out every nook and cranny for Pt! They were still trying to get back Pt and Pd from the bankrupt Englehard refinery last I heard. I don't know if they ever got it back and they are being very quiet about it.

Black BladeRE: Invisible Hand#3844310/06/00; 23:22:32

The Libertarian Party and other organizations have tried to place similar ads on the Networks in the past without success. They were denied based on content. It would be interesting if they can get this one placed but I wouldn't hold my breath. The ruling class won't stand for it. A few years ago The Libertarians were told they could participate if they got 50 state ballot access. They did, and the League of Women Voters changed their mind. Afterward some states raised the number of registered voters required to get on the ballot. Some states changed the law stating that registrars could not be paid contractors and they had to be residents of each voting district. The Demopublican Party does not want to upset the status quo. Let's face it, we lost this country to the ruling class long ago. The Sheeple are just too stupid to see it or even care. It's no wonder then that barely half the eligible voters even take the time to vote.
gidsekjustamerebear#3844410/06/00; 23:26:00

this made me laugh, I'm not sure why.



Write an online review and share your thoughts with other shoppers!

0 of 1 people found the following review helpful:

The Plague by Albert Camus, September 17, 2000
Reviewer: Your Name from USA
the book was boring because it was the same thing through out the whole book. its just about people dying from a plague. dont read it.

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714Oro #38371#3844510/7/2000; 2:36:07

You say, "By 1986 US oil imports from OPEC were at 0."

Huh? Where do you get this info? Are you saying that by 1986, the US was not importing any oil from Saudi Arabia, Iran, Libya, Venezuala, or any other OPEC member? I'd really like to see your source for that figure!


714More on the history of OPEC imports#3844610/7/2000; 2:45:56

"To meet demand, crude oil and petroleum products were imported at the rate of 10.5 million barrels per day in 1999, while exports measured 0.9 million barrels per day. Between 1985 (when net imports fell to a post-embargo low) and 1999, net imports of crude oil and petroleum products more than doubled from 4.3 million barrels per day to 9.6 million barrels per day. The share of U.S. net imports that came from OPEC nations reached 72 percent in 1977, subsided to 42 percent in 1985, and climbed back to 50 percent in 1999. Total net imports as a share of petroleum consumption reached a record high of 52 percent in 1998 before declining to 50 percent the following year. The five leading suppliers of petroleum to the United States in 1999 were Saudi Arabia, Venezuela, Canada, Mexico, and Nigeria."


42% of oil imports came from OPEC in '85, a post embargo low.

ORO714 - oil imports from OPEC#3844710/7/2000; 3:05:03

OK, so it wasn't quite 0. But it was an order of magnitude lower.

from U.S. Dept of Energy:

1973 011566
1973 021705
1973 031913
1973 041757
1973 052065
1973 062093
1973 072423
1973 082429
1973 092369
1973 102560
1973 112331
1973 121895
1974 011418
1974 021371
1974 031597
1974 042172
1974 052777
1974 063031
1974 073196
1974 083002
1974 092892
1974 102957
1974 113093
1974 122900
1975 013140
1975 022997
1975 032951
1975 042611
1975 052750
1975 063004
1975 073240
1975 083604
1975 093681
1975 103365
1975 113645
1975 123530
1976 013845
1976 023579
1976 033967
1976 044024
1976 053899
1976 064803
1976 075098
1976 084844
1976 095146
1976 104857
1976 115222
1976 125231
1977 015491
1977 025612
1977 035777
1977 045944
1977 055838
1977 066147
1977 076184
1977 085441
1977 095398
1977 105409
1977 115234
1977 125248
1978 015147
1978 024724
1978 035134
1978 044496
1978 054706
1978 065278
1978 075210
1978 085201
1978 095679
1978 105282
1978 115649
1978 125670
1979 015454
1979 025061
1979 034969
1979 045001
1979 054957
1979 065127
1979 075195
1979 085594
1979 095019
1979 105309
1979 114831
1979 124807
1980 014759
1980 024563
1980 034263
1980 044037
1980 053675
1980 064054
1980 073658
1980 083398
1980 093290
1980 103399
1980 113423
1980 123870
1981 013600
1981 023406
1981 033118
1981 043042
1981 052909
1981 062657
1981 072775
1981 082565
1981 092900
1981 102788
1981 112659
1981 122682
1982 012380
1982 021858
1982 031635
1982 041466
1982 051391
1982 061773
1982 072289
1982 081859
1982 091453
1982 101577
1982 111749
1982 121371
1983 011107
1983 02743
1983 03699
1983 04999
1983 051334
1983 061599
1983 071857
1983 082236
1983 092185
1983 101794
1983 111534
1983 121577
1984 011371
1984 021388
1984 031454
1984 041410
1984 052097
1984 061620
1984 071740
1984 081472
1984 091275
1984 101566
1984 111414
1984 121318
1985 01943
1985 02733
1985 031059
1985 041395
1985 051461
1985 061303
1985 071358
1985 081265
1985 091153
1985 101387
1985 111830
1985 121818
1986 011627
1986 021308
1986 031477
1986 041892
1986 052029
1986 062205
1986 072462
1986 082501
1986 092697
1986 102556
1986 112369
1986 122176
1987 012236
1987 022012
1987 031689
1987 041803
1987 052031
1987 062423
1987 072813
1987 083121
1987 092830
1987 102901
1987 112558
1987 122346
1988 012234
1988 022507
1988 032381
1988 042575
1988 052800
1988 062904
1988 072812
1988 082784
1988 092832
1988 102905
1988 112628
1988 122980
1989 013361
1989 023015
1989 032856
1989 043115
1989 053303
1989 063500
1989 073746
1989 083784
1989 093510
1989 103390
1989 113565
1989 123338
1990 013813
1990 023717
1990 033648
1990 043465
1990 053781
1990 063653
1990 074246
1990 084046
1990 093277
1990 102921
1990 112912
1990 122678
1991 013101
1991 023264
1991 033033
1991 043059
1991 053839
1991 063747
1991 073525
1991 083946
1991 093204
1991 103343
1991 113328
1991 123116
1992 013554
1992 022895
1992 032941
1992 043334
1992 053428
1992 063430
1992 073772
1992 083473
1992 093531
1992 103732
1992 113376
1992 123381
1993 013620
1993 023685
1993 033570
1993 043934
1993 053630
1993 063746
1993 073715
1993 083431
1993 093408
1993 103484
1993 113563
1993 123540
1994 012892
1994 023237
1994 033006
1994 043728
1994 053771
1994 063838
1994 073861
1994 083861
1994 093725
1994 103693
1994 113488
1994 123840
1995 013108
1995 023168
1995 033595
1995 043144
1995 053281
1995 063476
1995 073325
1995 083225
1995 093753
1995 103340
1995 113424
1995 123245
1996 013371
1996 023133
1996 033427
1996 043245
1996 053697
1996 063432
1996 073718
1996 083865
1996 093463
1996 103504
1996 113199
1996 123166
1997 013237
1997 023341
1997 033410
1997 043818
1997 054073
1997 064128
1997 073662
1997 084030
1997 094168
1997 104134
1997 113845
1997 123444
1998 013703
1998 023657
1998 034126
1998 044205
1998 054278
1998 064261
1998 074716
1998 084569
1998 094057
1998 104376
1998 114161
1998 123868
1999 014051
1999 024334
1999 034358
1999 044968
1999 054374
1999 064243
1999 074216
1999 084427
1999 094044
1999 104020
1999 113843
1999 123878
2000 013470
2000 024064
2000 034353
2000 044477
2000 054146
2000 064883
2000 074584

Crude Oil Imports from Arab OPEC Countries; Mb/d


714Speaking of corrections...#3844810/7/2000; 3:17:15

....I stated the other day that in the 1940's, an ounce of gold bought 159.1 barrels of Saudi oil. In reviewing my sources, I realize I was wrong. An ounce of gold paid the royalties on that much oil, which typically ran about 20% of the price. This would indeed put a gold-for-oil price right in FOA's range of 32 barrels per ounce of gold. I find no evidence that gold ever traded for oil, though. Only royalties were paid in gold, or as often as not, gold's exchange rate in US$'s.

I hope to have some of these documents uploaded to a website later this week.

p.s.--thanks, Oro.

ORO714 - as % of refinery input#3844910/7/2000; 3:35:10

Arab OPEC oil as % of refinery input

1973 6%

1974 during embargo, 1%
After embargo, 9%

1974-1976 rising slowly to 20%

1976-1980 20%-24%, normally 21%

1981-1983 falling steadilly to under 5%

1983-4 5-6% steady

1985 bottoming out at 1-2%

1986-1988 rising slowly back to 11-12%

1989-1997 11-12% steady

1998-2000 rising slowly to 15%-16%

714Oro, that jibes with this:#3845010/7/2000; 3:41:14

" In 1977 the United States received an average of 28 percent of its oil imports from Persian Gulf countries. Today less than 10 percent comes from those countries (see table below). Most U.S. oil imports come from Mexico, Canada, Venezuela, Great Britain, and Indonesia. The domestic production picture has changed too."

This is from a report written in 1985 by Sheldon Richman. But even this statistic can be misleading as Venezuela and Indonesia are OPEC members. Furthermore, can we look at US oil policy (or monetary policy, for that matter) in isolation, because the oil market is a true world market, yes?

Thanks again, though...always enjoy your posts.

SteveHET#3845110/7/2000; 3:44:34

You know, it almost seems the reason it disappeared is because they implemented it without telling anybody and this is what is suppressing the price of gold. Anyway, it shows the US was considering manipulating or controlling commodity prices back then. So who is doing it now?

your comments from previous post: "The purpose of a gold standard is not to turn every dollar bill into a warehouse receipt for an equivalent amount of gold, but to provide the central bank with an operating rule that will facilitate the maintenance of a stable price level." (Wall Street Journal, Oct. 13, 1981). Gold could be one of many commodities in a basket index, or even be excluded; one reason the price rule proposal was not welcomed by Austrians. Nor was it adopted by many Republican politicians in the 1980s; the idea quietly disappeared from public view.

OROGreat book, along the lines of Rees-Mogg and Davidson#3845210/7/2000; 4:06:51

Read this one a few months ago.

Meyer article reminded me of it.

The Rise and Decline of the State
by Martin Van Creveld

Editorial Reviews
Book Description
The state, which since the middle of the seventeenth century has been the most important of all modern institutions, is in decline. From Western Europe to Africa, many existing states are either combining into larger communities or falling apart. In the future, Martin van Creveld argues, their functions are likely to be taken over by other organizations. This unique volume traces the history of the state from its beginnings to the present day. It will be invaluable to all who would understand the history of government, and its future.

SteveHLet's analyze this...#3845310/7/2000; 4:37:41


Date: Sat Oct 07 2000 06:10
Crmblr (In the golden sunset) ID#291250:
Copyright © 2000 Crmblr/Kitco Inc. All rights reserved
Rationalists argue that the demonetisation of gold is approaching a climax. Some 33,000 tonnes of the stuff remain locked away in the vaults of central banks and institutions such as the International Monetary Fund. But can they justify holding an illiquid asset which earns almost nothing, except when it is lent out to borrowers who assume it will fall further in price?

The British Treasury has embarked on a high-profile disposal programme. If many more governments do the same the price at some point must collapse.

Gold bugs see it differently. These days, curiously, their declining numbers are concentrated in the US.

*** Interesting post as it shows the author hasn't read anything at this site and likely nothing at the site it was posted at (Kitco). Yet, there it is, disinforomation. We know the reason for record sales, we know why the CB's aren't selling their gold, OPG (other peoples' gold) is being sold to buyers who quickly stash it away. Where this person sees demonitization we see nothing but a dual-role of gold and one is monetization. We say at some point the price must sky rocket. Same set of facts, opposite conclusions. Is the glass half-empty or half-full? Go figure.

OROSteveH and ET - monetary gold#3845410/7/2000; 4:47:01

I will start with a simple statement of opposition to a gold standard. I don't believe government's central planning is any more eficacious in chosing the monetary metal than in running a McDonalds. A no-government-standard monetary system is my choice. Gold based? if that turns out to be the prefered market choice, with silver and PGMs? just the same. With stock and bond baskets? OK. Bank notes redeemable in more bank notes? fine. Just that the markets have a chance to make the choices.

The main thrust of popular support for the gold standard being price stability is not a positive. Prices tend to decline in a government imposed gold standard. Prices are more stable in a bimetalic system, though still tend to decline and can be even more stable with free banking on a bimetalic or multimetalic system. In the free banking model, the banks and other actors including corporations, non-profits, municipalities and individuals etc. issue monetary notes or account credits that are discounted at varying rates either at the banks or the shops.

There is no reason to believe that price stability is desirable. Quite the contrary - one would expect prices to vary greatly between different markets and different products at different times. Even general price levels would be expected to jump around as various surplusses and shortages occur. Particularly with the ebb and flow of energy booms and busts which permeate the pricing of everything much more so than was the case during any gold standard period. Oil, NG, Electric, coal and coal derived fuels routinely suffer equal boom and bust cycles that should affect general prices. If in the famine period after a "feast" the energy sectors have suffered from lack of investment, then it would be appropriate to see the prices of all goods and services rise with these since the savings accumulated during the period of no-investment in energy supply must be able to buy less energy and less of everything else with an energy component. Though long term price stability would arise (what fiat money has never provided), some years would be expected to see general price rises and some would be expected to produce declines (which is where fiat does smooth things out some so that prices just rise all the time or remain rather stable from year to year, but not over periods of decades).

The idea that government should have a "policy" regarding money and banking at all is wrong. It should not be subject to centralized judgement on any grounds, whether of popular will or pressures of "special interests".

justamereBearBlack Blade 38442 Oro 38452#3845510/7/2000; 4:48:12

Black Blade 38442
Bankrupt Englehardt refinery?? Hadn't heard of that one. Do you have any details? This is getting scary. Frightening but a type of development that was probable.

Oro 38452
Thanks for the post. Sounds very much like a treatment I have been looking for.

Black BladePrice of heat to rise#3845610/7/2000; 4:48:56

A 25% leap in heating oil and natural gas prices is expected this winter
October 6, 2000: 1:09 p.m. ET

WASHINGTON (Reuters) - American consumers should brace for at least a 25 percent jump in heating oil and natural gas prices this winter, with an even bigger leap in store if temperatures are colder than usual, the U.S. government said on Friday. The new predictions for the coming winter fuel season were issued two days after the Clinton administration finalized plans to loan 30 million barrels of the government's own stockpiled crude to energy companies. Release of the crude oil from the Strategic Petroleum Reserve is aimed at helping U.S. refiners replenish their inventories and inject more supplies into the market. Republicans have criticized the move as an attempt to influence voters in next month's presidential election.

The White House action will add between three and five million barrels of heating oil stocks to the market, the U.S. Energy Information Administration said in its latest supply estimates. The amount is relatively small compared to total winter demand for heating oil, but it does "improve the buffer" against any demand increases, the EIA said. U.S. government energy experts warned consumers that prices will be higher regardless of what fuel they use to heat their homes.

Natural gas prices paid by consumers will average $8.58 per thousand cubic feet (mcf) this winter, up more than 29 percent from last year, the EIA said. Heating oil will cost an average $1.37 per gallon, compared to $1.18 per gallon last winter, the agency said. And propane, a fuel used by mostly rural American households, will average $1.16 per gallon, up from $1.02 last year. "In contrast to those of previous winters, fuel market supplies cannot be described as adequate to ensure a high probability of supplies meeting the demands of a very cold winter without difficulty," the EIA said.

If winter temperatures are colder than normal, there is "enhanced risk of significant upward price shocks" due to low inventories of heating oil and natural gas, the government said. The government also said it expects U.S. crude oil prices to remain above $28 a barrel for the rest of the year, easing to an average of $25 a barrel in 2001. If achieved next year, that price is squarely in the middle of the range that the Clinton administration and Republican lawmakers have said is a good balance for producing and consuming nations.

U.S. crude prices soared to a 10-year peak of nearly $38 a barrel in late September before the White House announced it would tap the Strategic Petroleum Reserve. Since then, prices have fallen sharply and were trading at about $30.85 a barrel on Friday morning. The stockpile holds a total of 570 million barrels of crude oil, and was created by Congress in the mid-1970s after the first Arab oil embargo.

Black BladeRE: justamerebear#3845710/7/2000; 5:20:03

Sorry, that was Handy and Harmon not Engelhard. That was a few months ago and there was a scandel about some missing gold at one of it's S. American refineries. Oh well it's late and my memory is foggy after a few cold ones ;-)
The Invisible HandThere we go!#3845810/7/2000; 6:09:49 Research promises $5/barrel oil
Black BladeDistillates Poised to Rocket, Then Gold - Maybe#3845910/7/2000; 6:10:39

Think hard about this! Natural gas prices paid by consumers will average $8.58 per thousand cubic feet (mcf) this winter, up more than 29 percent from last year, the EIA said. Heating oil will cost an average $1.37 per gallon, compared to $1.18 per gallon last winter, the agency said. And propane, a fuel used by mostly rural American households, will average $1.16 per gallon, up from $1.02 last year. "In contrast to those of previous winters, fuel market supplies cannot be described as adequate to ensure a high probability of supplies meeting the demands of a very cold winter without difficulty," the EIA said.

On Monday the commodities markets are closed in NY, but the equities markets are open. What will happen? The shares of Natural Gas producers, refiners, pipelines, marketers, drillers and services will probably rocket higher. This is big news as many thought that NG at $6.00Mbtu would be the highest the price of NG would go. The majority of earnings warnings this quarter have been attributed to higher energy costs, closely followed By Euro weakness. Unless the "Working Groups on Financial Markets" (PPT) can pull another rabbit out of their hat, Wall Street will look very ugly next week. The PPT if it really is in the markets, is losing it's grip. With the employment numbers looking strong (wage inflation) and the need to keep foreign investment in dollars, I suspect that Cheeta (or Mr., Magoo - your choice) and his henchmen will begin a series of rate hikes after the election. The announced Japanese release of 6 million barrels of heating oil from their reserves is destined for Asian markets, but look for the financial media drones to play it up big time. At some point, Gold will play it's traditional role as a safe haven. In the meantime, PMs are a screamin’ bargain.

Matthew Simmons, of Simmons International, gave a speech to the Energy Institute of the Americas in Oklahoma City this past Monday. He said: "I feared we would face an oil shock. I was wrong. We are now facing a true Energy Crisis……" He went on to say, "Let me be clear. The world has not run out of oil and North America has not run out of natural gas….. What we have run short of is any way to grow supply of each."

He commented on the increasing decline rates, limited numbers of drill rigs, lack of refinery capacity, lack of tanker capacity, limited pipeline capacity, etc. In effect there are choke points everywhere we look.

Next week could be interesting - Black Blade

tedwBLAIR: ''EU should be Superpower"#3846010/7/2000; 6:11:42

Article at www.worldnetdaily

Blair has said his 2 cents about there being a European Superpower.

It seems to me that powerful forces are at work to make Europe one country, and that they are determined to succeed. That being the case, all their considerable resources will support the EURO. Europe being such a conglomeration of peoples, languages,and customs it seems to me that the EURO is needed as the mortar to hold all the bricks together. So whatever it takes to have the Euro sucede is what they will do. More interventions even if the US fails to go along.

OROGiovanni Dioro - Euro rates and targets#3846110/7/2000; 6:14:31

The target for the Euro rate rise is the treasury yield curve at about 5.9% +/- 0.1%. Which leaves little excess yield. The other myrriad of target rates is substantially higher. Particularly the "marginal" lending rate of 5.75%.

The Euribor rate is 5.1%, leaving a small - but significant margin to LIBOR of 6.75% or so.

The specs are back at hacking at the Euro, but the potential rewards from playing the spreads have fallen substantially. The risk has increased.

Cavan ManStranger#3846210/7/2000; 6:36:32

Hello! You struck a small nerve when you asked if I could see the Gateway Arch from where I live. Had to get this out before taking the girls to Irish dance.

No, I cannot see the Arch from here but, for many years, there was a building code in the city which preserved the absolutely unique feature (the Arch) of the St. Louis skyline. The Arch stands at about 630 feet or so and no building was permitted to be taller. Also, no new construction (and there was plenty) was permitted to obscure the Arch. Well, guess what? A new Federal Building was completed at great expense which is an architectural monstrosity and it blocks a view of the arch that prevailed here in St louis for over thirty years. To add insult to injury, it is called the "Thomas Eagleton Federal Building". You remember that great American leader TF Eagleton don't you? His family made a fortune selling plumbing parts etc.

Thanks for the explanation.

Black BladeSeptember Editorial from World Oil with an interesting political twist#3846310/07/00; 06:48:48

Look out for soaring gas prices

In Houston, as this was written, temperatures were reaching past 100°F, which is completely normal. But prices for natural gas were equally high, reaching $4.50 per Mcf on several occasions, which is completely unusual. At the same time, most Americans are blissfully unaware that the winter just around the corner could hold some major surprises.

In fact, a recent Financial Times (FT) website article noted that the term "energy crisis" has been resurrected by U.S. natural gas company executives, and that there is mounting evidence that the country's energy supply system could have problems meeting demand this winter. At about the same time, API reported that petroleum stocks had fallen to their lowest level in 24 years. This caused world crude oil prices to again zoom past $30 a bbl.

Compounding the bullish outlook for oil was an apparent OPEC view that high oil prices should be maintained despite Saudi Arabia's announcement that it would raise output to moderate prices. Then there was the trip to Iraq last month by President Hugo Chavez of Venezuela, during which Chavez and Saddam Hussein defended current oil price levels. According to the FT, U.S. Energy Secretary Bill Richardson condemned the visit, saying, "It is unhelpful that governments are trying to talk up the price of oil in ways that would harm economic growth." Finally, the International Energy Agency has questioned whether U.S. refining profit margins are sufficient to encourage the heating oil production necessary to meet winter demand.

But we digress - it was the price of natural gas that prompted this discussion. And with lower-than-normal natural gas storage levels, plus a return to a normal winter (the last three have been among the warmest on record), the U.S. natural gas system could be stressed beyond breaking. At a recent meeting in Houston, a representative of an eastern utility cited current, unusually high gas prices, then predicted that they could easily reach $6 per Mcf this winter. In the FT article, Ronald Barone, a natural gas analyst with PaineWebber, said there should be enough gas to go around, assuming a normal winter. But he added that, because of the tight supply situation, "you will see some businesses having to switch to other fuels and you will see some businesses closed." This means business and industrial customers that have interruptible gas supply contracts could see their supplies curtailed if cold weather boosts demand for these limited supplies.

In the Financial Times report, Mr. Barone estimated that natural gas in storage will total 2.6 Tcf on November 1, compared to a "comfort" level of about 3 Tcf. And it is this low storage level that worries analysts, who say there are few possibilities in the short term to boost natural gas deliveries. Like the utility spokesman above, the publication predicts that gas prices could reach $6 per Mcf on the spot market on especially cold days.

Another factor that could significantly impact gas prices in the short run is hurricane season in the Gulf of Mexico. Obviously, a storm entering the Gulf would prompt the shut-in of offshore oil and gas production platforms, which account for a large part of U.S. production. And any hiccups during this critical period, in which storage should be undergoing replenishment, could cause major disruptions later.

Just say no, Al. Because of their respective backgrounds as an independent oil producer and the head of an oilfield service company, we obviously expected candidates George W. Bush and Dick Cheney to be labeled "oily" by the general media. However, what surprised us is the amount of negative attention Ozone Al Gore, the darling of the environmental movement, is getting lately.

In case you missed it, hundreds of protesters marched to the site of the Democratic National Convention and chanted slogans against Occidental Petroleum and the Gore family's investment in the company. They want Occidental to abandon its plans to drill on lands belonging to U'Wa Indians in Colombia. Gore's father served on Occidental's board, owned stock in the company and served as chief executive of a subsidiary before his death. His stock holdings passed to his family.

Vice President Al Gore now controls at estimated $500,000 worth of Occidental stock. The stock came from Armand Hammer, a deceased oilman with communist ties who served for decades as financial benefactor to Mr. Gore and his father, Sen. Albert Gore, Sr. Mr. Hammer was said to have bragged that he kept the elder Gore "in my back pocket."

Since becoming vice president, Mr. Gore appears to have gone out of his way to help Occidental. Between 1995 and 1997, he helped engineer the sale of publicly owned Elk Hills Naval Petroleum Reserve in Bakersfield, Calif., to Occidental. Since 1912, the Navy had zealously guarded Elk Hills as a strategic resource. Congress resisted privatization attempts by Presidents Nixon and Reagan, but relented when President Clinton pushed it through as one of Mr. Gore's "reinventing government" reforms. Bill Sammon of the Washington Times notes that, "The sale of Elk Hills to Occidental was a dramatic departure for an administration that has walled off huge expanses of private land for public preserves."

In addition, Occidental has been paying the vice president $20,000 a year for decades for mineral rights to zinc-rich land the Gore family holds near Carthage, Tenn. Reports say the firm continues to make payments, even though it has never mined the land.

The convention protesters are upset about Occidental's plan to drill on the sacred ancestral Indian land because the tribe is threatening mass suicide if drilling goes forward. Thus far, Mr. Gore has refused to divest from Occidental or use his leverage to block the planned drilling. We certainly agree with him, but likely for different reasons.

wolavkaHere's one for you#3846410/07/00; 07:20:59

How would you like to know before the end of the trading day, where a market would have to close to continue its' trend?

They know.

Hipplebecklink from invisible hand#3846510/07/00; 08:20:29

I read the article. I can't see how digging up all that earth can be cheaper than drilling a well, can you?
miner49erEnd game#3846610/07/00; 08:47:11

First I stand corrected in my analysis that suggested the ECB would probably not raise rates. My thinking was that this would create an unnecessary psychological link between the Euro and USD in the forex. I also felt that the ensuing contraction would be harmful. If I understand what TG is insinuating from his IHT posting (38379), raising rates is an offensive move. From that perspective it seems that the increase does a few things:

1) It pressures us to raise rates. This may be both a move of force and mercy. Force in that any rate rise here will certainly send the markets hurtling. Mercy, in that it is medicine we should have taken years ago, but no one was in a position to compel us.

2) It reduces the spread on the Euro carry, subsequently directing more money for European capital formation, rather than USD speculation.

3) It does indeed cause a contraction in the Euro money supply, that while I questioned this wisdom, I see now that cheaper oil through imminent Euro settlement in economic proportions will more than offset this.

Second, my other suggestion that the 30 million barrel SPR release might never actually see the light of day, looks to be wrong. The thinking was that there was no need to actually "play" this move and glut the markets when the desired political goal was already achieved. How foolish of me to not have considered the profit motive: this oil will find its way to higher bidders overseas, and the conduits for these transactions will be entities who are owed something, or entities from which this President wishes to procure future favors.

I love the game of Chess but am an atrociously lousy player. It does seem to me as we look on here that the development of this one has matured to end game. This is why I have gone on about the sophistication of the U.S. perspective on an oil-as-de-facto-reserve-currency link. It is certainly not the most important thing, but it is another window in which we can look and analyze the strategy, and mindset of the players.

If such were deliberate, and hence systematic, there would be a constituency of kibbitzers with big bets on the game, who would be giving some arm-twisting advice. Absent such, the kibbitzing would be more a raucous crowd, each with his own interests, but little cohesion, hence leverage to apply to the player.

If such were deliberate, there would be a thread of cohesion in the play of the game, and whether the game was well played or no, there would at least be method. Otherwise, the play is likely to be haphazard at best, and reckless at worst.

This is where the current U.S. player's personal make-up is important. As I profiled in an earlier post, Clinton is intelligent and ruthless, and above all he hates losing. Bill Clinton is out for Bill Clinton. As such, where the President should view the game board and see the people to be guarded as the King, and our resources, treasures, and liberties treated as our second row pieces, all have instead become pawns, and the man playing the game has vested himself as King.

I mentioned also that one of the strategems he uses is surprise, as manifest in his unscrupulous ruthlessness. He allows himself to be capable of anything, and hopefully catches his opponents off-guard as they say, "Surely he wouldn't do THAT..."

Chess being as much a game of mathematical calculation, as it is the more subjective arts, surprise tactics do not work well in the long run, and especially in the end game. With few pieces left, there become only so many possible moves to make. Surprise is no longer... surprising.

I fear that when the next player takes his seat at the board in January, there will be little left for him to do except run the King around the board until the sinking thud of, "checkmate!" utters forth from the mouth of his opponent.

Let the game proceed.

Giovanni DioroEuro Intervention to offset Danish Nej vote#3846710/07/00; 09:26:20

The main reason we have seen joint intervention and a ¼-point ECB rate hike was to prevent the Euro from free-falling in face of the no-vote in Denmark's referendum to decide whether or not to join the Euro. The euro is designed to create a federal europe, and a socialist one at that.

If there hadn't been intervention, the euro could have easily lost 10% last week. This would be a big embarrassment to euro-pushers like England Prime Minister Tony Blair who is desperately trying to lock England into the federal Europe by adopting the euro. Also a 10% drop would give certain confirmation to the Danes that they were right.

Moreover, Germany and other nations seeing the Danes have the freedom to vote themselves out of the euro, would pressure their politicians to opt out. Surely the Germans and the French must wonder with disgust why they have never been offered a referendum to decide their fate.

Clint HTest#3846810/07/00; 11:53:45

RossLUpdated charts#3846910/07/00; 12:18:16

Gold Trail UpdateThe Gold Trail Discussion has been Updated#3847010/07/00; 12:29:11">The Gold Trail Discussion has been updated. Click on the link to read the latest updates.
Turnaroundmonetary police#3847110/07/00; 12:48:30

ORO (10/7/2000; 4:47:01MT - msg#: 38454)
SteveH and ET - monetary gold
"I will start with a simple statement of opposition to a gold standard. I don't believe government's
central planning is any more efficacious in choosing the monetary metal than in running a
McDonalds. A no-government-standard monetary system is my choice. Gold based? if that turns
out to be the preferred market choice, with silver and PGMs? just the same. With stock and bond
baskets? OK. Bank notes redeemable in more bank notes? fine. Just that the markets have a chance
to make the choices."

An apropos, short interview, excerpted below, with a lot of fascinating historical details:

"Few people have worked in and on the money system in as many different capacities as Bernard
Lietaer. He spent five years at the Central Bank in Belgium, where his first project was the design
and implementation of the single European currency system.", etc.

BERNARD: "…While economic textbooks claim that people and corporations are
competing for markets and resources, I claim that in reality they are competing for money -
using markets and resources to do so. So designing new money systems really amounts to
redesigning the target that orients much human effort.
Furthermore, I believe that greed and competition are not a result of immutable human
temperament; I have come to the conclusion that greed and fear of scarcity are in fact being
continuously created and amplified as a direct result of the kind of money we are using.
For example, we can produce more than enough food to feed everybody, and there is
definitely enough work for everybody in the world, but there is clearly not enough money to pay
for it all. The scarcity is in our national currencies. In fact, the job of central banks is to create
and maintain that currency scarcity. The direct consequence is that we have to fight with each
other in order to survive…."

SARAH: So some people have to lose in order for others to win? Some have to default on their
loan in order for others to get the money needed to pay off that interest?

BERNARD: That's right. All the banks are doing the same thing when they lend money into
existence. That is why the decisions made by central banks, like the Federal Reserve in the US,
are so important - increased interest costs automatically determine a larger proportion of
necessary bankruptcies.
So when the bank verifies your "creditworthiness," it is really checking whether you are
capable of competing and winning against other players - able to extract the second $100,000
that was never created. And if you fail in that game, you lose your house or whatever other
collateral you had to put up."

BERNARD: For one thing, power has shifted irrevocably away from governments toward the
financial markets. When a government does something not to the liking of the market - like the
British in '91, the French in '94 or the Mexicans in '95 - nobody sits down at the table and says
"you shouldn't do this." A monetary crisis simply manifests in that currency. So a few hundred
people, who are not elected by anybody and have no collective responsibility whatsoever,
decide what your pension fund is worth - among other things.

BERNARD: Yes, I see it now as about a 50/50 chance over the next five or 10 years [writing in 1997].
Many people say it's 100 percent, and with a much shorter time horizon. George Soros, who's made
part of his living doing what I used to do - speculating in currencies - concluded, "Instability is
cumulative, so that eventual breakdown of freely floating exchanges is virtually assured."
Joel Kurtzman, ex-editor at the Harvard Business Review, entitles his latest book: The
Death of Money and forecasts an imminent collapse due to speculative frenzy.
Just to see how this could happen: all the OECD Central Banks' reserves together represent
about $640 billion. So in a crisis situation, if all the Central Banks were to agree to work
together (which they never do) and if they were to use all their reserves (which is another thing
that never happens) they have the funds to control only half the volume of a normal day of
trading. In a crisis day, that volume could easily double or triple, and the total Central Bank
reserves would last two or three hours.

SARAH: And the outcome would be?

BERNARD: If that happens, we would suddenly be in a very different world. In 1929, the
stock market crashed, but the gold standard held. The monetary system held. Here, we are
dealing with something that's more fundamental. The only precedent I know of is the Roman
Empire collapse, which ended Roman currency. That was, of course, at a time when it took
about a century and a half for the breakdown to spread through the empire; now it would take a
few hours.

BERNARD: The biggest issues that I believe humanity faces today are sustainability and the
inequalities and breakdown in community, which create tensions that result in violence and wars.
We can address both these issues with the same tool, by consciously creating currency systems
that will enhance community and sustainability.

I propose that we choose to develop money systems that will enable us to attain sustainability
and community healing on a local and global scale. These objectives are in our grasp within less
than one generation's time. Whether we materialize them or not will depend on our capacity to
cooperate with each other to consciously reinvent our money."

ORO: "…The idea that government should have a "policy" regarding money and banking at all is
wrong. It should not be subject to centralized judgement on any grounds, whether of popular will
or pressures of "special interests"."

Perhaps, in a few hours, monetary policy will go the way of the Roman Empire.

JavaManMiner49er, end game indeed...or just a gambit?#3847210/07/00; 14:00:22

A fine analogy, to be sure, but what if the time clock that the players punch is not representative of the time Clinton is in office but, rather, the time he has as a player in general? If this is the case, then all which is going on now is just a gambit in a bigger game.

You said "As I profiled in an earlier post, Clinton is intelligent and ruthless, and above all he hates losing. Bill Clinton is out for Bill Clinton. As such, where the President should view the game board and see the people to be guarded as the King, and our resources, treasures, and liberties treated as our second row pieces, all have instead become pawns, and the man playing the game has vested himself as King."

You left out American citizens...they, too, would be considered as pawns.

Does this sound like someone who would be content to resign his position "at the board" to another telling himself that he has played the game well only to fade away into obscurity? I say, not if he is, in fact, who you profile.

You also said "I mentioned also that one of the strategems he uses is surprise, as manifest in his unscrupulous ruthlessness. He allows himself to be capable of anything, and hopefully catches his opponents off-guard as they say, "Surely he wouldn't do THAT...""

This thought may turn out to have far-reaching implications as the "pawns" in this country who expect/hope for him to go away quietly will assume that "Surely he wouldn't do THAT..."

Hill Billy Mitchell@ RossL and Shifty (Ponzi Index)#3847310/07/00; 14:05:13

I was surprised to see that the Ponzi Index is not at its lowest point since Shifty first presented us with it. Just had this feeling (uncomfirmed by the facts)that the latest losses had brought on a new low.

Just goes to show that we need the facts, always.


LeighTrail Guide#3847410/07/00; 14:14:03

"In the days ahead...." Trail Guide, is it that close?
RossLPonzi#3847510/07/00; 14:35:07

Sir HBM - Ponzi

Please remember - the Ponzi index gets its name from fraud and manipulation. The underlying indexes will always be changed in order to scam more dollars from uninformed persons. Loser stocks in the index will be discarded for the latest hot stock.

Everyone, please remember, the Ponzi index is all in fun to mock the Wall Street CNBC MSNBC types.

UsulThe Dollar#3847610/07/00; 14:38:15

Another's words weigh on my mind:

"Soon, gold will rise "with the dollar", then the maker of your money will force this currency down in a effort to stop it from coming home" - 6/29/98 ANOTHER (THOUGHTS!)

JavaManHello Lady Leigh...#3847710/07/00; 14:39:17

I've been wondering where you have been but I see you are as sharp as ever. Congratulations are in order as I missed that completely and I think your observation is as succinct and profound a post with the greatest of implications as I have seen in a long time! Well done. While our Trail Guide may be speaking in biblical terms... none the less, I enthusiastically nominate your post for the HOF.
LeighJavaMan#3847810/07/00; 14:59:06

Thanks for the compliment! I'm laughing in a grateful way! Nobody in this family thinks Mom is especially profound, so it's nice to come here, write two sentences, and get nominated for the HOF!
Hill Billy Mitchell@ RossL # 38475#3847910/07/00; 15:00:54

@ RossL # 38475

The Ponzi is no joke to me. I used to watch the directional changes in the Dow and Long Bond to get a glimpse of rotation from stocks to bonds and vice versa.

I have felt that we get a similar type of reading when we watch the Ponzi, ie when money flows from the Dow to the Nasdaq or from the Nasdaz to the Dow, we have a good idea not only as to the direction of money flows but also the extent of the flows. In other words when the Ponzi moves low enough and the 30 yr rate moves high enough we will have a good notion that money flows have moved out of both areas. When this happens if the money is not in cash (ORO will probably let us know if this happens)then we will have confirmation in the fact that both the dollar will be falling and PM's will be on the rise. So being a lame brain, technically, I watch the ponzi, the yield curve, the US$, the Euro/German mark/Yen and of course PM's diligently.

I depend on ORO mainly for technical information and various others on the forum for wisdom and interpretation. What you said, "The Ponzi is only for fun", I will give this considerable thought, as I have a high regard for your opinion; however I am slow to move when my gut tells me I have something which seems to be logical.

Any further thoughts from you or anyone else on this would be greatly appreciated as I do not want to waste my time watching erroneous stuff.



JavaManLady Leigh...#3848010/07/00; 15:09:42

Hold your ground. When "the people in this family" grow up, they will know!
wolavkaI'm gonna keep score#3848110/07/00; 15:10:52

I hold physical gold
I hold gold stocks
And I hold alot of paper contracts (long)

I will let you know the result on 1-1-2001.

RossLPonzi#3848210/07/00; 15:15:10

My reservations on the Ponzi index are just these two main points.

First, the Dow is weighted much higher in percentage terms than the Nasdaq index. This means a big decline in the Nasdaq can be offset by a fair gain in one Dow stock.

Second, as I alluded to before, the manipulators of these indices remove the losers and bring in hot prospects at frequent intervals. This is somewhat how a free market works, but not exactly.

LeighJavaMan#3848310/07/00; 15:20:10

If Trail Guide were speaking in Biblical terms, he would mean the collapse will happen a few thousand years from now, since "one day is like unto a thousand years." Somehow I don't think he's using Biblical terms!

Spent this week packing the freezer and buying firewood. I had hoped to have the house redecorated before things got nasty, but that's taking much longer than we ever thought. (Even a financial collapse is doable with a clean, redecorated house, right?)

Hermit ClubTrail Guide,, Enlightening!#3848410/07/00; 15:25:40

Thanks for the last update, one of the best definitions of the dollar "scheme" I've heard.

How much is the dollar to be inflated?I am canadian so I expect the same or worse here. How can a situation as this be repaired? I read through ANOTHER'S THOUGHTS today, and he mentioned "draconian measures", but I just can't envision this "hyperinflation". I've tried to research countries that went through it, but none can be compared to the west as it is today!
What a wake up call this will be!

JavaManLady Leigh, relax...#3848510/07/00; 15:44:18

Which is taking longer..."redecorating the house" or "things getting nasty"?

Check out the second half of my post to Rasbora, in JavaMan (10/05/00; 18:48:22MT - msg#: 38355) to miner49er.

Trail Guidetest#3848610/07/00; 15:51:46

John DoeOro, miner49er#3848710/07/00; 15:56:35


Perhaps that book should be titled, "The Rise and Fall of the Nation StateS", or "The Rise of the Global State and the Fall of the Nation States".

The demise of the nation-state will not necessarily bring the world to greater freedom and economic well-being. The destruction of the nation-state is a prerequisite of the global state. And, as I've opined previously, the concept and implementation of a global state monopoly is pretty much a recipe for disaster, for a host of reasons.

If I were part of a group assigned the task of implementing global government, I'd do everything possible to discredit, economically entangle, and generally hamstring every nation-state on the planet. I'd start with the smaller nations first, then the middle tier, and conclude with the G7. I'd hasten the implementation of any technology that would help achieve these ends and I'd foster any economic regime that would hurtle the concept of local, sustainable economic autonomy onto the dust heap.

Rees-mogg and Davidson can be read in two ways: as socioeconomic-techno-visionaries or as globalist toadies. One of tha two authors reeks much more of toadyism than the other, but I can't recall which. Their teaming seems to be for the purpose of helping to balance and soften their overt views and (possibly) covert agenda.


From one analogy junkie to another, that is one GREAT analogy. But I see WJC as just the latest (and worstest) opposition player in a long-running game, going back at least to the Wilson Administration.

Black BladeShades of 1973#3848810/07/00; 16:15:17

The Middle-East is heating up again. Ariel Sharon and several soldiers went into Nabulah in an effort to stir up passions between the Jews and Palestinians and to scuttle the peace process. It looks as if he may have succeeded. So far several Palestinians have died, mostly those caught in the cross-fire. Today three Israeli soldiers were captured by Hezbollah forces in Southern Lebanon in response to the killing of a child by Israeli forces (their words). PM Barak says that he is holding Syria and Lebanon responsible for their safety. Today PM Barak of Israel gave an ultimatum to Chairman Yasser Arafat to end the violence within 48 hours or the peace accords are dead. This situation is rapidly deteriorating and the Middle-East powder keg is set to explode. Now Iran and Iraq are saber rattling over this issue as well. Iraq has recently been accusing Kuwait of sniping oil from across the border, and the Kuwaitis are now making similar claims against Iraq. Saudi is trying to develop better relations with Iran and with semi-incapacitated King Fahd likely having to yield power to his half brother Crown Prince Abdullah who sides with Iraq the situation looks even more grim. And all of this at a time when a steady supply of cheap oil is in doubt and the New economy (and Old Economy) is under severe pressure. What pray tell is a US President to do? Side with the oil or secure Hillary the Jewish vote in her bid for the senate in New York? All this started with the idiot Ariel Sharon's antics. It couldn't have happened at a worse time as the Western nations are facing an energy crisis. Shades of 1973 all over again? Perhaps. Bubba is likely to side with Israel and that will put more pressure on the Middle-Eastern OPEC nations to respond in a way to "punish America", maybe by using oil as a weapon, just like 1973. We do live in interesting times.
Cavan ManHello Trail Guide#3848910/07/00; 16:32:24

How did you hit them today?

From your last hike: "We do not expect the world to fail...". What if you're wrong; shrug like Atlas? That's not terribly comforting from my small timer perspective.

Having read and re-read so much of what you have written and, having reflected for many hours upon your themes so well expostulated; theoretically, this very average person is in complete agreement with your analyses. So, "showtime" is it? Very well. As Francis Bacon was heard to say before the ax fell upon his frail neck, "What are you waiting for? Strike man strike!" We've all been in tougher spots before (well, many of us have anyway).

As you are an American, myself being an American; I must ask you how you feel about this whole business. I mean, how do you really feel? Know what I mean?

I bear you no malice or ill will rather, just simple thanks for all of your tireless efforts here these many months.

May you live a hundred years....CM

Trail GuideComment#3849010/07/00; 16:53:08

Hell everyone,

I wasn't going to add anything to the trail today, but we decided it was time to begin placing things in clear terms. It looks like our political posturing is leaving the "let's talk about this behind the door stage" and entering the "show us your cards stage". This is not just predicated on the recent ECB rate hike alone. Some other things are in the works and with this new climate, it won't be long before we see it on the news.

Certainly, we must talk about SteveH's recent posts. He has made a real effort in trying to unravel the gold value question. In addition ORO has some good reasoning that must be addressed. So before I begin:

Hello Hermit Club, and welcome!

I fully well know just how hard it is to see the prospects of US dollar price inflation right now. Unless one has been following this trail for a long time the present economic momentum seems like an object in motion that must stay in motion. But as I tried to present in the Showtime post, the US domestic price structure is already primed to show it's price inflation dynamic. For the first time we have placed ourselves in an unretractable situation. The dollar is terribly strong from this currency competition that it was forced into. If the Federal reserve tries to raise rates to slow our runaway expansion the dollar will only get more overvalued. That process alone will drive our deficit to the
moon. They will not are not going to allow this much longer. Yet, the fed has little choice but to stand pat or even lower rates in the face of any perceived slowdown. With the current debt and derivative stress built into the dollar system, their only card is currency exchange intervention to
lower the dollar. But we will always hear this as supporting some other currency.

As Giovanni Dioro said in #38437, " but judge them not by their words, but by their actions".

Hello GD, we do judge them by their actions. Just because the Western press, official press releases and various traders say the recent intervention is for the Euro doesn't mean it's true! On one side of the equator the drain water swirls one way while on the other side it goes the other, no? So if the Euro is up the dollar is down? Or is it if the Euro is down the dollar is up? Which perception is right?

We watch the actual local buying power relative to the local currencies to judge which way the water flows. Not only is Euro purchasing power relatively stable, it's basic across the board interest rates are lower than the US. The ECB could just as easily raise their rates to par with the US and the Euro would spike well above the dollar without any intervention at all. But making the Euro "as strong as the dollar right now is not their plan. The dynamic is to lower our over stressed dollar back to a "strong Euro level"! Now that's a different picture when one sees the Euro where it is with it's low financing rates. Rates that are building a solid foundation under their markets. In time here is where we will see who has the power!

But Euro weakness is not and never was the problem. The ball is squarely in the US court for them to lower the dollar to save their economy busting trade deficit from blowing them sky high. That will require the US to buy Euros or lower their rates and both those actions will greatly expose the
current built in weakness within the US structure. Yes, indeed, everyone is following the Euro weakness ball, but we are watching the entire dollar game. And that tells us that the recent action is part of a larger gameplan to unseat the dollar.

So, take the strong dollar position if you will, but doing so will place your bet in the right direction, but on the wrong horse. Just like trying to leverage a gold market position using a paper dynamic; good bet, wrong horse.


Trail Guide

justamereBearTo ALL Oilman 38382 GiovanniDioro 38404 Hi-Hat#3849110/07/00; 17:02:34

To ALL , Oilman 383452 Giovanni Dioro 38404 & 437 Hi-Hat 38404

Hi-Hat re Shees, and I thought I was negative!

Giovanni Dioro
38404; Thanks, I will follow up.
38437; Re weak Euro. (and conspiracy) (IMHO) while there is a downside, generally I would suggest that the Europeans want a lower Euro because it strengthens the trade position. But politically they have to appear to be doing the opposite. The US has other motivations; They are terrified that a weakening dollar will unravel all that confidence that keeps their borrowing and power so strong. Politically, they to, have to "support" the weakening Euro, but behind the scenes ??? No formal conspiracy, but the effect is there.

Oilman 38382, Aidsline, and Dr Alan Whiteside, are much more in the direction that I want to go. (I would suspect your thinking is along the lines that I want to go.) I suppose one might label it "behavioral science" or possibly "the ripple effect". (as follows)

TO ALL (comment invited)
It is fine to be a goldbug, and I agree by being one, BUT, while I believe gold has a definite place, stopping at that, I believe, is shortsighted.

I will start by posing an old French riddle, which I posted someplace. (but not here, as I recall.)

There is a lilypond , and on day one there is one lilypad in that pond.
On day 2 there are 2 lilypads in the pond, and on day 3, there are 4 lilypads in the pond. And so it goes, with the number of lilypads doubling each day, until on the 30th day the pond is full.
Question- On which day is the pond exactly half full?

The point is, that on the 26th day, when the pond is 1/16 full it is not easy to see that it will be full in the very short time of 4 more days. Only on the 28th day when it is ¼ full, or on the 29th day, when it is ½ full, is it easier to see that it will be full soon.

This is a geometric progression.

Worldwide, the opinion as to the starting date of AIDs, varies somewhat. Generally there is agreement by everyone I have seen, that there was no possibility it may have started before 1975. Many stories I have heard put the date when the first human was infected as being in the early 80's but generally not later than 1984. I have arbitrarily picked a date of 1982. (and I must apologize for using HIV infection, and the term AIDs somewhat interchangeably because the infection of others seems to be possible in either state.)

Recently, I read that, I think it was for 1998, the estimated HIV positive population of the world was either 85 or 185 million. Not that it matters much when you consider the lily pond and that this started initially with one person. THIS IS A GEOMETRIC PROGRESSION. Without all the rocket science math, it appears to me that about 1/6 or 1/7 of the HIV infected population dies each year. That means that upon infection the average life expectancy is 6 or 7 years. It also appears that each infected person infects, on average, slightly more than 2 other people each year. Each HIV/AIDs infected person is probably infecting more than 15 others in his lifetime, who are each in turn infecting 15 others during their lifetime, (15X15) who each in turn….. You do the math. Theoretically, when does the entire population of the earth become infected?

Happily, theory will not be strictly equal to practice, because some people will, for example, be monogamous. Also happily about 3% of the HIV positive population seems to be AIDs immune. Unfortunately, it appears that well in excess of 50% of the North American population is now infected with one or another of the STD's. (implications re morality) Most commonly, with human papilloma (sp) which is fairly benign, since it only has an implied connection with cervical cancer. Also unfortunately, the highest incidence appears to be in the younger, child bearing agegroup.

Leaving AIDs for a moment and skipping nimbly over to behavioral science with an example using oil.

Behavioral science teaches that humans, when faced with a major negative, go through several phases which include; Denial, Anger, Acceptance of the fact. (and roughly, I concur)

In the early 70's, peoples noses were rubbed in the fact that we had a FINITE supply of hydrocarbons. The price went up. California produced emission standards. New horizontal drilling and injection methods, etc were developed. 10, 20 or maybe even more years were added to the recoverable oil reserves. In a world that is concentrating on nano and femto seconds, 20 years is forever. It is not. But, mankind had collectively decided that mankind had always muddled through, and always would, and so, collectively they shrugged and went on to other things such as phosphorous in soap and Y2K. They were concerned. Oh Yeah. They were also in denial about oil.

In the denial phase, mankind started to proudly measure the state of societies advancement by how much energy was consumed. More advanced societies consumed more. The trend to lesser use of energy was derailed by the fashionable growth of such things as the gas guzzling "offroad" SUV. I will wager that 90% of the offroad vehicles in use today have never been on a dirt road, never mind no road. The use of hydrocarbons as throw away plastic packaging and other items grew like topsy. Conspicuous consumption was the norm.

Suddenly oil is on the radar screens again. And we have a great deal less of it. Much of North Americas lifestyle and society is built predicated on the consumption of energy. What do you think will happen, what IS happening, when Joe six pack is denied or limited in his "right" to climb in his gas guzzler and hit the road for the wide open spaces, for no other reason than he wants to.

Anger phase time.

This situation, and this phase was totally predictable, probably back in the seventies, and certainly in the 80's. I know. I predicted it, and was concerned.

Why are goldbugs so up in arms? They are, in my mind, are accurately predicting an event, and nobody will listen to them. Neither did anyone listen to me and my oil or other predictions. (and mostly they still don't)

Like in a game of chess, the guy who does not predict the next move is going to lose to the guy who does. The guy who sees the game several moves out is going to win over the guy who sees only one move out. I want to think about more than 1 move out. I would like to look at ALL the forces that will produce the next event, determine what forces that that event will produce, and thereby predict the event after the next one. I think that many goldbugs are narrowly focused on only one part of the picture, and as the AIDs example hopefully shows, there are other, major forces at work in our society today.

So in this row of dominoes, and I say row of dominoes, because, if the population starts to fall, where will government get the tax money to throw at an AIDs cure, and if AIDs is not cured, the population, and therefore the tax base, WILL fall. I see the major forces as being A)A probable implosion of the financial system, B)Disease, C)Population, D)The carrying capacity of the earth, E)Pollution, F)Naturally occurring cycles(such as weather) G)Mental attitude eg the unpreparedness of the North American population for negative change. H)Technology. I)Reliance on finite, but diminishing resources such as oil. J)Diminishing arable land. K)Specialization. L)Communications.

Not all of these items are negative, and some such as communications, are a two edged sword. They have potential to do very much good, but for example, they could erroneously spread fear.

However, the thrust of this missive is to look toward a method of predicting, and to attempt to garner ideas which will allow us to be better prepared for eventualities.

Let us assume that we do have a fiat currency crisis. What is going to be the possible reactions of government? Well, they are likely to be fighting desperately to save the treasury, since in the world as it exists today, from the treasury flows all power. He who pays the piper calls the tune. One thing they have always run to is a cooling off period. So that means a bank holiday.

Now take Joe six pack, teamster. How might he react to the closing of the banks? Well for starters, nobody is going to get a paycheck, no credit cards can be used, no bank machines because the banks are closed by law. The teamsters have learned that they need only tie up traffic, or at most, go on strike, and government will cave. How will Joe react if he finds his will no longer take this pretty toilet tissue in exchange for food?

If Joe sixpack ceases to carry goods, what is Mrs. 12 pack going to do when there is no milk coming into the city for her baby?

Anybody out there with an theory or prediction as to how this might unfold, or some forces I have not thought of, or any comments of any kind?

Black BladeOil and the Coming Global Economic Slowdown#3849210/07/00; 17:02:49

A differrent take on the comparison to 1973
Trail GuideComment#3849310/07/00; 17:09:35

Black Blade,

As a point of trivia: did you know that back in the early to mid 70s a Mcf of top tier (that's heavy) natural gas sold as high as $9.50!! That's when an old friend of mine that owned the Woodlands (in Houston) started cracking it into liquids. FWIW

Black BladeThe Oil World: 1973 Compared to 2000#3849410/07/00; 17:14:49

If you read anything about the coming energy crisis - read this one. It's a large file (pdf) so better if you print it, read it study it, then it will become clear. It is well worth the read. I strongly urge all to read this paper. Hydro-Carbon Man is in for a world of hurt. The author Matthew Simmons lays it all out in an easy to understand format. Go For It!
Black BladeRE: Trail Guide#3849510/07/00; 17:19:46

It would not surprise me. It seems that condensates are also very desirable and easy to refine. I was told that some condesates could go directly into the tank of an auto without refining (though not recommended) ;-)
JavaManSir justamereBear... #3849610/07/00; 17:30:08

You have done a yeoman's effort in gathering facts regarding the AIDs epidemic and it is, no doubt, certainly an issue to be addressed. What would you say is the most significant reason for its epidemic proportions?
Black BladeThree Kings#3849710/07/00; 17:31:57

The film "Three Kings" is on HBO tonight and since I have access to HBO tonight, I think I'll watch it It seems that MK recommended this movie when it came out. Going for the gold during the Desert Storm event. Should be interesting oil, gold and Middle-East theme - how appropriate and timely.
Cavan ManBlack Blade#3849810/07/00; 17:35:58

Simmons is a recognized authority with a excellent professional pedigree. Although my timing was poor in following his suggestions due to '98 Asian crisis, log term, I think he's on the mark.

Buy gold and hold. That's a better long term plan.

justamereBearJava man#3849910/07/00; 18:01:11

The smart @ssed answer is human nature, People like sex.

Actually I have a population based story but it is lengthy, and I am expecting company so it will have to wait for tomorrow


RANGERConfiscation#3850010/07/00; 18:02:07

Would someone settle a discussion as to whether Canada confiscated gold at any time in the past as was done in the U.S. If possible where would I find documentation of same.
Thanks in advance

Trail GuideReply#3850110/07/00; 18:05:08

ORO (10/6/2000; 14:54:46MT - msg#: 38403)
Trail Guide - ECB rate hike
I take it that the WAR is going out into the open. Is that so?

Hello ORO and thank you for your time here. Your ongoing breakdown of economics is to say the least, expansive! (smile)

Yes, the war is heating up now. There is simply no time left for negotiations. Officials are definitely beginning to play their cards before the betting even comes around. Don't be surprised if the US strongly stomps on the dollar at the same time they lower rates. This will smash the carry markets and probably crunch the dow. Whether they can wait until after the election is now very iffy??

All the posturing in the ME for accepting Euros for oil is having an effect and the higher the oil price goes the greater this effect is becoming. I said in the spring that $45 a barrel was coming and now $30 looks like the bottom. If we allow such a settlement proposition to go by without some action against the dollar to head it off, the eventual drop in dollar strength could be incredible. Let's face it,
the only difference between the dollar and Euros right now is world settlement support for all goods. With our trade deficit where it is, selling dollars for even third tier currencies would crash it.

your post:

Some mention has been made that Eddie is dumping Euro and that the hedgies got a green light to resume shorting the Euro from the Anglo camp. Does this mean the UK has finally decided to go with the dollar camp after Labour stating for years that the EMU membership is "inevitable"? Was this presumed turn of events the cause for the escalation?

No possible way, ORO! That's another example of trader posturing. These guys have been shorting the Euro and Yen from the get go and don't know what's waiting for them. You said it all later in your post "Euro carry has had the door slammed in its face"! Their positions makes good talk, but in reality they are just providing hedge material (making a deep market) for legitimate trade financing in Euros. The shorts are in it for a trade while the big finance is done for many years. If you finance in Euros your risk is in a rising currency, so these shorts create the derivative for you to throw off to them, your risk. Once the perception changes, these billions in shorts will not have a market to cover in. The big international positions will just keep the shorts capitol and then some!

UK is sliding right into EMU whether they like it or not. How can they not? The dollar has hit it's final timeline top and the US fed will see to it it's downhill from here on out. The only escape for the UK is to jump into the relatively closed trading markets in the Euro zone. The EMU group trades with themselves a lot more than with anyone else so being within them during a free for all in the
dollar will prove irresistible. I sold my pounds a long time ago and know they will belong to me once again in the form of Euros. (smile)


Further to comment to your post:

I think we have only begun to hear this talk about Euro oil settlement. Some of it is shifting right now and not saying anything about it. The Russians are selling so little of anything they are a non event right now. But wait, they will follow the leader, especially as we see more of an active stance from the US bringing down the dollar.

Now, for Steve (smile).

Trail Guide

JavaManjustamereBear RE: The smart @ssed answer is human nature, People like sex.#3850210/07/00; 18:42:03

Yes...that is a smart @ssed answer. But don't blame this disaster on human nature. People have liked sex from the beginning of time. The correct answer is some people are perverted and like perverted sex. And something recently has been introduced that makes this a behavior with major consequences. And poor souls like Arthur Asher, to name just one, are victims of it. But we are clearly off topic.
JavaManHello Trail Guide, You said... #3850310/07/00; 19:13:20

"The dollar has hit it's final timeline top and the US fed will see to it it's downhill from here on out."

Now THAT doesn't sound good. Please, Trail Guide, for the common man, would you care to expand on "the US fed will see to it it's downhill from here on out"?

beestingHello, Sir Trail Guide.........Question?#3850410/07/00; 19:25:14

It seems since Sept. 22,2000 the up and down movements of the paper Gold markets close-ly follow the up and down movements of the Euro value on the FOREX markets. Is this movement a coincidence or is there some sort of correlation going on between the(perceived) price of Gold and the value of the Euro?

Thank You in Advance, and for all your postings and time spent here......beesting.

ETFOA#3850510/07/00; 19:28:09

Hey FOA - thanks for all you bring to this board. I'll bet you are a fine storyteller when the grandchildren are about!

I have a question regarding how you and your friends see this hyperinflation manifesting itself. Do you see more or less a slow degradation similar to the 1970's or more of a credit collapse without the benefit of a 'lender of last resort'? The so-called 'stagflation' scenario seems to make the most sense to me but would require at least some competitiveness on the dollar's part versus the Euro. I'm having an increasingly difficult time believing the dollar is capable of this. Given the severe overhang and trade position the entire American economy appears poorly structured to weather this collapse in credit.

If I remember correctly, Another addressed the problem of getting this change completed without unduly softening demand for oil or slowing the world economy dramatically. Since the US uses a significant percentage of world output, are the players involved attempting to what I'll call 'keep the show rolling' while at the same time wresting control from the US?

Once again thanks for you and your friend's time.

AristotleSkiing for JavaMan--#3850610/07/00; 19:33:32

What do you want to bet that Trail Guide's "downhill" comment was in reference to the dollar's exchange rate? That's my take on it. Contrast this with the sense of "uphill" that you might currently get when you look at the chart from Usul's post and link earlier today (10/07/00; 14:38:15MT - msg#: 38476).

Gold. Get you some. ---Aristotle

JLVBlack Blade ---- Three Kings#3850710/07/00; 19:35:14

Don't bother. It's total crap.
Hill Billy Mitchell"Downhill of the Dollar"#3850810/07/00; 19:55:17

I wonder if by "the Downhill", he meant "downfall". If not, "downhill" could only be referring to the fall of the dollar against other currencies. No more strong dollar in other words but instead an ever weaking dollar. I would prefer a slow fall. Would that be possible? I think not.


JavaManSir Aristotle...#3850910/07/00; 19:58:04

Based on what TG says Usal's chart should be headin' south. I''m skiin' off into the woods...Yeahhh!.

What say you, TG?

JavaManSir HBM...#3851010/07/00; 20:05:56

Just as we may not have a stock market crash, it could be a slow grinding bear market that takes years to complete. But on the other hand, things "currency" might be behave differently.
AristotleA simple thought from a simple thinker#3851110/07/00; 20:08:05

I just wanted to express one reason that a person should think over their strategy IF they happen to be waiting for signs of a stock market downturn (as expressed throught the indices, for example) as their cue to start buying Gold.

Picture, if you can, a generic but suitable valuation for such corporations as Cisco or IBM. Got it? OK, our example is almost over. Now, try to picture what appropriate dollar price should be quoted for these stocks if the dollar's perceived value starts to slide as fast or faster than the generally perceived valuation of these companies.

I would call that an invisible crash, and it is probably the version that the government and monetary officials would favor because the banking system at least would have a prayer of surviving. But "bye-bye" to the value of cash savings and bond holdings.

Gold. Get you some. ---Aristotle

AristotleJavaMan, I think the operative part of the phrase was *from here on out*#3851210/07/00; 20:13:10

By the way (for Black Blade) --Three Kings-- I enjoyed it well enough to buy it on DVD. It conveys a very positive message about the power of Gold when all is said and done.

Gold. Get you some. ---Aristotle

AristotleUnsaid, but it follows from my msg #38511#3851310/07/00; 20:22:25

Given the dollar's position as the key currency, "bye-bye" to the value of the dollar and bond holdings (as expressed in that post) would translate into "bye-bye to bullion banking" in the resulting scramble for Gold.

Because the Dollar System has a symbiotic relationship with the bullion banking system such that, as long as the dollar appears strong, and Gold appears weak, both systems will survive and support the other. But if either side of this delicate balance were to get rattled...

The fact that the Euro System has built a symbiotic relationship with a Free Market Gold System should send you a clear message as to which currency system (dollar or euro) is fundamentally built for longterm survival and harmonious existence with the ways of human nature.

Gold. Get you some. ---Aristotle

JavaManAristotle, this may be my only chance to correct you...#3851410/07/00; 20:28:51

so I am going to jump on no simple thinker.

You said "I just wanted to express one reason that a person should think over their strategy IF they happen to be waiting for signs of a stock market downturn (as expressed throught the indices, for example) as their cue to start buying Gold."

You do have a gift for understatement. When Intel dumped to 49, I called my friend who I know to be in the markets and he said "it's a buying opportunity" and he bought more. Now INTC is struggling at 40.

Your preaching to the choir, but I say bring it on brother!

Keep it up.

ETAristotle#3851510/07/00; 20:34:05

Hey Aristotle - nice sentiments. You wrote in part;

"I would call that an invisible crash, and it is probably the version that the government and monetary
officials would favor because the banking system at least would have a prayer of surviving. But
"bye-bye" to the value of cash savings and bond holdings."

I happened to be in a home improvement place here in Lawrence today and was stunned by the huge inventory reduction. The store literally seemed to have half as much stuff as last March (including employees). Considering this store has always been well-stocked it has been quite a sudden change. I'd say they are victims of the invisible crash as you describe it.

AristotleAlso unsaid, but it similarly follows from my msg #38513#3851610/07/00; 20:40:36

Just as a declining dollar valuation could effectively mask a stock market downturn as a purely numerical exercise, so also could an declining valuation of paper Gold equivalents effectively mask an UPTURN in the underlying fundamental value of physical Gold. Think about it.

However, it must be said that whereas a weaker dollar could forever conceal, numerically speaking, a stock market collapse, the production of excess and devalued paper Gold only results in a temporary masking at best, as it further aggravates and propels an inevitable run on the bullion banks.

Gold. Get you some. ---Aristotle

Trail GuideComment#3851710/07/00; 20:46:57

SteveH, what can I say, you have written so much recently I have a hard time covering it all. Because my system comes on in auto mode and copies the forum at random times,,,,, or someone does it for me,,,,, I don't always catch all the imput. So, I'll try to comment on some of your thrust.

Just looking at 714's post #38448 today one can see that oil prices in gold go way back. It's no secret that in a broad term of valuations 1 gram brought a barrel of oil. We mentioned something to that effect long ago. Truth be told that is where Bunker Hunt got the angle when silver was in the $20 range in the late 70s. Then silver was hitting the old dollar gold targets that gave 1 gram gold for a barrel. He went on and on how one ounce of silver was equal to a barrel of oil.

Well, so much for then. Some producers are striving for a pricing gauge that can peg the value of oil in a modern society. A gauge that is not corrupted by currency inflation (I'm talking about the expansion of currencies not the general price levels such an expansion produces).

If someone is going to print some derivative,,,,, hand it to you in exchange for a finite commodity,,,,,, that's fine as long as you immediately lend it back to them or spend it for something. The problem today is that lending derivatives only brings in more derivatives and that process is made irreversible if the nation you deal with runs a permanent trade deficit. That's because the remedy to said trade deficit, when it is eventually deployed destroys the actual derivative (paper money) you are lending. It doesn't take a nuclear scientist to understand how this will end and how
it will affect your long term wealth. On the other hand, spending the money on something has it's limits when you are trying to build a self-sustaining economy. One that allows your citizens to market their abilities to the world. Neither can you trade your paper dollar wealth for gold wealth if the rest of the world gets wind of it?

In the end you are left to selling some portion of your oil for gold. No it doesn't happen the way our trader boys delight in degrading it; "some truck loaded with gold backs up and dumps bullion bars on the ground as the main man tells his worker bee to turn the valve"! No the oil is turned into bookkeeping currency digits in some bank's computer. Then those digits are traded for the ownership or rights to gold. When someone posted what Another said the figures were, I think that that 20 million of actual bullion in retention represented the tally over some ten years (and was growing).

You see, gold like any currency is also spent. Even Cavan Man (smile) can add up all his pay receipts over ten years and that doesn't equal his savings. That would be nice CMan but it doesn't work that way, does it? The main reason they don't take gold outright, 1 gm per barrel is that "noone" wants to bust the digital system completely. As much as everyone thinks our paper money is all bad, it really works fairly well. I think oil producers are like everyone else and only want a more fair control on the print press. As it is right now, the dollar is done and we are just witnessing
the management of it's transition away from reserve status.

To that end, oil has played the gold paper game with the best of them. No, they don't expect all their paper to return physical gold. But they do expect the gold they now have and a portion that will be sent to them (settling paper) to take over any lost wealth that occurs as the dollar grinds down. Needless to say, gold will have to jump a great deal to do this. It will. In doing this gold's
dollar value will represent all the incoming domestic US price inflation on the horizon plus all the currency inflation left over after the dollar hype's out. Again, that will be a lot. Much, much higher than anyone with Western eyes can now see.

But selling (inflating) paper gold to keep the price down (so oil can flow) had it's draw backs for the dollar system. Yes, it creates a two tier paper market that will send gold to the most favored first (in case of failure). But the left over contracts (held by hedgers both large and small) will have a huge disproportionate impact on the financial structure. Not only will no gold be delivered because
enough doesn't exist, but the price rise of physical against such paper will drain the books of many major financial houses. And at the price levels we are talking about, official intervention will be an absolute. At least until the wipe out is done, then gold will come to the forefront. Further, in today's world of molecular speed trading, all of this initial crisis will happen in a heartbeat. Blink,,,, it's done!


Steve, like I offered in an earlier post today, what perception of value is true? With all the dollars and their derivatives that are around today (80 trillion??) how can we know where the worth of oil is to our modern society? The continuos printing of dollar derivatives and gold derivatives makes the whole question a joke. Even supply and demand cannot answer the question when our supply and demand use dollars to create both sides of the equation. This is where physical gold comes in. It's the only denominator that is money in and of itself and no one can inflate it. We say, OK, one gram per barrel is where we are going. What currency price per barrel will that be? Who can tell? Will that much gold flow in to cover all the barrels produced? Of course not, all of us have bills. But some small portion will be retained and it's that portion that has become the ticking time bomb for the paper gold world!

This is the reason Another said they would eventually burn the paper markets. His implication was if the Euro failed at birth and later if the Euro succeeded. Once the Europeans began their withdrawal in 1999, it would be left to the US to act in it's own best interest. Just as they did in 71,
they will print paper gold currency until it's trading market values it at zero. Going back in time, I remember when the pre 71 dollar was being sold (inter CB trade) for 1/10 it's gold backing because everyone began to expect that no gold would be delivered to settle international trade
balances. I suspect that our present gold markets will do the same thing.

The Europeans have tried to structure their new currency to be prominently displayed as all this unfolds. Any breakdown in the dollar paper gold system will drive people away from dollars and into Euros and physical gold. Because the ECB / BIS is committed to a FreeGold market, the sky will be the limit in dollar terms. I fully expect the ECB to begin it's assault now because as Mr. D has said, our Euro is now mature and can walk into battle. We shall see!

thanks SteveH

Trail Guide

ETMoney#3851810/07/00; 20:53:44

From the article;

"From her perch below a poster that depicts a miracle of Christian faith,
Sandra Iannamico is performing a little wonder of her own. She is doubling people's money.

"One by one, each of the half-dozen clients lined up at her table in the courtyard of a 15th-century
palazzo steps up and surrenders a handful of Italian lire. In return, Ms. Iannamico gives them a
multicolored sheaf of a new currency called the simec, at an exchange rate of 1-to-1.

"In most places, the simec wouldn't be worth the paper it's printed on. But in the bustling shoe store
next door, and at about 40 other merchants in this mountaintop town of 12,000 overlooking Italy's
Adriatic coast, one simec can buy two lire's worth of goods.

"A simec

"The simec, whose name is the Italian acronym for "econometric symbol of inducted value," is the
brainchild of Giacinto Auriti, a wealthy local academic. This past summer, the 76-year-old retired
law professor spent much of his fortune to finance the simec in an effort to prove his eccentric
theory about money and a vast banking conspiracy. So far, his experiment has produced a frenzy of
consumption in Guardiagrele, a rupture in the local business community, a rebuke from the Bank of
Italy and a legal victory for Prof. Auriti, who hopes to convince the world that central bankers are
the biggest con artists in modern history.

"His main thesis: For centuries, central banks have been robbing the common man by the way they
put new money in circulation. Rather than divide the new cash among the people, they lend it
through the banking system, at interest. This practice, he argues, makes the central banks the
money's owners and makes everyone else their debtors. He goes on to conclude that this debt-based
money has roughly half the purchasing power it would have if it were issued directly to the populace,

"Initially, Prof. Auriti tried to challenge his own nation's monetary policy through the courts. But
Italian judges have thwarted his efforts to sue both Bank of Italy Gov. Antonio Fazio and former
Gov. Carlo Azeglio Ciampi for alleged fraud and a slew of other offenses, including incitement to
suicide. So, Prof. Auriti conceived another way to make his case."

elevator guyWar breaking out in Israel?#3851910/07/00; 21:13:11

Just continuing Black Blades' post-

It seems that full blown war is looming on the horizon, as Palestinians, Hezbollas, and Israelis square off. A very sad situation to be sure, and I am regretful of it.

What will this do TPOG? Oil?

What to do? Go long?

AristotleThe problem with Giacinto Auriti's simec or Lincoln's Greenbacks#3852010/07/00; 21:13:42

If you were the owner or producer of real wealth--such as shoes or food--would you part with your wealth in exchange for paper that the government were freely distributing to the people, and even creating for its very own use?

Why part with your wealth to obtain this free and easy (no-interest) paper when you could just as easily (and more prudently) keep your wealth for yourself, and simply stand in line for your own handout of this paper?

Gotta run. JavaMan, ET, thanks for the comments.

Trail Guide, you're the best. Must be something in the wind tonight. Truly enjoyed your walk down the Gold Trail today. Excellent delivery!

Gold. Get you some. ---Aristotle

miner49erReplies#3852110/07/00; 21:19:31

JavaMan - Perhaps he will consider what condition the game is in, before getting up… who can say anymore? And actually I was specifically referring to the American citizen when I referred to the "people to be guarded."

John Doe - thanks…

Aristotle, re: Simple thought - simply put, simply excellent…

UsulDollar vs. Trade Deficit#3852210/07/00; 21:22:18

Patrick Artus, in a resumé of a CDC Marchés private paper:

"What accounts for the external deficit of the United States?

Drawing on a detailed and econometric analysis, we show that the US trade deficit depends on the household savings rate, the dollar's trade-weighted exchange rate and, to a lesser extent, the cyclical position of the US economy in relation to rest of the world. This implies that the deficit can be cut via a real depreciation of the dollar or by a rise in US savings. A return to more homogenous global growth would have a smaller impact."

Well, the US savings rate chart looks like it just fell off a cliff (negative savings rate), many people are in debt up to their eyeballs, and the trade deficit is huge. If the paper markets collapse in bear mode, those who thought their worth was safe in equities and thought nothing of saving cash, will have no way of recreating savings. Indeed, I would expect the savings habit to return only after a long period of economic hardship has re-taught lessons such as were learned in the 1930s. Therefore, and bearing in mind the above summary analysis, we can expect on balance of probabilities a "real depreciation of the dollar".

UsulIs the US Trade Deficit Sustainable?#3852310/07/00; 21:35:46

"One possible response in the short run is a decline of perhaps 25 percent in the value of the dollar. Such a decline could be readily absorbed, by both the United States and the world economy, if it occurs gradually in a context of faster economic growth in Europe and Japan. It could cause severe disruptions, however, if it were to transpire precipitously under present economic conditions: inflationary pressures would be generated and interest rates would be pushed up in the United States, and the nascent recovery abroad would be significantly retarded..."

September 14, 1999 - Institute for International Economics

Recent weakness in the euro area, and continuing weakness in the economies of East Asia, suggests that the likely path for the dollar is weighted towards the more pessimistic of the scenarios outlined by the above. And there is also the inflationary pressure from oil, whose price has risen considerably since the above was written.

dragonflyTrail Guide#3852410/07/00; 21:36:33

The mention of your friend in Texas made me smile and recall something his brother in the restaurant business once said -

"Anybody could make a million in Houston, it takes a genius to make a living in Galveston."

How true it was at the time.

Thanks for all your insights.

JavaManSir miner49er...#3852510/07/00; 21:45:42

Thanks miner, after re-reading your post I see that you did, sheesh, I even quoted it. I guess I just have a tough time believing Clinton sees us as "people to be guarded."
Trail GuideReply#3852610/07/00; 21:53:36

JavaMan (10/07/00; 19:13:20MT - msg#: 38503)

Now THAT doesn't sound good. Please, Trail Guide, for the common man, would you care to expand on "the US fed will see to it it's downhill from here on out"?

JavaMan, Hello!
Well, the US economy is going full blast now even as the dollar is at it's peak. In the past, at this stage the dollar would have already rolled over from the effects of fed / treasury / government intervention to slow the boom. In fact, contrary to everything we read and hear, they have been trying to slow this thing down for some time. We only hear it as; "it's the new computer, highly productive, new wave, next economy that's driving all the money into the US and their markets"! But, in reality something was out there driving the dollar higher even as the brakes were being

Now the government is in a box it's never been in before. It they raise rates or slow reserve creation this will just drive the dollar ever higher while at the top of a boom phase. The explosion in deficit trade balances would at some point cause a crack up from where there is no escape
(deflation?). They can only play the intervention card to lower the dollar and that (because we are the dollar creating entity) will cause an inflationary run. Further, in conjunction with intervention, they could also lower rates. This will have the same effect in this overheated marketplace. Either way, the dollar is going to drop to the level of the Euro.

Note: again, I ask how are we going to know that? It will spin as "the Euro finally rose to dollar par"!

Then and only then will we all have a look at our respective US and European financial structures on a relative even basis. I expect to see the Euro Zone taking off with some price inflation and a declining trade surplus heading toward deficit. All the while the US goes hyper with mountains of
dollars coming home. And I don't mean coming home for investment. I mean coming home to exercise delivery against real US produced goods. I expect that before this is over, we (US) might be forced to use our gold card to help devalue the dollar. That would involve a forced restructuring of. the gold markets so as to make gold rise. A few political heads would roll if this takes place. Believe it!

So, will this all begin before the elections? The fuel certainly is in place. We shall see.

Trail Guide

UsulFor Tech Stocks, It's a Slippery Slope#3852710/07/00; 21:53:38

"Popular stocks such as Intel Corp. and Apple Computer Corp. are ''being taken out and shot one at a time''"

Americans have been putting their money in stocks, savings have disappeared, and all kinds of credit sources have been drawn upon. How many people are now looking upon the savaging of popular (formerly) high flying stocks with horror?

Alan Newman comments on current stock market participation at

"... participants are trading at a clip more than 4.4 times as high as in 1968, just about the peak of the broadest advance of the prior secular bull market and in precise alignment with the prior peak in investor exposure to stocks. At that time, approximately 45% of household assets had made their way into equities, a record that stood until only recently. Household assets in equities are now 50%. The increase in participant's exposure is highlighted most dramatically in the margin debt numbers, showing an acceptance of risk on an unparalleled scale since perhaps 1929. Measured in this manner, risk is four times as high as in 1987, when the stock market crashed. However, given the ready availability of home equity loans and second mortgages, we can easily make the case that much more borrowed money has found its way into the stock market. Worst case: 1929 all over again..."

UsulTo conclude#3852810/07/00; 21:57:01

Equities are being decimated.

There is a good chance that the dollar is in for a spell of depreciation. The UK pound is usually on its coat-tails. The euro? Who knows...

Time to review the age-old reasons why gold holds its value in a crisis...

Trail GuideReply#3852910/07/00; 22:10:49

beesting (10/07/00; 19:25:14MT - msg#: 38504)

It seems since Sept. 22,2000 the up and down movements of the paper Gold markets close-ly follow the up and down movements of the Euro value on the FOREX markets. Is this movement a coincidence or is there some sort of correlation going on between the (perceived) price of Gold and the value of the Euro?

Hello beasting,

I know that somewhere,,,,,, out there,,,,,,, some smart brains are starting to put a relative value on the Euro using it's relationship to gold. It's only just starting, but it's almost like using Euros in place of what Gold stocks used to be. Indeed, if the Euro becomes established as the premier settlement currency and fully allows gold to price out to whatever level,,,,,, then in dollar terms Euros will return an awful lot. Just look at it like a native holding dollars during one of the Asian meltdowns?

As time goes by gold and Euros will most likely run together. Again, we shall see.

Trail Guide

MariusOro: Price stability#3853010/07/00; 22:15:19


Thanks for your thoughts on the undesirability of price stability. I recalled, from my reading of Mises, Hayek, Rothbard, et al years ago, that the seeds of our economic destruction lay in government pursuit of the contradictory goals of full employment and price stability. In particular, price stability is only desired by:

a.) consumers who are ignorant of economics

b.) politicians who pander to them

Government enforced price stability is a sure formula for crisis.


megatronjustamerebear#3853110/07/00; 22:23:36

One possible scenario/playbook was a book called 'The Great Reckoning' by Davidson and Rees-Moog. Very logical well thoughtout. If your here you've probably read it. I love refering to it. It's truly a work of art. But not pro-gold, although not anti-gold either.
Trail GuideLast post.#3853210/07/00; 22:26:10


Your question about oil and it's continued use in this unfolding drama is a whole chapter's worth of replies. Oil will some day be priced very cheaply and this will make an end run around fuel cell technology and what have you. It's not the supply of oil that's been a problem, rather how we pay for it in real money.

Thanks all
Until the next time on the Gold Trail

Trail Guide

JLVTG#3853310/07/00; 22:44:40

"Needless to say, gold will have to jump a great deal to do this.It will."


Actually Gold won't jump at all.

Everything else will just move toward their real value.

Are my Western eyes changing?

ZenideaAussie. Democrats call for summit on A$#3853410/07/00; 23:15:48

9.45 (AEDT Democrats leader Meg lees has called for a round table economic summit to look at issues relating to the collapsing dollar.
She also called for Government to stop cutting funding to pay off government debt and to provide funding for education and research and development.
" I would call on this government to actually get togeather a national economic summit to look at the issues
relating to our dollar" Senator Lees told channel seven.
She said the economic rationalist policies pursued in Australia in the past had not worked for Australia in the past.
" weve been there before and done that, the Labor government before this government went through the process of reducing tarriffs , privatisation." . " This Government's gone further down the road, reform the tax system, looked at workplace relations and the list goes on and on basically leaving it to the market.
" that isnt working , I think it is about time we really did sit down and do some planning beyond the next 18 months or so in the electoral cycle, but actually some long term planning as to where we want Australia to head".
She suggested a new look at household savings through superanuation , research and development investment and spending on education.
The current budget surplus should be put towards investment in the future rather than paying off debt.
"Our party room has discussed these issues over the last week or so and I think it is getting to the point where we do need something done at a federal level to drive this.

ZenideaDivide and conquer :)#3853510/07/00; 23:41:21

Just curious ? . As some of you may know Australia has introduced a GST ( Goods and Services Tax ).
Apon frequenting a local mint lately , I was asked to sign a form apon purchase that in essence stipulated that I would not charge the said people of whom the said bullion was purchased from a GST should I decide to sell the same back to them ?.
I remember an icecream on sale that had lollies in it, and of which my two then young daughters would squabble over each accusing/complaining that the other was taking out the royalty thereof.
So to serttle matters one would divide out two bowls and the other would have first pick.
All things being equal I wonder no suspect for no apparent reason whatsoever ... Why is his so ?. Loopholes anybody ?. regards.

MarkeTalkIsrael, Oil and the Middle East--Response to Black Blade#3853610/08/00; 00:04:43

A comment on your earlier post about the "idiot" Ariel Sharon's actions to stir up passions on the Temple Mount. In the BIG picture, there are no accidents in life especially in the Middle East. What we are witnessing is the fulfillment of Bible prophecy. War is imminent, whether next week or next month or next year. No other person could have inflamed passions like this man. For those readers who don't know this man's resume, he was defense minister in 1982 when Israel went into southern Lebanon and established a buffer zone as protection from rocket attacks by Hezbollah guerillas. He was particularly efficient at his job, and was heard often referring to Palestinians as "cockroaches." Even though he is no longer connected with any government position, his mere presence on the Temple Mount as he led a group of Jewish nationalists opposed to the peace process was enough to stir things up. But, as the saying goes, it takes two to tango and the Palestinians willingly obliged him.

News reports on Saturday from around the Middle East show widespread sympathy with the Palestinian cause. Arabs in Iraq and Syria burned Israeli flags and vowed their support to fight against Israel. Some even wanted to travel there and enlist in the ranks if it were possible. Even Pakistanis who are far removed from the conflict are incensed because they are Moslems and they feel comraderie with their Islamic brethen in Palestine. As if tensions were not high enough already, Israeli Prime Minister Barak raised them higher by announcing his ultimatum to Yasser Arafat: Curb the violence in 48 hours or else the full force of the Israeli Defense Force will be applied. By my calculations, this means sometime Monday afternoon, Israeli time.

Unfortunately, I don't see an abatement of tensions but rather escalation. And all of this is happening during the Jewish holy days. As Black Blade pointed out, we are looking at shades of 1973. But it could be a replay of 1973 in more ways than just one (i.e. oil). The last Arab-Israeli war occured on Yom Kippur in 1973. In the year 2000, Yom Kippur begins today at sundown Sunday evening, October 8th and we could see a second Yom Kippur war begin at this time. I might point out that tensions started on Rosh HaShanah (September 29/30) which marked the beginning of the Jewish holy days. I assume that the Arabs will once again use oil as their weapon against Israel and anyone who sides with her, i.e. the U.S. and possibly Britain. Europe, especially France, is pro-Palestinian/pro-Arab and anti-Israel. Witness France's alliance with Russia this week to snuggle up to Saddam Hussein and lift the sanctions against Iraq.

So it is a foregone conclusion that the U.S. will support Israel and that the Arab nations will use the oil weapon--whether next week, next month or next year. We better get used to higher oil and gas prices, higher inflation and--yes--HIGHER GOLD PRICES. Could the recent plunge in stock prices be telling us the same thing? We don't have long to wait.

Zenidea"Alcohol, water and Yeast", good on there own, explosive togeather!#3853710/8/2000; 0:18:10

Whilst I am on a roll of talking to myself and a frequenter of the US etc patent office. I just wonder again friends.
To try and attempt to understand everything , I mean to see the whole picture from quantum mechanics to infinity re: oil Ag , Pd, Au, Pt , and wherewithal the said comes from and who has what and who loves and why and on and on in our technological age why dont we further our discussions to the other elements in the periodic table ?. For example iridium and osmium ? Why are the stat"s on the net so scant? lets face it we need Platinum to crack oil and other incredible metals. We need through complicated processes high temp shit to extract the Platinum,. shouldnt we be broadining our minds a little ?. Water and Vacuums in nuclear reactors, or are we pandering to the sheeple on such a basic level we are only hopeing the truth will transpire by democratic belief ?. I love you all but I cant help wanting to move on at times .

Perplexedcondesates Black Blade 38495#3853810/8/2000; 0:19:50

Your information on condesates was dead on. My uncle was a
gager for Conoco in the Burkburnette oil fields in the vacinity of Wichita Falls Texas, during and prior to the 1940s. The gas was called Cason Head gas and was a problem.
It collected in elbows and perhaps traps, I was about 11 or 12 and don't remember all the details. The condesate had to be periodically drained, and at certain times of the year there was a considerable amount produced. The octane level was pretty high, it had a very destintive smell,and was very suitable as a motor fuel. Getting rid of the stuff was a real problem, and although either federal law or company policy forbid its use, it was winked at. The gas was collected in 55 gallon drums and delivered to friends and fellow employees. I don't remember if the gas was used in company cars or not, but my uncle always drove late model Chevrolets, with four in line fuel filters. It seems to me that the water content was pretty high, but because it settled to the bottom of the barrel, was easy to seperate.


Zenideawooooooooooops :)#3853910/8/2000; 0:24:33

Big mistakes ... Sugar, water and yeast :), off to bed :)
Black BladeRE: MarkeTalk#3854010/8/2000; 0:25:05

I agree! The battle lines are being drawn. The are elements on both sides that want war in order to fulfill what they consider to be their destiny. Tonight Saddam is making noise about going to war with Israel, The US abstained in a vote at the UN condemning Israel's actions, which means that the US position is not "officially" in agreement with the resolution, but "unofficially" we are not opposed to the resolution. There are more steps taken toward war as we pass these thoughts among ourselves. The Hezbollah are shelling Israel along the Lebanon border and Israeli troops are massing near the border. The situation is getting out of control. Perhaps the best thing for the US is to "wash our hands" of this whole mess, and encourage them to just do it, finish it, get it over with and let the survivors bury the dead. Of course there really are no winners if the Arabs and israelis duke it out to the finish. But after several millenia it's probably the only solution. Bummer!

UN Condemns Middle East Violence -- U.S. Abstains

UNITED NATIONS (Reuters) - With the United States abstaining, the U.N. Security Council adopted a resolution on Saturday that condemns the ``excessive use of force'' against Palestinians, who suffered some 80 casualties. The other 14 council members voted in favor of the hotly-contested resolution, which followed days of marathon negotiations between U.S. envoys and Palestinian supporters. The final draft was sent to both President Clinton and Palestinian leader Yasser Arafat, diplomats reported. The resolution condemns the ``excessive use of force against the Palestinians, resulting in injury and loss of human life.''

It indirectly blames Israeli opposition leader Ariel Sharon, for provoking the week-long rioting after his Sept. 28 visit to a shrine in Jerusalem's Old City, holy to both Muslims and Jews. Neither Israel nor Sharon are mentioned by name, a concession to the United States, but its implication is clear and one reason Washington abstained, diplomats said. ``The United States does not think it was a very good resolution, to put it mildly,'' U.S. Ambassador Richard Holbrooke told reporters after the vote. ``We decided in the end, because of certain changes and improvements in it, that it was no longer clearly in veto land. We were prepared to veto it,'' he said. ``It was one-sided. It did not reflect the fact that Israelis had been killed and wounded, that this is not spontaneous and many of the things going on have a deliberateness about them,'' Holbrooke said. The document, initiated by the Palestinians, also called for an immediate resumption of Israeli-Palestinian peace talks and supported ``a speedy and objective inquiry'' into the violence, without saying who should conduct the probe.

Fears mounted that a U.S. veto on the resolution would only exacerbate the violence among the Palestinians and their supporters in Lebanon and elsewhere. But Nasser al-Kidwa, the Palestinian U.N. observer, said ''We think that the resolution contains extremely important elements. It could help alleviate the gravity on the ground and hopefully help bring the situation under control.'' Israel's ambassador, Yehuda Lancry, disagreed, saying: ``We indeed consider that this resolution does not reflect strictly the complexity of the reality on the ground.'' But he said it was less one-sided than earlier versions, thanks to American efforts.

The Palestinians say the violence was sparked by Sharon's presence on a plateau known by Muslims as al-Haram al-Sharif, on which are located the al-Aqsa mosque, Islam's third-holiest shrine, and the Dome of the Rock mosque. The same site is revered by Jews as the Temple Mount, on which stood the First and Second Temples of biblical times. Israel says Sharon's visit was only the pretext for Palestinian violence, which began earlier with the killing of an Israeli soldier and a policeman. Holbrooke said he would have preferred the equivalent of a line-item veto but one sponsor of the resolution, presumably Malaysia, would not allow it. Other sponsors were Bangladesh, Jamaica, Mali, Namibia, Tunisia and Ukraine.

President Clinton intervened during the night, having telephoned Israeli Prime Minister Ehud Barak and Palestinian President Yasser Arafat to try and break the impasse as new clashes broke out with the pro-Iranian Hizbollah group seizing three Israeli soldiers on the Lebanese border. Council members belonging to the 114-member Non-Aligned Movement of developing nations had been pressing for condemnation of Israel for the past week at the urging of Palestinian U.N. observer Nasser al-Kidwa. The United States had tried to head off the resolution, saying council action would interfere with efforts to try to end the bloodshed and salvage the Middle East peace process.

The resolution also says Israel should ``abide scrupulously'' by its obligations under the 1949 Fourth Geneva Convention, which deals with protection of civilians in time of war. But it no longer specifies that the convention is applicable to all the territories occupied by Israel since 1967. Israel captured East Jerusalem and the West Bank from Jordan and the Gaza Strip from Egypt during the 1967 Middle East war.

The United States had balked at earlier versions of the text that specified the convention applied to all the captured areas, because this would underline East Jerusalem's status as an occupied territory.

Black BladeThree Kings#3854110/8/2000; 0:37:54

I just finished watching the movie Three Kings. But there were four of them?! At the end of the movie it said that the Kuwaitis got back their gold, but claimed that some was missing. I could only think that I know of 79 tons that they won't be getting back ;-)

Note: Now israeli citizens are being evacuated from populations centers along the borders and borders along the West Bank and Gaza are being sealed off. Starting to look more perilous. Meanwhile, Bubba is running out of time to establish a legacy. No legacy of peace in the ME, and probably no legacy of a strong economy the way things are shaping up. Only a legacy of debauchery!

ZenideaBlack Blade :)#3854210/8/2000; 0:46:36

Yeah my fathers sentiments by the first paragraph exactly , (bummer!)_Your sence of humour as dry as it may well be at times cracks me up my friend .
Perhaps one may feel better when one has given up hope !?. I wonder is it in the blood . Sad but what does one do after the umpire of reason cant sort this out after thousands years of genetic beliefs have transpired. Go fishing !. .... definately hitting the farter :)

Black BladeHere We Go Again, at Least it wasn't an Invalid Preacher or Child this Time #3854310/8/2000; 1:17:53

Think That This Could Happen With a Return to Gold Confiscation?

Police Admit Mistake Man Killed During a Raid on the Wrong House
By Vicki Brown
The Associated Press

L E B A N O N, Tenn. — A 61-year-old man was shot to death by police while his wife was handcuffed in another room during a drug raid on the wrong house. Police admitted their mistake, saying faulty information from a drug informant contributed to the death of John Adams Wednesday night. They intended to raid the home next door. The two officers, 25-year-old Kyle Shedran and 24-year-old Greg Day, were placed on administrative leave with pay.

"They need to get rid of those men, boys with toys," said Adams’ 70-year-old widow, Loraine. John Adams was watching television when his wife heard pounding on the door. Police claim they identified themselves and wore police jackets. Loraine Adams said she had no indication the men were police. "I thought it was a home invasion. I said ‘Baby, get your gun!," she said, sitting amid friends and relatives gathered at her home to cook and prepare for Sunday's funeral.

Resident Fired First

Police say her husband fired first with a sawed-off shotgun and they responded. He was shot at least three times and died later at Vanderbilt University Medical Center in Nashville. Loraine Adams said she was handcuffed and thrown to her knees in another room when the shooting began. "I said, ‘Y’all have got the wrong person, you've got the wrong place. What are you looking for?"‘ "We did the best surveillance we could do, and a mistake was made," Lebanon Police Chief Billy Weeks said. "It's a very severe mistake, a costly mistake. It makes us look at our own policies and procedures to make sure this never occurs again." He said, however, the two policemen were not at fault.

The Tennessee Bureau of Investigation is investigating. NAACP officials said they are monitoring the case. Adams was black. The two policemen are white. Family members did not consider race a factor and Weeks agreed, but said the shooting will be "a major setback" for police relations with the black community. "We know that, we hope to do everything we can to heal it," Weeks said. Johnny Crudup, a local NAACP official, said the organization wanted to make sure and would investigate on its own. Weeks said he has turned the search warrant and all other evidence over to the bureau of investigation and District Attorney General Tommy Thompson. A command officer must now review all search warrants.

Black Blade: The part that says: "We did the best surveillance we could do, and a mistake was made," just about says it all. This is what happens when the Keystone cops are allowed to run amuck!

Black BladeIsraeli Tanks Moving Into Jerusalem #3854410/8/2000; 1:38:37

It's looking more like a possible war in the making as some Arab countries are making counter-threats. Now Israeli centurion tanks are taking up positions in and around Jerusalem. I go off to sleep now, but I wonder what kind of world I will wake up to.
KnallgoldTG destillate#3854510/8/2000; 2:38:25

"..I expect that before this is over, we (US) might be forced to use our gold card to help devalue the dollar. That would involve a forced restructuring of the gold markets so as to make gold rise. A few political heads would roll if this takes place. Believe it!"..

Sounds like higher paperGoldprices are possible?Comments?

"I fully expect the ECB to begin it's assault now because as Mr. D has said, our Euro is now mature and can walk into battle. We shall see!"

"Some other things are in the works and with this new climate, it won't be long before we see it on the news."

It seems there is not much time left for buying physical.Somehow sad.All the best for you,especially the americans!

OROProf Auriti's site#3854610/8/2000; 3:04:12

A short quote to whet your apetite:

Money is, indeed, a measure of value and a value of measure in the same time, since every unit of measure is determined by the corresponding quality of what it can measure. If the metre is characterised by the quality of length because it measures length, money has got the quality of value because it measures value.

Therefore, even if money is a collective good it is also a good of individual private property, that is a good of the bearer, since "the value of the measure" is an induced value (and not a credit one) which is incorporated into the symbol.

The monetary value, which is not created by who issues symbols but by who accepts them, has no cost.

It has no cost because the value is generated by the simple expectation of the other people's behaviour, as a condition for his own behaviour. Everyone is, indeed, willing to accept money against goods, because he expects to give money against goods. This means that money has a value because we conventionally decide that it must have it.

The monetary value is not created by who issues symbols but by who accepts them, that is the parties of the convention. Therefore, money, at the issue's act, must be considered a national collective property and not a central bank one, as it happens today. When money was made out of gold the bearer was the owner. With the nominal money (born in 1694 with the foundation of the bank of England) the bearer has become the debtor, that is "temporary owner" as long as the loan lasts.

In order to understand this fundamental changment, let us examine a simple example. Some times ago, the person who found a golden nugget, embezzled it without any debt with the mine. Today, instead of the mine we have the central bank; instead of the nugget a piece of paper, instead of the property, the debt.

Therefore, the substitution of golden money with nominal money has not been the simple changment of the marketing nature of the symbol, but a deep and substantial juridical innovation: peoples have been surreptitiously transformed from owners to debtors of their money, because the bank issues money only through loans.

The monetary circulation is, therefore, a circulation of real goods of induced value, which are burdened by loans at 100% to the central bank.

NetkingRumors#3854710/8/2000; 3:42:46

"You shall hear of wars & rumors of wars..."('Manufacturers Handbook'). Welcome to the 'Last Days' right? 2001 is going to be a good old fashioned shakeup with the markets continuing to reel like they have been punched by the new upcoming heavyweight boxing champ David Tua.....interesting days ahead....hang on!
wolavkaDollars @home and abroad#3854810/8/2000; 3:53:35

WAC (Wide Awake Club)@Justamerebear#3854910/8/2000; 4:00:07

'Forgotten' HIV reaches record level

Roger Dobson

BRITAIN has registered a record number of HIV cases, the highest since the disease was discovered 20 years ago.
Figures being compiled by the Public Health Laboratory Service are forecast to show that more than 3,300 people were diagnosed last year.

"We expect it will be the highest ever," said Dr Barry Evans, head of the HIV unit at the PHLS. "The next highest [3,200] was in 1985, and that was high only because we had a big backlog as a result of the first test then becoming available." In the 1990s, the average number of new cases a year was 1,500.

It is estimated that a further 10,000 people in Britain have HIV but have not yet been diagnosed.

Doctors are concerned that HIV has become almost a forgotten disease, especially among young people. The incidence of other sexually transmitted diseases is also rising sharply - clear evidence that the message to practise safe sex, so loudly trumpeted in the late 1980s and early 1990s - is being ignored or forgotten by today's younger generation.

"I am worried about the trend, especially the trend in the outer markers - the other sexually transmitted diseases," said Evans.

New figures on gonorrhoea echo the increase in HIV. In the second half of the 1990s the rate of the disease among 19-year-old men more than doubled. In women of the same age it went up by 50% and overall it rose by 31%.

Health professionals fear that there is now a popular misconception that HIV and Aids are easily treatable, and that fears about Creutzfeldt-Jakob disease, the human equivalent of "mad cow" disease, have relegated HIV's impact as a health threat.

"There is a perception that it is not the serious disease it used to be," said Evans. "HIV is more treatable but it is still an incurable infection and we don't know when resistance to the drugs will kick in.

"Although treatments are showing very real benefits, the drugs are toxic and not pleasant to take. It is not like taking a couple of antibiotics, and you need to take them for a long period of time. They are also expensive - about £15,000 a year per patient."

Evans estimates that there are about 20,000 people with HIV in Britain - at least half of whom are not even aware that they are infected. Since the disease was first diagnosed, 15,000 people have died of Aids in the UK. Last year, for the first time, the majority of people diagnosed had acquired HIV heterosexually. Between a quarter and a third of the cases are women.

A spokesman for the Terrence Higgins Trust said: "We estimated that in five years the number of people living with HIV will have increased by 50%."

OROAuriti on the legal nature of fiat money#3855010/8/2000; 4:48:25

Prof. Auriti makes the legal argument to "correct" the lack of legal definition of money in Italy, and in any of the treaties of the EMU. He states the obvious and sees the consequences, even the banker's political conspiracy, but he attempts to replace this system with a pure cash fiat, i.e. a nominal money issued without counterweight in debt.

The good part is that he points to debt-money creation as a legalized expropriation. In the process, a bank (backed by a central bank commitment to issue unspecified quantities of banknotes or electronic credits, as necessary) simultaneously creates a debt and an asset (the money). The asset, however, does not yet have value. The value is provided to the money by the acceptance of the borrower, who in turn accepted the money (and the obligation to repay) only because he expects others to accept it in return for goods which he intends to purchase.

Auriti claims that the bank makes two expropriations. First, it produces a current expropriation of the purchasing power value of the debt-money issued, for which no cost was incurred. And then the banking system expropriates the same nominal value once again in demanding a payment of interest with money that does not yet exist.

Though the analysis is correct on the face of it, and is definitely so in legal terms, the practical matter is that since governments everywhere have eliminated the fixed caps on the interest rates that deposits at banks can get, the bank does not earn the full interest charged, but only the margin between its own interest costs and interest revenue. Thus the created debt-money does cost the bank a certain amount, resulting from the deposits created by the spending of the loan (the bank's asset is the loan) bearing interest.

Auriti also claims that bankers have created artificial scarcities of money in Europe during the 18th and 19th centuries in order (among other things) to push people into the Americas, where they had created a commensurate artificial abundance of money. He also claims that the debt disaster in emerging economies was an orchestrated event intended to induce immigration into Europe and the US, where the same bankers are pressing an artificial expansion.

JavaMantypos#3855110/8/2000; 6:04:41

justamereBear...That should have been Arthur Ashe.

Usul...sorry for the mis-spell

HI - HATORO.......See or Seem#3855210/8/2000; 6:08:52

Edgar Allen Poe, slipped into the future and liberated himself from the Newtonian universe with his :
"All that we see or seem, is but a dream within a dream".

I guess it was in the natural flow of this that Banksters would cover their end of this equation, and have transpire:
All that we see or seem, is but a debt within a debt.

SteveHPoint#3855310/8/2000; 6:49:42

You said, "Then those digits are traded for the ownership or rights to gold. When someone posted what Another said the figures were, I think that that 20 million of actual bullion in retention represented the tally over some ten years (and was growing)."

Twas I who posted 20 million, but it was 20 million ounces per year since 1991 and much more recently.

GATA lives in a commodity world, trying to influence a money universe. The commodity world is regulated by government; the money world is regulated by nations. GATA's basis is collusion of nations and key bullion banks; yet, it is clear from this perspective that GATA's claims, although reasonably true, cross the commodity-money boundry where government isn't much interested in regulation against nations whose currencies are at risk. The GATA claim of collusion is but a smaller complaint against a much large systemic problem -- gold's apparent hidden role in a dollar-based universe that has little incentive to admit gold's role. For nations to admit gold's role as money would be to accomplish a run-for-gold that would only further (at least in their minds) exascerbate the dollar's role as money. In short, government looks the other way as gold trades on COMEX (and LBMA) with unlimited paper, because some Nations require it so.

Is GATA's role diminished or left chasing windmills with a wooden spear? No, but I wonder if GATA is to be successful, if they must first admit and refocus on gold as both commodity and money? It is the bullion banks who live in both worlds: they are windmills and dragons both.

justamereBearJavaMan Re AID's#3855410/8/2000; 6:53:19

I have an offbeat theory that I have never heard anywhere.

Back in the 50's someone got to wondering why the animal population went up and down, as opposed to finding a stable level and staying there.

In 2 experiments deer on one island, and wolves on another were studied. Similiar results on both so I will deal with the deer.

The theory was that since the deer were on an island that there would be no external forces to disrupt the experiment. There were also no preditors on the island.

At the start of the cycle, the population was low in relation to the food supply, and the deer population grew. After a few years the deer started to show signs of stress. By now the population was at or over the long term carrying capacity for the island. Still the population grew. Then a strange diease would roar through the population, and knock the numbers way down.

Being a farm boy from the foothills of the Rockies, I could relate to that. The rabbit population had about a 7 year cycle. the rabbit population would grow and grow, and about every 7 years the rabbit population would die off.

That year you had to watch, because the preditors, whose staple diet was the rabbits, were hungry enough that they would come down from the mountains, and they would take a calf, or a sheep easily. Sometimes they would try for a cow. I recall one year, I shot a lynx every single day for 3 weeks straight. Normally we would never see a lynx.

Autopsies were done on the dead deer. The only slightly abnormal finding was that all of them had enlarged adrenal glands, indicating and confirming the observation that the deer were under some kind of stress. As soon as the population died down, adrenal glands of autopsied animals returned to normal.

I don't remember where (this experiment is well known to people in the field even to this day) but they decided to move the experiments inside using rats..

Rats are unusual in that they have a very rigid social structure. There is little fighting among particularly, adult rats. The female is very caring of the young, and makes a very neat nest. Their mating rituals are very patterned, with the male nipping at the tail of the female, and they race around, until the female eventually retreats to her burrow. The male stands around at the entrance to the burrow, hopping from foot to foot. If she comes out and sniffs at him, they go back in and mate. If she does not, eventually he goes away.

The experiment was simplicity itself. They simply provided the rats with a very large cage, all the food, water and bedding they wanted, and sat back to watch.

At first things went as normal, but at a certain stage in the population growth the social structure began to break down. The tails of attractive females were bitten until bone showed. Males no longer waited at the burrow entrance, but went diectly in and mated. Gangs of adolescent rats formed, terrorizing the populace. Males began to mount males. Females no longer made careful nests. Nests often consisted of a few straws scattered about. Females would decide to move the nest, and half way through, while carrying a kit, something else would catch their attention, and they would drop the kit and wander off. Infantacide grew. Autopsies showed enlarged adrenal glands.

Then, along came a strange disease. The population would die back by 90 to 97%. The origional social structure would reappear. The population would begin to grow again.

Interestingly, they found they could dramatically increase the absolute numbers of the rat colony before the breakdown came, by the simple expedient of providing what for a normal rat, were very small high rise apartments. They simply piled orange ceramic drain tiles up into a stack. That area was much smaller than the rat normally used as a den, but it seemed as long as the rats had a personal space they did not become as stressed.

Think about it. Normally if you and I are talking, and there is no sexual significance to the conversation, we will maintain a fairly constant distance between us. There are minor differences between cultures, and depending on how interesting the conversation is and how comfortable with each other the parties are. But the personal space zone is quite well defined. If I move in by 6 to 10 inches, you will become uncomfortable and either try to move away, or object. If you are in a crowded elevator, you will stand at rigid attention, saying with your body language, "I am not touching you because I want to, but because the situation forces it".

The question has crossed my mind; Has humanity found its strange disease?

LeSin@ STEVE H -- MR AG - Confirms "Gold is Money" by threats of leasing#3855510/8/2000; 7:01:28

From GM "Teetmyer" Thank You

Steve - I think this post from GM some what supports your earlier post - Agreed Gold is MONEY when free or imprisoned from the masses. "S"

Greenspan Faux Pas
(Teetmyer) Oct 08, 06:40

"Central Banks stand ready to lease gold..."

"Central Banks stand ready to lease gold in increasing quantities should the price rise"

"Central Banks stand ready to lease gold in increasing quantities should the price rise"

There is NO ambiguity here... no nebulous nor esoteric terms. No obscure nor vague inferences. In fact it is totally devoid of arcane and/or secret meanings.

Fed chairman in an extremely rare plain talk says, "Central Banks stand ready to lease gold in increasing quantities should the price rise" Please pronounce each word slowly and methodically to savor the essence and spirit of this very meaningful statement:

"Central-- Banks-- stand-- ready-- to-- lease-- gold--in-- increasing-- quantities--should-- the-- price--rise"

This is monumentally significant for the following reason. The Fed, the US Treasury and countless Wall street lackeys have carped and harped for years that GOLD is NOT money, but rather is just another commodity, subject to normal supply/demand dynamics. OK, OK. Let's accept that precept: that GOLD is indeed a traded commodity - no more nor less... simply a traded
commodity like COPPER!!!!!!

Recall many months ago the U.S. Attorney General of the Department of Justice announced on national TV that two drug companies have been found guilty of PRICE-FIXING. Furthermore, just a few days later it was also announced on national TV that Merrill Lynch is being formally accused of PRICE-FIXING collusion related to the Sumitomo Copper Caper fiasco perpetrated just a few years ago (I believe about 1995).

Fast forward again to Fed Chairman's comment about the COMMODITY CALLED GOLD:

"Central Banks stand ready to lease gold in increasing
quantities should the price rise"


Should not the US Department of Justice, the CFTC and the SEC interpret AND ENFORCE the same applicable laws, when considering the relevance and poignant significance of"Central Banks stand ready to lease gold in increasing quantities should the price rise?"

I confess I am NOT versed in the law. Nevertheless, I cannot rectify how PRICE-FIXING LAWS may apply to drugs and copper, but NOT to GOLD - because to the Fed and the US Treasury, GOLD is indeed a COMMODITY.

Would someone at the forum more versed in the law help me clear up my "ignorance?"

Hipplebeck(No Subject)#3855610/8/2000; 7:12:21

ranchers will grow more cattle if the price of beef rises.
TaurusResponse to justamereBear's post #38491#3855710/8/2000; 7:22:28

Sir justamereBear,

I'm ordinarily a lurker at this forum. Your post #38491, however, has prodded me to respond.

You said, "Anybody out there with an theory or prediction as to how this might unfold…?" Also, "…the thrust of this missive is to… garner ideas which will allow us to be better prepared for eventualities."

As to what comes next, allow me to quote from the book referenced in the above link:

"Life has no guarantees. And, because there are no guarantees, we need a portfolio that will protect us in all situations – runaway inflation, deflationary depression, even war.

"If nature takes its course, it appears that the logical sequence we face is (1) increasing inflation, followed at some point by (2) wage and price controls, followed at some point by (3) deflationary depression. Of course, a major debt default (by a third world country unable to pay its bills, for example) could leapfrog the normal course of events and plunge us directly into depression. In fact, the next thing on the horizon could be inflation OR depression OR both – and in either order. In simple fact, no-one knows what's coming next. No-one.

"And if a war starts, all bets are off. War is as likely as any other scenario because it allows politicians to rally support in the face of failed policies, consolidate power, impose controls, and shift blame. War – rallying ’round the flag – is a great blessing to a faltering leader."

And so, justamereBear, what's coming next? Darned if I know. (Though I am holding my breath to see what happens on the stock market tomorrow.) But there ARE ways to protect oneself regardless. What's the best way? (Aside from sitting at the right hand of God, that is.) What's the best thing to have in your portfolio? Stocks? Bonds? Real estate? Gold? Tangible assets? Baseball cards?

On a coffee break not long ago I actually heard a man bragging to his friends about how his baseball card collection was his retirement fund. His baseball card collection was his leg up on the rest of us. I chose not to engage him in debate.

No doubt most of us went through some Y2K planning. And a decade or two ago we went through some "survivalist" planning when runaway inflation appeared imminent. Hopefully we have outgrown the paranoia of living in a bomb shelter, patrolling our property with rottweilers, and arming our children with assault rifles against the dreaded Russian invasion.

But the future does NOT look promising. AIDS; germ warfare; Muslim hatred of the West; terrorism; the breakup of the USSR with the result that Hershey bars can be swapped for atomic bombs; good old fashioned racial bigotry; the fact that we're losing the war on drugs; the fact that crack babies will grow up looking like everybody else and think nothing of ripping off a few rounds in drive-by shootings; et cetera… Oh yes. Let's throw in a few wild-card, certified crazies as international government leaders. Not just folks out to line their own pockets. CRAZIES!

Not to worry, you say? The U.S. government has everything under control, you say? Let me again quote the book in the above link. "As the punch line of a dirty joke has it, ‘Be ye not a wee bit old to be believin’ in leprechauns?’"

But to the point. How can we be better prepared? How can we rest easy at night, knowing we have done all we can do? What tangible steps can we take to help both ourselves and our loved ones? Bottom line, what SHOULD our "portfolio" consist of?

The answer, I believe, goes a step beyond stocks and bonds and real estate. Even a step beyond gold. The best thing with which to arm oneself is KNOWLEDGE.

Knowledge can be carried across international boundaries with impunity. Not taxed, not confiscated, not detected. No metal detector, no sniffing dog, no customs inspector can find it. Knowledge is ageless, priceless, irreplaceable. Knowledge will allow you to earn a living and survive in any corner of the world.

What kind of knowledge? ALL kinds. How to drive a car, how to swim, how to speak a second language, how to ride a bicycle, how to grade rare coins, how to calculate standard deviation and statistical process control, how to type, how to program a computer, how to grow a garden and do home canning, how to deliver a baby, how to pilot a plane, how to double-clutch an 18-wheeler, how to speak in public, how to play bridge and golf and dance and other social graces, how to fish and hunt and trap and butcher animals, how to do oxy-acetylene welding and set-up a metal lathe, how to start a fire with flint and steel, how to change the oil on your car, how to haggle in a public market, how to make a 12-gauge shotgun from 3/4-inch pipe…

Knowledge will enrich your life, make you feel more competent and better able to cope, and help ensure your future survival in this world.

Sign up for some adult education classes. Learn something useful. To prepare for the trying times that surely lie ahead, learn a craft or skill that will bring people to your door seeking what it is that you know and that they lack. Be the first in your neighborhood to throw an atlatl. Be the first to make colloidal silver. Be the first to eat the edible mushrooms that grow wild in your area. In short, "Get thee a copper kettle…" (Those are the opening lines in a classic on building your own whiskey still.)

You're already a free-thinker or you wouldn't be reading this forum… And your greatest wealth, your greatest resource, is KNOWLEDGE.

AND while you're at it, stash a few gold coins. Maybe at home. Maybe in a safe deposit box in a foreign country. (Many millions of Americans live but a few hours drive from Canada or Mexico or a quick hop from the Bahamas.) And maybe not in a bank at all. Maybe place those coins in the safekeeping of a personal friend or relative in a foreign country. Hey! If the Swiss can vote themselves off the gold standard then anything is possible, yes?

HI - HATTaurus......Understanding is Power__Then BASICS#3855810/8/2000; 8:04:42

Concentrated Barterable Wealth

Depending on severity.. Worst case........basics.

Shells , Ammo. Gold, silver, liquor, chocolate, coffee.

..........Swords and Plowshares..........

justamereBearReplies & thots Megatron Oro WAC Aristotle Journeyman#3855910/8/2000; 8:20:49

Megatron 38531
Yes "The great reckoning" is something of a bible. I have an autographed copy, and subscribed to their newsletter for a time. Eventually found it a bit strident and obsessed, and quit. Have you tried "the axmakers gift" by R Burke? Similiar conclusion but a slightly different attack point.
A look at history.

Oro 38550
One thought- not that I disagree with the general direction of your thesis. There is a debt. It is to prof Auriti, and it is his guarentee that he will exchange back to lira, on demand, that people are relying on.

WAC 38549
That is tame to what Africa and some parts of Southeast Asia, particularly Thailand, are experiencing. In those cultures that do not actively promote monogamy the rates are soaring. Russian rates of infection over the past 10 years have been rising dramatically as people increasingly feel they have little left to lose, and increasingly, women are forced toward prostitution to survive.

Aristotle 38511
Loved your invisible crash. It is a question I have been struggling with in several areas for some time. Unfortuately I lack your facility with words, and there is no doubt that, in the process of accurately describing a situation, one is forced to think about the problem much more clearly.
One of the problems is, we lack any experience with which to relate, so it is hard to imagine, to start with, an invisible crash. How does one go about explaining "red" to a blind person?

One thing that is apropos our discussion about traders and this forum. There is an adage; "(commercial) Bank" traders cannot go head to head with the central banks, and central banks cannot go head to head with the market.

tedwThe Middle East#3856010/8/2000; 9:32:15

The situation in the Middle East appears to be worse than previous posters are portraying.

1) Isreal has launched jet attacks against Lebanon in retalitation for the capture of 3 Isreali soldiers by Hizbollah.

2)Syria has said Hizbollah was "justified".

3) Barak has issued a 48 hour ulitmatimum to Arafat to stop the violence or peace prospects are over.

4) Palestenian spokesman have rejected the 48 hour ultimatimum

5) Iraq is calling for a holy war to liberate Jerusalem.

6) Opinin polls show 2/3 of arabs want war with Isreal.

7) Isreal appears to be in the process of forming a unity government.

8) UN resolution (US abstaining) condemen Isreal for excessive violence againt Palestinians.

The Middle East is on the brink of war.I think it is likely that the Arabs may attack Isreal from all sides. I think it is also likely that Isreal will respong this time with the use of NUCLEAR WEAPONS and eliminate 100's of millions of Arabs. Her back is up against the wall and in order to survive she will have to do it. She has the means and the will.

God help us all.

JavaMan(No Subject)#3856110/8/2000; 9:44:26

Compliments to nomercy.

From the link: "Mr Jacques Santer, former president of the European Commission, has called on Gulf Arab oil exporters to price their crude in the euro rather than the US dollar as a means to stabilise the oil market."

SanchojustamereBear#3856210/8/2000; 10:20:52

RE your post 38554, studies were ade of the relative wolf
and moose populations on Isle Royale National Park at
Michigan, of which each waxed and waned successfully for
years, until some helpful environmentalists brought along
with them some poodles or somesuch and the wolves had a
major dieoff from canine distemper. Thomas Malthus's
theories about human populations being limited from time to
time by war, disease, famine, etc were set back by advances
in food production, some disease elimination etc. but I
think we are not exempt from nature despite mankind
spending most of their efforts to supplant it. Something
noteworthy debilitating will invariably come along. The
nature of it is that human beings have multiplied with
abandon to such an extent all over the world that a goodly
percentage of other species have to die out. From habitat
destruction on land to widening ozone holes killing things
we don't see like plankton, we may yet have to cope with
limiting our population (most people will not volunteer as
well as myself). Wars and disease are useful for that.
Was it Einstein who when asked how the world might end said
it probably would not go out with a bang but with a

totalamateurGold and Truth!#3856310/8/2000; 10:29:05

Gold and Truth! Is there a connection?

There is a striking parallel to be found between your gold market and your 'spiritual market'. You are living in a time period where extreme materialism is prevailing and where spiritual substitutes have been accepted and been considered as adequate and the real thing for a long, long time now. By the same token as it takes a lot of faith to keep the Bible's ideas and thoughts close to heart and in general "keep the faith" as it is called, it takes a great amount of faith to keep and hold on to one's physical gold in these days. This applies whether you are a small guy and the owner of one little gold coin or a central banker with a vault full of gold bars!

The Church, Christianity, religion and Christian faith has never been attacked so viciously and from so many sides as it is to day, with the Church and thereby the believers in God and Jesus being ridiculed and persecuted and even burned at the stake to entertain the public's lust for blood (Waco). Your government and the powers that be had no guilt in this instance, they said so themselves, and then it must be true, mustn't it? And all of you watching it all from your comfortable armchairs were equally innocent; after all they were a bunch of fanatics and weirdoes and had it coming! But come to think of it: What about Jesus and His disciples, weren't they a bunch of wandering hippies and dropouts as well? Sorry to digress like this, but this episode carried great importance and marked the beginning of the End of the World as you know it now!

Anyway, back to the gold market: I propose that a familiar attitude that results in the burning of Christians at the stake is prevalent in the world of finance. There are believers in the lie; read: fiat currency, paper gold, and other papers, and you have believers in the real thing, the truth: real gold and actual, real, valuable commodities. The believers in the lie are in a solid majority; the majority seems somehow for a number of reasons to always be wrong. And sad to say, they are not satisfied being wrong themselves, they seek to persuade the undecided and the ignorant to come their way, and having done short work of them, they proceed to cover their own wrong choices and wrong-doing by ridiculing and persecuting the minority that holds to the truth with the hope of eventually getting rid of them altogether. The lie cannot coexist with the truth anymore than light can coexist with darkness. One side must win in the end. Real and sound money, if allowed to exist, will eventually drive out the lie that paper money is and be replaced with, yes, you all guessed right, gold and silver and even coppers for the smaller denominations. - What is new under the sun? (I am aware of the fact that it has been suggested on this forum that they can indeed exist and live happily side by side, but as one writer had said, time will prove all things, also that idea! A lot will be left for free men and free nations to decide and we will all continue to learn as we go.)

I am here only as an observer, on a time travel back from the future, and it is very interesting to see how the thoughts of men are developing and helping shape the future that I am already occupying. You forum writers are truly the avante garde of the economists of your day! Having served the Manufacturer in my time on Earth, I am now part of the maintenance crew if you will. Although I have to admit it came as a shock to me the awesome responsibility that has been laid on my frail shoulders. But we work in team works with plenty of safeguards and have at our disposal the wisdom of all ages and all the help we need from the place you call Beyond, but which we call Home! The World is a different place than it was during "your" days, even if some of you survived the devastation of the final days of horror, and are still there. Others of you that at one time or another had received the gift of Salvation or accepted Jesus in any way, shape or form, are now with us here in the Heavenly City. You couldn't take your gold with you, but you realized soon you did not need it as this place is to some extent made out of gold and that of a superior kind of gold than you were used to! You also realized that the debate about gold versus paper was only a tool that had been allowed to help people choose the truth instead of lies!

The World is a better place now: There is no more war, the physical environment of the South and East has remained mostly intact and untouched by the horrible devastation of the North. The evil monstrous cities has been destroyed and the survivors have been resettled in the countryside where they once again farm the land and have had to learn from them that stayed loyal to the soil. Not only are the cities destroyed, man himself realizing the damage they did, have banned them forever. Most people are producing their own meager and simple needs for food, clothing and shelter, and what they cannot produce they trade and barter with others that can, from each according to his ability and to each according to his need. They that will not work, don't eat either! There is no more welfare or social security for the lazy and the slothful!

Since the love of money had become the root of all evil in your past generations, there is no longer any filthy lucre to pollute the economy. People are now exchanging commodities of real value, gold and silver of course included; and: it just had to be done: nobody is any longer allowed to accumulate more than his share. And none are permitted to suffer for lack of it.

The cities gone, small towns and villages are the order of the day. They are better than they of the past; beautiful, well-planned and wisely organized; small circular towns with roads radiating out into the surrounding farms and countryside. No more gigantic smoke-belching Earth polluting factories and industries, no more roaring, self-destructive forms of rapid transportation which killed even more than even the evil diseases of your wicked civilization. This took a bit of time to implement; the old being gradually phased out through a mere lack of production of new vehicles and spare parts. Car factories were turned into assembly lines for farm wagons and carts and carriages and buggies.

It helps to realize that the age you are now experiencing is but a twinkling of an eye; for thousands of years camel trains and wagon trains were occupying the roads, and sailing ships were gracefully plowing the seas. The fast hell-bent, destructive speed-that-kills of the past has been slowed down to a peaceful pace that your mind and body can better endure and survive and enjoy at a rate that gives you time to think and pray and observe the beauties of God's creation as you pass slowly by, and absorb the clean fresh air of an unpolluted atmosphere that you can breathe deeply and freely with plenty of time, instead of the nervous haste and reckless driving of the past and all its human carnage and vehicular wreckage. The wild world of past civilizations are gone!

The Southern part of the World are again learning to shift for themselves, with their powerful, cruel northern neighbors gone. They had been seduced and persuaded into industrializing and borrowing billions that the rich north knew they were never going to be able to repay, but had only served to make them slaves and servants of the Northern lenders who literally owned those countries and told them how to run their affairs. Finally the South refused to pay and this had helped bring on the Great Crash of the North. The North eventually did themselves in through their own wars and the judgments of the Manufacturer culminating in the Great Battle also called (Armageddon). The South is now free, the Pharaohs of the North being gone forever.

I am painting a picture of sheer and pure bliss here, but men are men, and all will not behave no matter how perfect the conditions are, so for the sake of the record; there are still rebels even in this perfect day and age. But all in all, this is Heaven on Earth; man is now free of disease, sickness, hurts, pain and early death, and if you can believe it; you even walk easier as gravity is lighter than in your day! The atmosphere is healed and there is full protection against the ultra violet rays from the Sun as well as cosmic rays. It may come as a surprise to you that what you called natural disasters were not natural at all; there are no more calamities like torrential rains, storms, hurricanes, volcanoes erupting, earthquakes, floods etc. The climate is perfect and temperate over most of the Earth where the majority of the people live. A lot was changed when the earth's axis had its angle corrected. The former polar regions are no longer frozen, barren wastes, but are temperate zones being populated and farmed! The deserts are long gone and are green and lush and flourishing! The trees are again bearing such abundant fruit that you can get most of your food from the trees, thus almost eliminating the hard work of tilling the land, except for diehard vegetarians! It is the Garden of Eden revisited!

Well, dear forum friends; this is what has become of the World that you were so worried about and thought were too far gone! And I don't blame you one bit; I must admit things were looking quite bleak for a while. I too had my doubts and was about to throw in the towel a few times, but it just goes to show never to give up hope and to keep looking for that silver lining of those storm clouds. Tomorrow is wonderful, I can assure you, I am there already! You will not be disappointed, the future is everything you could ever hope for and more! What more can I say, except keep the faith, or get you some! Ha! And yes, since this is a forum for people seeking a certain amount of physical security in holding a bit of gold for a rainy day; yes, gold is God's ordained wealth storage, untamperable, enduring. We here wouldn't use the expression eternal, as that is reserved for the real goodies! Get you some, but just not too much! As it would be sad to end up with a heap when it's time to go and no pocket to put it in! Besides being the perfect money and a royal metal it is meant for a buffer in a tight situation. When my Big Brother, who was once a little weak Child, had to seek refuge abroad, my fellows made sure that his parents had some gold to tide them over till it was safe to return to their home land. In the same manner it can be a help to many of you when the Crash hits. As many of you are becoming aware, there will soon come a period when the Wicked One will demand that no one can buy or sell except they have his mark or his number in their hand or forehead. In that day a few brave souls will ignore his threats and use gold and silver as a means of exchange. In the same manner as the Truth is esteemed of low value and trodden under foot of men, so is gold; the two go hand in hand. But the day will soon come that both are honored and recognized for what their real value is!
Signing off, but will continue to work from this side towards a liberation of gold from the stranglehold of the greedy manipulators. However, our hands are tied just now and we can only do so much, the rest is up to you, we can only work through yielded human vessels. So get your signals straight and you won't go wrong. Your decisions and actions is what will tip the scales of balance in due time. Spread the Word: the dollar is doomed, the Crash is here, the Euro will take over and gold is still the yard stick! Show time is now! This year is the year of change!

Gandalf the WhiteROFL !!!#3856410/8/2000; 11:39:02

The Wiz just returned to the TableRound from more battles with the Orcs to catchup with the happenings of the last two days. In reading Saturday's comments, I began to see the truth through inadvertent and unconscious statements !
Cavan Man (10/07/00; 16:32:24MT - msg#: 38489)
Hello Trail Guide
As you are an American, myself being an American; I must ask you how you feel about this whole business. I mean, how do you really feel? Know what I mean?
THEN, directly followed by: <;-)
Trail Guide (10/07/00; 16:53:08MT - msg#: 38490)
Hell everyone,
Enough said !!! <;-)

Clint Htotalamateur --The lie cannot coexist #3856510/8/2000; 11:51:26

totalamateur (10/8/2000; 10:29:05MT - msg#: 38563)
Gold and Truth!
Gold and Truth! Is there a connection?

<<The lie cannot coexist with the truth anymore than light can coexist with darkness. One side must win in the end.>>

totolamature, by not responding to your post I would be indicating approval. Some of your ideas would seem the truth to those who are like minded. However this is a worldwide forum and some of your statements would be offensive to people in other religious cultures.

Many cultures and religions have the same goals and feelings about gold and the financial markets but not necessarily from your religious perspective.

Please be aware of their views as you talk of golden things.

Buena Fetotalamateur (10/8/2000; 10:29:05MT - msg#: 38563)#3856610/8/2000; 12:03:09

I know of what you speak!
-Just Government...(not a democracy)....a Monarchy...a KING!....ruling from where you say?.....Jerusalem!!.....I pray for the Peace of Jerusalem, (even though I am not Jewish).

-And perfect/balanced weather!......must be a beautiful sight that canopy......especially the sunrises! and the sounds! I can hardily wait.

Long Live The KING!

Hill Billy MitchellClint H # 38565#3856710/8/2000; 12:22:16

You say:

"...this is a worldwide forum and some of your statements would be offensive to people in other religious cultures...
Many cultures and religions have the same goals and feelings about gold and the financial markets but not necessarily from your religious perspective. Please be aware of their views as you talk of golden things."

May I say, we are seeking truth on this forum. Truth is absolute. We are not running for political office here and our opinions need not be suppressed. 'Other religions and cultures' have the privilege of addressing their grievances and giving their opinions as to the truth here expressed. I for one do not want Totalamateur, Buena Fe, or anyone else censured on this forum.


Black BladeA Modest Proposal by Jonathan Swift#3856810/8/2000; 12:26:44

A Nice Reading Assignment for a Sunday, Hmmmm.....

First Published in 1729


It is a melancholy object to those who walk through this great town or travel in the country, when they see the streets, the roads, and cabin doors, crowded with beggars of the female sex, followed by three, four, or six children, all in rags and importuning every passenger for an alms. These mothers, instead of being able to work for their honest livelihood, are forced to employ all their time in strolling to beg sustenance for their helpless infants: who as they grow up either turn thieves for want of work, or leave their dear native country to fight for the Pretender in Spain, or sell themselves to the Barbadoes.

I think it is agreed by all parties that this prodigious number of children in the arms, or on the backs, or at the heels of their mothers, and frequently of their fathers, is in the present deplorable state of the kingdom a very great additional grievance; and, therefore, whoever could find out a fair, cheap, and easy method of making these children sound, useful members of the commonwealth, would deserve so well of the public as to have his statue set up for a preserver of the nation.

But my intention is very far from being confined to provide only for the children of professed beggars; it is of a much greater extent, and shall take in the whole number of infants at a certain age who are born of parents in effect as little able to support them as those who demand our charity in the streets.

As to my own part, having turned my thoughts for many years upon this important subject, and maturely weighed the several schemes of other projectors, I have always found them grossly mistaken in the computation. It is true, a child just dropped from its dam may be supported by her milk for a solar year, with little other nourishment; at most not above the value of 2s., which the mother may certainly get, or the value in scraps, by her lawful occupation of begging; and it is exactly at one year old that I propose to provide for them in such a manner as instead of being a charge upon their parents or the parish, or wanting food and raiment for the rest of their lives, they shall on the contrary contribute to the feeding, and partly to the clothing, of many thousands.

There is likewise another great advantage in my scheme, that it will prevent those voluntary abortions, and that horrid practice of women murdering their bastard children, alas! too frequent among us! sacrificing the poor innocent babes I doubt more to avoid the expense than the shame, which would move tears and pity in the most savage and inhuman breast.

The number of souls in this kingdom being usually reckoned one million and a half, of these I calculate there may be about two hundred thousand couple whose wives are breeders; from which number I subtract thirty thousand couples who are able to maintain their own children, although I apprehend there cannot be so many, under the present distresses of the kingdom; but this being granted, there will remain an hundred and seventy thousand breeders. I again subtract fifty thousand for those women who miscarry, or whose children die by accident or disease within the year. There only remains one hundred and twenty thousand children of poor parents annually born: the question therefore is, how this number shall be reared and provided for, which, as I have already said, under the present situation of affairs, is utterly impossible by all the methods hitherto proposed. For we can neither employ them in handicraft or agriculture; we neither build houses (I mean in the country) nor cultivate land: they can very seldom pick up a livelihood by stealing, till they arrive at six years old, except where they are of towardly parts, although I confess they learn the rudiments much earlier, during which time, they can however be properly looked upon only as probationers, as I have been informed by a principal gentleman in the county of Cavan, who protested to me that he never knew above one or two instances under the age of six, even in a part of the kingdom so renowned for the quickest proficiency in that art.

I am assured by our merchants, that a boy or a girl before twelve years old is no salable commodity; and even when they come to this age they will not yield above three pounds, or three pounds and half-a-crown at most on the exchange; which cannot turn to account either to the parents or kingdom, the charge of nutriment and rags having been at least four times that value.

I shall now therefore humbly propose my own thoughts, which I hope will not be liable to the least objection.

I have been assured by a very knowing American of my acquaintance in London, that a young healthy child well nursed is at a year old a most delicious, nourishing, and wholesome food, whether stewed, roasted, baked, or boiled; and I make no doubt that it will equally serve in a fricassee or a ragout.

I do therefore humbly offer it to public consideration that of the hundred and twenty thousand children already computed, twenty thousand may be reserved for breed, whereof only one-fourth part to be males; which is more than we allow to sheep, black cattle or swine; and my reason is, that these children are seldom the fruits of marriage, a circumstance not much regarded by our savages, therefore one male will be sufficient to serve four females. That the remaining hundred thousand may, at a year old, be offered in the sale to the persons of quality and fortune through the kingdom; always advising the mother to let them suck plentifully in the last month, so as to render them plump and fat for a good table. A child will make two dishes at an entertainment for friends; and when the family dines alone, the fore or hind quarter will make a reasonable dish, and seasoned with a little pepper or salt will be very good boiled on the fourth day, especially in winter.

I have reckoned upon a medium that a child just born will weigh 12 pounds, and in a solar year, if tolerably nursed, increaseth to 28 pounds.

I grant this food will be somewhat dear, and therefore very proper for landlords, who, as they have already devoured most of the parents, seem to have the best title to the children.

Infant's flesh will be in season throughout the year, but more plentiful in March, and a little before and after; for we are told by a grave author, an eminent French physician, that fish being a prolific diet, there are more children born in Roman Catholic countries about nine months after Lent than at any other season; therefore, reckoning a year after Lent, the markets will be more glutted than usual, because the number of popish infants is at least three to one in this kingdom: and therefore it will have one other collateral advantage, by lessening the number of papists among us.

I have already computed the charge of nursing a beggar's child (in which list I reckon all cottagers, laborers, and four-fifths of the farmers) to be about two shillings per annum, rags included; and I believe no gentleman would repine to give ten shillings for the carcass of a good fat child, which, as I have said, will make four dishes of excellent nutritive meat, when he hath only some particular friend or his own family to dine with him. Thus the squire will learn to be a good landlord, and grow popular among his tenants; the mother will have eight shillings net profit, and be fit for work till she produces another child.

Those who are more thrifty (as I must confess the times require) may flay the carcass; the skin of which artificially dressed will make admirable gloves for ladies, and summer boots for fine gentlemen.

As to our city of Dublin, shambles may be appointed for this purpose in the most convenient parts of it, and butchers we may be assured will not be wanting; although I rather recommend buying the children alive, and dressing them hot from the knife, as we do roasting pigs.

A very worthy person, a true lover of his country, and whose virtues I highly esteem, was lately pleased in discoursing on this matter to offer a refinement upon my scheme. He said that many gentlemen of this kingdom, having of late destroyed their deer, he conceived that the want of venison might be well supplied by the bodies of young lads and maidens, not exceeding fourteen years of age nor under twelve; so great a number of both sexes in every country being now ready to starve for want of work and service; and these to be disposed of by their parents, if alive, or otherwise by their nearest relations. But with due deference to so excellent a friend and so deserving a patriot, I cannot be altogether in his sentiments; for as to the males, my American acquaintance assured me, from frequent experience, that their flesh was generally tough and lean,
like that of our schoolboys by continual exercise, and their taste disagreeable; and to fatten them would not answer the charge. Then as to the females, it would, I think, with humble submission be a loss to the public, because they soon would become breeders themselves; and besides, it is not improbable that some scrupulous people might be apt to censure such a practice (although indeed very unjustly), as a little bordering upon cruelty; which, I confess, hath always been with me the strongest objection against any project, however so well intended.

But in order to justify my friend, he confessed that this expedient was put into his head by the famous Psalmanazar, a native of the island Formosa, who came from thence to London above twenty years ago, and in conversation told my friend, that in his country when any young person happened to be put to death, the executioner sold the carcass to persons of quality as a prime dainty; and that in his time the body of a plump girl of fifteen, who was crucified for an attempt to poison the emperor, was sold to his imperial majesty's prime minister of state, and other great mandarins of the court, in joints from the gibbet, at four hundred crowns. Neither indeed can I deny, that if the same use were made of several plump young girls in this town, who without one single groat to their fortunes cannot stir abroad without a chair, and appear at playhouse and assemblies in foreign fineries which they never will pay for, the kingdom would not be the worse.

Some persons of a desponding spirit are in great concern about that vast number of poor people, who are aged, diseased, or maimed, and I have been desired to employ my thoughts what course may be taken to ease the nation of so grievous an encumbrance. But I am not in the least pain upon that matter, because it is very well known that they are every day dying and rotting by cold and famine, and filth and vermin, as fast as can be reasonably expected. And as to the young laborers, they are now in as hopeful a condition; they cannot get work, and consequently pine away for want of nourishment, to a degree that if at any time they are accidentally hired to common labor, they have not strength to perform it; and thus the country and themselves are happily delivered from the evils to come.

I have too long digressed, and therefore shall return to my subject. I think the advantages by the proposal which I have made are obvious and many, as well as of the highest importance.

For first, as I have already observed, it would greatly lessen the number of papists, with whom we are yearly overrun, being the principal breeders of the nation as well as our most dangerous enemies; and who stay at home on purpose with a design to deliver the kingdom to the Pretender, hoping to take their advantage by the absence of so many good protestants, who have chosen rather to leave their country than stay at home and pay tithes against their conscience to an Episcopal curate.

Secondly, The poorer tenants will have something valuable of their own, which by law may be made liable to distress and help to pay their landlord's rent, their corn and cattle being already seized, and money a thing unknown.

Thirdly, Whereas the maintenance of an hundred thousand children, from two years old and upward, cannot be computed at less than ten shillings a-piece per annum, the nation's stock will be thereby increased fifty thousand pounds per annum, beside the profit of a new dish introduced to the tables of all gentlemen of fortune in the kingdom who have any refinement in taste. And the money will circulate among ourselves, the goods being entirely of our own growth and manufacture.

Fourthly, The constant breeders, beside the gain of eight shillings sterling per annum by the sale of their children, will be rid of the charge of maintaining them after the first year. Fifthly, This food would likewise bring great custom to taverns; where the vintners will certainly be so prudent as to procure the best receipts for dressing it to perfection, and consequently have their houses frequented by all the fine gentlemen, who justly value themselves upon their knowledge in good eating: and a skilful cook, who understands how to oblige his guests, will contrive to make it as expensive as they please.

Sixthly, This would be a great inducement to marriage, which all wise nations have either encouraged by rewards or enforced by laws and penalties. It would increase the care and tenderness of mothers toward their children, when they were sure of a settlement for life to the poor babes, provided in some sort by the public, to their annual profit instead of expense. We should see an honest emulation among the married women, which of them could bring the fattest child to the market. Men would become as fond of their wives during the time of their pregnancy as they are now of their mares in foal, their cows in calf, their sows when they are ready to farrow; nor offer to beat or kick them (as is too frequent a practice) for fear of a miscarriage.

Many other advantages might be enumerated. For instance, the addition of some thousand carcasses in our exportation of barreled beef, the propagation of swine's flesh, and improvement in the art of making good bacon, so much wanted among us by the great destruction of pigs, too frequent at our tables; which are no way comparable in taste or magnificence to a well-grown, fat, yearling child, which roasted whole will make a considerable figure at a lord mayor's feast or any other public entertainment. But this and many others I omit, being studious of brevity.

Supposing that one thousand families in this city would be constant customers for infants flesh, besides others who might have it at merry meetings, particularly weddings and christenings: I compute that Dublin would take off annually about twenty thousand carcasses, and the rest of the kingdom (where probably they will be sold somewhat cheaper) the remaining eighty thousand.

I can think of no one that will possibly be raised against this propasal, unless it should be urged that the number of people will be thereby much lessened in the kingdom. This I freely own, and it was indeed one principal design in offering it to the world. I desire the reader will observe, that I calculated my remedy for this one individual Kingdom of Ireland, and for no other that ever was, is, or, I think, ever can be upon earth. Therefore let no man talk to me of other expedients: Of taxing our absentees at five shillings a pound: Of using neither clothes, nor household furniture, except what is our own growth and manufacture: Of utterly rejecting the materials and instruments that promote foriegn luxury: Of curing the expensiveness of pride, vanity, idleness, and gaming in our women: Of introducing a vein of parsimony, prudence, and temperance: Of learning to love our country, wherein we differ even from Laplanders, and the inhabitants of Tompinamboo: Of quitting our animosities and factions, nor act any longe like the Jews, who were murdering one another at the very moment their city was taken: Of being a little cautious not to sell our country and consciences for nothing: Of teaching landlords to have at least one degree of mercy towards their tenants. Lastly, of putting a spirit of honesty, industry, into our shopkeepers, who, if a resolution could now be taken to buy only our native goods, would immediately unite to cheat and exact upon us in the price, the measure and goodness, nor could ever yet be brought to make one fair propasal of just dealing, though often and ernestly invited to it.

Therefore I repeat, let no man talk to me of these and the likes expedients, till he hath at least a glimpse of hope that there will ever be some hearty and sincere attempt to put them in practice. But as to myself, having been wearied out for many years with offering vain, idle, visionary thoughts, and at length utterly dispairing of success, I fortunately fell upon this propasal, which as it is wholly new, so it hath something solid and real, of no expense and little trouble, full in our own power, and whereby we can incur no danger in disobliging England. For this kind of commodity will not bear exportation, the flesh being of too tender a consistence to admit a long continuance in salt, although perhaps I could name a country that would be glad to eat up our whole nation without it.

After all, I am not so violently bent upon my own opinion as to reject any offer proposed by wise men, which shall be found equally innocent, cheap, easy, and effectual. But before something of that kind shall be advanced in contradiction to my scheme, and offering a better, I desire the author or authors will be pleased maturely to consider two points. First, as things now stand, how they will be able to find food and raiment for an hundred thousand useless mouths and backs. And secondly, there being a round million of creatures in human figure throughout this kingdom, whose whole subsistence put into a common stock would leave them in debt two millions of pounds sterling, adding those who are beggars by profession to the bulk of farmers, cottagers, and laborers, with their wives and children who are beggars in effect: I desire those politicians who dislike my overture, and may perhaps be so bold as to attempt an answer, that they will first ask the parents of these mortals, whether they would not at this day think it a great happiness to have been sold for food, at a year old in the manner I prescribe, and thereby have avoided such a perpetual scene of misfortunes as they have since gone through by the oppression of landlords, the impossibility of paying rent without money or trade, the want of common sustenance, with neither house nor clothes to cover them from the inclemencies of the weather, and the most inevitable prospect of entailing the like or greater miseries upon their breed for ever.

I profess, in the sincerity of my heart, that I have not the least personal interest in endeavoring to promote this necessary work, having no other motive than the public good of my country, by advancing our trade, providing for infants, relieving the poor, and giving some pleasure to the rich. I have no children by which I can propose to get a single penny; the youngest being nine years old, and my wife past child-bearing. (1729) THE END

oldgoldMiddle east#3856910/8/2000; 12:30:08

What is happening now in the Mideast is not war (although that could develop) but a massacre of unarmed Palestinians by heavily armed Israel troops. Rocks against tanks and machine guns is not a war but murder plain and simple.

This will not help gold at all BTW -- rather the US dollar.


"If the Arab world is heading for war
there is nothing (we) can do."
Shimon Peres - today

MID-EAST REALITIES - www.MiddleEast.Org - Washington - 10?07 - 3:30pm
Clinton canceled his Midwest fundraisers today to return to the White
and the Middle East crisis. The Israeli Cabinet is meeting in emergency
this evening at the Defense Ministry in Tel Aviv. The Lebanese
government has
been warned Beirut will be bombed, and Syria too has been put on notice.
the Palestinians have finally thrown the Israelis completely out of
Nablus, making
the Israelis fear, and rightly so, that Hebron and Gaza are next...and
And just in the last few hours Barak has given Arafat a public ultimatum
end the violence within 48-hours or else!
The "or else" may well be a "national unity government", Ariel Sharon
Defense Minister, and a new wave of violent repression, the unleashing of
military even more in the occupied territories and again Lebanon. If this
what the Israelis are now considering, then it is likely sooner rather
than later
because in the midst of an election now just 4 weeks away American
can be counted on not only to rally to Israel's side but to box themselves
so that post-election they will have little choice but to keep playing by
With emotions so raw a growing orgy of violence may be ahead, maybe
soon. The Arab world remains too weak, scared, divided, and compromised,
actually take Israel on directly. The Arab "client regimes" -- mostly
of persons only marginally competents with far too many thugs and cowards
leaves that to the Palestinian "Children of the Stones". But a great many
fires can break out in various locations if today's situation escalates
further; and some of them may not be easily extinguished.
As for the Israelis, one Minister actually had the chutzpah to today
at the Lebanese "return our kids" -- referring to the 3 soldiers captured
Hezbollah earlier today. This while the Israelis are still wantonly
Palestinian kids, with Israeli snipers shooting in cold blood. Other
officials have condemned as
"kidnapping" Hezbollah's actions...apparently obvious that they did in
fact kidnap
Hezbollah leaders years ago who are still in Israeli prisons, including
Obeid. Plus Mordechai Vanunu, one of their own, lured from London and
from Rome. And still other Israelis have publicly insisted that Lebanon
U.N. Security Council Resolution 425, the very resolution they defied for
years, not to mention so many other Security Council resolutions they
to defy to this day.


BEIRUT, Lebanon, Oct. 7 (UPI 11:18 ET) -- The Hezbollah movement warned
Saturday of any "foolish action" against Lebanon to try to gain the
of three of its soldiers who were captured earlier by the Muslim
on the Lebanese-Israeli border.

"Any aggression on Lebanon under any pretext will be a foolish action and
will be reciprocated by targeting (Israeli) soldiers and settlers," said a
Hezbollah statement released in Beirut. "And soldier-prisoners will remain
in our hands until achieving the goals. The enemy (Israel) has no other

Hezbollah was responding to reported threats made by Israel against
Lebanon if its soldiers who were captured by Hezbollah earlier Saturday
not freed.

"It is time the Zionists learn that Lebanon is the grave of invaders and
the (Hezbollah) resistance is not terrorized by threats," the statement

Hezbollah-run "Al Manar" television station said hundreds of the group's
followers were gathering in Beirut's eastern suburbs for a demonstration
joy" for the detention of the Israeli soldiers.

The soldiers were seized during clashes between Hezbollah guerrillas and
Israeli troops across the border that followed the killing of two
Palestinian demonstrators by Israeli fire on the Lebanese-Israeli border.
About 20 other Palestinians were injured. The nearly 1,800 Palestinian
demonstrators, who came from various refugee camps in Beirut and south
Lebanon, were protesting the Israeli "massacres" against the Palestinians
the West Bank and Gaza Strip.

Rolf Knutsson, personal representative of U.N. Secretary-General Kofi
Annan, expressed "grave concern" for the cross-border exchange of fire and
appealed on all concerned parties to exert "maximum restraint, especially
this time of unrest and tension in the occupied (Palestinian)

Knutsson, in a statement released in Beirut, said Lebanese Prime Minister
Selim Hoss assured him that the Beirut government "would take action with
view to bringing the situation under control."

The U.N. envoy said he told Hoss during a telephone contact that the
Lebanese authorities should not "lose time in asserying their full and
effective control of the liberated area of south Lebanon, particularly
the Blue Line" that was set by the U.N. to confirm Israeli pullout "in
to avoid further tragic events."

Hoss said Saturday's violence "is extremely regretful and constitutes a
condemnation to Israel for firing at unarmed civilians, keeping Lebanese
detainees and still occupying Lebanese land in the Shabaa farms."

"As for Jerusalem, everybody knows that it will remain a source of
instability in the whole region until rights are restored and the holy
regains its Arab identity," he said in a statement. "We repeatedly said
Jerusalem is not the cause of the Palestinian people only but is an Arab
cause which concern all Arabs, Muslims and Christians."

Hoss said it was time for the international community "to realize these
realities and the big countries to pressure Israel to restraint it from
further aggressions and injustice."

Earlier, a Hezbollah statement said its guerrillas attacked several
Israeli positions in the Shabaa farms, which was not evacuated by Israel
when it pulled out its troops from south Lebanon on May 24 ending 22 years
of occupation.

"They captured many Zionist soldiers and succeeded in evacuating them
the area of operations to a safe place," said the statement. It later
confirmed that three Israeli soldiers were seized.

The Hezbollah statement said the group "offers this operation to all
Jerusalem martyrs," including the 12-year old Palestinian boy, Mohammed
Durra, who was killed in his father's embrace by Israeli soldiers in Gaza
last Saturday.

The statement said it also came "to fulfill Hezbollah promises to
all (Lebanese) detainees, every inch of occupied Lebanese territories and
show solidarity with the Palestinian people." It pledged to continue the
"Jihad" (armed struggle) until the liberation of Jerusalem.

Earlier, Israeli forces and Hezbollah guerrillas exchanged bombardment
across the Lebanese-Israeli border in a first such and most dangerous
incident since the Israeli withdrawal.

Security sources reported "fierce clashes" between the two parties in the
border area of the Shabaa farms.

Israeli forces fired shells on the Lebanese side of the Shabaa farms and
the outskirts of the village of Kfar Shouba, prompting Hezbollah
to fire back with mortars, Katyusha rockets and rocket-propelled grenades
Israeli posts on the other side of the fence.

The sources said Hezbollah-Israeli clashes continued "with all kind of
weapons" and Lebanese inhabitants of Shabaa sought refuge in basements and



TEL AVIV, Israel, Oct. 7 (UPI - 14:39ET) - Israel has launched an
diplomatic effort to secure the release of three soldiers taken Saturday
afternoon while its helicopters carried sorties across the border and
airlifted troops to the front.

The Israeli cabinet is scheduled to hold an emergency session at 9 p.m.
the Defense Ministry in Tel Aviv to decide on its next steps.

Prime Minister Ehud Barak warned Lebanon "to immediately cease all
activities on Israel's northern border, and impose its authority upon all
the organizations operating along the border."

Deputy Defense Minister Ephraim Sneh said Israel considers Syria to bear
prime responsibility.

"The Syrian regime is the dominant and responsible force in Lebanon. It
the one who makes decision and we shall treat it accordingly," he said.

The warning was issued after Hezbollah gunmen ambushed an Israeli patrol
and took three soldiers hostage. The Qatari television station Al-Jezirra
said Hezbollah forces killed other soldiers in the patrol, but the Israel
Defense Forces spokesman denied the report.

Second Channel TV and Israel Radio said the gunmen fired mortars at
several IDF positions in the area and the soldiers drove to the border to
check it. Hezbollah gunmen, who had parked their car just across the
opened fire, crossed the border fence, took the soldiers, and sped away.

Last May, Israel withdrew its troops from Lebanon to a line the United
Nations determined. Since then, the border has been quiet except for
incidents. An Israeli general recently told UPI the air force has also
ceased intelligence sorties over Lebanon.

Barak's warning was not explicit as it was issued before the IDF
the news of the seized soldiers.

Reports from Lebanon said Israel threatened to bomb Beirut unless the
soldiers are returned within a given deadline but Sneh said, "We haven't
an ultimatum."

The Foreign Ministry said that acting Foreign Minister Shlomo Ben-Ami
talked to U.S. National Security advisor Samuel (Sandy) Berger, Secretary
State Madeleine Albright, and the U.S. Ambassador to the United Nations
Richard Holbrooke. He asked Washington to relay its messages to Beirut and

Cabinet Secretary Yaakov Herzog told UPI that Israel has been in touch
also with United Nations Secretary General Kofi Annan and the
Red Cross demanding the soldiers' release.

The acting Foreign Minister has instructed the Israeli representatives at
the United Nations to sharply protest the attack.

The Foreign Ministry's spokesman said, "Lebanon is responsible for
maintaining quiet along the northern border, and the actions today
a blatant violation of U.N. Security Council Resolution 425, and an act of

The spokesman's statement called upon the Security Council to condemn the
attack and "oblige Lebanon to adhere to international law."

The army statement that eventually reported the missing soldiers said,
"Three soldiers in operational activity along Israel's northern border
were kidnapped this afternoon by a Lebanese group, in all likelihood the

The incident occurred in the Mount Dov area in the northern Golan Heights
near the Lebanese border, the statement said.

"The IDF will make every effort to track the kidnapped soldiers and bring
them home safely," the statement added.

The Air Force has sent attack helicopters into the area in an apparent
to track the Hezbollah men and the Israeli soldiers. CH-53 helicopters
been airlifting troops to the Mount Dov area in preparation for a possible
cross-border operation.

Hezbollah, in a statement issued in Beirut, warned Israel that, "Any
aggression on Lebanon under any pretext will be a foolish action and will
reciprocated by targeting (Israeli) soldiers and settlers."

The Israeli statement said the government "intends to take decisive
in order to ensure the safety is Israel's northern towns and villages."

Israel said it views "with the utmost severity any violation of the calm
that has existed on the northern border since the IDF's withdrawal from

Former Prime Minister and Nobel Peace laureate Shimon Peres, who has
been optimistic over the peace process said Saturday night: "If the Arab
world is heading for war there is nothing (we) can do."

MiD-EasT RealitieS - www.MiddleEast.Org
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tedwThe Middle East#3857010/8/2000; 13:22:28

Old Golds post lacks a little objectivity.

Ive read news reports that an arab orgnization is offering $300 per wound and $2000 for children martyred in the conflict.

The first casualty in any war is the truth.

SHIFTYPeriodic Ponzi Update PPU#3857110/8/2000; 13:48:02

Nasdaq 3,361.01 + Dow 10,596.54 = 13,957.55 divide by 2 = 6978.77 Ponzi

Down 183.10 Ponzi points!

I see that Sir RossL has updated the Ponzi chart. Thank you

Hill Billy Mitchell : I too thought we may have seen a dip to a new Ponzi low on Friday , but a quick check told me not yet.

When I stopped posting the ponzi on a daily basis I got into the habit of doing it on Sunday's to refresh everyone for the next week of market mayhem.
Tomorrow is a Holiday in the USA, but will the rest of the world be trading tonight? I think so.
I did not get to read any of yesterdays posts till late last night. I read till 4:00 am EST. Wow this place was busy.
Lots of great posts.
I have to run to Daytona for an hour or so. Hope to find more good stuff here when I get back.


justamereBearTaurus 38557#3857210/8/2000; 13:55:44

WOW!!! Happily I have inadvertently been practicing a good deal of what of what you preach, but have never expressed it so thoughtfully and eloquently. Add my voice to that of yours and Hi-Hat immediately following. Knowledge is power. But then, that was part of the reason I was posting, to promote a bit of a "WHAT IF" game and thus gain (for myself and others) knowledge.

Lots of food for thought which demands I give it the time and attention it deserves. Saved it.

Thank you.

PS also got a real chuckle out of some of your phraseology.

PPS Not sure how strongly I would recommend valuables in any bank vault AFTER a financial meltdown. Some of my research suggests that occasionally the individual custodian of the other key to the bank vault, feels he has a "partnership feeling" toward you, and wants a cut of whatever is in there, like 50%.

Hill Billy MitchellLurking test#3857310/8/2000; 15:15:07

Lurk, lurk!
TownCrierThis link was forwarded to The Tower by carrier pigeon...Thanks!#3857410/8/2000; 15:19:12

HEADLINE: Santer calls for oil to be priced in euros

At a Gulf-Euro conference in Dubai, the former president of the European Commission, Jacques Santer, urged the Gulf oil exporters to price crude in euros as a means of stabilizing the oil market and reducing effects from US foreign policy. He remind his listeners that Europe was the world's biggest oil importer, and also said, "Trust and partnership spirit between the Union and the GCC could well increase if we were to consider trading the barrel in the euro" (instead of the dollar). Against the euro's recent track record on the foreign exchange market, Mr. Santer offered, "My contention is that the euro will move again toward parity with the US dollar, even if it may take some time, by gradual extension of the euro in international transactions."

These are important "political" rumblings that go well beyond the recent announcements by Iraq which might otherwise tend to be dismissed in the mainstream as little more than anti-U.S. posturing by a noisy nation.

ChrusosBubble flow chart and Israel news#3857510/08/00; 15:39:51

To all friends on the forum - WOW things are really hotting up. Multiple eventsoccurring simultaneously in every sensitive area that could quickly shatter euphoria :-
# Body slams on US indexes
# Mid East on brink of war
# Oil crisis
# Credit crisis
# Dollar crisis
# A 7.3 quake in Japan (100 injured - miraculously no

Does anyone remember ORO's credit priming machine? Well there's a very comprehensive Bubble Flow Chart at the above link - I'm sure most of us could speak for a considerable time (with varying levels of expertise!) on this as every part of the equation is brought in. One glaring ommission is gold. Although one could argue that, at this point in time, it is off the radar and completely dormant.

The financial storm articles at the link, for those who haven't read them, are well worth a read.

For those friends of Israel there is an excellent site giving the conservative picture to the violence at

Like how did all the stones get to the mosque on the first - well they were all conveniently stacked in heaps ready for stoning the Jews at the wailing wall. Arafats no 2 has carefully orchestrated in person the various actions.

And then there is the tragic shooting of the little boy Mohammed. Who did it? - there are a number of questions raised on the net as to whether it was the IDF eg see

Bill Koenig has a christian site which covers the conflict from some amazing news sources and this where I first found Gamla. The URL is

As TG likes to say "We shall watch this unfold together - No?"


Giovanni Dioroeuro/usd#3857610/08/00; 16:29:33

When the euro came out the ECB decided to set it at a very low interest rate. They have set a course to let the euro slide in currency markets. It is my opinion that insiders must have known they would set a weak euro policy and it has likely been exploited in the carry-trade. As has been pointed out to me, the rise in rates of the euro has minimalised the effectual advantages of the rate differential, but nevertheless the ECB has been running a weak euro policy.

I believe I read that european central banks hold around $300 billion in US financial instruments. This would go beyond normal reserves and gives credence to the weak euro/strong dollar policy that has unfolded in the past couple of years now.

As to the dollar, it is fundamentally weak and the turnaround may very well be near. Trail Guide said yesterday that Greenspan wants a weaker dollar to get the trade deficit to a more reasonable level. Well he should very well get a weaker dollar exactly because of the trade deficit. America has rung up a total of roughly $1 Trillion dollars in its trade deficit over the past 3 years. There will be repercussions from this, which is of course a much weaker dollar in the years to come.

RAPSir Lurker!#3857710/08/00; 17:18:55

I think it would be of interest to all if you could take each point in time and convert oil, using the dollar price at that time, into grams of gold, and plot oil vs gold directly. This would remove the value of the dollar from the equation, for a true value of oil in terms of gold.
A chart I would be very interested in seeing.
Back to being a real lurker.

Hill Billy MitchellRAP # 38577#3857810/08/00; 17:49:11


I will give your request some serious consideration. I am still trying to sell the brains on this forum with the notion that the top chart,"CUMULATIVE REAL PRICE " is very precise in giving the relationship between Oil and Gold prices. The whole point of using constant 1999 dollart is to remove the change in the value of the dollar distortion from the equation.Of course we have the premise that the change in the value of the dollar pulled from consumer price indices over the last 20 years is correct. That premise could very well be wrong, simply because the numbers generate from a lying, stealing, cheating government.

Maybe your suggestion would be an improvement. It certainly would be interesting to compare such a chart with the "CUMULATIVE REAL PRICE" chart and the "X 20 / X 500 chart.

My wife is calling me to a true commitment and I must go.
Will see.


RossLChart#3857910/08/00; 17:50:50

Sir RAP, your requested chart is up. What do you make of all this?
RossLSir HBM#3858010/08/00; 17:54:24

The newest chart is using the same inflation adjusted values. If you believe this approach is in error, then let me know.
Black BladeGold market "time bomb" theory blasted by South African#3858110/08/00; 18:18:24

The author, Daan Joubert, an independent technical analyst in South Africa, has responded to "Mr Gold's" article (Jim Sinclair) in a point by point style. The comments in italics are, therefore, key extracts from Jim Sinclair's article which headlined: "Gold Market Sitting On A Time Bomb" and are followed by Daan Joubert's replies. Enjoy: At the URL above

Interesting. - Black Blade

714Trail Guide 38517#3858210/08/00; 18:45:43

Just caught your post from yesterday and I need to correct a few matters:

First, Aramco's royalties to the Saudi king and his government were pegged to gold, but not always paid in gold. In fact, it appears that the Saudi government preferred dollars over gold for their royalties when it began to insist on royalty payments in US$ in 1940 at the dollar/gold exchange rate to be had in Jedda, which was twice as high as that in NY, largely due to the war and subsequent closure of the London gold market. This became an ongoing issue until settled in the late 40's.

Second, once the royalty was paid by Aramco to the Saudi government, the oil belonged to Aramco, which at that time was owned by Standard Oil of Texas and Standard Oil of California, and undoubtably it was sold, at full market value, for currency, not gold, with the proceeds flowing to American oil company coffers. Of course, today Aramco is largely owned by the Saudis and can no longer really be considered an American oil company.

Third, I only meant to imply that IF oil was sold for gold, it would be in that range you spoke of. I'm finding no evidence whatsoever that gold ever bought oil. It only paid the royalties...sometimes.

I'll have this material uploaded in the next few days as I'm working out a couple of problems with a web server provider.


JourneymanCB's vs. the market according to Greenspan @justamereBear msg#: 38559#3858310/08/00; 19:23:56


Your adage, "'(commercial) Bank' traders cannot go head to head with the central banks, and central banks cannot go head to head with the market" reminded me of an A. Greenspan quote:

"That we, meaning the monetary authorities, the Fed and
the Treasury, can somehow alter the value of a currency
in a significant manner when fundamentals are going in
the opposite direction is an illusion. We cannot." -Alan
Greenspan, Semi-annual Humphrey-Hawkins Testimony to US
House, July 22, 1998, 12:52 PM EDT


lamprey_65Middle East Tensions#3858410/08/00; 19:26:49

Seems to me Arafat is playing a very dangerous game of chicken...

Something like, "You give us what we want, or we resort to violence."

I don't see this working. These two peoples, IMHO, just are too far apart to live in peace. Sometimes the truth isn't pretty.

JourneymanA slightly different take on gold is money and a commodity @SteveH, ALL#3858510/08/00; 19:38:45

How about this verbal construction:

Gold is a commodity that many people around the world stubbornly insist on using as money too.


Giovanni DioroGold is a C ommodity#3858610/08/00; 19:53:58

Journeyman would you rather have money that is a commodity being tangible and valuable or would you rather have money that is intrinsically worthless and whose value is subject to the manipulations and machinations of those who print it and set the interest rate thereof?
JourneymanWhat I prefer @Giovanni Doro#3858710/08/00; 20:04:09

Sir Doro,

I PREFER free banking and believe this would inevitably lead back to a defacto gold standard, with other types of private debt circulating, down to and including Uncle Joe's IOU written on the back of that envelope, most discounted based on the expectations of delivery unique to each author of each IOU.

As Austrian economists will tell you, except for fiat currencies, things traditionally (pre 1933) used as money had other uses as well. Thus they served all their several uses, use as a medium of exchange only one of them.

Of course, it could be argued that fiat also has other uses --- as wall (and another kind of) paper for example.


TaurusjustamereBear 38572 & beesting 38271#3858810/08/00; 20:14:47

Sir justamereBear,
Thank you. Very flattering.

Sir beesting,
Thank you, too. You cleared up what was to me a mystery.


SteveHRossL#3858910/08/00; 21:45:33

Help us out. How do you derive Grams of gold for oil chart?

Can you extend all your charts into 2000 as of today? This is important. I believe we will see a tremendous divergence in the POO v POG.

SteveHRossL#3859010/08/00; 21:51:29

I believe the conclusion to be drawn from gm of gold v oil is that the price of gold has been kept OR the price of oil has been kept to within a very narrow range of one to the other such that the correlation is quite high. Any statisticians may want to give us a correlation of oil to gold and a standard deviation on the grams to gold thing.
Which controls the other I believe depends on who has fallen behind. Gold does seem to be the leading indicator. Oil is leading now though.

Bottom line. OIL can buy gold anytime and in any market as the market is kept such that 1gm (approx.) of gold buys 1 barrel. How convenient.

SteveHPair of dimes again#3859110/08/00; 22:06:40

Our currency may not be officially backed by gold but it is valued to gold which is valued to oil. The below only shows a partial picture -- oh so misleading, eh?

Date: Sun Oct 08 2000 20:52
sharefin (Could this be true?) ID#284255:
Copyright © 2000 sharefin/Kitco Inc. All rights reserved
In the past, people have invested in precious metals as a method for storing value when a currency was losing its value. But today, our currency is no longer backed by gold per se. It is backed by the gross domestic production of the nation. Now there are many other reasons people have for investing in precious metals. For the last several years, the consumption of gold, silver, platinum and palladium has far exceeded its production. This is coupled by the fact that the market price of these precious metals has been kept relatively low by the selling of gold reserves by central banks. In addition to this, rich foreign investors from developing countries have been increasingly looking for an investment to store away their personal wealth. They are moving out of their governments, which are often in the hands of corrupt politicians. It would take a global recession to slow the demand for gold and other such precious metals. Precious metals have long been looked to as the repositories of ***absolute value*** -- not the relative value of paper currency.

justamereBearSancho 38562#3859210/08/00; 23:01:01

Yes, We do not seem to be exempt from war & disease.
megatronTaurus#3859310/08/00; 23:03:34

Your post about learning and knowledge was refreshing although I'm sure we both know very 'smart' people who don't know their ass from a hole in the ground. Let me add that any 'learning' is almost useless unless it's attached to a rational mind. Other wise it's just mis-appropriated energy.
TurnaroundIraq dumping dollars#3859410/09/00; 00:25:49

BAGHDAD (AFP) - - Iraq's central bank has begun to buy
european currencies, following Baghdad's decision to
stop using the dollar, the INA agency reported.

The central bank said in a statement Sunday that it was "disposed to buying european currencies against their
equivalent in American dollars".
The statement said that "the currencies which will be
bought are the French franc, the German mark, the
Austrian schilling, the pound sterling, the Dutch florin and
the Italian lira".

AristotleHey there, Turnaround. It's good to know that Iraq has kept its humor while taking an important and symbolic first step.#3859510/09/00; 00:59:58

The statement said that "the currencies which will be bought are the French franc, the German mark, the Austrian schilling, the pound sterling, the Dutch florin and the Italian lira".

The translation---

The statement said that "the currencies which will be bought are the euro, the euro, the euro, the pound sterling, the euro and the euro".

Simply grand. A policy statement that offers the display of diplomacy and comedy all rolled into one!

Gold. Get you some. ---Aristotle

SHIFTYAsia/Pacific & Europe#3859610/09/00; 01:54:22

Lots of red ink in the markets around the world tonight.


wolavka97%#3859710/09/00; 02:51:23

No brainer, pattern, chart, higher for dec gold. end of story.
The Invisible HandWall Street preview#3859810/09/00; 03:20:21

I'm not sure whether the Nemax 50 is a European or German kind of Nasdaq but it's losing more than 6 % for the moment.
Black BladeIsraeli feared kidnapped in West Bank said to be VP candidate Lieberman's cousin #3859910/09/00; 03:31:06

Source: Ha'aretz Services

Hillel Lieberman, a missing Jewish settler feared kidnapped and killed by Palestinians, is a cousin of U.S. Democratic Vice-Presidential Candidate Joseph Lieberman, according to sources in the Jewish settler movement in the West Bank. The senator has been apprised of his cousin's disappearance and is closely following efforts to secure his release, the sources said Sunday. Israeli security forces have opened a widespread search for Lieberman, 36, a resident of Elon Moreh in the West Bank and a father of eight, who has been missing since Friday night. Israeli media have said he was was last seen en route to a demonstration against the Israeli army's evacuation of the Joseph's Tomb shrine in Nablus. Hillel Lieberman's father, a rabbi, is a first cousin of the senator. There was no independent confirmation of the Palestinian Television report of his abduction and killing.

Black Blade: Wae for sure. Eye for an eye, tooth for a tooth.....

Black BladeIsraeli feared kidnapped in West Bank said to be VP candidate Lieberman's cousin #3860010/09/00; 03:33:03

Source: Ha'aretz Services

Hillel Lieberman, a missing Jewish settler feared kidnapped and killed by Palestinians, is a cousin of U.S. Democratic Vice-Presidential Candidate Joseph Lieberman, according to sources in the Jewish settler movement in the West Bank. The senator has been apprised of his cousin's disappearance and is closely following efforts to secure his release, the sources said Sunday. Israeli security forces have opened a widespread search for Lieberman, 36, a resident of Elon Moreh in the West Bank and a father of eight, who has been missing since Friday night. Israeli media have said he was was last seen en route to a demonstration against the Israeli army's evacuation of the Joseph's Tomb shrine in Nablus. Hillel Lieberman's father, a rabbi, is a first cousin of the senator. There was no independent confirmation of the Palestinian Television report of his abduction and killing.

Black Blade: War for sure. Eye for an eye, tooth for a tooth.....

Black BladeGoing to be ugly on Wall Street this week, Petroleum will rise very nicely too.#3860110/09/00; 03:39:34

Asian markets are getting ugly, petroleum is up across the board, and Au is up a buck.
wolavkaOkay#3860210/09/00; 04:19:05

"The fly and the Mule."
RossLGrams Au per barrel of crude#3860310/09/00; 04:38:04

SteveH, I changed the chart. Previously, I was using HBM's inflation adjusted data. I decided to ues real prices in dollars instead.

The gold price is divided by 31.104 to arrive at the dollar price for 1 gram of gold. The dollar price of crude oil is divided by the gold gram price. The result is what you see.

The final segment in red is an estimate of where we are today. It is not based on HBM's annual averages like the rest of the data is, so it may be misleading.


Man's body found near Nablus; might be of missing settler
By Amos Harel, Shlomo Shamir and Ha'aretz Services

IDF troops discovered a man's body at the southern entrance to Nablus at about 7 P.M. on Sunday. The IDF is examining the possibility that the man is Hillel Lieberman, a settler from Elon Moreh who has been missing since Friday night.

The body has been transfered to the center of forensic medicine at Abu Kabir.

Hillel Lieberman is a relative of the U.S. vice presidential candidate Joseph Lieberman, according to sources in the Yesha Council of Jewish Settlements.

On Saturday, Israeli security forces opened a widespread search for Lieberman, 36, a resident of Elon Moreh in the West Bank and a father of eight. According to Israeli media, Lieberman was was last seen Friday, en route to a demonstration against the IDF's evacuation of Joseph's Tomb in Nablus.

SteveHRossL#3860510/09/00; 05:13:35

Can you also extrapolate the x5x20 chart too?

Also, the 1gm of gold per bbl of oil obviously tracks, except we have broken out in 2000 from the standard deviation, which is obviusly an anomoly driven by an unusual market event, which I suspect to be the higher price of oil and gold's inability (for the moment) to track with it. This is as much an indication of unusual market event and supports circumstantially the manipulation of gold and/or oil.

It also tells us for the relationship to hold, gold and oil must rise together in lock-step. We can't have (under normal macro market conditions) a rising price of gold without a rising price of oil. Oil is now rising, creating this divergence from the norm. Gold will therefore sustain tremendous pressures the further the break out in oil. Whatever pressures of the past kept oil and gold in synch will be working against gold's divergent behavior. I suspect the greater the divergence, the greater the upward pressure on gold (or downward pressure on oil). This points back to the theory that oil and or gold can be driven by those who control oil and or gold. Either can be used as pressure on the other. Most of the time, gold appears to lead oil. It is different this time: oil leads gold.

Canuck@ Steve H. @ Ross L. @ All#3860610/09/00; 06:25:33

I have been following the 1 gm. gold/ 1 bbl oil discussion the last week or so.

Thanks for the comments; most interesting.

It appears that you guys have identified the disparity of late and the apparent role reversal; that is oil leading gold.

I have a couple thoughts and if I may pose a question.

Does it not seem possible that oil should lead gold during the economic cycle. As oil rises during robust times it then in turn causes inflation, economic peaking and finally a rise in POG?

Money chases investment yielding highest ROI, yes? Currency traders have bet the farm on the US$. It can be debated that the dollar is overbought, overvalued. Are oil producers simply aware that the dollars value is too high, consequently the POO has been racketed up to reflect this? Oil (let's call it a 'currency' for a moment) is inflated to match the dollar?

I recall FOA's recent statement, something along the line of, "... the rising POO has never been a supply/demand problem; it is recognition by oil producers of an inflated dollar.."



TownCrierHear ye! Hear ye! A select group of posters are invited to step forward to claim their precious metal!#3860710/09/00; 06:31:36

The passing of this recent fortnight has seen The Tower actively engaged in many projects, certainly the most challenging of which was the process to review and distill the wide field of exceptional contest entries to those few recognized here. As a reminder of the stake, Centennial Precious Metals offered a quarter-ounce Uruguayan 5-peso gold coin as the grand prize, and tenth ounce gold bullion coins for the two runners up in this contest to celebrate the Forum's second birthday. The task to you, our visitors, was to either name the one specific development or event that would break gold out of its current price range, or else indicate the reason that you return to this Forum time and time again.

The difficulty of picking only three prize winners out of many, many insightful posts proved too great a challenge, so Centennial generously threw open its vault for the provision of additional prize metal for those that most closely contended for the gold. The big moment has arrived...

With the benefit of hindsight, we can now see that the contest for the grand prize was over as soon as it began. We are happy to announce that the Uruguayan gold coin is awarded to Sir JavaMan, who boldly offered the very first entry to the contest. In the final analysis, those of us judging this affair are all quite human here in The Tower, and Sir JavaMan's post appealed to our frail human emotions, allowing us to feel appreciated for our efforts involved in providing this website. Can you blame us? Just read these excerpts...

*****JavaMan (9/17/2000; 17:18:36MT - msg#: 36853)
I, a USAGOLD "poster", keep returning to this Forum for many reasons. Among them are:
The fellow knights and ladies...who unselfishly share their wisdom and knowledge at the forum, and with an attitude of politeness befitting knights and ladies of the Table Round. Also, many of the values and views expressed at the Table are consistent with mine so there is a certain level of "like mindedness" to be enjoyed. Often, the discussions are an intellectually challenging experience and it is not uncommon to encounter a post that requires more than a casual or one-time read.

The Management and Staff...who have consistently demonstrated a high level of integrity in terms of how the forum is monitored. We have thirty words or more to articulate our reasons, but if I was limited to only one word, it would be "class". USAGold has class, which, first and foremost, is a reflection of the Management and Staff. As a result, visitors who recognize and appreciate this particular quality, find their chair at the Table to be a comfortable and rewarding one. Furthermore, they too offer an unselfish sharing of their time, knowledge, genuine concern, and accommodation both at the forum and behind the scenes - through email, for instance.

And now for some bullets:
The Web Site itself...there are no annoying advertising (especially animated graphics).
The twenty-four hour hit provides access to all of the posts since the previous midnight.
The On-Line Offerings...where one can conveniently participate as their circumstances permit.
The Trail...the efforts of our Trail Guide / FOA do not go un-appreciated. Who IS that guy?
The Hall Of Fame...where the classic writings of such as ORO, Aristotle, and all the others can be easily navigated.

In summary, I would offer that USAGold (cyberspace gold) mirrors many of the qualities of physical gold: i.e. integrity, honesty, value, consistency, reliability, etc., etc.. Just as physical gold ownership provides a sense of confidence and peace of mind, USAGold and those who sit at the Table provide a similar experience by sharing knowledge, insight, and opinion that, likewise, promotes a sense of confidence and peace of mind. As physical gold is a true store of wealth, USAGold is a true store of informational and intellectual wealth. And its more than that, its a relationship.
These are the reasons I keep returning to the USAGold forum. Happy Birthday, USAGold and many happy returns!
Thank you, Sir JavaMan, for making it all worthwhile. Our first runner up, Sir Tate, was awarded a tenth ounce gold bullion coin for his succinct yet entirely suitable and insightful commentary on the development that would break gold out of its price range. His post shows the key to be the physical market repercussions arising from mainstream exposure to the realities of the outstanding paper.

*****Tate (09/18/00; 20:31:12MT - msg#: 36911)
... the one specific development or event that would break gold out of this price range, it would be run on physical metal. I call it HUNGER FOR GOLD that spreads around, caused by slowly rising worldwide inflation induced by currencies devaluation and meltdown that in turn would make impossible for FED and associated parties to continue POG manipulation.

[Now, check out this next portion of the post...a sound-bite statement that EVERYONE can understand...]
US Dollar inflation was already revealed in several ways.
Inflated US stock bubble revealed monstrous float of paper.
Rising price of Black Gold (oil) revealed falling paper value.
Thank you, Sir Tate. Our second runner up prize of a tenth ounce gold bullion coin is awarded to Sir nickel62 for his important point reminding us to watch the international scene, and the powerful forces ultimately wielded by the masses beyond U.S. borders.

*****nickel62 (9/19/2000; 9:43:22MT - msg#: 36953)
... the one specific development or event that would break gold out of this price range, it would be the realization that the value of the currencies of the European nations will be irreparably damaged by the continued acquiescence of their governments to the manipulation of the US dollar. This will be sparked by a resounding defeat of the referendum of the Danish people to accept the Euro and the realization that 300 million average Europeans do care about the value of their currencies being maintained even if their bankers and politicians do not. Politics will lead to changes in the movements of markets which will cause unforeseen events to undercut the ability of the US trading firms' computer models to continue to manipulate the game. Like all house of cards the game will then unravel in ways that no one can predict.
Thank you, Sir nickel62. Honorable mention and a U.S. silver Eagle is awarded to Sir canamami for his insightful post along these same lines, though focused more upon the governmental side of international forces. An excerpt:

*****canamami (9/21/2000; 23:31:29MT - msg#: 37161)
... the one specific development or event that would break gold out of this price range, it would be a material change in the embracement of gold by the official sectors (i.e., governments/central banks) of significant countries. In particular, this could be achieved by (a) a modest actual change coupled with a public announcement of the government's/central bank's new policy towards gold, or (b) a much more significant actual change, if that change were unannounced. For example, if the parties to the Washington Agreement announced that there now would be no further sales from those central banks, or if they announced the winding down of all leasing activities, this would greatly impact on the POG. The initial change in actual activity would be modest, but the psychological effect of the announcement would be significant. In a somewhat different vein, if the Chinese central bank started dumping massive amounts of dollars, said dollars being used to buy gold, but without an announcement of this new policy, the effect of the actual market activities would probably knock the POG out of its price range. ... In short, the official sector's policies and actions are the fulcrum upon which the POG turns.
Thank you, Sir canamami. In this light, the very public Dollar-selling action of Iraq takes on special significance. Shifting gears again to the reasons we return to the Forum, we award a silver Eagle to Lady Leigh for a fine expression of the camaraderie we have all come to enjoy here at the "Round Table". A sample...

*****Leigh (09/20/00; 20:21:13MT - msg#: 37075)
Why do I keep returning to USAGOLD? Because we're not afraid to take on hard topics here. In my day to day life, as I watch and talk with other people, I feel that they're living in a dream world that's about to collapse. I want to warn them, but I know my warnings will go unheeded (at best) or that I will be turned upon. I feel that I'm living in two worlds. One is the surface world of good times and buying and spending. I can function in it, but my mind is almost always elsewhere.

I crave the company of people who are living life in earnest. I want to sit at the feet of those more knowledgeable than I and understand why things are the way they are and whether there is a better way. At USAGOLD I find fellow searchers. The instant camaraderie we share is invigorating, and such a relief! At last I feel that I'm on terra firma, and the ironic thing is that the terra firma is in cyberspace! ... I always feel that I'm among friends here. Though some people would say we're only cyber-friends, we are all flesh and blood people only separated by the happenstance of life. Truly, our inner selves can shine through because we don't have to make allowance for our often clumsy exteriors.

Thank you, USAGOLD, for providing this lifeline to truth, wisdom, and friendship. This is far, far more than a gold site. It is an outpouring of people's hearts and souls.
Thanks for the outpouring of heart and soul, fair Lady. We concur with your assessment. We also concur philosophically with the importance of the quest for education as expressed next by Sir being the very essence of the Forum. For this, another silver Eagle is awarded as honorable mention. Some excerpts...

*****Perplexed (09/20/00; 01:27:18MT - msg#: 37014)
I, a USAGOLD poster , , keep returning to this Forum because:
In my view, the beings created in the image and after likeness of God, were created to the role of information gatherer by means of experiences. In order to fulfill my function and advancement in the plan, I consider it my obligation to acquire the competence to, (as infallibly as possible) recognize truth. In a word-- EDUCATION.

We are literally awash in a sea of information, some correct, some erroneous, some erroneous by intent. For anyone with a true desire to know the answer to any question, the only requirements are an open mind and the willingness to invest the necessary time reading, compiling, analyzing, and correlating this glut of information. They must also be willing to examine, dissect, and if necessary, unlearn previous "truth". ... Because I recognize the limits on my time as well as education, and am not too proud to accept help from any of my present day fellow travelers, this Forum draws me like a bee to a honeysuckle vine, and a pirate to the Spanish plate fleet.

Because we have all acquired information, in a different, manner, under different circumstances, and even as different genders and nationalities, I am assured of acquiring a treasure trove of varying-- sometimes conflicting, (though not necessarily wrong) opinions, from which I may further my eternal goal. YOU GUYS AND GALS MAKE IT EASY. ... My heart felt thanks to all my friends on this Forum, especially to Michael and all the staff of Centennial. And to all you lurkers? They say that a stranger is just a friend that we haven't met. Looking forward to meeting you on the Forum.
Thanks for your contribution, Sir Perplexed. This subject of education makes for a smooth segue to our final honorable mention award of a silver Eagle going to Sir Phoenix. Not only did his helpful lecture caution us about the proper valuation for a limited and depleting asset, it did so in a manner that was a joy to read. A sample...

*****Phoenix (09/20/00; 17:34:56MT - msg#: 37062)
... the one specific development or event that would break gold out of this price range, it would be "DEPLETION." After a brief introduction, I will regale you with my theory. ... Myself, I remain a yeoman in many of life's intricacies as I find wisdom everywhere and from everyone I listen. I prefer it that way actually. Makes for an interesting walk. My history is of education in the oil patch as an engineer working for an independent oil and gas company in the shadows of the Rockies. However, there's not a day I don't enjoy getting my hands dirty, wielding a current day mace, a.k.a "Pipe Wrench" in one hand and a pair of "Channel Locks" in the other. If Arthur had used such tools, the grail may not have tickled his fancy so much, but I digress.

Since petroleum put coins in my bag, I study the future quite closely and come into contact with sources that garner keen insight on the true workings of the industry. In years past (i.e. pre oil-for-gold), I have always felt that the Middle Eastern countries were absolutely idiotic for not charging more for their finite supply of natural resources. This led me to the musings of ANOTHER at USAGold. The pieces of the proverbial puzzle finally made sense. Whilst we don't know if oil-for-gold is cast in stone, it remains the most logical and sensible conclusion. One a businessman like myself could appreciate. Since then, I've lurked for years on the board never truly needing to contribute. In that regard, the Black Blade is my compatriot in this castle as he does a robust job supplying energy news for consumption.

... Many of learned folks here know that a newly discovered oil field is a fixed size based on nature's whimsy. What you may not appreciate is that from the first day a well is drilled in an existing field or a new field, it's rate will decline from 2%/year to as high as 20%/year. That causes a well/field producing 1,000 bbls/day to drop to 980 bbls/day (2%) or 800 bbls/day (20%) a year later. That percentage is called the "decline rate," but the loss of the 20 bbls/day to 200 bbls/day is termed DEPLETION. (Take an average percentage and start multiplying the rates out a few years, and you can really see the dramatic impacts in even a few short years.) .... Most of the giant oil fields are fully developed in terms of wells and additional recovery methods. Their production rates are falling faster than even 10 years ago.

Onto today and tomorrow, now factor in crude demand growth of 2%/year from 76 MMBOPD to 92 MMBOPD in 2010. Then match it against 98% of current capacity utilized. Oh, and throw in the DEPLETION kicker of 2% to 20% loss for all existing oil production. The difference between demand a