USAGOLD Gold Discussion Forum Archive

Electronic reproduction sourced from
Black Blade'The center of gravity in world oil is shifting' #1318285/1/05; 03:47:48


Soaring demand for crude oil in China, India and other developing nations has set off a scramble to secure future energy supplies that could undermine the economic and national security of the United States. The United States, Europe and Japan increasingly will be forced to compete with developing nations, especially China and India, the world's two fastest growing major economies, which comprise more than a third of the world's population.

"The center of gravity in world oil is shifting," said Daniel Yergin, the chairman of Cambridge Energy Research Associates and an author of "The Prize," an award-winning history of oil. "Last year, Asia consumed more oil than North America," Yergin said. He predicts an oil supply shift, too, as Africa, Russia and former Soviet republics compete with the Middle East to fill the growing demand for oil.

The developing world's growing appetite for oil is one reason gasoline prices have shot up for Americans. Over time, these emerging economies will also shape not just global oil flows and prices but also world events, said Anne Korin, the co-director of the Washington-based Institute for the Analysis of Global Security, an energy security think tank. "A third of humanity doesn't want to ride bikes anymore," she said. "That has profound geopolitical implications."

Black Blade: The balance of world oil consumption is shifting. Today the United States consumes nearly a quarter of world oil production but China and India are moving up fast. As the industrialization of both China and India grow so will their appatite for more oil straining the limits of production. Given that oil production is nearly at "peak" production the global economy is at risk. China and India are out to secure energy supply from sources around the globe competing directly with the US, Europe and Japan for available resources (see link).

Black BladeOut to shock the world over Saudi reserves#1318295/1/05; 04:03:54


AS President George W Bush strolled around his Prairie Chapel ranch in Texas last week with Saudi ruler Crown Prince Abdullah, oil prices were high on the agenda during talks between the leaders of the world's biggest energy consumer and largest oil exporter. At the same time, Matt Simmons, one of Bush's energy advisers, was at a conference in Edinburgh, spelling out harsh facts on Saudi oil production which, if proved true, would have severe repercussions for the global economy.

Simmons's belief is that Saudi has been overstating its oil reserves for years, its biggest oil fields are in decline and it will struggle to live up to its promise to crank up daily output from around 10 million barrels a day to 12 million by 2009 and later 15 million to meet global demand.

He visited Saudi in 2003 as part of a US energy delegation. By the time he left, six days later, he was convinced that the rosy picture the Saudis had painted of their key strategic resource was deeply flawed but he could not yet prove it. "On the plane back from Riyadh I said ‘Something doesn't meet the smell test …’ I have made my career out of uncovering illusions and I thought, wouldn't it be odd if the biggest energy country in the world proved to be an illusion," he says.

Black Blade: It has been known for years that oil production would "peak". That is demand would match the limits of economically viable production or where more oil energy could be consumed than what is produced. Soon perhaps, very soon, that "peak oil" production will be passed and the soaring costs for energy will hammer the global economy - what we see today is just a taste of what is to come. Holding Gold and Silver is highly recommended as "portfolio insurance". (see link)

TownCrierHEADLINE: German bond flop heralds Euro crisis (???)#1318305/1/05; 07:56:33

May 1, 2005 -- SOMETHING significant happened to the euro zone economy last week.

In an ominous sign ... yields on 10-year German government bonds collapsed to an all-time low of 3.4%.

Long-term nominal interest rates are usually thought to reflect a combination of real growth prospects, inflation expectations and a premium to compensate for default risk. It seems that last week's drop in yields was largely the result of investors finally understanding that Germany is in long-term economic decline.

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Excuse me for sounding a note of discord, but if it were MY investment funds on the line, if I truly thought a region were in for a long economic decline, I would insist on somewhat HIGHER bond rates, not lower, as a mitigating risk premium against possibilities of default and/or Keynesian eventualities.

I'm not buying what the media here is spinning.


Cavan ManSaudi oil and stating the obvious.....#1318315/1/05; 08:58:04

With no oil the House of Saud becomes entirely expendable to the US administration.
TownCrierBerkshire's Buffett ... Keeps (Anti-)Dollar Bet #1318325/1/05; 09:01:39

May 1 (Bloomberg) -- ...Buffett, admired around the world for his investing prowess, said (yesterday at Berkshire's annual meeting of shareholders in Omaha, Nebraska) Berkshire maintained a bet against the U.S. dollar of more than $21 billion even after it cost the company about $310 million in the first quarter.

Berkshire kept slightly more than $21 billion in foreign currency forward contracts through the first quarter as the dollar rose 4 percent against a basket of six currencies. Buffett said he would buy more contracts if it weren't for the skepticism of Vice Chairman Charles Munger.

Buffett, the world's second richest-man after Microsoft Corp. founder Bill Gates, has been betting against the dollar since 2002 on concern that widening U.S. trade and budget deficits will erode its value.

Berkshire made $1.63 billion on his forward contracts in the fourth quarter when the dollar slumped. The contracts are agreements to purchase foreign currencies on a future date at the current price.

...Buffett, renowned for investing in out-of-favor companies, is searching for ways to deploy Berkshire's more than $44 billion of cash. Yesterday he said buy-out funds and hedge funds are driving up asset prices and making acquisitions more difficult, he said.

``Right now we are positioned very badly in terms of buying businesses,'' he said. ``Your Berkshire stock will not do as well under these conditions as it did five years ago or 20 years ago. And I don't have the magic solution for it.''

Berkshire's stock has fallen 9.7 percent in the past 12 months. The shares gained $749.90 to $84,350 in New York Stock Exchange composite trading two days ago.

Buffett said he may entertain the idea of issuing a dividend should he continue to find few opportunities to use Berkshire's cash.

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It's a tough investment climate out there, but gold remains one of the best fish in the sea. Use your net and haul some in.


TownCrierCavan Man, "BECOMES expendible"??#1318335/1/05; 09:14:36

What's left to expend when the oil's gone?

Are you suggesting that after we've pumped and burned the last drop, we're then going to say "nuts" to decorum and raid any cookie jars and piggy banks they may have stashed full of gold?


Buongiorno!Townie--German Bonds#1318345/1/05; 09:58:48

German 10 year yields may be declining because of deflationary/inflationary fears. Add to that the "any port in a storm" feeling that may evolve, and serious-money buyers may just want something with little economic risk. (Perhaps, as here, they think the govt. could just print up money to make the bonds good.) That could very important if you were, say, an insurance company with lots of fixed-DM contracts on the books. It might not matter if the DM was worth much, just that you could make good on those contracts.

Also, consider the prospects of a socialist contry, declining birth rate, dependent upon imported labor and imported energy, flaccid leadership.....and you may have part of the picture.

Past that, I am but a shade-tree economist and do not have all the answers....but here you are, for what it may be worth on a Sunday morning.

TownCrierBuongiorno!, those low rates...#1318355/1/05; 10:11:34

From where I sit, it seems that the market is essentially declaring a belief that the spirit of Keynes no longer haunts the European houses. It would therefore seem, quite to the contrary of popular media, that the market apparently feels the Stability and Growth pact is actually worth something -- at least enough to rule away the ghost of Keynesian excesses.


MKThis week's USAGOLD Market Update is posted. . . #1318365/1/05; 12:25:55


Much to talk about this weekend. . . . .

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Gold Overview:

"China's decision (lobbied-for by the U.S. federal government) folds nicely into the inflation discussion above. Unwittingly, the United States may be opening a Pandora's box -- squeezing the hair trigger. Some analysts believe the revaluation could backfire. For nearly a decade, the inflation rate in the United States has been disguised by cheap Asian imports. Now with the dollar support system in Asia about to unravel with what could be breathtaking speed, the price on those imports is about to escalate. We will see soon enough if the policy makers and financial markets are ready for what could amount to the most important structural change to the economy in a decade."

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All new "Short & Sweet" - - - - (Snip) There are rumors afloat that King Fahd of Saudi Arabia is on his deathbed - some say he is clinically dead. Crown Prince Abdullah, who recently visited President George Bush in Texas, is generally perceived as his successor and seen as closer to the religious element and less friendly to the West . . .Richard Russell on gold stocks and gold coins: "The disparity between gold, the metal . . . . . . more

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Gold market survey says metal headed to $500 in 2005

Globalization and the American Bourgeoisie

Death of the Death Tax Greatly Exaggerated

Rocky Mountain States Struggle for Sovereignty

UK's Gordon Brown Desperate to Suppress Gold Price

And more. . . .

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Archive of past issues

GoldiloxShort and Sweet comment#1318375/1/05; 14:18:22

@ MK,

The Sol comment was interesting, whereby "bin Laden" takes credit for bleeding the Soviet Economy to death. Many others have blamed the arms race itself, wherein too large a percentage of the Soviet GDP was committed to buildup of high-tech weapons for their own version of "determent". Still others have claimed the Oligarchs have transfered the wealth of Russian resources to foreign investors (not blaming them for the fall itself, but more for the post-fall pillaging), and continued serfdom of the Russan population in their new "democracy".

For years we were told that the Reagan era arms race bankrupted the Soviet empire, but this focus seems to shift responsibility to the illusive "terrorist powers". Is this but a political ploy to defocus us from the effects of over-concentration of military expenditures to our own economy? The Soviet empire was the first modern major power to implode in its own military gluttony, but it is not likely to be the last.

While the Chinese are trying to guilt-trip the Japanese out of US domination to shore up their claims on Taiwan, the euro block is trying to squirm its way out of NATO, and the UK is suffering Iraqi-guilt issues in the electorate, the evolutions of power will be interesting to monitor - especially with the US trying so deperately to support the dollar world-wide. Any politico-social upheaval in Saudi Arabia will add some very unwanted pressure on US domination in the Middle-east, as well.

Bucky Fuller said it well. In his studies of social systems, he found that they begin as ecomomic partnerships, evolving into ever growing security arrangements. As their security functions grow, their cost upon the productivity becomes more and more constrictive, until major revision (often by revolution) is necessary to rebalance the economics again.

Currently, the major expenditures of the US government are entitlements and security, by far outstripping the discretionary budget. One can argue that the entitlements are a direct result of military (security) excesess slowing down other productivities with over-regulation and poor focusing of huge labor resources to both security and administration, but I guess that's the Libertarian in me coming out!

I've already missed the open forum time limit, so I'll quit now,

mikalDoubled debt redoubled infinity#1318385/1/05; 14:30:46

Ed Henry
Doubling back to revisit the state
of double-dealing debt dealers, my
puny senses were overcome by the dreadful
draft swirling down a dark drop-off...

mikalBankers banking on bankrupt GAAP?#1318395/1/05; 15:29:48

Bush, Bernanke, banking buddies and media barons bend over backwards to belabor the world
that euro bookkeeping standards
are business unfriendly, that GAAP is
a bankrupt old-world procedural relic
that further beckons investment towards U.S.
bonds, derivatives and similarly debauched
Behold a future Fed Chairman Ben Burnan-and-on
brazenly offering a branch to Buffett:
"Can I interest you in our set of customized billionaire's double-books?"

mikalRiddle#1318405/1/05; 15:38:17

Q. What did the bullion banker use to
prepare the day's red herring?
A. A cookbook.

DryWasherGold and Deflation: A Dissenting Dissection#1318415/1/05; 16:11:44

A new Commentary dated April 29, 2005 by Bob Landis (RKL) has been added to the Golden Sextant, at the above link, for those who are interested.

"One of the heartiest weeds in the garden of contemporary gold commentary is the inflation hedge theory of gold. Bob Landis takes aim at the latest sighting in his new essay, Gold and Deflation: A Dissenting Dissection."

Happy reading.

PRITCHOWORTH THE READ - - - -- - #1318425/1/05; 19:39:56

Last week I read an article entitled --"Why you should own
Gold & Dollars" --interview of Bob Hoye by J.Taylor (dated Feb 14th).It was very informative & a needed boost, given the recent & ongoing trashing of Gold & Gold/ Silver equities.

Bob Hoye has written a new essay (29thApril) "Gold Contra--
Cyclical Opportunity" --- an excellent read.

I recommend both articles. Enjoy. See link

Dollar Bill.,.#1318435/1/05; 19:57:34

What in the world plan does the fed have to get us to the globalists utopia? I imagine a group of army ants, they can form a ball for whatever reason and hang on to each other.
I imagine the globalists linked in thier quiet agreements rolling ahead comforting themselves -I imagine the reason the Saudi top guy came was he needed some confidence building- comforting themselves as we roll along not knowing if the whole gamble will really work out without a messy collapse.
I can only assume that it comes down to a factor not mentioned in financial press. If god is into a globalist future, for however long.....then it will survive the troubles it faces.
If he is into it just up to its edge, then troubles will defeat the effort what a mess.

R PowellNot an auspicious start#1318445/1/05; 20:22:05

Overnight electronic markets show the US dollar up just slightly and everything else...everything ...equities indexes, bonds, other currencies, metals + grains...all down.
R PowellOoopps#1318455/1/05; 20:29:41

Did I forget to mention energy. Yup, crude, heat, unleaded and gas are also down. The link should refresh as time goes by and markets move so maybe by the time you read this and check, something will be positive.
SundeckGordie Brown, the "Beau Blair", UK elections and Gold#1318465/1/05; 21:10:24

A few thoughts on the situation in the UK and Brown's possible tilt at the leadership...

Putting together the body language, the new-found bonhomie between Blair and his Chancellor of the Exchequer on the eve of the UK elections, the racked countenance of Blair and the rabid look of fear and loss of self-confidence in his eyes, the stubborn pursuit of IMF gold sales by Brown in the face of overwhelming opposition...what are we to make of it all?

First the election. Politically, (I suspect) Blair is a dead-man-walking and he knows it. The only thing staving execution for him is the proximity of the election. That out of the way and he is likely to be dumped by his party in favour of another...the most likely contender being Brown. You can see in Blair's expression that the grinning, cock-sure confidence of the past has gone; his (I believe) knowing deceptions to the parliament and the people of the UK involving the Iraq war hang around his neck like an albatross. He knows it, his colleagues know it, the Tories know it, the UK public know it and the World knows it.

Brown will be the replacement...unless something intervenes to blight his reputation. As Chancellor of the Exchequor he can afford to be "generous" in his praise of Blair (to help win the election for Labour), knowing as he does that the good PM has had it. However he must preserve/enhance his own credibility and that means ensuring the economy holds together long enough and there are no great financial mishaps between now and his ascension to PM.

Why is Brown hammering away at IMF gold sales? There may be several reasons:

1. To paint himself as a compassionate world leader.

Politically, he needs to be seen in a different light to Blair, but he cannot come right out and disagree with Blair publicly on Britain's role in the Iraq war...that would be too devisive, cause tumult in an election environment, seriously let-down the efforts and morale of British forces in Iraq, and provide instant grounds for his sacking. However he can leverage off the sympathy of the British voter by positioning himself as "compassionate" towards other nations' hardships (nations other than Iraq, that is). Having got away with the sale of half of the British public's gold at record low prices, he probably feels that he can continue the gambit with impunity, but this time by deploying IMF gold; believing that the broader public attitude in the UK to gold is still fairly benign. He will be seen as seeking to address third-world poverty using an asset that is not high in the public consciousness.

2. Knowingly attempting to just "talk-down" the gold price.

Perhaps he knows only too well that he has no chance of securing IMF gold sales, but nonetheless is helping to keep the price of gold low to avoid an "LTCM-style" mishap in the UK financial system prior to his ascension as PM. At the same time, he benifits in the public eye as discussed in Reason 1 above.

3. Genuinely attempting to secure gold to avoid an LTCM-style event.

On the other hand, perhaps he is genuinely aware of serious dangers in one or more UK financial institutions who are short gold and he is desparately attempting to secure IMF sales to keep the price down and secure a source of gold for the shorts. Certainly, the BOE cannot help out much more having already divested half its gold. Perhaps the 300-odd tonnes it has remaining on its books are nothing more than "gold receivables"...not very useful in bailing out local institutions that are short the metal. Also, it is worth noting that the price of gold in British Pounds has remorselessly increased from about 160 pounds per ounce in mid-1999 to about 230 pounds per ounce at present...a 44% increase in six years. That trend shows no sign of breaking, even though the British-pound is strengthening against the US-dollar.

Just some random thoughts...for what they are worth...


Dollar Bill.,.#1318475/1/05; 21:32:53

Stock technical guys are watching for the sign that says the bear is on. In a bear, 80 per cent of the stocks go down. The usual assumption is that if the fed raises rates again and again, the techies watch support signs in the stock market, and when finally the bottom starts to go, short stocks.
Which is what I would use that 21 billion for if I was Buffett. What to short? Not short squeeze targets like GM will be, Some defined the roaring nineties as just a big short squeeze. And, well, there is some truth in that. Guys that bet that idiot businesses were priced too high shorted the stock, as it seemed only sensible, only to get killed by well funded short squeeze guys. Since you cant buy 21 billion of gold, buying agribusiness might be a long term safe bet. Not thier stock, thier business. But, Japan has already done a lot of that, probably to keep from having to go into a bidding war with China. If China even sees the wisdom of that yet.
Those buying gold at this time will find themselves lucky when the risk markets and the reflation efforts fail.
How the heck can they not fail?
Japan gave itself unlimited? permission to, if it finds the need, to buy all the debt the US wans to sell.
But that must mean just the dollar support expense, how could Japan or any group hold the crazy debt and credit creation markets together as they ballon out of control?

Black BladeStagflation i s back -- and that's good for gold#1318485/1/05; 21:49:49


There's obviously a good chance that, when the stock market really tanks and the real-estate market goes with it, and given all the debt that's piled up, we could experience the break to deflation that many people are expecting. That said, the Federal Reserve would fight deflationary symptoms tooth and nail by printing more money, so it's not clear how the dollar would survive that.

What the GDP and durable-goods data also point out is the fact that the Fed is trapped. With the economy slowing down, I'm sure they'd like to reduce their tightening, but inflation is too high. However, I don't believe the Fed cares very much about inflation. In my opinion, the Fed will be swayed by GDP weakness, not by inflationary pressures.

Meanwhile, it seems clear to me that the beneficiaries of these problems are the precious metals, though, given the crosscurrents in the metals arena, it's possible that people won't come to that conclusion just yet. (The precious metals will also benefit ultimately from the weakness in the currencies.)

Black Blade: We saw the first real signs of stagflation in recent governmnet data. Slow growth and rising inflation. Better get the "golden lifeboats sea worthy".

Black BladeGold May Rise as Alternative Asset to U.S. Stocks, Survey Shows #1318495/1/05; 21:57:09


May 2 (Bloomberg) -- Gold may rise this week on speculation investors will buy the metal as an alternative to slumping U.S. equities, a Bloomberg survey showed.

Newmont Mining Corp. President Pierre Lassonde said demand for gold is so strong that metal refiners in Switzerland and Australia are ``working 24- seven putting product out.'' And, ``People are very keen to use gold as an alternative currency, an alternative asset,'' Lassonde, 58, said in an April 27 telephone interview from the company's headquarters in Denver. Newmont is the world's largest gold producer. ``For the first time in three years, we're going to see the gold price going up at the same time as we might see the dollar firming up, because of the perceived rise in interest rates,'' Lassonde said. Gold may rise on its own, either as investors seek a hedge against declines in stock and bond prices or as gold takes on a role as a currency on its own, he said.

``People are buying gold to preserve capital,'' said Ian MacDonald, managing director of precious metals trading in New York at International Assets Holding Corp., an Altamonte Springs, Florida-based brokerage and asset-management company. ``If you look at the fundamentals of the euro, the yen and the dollar, none of them are good.''

``Real short-term interest rates are still low to negative, and that traditionally has been bullish for gold,'' said Michael Cuggino, who manages $350 million at San Francisco-based Pacific Heights Asset Management LLC, including about 115,000 ounces of gold bars stored in bank vaults.

Black Blade: All very good reasons to lock in Gold now.

BelgianOpinions...#1318505/2/05; 04:09:14

I would like to see the following 3 bright minds, brain-storming "together" : >>> Brian Bloom - Ned W. Schmidt - Bob Landis. Would create a great synergy.
Unfortunately, there is not a woman's thought on the matters available. Or,...shall we invite Madame Jessica Cross (-:-)!?

The more the planet's central bankers realize that the virtual defaulting $-IMS is in the process of defaulting "de facto"...the "polarizations" between the dollar and the euro-alternative do increase. Today, 986 signalled that the Bundesbank is negative (rejecting) Bofinger's candidature . Bofinger, the German G.Brown (goldsales)(stable $). Randy's post on the euro long term bond (opinion) also fits into the increasing polarization on $ and €-alternative IMS (not currencies as such).

Against this background we watch the " goldprice(s)-pattern(s) " evolve. We watch how the polarization is translated into figures (patterns). Who is winning/losing ground. * IF * there is a transition ($ >-IMS) and how fast/slow it evolves.
Gold's price-pattern is still "symbolic" as it has been functioning for the past 90 years through the "fixed" and "semi fixed" eras of gold and fiat system.

My opinion remains that gold is in the process of being taken out of its former "symbolic" function as to morphe into gold's "real" (ancient) function as a wealth-tangible.

A hell of a job !!!

Certain CBs don't want gold in its fiat(currency) corset anymore, whilst other CBs desire it to stay there. This is the fundamental difference between gold=money and gold=wealth. A very, VERY difficult notion for the gold bystanders (bugs). NOT so for the central bankers (rulers) !!!

Nobody, - but a free goldmarket - should determine the price of gold in its function as a wealth reserve. If you wish gold to remain money, then ask/demand and accept more of the same goldprice-fixing !

The old (aging) $-IMS allies are facing new blocks of formidably growing challengers (Asia-oil-EMU factions) !!!
Lucky us, we don't have any idea about gold's "off market" actions. We can only spot some minor (initially) gold-tumult.

May I recommand the intense study of the 3 gentlemen's brilliant opinions. Combine the 3 thoughts and have a close look at the flaws in it. Think "global" when thinking about gold.

968Bundesbank opposes to the proposition to replace ECB's chief economist Otmar Issing by Peter Bofinger.#1318515/2/05; 05:24:51

See link :

Bofinger was the driving force behind the (would-be) German goldsales last year :

GERMAN PRESS: Top Economists Urge ECB Dlr Intervention

12/05/04 FRANKFURT (Dow Jones)--Peter Bofinger, one of Germany's five economic wise men, and Hans-Werner Sinn, president of the Ifo economic research institute have called for immediate intervention from the European Central Bank to strengthen the U.S. dollar, weekly magazine Spiegel reports in an advance copy of Monday's edition.

Sinn said that international capital flows are determining economic development "to an extent which is hardly bearable anymore," which is why the ECB would have to take action.

In an advance copy of Monday's Berliner Zeitung, Bofinger also called on the Deutsche Bundesbank to sell its gold reserves as soon as possible. Instead of keeping gold reserves, Bofinger said the money would be better invested ineducation and people.
Magazine Web site:
-Frankfurt Bureau, Dow Jones Newswires;
See Sir Belgian's post for a nice explanation.

TopazThis may well break el Systemo's back.#1318525/2/05; 06:25:03

OK, the Dollar/Oil price drops because Bond Yields drop.

With a nice contango developing, producers opt to supply out-months in preference to Spot ...current supply dries up.

Despite, or because of LOWER front-month prices, little Oil gets delivered.

A reversal of the previous crisis but a crisis nonetheless ensues.

Unless we get a sharp rise in Bond Yields or an alt yardstick, this could very well be our fate in the coming months.

White RoseTopaz: please explain how this works#1318535/2/05; 07:43:43

You say that collapsing bond rates implies a dropping oil price. How is this?

I think of a high oil price as causing a demand for dollars. I think of high bond rates as causing people to buy bonds, thus increasing the demand for dollars. Thus in my mind, high bond rates and high oil prices are both mechanisms to soak up dollars. Thus a collapse in bond rates does not imply a drop in the oil price.

So maybe I am thinking of this all wrong. A low interest rate implies lots of money creation. With a lot more money to circulate, it should be easier to afford oil. Thus, more parties should be able to keep buying oil at high price levels.

So ... my two attempts to puzzle out your statement have ended in the opposite conclusion. What am I missing?

GoldiloxHUH?#1318545/2/05; 08:53:40

@ Topaz,

If the oil producers are reacting to your contango scenario as the gold producers described by Lassonde in BB's post yesterday, they will up production to support revenues, knowing their stock price will tumble if they take too big a short-term hit to revenue.

You neglected the fact that most companies are run by people who are most concerned with near-term bottom line.

TownCrierChinese Yuan traded briefly outside of its usual band#1318555/2/05; 09:19:44

Monday, May 2, 2005 -- On Friday afternoon for about twenty minutes, the Chinese Yuan traded briefly outside of its usual band in what one Chinese spokesman said was the result of technical problems. Despite this posturing, it seems quite likely that this move was a dry run to gauge what might happen to the Renminbi if it were allowed to float, leading many to believe that such a move is becoming ever more likely.

^-----(from url)-----^


TownCrierCourt Orders Gold Mine to Cut Production#1318565/2/05; 09:49:38

(AP) 05.02.2005 -- A Hungarian court on Monday ordered a Romanian gold mine to cut its production by 85 percent citing the company's role in a 2000 environmental disaster and the possibility of further accidents. ...The incident was called at the time the most serious environmental disaster since Chernobyl.

The Budapest City Court said Transgold SA must reduce its output starting Tuesday, according to Andras Szecskay, the attorney representing Hungary in the lawsuit.

"I hope the company will respect the ruling, especially given the international attention this case has received," Szecskay said.

"A Hungarian court cannot impose a judicial decision on a commercial operation in Romania. It is not correct," Ben Mantean, the operation manager of Transgold SA told the Associated Press in Romania.

"We also expect the European Union to pay close attention to see whether a ruling issued in a member country is being respected in an applicant country," Szecskay added.

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Internationals (cross-border) affairs becomes a nettlesome kettle of fish (baaad gumbo) where brute national sovereignty locks horns with more delicate civilizing-cooperative treaties.

Take this miner's cut-production example and turn it around in your mind to consider an alternate provide-metal scenario trying to be imposed cross-border (for example upon a bullion bank).

Very quickly it becomes obvious that the apparent strength of the worldwide paper gold network is no stronger than the weakest link in the papery realm of international rule of law.

The thought is not lost on many solid thinkers that, where gold is concerned, POSSESSION is a most vital 99.99% component insofar as reaping the particular benefits that gold has to offer within a well-rounded portfolio.

Call USAGOLD-Centennial today to avail yourself of this benefit and round out your empty corners.



TownCrierNew York has its way with paper gold, selloff upon holiday#1318575/2/05; 10:10:58

NEW YORK, May 2 (Reuters) - Gold futures tumbled on Monday morning in holiday-thinned trading...

Dealers said mild fund selling swept through gold after the opening, with many overseas trading centers closed for holidays, after talk died down about China soon revaluing its currency.

"We opened lower because nothing happened with the Chinese currency. But volume is very light and there is no arbitrage because of the May Day holiday" in London, said James Quinn, commodities commentator at AG Edwards & Sons.

London's commodity markets were closed Monday for May Day. China was to be shut all week for a labor day holiday, and Japan will close from Tuesday to Thursday for public holidays known as Golden Week.

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By rights, paper gold SHOULD trade at a deep discount to physical gold -- or better yet, it should not trade at all. Think about it.


Federal_ReservesGold is making a triangle formation.#1318585/2/05; 11:18:35

Some kind of consolidation phase I think. The long term uptrend line is still holding, a multi-year series of rising bottoms, and it is still persumed to be in control since it is the long trend. But then we have also declining tops starting with last Dec, then March, and April. The break from here will be telling. We could trade in this funnel for quite a while. If we drop below the long term uptrend line, I will start to hedge my physical. It appears to me that the policy makers are trying to attack the CRB without damaging the consumer economy (services, construction). They play with fire.

I'm standing on edge here, nervous as comic telling bad jokes in a crowded house full of tomato throwers.

USAGOLD - Centennial Precious Metals, Inc.USAGOLD Market Update posted for May 2, 2005#1318595/2/05; 11:45:40


Much to talk about. . . . .

* * * * * * * * * * *

Gold Overview:
"China's decision (lobbied-for by the U.S. federal government) folds nicely into the inflation discussion above. Unwittingly, the United States may be opening a Pandora's box -- squeezing the hair trigger. Some analysts believe the revaluation could backfire. For nearly a decade, the inflation rate in the United States has been disguised by cheap Asian imports. Now with the dollar support system in Asia about to unravel with what could be breathtaking speed, the price on those imports is about to escalate. We will see soon enough if the policy makers and financial markets are ready for what could amount to the most important structural change to the economy in a decade."

* * * * * * * * * * * * *

All new "Short & Sweet" - - - - (Snip) There are rumors afloat that King Fahd of Saudi Arabia is on his deathbed - some say he is clinically dead. Crown Prince Abdullah, who recently visited President George Bush in Texas, is generally perceived as his successor and seen as closer to the religious element and less friendly to the West . . .Richard Russell on gold stocks and gold coins: "The disparity between gold, the metal . . . . . . more

* * * * * * * * * * * * *


Gold market survey says metal headed to $500 in 2005
Globalization and the American Bourgeoisie
Death of the Death Tax Greatly Exaggerated
Rocky Mountain States Struggle for Sovereignty
UK's Gordon Brown Desperate to Suppress Gold Price

And more. . . .

* * * * * * * * * * * *

PLUS -- Archive of past issues

mikal@TC#1318605/2/05; 12:15:48

Re: "By rights, paper gold should trade at a deep discount to physical gold -- or better yet it should not trade at all."
Moving in that direction, the LBMA is the ruler of rule changes, yes?
As for the COMEX, any next move in their
metamorphasis involving shorter and shorter NY
trading hours might seem restrictive, were it
not the "cocoon" covering stage integral to it's
destiny and survival. (Nothing's "dormant" in there
if we're not lulled to sleep by it.)

TownCrierChina may alter yuan-dollar peg; Holiday seen as possible timing for currency reform#1318615/2/05; 13:31:57

WASHINGTON (MarketWatch) -- Economists reading the tea leaves say there is a chance China will revalue its currency when its financial markets are closed for the "golden week" holiday from May 2 to 6.

^----(from url)----^

Almost reminds one of Roosevelt's infamous bank holiday of 1933.


USAGOLD Daily Market ReportPage Update!#1318625/2/05; 14:26:05">
The Daily Gold Market Report has been updated.

If you are considering investments in gold we invite you to">request our free introductory information packet detailing the products and services offered by USAGOLD ~ Centennial Precious Metals. We welcome your inquiry and look forward to working with you.

Monday Market Excerpts

U.S. gold futures closed at their lowest since mid-April on Monday, pressured by investment funds selling in trade thinned by overseas holidays. Much of the activity in commodities came through New York and Toronto as London's markets were closed for May Day.

China was to be shut all week for a labor day holiday, and Japan will close from Tuesday to Thursday for public holidays known as Golden Week.

The COMEX June gold contract tumbled $5.60 to $430.50, its lowest close since April 18.

Fund pressure dragged down the metals complex, though strong physical buying from Asia, particularly India, where it is wedding season, lent support to gold at lower prices, said Andy Montano, director of precious metals at ScotiaMocatta.

The funds might have been moved to sell some positions after a sharp boost in their net long stance in gold in the latest week lifted futures to overbought territory, dealers said. "The volume of fund selling overwhelmed what the physical market could absorb," Montano said.

"And, there was a little bit of movement in price with the currencies as well, with the euro coming off at midmorning."

Also playing a part in trading was uncertainty ahead of Tuesday's meeting of the Federal Reserve, which was widely expected to raise interest rates for the eighth consecutive time to reach the 3 percent level.

Technically, however, gold was still supported at the bottom of its $430 to $440 trading range, despite falling below initial support at $433, traders and analysts said.

----(see url for full news, international headlines)----

SundeckGolden Week?#1318635/2/05; 15:50:47

Notice Chinese and Japanese markets are closed for "golden week"...not "paper week", or "polyester week", "digital dollar" week, or even "FRN week".

Curious, isn't it... Maybe just a barbarous tradition or a cultural relic.


YGMHard Workers Deserve Many Holidays? Even an In Between Day :-)#1318645/2/05; 16:38:40

Golden Week.....
April 29
Greenery Day (midori no hi):
The birthday of former Emperor Showa, who loved plants and nature. From 2007, this national holiday will be renamed Showa Day, while Greenery Day will be moved to May 4. Part of the Golden Week.

May 3
Constitution Day (kenpo kinenbi):
National holiday remembering the new constitution that was put into effect after the war. Read more on the Golden Week page.

May 4
"Between Day" (kokumin no kyujitsu):
According to Japanese law, a day which falls between two national holidays is also declared a national holiday. From 2007, Greenery Day, currently celebrated on April 29, will be moved to May 4. Part of the Golden Week.

May 5
Children's Day (kodomo no hi):
Also called boy's festival. Read more on the Golden Week page.

TownCrierBretton Woods institution World Bank dips toe into gold#1318655/2/05; 20:26:00§ion=investing

WASHINGTON, May 2 (Reuters) - The World Bank's private sector lending arm said on Monday it has acquired a $15 million equity stake in [a] gold exploring and mining company ... as it seeks to explore and expand assets in the Amur region in Russia's Far East, home to some of the world's biggest virgin gold fields.

"The investment helps develop the gold sector in the Amur region and in Russia as a whole, where the resource economy is heavily dependent on oil and gas," the IFC said. "It also sets high business, environmental and social standards."

The World Bank has said it wants to boost its investments in mining in developing nations, aiming to become involved in projects at an early stage to encourage good practices and confront corruption.

... said would help the company assess a possible expansion of its main mine, Pokrovskiy, near the border with China.

...said its stake included an eight-year option allowing the World Bank unit to subscribe for one further share in the company for each share held.

^----(from url)----^

Getting a piece of the pie because they know what time it is.


TopazComex ...White Rose, G'lox. #1318665/3/05; 02:16:33

To say the dynamics of price discovery have changed since we rolled over into May would be both correct and glaringly understated!

White Rose, you said :- I think of a high oil price as causing a demand for dollars. I think of high bond rates as causing people to buy bonds, thus increasing the demand for dollars. Thus in my mind, high bond rates and high oil prices are both mechanisms to soak up dollars. Thus a collapse in bond rates does not imply a drop in the oil price -:

We're not talking a collapse in Bonds, just more of the same ...grinding lower. This, coupled with a rising $ would drive the front month Oil lower ...and it is thought MAY induce a supplier backoff enough to upset supply in the coming months.
We are at totally different ends of the perception spectrum in regards to the why's and wherefore's of Bond Yields WR.

G'lox:- I wasn't referring to refiners G, the producers who may find it in their interests to work the contango as it develops are or would be suppliers a-la OPEC.

KenoRise off trendlines#1318675/3/05; 03:07:12

Hello to all forum members. Question? With regards to the strange actions of the indexes lately could it be that a thinly traded metal such as palladium triggers the move to the upside away from all support lines.
968Yuan not the cause of US trade gap: China.#1318685/3/05; 05:44:03

"The conclusion is clear: The reason for the US trade deficit with China is not China's currency exchange rate. The key problem is American policies that cause US manufacturers to lose their comparative advantages to other exporters. If the US truly wishes to compete on a fair and open playing field, it should review its policies, including its erroneous trade policies regarding China, rather than simply making China a scapegoat. To place tariffs on all Chinese products will only hurt the interests of both countries."
Interesting read !

BelgianOpinion#1318695/3/05; 05:56:55

What might be the dollar's strategy (filosofy) behind the demand for yuan floating (unpegging) !?
Note, that, together with the yuan, all other Asian currencies will change (up or down) in exchange rate with the dollar (and other currencies).

>>> The dollar wants more "global" price-inflation. >>> More $-units of account per unit of product/service means that more dollar-digits can be added to the existing global float of dollar-mass.

The filosofy behind this maneuver is "not" a harder dollar currency, but "more" dollars. This might even result, after some time, in a "rising" or a "stabilizing" dollar exchange rate (above the USDX=80). As a global "reserve" currency, the dollar can defie the laws of gravity and an increasing floating mass of dollars is generally percepted as "positive", just because of that unique privilege of "reserve"-status.

More dollar-volume, due to global price-inflation, is expected to result in more dollar reserves uptake and dollar savings !? Simply because the dollar is the unit for the principle of "debt-driven" economy, whilst the other currencies are units for "savings-driven" economies. Spenders ($) will always remain debt spenders and mercantilist savers (Asians) will always remain savers of their surplusses.

Floating (rising exchange rates) of Asian currencies might have the purpose of clipping the strongly growing wings of the chinese flying dragon by reducing China's trading power with areas who have weak currencies. I don't see the Asian block evolving towards a converging currency goal, because of the many fierce rivalries (China/Japan).

But the Chinese strong Central Planning policies will not bow to any pressure. Never !
If China is ready to give something to the will only be, because they can get MUCH more in return for it.
Perhaps less protectionism from the buyers of chinese goods and its competitors (World Trade) ?

After all is said and done, "nothing" fundamental will have changed on the dollar-system...but again some more time.

The dollar-volume will keep rising (price-inflation)...Asia will keep growing...The west will lose ever more home-manufacturing capacity and its service-conomy will soon have nothing to serve anymore. All this whilst we are all swimming in an ever larger dollar-pool.

No wonder that the floating golden lifeboat must be masked !!!

The dollar's remaining defense (not offense anymore) is to pull each and everyone into its debt-driven-economy principle/system. Spend more and save less !!! Or better,...produce more (unproductive) debt and forget about safely consolidating your surplusses that are the fruit of your labor. Sounds almost like "carpe diem".

It is the sliding giant debt-berg that forces us to go for obsessive growth and leave all stability... or be crushed under the weight force of the debt that has to be created (now $6 to $1) in order to grow anyway. A very, very viscious circle...death-spiral.

But when everything starts to fail, very visibly,...we have Asia as the proverbial scapegoat ! Asia wasn't flexible enough and refused to do-operate with the dollar-system !
And those Eurolanders never produced any global growth contributions and continued also saving.

This planet's economic engine seems running on one single ($) cilinder (US debtisch consumer of last resort). Would you like to be in charge for bringing this story to a successfull (balanced) end !? Not me.

A non-coastal chinese worker is producing the stuff we consume at an all in cost of $50/month. How can we possibly bridge that gap of a factor x25 !?

The dollar will in no way be able to enforce the pace of growth for Asia's domestic consumption...>>> This is centrally planned by the authoritarian regimes, themselves.
Not for the dollar's (the system-$IMS) convenience but for their own development of strength (read dominance). They produce, we consume. This growing imbalance will become increasingly unmanageable ...UNDER THE ACTUAL DOLLAR REGIME ! Protectionism will make things worser (textile etc) and fasten the detoriating imbalances.

It is not the growing capitalistic Asia that should change its is the $-IMS, under wich we are all forced to operate, that needs a dramatic change. It is not the savings and surplusses that must be consumed, but the debt-producing consumers that must save ! The dollar-system cannot go on putting the whole world upside down.

Can it...!?

Keno1/4 point already figured in have faith#1318705/3/05; 06:23:27

The Fed raise has been digested for some time. Do not despair goldbugs. Give them nothing of your physical nor even waste the commission on in and out of your stocks. Hold tight,the worst is now over. The slight break of the hui and xau trendlines to the downside need not be feared.The "Dip" is our friend.
968ECB's weekly financial statement.#1318715/3/05; 07:58:19

Gold and goldrecievables : minus 528 million euros.
Net foreign currency position : plus 0,3 billion euros.

New gold position : 127,4 billion euros.
New foreign currency position : 159,5 billion euros.

The ECB's foreign currency position exceeds their gold position by 25,2%.

KenoBottoms up#1318725/3/05; 08:18:56

I know you have not seen me post here before and I have not earned my stripes, so to speak,but most everyone had that uneasy feeling that we would break down here so I wanted to stick my neck out a little and give my humble opinion. The bottom is in [5 touches of hui 175 is enough for me].See you at about 250. Congratulations to all the strong hands.
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RimhRe: Keno#1318745/3/05; 10:06:05

Thanks for your optimism! I hope you're right - this has been tough trough.....
KenoSince 1200 eastern#1318755/3/05; 10:26:39

Its an absolute war in the gold pits right now. They are throwing everthing but the kitchen sink at us right now. And, were holding silver and platinum are literally holding the flanks.We hold here and were ok.
GoldiloxCreating 'human-animals' for research#1318765/3/05; 12:04:44


RENO, Nevada (AP) -- On a farm about six miles outside this gambling town, Jason Chamberlain looks over a flock of about 50 smelly sheep, many of them possessing partially human livers, hearts, brains and other organs.


Dr. Moreau or just the latest "sheeple"?

Goldilox"sheeple"#1318775/3/05; 12:06:54

Sorry, I was way off topic, although Sinclair might argue that these are "gold analysts" in training.
GoldiloxFINANCIAL ACCIDENT ON THE HORIZON?#1318785/3/05; 12:18:02


by Monty Guild

In my last memo, we printed a summary of a statement by former Federal Reserve Chairman Paul Volcker. He mentioned the possibility of a financial crisis.

We believe that gold may act as an anchor to windward in periods of financial crisis, and is therefore a natural resource which may be sought by China, India and other asset rich nations desiring to diversify away from paper currencies. I have heard from three friends who I respect that a crisis is brewing in the derivatives market. It may be insurance derivatives, or it may be speculation against the Chinese Yuan, which has cost some big hedge funds enough money to precipitate a crisis.


More concern about the derivatives excesses. Have we heard this enough to qualify as "crying wolf", or are we due for a new LTCM affair?

Bill Gross has just told CNBC that the economy is suggesting that there is room for rate growth in the Bond market, usually meaning that the SM is in for more decline.

The FED just released their expected 0.25 bump, but acknowledged slowdown. they did not, however, remove the "accomodative - measured pace" remarks.

GoldiloxLink for Monty Guild quote#1318795/3/05; 12:21:40

Monty's quote, of course, comes from JSmineset. I apologize for the omission.
mikalU.S. Bonds#1318805/3/05; 12:38:46

Just reversed direction suddenly. Maybe Fed announcement related.

India looks at life beyond the dollar
Reuters - May 3, 2005

GoldiloxMiners up#1318815/3/05; 12:47:19

On a day when the FED buzz has gold and silver dropping slightly, mining stocks are quietly up in the background. For those who believe the miners lead the metals, perhaps a bottom is being formed.
TownCrierFOMC Statement -- Fed raises rates by 25bp to 3%#1318825/3/05; 13:17:24

May 3, 2005

For immediate release

The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 3 percent.

The Committee believes that, even after this action, the stance of monetary policy remains accommodative and, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity.

Recent data suggest that the solid pace of spending growth has slowed somewhat, partly in response to the earlier increases in energy prices. Labor market conditions, however, apparently continue to improve gradually.

Pressures on inflation have picked up in recent months and pricing power is more evident.

The Committee perceives that, with appropriate monetary policy action, the upside and downside risks to the attainment of both sustainable growth and price stability should be kept roughly equal.

With underlying inflation expected to be contained, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Roger W. Ferguson, Jr.; Richard W. Fisher; Edward M. Gramlich; Donald L. Kohn; Michael H. Moskow; Mark W. Olson; Anthony M. Santomero; and Gary H. Stern.

In a related action, the Board of Governors unanimously approved a 25-basis-point increase in the discount rate to 4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.

968Swiss gold sold with a premium ?#1318835/3/05; 13:59:21

Speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank, at the Bank's Annual General Meeting, Berne, 29 April 2005.

"Completion of the gold sales On 31 March, we completed our sales of the 1,300 tonnes of gold no longer required for monetary policy purposes. These sales had begun on 1 May 2000. The fears expressed in some quarters that our gold sales would destabilise the market have proven to be unfounded. By selling the gold in small instalments and according to a fully transparent schedule, we succeeded in assuaging the market's fears. Moreover, our sales strategy and risk hedging also proved effective in financial terms: the 1,300 tonnes of gold were sold at an average price of CHF 16,241 per kilo. This was CHF 700 more than the average market price during the same sales period. An additional profit of more than CHF 900 million was therefore realised. At the end of the sales programme, the National Bank still held 1,290 tonnes of gold, corresponding to one third of the value of its currency reserves. Even though it has been demonetised, the yellow metal still plays an important role in our reserves. It is an asset category that traditionally affords good protection in times of crises in the international monetary system. It also allows us to hold part of our reserves on our own country, which is not possible with financial assets. Moreover, as expressly requested by Parliament, Article 99 of the Federal Constitution requires the National Bank to hold part of its currency reserves in gold. The Governing Board considers that the holdings of 1,290 tonnes are appropriate to the current international environment. It does not intend to proceed with further sales of gold."
The gold is DEMONETIZED according to Mr. Roth ! It is now a wealth asset !
Moreover, the gold is sold for an average price of 10546,00 euros/kilo, that +/- 4,4% above its market value over one year. allows us to hold part of our reserves on our own country, which is not possible with financial assets... That's also a bold statement !

mikalAIPAC#1318845/3/05; 14:00:07

Asian Giants Join Forces To Fight Currency Attacks
Reuters - May 3, 2005
Three days of meetings this week might even
accompany a Yuan surprise...

TownCrierSomething to think about#1318855/3/05; 14:13:13

BIS Paper (#22): Investigating the relationship between the financial and real economy

Intro (by Konstantinos Tsatsaronis)

Central banks have always recognised the importance of financial stability for overall macroeconomic performance, but questions related to the health of the financial system have traditionally taken a back seat to those more directly linked to the process of inflation and growth.

In recent years, however, financial stability has gained greater prominence on central bankers' agenda. Monitoring the performance of the financial sector and the interaction between the health of financial institutions and macroeconomic stability has increasingly preoccupied central bank economists and decision-makers.


On the structural side, deregulation has transformed the financial system, enabling financial firms to explore profitable opportunities more fully and to expand the scope of their activities. Intensified competition has promoted efficiency and encouraged innovation. As a result, the financial sector has grown rapidly both in size and in terms of its contribution to overall economic activity.

At the same time, a deregulated environment is arguably also one more prone to volatility: failure is an integral part of the market adjustment mechanism in a competitive system and provides the natural check on participants' pursuit of profit.

On the secular side, the success of central banks in combating high inflation might also have influenced the nature of the interaction between the real and financial sectors of the economy. Reduced macroeconomic uncertainty has freed resources to transact in other sources of risk.

At the same time, this success may also have had the unintended consequence of cultivating a sense of private sector complacency about the potential downside risks.

Such an environment might arguably be more permissive of cumulative processes that gradually contribute to the build-up of financial imbalances, which in turn can be the source of macro instability when they unwind.

...the fact that markets rely so much on banks for market-making and backstop liquidity services means that their functioning, too, can be impaired by a weakening in the financial vigour of institutions.


Asset prices play a key role in the process, on both the demand and supply sides. Private sector expectations are embedded into the prices of financial and real assets.

As such, they reflect the extent of any excessive optimism or pessimism of market participants. In addition, they have a direct impact on the ability of the private sector to obtain financing, not least since a borrower's wealth is a common source of security for lenders.

Asset price fluctuations, therefore, can have an important effect on determining macroeconomic outcomes through their impact on balance sheets.


The interaction between prevailing financial conditions and real economic activity also runs in the opposite direction. The state of the business cycle has an important influence on incomes, profits and, by extension, the balance sheets and creditworthiness of various economic players. Understanding these links is no less important, especially if the objective is to gain insight into the feedback mechanisms that determine the overall impact of developments or policy actions on the state of the economy.

Financial conditions in the economy evolve largely in sync with the different phases of the business cycle, ie., they are highly procyclical. Periods of expansion boost income and strengthen the balance sheets of households and firms. By contrast, the creditworthiness of borrowers deteriorates during periods of economic slowdown, which are typically associated with thinning income cushions and greater financial strains. In addition, the rise in default rates tends to spread those strains to the economic sectors that are net lenders of funds. asset quality follows the business cycle, provisioning costs and outright losses tend to be higher in economic downturns. Moreover, prevailing accounting practices, which lead to a recognition of losses only once negative credit events are clearly identifiable, increase this synchronicity.


Thus, during expansions, low levels of measured risk would encourage financial intermediaries to expand their activity, even as imbalances and the associated risk are actually building up.

The opposite will be true during slowdowns, when increased levels of measured risk prompt retrenchment, potentially restricting the ability of the financial system to channel funds to their best use. This might seem a prudent course of action when viewed from the perspective of the individual institution in response to exogenous sources of risk. However, it is not necessarily the optimal response from a macro viewpoint, which is more sensitive to the mechanisms that can endogenously amplify the risk to the economy.

This has implications for prudential policy design. Arguably, a prudential policy framework should, to the extent possible, counterbalance the feedback mechanisms that tend to amplify the financial and business cycles. The optimal design of capital requirements, provisioning and reserving rules depends critically on the relative balance between idiosyncratic and systematic movements in the dynamics of asset quality, profitability and cost structures of the financial sector. Prudential norms that help reduce the importance of the systematic component of these movements should lead to more stable outcomes.

^------(full paper available thru URL)----^

968@ Towncrier message #131885#1318865/3/05; 14:18:34

Thanks for the great post.
TopazSilver on the move.#1318875/3/05; 14:41:52

Curious to observe price action "during" a delivery month as opposed to a non-d one.
Silver is now the shuffle-du-jour in the Warehouse with 300 odd lots today following on from 1500 or so yesterday ...unusually high for Ag.
Silver prices haven't been hurt either as it works higher against the trend.

...and they say they don't shop for metal at Comex.
...maybe not, unless that's all thats left!

mikalOff MK's newsfeed#1318885/3/05; 15:02:22

ADB says Asian forex reserves too high
The Financial Express of India - May 4, 2005
Sabyasatchi Mitra - Istanbul - May 3, 2005
Short article has interesting comments
by Asian Development Bank's top economist.

mikalFed corrects error#1318895/3/05; 15:22:42

Federal Reserve Adds Sentence Dropped From Statement
Bloomberg - May 3, 2005
Fed adds inflation statement left out earlier

Federal_ReservesPost rate hike.#1318905/3/05; 15:47:43¶m=archive&siteid=google&guid=%7B80107F52%2D9557%2D459A%2DA3DB%2D5C39106F4529%7D

I'm as nervous as cold butter looking at a hot knife.


Lets hope old gold can hold above the low $420's.

RUMORS about the hedge books full in the mining stocks! Can anyone hear substantiate?

"The poor performance of the gold shares was egged on by rotten results last week from the major mining companies, particularly Newmont (NEM: news, chart, profile) and Placer Dome (PDG: news, chart, profile) .

Alert observers have also noted the failure of the big miners generally to reduce their disastrous hedge books last quarter. "

GoldiloxFed Ups a Quarter, Trips a Lot#1318915/3/05; 16:19:13


No surprise in that - but even more fun is the revision of the Fed comments after their initial release. Why? because the market sensed a train wreck and the Fed got wind of it when markets turned down...

Fed's addition:

"Longer-term inflation expectations remain well contained."

And yes, you would not be alone to read something approaching panic into the revision. Lord help those still in the market who remain skeptical after this one...


George Ure's take on the FED release and near-immediate correction. The thing I noticed was the uninterrupted rise of the better mining stocks.

Teh next few days should exhibit some incredible fireworks and damage control.

GoldiloxNews Priorities continue to baffle#1318925/3/05; 16:35:41


LOS ANGELES, May 2 -- Four Southern California drivers have been shot to death and four more have been wounded -- including two last weekend -- in a seven-week epidemic of freeway violence that has stymied investigators and sent shivers through car-dependent Los Angeles.

Authorities said they do not believe the shootings are linked, but the newest rash of car-to-car shootings is the deadliest period of freeway violence to hit Southern California since five people were killed and 11 were wounded during the summer of 1987.


While the news media bombards us with reluctant brides, Martha's suspected abuse of parole conditions, and steroid geezing baseball players, real trends of social unrest go unreported nationally. Notice that the story, about violence on the LA freeways, finds its outlet in the Washington Post.

Don't expect any real news of financial events to find their way to you via traditional outlets! They will be found dotting "i"s and crossing "t"s in the FED statement, attempting to paint themselves as pundits!

For my money, more will be revealed here at the forum than through more traditional venues.

TownCrierButtery Federal_Reserves...#1318935/3/05; 16:46:28

RE: your news comment... "Alert observers have also noted the failure of the big miners generally to reduce their disastrous hedge books last quarter."

To provide context, I have seen other reports, such as the April 29th blurb from the Daily Market Report, that have indicated as follows:
In a report sponsored by Mitsui Precious Metals, major gold miners looked to have put the brakes on hedging activities in the first quarter of 2005, compared with the previous two quarters.

During the past four years, major gold miners have massively reduced their hedge books, which commit them to sell at a fixed price that may be lower than the market -- as bullion prices rose to their highest in more than 16 years close to $460.

The report said hedging by the four largest hedgers -- Anglogold Ashanti, Barrick, Newcrest and Placer Dome -- was just 500,000 ounces, compared with levels of around 2 million ounces in recent quarters.

Getting beyond the activity quoted above, perhaps the "failure of the big miners generally to reduce their disastrous hedge books last quarter" requires additional interpretation along lines something like the following.

A big miner can close out hedges in one of three acceptible ways. (A fourth way exists, (i.e., default), but would not be considered "acceptible".)

The first way is to deliver newly mined product into the hedge position. The pace of this reduction is obviously limited to the rate of production minus other delivery obligations.

The second way is to buy open market gold for delivery into the hedge position. This option, together with the previous one, further assumes that the receiving counterparty is in a position to accept (and pay for) the the prematurely arriving gold. The pace of this form of hedge reduction would be limited by the miners' financial and cash position to buy the metal in question (not to mention the actual ability of the physical market to hand over such amounts of metal at the prices in question.)

The third (historically common) way to reduce the hedges is as a purely paper offset -- getting the counterparty to accept a cash settlement or negotiating an offsetting OTC contract with another counterparty by which you can facilitate your escape from the future obligations and through which the derivatives dealer can maintain its balanced book with original counterparty.

Limitations of the first two avenues are fairly obvious in explaining why further progess may not have occured during the past quarter in the reduction of miner's hedges.

To explain why progress down the third avenue my have run up against limitations, we need consider two possibilities. Either the miners are suddenly comfortable with their remaining hedge book (doubtful?), or else they have found the OTC market to have finally become too illiquid for the purposes of settling their accounts with paper only.

According to the trend over recent years, the unrelenting sliding volume of LBMA clearing statistics is certainly an indication that that day of paper gold illiquidity will arrive. Maybe hereby we begin to perceive a sign that it is sooner rather than later -- if, in fact, the miners are basically "stuck" with their hedges and may have to close them in due course according to their physical production schedules.

Just an idea...


USAGOLD Daily Market ReportPage Update!#1318945/3/05; 17:09:08">
The Daily Gold Market Report has been updated.

If you are considering investments in gold we invite you to">request our free introductory information packet detailing the products and services offered by USAGOLD ~ Centennial Precious Metals. We welcome your inquiry and look forward to working with you.

Tuesday Market Excerpts

May 3 (from DowJones) -- The COMEX June gold contract settled $2.80 lower at $427.70.

Gold opened with a softer tone Tuesday morning, with traders at the time citing fund liquidation. The metal then moved sideways for a few hours while traders awaited the outcome of a meeting of the Federal Open Market Committee occurring Tuesday.

"We broke some very short-term support, although nothing dramatic," said one broker.

The decline occurred on a day when some traders were reluctant to probe the upside in case the Federal Reserve should be more hawkish than expected, and June crude oil once again briefly dipped below the $50-a-barrel level.

"We had sell stops that began at $428," reported George Gero, senior vice president with Legg Mason Wood Walker. "Sell stops were going off."

Another contact pointed out that the market held for a while around $428.10, the low from April 19, before finally accelerating down through this late in the session. "I think dealers pushed it into some stops," he said.

"I don't think there's anything dramatic fundamentally. I think what we saw yesterday (when the market fell) probably unnerved some of the longs." As a result, there was some liquidation, he added.

(from Reuters) -- The Fed raised benchmark rates for the eighth straight time and, in an accompanying statement, retained its commitment to a "measured" pace of further increases. ... Natexis Commodity Markets said in a metals report that the downside for gold remains limited, and prices should stay above $400 as physical off-take kicks in at cheaper prices.

----(see url for full news, 24-hr international headlines, market prices)----

Liberty HeadGreenspan Quiz Question#1318955/3/05; 21:32:06

What happens when a well-contained expectation meets an irrational exuberance?

Enquiring minds want to know.

Best Wishes

SundeckDollar waterfalls are back...#1318965/3/05; 21:56:18

Oops! Dollar is falling and looking for a pool... (Gandalf! Are you at it again?)

liberty Head asks: "What happens when a well-contained expectation meets an irrational exuberance?"

They have two children...opposites, in character.

Well-contained Exuberance: The life-of-the-party, but managers her money wisely and keeps a tidy reserve in gold.

Irrational Expectation: Also can be fun to be with, but he is the get-rich-quick kid and comes to grief in a sea of highly leveraged derivatives.



Liberty HeadA+ for Sundeck#1318975/3/05; 22:40:06

Best Wishes
GoldiloxDX falling#1318985/3/05; 22:42:30

Gee, I wonder who was buying gold stocks all morning as gold and silver were falling. I guess the ESF boyz need to cover their $ losses somehow.

Even more interesting was the options purchasing going on even before the gold stocks started to rise.

KenoCongratulations#1318995/3/05; 23:27:26

Again,all strong hands should be proud and sleep tight.I love my wife,children and close family and am glad to be a part of the gold investment family. Some bright characters here. We have pleasently exciting days and months ahead.The " lines in the sand" held. Remember, the "Dip" is your friend.
Black BladeMay Day Gold Massacre Not all It Seems#1319005/4/05; 02:07:08

An interesting article by Tim Wood (see link). A good run down on Gold reserves and extraction costs, etc. Also, apparently I am not the only one who sees inflationary pressures unseen by our enlightened "experts" in government.

- Black Blade

968ECB PRESS RELEASE : rates remain unchanged.#13190105/04/05; 07:03:28

4 May 2005 - Monetary policy decisions
At today's meeting, which was held in Berlin, the Governing Council of the ECB decided that the minimum bid rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 2.00%, 3.00% and 1.00% respectively.

The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 2.30 p.m. (C.E.T.) today.

mikalU.S. Bonds#13190205/04/05; 08:15:25

U.S. Treasury Considers Reissuing 30 yr Bonds.
Bloomberg - Update 1 - May 3, 2005
The bond market reacted initially to the downside
before some big buying (intervention) reversed the slide.
The decision on 30 yrs won't be made for many months
and the release would begin next year at the earliest.
Too little, too late IMO to help the economy but
would at least provide a drop in the bucket of financing requirements.

mikalTreasury prices fall#13190305/04/05; 08:34:49

Treasury prices fall ahead of refunding announcement
AFX - May 3, 2005
Reuters reported afterwards that Treasury did
announce that the expected $42 billion
will be refunded this week.

mikalRefunding is NEXT week#13190405/04/05; 08:41:51

Here is an excerpt from Reuters:
"Treasury also said on Thursday it will sell $51 billion in
securities in its quarterly series of "refunding" auctions next week.
The Treasury said it will sell $22 billion of three-year
notes on Tuesday, May 10; $15 billion of five-year notes on
Wednesday, May 11; and $14 billion of 10-year notes on
Thursday, May 12.
The auction will refund $39.6 billion of publicly held
securities and government account holdings maturing or called on May 15, and raising about $11.4 billion in new cash."

GoldiloxMay Day Massacre Not all it Seems#13190505/04/05; 08:45:02

Tim Wood over at Resource Investor ha posted an article reflecting the view that yesterday's rise in the miners should be a positive indicator for the PMs. It's copy-protected, so I'll just post the link.
GoldiloxRates: 'No Right Answer'#13190605/04/05; 09:11:38


As we reported right after the Fed decision on Tuesday, it is extremely rare for the Fed to have a typo like the one explained as an omission in something as important as the FOMC meeting statement - so much so that we just can't buy it. The markets are expected to open a bit down this morning, but we expect that the downside momentum may be only a few days from really taking hold. Maybe some tech strength due to semiconductor sales figures out this morning.

In truth the Fed's steno problem comes as a surprise to us, sort of like a policy speed bump warning that the Fed has just about reached the end of the line as the dual forces of hyperinflation on the one hand and fleeing foreign investors on the other leave the Fed with little freedom of movement. Clearly, the Fed's raise of rates was due to something but one has to consider what. If, as the statement said, long-term inflation expectations are well contained, it would seem there is little reason to raise rates, especially when the durable goods orders have recently hit the skids. There's also evidence of a slowing of consumer confidence, and if I were a practicing economist, I would have to say the evidence on the table should have kept the Fed from raising. Nevertheless, they did, and the reason lurking off in the background is foreign bond sales which are necessary to keep the U.S. solvent.


Not the kind of analysis we get on the mainstream news infomercials - George looks a little closer at the FED's "omission".

GoldiloxRefunding#13190705/04/05; 09:19:44

@ mikal,

Bonds are getting hammered today, especially the long bonds. It should make for some interesting auctions next week. If demand is not strong, we should see more action from the Caribbean banking centers, whose participation in the bond market seems to be gowing at a rate reflecting the Asian exit strategy.

Thank goodness for the SM bubbles and ENRON debacles, or they wouldn't have enough capitalization to carry the load.

George hits this topic today as well, with an interesting reader submission.

TownCrierHEADLINE: Long-term US Treasuries trounced after 30-yr shock#13190805/04/05; 09:40:06

NEW YORK, May 4 (Reuters) - Long-term Treasury debt prices tumbled in wild trade on Wednesday after the U.S. Treasury stunned the market by saying it was considering whether to bring back the 30-year bond.

Assistant Secretary for Financial Markets Timothy Bitsberger said Treasury would "examine if we have flexibility to issue 30-year bonds while maintaining deep and liquid markets in our other securities and determine if nominal bond issuance is cost effective.".

The Treasury said it was considering semiannual auctions of a 30-year nominal security beginning February 2006. Treasury ceased issuing 30-year bonds in October 2001 and its subsequent scarcity has tended to keep prices relatively high.

The prospect of fresh supply sent the 30-year bond down almost two full points in price, while yields shot up to 4.60 percent from 4.49 percent on Tuesday.

^-----(see url for traders' reactions and pain at this trial balloon)----^

A hard reaction at a mere float of an idea, imagine how much harder it might be if the Treasury were to actually follow through.

The market has clearly rendered its opinion of the prognosis of a 30-yr dollar (bond), and the consensus is that our financial house has been built on the sovereign territory of Banana Republica.

Choose gold.


KenoFrance L.T Bonds#13190905/04/05; 10:17:44

The French long long long term bonds sold out very quickly.The Fed is only attempting to piggyback on the French success. P.T Barnum comes to mind.
GoldiloxDx Action#1319105/4/05; 10:44:45

Serious knock-down, drag-out at the 84 level. It seems like the traders are suggesting a fall from here might require parachutes.
USAGOLD / Centennial Precious Metals, Inc.A risk-free request, helping you enter the gold market with grace and confidence.#1319115/4/05; 11:55:22">Get a head start on the gold market!
Clink!On the lighter side of the Fed#1319125/4/05; 12:44:43

This is a quick quiz from Rick Ackerman's site. For reference, I would point out that there is/was a Dilbert site which allowed you to automatically generate ridiculous project mission statements on a similar basis - I stopped playing with it the day I used one of the results in a project meeting at work and nobody raised the slightest objection !


USAGOLD Daily Market ReportPage Update!#1319135/4/05; 13:56:11">
The Daily Gold Market Report has been updated.

If you are considering investments in gold we invite you to">request our free introductory information packet detailing the products and services offered by USAGOLD ~ Centennial Precious Metals. We welcome your inquiry and look forward to working with you.

Wednesday Market Excerpts

May 4 (from MarketWatch) -- The Federal Reserve's latest statement on inflation and monetary policy, China's potential ending of the dollar currency "peg" and the U.S. Treasury's concession on possibly reintroducing the 30-year bond -- all were grist for traders in the New York Mercantile Exchange's metals pits.

Kenneth Gerbino, who manages a hedge fund specializing in precious-metal mining stocks, said he sees signs of speculating tied to rumors of a revaluation of China's yuan. This could encourage greater buying and selling in gold among Chinese investors, he noted.

Meanwhile, the Fed's belated announcement issued late Tuesday saying inflation "remains well contained" -- initially omitted from the central bank's policy statement -- rippled through the bond, currency and metals markets.

Finally, the Treasury took many in the financial markets by surprise with its announcement that it's open to considering bringing back the 30-year bond, pressuring prices for Treasury bonds.

Against this busy backdrop,the dollar yielded ground against the other major global currencies.

Moves in gold remain closely correlated to action in the euro, according to James Moore of

As a result, gold "looks set to test back above the $430 level," he said, adding that it's looking "increasingly likely" that gold will be able to decouple from the euro and move higher on a fundamental basis eventually.

COMEX June gold futures ended at exactly $430, up $2.70 and thus erasing much of Tuesday's weakness.

----(see url for full news, 24-hr international headlines, market prices)----

TownCrierUPDATE -- Dollar continues to lose international influence#1319145/4/05; 14:14:09

HEADLINE: Asia agrees to strengthen currency defences

ISTANBUL, May 4 (Reuters) - Asian finance ministers agreed on Wednesday to double the size of their arsenal for fighting attacks on currencies and vowed to develop local bond markets to avoid the kind of financial turmoil that struck in 1997/98.

The ministers had been considering ways to strengthen the Chiang Mai Initiative - a network of currency swaps set up in 2000 -- during the annual meeting of the Asian Development Bank in the Turkish city of Istanbul.

In their joint statement, the ministers of Japan, China, South Korea and the 10-member Association of South East Asian Nations (ASEAN) said: "To address short-term liquidity, the size of BSAs (Bilateral Swap Arrangements) should be increased."

The web of Asian central bank swap lines will now be doubled...

The ministers also agreed to raise the ceiling for drawing on swaps without any International Monetary Fund support to 20 percent from 10 percent.

Some Asian governments want to turn the web of swaps into a fledgling Asian monetary fund, a move frowned upon by Washington and the IMF.

...In a further bid to cement regional financial stability, the Asian Development Bank planned to launch its first bonds denominated in bahts and pesos -- the latest in a series of issues in local currency.

^----(from url)----^

As the dollar slips further from predominance, it becomes only a matter of time before the privileged status of international reserve asset is a bygone thing.

Be sure you are holding gold in anticipation of that eventuality.


GoldiloxHUI gains 6% in two day rally#1319155/4/05; 14:33:24

While the SM has been exhibiting its regular roller coaster activity, the oversold condition of the HUI stocks has quietly generated a 6% gain from 176 to 186 in the past two trading days.

Some analysts have been calling for Au and Ag to respond accordingly, as the stocks tend to lead the metals. Others have suggested that the two need to reach equilibrium, but a lack of response in the metals might bring the miners back down.

I'm rooting for the former scenario, but we shall soon see which comes to pass.

Federal_ReservesThe Triangle....#1319165/4/05; 15:25:30

No break of the tigthening triangle in gold. On a daily chart, connect up the last 3 tops and the last 3 see it for sure. Silver same formation.

The dollar also is in the same formation.

Tough waiting this out.

968@ MK#1319175/4/05; 15:49:56

Good evening Sir MK,

I quote your statement in message # 130941 : "...Europe at the moment is a nation without a governing political document. It has a central bank that issues a currency without political protocols - essentially a currency without a country. I see that as a disadvantage, not an advantage. Until that is addressed, it will be a competitor but only in terms of default..."

May I ask you to observe Mr. Trichet's statement today during the questions and answers of the ECB's press conference :
Trichet: "I would only like to add that we are an "apolitical institution" or a "multi-partisan institution". We are guarding, defending and preserving a public good, which is the single currency. We have to guard this public good with standards that are extremely high, because we have to continue delivering a single currency which, according to the promise which was made, is at least as good as the best previous national currencies. And we were created ourselves by the virtue of a multi-national and multi-partisan consensus. A strong will to create the ECB."

I would like to go further : in my humble view, using your words, GOLD is a currency without political protocols - it is essentially a currency without a country. So, I don't see the problem.

Can you please help me where I am wrong on this one ?

Thanks in advance for your precious time.

TownCrierECB President Trichet's press conference of the Governing Council#1319185/4/05; 16:49:07


...when looking beyond the short term, conditions remain in place for stronger real GDP growth.

On the external side, euro area exports should continue to be supported by foreign demand.

On the domestic side, investment should benefit from the very favourable financing conditions, the robust corporate earnings currently being observed and ongoing improvements in corporate efficiency. Consumption growth should evolve broadly in line with expected developments in disposable income.
...You know that ten-year rates at the level of 3.4% is something that, before the setting up of the euro, would have been considered impossible to deliver to the 306 million inhabitants of the euro area. So, it is something which is obviously extremely favourable for growth and job creation.

I have to stress this point again and again because delivering a favourable financial environment is a necessary condition for growth and job creation, but it is not a sufficient condition per se.

There are other conditions, and these certainly include the structural reforms that I have mentioned on behalf of the Governing Council.

Among these conditions there is also confidence.

The confidence of the households and the confidence of the entrepreneurs are very important.

We, ourselves, are an institution which is profoundly devoted to confidence -- to inspiring and consolidating confidence.

We could say that price stability and the present environment, which we are helping to create on the financial side, are elements of confidence for the households. We tell the households that they can trust us to deliver price stability and, if they intend to consume, we would certainly tell them they can consume with confidence and that, of course, would be an element of growth.

We would say the same to the entrepreneurs: you have an environment which is exceptionally favourable to physical investment in Europe with the present long and medium-term market rates, and there are a lot of good reasons to have confidence and to invest.

^------(from url)-----^

I do love the word "consolidate", especially as it pertains to consolidating inspiration and confidence as Trichet here makes use of it, and consolidating your papery income into gold metal savings as I frequently express it.

The happy coincidence is that the act of consolidating your papery gaming piles into solid gold savings is a reliable means by which you can feel an inspiration of confidence (which would otherwise be not as prevalent while having an all-papery position in the world).

As Trichet would like to consolidate inspiration and confidence among European households and entrepreneurs, that they may thereby participate perhaps more vigorously toward elements of economic stimulation and growth with less trepidation over "disposable income", so too would he like to see the right conditions fostered that are likewise supportive for the stimulation and growth of foreign demand.

This is where we come to the favorable coincidentally helpful role of gold savings and reserves. As abundant wealth is already in fact consolidated in gold savings at home and abroad among billions of savers, and as the derivative pricing shackles are cut loose such that gold can be properly revalued based on the physical (consolidated) market, there will surely be an ample "wealth effect" from the gold revaluation that will stimulate enough global economic demand to carry the world well into the next generation.


mikalFrench leaning to "oui" on constitution#1319195/4/05; 17:06:15

EU constitution is the daughter of French Revolution, says Chirac
By John Lichfield in Paris - 04 May 2005
Snippit: "In a 50 minute interview on France 2 television, President Chirac told French viewers the EU constitution was the "daughter" of the French Revolution of 1789. The treaty was based on values which "are in reality those of France," he said.
Asked if a "no" vote would be a personal failure, he said: "I don't know if it would be a difficult moment for me, but ... it would be a very difficult moment for France.
"[France] would emerge from this adventure considerably weakened, weakened in terms of defending its interests, its values, and responsible for a breakdown of the European project that it has been developing for 50 years."
It was the President's second television appearance to solicit support for the constitution. Although his first performance last month was criticised, he appears to have aided a reversal in the trend in the opinion polls. Two surveys yesterday, and one at the weekend, suggested the "yes" camp had regained the lead. One poll in the newspaper Le Figaro and on Europe 1 radio, showed 53 per cent of French voters backed the constitution."

TownCrierTrichet's best few lines...#1319205/4/05; 17:22:58

"First of all, I said -- and I am deeply convinced of the lessons that we can draw from all evolution; I am speaking in Berlin and I am always moved to be in Berlin myself, because I knew Berlin divided, I knew Berlin with the Mauer, I knew Berlin in totally different times -- and so we know that the market economy lays down the rules that permit to create wealth, and that is extremely important. We also know, of course, that political democracy calls for discussion and for thought on how to get the best out of this wealth. But wealth has to be produced, and it is a clear lesson of the past, a difficult past -- a terrible past in some respects -- that these rules of market economy are key to produce goods. You can see that here in Europe. You can see that also so clearly in Asia – in emerging Asia."

"...history is moving impressively."

And gold, impressively, has always been the real wealth driving the wheels and serving the powers behind the throne. And it always will be, because you can't fake your way to truth and consolidation of markers. It's simply got to be real. Hence, gold.


Golden LionheartThe Golden Triangle#1319215/4/05; 20:22:13

I am sure most people have noticed the large triangular pattern that gold has formed in recent months.

Take heart from this, although the price can break up or down from such a formation, it is usual for the breakout to take the direction of the established trend. In this case up!

It is not unusual that the breakout move would equal the height of the triangle, around a $50 move in this case. Action is usually strongest when the breakout occurs about three quarters the way along the triangle. Like the situation the price is in at the moment.

It would not be a good sign if the price crept indecisively out of its apex, this would imply that the future price action had not reached definite conclusion.

As an old chartist for over 40 years I am quite heartened by what I see but the waiting can be quite painful.

A good book on charting is:- "How Charts Can Make You Money" by T.H.Stewart.

TownCrierMarquette changes nickname to 'Gold'#1319225/4/05; 20:48:01

May 4 -- Marquette University announced Wednesday that it has changed the nickname of its sports teams, but not back to "Warriors" as some alumni has supported -- its teams are now the Marquette Gold.

The university's board of trustees voted to change the nickname from Golden Eagles at a meeting Wednesday. The change will be effective on July 1 when Marquette enters the Big East Conference.

The university is dropping the Golden Eagles name after data collected in an online survey last fall of opinions and attitudes indicated that even 10 years after its introduction, the Golden Eagles nickname, logo and mascot have not generated with the Marquette community a strong sense of pride or identity. In the survey, the terms respondents most often used to describe the Golden Eagles nickname are boring, weak and common.

Marquette "Gold" was the board's overwhelming favorite, the university said.

"I am really pleased that the trustees have chosen this direction for Marquette athletics. The Board has chosen a name that reflects our desire to be champions," said Marquette president Robert Wild.

"With Marquette 'Gold,' the Board has captured decades of traditions in one profound term that symbolizes the high standards...."

^------(from url)----^

"Go team!"


TopazAg ...looking UP!#1319235/5/05; 01:53:55

Can't remember whats in the link but it's either Vol/OI which is still quite healthy for May ...or Nymex Delivery notices which, at 600 contracts, is curiously positive.

Price action during a delivery month is, as Gold was last month, outperforming.

Smarter people with deeper pockets than I will also see these unusual occurrences ...and ponder their empirical meaning.

968Bear's shadow falls over financial markets.#1319245/5/05; 05:33:10

"The real mystery lies in the fact that so many perfectly intelligent and well-educated financial professionals, economists and policymakers have overlooked the alternative while holding fast to a logically confounded concept evidencing a record of failure. Regrettably, those depending on their expertise have suffered, and will suffer, terrible consequences during periods of secular decline. My hope is that readers of this article will find the insights offered compelling enough to serve, at least, as a basis for rejection of the notion that we are in a "new era" or that things will somehow "be different this time", notions which have proven ill-conceived time after time, cycle after cycle, and that readers will be encouraged to protect themselves from the inflationary secular bear market which is inevitable - and now imminent!"
A nice article.

Clink!When will we see one of these in New York ?#1319255/5/05; 06:39:55


Three years after staging the largest debt default in modern history, Argentina on Thursday opened what may be the first Museum of Foreign Debt to teach people the perils of borrowing abroad.

The subject is heavy, but the museum's creators have tried to make the mood light and the displays accessible to everyone, especially schoolchildren.

------ and -------

"People know absolutely nothing about how we accumulated all this debt, they only know about the misery they have seen lately," said museum director Simon Pristupin, who dreamed up the idea in 2001 and struggled to convince sceptics. [This would be BEFORE the crash, if I count right]

------ and the best --------

Pristupin said his favourite part of the museum is a golden cart sculpture made out of cardboard.

"It symbolizes Argentina's reality: everything's golden, but it's made of cardboard and that reminds us of all those people who today collect cardboard for recycling."

C! Let's face it, we here couldn't think of a better analogy for the dangers of paper gold, could we ?!

Have a good day,

USAGOLD / Centennial Precious Metals, Inc.Proven Reliability, Longevity, Quality and Professionalism ---- Invest with Confidence!!#1319265/5/05; 08:26:19

The HoopleTC re: Marquette Gold#1319275/5/05; 09:09:18

Pronounced maybe "market gold", as in PHYSICAL, not paper? Possibly too a GATA member on that Marquette trustee board? They probably figured it would be tough to get behind a team called the "Paper ETF's" or the "Dollar Proxies". Although according to Jesica Cross & the WGC they should have re-named it the "Platinum Jewelry".
TownCrierTH re: Marquette (=market) Gold#1319285/5/05; 09:22:42



RimhGreat story, Clink!#1319295/5/05; 09:41:44

It would be interesting to see how detailed is his breakdown for who is to blame for the monetary misfortunes of Argentina.... Is the finger pointed at the politicians at all?
968Risk Transfer and Financial Stability#1319305/5/05; 09:49:33

Remarks by Chairman Alan Greenspan
Risk Transfer and Financial Stability
To the Federal Reserve Bank of Chicago's Forty-first Annual Conference on
Bank Structure, Chicago, Illinois
(via satellite)
May 5, 2005
$220 trillion in derivatives! Ouch! The bomb keeps ticking...tick...tick...tick...

TownCrierDare I say it?#1319315/5/05; 10:22:34

According to my best indicator...

"Brace yourself -- gold is poised to turn higher very soon".

There. I've said it. And now my street credibility is completely gone.


mikalS&P cuts GM rating to junk status#1319325/5/05; 11:09:03{128C0AE0-E399-4353-93ED-FF4A474DFECF}&dist=bnb

GM bonds downgraded. Anyone here surprised?
mikalStandard and Poors downgrades#1319335/5/05; 11:20:02

S&P cuts GM, Ford debt ratings to 'junk' status
Reuters - May 5, 2005

TownCrierFed buys Treasuries outright in $1.25 billion bill pass#1319345/5/05; 12:53:28

While fed funds were trading in line with the new three percent FOMC target rate, the trading desk for the Federal Reserve System nevertheless saw fit to enter the open market in a dollar-creation capacity, providing $14.25 billion at the end of operations.

First the Fed injected $7.0 billion through a round of 14-day repurchase agreements at an average cheaper-than-directive rate of 2.937 percent.

About an hour later the Fed's trading desked deemed it appropriate to provide another $6.0 billion through overnight repos, still a bargain at an average price of 2.971 percent.

Rounding out the day's open market activity was the smaller but more significant outright purchase of Treasury bills by the Fed's trading desk, in which bills maturing June 16 - August 11 were targeted in the amount of $1.25 billion for the total purchase.


Federal_ReservesFED activity#1319355/5/05; 13:16:40

After a 6 month pause, they have been stepping up the activity with the coupon passes lately. $3billion since 4/22. I think they are fighting a collapse. With today's junk bond ratings for GM & F, along with the unreal amounts stored up in the GSE's with shady even scandulous accountings (fannie moe and jack) they must be frightened the credit bubble is finally breaking up. And its this credit bubble that is holding up the entire economy and unwrites the other bubbles (stocks, bonds, homes). Once credit starts to contract, they may not be able to hold the economy up. They couldn't during the 30's either when that credit bubble contracted.
TownCrierBlast hits UK Consulate, fans NY security fears#1319365/5/05; 13:35:17

NEW YORK (Reuters) - Two homemade grenades exploded outside the building housing the British Consulate in the pre-dawn hours on Thursday just as election polls were opening in Britain, raising concerns about New York's post-Sept. 11 security.

The incident, which briefly upset British financial markets, occurred as British voters were deciding whether to return Prime Minister Tony Blair for a third term in office. In the short general election campaign Blair battled public anger against his support of the war in Iraq.

Juliette Kayyem, a homeland security expert at Harvard University's Kennedy School of Government said, "No matter how much money we spend, how many liberties we give up, how tightly we close our borders, we are going to be a vulnerable society."

^-----(from url)-----^

A reminder of disruptions and vulnerabilities. Is your wealth at the mercy of a network, or can it stand alone?

Choose gold.


968Transcript of Press Conference by Managing Director Rodrigo de Rato #1319375/5/05; 15:49:43

Transcript of Press Conference by Managing Director Rodrigo de Rato with External Relations Director Thomas C. Dawson and Director of IMF Offices in Europe Saleh Nsouli

International Monetary Fund
Tuesday, May 3, 2005
Paris, France

"The exchange rate has had effects, but we don't see as it playing a major role. In part, regarding to the euro area, it has buffered the effects of higher oil prices."

"We see that the soft patch, if you want to call it that, will continue during the first quarter of 2005, both in Europe, but also in the United States, and its downside risks have increased in the world economy, as we had the chance to say it in the spring meetings."

"In that respect also I would like to signal that inflationary pressures are well contained and inflation expectation is well anchored. And I want to recognize clearly that the credibility of the European Central Bank's monetary policy is strong, and in this setting the International Monetary Fund considers it premature to rule out interest rate cuts in Europe."

QUESTION: You mentioned a little bit about the Europe and the exchange rate. There has been some discussion recently about what impact the Chinese revaluation would have on the U.S. trade deficit, with some economists coming out and saying that it wouldn't have much of an impact at all because other Asian nations would move in and supply the goods to the U.S. that China does now.

What effect do you think a China revaluation would have both on the U.S. trade deficit and also on growth in the European Union?

MR. DE RATO: As you know, our approach to the global imbalances, and I have to say that global imbalances have increased in the past 6 months, our approach to global imbalances is more in the view that change of policies are needed not only in Asia, but also in the United States and Europe, and that one single change will probably have very limited effects.

So we really are of the opinion that it is necessary for the U.S. economy to increase in a very credible way its savings rates, and I just want to mention last week's statement by the U.S. monetary authorities in that regard. We see clearly that it is in the advantage of the United States to increase its budgetary restraint and to increase its domestic savings rates, and that will have a contribution to at the same rebalance the global economy.

We see that it is needed for Europe to have a more active role in world growth, and for Japan. And in that respect, we see that changes in Europe, as I just defined as positive, but needed to be strengthened and accelerated. And we see the recent announcement of the Japanese government to pursue its liberalization and privatization policy in the Postal Service as a positive one. In that context, we also see that more flexible exchange rate regime throughout Asia, and especially in China, is certainly to the advantage of the Chinese economy and will have also a contribution to readdress global imbalances.

But we believe that the approach to global imbalances has to be a comparative one because the actual change of policies of one of the actors will not be sufficient to readdress the situation.

QUESTION: You said that global imbalances have gotten worse over the last 6 months.

MR. DE RATO: I haven't said a lot. I said it got worse.

QUESTION: Not a lot worse then?

MR. DE RATO: No. I haven't said a lot.

QUESTION: In that context, how do you still rate the risk of a serious decline of the dollar in order to resolve some of these imbalances?

Secondly, given your remarks on China, do you not regard a Chinese revaluation as being as urgent as issue as the U.S. administration seems to find it?

MR. DE RATO: Well, first of all, I'm not going to make predictions on the evolution of currencies.

And the second question is that the global imbalances, that is, the difference between savings and investment in the world, and the difference between the rates of growth have increased, not decreased. And the influence of high oil prices have been sustained and even increased in some moments so that that is why we are stressing that the downside risks have not been reduced but have increased.

The reduction of global imbalances in our opinion will be more efficiently addressed if certain systemic countries, big economies, do change some of their policies to address those imbalances. There is an increased and sustained increase in the rates of domestic savings in the United States and that will be not only important for the world economy, but it will be very important for the move or maneuver of macroeconomic policy in the U.S. and for the challenges regarding Social Security and heavy expenditures in the U.S.

Second, that Europe increases its growth potential, and that is not only important to increase the contribution of Europe to world growth, but it's essentially for Europe challenges regarding the aging populations problem, the same regarding Japan, and certainly a movement towards exchange flexibility in Asia.

The question is that what is needed is for Asian countries that are playing a more and more important role in the world economy to have more flexible exchange rate systems. Why? Because that will allow them to pursue a more nationally owned monetary policy and antiinflationary policies, and also because it will allow them to absorb external shocks in a more efficient way. That's how we have been seeing the issue since last year, and we see more and more merit in our analysis as time goes by. At the same time, we see that the doubts and risks are increasing.
Global imbalances, derivatives riks, low savings,...
Monetary $-policy isn't maintaining price stability for the moment, it's simply keeping the system running by whatever means necessary...
To play a more important role in world economy, one has to have a more flexible exchange rate ???? Are that De Ratonomics ???
Or should I say Asia has to have a more flexible exchange rate to support de $-system ?

USAGOLD Daily Market ReportPage Update!#1319385/5/05; 16:14:52">
The Daily Gold Market Report has been updated.

If you are considering investments in gold we invite you to">request our free introductory information packet detailing the products and services offered by USAGOLD ~ Centennial Precious Metals. We welcome your inquiry and look forward to working with you.

Thursday Market Excerpts

Comex gold futures made a slight advance Thursday thanks to continued weakness in the U.S. dollar and a widespread downturn across the equity markets caused by news that ratings agency S&P cut both General Motors and Ford to junk status.

The most active June gold contract settled 70 cents higher at $430.70.

The U.S. currency proved reluctant to extend its early losses and managed to claw higher mid-morning and mute demand for dollar-alternatives like gold. A late revival followed, however, in the wake of the surprise news of GM's and Ford's downgrades, which sent investors in the equity markets in search of safe-haven assets such as gold.

Dealers said that while the equity market turmoil was supportive for gold, bullion remains primarily fixated on the currencies and is unlikely to extend any recent price trends unless the U.S. dollar weakens notably at the same time.

"The GM news stirred things up, but really didn't change the nature of the market. We're still currency-driven more than anything else right now," noted an analyst with a U.S. commission house.

The metals market is expected to throw off some of its recent sluggishness as Japan's string of "Golden Week" holidays draw to a close, traders said.

----(see url for access to full news, 24-hr int'l headlines)----

TownCrierGold-backed securities seen on Euronext by end-2005#1319395/5/05; 16:28:44

May 6, Reuters -- European investors will get access to gold-backed securities that allow them to buy a share in a bar of bullion soon, with a listing on the pan-European exchange Euronext seen by the end of this year.

Gold Bullion Securities managing director Simon Village said the Euronext listing would enable much wider access to paper-backed gold.

[errrr... didn't they mean to say "gold-backed paper"? Gold don't need no steenking paper backing.]

"What we wanted to do was make gold accessible, cost- effective and efficient," he told Reuters in an interview on Thursday, adding that due diligence was also underway to explore a listing in Asia.

Exchange-traded funds (ETFs) are a relatively new type of investment that are traded on stock exchanges around the world...

Collectively, the funds have accumulated 236.38 tonnes of metal...

While analysts have hailed the growth of ETFs, particularly the US-listed StreetTRACKS gold fund and COMEX Gold Trust, they note weakness in capturing a significant swathe of smaller, retail investors.

Village said retail investors still needed to really understand the benefits of gold ownership...

^------(from url)---^

Hello. The only way to tap into the FULL spectrum of benefits (financial and security) that gold ownership has to offer is to TAKE POSSESSION of the gold.

Choose wisely and make sure you GET what you pay for.

USAGOLD-Centennial has been America's trusted source -- delivering the goods for over 30 years.


R PowellTownCrier#1319405/5/05; 18:20:09

Your prediction....

"According to my best indicator...

'Brace yourself -- gold is poised to turn higher very soon.'"

Okay, now you've done it! (G). I sincerely hope that you are more accurate in forecasting than the likes of Mahandra, Sinclair, Russell, Morgan, and a vast host of other goldbugs and analysts. Although not a goldbug favorite, Leonard Kaplan has probably been more accurate with his market calls than most. Imho, anyone who does actually time the market with a few correct short term calls will then probably be in dire need of reading Taleb's "Fooled By Randomness". Notice the adjectives "short term". But you already know how extremely difficult it is to make correct short term predictions.

What caught my eye here is "according to my best indicator". Are you willing to share what this is??

GoldiloxPossession is 9/10ths . . .#1319415/5/05; 18:24:23

@ TC,

So true. One of the worst problems in the mining industry is the ability of brokers to "borrow" and short the stocks, driving their value down. I expect that the ESF custodians are tempted to do similarly when they want to accumulate.

When possible, owners of stock should utilize the same philosophy of "holding in one's possession" to block short borrowing.

Derivatives, dervatives. What a shtinking mess!

MK30 Year Bond -- NAI#1319435/5/05; 20:32:29

Bill Murphy ( posts this from the Brimelow Report:

"He [an analyst Brimelow has access to] also feels the Treasury rumblings about a 30 year Bond sale are significant:
'If I were a gold bug, in hibernation the last 5000 years [a scarab, therefore], I'd see this as ‘the big one’. The beginning of Weimar in the USA.'"
-- - - - - - -
I thought that comment might be germane to members of this illustrious table round based on the recent contest we had on the Weimar inflation (with many excellent entries, I might add). Who would like to take a crack at explaining this to all of us?

The USAGOLD piece on the Nightmare German Inflation (which is part of our introductory information packet available via the link above) ranks number 15 of our most visted pages. This was a surprise to me. Apparently it is linked all over the internet an indication that people are curious about the parallels. One time Randy, our mathematically inclined sitemaster, figured out the price of gold for me at the height of the NGI. It was in the billions if I remember correctly.

GoldiloxTransparent Quicksand - Will Reishman at FSU#1319445/5/05; 21:11:17


It stretches credulity beyond the breaking point to believe the Fed left anything out of their statement inadvertently. As ludicrous as it is, the wordings of these Fed pronouncements have become the most closely examined data points in the U.S. economy. It would seem only too "transparent" that the Fed's original version wasn't playing according to script without the "long-term inflation well-contained" phrase.

So they had to try that little "inadvertent" stunt. Talk about transparency! What's becoming ever more apparent is that the heavy hand of the government/financial establishment combine is managing public perception of issues affecting our capital markets. Perhaps this is most apparent in the obviously distorted inflation numbers from the Bureau of Labor Statistics. All this can only end badly for the American economy and the millions of honest, hard-working families who haven't a clue that such stuff goes on.


Even conservative financial pundits express incredulity at the latest FED move. It is truly getting "interesting".

GoldiloxK.I.S.S.#1319455/5/05; 21:18:33


Right now, authorities are faced with some fairly unpalatable alternatives in terms of juggling all these markets at the same time. It appears that because of the degree of internal imbalances in the US, primarily surrounding debt related issues on both official and consumer levels, foreigners have decided to slow the accelerated subsidization necessary to maintain price stability in domestic debt markets such that if money supply growth rates are not seen slowing, the US Dollar (USD) will collapse prematurely because of possible net withdrawals. We say ‘prematurely’ to ensure you understand that based on the current global economy, which is in fact a US banking interest construct, the USD must eventually fall in offset of increasing deflationary pressures as economic conditions continue to erode. What price managers do not want to happen to the USD, but what they might get with the stock market however, as they may have managed themselves into a corner now with all the bubbles floating around, is a crash, where if the Fed tightens too much, this miscalculated tinkering could prove very costly to investors.


Another FSU editorialist who is not very optimistic about market manipulation.

GoldiloxIS THE GOLD BULL MARKET OVER? - Nick Barisheff#1319465/5/05; 21:47:55


In an April 28, 2005 news release, GFMS announced that the year-end price of gold could reach a 22 year high of US$500. With the price of precious metals in a trading range and mining stocks experiencing double digit declines this announcement comes as a surprise to many gold bugs and analysts. It is particularly noteworthy, since GFMS is notoriously conservative when it comes to predicting future gold price trends.

Of even greater significance are the two main reasons behind GFMS's position.

First, GFMS states first that growing US deficits, a weakening US dollar and the prospect of a marked US economic slowdown will push up the market value of gold bullion this year and next. Ally that with an event driven rally in the oil price then gold heading for the $500 mark no longer looks fanciful. Second, the downside for the gold price is negligible. This is because of a "robust demand" for physical bullion, and an increased willingness on the part of investors to buy gold on price weakness.

In its Gold Survey 2005, GFMS mentions several developments that together show an increasing interest in physical gold ownership.

1. Gold coin fabrication rose 7.0 percent in 2004.
2. Bar hoarding rose a whopping 38 percent in 2004.
3. Producer de-hedging rose to record levels of just over 440 tonnes in 2004.
4. Gold mine production fell by 5 percent.
5. Net official sector sales dropped 23 percent to a five-year low.
6. Scrap gold supply fell to a three-year low of just 828 tonnes.


In a word, "NO!"

KenoJobs number#1319475/5/05; 22:04:21

With all the scuffling around on G.M. and Ford, the "forgotten paragraph" on the Fed. release,the 30year suicide bond and such,how about the boyz goof up and release closer to reality jobs number in the morning. Let's hope for 50,000 or less and break up out of some of the tightening triangles that have formed and we really have some good laughs tommorow. Something in my bones tells me we make a move tommorow.
Sundeck30-year bond#1319485/5/05; 23:06:00

It seems that there is a bit of cynicism out there on the proposal to reintroduce the "long-bond". This bit from Jim Jubac on MSN-money (see link):


If the U.S. Treasury starts to reissue 30-year bonds -- and the soonest it could resume the twice-yearly auctions for the bonds would be February 2006 -- then the government can lock in currently low interest rates on the 30-year bond (just 4.7% or so, even after the bond market sell off on May 4) for 30 years. It wouldn't cost the government an extra penny in interest on a 30-year bond sold to investors in 2006 if inflation spiked to 5% or interest rates climbed to 8%.

Consumers who owed money on their credit cards or held adjustable-rate home mortgages, however, would pay higher interest rates immediately.

Here's how the chief economist at New York investment bank Bear Stearns put it in an interview with the Bloomberg News Service on April 27: "It does not make sense for the government to be putting the interest-rate risk onto the household sector. By the government having shorter maturity for its debt, it takes the interest-rate risk on itself."

Sundeck: Mmmm...sounds about right. Anyone who buys and holds these new long-bonds to maturity would need to have their head read. Reminds me a bit of Barrick raising funds through bond issues...same deal...get the dollars now while they have some value, invest them in gold and make coupon payments in ever-diminishing dollars to the suckers who opted for the paper.

What is that saying??? "Hey guys, you can stop worrying now. We're here to help and we're from the government!"


GoldiloxHackworth Passes On#1319495/5/05; 23:50:33


NEW YORK, May 5 /PRNewswire/ -- Col. David H. Hackworth, the United States Army's legendary, highly decorated guerrilla fighter and lifelong champion of the doughboy and dogface, groundpounder and grunt, died Wednesday in Mexico. He was 74 years old. The cause of death was a form of cancer now appearing with increasing frequency among Vietnam veterans exposed to the defoliants called Agents Orange and Blue.


The men and women in uniform have lost a tireless advocate for their safety and rights. A more comprehensive eulogy can be read at his website. I have greatly admired Hack's efforts. Having lost a brother to the same cause, I was touched by this article. I have yet to see any reference in the mainstream press, but it's probably not sensational enough for their attention.

skiUnusual price drop noted...#1319505/6/05; 00:33:20

Just noticed a very unusual and powerful price drop on the 24 hour silver AND gold chart at the neighborhood site that provides such info. The drop took place at about 11:30 pm, NY time. About $3 for gold and 20 cents for silver. Within a couple of minutes, all markets completely recovered. Platinum and palladium also were affected,... but not as much. Could this be an effort to "hit some stops" just before an expected price rise? Or, could this just be a glitch.
Topazski, it does bode well.#1319515/6/05; 01:31:54

They are struggling to keep a lid on it (pog) despite dropping on the rollover Apr-May.
In fact, we see a nice divergence underway again ...GOOD!

Topaz30T's#1319525/6/05; 01:52:32

Seems to me this talk of re-issuance is $ and curve related.
The Dollar can't be guided lower without steepening the curve and at present 30T, due to it's relative "scarcity" is a millstone around the neck of the planners.
We could expect the other trading bloc's to "again" sit by and take it up the proverbial as once more the odd's are stacked in favour of 'ol Buck and all that bloodsuck off her.

The gut feeling though is that Jack, Jill and Joe are becoming quite disallusioned with all this and "slowly-but-surely" are moving to a more quiet monetary place.

SundeckSki #131950 - negative price spike#1319535/6/05; 03:54:03

Sir Ski...

I have noticed this phenomenon before and have often wondered what caused it.

My feeling is that the data that feed the gold price charts are drawn from various gold exchanges all over the world.

When an exchange opens (or closes) for the day, the price is set using a "Dutch auction", or "fixed-price auction" in which buyers (sellers) state the volume they wish to acquire (sell) and the price they are prepared to pay (accept). So long as there is an overlap in price between buyers and sellers, the opening price is determined by assigning volumes amongst players until there is no longer any price overlap.

To ensure they do not miss the open, buyers often bid a bit higher (and sellers a bit lower) than what they expect the opening price to be. Normally the resulting opening price is close to that prevailing on other world markets. Usually, there is a bit of jockeying amongst traders at the last minute and it sometimes happens that a buyer (or seller) finds they have significantly overbid (or underbid) the market. When volumes are assigned, the resulting opening price may differ significantly from the price prevailing on other markets. This is rapidly corrected as trading continues and the price between various exchanges follow one-another pretty closely.

This is my interpretation of what least that is the way trading works for shares on the Australian Stock Exchange where this sort of phenomenon is often observed.

However, I cannot say for sure that the price spike is due to this mechanism...but that is my strong impression.



mikalRunning out of tricks#1319545/6/05; 07:44:06

Before the 'U.S. jobs report' this morning came in
well above "analyst's expectations", the numbers
were anticipated by many gold advocates. Here is one
of the reasons why, snipped from another gold forum:
"Took a look at CES net Birth/Death numbers, of the 274K jobs created 257K (94%) came from this model. Here's one of their notes describing the model.
'The most significant potential drawback to this or any model-based approach is that time series modeling assumes a predictable continuation of historical patterns and relationships and therefore is likely to have some difficulty producing reliable estimates at economic turning points or during periods when there are sudden changes in trend.'
Jobs and money out of thin air, amazing trick."

KenoMea Culpa#1319555/6/05; 07:59:16

The worker bees at the Fed fooled me. They were up to the task of producing the product for their superiors. Goldbugs can be heartened though,for if we have a turn up from here in the metal, and the shares sustain or push forward we then have the basis to move forward with strenghth. Wishing all of us good luck in our positions.
Buongiorno!@Goldilox--Col David Hackworth#1319565/6/05; 09:04:10

Thanks for the sad news on Col Hackworth. Heck of a man! Saw him interviewed several times and would have loved to shake his hand. May he rest in peace.

Sorry for the news of increased cancer rates among those vets--it was enough to cope with, considering the war and and the stinking reception many received upon return to the USA. May we never go back to those bad days and worse ways.

GoldiloxVet Cancer rates#1319575/6/05; 09:25:33

@ Bongiorno,

Sadly, the way the US forces are spreading DU dust around the battlefield, and the reintroduction of defoliants in the Columbian "anti-drug" theatre (make sure your coffee comes from Viet-Nam, as the defoliants have had more time to dissipate) suggests to me that the Perfumed Princes remain ambivalent to the long-term fate of their own troops and, basically, their electorate.

Hack will be sorely missed as this latest round of vets returns - read the story entitled "The Wall" posted on his site.

GoldiloxStatistical Confessions#1319585/6/05; 09:57:49


Excellent spelunkering of the population model! Here's some more.


Statistics based on the household and establishment surveys are subject to both sampling and nonsampling error. When a sample rather than the en- tire population is surveyed, there is a chance that the sample estimates may differ from the "true" population values they represent. The exact difference, or sampling error, varies depending on the particular sample selected, and this variability is measured by the standard error of the estimate. There is about a 90-percent chance, or level of confidence, that an estimate based on a sample will differ by no more than 1.6 stand- ard errors from the "true" population value because of sampling error. BLS analyses are generally conducted at the 90-percent level of confidence.

For example, the confidence interval for the monthly change in total employment from the household survey is on the order of plus or minus 430,000. Suppose the estimate of total employment increases by 100,000 from one month to the next. The 90-percent confidence interval on the monthly change would range from -330,000 to 530,000 (100,000 +/- 430,000). These figures do not mean that the sample results are off by these magnitudes, but rather that there is about a 90-percent chance that the "true" over-the-month change lies within this interval.

This means the alleged increase is well within the error rate of +/- 430,000! Whoopee! Of course the private Swiss report on jobs making the rounds in Europe's financial community alleges the numbers to be twisted and the decline was more like a net loss of 300,000 jobs, but for today, look for the Cinco de Mayo party to rock onward and upward.

USAGOLD / Centennial Precious Metals, Inc.The key to diversification is position, position, position. Are you diversified? We can help you get there.#1319595/6/05; 10:16:19">Change paper into gold!
Federal_ReservesJob's report stunner.#1319605/6/05; 10:16:52

In a single month, 605,000 added to the civilian labor force. 598,000 new workers! What the dickens! Are they starting to count the illegal aliens now? Maybe they found a lost city of people! Nah, just more adjustment carp from the ministers!
Gandalf the White"FUNTASTIC" Job ESF Boyz !!!#1319615/6/05; 10:26:40

It is astounding what can be done with MISINFOMATION !
These Boyz can make some statistics do ANYTHING that they want.
BUT, the end result is only delayed a little bit longer.

TownCrierGold slips 1 pct early on strong US payrolls#1319625/6/05; 10:50:36

NEW YORK, May 6 (Reuters) - Gold futures in New York sank to three-week lows early Friday as surprisingly strong U.S. payrolls data hoisted the dollar broadly and dulled the allure of bullion for investors.

The dollar rallied after the U.S. Labor Department said employers created 274,000 new jobs in April, which far outstripped Wall Street economists' ideas for 170,000 new jobs.

One New York trader at a precious metals refiner said, "What you see is dealers liquidating. They got long at around $430, expecting the market to drift a little higher, and then initially you see the knee-jerk reaction."

Investment funds also were active sellers, market sources said, though some mixed buying was kicking in at cheaper prices after traders felt the retreat was a fitting correction, given the jobs data and the corresponding reaction in currencies.

"We have to settle in now and see, are we going to establish a range between $423 and $428 again, or is the market going to try for a higher range at $430 to $435?," the trader said.

He added that market players then would be focusing on next Wednesday's international trade figures for hints of a reaction in the dollar.

^------(from url)-----^

It's hard to imagine that serious traders and investors will have lost focus for very long on the chronic international trade deficit and federal budget deficit for the U.S.

It is also hard to imagine how they might temporarily buoy up the dollar today on strong evidence (jobs data) that the Fed's position is stalking inflation from so very far behind. If the dollar were truly in fine shape, interest rates should not have to rise from here, nor would investors think a rate hike as any sign of health. With the fate of the international reserve dollar on the chopping block, we are in a brave new world and the old "rules" of the past few decades do not so easily apply anymore.

After all that is hard to imagine and hard to see, what is not so hard to see is why today's purely-COMEX phenomenon would find people exiting positions in paper gold more agressively than those buying into paper gold. Physical demand, meanwhile, continues much the same as it has these past few years -- strong and stronger. People realize that proper diversification is all about position; you cannot expect to use piles of more paper as a very effective fireline against a conflagration of your whole portfolio and papery net worth.

Choose physcial gold with confidence, and smile at unexpected bargains along the way.


TownCrierGold price and time frames#1319635/6/05; 10:56:28

See charts at url. Each chart on the right is essentially a zoom-in on the tail end of the longer-term chart pictured to its left.

One week; one day
one year; one month
20 years; five years

euro month; euro day


Federal_ReservesBread Crumbs....#1319645/6/05; 11:21:16

As you all know, gold thrives when the US government has reckless financial policies. Growing trade and fiscal deficits, wars, unemployment, weaken the dollar, and are good for gold. For the last 4 years, the policy makers have claimed to be supporting strong dollar policies but did nothing to stop the drain. Are we moving back from the edge of the cliff now?

Lets look at the trail of bread crumbs.

First we hear of big tax receipts and surpluses in the government along with a huge surge in workers.

Tax Receipts Exceed Treasury Predictions
Early Surge Lowers Deficit Projections

By Jonathan Weisman
Washington Post Staff Writer
Thursday, May 5, 2005; Page E01

After three years of rising federal budget deficits, a surge of April tax receipts brought unexpected good news to fiscal policymakers -- the tide of government red ink appears to be receding.

The Treasury Department this week reported there would be a $54 billion swing from projected deficit to surplus in the April-to-June quarter, after an unanticipated gush of tax payments poured into the Treasury before the April 15 deadline. That prompted private forecasters to lower their deficit projections for the fiscal year that ends in September.

Next, some movement on the trade deficits, with SNOW telling China to let the YUAN float. A big confab scheduled for Monday....

UPDATE 1-US's Snow says he thinks China will loosen yuan
Fri May 6, 2005 12:51 PM ET
(Adds detail, context)
WASHINGTON, May 6 (Reuters) - U.S. Treasury Secretary John Snow said on Friday he believed China would move to a more flexible foreign exchange regime, but would not comment on when.

"Yes, I think they will," Snow said in reference to whether China will move to a flexible exchange rate.


CAFTA looks like it will not pass.

Centrist Democrats oppose CAFTA

By Jim Puzzanghera

Mercury News Washington Bureau

WASHINGTON - The leaders of the centrist New Democrat Coalition in the House of Representatives announced today their opposition to a free trade agreement with Central America, imperiling the passage of one of the top legislative priorities of Silicon Valley's high-tech industry.


Finally gold on the verge of breaking below the long term uptrend line. Stay alert. If it breaks I plan to hedge.I think at the margin some of the reckless policies we have are being reviewed and altered if ever so slightly.

TownCrierRE: msg#: 131962#1319655/6/05; 11:23:52

The bond market participants, at least, got their signals right. The prices on Treasuries slid on inflation expectations (that is to say a weaker, not a stronger, dollar is expected).

It might seem strange that inflation-antidote gold would suffer a mild sell-off on a day where bonds are suffering an inflation-based sell-off, however, we must bear in mind that the "gold" selloff we're seeing here is primarily a flight out of COMEX paper. And a bit of BB gamesmanship, too. And frankly, what else would we expect?


GoldiloxUp into the Close#1319665/6/05; 11:28:57

If the SM can barely eek a 25 point gain out of the "fantastic" jobs numbers, look out below!

The traders don't believe much of what is published, either.

Gold and silver are recovering some of the shock losses into the COMiX close.

R PowellMichael's question#1319675/6/05; 14:02:39

MK, did you ever get a copy of "When Money Dies" by Adam Ferguson that you were looking for? I'd be glad to loan you mine but mine was borrowed from a Boston library which loaned it to our local library system. I could not keep it which bothers me somewhat as I like to reread good information every so often. This is necessary since my brain leaks (old age?), like the Boston "Big Dig". Boy, those Boston politicians in cahoots with big contractors took those government boys bearing "Federally Funded Money" available for construction projects for a big ride. Don't mess around with Boston politicians!

Was Sundeck's response (131948) near to what you had in mind to your question (131943)? Basically, if I read it right, I believe he was suggesting that if it is necessary to carry long term debt, the longer the term at a low fixed interest rate, the better. Yes sir, what this country needs is a good nickle cigar and 100 year bonds.

Also, I believe (not positive?), another result of that Weimar hyperinflation was the repayment of the WW 1 war debt that the French demanded that the Germans pay. Hey, if/when the average pay rate reaches $100.00/hour, for minimum paying work, then, at least, corporate, consumer, state and federal debt will be so much easier to pay off, no? Why, even GM and Ford will be able to finance their (fixed) retirement pension obligations with ease. It's so simple, really, just print more money. And, so as to be environmentally friendly and save trees, add a zero or two every few months to the bills' denomination. Bingo, no more deficits!
The losers? Anyone on a fixed income or the very wealthy who hold their wealth in paper denominated assets that do not appreciate as the currency depreciates might not be too happy with this "rebalancing".
Do you remember the story from the Weimar inflation of the city-dweller who traded a baby grand piano for a few hundred pounds of potatos and how the farmer had to smuggle the food through the town to keep it out of sight of the hungry crowds but had no trouble leaving town with his new piano?
Any other thoughts to the question (post 131943)??
happy weekend once again!!

GoldiloxHedonics on CNBC#1319685/6/05; 14:18:08

One of Maria's interviewees said he was concerned that 257K of the 274K jobs were "created" by the birth-death model. She had no reply and moved to another topic post haste!

I bet he doesn't get interviewed again soon.

John Snow says "we will continue to have good, strong, non-inflationary growth that creates a lot fo job growth going forward."

OK, if job growth is real, will the FED increase rate hikes to battle inflation?

It's getting more interesting daily. John Stewart couldn't script it better.

R PowellSundeck#1319695/6/05; 14:19:52

The transition of prices from one market to another that you mentioned (131953) is usually a fairly easy transition with bid-ask prices. Occasionally there may be a discrepancy between different markets. There are arbitrage traders who will immediately pounce on this situation buying at the lower price while simultaneously selling on the higher priced market until both markets are equally priced again. Add in ever fluxuating currency exchange rates to the equation and one begins to appreciate how tenuous this type of casino action can be.

These price differences do not usually last very long as the arbitragers are like piranhas. But, they serve their purpose in keeping the price for the same item balanced from market to market. They do their job very well.
happy weekend!

TopazBond Pit Mantra.#1319705/6/05; 15:04:26

One of the few joy's in life for me is to get up on a Saturday morning (here) and check out o/night market action ...sick puppy that I am!
This morning didn't disappoint as we find DX up, Gold down(ish) ...and, whats this?? ...Bond "sell-off"!!

I'm afraid I must disagree with those pundits who look to Bond Yields and declare this move as inflationary ...or indicative of such.

We DO see some "weak-hand" selloff, but to attach any substance to it (atpit) is jumping the gun somewhat.

Now repeat after me the BPMantra ...

...there is NO inflation ...there IS no inflation.

968Interchange in a changing market: Observations from the euro area perspective#1319715/6/05; 15:12:41

Speech by Gertrude Tumpel-Gugerell, Member of the Executive Board of the ECB
for the conference organised by the Federal Reserve Bank of Kansas City
Santa Fe, 6 May 2005

Slights can be found at the following url :

"In none of the euro area countries is the level of card use as high as in North America. Euro area citizens make an average of 36 card payments per year. In the United States, the figure is almost four times higher, at 126 transactions. I should, however, point out, by way of a caveat, that the data are certainly not fully comparable between the United States and the euro area."
This certainly explains something of the difference between the US - Euro area savings habits.

MKRich#1319725/6/05; 15:21:48

I guess I just don't see the connection between issuing 30 year bonds and hyperinflation. Borrow now. Pay later. So what else is new. The national debt is there whether it be financed with 5 year, 10 year or 30 year notes. To me a signal of impending hyperinflation would be if Treasury issued 30 year notes and no one bought them. Then they issued 10 year notes and no one bought them. All the way down to 6 month notes (and no one bought them). Then the Fed would resort to financing the debt with printing press money and Bernanke would get the helicopters in the air. But if the world is ready to lend the U.S. money for 30 years at current interest rates - that is a vote of confidence, isn't it?

I thought the remark out of the Brimelow column an interesing one and wondered what was behind it. Still searching. . . .

Along these lines wasn't there some talk here and elsewhere when they stopped issuing the 30 years it was to avoid the embarassing proposition that the market wouldn't be all that good for paper that far out? So what happens if Treasury issues 30 year bonds and they have a hard time peddling them?

Hope all's well with you and your family. We may see an economic slowdown this summer but it won't hit the construction trades. . . .it will be the Walmart slowdown. The trades will be good for at least one more year. (one man's opinion). Watch out for that revaluation everyone's talking about. That's for real.

The headline in the Financial Times this morning has to do with GM and Ford issuing junk -- and I'm not talking about their cars (ahem). . . .I'm talking about their paper. We could have a credit crisis in this country and NY/London dumps gold $5 - - go figure.

R PowellTopaz#1319735/6/05; 15:25:37

do you mean to imply that watching market action is somehow addictive..."sick puppy that I am" or otherwise not healthy? I have to confess, I fully understand. Shall we start a market watchers anonymous? "Hello, my name is rich and I'm a market watching junkie." And anything (commodity) that's traded gets my attention! I mean, how many people do you know that monitor the Tokyo Grain Exchange to keep tabs on the grains and coffee when the US and London markets are closed? Japan is the fourth largest coffee consuming country in the world. Houston, we may have a problem here...

I always appreciate your daily reports, thanks.

Will the mantra help? I'll close my eyes, click my heels three times and repeat over and over...

There is no inflation
there is no inflation
there is no in.....

968@ MK#1319745/6/05; 15:35:32

Good evening Sir MK,

Thanks for joining us at this excellent discussion board. May I kindly remind you on msg#: 131917 ?

Thanks in advance and have a golden weekend.

R PowellMK#1319755/6/05; 15:44:54

About those 30 year (or longer) term said...

"I guess I just don't see the connection between issuing 30 year bonds and hyperinflation. Borrow now. Pay later. So what else is new. The national debt is there whether it be financed with 5 year, 10 year or 30 year notes."

I was thinking from the point of view of the issuer of the bonds. It would advantageous to finance at low fixed rates for as long as possible, no? And yes, if no one wants to buy the debt, then deficit spending is all done. Fiat must expand (inflate) or die. Is this true + does it mean that debt issuance must always expand too? I guess it's a matter of confidence, no?

As many have mentioned before, if the dollar weakens (or worse), who benefits and who loses? This, in light of who holds the paper and with consideration given to the amounts held, turns this whole currency question into more than just a confidence crisis for ONE country's currency. It's now global. This complicates the question well beyond any conclusions that I fell even remotely secure in, which, of course, greatly peaks my curiousity. Now, if we add in the possibility of a Chinese floating currency...?

I heard from an unconfirmed source today, that the Chinese may have loaded up recently on commodity buying. Might this be in anticipation of a stronger yuan? The weekly cotton export sales number released by the USDA yesterday was the largest number, by far, that I've ever seen in a good many years of closely watching such numbers. Hmmm??

More thoughts from one and all?
happy month of May weekend to all

MKThe euro -- A currency without a country#1319765/6/05; 16:16:17

Briefly. . . .

Gold has no aspirations. Gold does not want to rival the dollar. Gold doesn't particularly care if it is a reserve item or not. The euro has plenty of aspirations. It wants to be the main rival to dollar. It wants to become an international reserve replacing the dollar. That's the difference. . .

In order to do that it must recognize itself as a product. It must make itself appealing. The more appealing it is, the better its share of the international reserve market. But as much as it wants to be the belle of the ball it is still just a fiat currency and whereas other fiat currencies, like the dollar, have the power of the nation state behind it, the euro doesn't even have that. So what is a euro? What does it represent? In the end, that's what this boils down to doesn't it?

How is the euro going to garner its share of the reserve market? By putting on a pretty face and saying "Here I am?" That works for awhile but sooner or later the prospective suitor will look behind the pretty face to see what's really there.

That's why the constitutional vote in France is so important. Your post makes me think that you see my views as somewhat radical. They are not. The same position I outlined is being discussed in nearly every publication of substance in Europe at this very moment. And it should be. . . . .

Trichet's comments, as you outlined them, are ambiguous. How can something be "apolitical" and "multi-partisan" at the same time? Isn't that an oxymoron -- one of those self-cancelling statements often made by central bankers -- the sort of thing that Alan Greenspan raised to an art form. To me it reflects the overwhelming confusion circling around the euro, the European Union and the constitutional vote.

Trichet, like his predecessor, is playing the hand he's been dealt. He calls the ECB "apolitical" to spin the euro and hide its fundmental weakness, i.e. issuing a currency without a country. He calls the ECB "multi-partisan" to appease the millions in the Euro community who would rather deal with their own central bank staffed by their countrymen and responsive to their interests. In short, Trichet's job is making lemonade. His job is to make the ECB acceptable to as many Europeans as possible, so the light is bent through the prism Trichet is holding.

Let me ask you, 968: If the euro were put to a vote in Germany today, how would that turn out? Try to be honest with yourself. How many Germans would vote for the return of the D-mark? I would bet you a dollar if it were put to a vote, the D-mark would win!

All of these votes come down essentially to votes of national sovereignty, and in order to give up one's sovereignty, the citizen must know what he or she is getting in return. It stuns me that the greatest opposition to the Constitution is not the Gaullist right, but the socialists who believe the new constitution will deprive them of their mega-welfare state -- which they view as progressive. The Constitution at least at some level provides a framework through which the will of the people can be exercised. Europe will become a nation state with a national currency instead of loose confederation issuing what amounts to sophisticated bank scrip.

One last point, you are right gold is the original currency without a country and that is because Nature made it that way not a board of bureaucrats in Frankfurt. There is a restriction on its issue and a heavy cost. South Africa's recent problems come to mind. This is what makes gold valuable. Can you same about the euro? You cannot because it is a fiat currency, just like the dollar. We are all proficient enough students of history to understand what that means. This is why the euro has met with a cool reception among gold advocates. There simply is no more reason to trust it than there is any other fiat currency.

Enough for one day. Thanks for the opportunity to share my thoughts on this important matter. Should the constitution pass in France and Netherlands and the nation state put in place, then we shall discuss other, even more comples issues, but for now, the vote will be important enough to occupy Europe's attention and the attention of the world. . . .

We shall see how it comes out and how the euro fares should the constitution be defeated.

mdgcRevaluation of the RMB#1319775/6/05; 17:10:13

R Powell

The Chinese would delay buying if the coming revaluation were about to happen soon. Then buy the same resource with fewer yuan than before the rate change.

My guess is that they will announce an eight to ten percent appreciation later this year, say September. They will eventually float the yuan but that is still a couple of years off.

Gandalf the WhiteThe GOLD P&F chart has a new vertical column ! <;-)#1319785/6/05; 17:11:57$GOLD,PWTADANRBO[PA][D][F1!3!!!2!20]&pref=G

LOOK ==> a stack of two RED "0's" under a RED "5". which is slightly "bending" the RISING CHANNEL line --- BUT not breaking it !!!
Get ready to ROCK AND ROLL !
To the MOON, Alice !

melda laureEurope a constitution- even the High King at Tara had term limits!#1319795/6/05; 18:06:46

Europe IS a country, in my opinion. The euro is a currency without a GOVERNMENT- i.e. without the power of coercive taxation-inflation (or gasp! deflation) behind it. Were it gold then there would be no question, but instead they have chosen a crown, and right now it is a headless crown. Gold has no opinions, it goes flows to wherever it is wanted (ie bid for).

Crowned heads always have opinions- otherwise the money would flow away. The euro bond paper market will never quail in fear of the opinions of some "advisory-junta-on-monetary-affairs". More importantly for the bankers, Trichet is operating a lemonade stand when what the bankers want is a trans-european protection racket.

Should they ever have a european LTCM, can they be sure that nationalism wont "impede" the bailout process? What if (pick any country with former colonies, - for no particular reason, suppose France/Algeria) France were to get into a major $hooting $cuffle on the Algerian border with Whatsitstan? Where does the 100 billion euros/year come from to finance the conflict?

In short, under the present headless hydra (all necks, no body), the member governments must forgo cowboy diplomacy, moral hazard, and welfare statism- the three things that make the modern state what it is. That is, they get all the restrictions of a gold money, with only a small portion of the stability. Were europe a continent peopled by hobbits this wouldnt necessarily be a bad thing. Unfortunately it is peopled by Danes, Gaels, Huns, Romans Saxons, Franks, and while we may laugh at Spain and Greece, they had their heavy metal days not so very long ago that the rest of the world has forgotten.

"Political protocols" (mssg #131917) is perhaps too much a euphemism. "Weasel Protocols" is probably closer to the truth, even though it sounds a rather silly.

On the other hand, you have to consider that a much more limited political association required the years from about 1621 to 1866 to form the USA. Even the US constitution was several YEARS in the making- not all of which can be attributed to lack of good roads and high speed internet. I have no idea how it will turn out, and I'm not in a hurry, even the irish knew the value of term limits, it's just taken a couple millennia to get back to it.- what do YOU think of western civilization?

Deng Xiao Ping: "Too early to tell..."
Ghandi: "I think it would be a good idea."

melda laureCorrection 1621 to 1933#1319805/6/05; 18:11:32

That's how long it took to form the current form of US government. I use the word "form" purely out of silliness, so as not to offend you with orcish speech, you may substitute "profane" if you desire.
R Powellmdgc#1319815/6/05; 18:46:34

Right you are about commodity costs becoming cheaper for China should their currency strengthen. I had that wrong, as did those elsewhere from whom I picked up the rumor. Why then, if the rumors have any validity, is China stocking up on raw materials OR is their industrial demand for materials simply even greater than the current bullish expectations so that the recent buying is just to supply ongoing needs + not for stockpiling? That cotton sales number was simply extraordinary (or a misprint?). Or, perhaps they have no intention of breaking the current yuan/dollar peg and foresee the dollar growing even weaker (making raw materials more costly)? I don't know. Maybe they do. Maybe they have decided not to support the dollar in the future?

Jimmy Rogers has a fairly new book out in which he states that he has/will invest in anything and everything that China needs. He even advises that "buying the price dips" may be a good stategy whenever any news items speculate that Chinese growth may be slowing or that the central government may try to slow growth to contain inflation or prevent economic bubbles. I wonder if the demand for good workers there can also sustain better wages (possible gold demand?), with the intent being to increase domestic consumption? Wouldn't this be a good policy before floating the yuan? Fwiw, this month's "Futures" magazine has an interview with Rogers which may give his current views. I haven't read it yet.
Thanks for correcting my error.

GoldiloxStockpiling commodities#1319825/6/05; 19:56:00


If the Chinese are stockpiling, it makes good sense to cost-average. If they wait unti they depeg the currency, someone (I wonder who?) would block them from further accumulation.

Maybe that's another indication that they are more visionary than others have been in the past.

GoldiloxConfessions of an Economic Hitman#1319835/7/05; 00:43:16

This week's 2nd hour guest on the FSN is John Perkin's author of the title volume. I saw him a while back on CSPAN Book Report.

His story of overt and covert support for American globalism since WWII is fascinating.

snip from his bio:

"Confessions of an Economic Hit Man, which many people warned Perkins not to write, exposes the little known inner workings of a system that fosters globalization and leads to the impoverishment of millions of people across the planet. It is a compelling story that also offers hope and a vision for realizing the American dream of a just and compassionate world that will bring us greater security."

KenoGoldi and all#1319845/7/05; 00:54:53

Yes that was very interesting,Perkins has some strong backbone. On the metals and metal shares there was some great strength shown today.All that held their positions will be grately rewarded possibly right out of the shoot on Monday.Remember to to good things for your family with your new, but hard fought for wealth. Have a good weekend everyone.
masFor the funny side of Saturday#1319855/7/05; 01:19:05

Here's an impressive web site for all you Americans, see where it leads you? Something like the chocolate factory but with a serious tone.

DruidREMEMBER FREE MARKETS?#1319865/7/05; 01:57:04


"Forget about market fundamentals: P/E ratios, debt ratios, earnings, blah blah blah. Forget about technicals: Double-tops, support, resistance, who cares? Those concepts were relevant in the good old days, but not in our super-duper never-a-bear-moment, new and improved 21st century government/central bank managed and manipulated market.

That's right folks. I'm talking about market manipulation and I'm here to tell you that the idea is no longer the exclusive domain of wackos and nutjobs like me. Market management has become so blatant, so undeniable that even Stephen Roach of uber-mainstream Wall Street firm Morgan Stanley recently wrote "I am not a believer in conspiracy theories. But the Fed's behavior since the late 1990s is starting to change my mind."

Why talk about manipulation? Why do we care? Because in my estimation, it has become the single, most-dominating force impacting your investments today. I won't delve too deeply into the mechanism or the means as this information is readily available all over the Internet. But a brief history is in order.

Prior to 1987, we had relatively free markets in this country. Government, albeit stupid overall, had sense enough to leave this one area relatively free of intervention, aware that while they can screw up just about everything else and get away with it, it's not a good idea to bite the hand that feeds you.

But after "the crash", Executive Order 12631 created the "Working Group on Financial Markets", consisting of the Secretary of the Treasury and the chairmen of the Federal Reserve, the SEC and the CFTC (or their designees.) Their goal: to enhance "the integrity, efficiency, orderliness and competitiveness" of our financial markets and to "maintain investor confidence." The means: "The Department of the Treasury shall provide the Working Group with such administrative and support services as may be necessary for the performance of its functions."

And what better way to maintain investor confidence than to make sure the stock market doesn't go down by tossing

And what better way to maintain investor confidence than to make sure the stock market doesn't go down by tossing the Treasury's unlimited resources at it?

From the WGFM grew what today we nutters and wackjobs refer to as the "Plunge Protection Team." It is surmised that this group was built upon 1989 suggestions from Fed Governor Robert Heller who felt that the Fed should purchase stock index futures during market "emergencies" in order to halt major declines.

Do we know that the PPT exists? Official government denials of its existence are our first clue that it almost certainly does. But we needn't resort to cynicism for evidence. If such a creature exists, it must leave footprints in the market. Where there are footprints, there must be creatures. And oh yes, there are footprints.

Since the current cyclical bull began the S&P 500 has never suffered so much as a 10% correction. That is "unusual" like Mt. Everest is "a decent chunk of rock." In the two years during which the economy has struggled with the worst "recovery" on record, in the face of stagnant job growth and a host of other problems, the market has been so flooded with bullish investors that it couldn't pull back 10%? Nonsense.

In fact, whenever the market appeared ready to reverse its uptrend at key technical levels, (and it tried PLENTY of times), huge buying appeared in the futures pits. These were obvious levels that, if violated, would have triggered much more substantial selling. Some "market player" was willing to throw oodles and gobs of money at the market to prevent it from falling.

While there are funds that have that kind of capital, there aren't funds that are stupid enough to step in front of a speeding freight train to take a contrary position when they could make so much more money so much faster by positioning themselves WITH the decline.

Sure, every once in a while some of them get crazy and make a huge contrary bet. But not EVERY time and not at EVERY major turning point. None of them have enough capital, cojones nor dim-wittedness to attempt to halt a decline every time."

Druid: Rostenko writing a nice commentary about FreeGold without even mentioning it. Given enough time and data, even your mainstream guys like Roach are beginning to connect the dots.

mikalFanciful trust funds and real levies#1319875/7/05; 06:06:56

ALL OVER THE PLACE - Ed Henry - Excerpts:
"I hope you are all listening to, watching, and reading the pure garbage that's being put forth today. And put out without challenge by anyone. Let's list some of these:
Words have become weapons of mass destruction. Removing filibusters is a "nuclear option." Let's send filibusters to Iran and North Korea so they can talk themselves to death. At least the girls at Hooters are more sincere when their t-shirts say "weapon of mass distraction."
Social Security is going broke, bankrupt, bust by 2041. A supplemental retirement insurance program that produced a profit of $71 billion last year and is following the same path month by month this year is unhealthy, in trouble, and needs to be fixed so the pirates can steal even more loot.
It's costing us $600 billion a year until we "fix" Social Security – the same program that produced the $71 billion profit last year – an $82 billion excess the year before that – $89 billion extra in 2002 – and $98.7 billion in fiscal 2001, the first year of the Bush presidency. Nobody asks "why" we're suddenly losing $600 billion a year somewhere and somehow, a sum that sounds more like government budget deficits or our annual balance of trade deficit. Are politicians now blaming Social Security for their financial mess?"

"The one thing people can be sure of is that you cannot count on the members of our Fourth Estate or watchdogs to investigate much of anything. Incapable of responding to, opening up, or pressing a single Social Security issue, much less the crazy numbers being bandied about, they seem to think that a "probe" is something your general practitioner does during your annual check-up."

USAGOLD / Centennial Precious Metals, Inc.Peace of mind, 24/seven#1319885/7/05; 11:23:13">gold -- a global calling card
Black BladeThe Truth About Euros and Dollars - Financial Tsunami#1319895/7/05; 11:53:48


Economists predict a financial tsunami. The clash of the two titans has begun. The newly introduced 15-nation currency Euro is giving sleepless nights to the high and mighty Dollar. Well the falling dollar is just the beginning.

The only country to escape the perils of World War II was USA. With about 80% of the world's gold reserves and 40% of world's production, US was touted as a power to reckon with. A fixed exchange currency was established based on gold, the gold-dollar standard, wherein the value of the dollar was pegged as U.S. $ 35 per ounce of gold. Because gold was combined with U.S. bank notes, the dollar note and gold became equivalent, which then became the international reserve currency. However, the onslaught of the Vietnam War and the alluring stock market gains assured a steep decline in gold reserves. The U.S. Treasury was running out of gold and had only $ 10 billion in gold left. On August 17, 1971, Nixon suspended the U.S. dollar conversion into gold. Thus, the dollar was "floated" in the international monetary market.

Where oil is concerned, President Roosevelt saw to it that dollar dominated the international trade and became the reserve currency. Saudi Arabia, the largest oil producer with the largest known oil reserves, is the leader of OPEC and also largest exporter to US. It is the only member of the OPEC cartel that does not have an allotted production quota. It is the "swing producer", i.e., it can increase or decrease oil production to bring oil draught or glut in the world market. This enables it more or less to determine prices.

Non-oil producing countries, such as most underdeveloped countries and Japan, first have to sell their goods to earn dollars with which they can purchase oil. If they cannot earn enough dollars, then they have to borrow dollars from the World Bank or International Monetary Fund (IMF), which have to be paid back, with interest, in dollars.

This creates a great demand for dollars outside the U.S. In contrast, the U.S. only has to print dollar bills in exchange for goods. Even for its own oil imports, the U.S. can print dollar bills without exporting or selling its goods.

Black Blade: Some interesting Saturday reading.

geGet On Board the Gold Train!#1319905/7/05; 12:56:24

The Elliott Wave People have started to predict $200 gold again.

Since they are contrary indicators, this must be the bottom, or a place near to the bottom.

Is this an express train? The express would not stop at minor stations.

melda laureHit Men and Political Capital.#1319915/7/05; 14:28:33

I read Ed Perkins book. It's tempting to view it as weenie-liberal america-bashing droolings, but the truth is that this is the way the world has ALWAYS been, it's just that it has been other countries doing the deed. You might consider that in the roman era similar things happened, after all you cant very well nuke the patrician next door, but you can apply "leverage", bribes and kidnappings.

As Bill Bonner says, "there are honest means and there are political means, there is commerce and there is coersion and knavery."

It does fill in some blanks in my memory however. Interesting that the Oil in Indonesia was already a target even in 1965 when the peak oil production in the US wasn't until 1973. Clearly the so called lack of strategic planning, the oil crisis and so on was somewhat overbilled in the history books. When Nixon declined the Shah's offer of a strategic oil stockpile perhaps he felt that the political stockpile was deep enough- though the thought occures that perhaps he knew the potential profits were greater post-crisis.

Political stockpiles are NEVER deep enough in crisis. Only the real article will do.

Black Bladege - Gold Train#1319925/7/05; 16:34:13

Indeed! The last time the Eliott Wave folks made this prediction (as I recall) Gold jumped higher by about $85. Every time they call for Gold to fall lower it really is a contrary indicator. hard to tell who is the better contrary indicator - Elliott Wave or Andy Smith "the Gold Bear" of Mitsui.

- Black Blade

mikalSir Alan and the Knights of the Oblong Table#1319935/7/05; 20:01:11

Photo caption reads: "during at a meeting of the President's Working Group on Financial Markets..."
2003-11-14-15-31-44-23478: President's Working Group on Financial Markets Meeting

Goldilox"Pork-Laden" Iraq Bill#1319945/7/05; 20:48:36


"Just when you thought it might be impossible for the Bush administration and House Majority Leader Tom DeLay to stoop any lower, they have sunk to a new depth. They are now, in the well-chosen words of one member of the U.S. House, "using America's fighting men and women as human shields to pass pork-laden legislation."

The administration and its chief congressional ally hijacked the resolution for supplemental funding of the U.S. occupations of Iraq and Afghanistan and added to the measure a laundry list of giveaways to special interests and bad policies. In addition to packing in all sorts of new immigration rules and expenditures, which should have been dealt with on their own merits rather than buried in an "emergency" spending bill, they also included money for a "wish-list" of Pentagon boondoggles that have nothing to do with helping the troops on the ground in Iraq and Afghanistan -- let alone getting them home alive.

Unfortunately, most Democrats went along with this abuse of the legislative process, making themselves partners in an ugly and unwarranted diversion of taxpayer dollars. The final House vote in favor of the $82 billion package was 368-58. Supporting the "emergency" bill were 225 Republicans and 143 Democrats; opposing it were 54 Democrats, three Republicans and Vermont Independent Bernie Sanders."


With the passing of watchdog Col. Hackworth, the current band of thieves will hide behind the patriotism of the troops to pass their pork-laden fleecing of the US taxpayer. Too many gutless representatives hide behind the "machine" and worry that voting any conscience they may still have will cost them their jobs!

The Invisible HandDebacle, what debacle? – me British, me gentleman!#1319955/7/05; 21:09:20
Fears of hedge-fund meltdown prompt FSA to launch probe
By Jason Nissé
08 May 2005
John Tiner, the chief executive of the Financial Services Authority, has launched a wide-ranging investigation into the workings of hedge funds in London which is expected to lead to a massive shake-up in the way they are regulated.... There are also fears that a massive financial scandal could be brewing after what was described by an industry insider as "a few near misses".,6903,1478830,00.html
Third term opens with retail crash
Heather Stewart, economics correspondent
Sunday May 8, 2005
April was the cruellest month on Britain's high streets for more than five years, retailers are expected to reveal this week, underlining fears about the health of the economy as Labour begins its third term

From last week:;sessionid=KSNAKV155RQZ3QFIQMGSM5OAVCBQWJVC?xml=/money/2005/04/30/cnotmar30.xml&menuId=242&sSheet=/portal/2005/04/30/ixportal.html&secureRefresh=true&_requestid=16981
Germany puts its faith in Keynesian
By Ambrose Evans-Pritchard (Filed: 30/04/2005)
Germany is backing a 1970s-style Keynesian to take over the crucial job of chief economist at the European Central Bank, marking a dramatic shift in Berlin's economic thinking and horrifying the guardians of orthodoxy in Frankfurt.

GoldiloxCarter Tried To Stop Bush's Energy Disasters - 28 Years Ago#1319965/7/05; 21:13:14


"In his recent news conference, George Bush Jr. suggested that our nation's "problem" with high gasoline prices was caused by the lack of a national energy policy, and tried to blame it all on Bill Clinton. First, Junior said, "This is a problem that's been a long time in coming. We haven't had an energy policy in this country."

This was followed by, "That's exactly what I've been saying to the American people -- 10 years ago if we'd had an energy strategy, we would be able to diversify away from foreign dependence. And -- but we haven't done that. And now we find ourselves in the fix we're in." As is so often the case, Bush was lying.

Consider President Jimmy Carter's April 18, 1977 speech. Since it was given nearly three decades ago, when many of the reporters in Bush's White House were children, it's understandable that they don't remember it. But it's inexcusable that Bush and the mainstream media (which, after all, has the ability to do research) would completely ignore it. It was the speech that established the strategic petroleum reserve, birthed the modern solar power industry, led to the insulation of millions of American homes, and established America's first national energy policy. "With the exception of preventing war," said Jimmy Carter, a man of peace, "this is the greatest challenge our country will face during our lifetimes."

He added: "It is a problem we will not solve in the next few years, and it is likely to get progressively worse through the rest of this century. "We must not be selfish or timid if we hope to have a decent world for our children and grandchildren.

"We simply must balance our demand for energy with our rapidly shrinking resources. By acting now, we can control our future instead of letting the future control us." Carter bluntly pointed out that: "The most important thing about these proposals is that the alternative may be a national catastrophe. Further delay can affect our strength and our power as a nation." He called the new energy policy he was proposing, "[T]he 'moral equivalent of war' -- except that we will be uniting our efforts to build and not destroy."

When Carter had become president three months earlier, the nation was still recovering from the "oil shock" of the 1973 Arab oil embargo, and scientists were realizing our nation was just then hitting the point of domestic peak oil production predicted more than a decade earlier by scientist M. King Hubbert. (The rest of the world is hitting the Hubbert Peak right now.) As Carter noted in his speech, "The oil and natural gas we rely on for 75 percent of our energy are running out. In spite of increased effort, domestic production has been dropping steadily at about six percent a year. Imports have doubled in the last five years. Our nation's independence of economic and political action is becoming increasingly constrained." Hubbert had predicted that the peak of oil production for the USA would come in the 1970s, and it did, hitting us with a shock.

"The world has not prepared for the future," said Jimmy Carter. "During the 1950s, people used twice as much oil as during the 1940s. During the 1960s, we used twice as much as during the 1950s. And in each of those decades, more oil was consumed than in all of mankind's previous history." Hubbert said we must begin to conserve. Carter agreed.

"Ours is the most wasteful nation on earth," he said, a point that is still true. "We waste more energy than we import. With about the same standard of living, we use twice as much energy per person as do other countries like Germany, Japan and Sweden." Carter directly challenged the fossil fuel and automobile industries. "One choice," he said, "is to continue doing what we have been doing before. We can drift along for a few more years. "Our consumption of oil would keep going up every year. Our cars would continue to be too large and inefficient. Three-quarters of them would continue to carry only one person -- the driver -- while our public transportation system continues to decline. We can delay insulating our houses, and they will continue to lose about 50 percent of their heat in waste. "We can continue using scarce oil and natural gas to generate electricity, and continue wasting two-thirds of their fuel value in the process."


One of Carter's main weaknesses, of course, was his unwillingness to cowtow to oil interests, often termed "inability to play the Washington game". Just as today's NASA plagiarizes McCanney without reference to his work, Bush's silent "Energy Policy Committee" - kept secret through collusion with Justice Scalia - will take Carter's policy for energy independence policy and call it their own. One of Reagan's first acts in the White House was to remove the solar panels on the roof as a statement of solidarity with Bush I and the Oil cartels.The Great Energy Waste was ON!

Does anyone really think the oil admin is depressed by >$50/bbl oil? Just look at XOM's $8B record quarter profit to see who benefits.

heavy mettleBuffett & Munger#1319975/7/05; 22:12:59


On gold, both Buffett and Munger made their dislike for the yellow metal very clear.

"We are not enthused about gold," Buffett said. He prefers an asset that is "useful." He said gold has very little economic utility and prefers commodities that have an economic effect – like oil.

"Gold is a dumb investment," Munger cut in.

I've just lost more respect for these guys. When Buffett went to Europe to hang out with most influential bankers, well...

Can't really blame them for disliking a world class asset that utilizes the most important area of the world's economic wealth pyramid; its base. What about the other side of CB selling? If the average person were to run to the yellow metal from paper promises and inflation, going forward, to protect their net worth from Wall Street and Washington pirates, BM's stash of 44 billion would soon have some of the air taken out like a swift punch to the solar plexus.

And for the last quip about gold being a bad investment, if history is any guide, gold acts more like a currency par none in bad times which their doom and gloom comments of troubled times ahead are ironically sandwiched around their negative comments about gold being a terrible commodity and investment. I mean these guys are old enough to have been around in the 70s and 80s. Munger has conveniently confused true wealth with unstable and hard to store commodities and their paper promises.

Certainly living in the US and investing in dollars would be dumb, so what Munger says is correct assuming the dollar were backed by gold and if the world was on a gold standard. However if I hold a wealth asset outside of my own fiat that appreciates relative to the dollar like real estate, the Cando, euro and Gold, then relatively I have kept even with inflation or possibly come out ahead in recent years. Aren't these guys heavily invested in currencies other than the dollar? If their stock investments aren't losing nominally, they are more than likely only breaking even due to the effects of real inflation over the last few years.

Do they not deceive themselves and their stockholders in the pursuit of paper and digital profits as gold pays no interest? I patiently wait for the day they recommend yesteryear's conventional wisdom of 10% allocation just to be on the safe side. At that time I'll be with them buying real estate at bargain prices. The exogenous event they speak so sagaciously of might be of embarrassment down the road if they aren't backing the right horse.

... so where do they think people are going to run once the wheels fall off, Fruit of the Loom underwear?

GoldiloxBuffett and Gold#1319985/7/05; 23:34:12

@ Heavy Mettle,

It's not too hard to see why WB doesn't prefer gold. You speak of a financial pyramid. Remember, Buffet is the very capstone of the Insurance Industry - the grandest pyramid scheme of all.

One thing we've learned about insurance. When disaster strikes, they run out and leave the shambles for the government to "fix", a la SLDIC, LTCM, FEMA, etc.

It's certainly not difficult to see why he would not forsake his personal pyramid for one that he doesn't control.

Black BladeCommodities-hungry India lining up to be new China: analysts#1319995/8/05; 00:23:17


India has contributed largely to soaring Asian demand for hard commodities, such as oil and metals, during the past two years.

It is by far the world's biggest consumer of gold, representing about a fifth of global demand. The precious metal is bought in bulk in the form of jewellery that is offered as gifts on the occasion of marriages and the country's various festivals.

"Gold is a big part of Indian life and as people get richer they'll buy more gold jewellery," Evers said. China is the world's biggest consumer of platinum jewellery.

India accounts for only two percent of world copper demand compared with 22 percent by China, which is ahead also regarding crude oil. China accounts for eight percent of crude compared with three percent by India.

Black Blade: No real surprise here. China and India are both on track to consume more raw materials and use ever more of the global energy supply. Both have also been "on the hunt" for energy supply where-ever that may be. And both are poised to become ever more extremely huge buyers of precious metals.

ChallyIf it walks like a duck and quacks like a duck......#1320005/8/05; 00:40:21

.....then by God, it just may be a 'Nash equilibrium'..or better yet a 'stable disequilibrium'.

I read and absorb(or TRY) the astute observations of some awesome Roundtable members here. One thing that's pretty much agreed upon is the fact that we're watching a train wreck in slow motion.

The big unknowns in the scenario are 1)....the timetable for this wreck, and 2)....just how badly it will conclude.

Now personally, because of how I'm positioning my assets, I WANT the wreck to happen quickly and be over with so that my 'yellow' hoard will attain great value relative to the avalanche of green fiat that seems to rule the planet.

Of course if it plays out as I suspect, gold may not totally insulate us from the many disruptions which may follow a sudden readjustment of monetary values.

So I'll offer up this snipit (and link to the complete article) from John Mauldin's weekly eletter, which, sums up the problem concisely (meaning 'understandable' to ME)and whose only 'good news' may be that we could have a while to accumulate more shiny coins before the SHTF....oh and it explains 'stable disequilibrium'. OK, heres the snipit
-----------------------------------------------------------I have described the instability in terms of a Nash equilibrium. Again, in review: in game theory, the Nash equilibrium (named after John Nash) is a kind of optimal strategy for games involving two or more players, whereby the players reach an outcome to mutual advantage. If there is a set of strategies for a game with the property that no player can benefit by changing his strategy while (if) the other players keep their strategies unchanged, then that set of strategies and the corresponding payoffs constitute a Nash equilibrium. (John Nash, the Nobel laureate in mathematics was featured in the movie "A Beautiful Mind.")

The US is living, many say, on the kindness of strangers. If it were not for the willingness of Chinese and Japanese central banks, along with their smaller Asian counterparts, to finance our trade deficit, we would be in perilous circumstances. If Asian currencies saw the dollar fall by 33%, they stand to lose over $600 billion in buying power due to their massive $1.8 trillion US dollar reserves. That is a massive amount of confidence.

Yet it works both ways. Exports to the US alone accounted for about 12% of China's GDP, and that was up from 9% in 2000. At current growth rates, US imports could be responsible for 20% of China's GDP by 2008. It may be that China is depending upon the kindness of strangers, in this case US consumers. Other Asian countries have similar, if not as dramatic, dependence upon US consumers. And many of them ship materials to China which eventually find their way to the US.

The elephant in the world economic room is the now $660 billion US current account deficit. At least $465 billion of that comes from foreign central banks. It is an odd Nash equilibrium. They take our paper, which they know will one day be worth less than it is today, in order to be able to sell us products which keeps factories growing. How long can the game continue? In the case of China, it may continue until they have established their own internal equilibrium of jobs for the hundreds of millions of peasants moving from the farms looking for a better life.
I'll eagerly await commentary

Black BladeAPPETITE FOR OIL - CHINA#1320015/8/05; 00:48:12


EARLIER this month, ChevronTexaco foiled an attempt by the China National Offshore Oil Corp. to buy Unocal, America's ninth-largest oil company. The CNOOC bid brought China's energy needs to America's doorstep for the first time. It won't be the last. China's exploding oil demand is sparking competition with the United States. Perhaps more important than PRC ownership of a U.S. oil company, China's willingness to cut deals with nasty regimes has already begun undermining American policy priorities.

Black Blade: That China is cherry picking global energy supply all around the world is one thing - but when they attempt to buy out an American major that says volumes!!!
China has been buying up global energy supply at a frantic pace and they start to fill their own SPR in August. They recently bought Canadian oil supply and are building a pipeline to the western Canada coast to take it out. "Interesting Times" indeed!

PNB@Black Blade#1320025/8/05; 01:55:01

Thanks for the contributions to This board.
It's great the way you summarize the link contents.

PNBChina oil contracts#1320035/8/05; 02:01:29

Does anyone remember reading an article a couple of years ago on an obscure web site about China signing forward contracts for Oil at US$40 a barrel when oil was trading around US$20.

I think it was BP research ( I remember the BP logo). But when it did not make it into the mainstream press I went looking for it again and couldn't find it.

Those contracts look pretty smart now. In hindsight it was curious that it did not make it mainstream in ANY of the major news services. Or did I miss it?

PNBCommodities-hungry India#1320045/8/05; 02:08:46

China is commodity hungry and have opened up their resources for international companies to exploit.

However very few international mining companies operate in India. Certainly a few have tried, and have landed in all sorts of legal binds.

Of course this will have to change, because it will cost India an arm and a leg to import all their raw materials.

It would be a good idea to keep an eye out for a change in Indian mineral legislation. Currently I think it is all controlled by the provinces.

Could be the next elephant country for miners. However go in too early and you will get bagged yourself.

heavy mettleBuffet, Munger & Gold#1320055/8/05; 02:59:05


I agree. As well as their capstone, I think power and ego are starting to play a bigger role in their M.O.

Thanks for all your posts. Enjoy them a lot.


968@ MK msg#: 131976#1320065/8/05; 03:05:23

Thanks for your answer. I'm probably too much focussed on the euro, and that's why I appreciate your broad view on things.
I still have a few questions :

1. I agree with you gold doesn't want to rival the dollar, but IMVHO the dollar wants to rival gold. And the fundamental difference with the euro is that this currency DOES NOT want to do that. It wants to put gold OUTSIDE the currency system as a WEALTH asset. Isn't that a fundamental difference ?

2. What is the difference for a Central Bank in valueing its goldreserves at ca. 42$/ounce, or using a marked to market strategy to value its goldreserves (e.g. US Treasury - ECB). Isn't this a fundamental change in attitude towards gold ?

3. What is your opinion on the following remark of Wim Duisenberg during his acceptance speech in Aachen on 9 May 2002 : "The euro, probably more than any other currency, represents the mutual confidence at the heart of our community. It is the first currency that has not only severed its link to gold, but also its link to the nation-state. It is not backed by the durability of the metal or by the authority of the state. Indeed, what Sir Thomas More said of gold five hundred years ago – that it was made for men and that it had its value by them – applies very well to the euro."

Thanks in advance for your answers.

mikalBritain's achille's heel?#1320075/8/05; 08:07:55

Fears of Hedge-Fund Meltdown Prompt NSA To Launch Probe
Jason Nisse - May 8, 2005

mikalTremors quelled in conference#1320085/8/05; 08:35:24

Re: Fears of Hedge-Fund Meltdown Prompt FSA to Launch Probe ~ ~ Sloppy handling of naked shorts and speculative excess
predictably is causing embarrassing collateral damage within and without Britain's industry- a mess even before TPTB planned. Planning conferences reported by the Independent will only cause cursory changes while lip service
continues. "Overhauling regulations" will have
the same effect as a warning from Greenspan in the US,
where this industry has NO regulations.

GoldiloxChina - appetite for oil#1320095/8/05; 08:44:22


Hasn't China also purchased at least controlling interest in some other resources, a la mines - base and precious?

USAGOLD / Centennial Precious Metals, Inc.Always gold.#1320105/8/05; 12:13:14">gold -- a global calling card
TownCrierChally, on Mauldin's China commentary#1320115/8/05; 13:03:58

"They take our paper, which they know will one day be worth less than it is today, in order to be able to sell us products which keeps factories growing. How long can the game continue? In the case of China, it may continue until they have established their own internal equilibrium of jobs for the hundreds of millions of peasants moving from the farms looking for a better life."

This sounds exactly like something I've offered unto the ghosts of the Forum Archives sometime in the past year -- so without undertaking a long hunt for it, suffice to say I am in agreement with that particular crux of the matter. Insofar as smoothing the way for this massive transition from a rural agrarian- to specialized industrial- dominant society, China will do what is right for China's long-term success and stability of society -- even if it means choking down a few billion gaming tokens (U.S. dollars) as a relatively small price to pay in light of the big picture.

Just as building a factory involves massive up-front costs, so too does "building" the framework for a specialized market-driven society. The rationale is effectively to use disposable dollars to build the thing, and look ahead to a stream of more desirable settlements when finally put into production.


mikalBerkshire and Borsheim's- wedded for better or for worse#1320125/8/05; 13:31:41,2086,00.html

Excerpt from The Sunday Times on Berkshire Hathaway's shareholder's meeting last weekend featuring Warren
Buffett and Charlie Munger:
May 08, 2005 - Special Report
Buffett turns into prophet of doom - Dominic Rushe
"...Both believe the economy is at a turning point. Berkshire has more than $40 billion it would like to spend. But, because of what they see as the inflated prices businesses are attracting, there are no bargains to be had. "For the first 30 years my ideas outran my capital," said Buffett. "Now my capital outruns my ideas."
We are at a peak, warn the Berkshire boys, and they are looking down into the trough.
A number of shareholders ask the "Sage of Omaha" about house prices — clearly overvalued in some areas, he said. Buffett recently sold a house in Laguna, California, for $3.5m. "It was on 2,000 sq ft of land, maybe one twentieth of an acre, and the house might cost about $500,000 if you wanted to replace it. So the land sold for something like $60m an acre."
The housing market is not the worst excess Berkshire's bosses see. They are also concerned about America's trade deficit. Buffett compared America to "an incredibly rich family" that was "consuming more than we bring in. So we sell off a piece of the farm, or mortgage it. We can't see what's being sold. We trade away a bit of the farm every day and the rest of the world is happy to buy it. That can go on for a long time but our children will be paying for it one way or another."
Munger is more blunt. He said America had reached the apex of western civilisation and that today society reminded him of "Sodom and Gomorrah".
Excesses in the market could trigger a catastrophe at any time, said Buffett. The speed with which money could now be moved by what Munger called "the electronic herd" of hedge-fund managers meant a financial crisis could spiral out of control very quickly. "The last 60 years have been the best years for western civilisation. My generation has been very favoured. It is unlikely that the next 60 years will be so favourable," said Munger.
Both men said China was bound to be the next great world power. "It's quite conceivable that China will end up being the most important nation in the world," said Munger. The scale of the country plus the Chinese work ethic and enthusiasm would make them hard to beat, said Munger. "When I look at a modern symphony orchestra, every instrument that is difficult to play has an oriental face over it," he said. The West, by contrast, was lazy and decadent " living in extreme affluence with all these people running hedge funds," he said.
PERHAPS it was the warnings of doom, perhaps it was the discount — either way at the Berkshire-owned Borsheim's jewellery store the next day shareholders were shopping like there was no tomorrow. Buffett's magic was still paying off..."

TopazWhich comes first, GM Chickens or Rotten Eggs.#1320135/8/05; 14:08:08

We can look forward to a MOST intriguing week ahead as some mighty fine conundrums get set for resolution.

With the Twins (defecits) moving centre-stage, and last weeks attack on the long end of the curve, we wonder just WHAT is in store?

The con-undrum of which I speak is DJIA-$-Oil ...the Dow appears to react contra DX and OIL, so a rising DX and rising Oil would be BAD for Dow.

BUT! all the negative Long-Yield noise would suggest that Yields are heading higher! Historically this will take both DX and Oil with it long DOW.

When EVERYTHING points in one direction it pay's to give undue attention to the contrary side, SOOO, the only thing next week that MAY rationalize recent past events is a very VERY positive Defecit release.

All imho ...and Thanks Rich!

ToolieMercosur <--> GCC#1320145/8/05; 18:39:48

Snip: BRASILIA, Brazil: South America's Mercosur bloc expects to enter free trade talks with Gulf Arab states next week at a regional summit that aims to redraw the world trade map, Brazilian officials have said.
Mercosur is set to sign the accord with the Gulf Co-operation Council (GCC) at an Arab-South American summit in Brazil to boost trade between developing nations and cut US and European economic dependence, officials said. (end snip)

The world seems to be getting smaller every day. Especially, if you're a US dollar looking for a cozy CB vault to kick back in. GCC has delclared 2010 the target for introduction of a common currency. Recently Mercosur has been silent about the prospects of its regional currency! ? ! And, FTAA looks less likely all the time.

Dollar Bill.,.#1320155/8/05; 19:34:09

Mikal, well now I understand Buffett more. Munger has his ear, and I would hate to have munger as an advisor.
He is too limited in his view.
Mungers comments about musicians reveal enough about his basic assumptions. Buffett thinks =market forces= are the only factor in the dollar price? If the big boys want the dollar to be high, they will make it so. The day is not here that they are not in control.

TownCrierHEADLINE: Gold set to double in value#1320165/8/05; 19:42:34,9353,15210087-28782,00.html

May 8, 2005 -- Gold is making a comeback on world markets as increasing demand and a shortage of supply push up prices.

...As global stock markets wobble, interest rates rise and the US dollar falls, one Australian analyst is predicting gold will double in value as producers scramble to overcome supply bottlenecks and possibly find new deposits.

Angus Geddes, director of well-known investment firm Fat Prophets, expects the price to rise from the current $US430.28 per ounce to $850 per ounce or more in the next three to five years.

"A lot of people say that's a big increase but in the historical context of the past 25 years it's not that much of a move," Mr Geddes said.

Keith Goode, an industry analyst with Taylor Collison, said local prospectors were struggling to find enough new deposits.

"At present you can't get (drilling) rigs for love nor money," Mr Goode said.

Meanwhile, miners face a shortage of basic equipment. "There are not enough vehicles and there are not enough tyres," Mr Goode said.

...The production squeeze coincides with a big increase in demand from markets in East Asia and India.

India ... is enjoying an unprecedented economic boom, a phenomenon analysts expect to continue.

Already the world's largest single market for gold, India consumed 40 tonnes more gold for fabrication last year, according to figures from the London-based consultancy Gold Fields Mineral Services.

Elsewhere in Asia demand is also on the rise. In Japan, for example, demand for gold increased 70 per cent last year amid concerns about the stability of the country's financial system.

Demand in China, also in the midst of an economic boom, is set to take off after authorities relaxed strict regulations governing its sale.

...It all adds up to a major shift in gold's fortunes, according to Fat Prophets' Mr Geddes.

"There's actually going to be a change in the underlying supply and demand," he said.

^-----(see url for full article)-----^

Doubling in price? Well, I would call that a a step in the right direction... a small start on the road to fair value.


TownCrierHEADLINE: Central banks have more to fret about...#1320175/8/05; 20:11:08

9 May 2005

Sometimes monetary policy is easy. Sometimes it's difficult. At the moment, it's probably the latter. Policymakers at central banks like things to be unambiguous. If growth is strong and inflation is rising, it's fairly obvious that interest rates should go up. If growth is weak and inflation is falling, it's equally obvious that interest rates should come down. What, though, of the more difficult combinations? What should central banks do when growth is strong but inflation is falling? Or when growth is slowing but inflation is rising?

These are not idle academic questions. They are, instead, the questions that central bankers are asking of each other now.

.....Workers who demand a big pay increase by means of compensation are likely to find themselves swiftly outsourced, offshored or replaced by migrant workers from elsewhere.

...there's been a huge increase in the supply of actual and potential workers, reflecting China's and India's increasing integration into the world economy, together with the emergence of central and eastern Europe.

...Without wage-price spirals, it's difficult to see how inflation really could accelerate in a meaningful way unless central bankers were to turn on the printing presses with manic ferocity. Even then, though, we'd probably never believe that they could be so stupid, thereby exposing the futility of their crazed plans.

^-----(from url)-----^

I wonder if the author has ever seriously considered what series of actions and reactions might factor into his assessments when a paradigm shift in the international reserve currency structure is part of the equation.

It doesn't sound like he has.


Cavan ManDollar Bill#1320185/8/05; 20:11:19

You are right about the "in crowd" but many are too republ;ican to think clearly IMHO.
Black BladeGold Expected To Resume Bull Run, Hit US$500#1320195/8/05; 20:12:52


SYDNEY (Dow Jones)--With the pendulum apparently swinging back in gold's favor, some analysts now expect the metal is back on track for US$500 sometime next year. Confidence is building among gold traders and analysts that the widening U.S. twin deficits will keep the U.S. dollar under pressure for at least another year or two, setting the scene for gold to resume its upward trend. Prices have climbed steadily since early 2001 as investors have sought refuge from a weakening greenback. Gold peaked late last year just below US$460 an ounce and has since returned to US$430 levels, in line with its inverted correlation with the U.S. dollar.

"The U.S. dollar looks like resuming its downtrend after this rally runs out of puff, which is positive for gold," says Euan Leckie, portfolio manager of the US$420 million Scudder Gold & Precious Metals Fund.

Gold bulls like Leckie expect the metal to hit US$475 by the end of 2005 and reach US$500 next year in a continuation of a slow upward trend. "If we don't see prices above US$500 within 18 months we'd be more than a little surprised," he told Dow Jones Newswire in an interview.

Ellison Chu, senior trader with Standard Bank London in Hong Kong, said gold is likely to stay in the US$425-US$438 range over the medium term to finish 2005 around US$450-US460. "I'm a bit bullish on gold because I don't think the dollar can be as strong in the second half, not just because of the deficits but because I don't think the foundation of the U.S. economy is as strong as people think," said Chu.

Sydney-based investment advisory group Fat Prophets early this month said it believes gold is in the early stage of a bull market. "While gold remains vulnerable to additional selling pressure in the near term, we believe the longer term outlook remains overwhelmingly positive," Fat Prophets said in a note to clients. "The fundamental backdrop for the precious metal has seldom been this supportive in our opinion. In time, we believe the price of gold will surpass the 1980 all-time high of US$850 an ounce," it said.

Black Blade: All I can say is "Ditto That".

The CoinGuyMunger and Buffett gold quote.#1320205/8/05; 20:13:40

Those quotes were taken out of context. I was 10 ft from Charlie when he said something entirely different than what is quoted in that article. What he said was, "If you have an option to invest in something like Berkshire Hathaway for a hedge, then gold would be a dumb investment". He was talking up Berkshire, which I consider to be well within his rights. He was chuckling when he said it. Warren, didn't mention gold at all.

My family made their wealth from the insurance industry. It "was" a clean business at the time, I'm not sure how things have changed, other than the fact the fat cats have swallowed all of the canaries out there....but I don't like what I've been hearing as of late.


The CoinGuy

TownCrierGold buying set to hit a high this festival season#1320215/8/05; 20:59:52

BangaloreMay 09, 2005 -- Akshaya Tritiya is one of the four most auspicious days of the Vedic calender. Akshaya means never-diminishing and stands for prosperity in any new venture or investments made that day. Gold and gold jewellery bought and worn on this day signify never-diminishing good fortune.

With all these attached to the festival it has become a day when gold buying hits a peak predominantly in south India is now set to appeal to a pan Indian audience, thanks to the initiatives of the World Gold Council (WGC) in India.

...Last year about 15 tonnes were sold on Akshya Tritiya and according to WGC estimates this is set to increase by 20 per cent this season.

Indian gold jewellery industry, estimated to be a 800 tonne market, is growing at 15 per cent to 17 per cent. South India's share is estimated around 45 per cent.

"Though India is the largest consumer of gold, London and Dubai being leaders in the market, control the trade. Integrating prices internationally, for example, is a step in the right direction."

^-----(from url)----^

Gold... does it really matter if it is shaped in chains and charms and called jewelry, or does that designation make it any less of an investment than if this same tangible wealth had been cast and collected in the form of coins and bars?

Regardless of the form, as suggested by previous articles, tangible savings with gold is very much "in fashion" around the world.


The CoinGuyTC#1320225/8/05; 21:33:41

I've always felt "jewelry demand" was a fanciful term. My indian friends don't feel this way. You should see the bridal necklaces they pass down through their dowry's, a sight to behold when you're looking at a necklace that can weigh over two hundred ounces...



GoldiloxPast and Present Chairmen of the Fed Speak About Derivatives#1320235/8/05; 21:45:25


"Circumstances seem to me as dangerous as any I can remember - and I can remember quite a lot" said Paul Volcker, who was Chairman of the Federal Reserve from 1979 to 1987.

Not to be outdone, Chairman Greenspan finally has gotten on the record warning us now about the dangers of over-the-counter derivatives.

According to the Financial Times, Chairman Greenspan is quoted as saying that the rapid growth in the credit derivative markets has created considerable uncertainty about how the global financial system might react to economic shock.

Now why in the world would our Chairman fear over-the-counter derivatives? These are just the instruments that he has said required no regulation in the past. Why has there been such a change of opinion? Could it be that over-the-counter derivatives:

1. Have no regulators.
2. And therefore have no regulations.
3. They are not listed on any exchange.
4. There are no standard contracts.
5. There are no clearinghouse guarantees.
6. There is no transparency.
7. They are issued in most cases by subsidiaries of good name international investment firms - not the investment firms themselves.
8. There is no automatic guarantee mechanism between the parent and the subsidiary when it comes to trade debts.
9. A bankruptcy of the derivative-granting subsidiary would not be guaranteed by the holding company parent.
10. It is not possible to know the financials of a subsidiary of an SEC filing company as all that is required is for the parent to file if or not the subsidiary meets capital requirements - if there are any in the area they operate.
11. The subsidiaries are generally located in financial areas without capital requirements for financial commitments.
12. The financial capability of the performance of a derivative depends on the balance sheet of the loser on the contract.
13. Valuations are products not of a market but of a computer simulation based on assumptions inputted by the company doing the valuation for its own purposes.

There are many additional awful characteristics of derivatives, not the least of which was that "Fred and John," who actually invented this market were rewarded by jail sentences (certainly inappropriate by today's standards). However, I will end the litany of derivative dangers on number 13 now that Chairman Greenspan has gone on the record as being somewhat concerned about these financial weapons and their destructive capabilities. Now if you want to see the size of this nuclear pile, go to the BIS web site and hang on to your hats.


Sinclair relates his position on the "Weapons of Financial Mass Destruction"

GoldiloxMore Hedonics#1320245/8/05; 21:52:59


I have been following a little known "adjustment" that is made to the survey number called the CES Birth/Death model. Perhaps you have heard of it. They started tacking this number on in April 2003 (the start of the bear market rally in stocks is purely coincidental, or is it?)

Anyway the data is not easy to find, and is most likely ignored by just about everyone, but here is the link if you want to check it out.

When you take this into account, the last few months of strong job growth do not look so great after all:

720,000 jobs created Feb-Apr

536,000 due to birth-death model

184,000 actual jobs created (or not, depending on whether you trust the survey or the margin of error)

The last 2 months are even worse:

420,000 jobs created Mar-Apr

436,000 due to B/D model (therefore all jobs reported for last two months are imaginary jobs and we actually LOST jobs over those two months!)

They can only keep this up for so much longer before the general public catches a whiff.


Another interesting take on the "hedonic adjustments" of BLS figures. Given that even CNBC analysts are questioning these fraudulaent figures, the public may be "catching a whiff", and it smells funny, but like many of the other prevarications of this administration, are the revelations too late and too ingrained for corrective action? DeLay tactics are a favorite of the current Washington gang.

GoldiloxRoger Reynolds on gold, miners, and oil equities#1320255/8/05; 22:01:52



1)Over half of the gold stocks have broadening bottoms in place, the opposite of the winter highs of the DOW. The author of the book, about how to time these bottoms, says to expect bottoms 30 to 40 percent below their 200 day average. Many gold stocks have done so.

2)Gold metal meanwhile has made a small broadening bottom right at it's 200 day line. The author says this is very BULLISH.

3)I have read about the gold companies reporting lower profits. This is deliberate because during "hard times", the gold companies mine the most profitable ore. During good times they mine the lower grade ore. This extends the mine life and cash flow from the mine. A NORMAL MANAGEMENT RESPONSE.

4)Eight to 10 years ago, oil/gas companies had subnormal profit margins due to oversupply of the commodity. BUT, it was changing and I said so. Now oil/gas companies profit margins are nearly twice normal. Profits are soaring. Gold companies have less than a one fourth normal profit margin. Normal would have gold metal selling for about $700. "IF" and when gold metal breaks out and heads for 500 plus, then gold stocks can soar.

5) Manipulation--All stocks and industry groups that have big moves are manipulated by "knowing" investors. Manipulators who knowingly sold their gold shares in Oct-Dec 2003, now they can buy back nearly twice as many shares for the SAME money. "IF" they are doing so, this alone eventually makes the stocks go up.

6)Watch the gold price versus the EURO. "IF" the gold in Euro's price breaks out above 350, then the metal price will be in a bull market in Euros. That's a lot of potential "JUMP IN" commodity players.


Not too different from a lot of gold and commodity bulls message.

Max RabbitzGordon Brown must be getting desperate#1320265/8/05; 22:17:48

"Malaysia may use gold to secure loan for 1 bln stg arms deal with BAE - report. Under the BAE-initiated proposal, the British defense contractor would arrange financing for the arms purchases with a loan secured by gold certificates issued by the Malaysian government, the newspaper cited the sources as saying."

Max....That's about 30 tonnes of gold. Sounds like the Brits still value gold after all. I hope those Malaysians don't mind their gold certificates being "lent" into the market. I'm sure they can still carry the gold on their books anyway.

GoldiloxDisasters, populations, resources, debt-slavery, greed, and governments#1320275/9/05; 00:27:45

Many who have read my posts are aware than I am a fan of Jim McCanney's independent scientific research.

On Wednesday, April 20th, he joined Alex Merklinger for 2 hours discussing topics in the wide-ranging title above.

For those who can invest a couple hours, this interesting audio is available at the link above. Jim joins in after the first half-hour of Alex's show.

GoldiloxDX Jumps in Asian Market#1320285/9/05; 00:47:30

The DX moved vertically to 84.76 at the Asian market opening. I wonder if it a precursor for the US market opening?

Activation energy for the waterfall, perhaps? We'll see.

TownCrierHEADLINE: Glittering future predicted for Dubai gold exchange#1320295/9/05; 01:14:26

9 May 2005, Dubai -- The Dubai Gold and Commodities Exchange (DGCX), which is expected to go live this year, will float a fully owned subsidiary to carry out the settlement of trades on the exchange.

"It will function as the buyer for sellers and seller for buyers on the exchange."

...the trading of crude will not be introduced in the initial stage, although bunkering fuel will be allowed to be traded on DGCX soon.

The establishment of DGCX will help protect Dubai traders against price volatility. It will also bring Dubai global recognition as an exchange, setting new price benchmarks for gold. In the process, it will act as a new reference point for the price of gold, especially on Saturdays and Sundays when all other exchanges remain closed.

At present New York and London are the only two global gold exchanges. forward contract on DGCX would be of one kilogram and the margin to be paid to the exchange has been fixed at 3.5 per cent of the value of the contract.

Payments will be made every evening in accordance with the loss or profit the trader makes during the day's trading. And at the end of every two-months the delivery period the trader can take delivery after informing the exchange.

^-----(from url)-----^

Another paper tiger to feast on gold in a cage, or the start of free-er and fairer (less fractionally derivatized) valuations?

Depends on the principle players and how they use it.


Great Albino BatSpot gold chart on the neighboring forum...#1320305/9/05; 07:21:30

I don't recall having seen a spot gold chart with such JAGGED lines!

I am not an expert chart reader but this chart gives me the impression of a BATTLE ROYAL going on...up,down, up, down for hours and hours...

Extreme volatility, looks like to me.

Perhaps desperation on the part of the controllers of the gold price, to keep it down - might this have something to do with the massive addition of junk bonds to the already large stock, due to the downgrade of (part) of the Ford and GM oustanding bonds ($290 billion, just the part downgraded, plus another similar batch awaiting downgrade).

The Funds holding these now downgraded bonds are going to be selling them as of today, as they are not allowed to hold junk bonds in their portfolios.

Today will witness the beginning of a loss of illusions for investors in paper. Just the beginning, but it is the will only come into its own when the illusions of paper investments dissolve in general depreciation of these investments.

Maybe the volatility in the spot gold chart has something to do with this process.

The GAB in the Land of the Rising Sun

MKThe latest USAGOLD Market Update is posted#1320315/9/05; 08:06:55



"Last week systemic risk was in the air. General Motors and Ford's bonds reduced to junk status. Rumors of at least one hedge fund and possibly others on the ropes. Talk of several major American corporations in financial trouble. Amidst all of this, the Chairman of the Fed raised the specter of systemic risk citing Adam Smith's 'invisible hand' and the forces of chaos and creative destruction in the market."

Mr. Greenspan's remarks are posted

New "Short & Sweet"

Some interesting "Nuggets"

KenoSilver C.O.T Great Albino#1320325/9/05; 08:37:08

What you see is the manipulation of price in favor of the Commercials especially in silver this morning. Yes, some of the bond money is going into metals. The commercials knew it and just in case nobody noticed right away the big boys ran silver up 8 cents just to get everyones attention.All this action is garbage but at least it is in our favor. We just may break out of some constricted triangles this morning. Then let the fundamentals take over and we have some fun. Hope everyone is positioned o.k. Good luck all.
KenoGood news#1320335/9/05; 10:02:23

This is either the best head fake in a long time or else silver IS ready to break up and hard,bringing all other metals along for the ride.
TownCrierUS Treasury's Snow says...#1320345/9/05; 12:04:26

HARTFORD, Conn., May 9 (Reuters) - U.S. Treasury Secretary John Snow, speaking on Monday as a Chinese delegation visited the U.S. Treasury for talks on currency and other issues, said Beijing should act now loosen its fixed currency regime.

The U.S. Treasury chief was responding to reporters' questions after addressing a local business leaders' group on the issue of Social Security.

A group of officials from the People's Bank of China was in Washington on Monday for discussions that include foreign exchange.

U.S. Treasury officials portray the talks as regular technical discussions on a range of economic and financial issues but they occur when speculation is high that China may be near a revaluation of the yuan.

...The United States and European countries have been pressuring China to loosen its fixed currency regime as a way to help rebalance global economic growth.

U.S. manufacturers particularly complain of unfair competition from cheap Chinese imports because they believe the yuan currency, also known as the renminbi, is undervalued by as much as 40 percent.

^-----(from url)-----^

It's largely relative. If you elect to view China as the center of the trading universe, then rather than saying the renminbi is undervalued by 40 percent, suddenly you are faced with the more panic-inducing alternate expression that the dollar is OVERvalued by 40 percent. Wheeuw.... who would want to hold onto it during the relative correction?

On the topic of the 30-year bonds, the article says....

------------Snow was asked why Treasury announced last week that it was considering reintroducing a 30-year U.S. Treasury bond after discarding it in late 2001. He said there was demand for it from financial markets and Treasury had to take that into account, though he added he wasn't trying to foreshadow what Treasury will announce on Aug. 3.

When it was dropped in 2001, at a time when the United States was enjoying a brief period of budget surpluses, Treasury said the 30-year bond was no longer needed.------------

"No longer needed..."

A-hem... the hard truth of the matter was that in the immediate aftermath of the 9-11 terrorist attacks that brought down the World Trade Center, the international "investment community" suddenly lost its nerve and its appetite for 30-year long speculations on the fate of the dollar. As the dust was settliing, the Treasury auctioneer looked out over an audience of empty seats and few bidders.


USAGOLD - Centennial Precious Metals, Inc.Helpful investor information is at your fingertips!#1320355/9/05; 12:45:04

Why put up with sales pressure when you don't have to? Say 'Hello' to USAGOLD-Centennial, and arm yourself with information.

The request is quick and completely free, and your privacy is assured.

968@ Towncrier : Philipp M Hildebrand: SNB gold sales - lessons and experiences#1320365/9/05; 12:50:46

Speech by Dr Philipp M Hildebrand, Member of the Governing Board of the Swiss National Bank, at the Institute for International Economics, Washington, DC, 5 May 2005.

Hello Towncrier, let us please know what you can make out of this speech.

thanks in advance.

TownCrier968, thanks for Hildebrand...#1320375/9/05; 13:34:16

I've downloaded the file from your link, and will put on my thinking cap as I give it a good look. Will let you know my thoughts -- thanks for asking.


GoldiloxHildebrand#1320385/9/05; 15:08:32

After reading the speech, one has to wonder why it was called the "Washington Agreement", and not the "Swiss Sales Plan". Sure would be interesting to know who bought the 1170 ton parcel.

My gut feeling is that many of the buyers are private interests from the third-world cooperatives, a la Marcos, Noriega, Saudis, Saddam, and other "Generalissimos" that run the resource carry trade for the economic hitmen,

They obtain generous IMF funding to develop their "resources", pocket the bribes, pay the rest back to First World "developers", and build their "golden parachute" for the day that the Forex raids their currency and bankrupts their nation.

Interestingly, the gold never leaves the Swiss banks, and the perpetrators just have to survive (physically and legally) to get their mits on it. If not, it reverts back to the "holder" for recirculation in the next "Washington Agreement".

It's a good idea to hold your own gold, especially with the new Bankruptcy bill guarantees for the banksters.

USAGOLD Daily Market ReportPage Update!#1320395/9/05; 16:56:41">
The Daily Gold Market Report has been updated.

If you are considering investments in gold we invite you to">request our free introductory information packet detailing the products and services offered by USAGOLD ~ Centennial Precious Metals. We welcome your inquiry and look forward to working with you.

Monday Market Excerpts

Gold futures in New York settled unchanged and still near three-week lows on Monday in subdued, currency-driven dealings ahead of U.S. trade data later this week, traders said.

COMEX June gold futures were flat from Friday's finish at $426.90 after trading from $427.40 to $425.40.

As the focus shifted from Friday's payrolls data to international trade data due Wednesday, gold was tracking currency markets but was not looking particularly strong, despite some bargain hunting by physical players.

"Mixed currency moves on speculation of a (Chinese) yuan revaluation has kept gold in a mixed mood today," James Moore at said in a report.

But, gold still has "upside" potential and $500/oz bullion remains a realistic target for later in 2005, due to wide U.S. trade and budget deficits and growing demand for oil, which potentially could fuel inflation, Moore said.

-----(see url for full news, 24-hr headlines, market prices)----

KenoFootsteps#1320405/9/05; 22:39:43

Ready to turn out the lights,but I think there are footsteps in the distance. Possibly the sound of a herd of commercials coming this way. All I can sense is upward movement in our precious metals,and share prices. Hope Im right. Really think I am. Everyone cross your fingers cause sometimes it takes a little luck too. Night all, rest easy.
Black BladeA rush for gold#1320415/9/05; 22:51:54


GOLD is making a comeback on world markets as increasing demand and a shortage of supply push up prices. A symbol and guarantee of wealth since ancient times, the precious metal is again fashionable among investors facing uncertain times. As global stock markets wobble, interest rates rise and the US dollar falls, one Australian analyst is predicting gold will double in value as producers scramble to overcome supply bottlenecks and possibly find new deposits.

Black Blade: Another article making the case that this Gold Bull Market still has legs. Personally it is a "survival currency" for me as it is more "portfolio insurance" that I hope to not have to call upon. if it turns out to be a wildly positive investment then that's just "gravy".

Black BladeConnocoPhillips shareholders mtg: The US is Running Out of Light Sweet Crude#1320425/9/05; 22:57:46

Comments from the ConnocoPhillips shareholders meeting:

ConocoPhillips Chairman and Chief Executive Officer Jim Mulva told shareholders that ConocoPhillips plans to invest $3 billion from 2006 through 2010 to increase its ability to refine heavy, sour crude. He said feedstock will become heavier and more sour over time, and the company wants to plan ahead to increase its ability to process it.

Heavy sour crude has more sulfur and is heavier than light sweet crude, which is easier to refine because it doesn't have as many elements that must be filtered out during processing. Mulva said Canada, Mexico and Venezuela increasingly export heavy crude.

"It obviously has traded at a discount to the light, sweet crude," Mulva said.

Mulva said that discount has historically been several dollars per barrel, but more recently the savings have increased to $15 to $20 a barrel.

Over five years, Mulva said the $3 billion investment would allow the company to process 41 percent of the heavier crude compared to 28 percent now.

"We see very attractive returns for our business," he said. "We feel that we are at somewhat of an advantage because of our refining position in the lower 48 (states). ... We can move that heavy oil through existing pipeline structure and infrastructure directly into our refineries."

Dennis Erectus (a.k.a. Black Blade): As I have repeatedly pointed out - the spread between light sweet and heavy/heavy sour crudes are widening to historic levels. This is because of the fact that demand for light sweet is outstripping supply faster than it can be found and produced. Most US refineries are structured to handle light sweet crude and very few have been refurbished and expanded for the crappy low quality crudes. This also came to light as the EIA reported last week that there were 1 million bbl/day of refined product - gasoline - imported to the US because of insuffient refining capacity. ConnocoPhillips and Valero are the leading refiners of heavy sour crudes and the other players will now have to wake up and smell the coffee. We have well passed the peak for light sweet crude and now ever more oil (heavy/heavy sour) will be needed to refine the same amount of product. In short - we will now use more oil by volume because of the increased reliance on low quality crude and also because of increasing global demand. We have come to that slippery slope where Hubbert's Peak is upon us - and storing more heavy sour crude in inventory just won't cut it anymore when it can't be refined fast enough.

TopazBond/Oil#1320435/10/05; 00:19:33

Whilst the front months are having a whale of a time ramping up PoO, the further-outs (anticipating whats in store mebee?) are taking the more conservative approach.
Bond Yields look set for a "correction" back down and imo will clip Oils wings in the process.
A couple of $2-3 PoO down days wouldn't surprise here.

TopazDollar/Gold#1320445/10/05; 01:03:39

PoG looks to have developed a cronic aversion to venture below $425 and still hangs $9 odd above it's currency mean.

Of course we alt-currency types (hi Bel) have seen OUR gold languishing for 5 Yr's now and are well overdue for a little bit of your "guys" good fortune.

Not that it matters much ....."in reality"

TownCrier968, assorted thoughts on Hildebrand's speech to the IIE#1320455/10/05; 02:49:40

The first thing I find interesting is that this "how-to" mobilize gold presentation was delivered in Washington DC of all places. Hint hint.

In reading this convenient overview of the chronology of events and decisions, its hard not be be impressed with the intimacy with which so-called "neutral" Switzerland is involved in the golden affairs of its European neighbors. It seems significant to me that Switzerland seriously got the ball rolling on its own demonetization of gold in early 1997, and by end of that year had laid the primary groundwork for a reallocation of 1300 tonnes -- half of its massive gold holdings.

In my mind, at least, this is a significant correlation with the scheduled spring 1998 decision of the EU regarding the participants and commitment to the official launch (timing) of the third stage of EMU. As you know, it unfolded with eleven member nations committed to rolling the EMI into the ECB on June 1, 1998 with a subsequent stage III euro launch on January 1, 1999.

It is my sense that the Swiss decision, (even though they are "neutrally" outside of the EU), was an absolutely vital step of international "solidarity of direction" in giving a green light to the fledgling eurosystem's mark-to-market framework, and also assuring that ample gold resources would indeed now be available to secure the attention and cooperation of economic allies to the upcoming dollar-alternative.

The other significant thing that I would bring out of this presentation is the keen demonstration of the political will involved in this whole affair, especially as one is forced to connect-the-dots to a bigger (MTM euro) picture to understand how Hildebrand could say the following:

"the most important lesson to be drawn from the SNB's gold sales is that the decision to sell official gold holdings should be made separately from any consideration on how to use the proceeds."

Without being able to connect dots to the underlying goal of paving the way toward the MTM euro-style framework, a simple observer would be easily left scratching his head over the rationale in selling gold without any obvious reason (i.e., no plan for "use of proceeds").

And finally, I was also impressed at the effort with with Hildebrand tried to stress the commitment NOT to escalate making use of gold hedges (forward derivatives) for pricing protection, but rather using hedges primarily within the more appropriate (paper) realm of cross-currency positions. And that anti-derivative gold resolve, too, is a vital component in the anticipated free-gold MTM IMS regime.

On a related note, as I have it, by end of 2004 Switzerland closed out the books on its final 130 tonnes of lent gold, marking the end of a seven-year era of gold leasing operations enabled by the 1997 revision to the National Bank Law. (Coincidentally(?), 130 tonnes was the same figure as the amount reallocated under the last tranche of "Washington Agreement" sales.

If I've mucked up or missed anything important, please chime in and let me know the score. Thanks for the link and dialog.


GoldiloxGov't considering buying RM3.8 bil of weapons with gold reserves#1320465/10/05; 03:21:34


May 9, 05 5:59am

Malaysia is considering a RM3.8 billion arms deal that calls for it to commit part of the country's gold reserves to help finance the purchase of warships and other defense equipment, a report said today.


Has some arms manufacturer convinced the Malays that giving up some of their gold will protect them from the "Boogeyman"?

This fits somewhere between extortion and foolishness!

GoldiloxWild Ride#1320475/10/05; 03:22:49

The battle rages on!
Belgian@ Sir Towncrier#1320485/10/05; 05:45:52

You : >>> ...THE ANTICIPATED FREE-GOLD - MTM - IMS regime !

Everything golden in only 3 words ! Waw.

And you were so nicely tactfull not to add any currency symbol before IMS. You are a "gentlemen" indeed Sir.

Putin at EU-Russia top : "One great Europe is in the make".

Also note how Hildebrand in his seemingly cool-sober and technical report on (perfect-succesfull) SNB goldsales, is throwing a hidden hint at the IMF. Do it the Swiss way...because the MTM-concept will be universalized. That's why his speech was to be delivered in Washington. Not only Swiss, IMF gold but also UST-gold should look at the MTM-concept. Mr. Sleeper went down to Pretoria for suggesting exactly the same.

There are indeed people (factions) who have great (greater) *** WEALTH RESERVE *** aspirations with gold. Time has come for the dollar not to rival gold anymore.

Thank you Sir Randy.

Cavan ManMessage to "W"#1320495/10/05; 05:52:24

Russia, EU Strike Partnership Accord

The Associated Press
Tuesday, May 10, 2005; 6:11 AM

MOSCOW -- Russian President Vladimir Putin and top European Union leaders hope a new partnership accord will draw a line over an acrimonious year since the EU expanded further into Russia's traditional sphere of influence.

Timing is everything.

968@ Towncrier#1320505/10/05; 06:01:01

Thanks for your interesting insights. The political will in this whole issue is certainly remarkable !!

A couple of questions/remarks :
- Hildebrand explicitly mentions the fact that gold is valued 3 times lower in the account balance. It seems to bother the SNB that no MTM accounting was used ?
- 1300 tons were sold because they were not relevant for 'monetary policy'. How does the remaining stack fits in that monetary policy ? MTM ? Why do they suddenly need 50% of their gold for their 'monetary policy' ?
- why was it after 04/2001 not necessary anymore to use the BIS as selling agent ?
- why use the BOE as physical settlement agent ?
- 350 tons in an option program ?
- it looks like the SNB was concerned about the value of the dollar (since they hedged the currency risk).
- the gold was sold for dollars, not for euros or swiss francs. Selling physical gold + using dollars for it --> they wanted to give the impression that that this operation is conducted in support of the dollar-system !?

It seems that an evolution to MTM on goldreserves is the clue to this whole issue.

USAGOLD / Centennial Precious Metals, Inc.Proven Reliability, Longevity, Quality and Professionalism ---- Invest with Confidence!!#1320515/10/05; 07:26:47

968ECB's weekly financial statement.#1320525/10/05; 08:11:50

Gold and gold recievables : minus 27 million euros.
Foreign currency position : minus 100 million euros.

New gold position : 127,4 billion euros.
New foreign currency position : 159,4 billion euros.

The ECB's net foreign currency position exceeds their gold position by 25,1%.

GoldiloxSinclair story#1320535/10/05; 10:27:14


Sherlock Holmes and Dr Watson go on a camping trip. After a good dinner and a bottle of wine, they retire for the night, and go to sleep.

Some hours later, Holmes wakes up and nudges his faithful friend. "Watson, look up at the sky and tell me what you see."

"I see millions and millions of stars Holmes," replies Watson.

"And what do you deduce from that?"

Watson ponders for a minute.

"Well, astronomically, it tells me that there are millions of galaxies and potentially billions of planets. Astrologically, I observe that Saturn is in Leo. Logically, I deduce that the time is approximately a quarter past three. Meteorologically, I suspect that we will have a beautiful day tomorrow. Theologically, I can see that God is all powerful, and that we are a small and insignificant part of the universe. What does it tell you, Holmes?"

Holmes is silent for a moment and then says: "Watson you idiot, someone has stolen our tent!"


This was too funny. I often think the analysts miss the forest for the trees. They endeavor to find the most obscure datum and don't care about the fundamental picture.

Black BladeWall Street weighs stagflation threat#1320545/10/05; 10:27:34


Fears are growing on Wall Street about the possible return of stagflation, which often arises when tepid economic growth mixes with rising inflation. That toxic combination can cripple the economy, and while such a grim predicament has yet to emerge, there certainly are hints that stagflation could be brewing.

At the start of the year, the economy seemed to be in a good spot. The Federal Reserve, by raising interest rates multiple times, had managed to slow economic growth just enough to keep inflation in check. Some economists were even touting the rebirth of what is known as the "Goldilocks" economy -- not too hot, not too cold, just right.

Those days now seem long ago. Worries over inflation and slow growth have become the buzz of economic circles and have rattled the stock market in recent weeks.

Stagflation in the 1970s grew out of the OPEC oil embargo that caused oil prices to quadruple. Inflation surged and economic growth was stunted.

This time around, a similar picture seems to be emerging. Oil prices soared above $58 a barrel in early April. And while prices have since retreated and now hover just above $50 a barrel, that is still well above the $40 a barrel hit a year ago.

Those price gains, coupled with a big upswing in other commodity costs and a steep decline in the dollar, have led to inflationary pressures appearing elsewhere in the economy. Core consumer prices, which exclude food and energy, rose at an annual rate of 3.3 percent in the first three months of this year, significantly higher than the 2.5 percent increase seen in 2004.

Black Blade: I definitely see a return to stagflation. Wage inflation is simply not keeping up with rising costs mostly due to the way the US government agencies "manage" inflation data. This of course hurts those on fixed incomes and the soon to be defunct Social Security and Medicare. With the return of stagflation, it is certainly adviseable to have at least a modest holding of precious metals as "portfolio insurance". Check out the Treasury here at USAGOLD.

GoldiloxOil Up, Pumps at Limit#1320555/10/05; 10:44:40


Back to $51 - and with it, another report that OPEC is pumping pretty much flat out.
Now let's play "connect the dots" for a minute. We see that oil is at $51 - and we see in the work of several colleagues that the purchasing power of the US dollar may be about to resume its downward spiral. So when we see stories like the one about Russia and the EU signing landmark cooperative accords, we see more to the picture.

One thing, just to think about, is what will happen if before June of 2006 Russia were to start denominating its oil business in Euros instead of US dollars. Remember as we watch the increasing threat of an attack on Iran, that the issue is not really nukes. There are already plenty of nukes around the Middle East. Iran as reportedly had at least two since the breakup of the former Soviet Union while Israel at latest reports was around 265 warheads, plus or minus a Hiroshima or two.

No, the real issue with Iran is that they are still planning to open an oil trading bourse in March of 2006 which will trade oil for Euros - and Russia is jockeying into position to sell oil for Euros. Because such a development would end dollar hegemony, the US and its controlling banker interests won't likely allow it to occur, even if it means a first strike on Iran - a move Russia has already signaled would involve great peril should the West do anything so aggressive.


News analysis of the Mid-East tensions are a lot like Watson's view of the stars. If the oil bourse in Iran "steals the Nymex tent", there will be Hell to pay.

GoldiloxGM Hedge Trade#1320565/10/05; 11:10:28

CNBC is reporting on a rumor that some large hedge funds (including GLG who has denied the rumor) lost their shirts in a GM hedge after Kerkorian's offer for GM stock.

David Faber is commenting that a number of convertible bond hedgers have fared poorly in the current market.

No real news, but the talking heads are sure yapping about the derivtives mess enough to make one wonder.

The best 'hedge" is physical in hand!

mikalMid-day Headline Roundup#1320575/10/05; 11:32:31

CNNfn - El Paso profit falls short
CBS Marketwatch - Market Snapshot: U.S. stocks post sharp declines on hedge fund rumors
Bloomberg - Oil, Gasoline Prices Rise After Refinery Outage Heightens Supply Concerns
ABC News - Stocks Droop As Oil Prices Move Higher
CNNfn - Investors seeing red
Chicago (IL) Tribune - Oil Prices Prompt Selling on Wall Street
MSNBC - Stocks dropped Tuesday as investors eyed higher oil prices
CBS Marketwatch - Dollar hit by speculation about troubled hedge funds
MSNBC - Delta sees higher risk of bankruptcy
Bloomberg - Stocks in U.S. Drop on Oil Price Concerns; Delta Air, Fall
Chicago (IL) Tribune - Morgan Stanley May Suffer After Spinoff
USA Today - 401k use grows
Bloomberg - Morgan Stanley's Purcell Says He Tried to Minimize `Breakage' Amid Turmoil
USA Today- Toyota posts lower profit

USAGOLD / Centennial Precious Metals, Inc.Don't miss the latest USAGOLD Market Update#1320585/10/05; 13:02:28



"Last week systemic risk was in the air. General Motors and Ford's bonds reduced to junk status. Rumors of at least one hedge fund and possibly others on the ropes. Talk of several major American corporations in financial trouble. Amidst all of this, the Chairman of the Fed raised the specter of systemic risk citing Adam Smith's 'invisible hand' and the forces of chaos and creative destruction in the market."

Mr. Greenspan's remarks are posted

New "Short & Sweet"

Some interesting "Nuggets"

Goldiloxcapitulation?#1320595/10/05; 13:11:13

One of the CNBC talking heads just said, "We just don't understand why this market is falling so fast today!"

DOW down 120 so far. Oops, there goes a green quote!

In the immortal words of Bart Simpson, "DOH!"

USAGOLD Daily Market ReportPage Update!#1320605/10/05; 14:43:37">
The Daily Gold Market Report has been updated.

If you are considering investments in gold we invite you to">request our free introductory information packet detailing the products and services offered by USAGOLD ~ Centennial Precious Metals. We welcome your inquiry and look forward to working with you.

Tuesday Market Excerpts

Gold aided by euro, equities
May 10 (from DowJones) -- Moves in the foreign-exchange and equity markets offered modest support to gold futures in New York on Tuesday. Overall, activity was described as uneventful, however.

June gold added $1 to settle at $427.90. "It was a very thin day," said Leonard Kaplan, president of Prospector Asset Management. "Nothing was really happening. "I think it was because of the stock market and the euro. That was about it."

Analysts with commented that gold -- which opened higher on the Comex -- had drawn some support earlier in the day from news reports that seismic activity had trapped several miners underground at the Driefontein goldmine in South Africa owned by Gold Fields, Ltd.

Gold subsequently slipped in response to a downturn overnight in the euro, then turned higher again during Comex trade when the single European currency did the same, the analysts said.

Looking ahead, analysts noted that gold traders will be keeping tabs on U.S. trade and budget data due out Wednesday to see how this affects the dollar, which in turn can influence gold.

The March trade balance is scheduled for release at 8:30 a.m. EDT. Expectations are for a deficit of around $61.5 billion, compared to $61.04 billion the previous month.

The April budget report is due out in the afternoon, after the gold market has closed.

----(see url for full news, 24-hr international headlines)----

GoldiloxDribble-tive meltdown#1320615/10/05; 18:16:02


Late last week Chairman Greenspan warned about derivative growth and valuation methods, pointing primarily at interest sensitive instruments. The truth is they are all interest sensitive because there is no over-the-counter derivative that does not have an interest cost associated with it.

You can be sure that specific performance financial paper that is unregulated, unfunded, totally lacking in transparency, lacking standardization, not clearing house guaranteed and not listed on any exchange, will come back to bite you on the rear-end. OTC derivatives will in time bite the entire financial system in the same place. You need only go to the BIS web page to see the size of this so- called "market" that in fact is very illiquid.

You have asked me if there is a real problem out there right now. The answer is yes but it has been with us now for years hidden behind the method of valuation used on derivatives which is computer simulation based on mathematical assumptions inputted by the company marking itself to market.

As the US economic recovery rolls over, the cracks hidden by an ebullient equity market will be revealed. Watch the Fed figures closely because a move to increase liquidity over more than one week would only be motivated by an impending collapse of some over-the- counter derivative trading entity. Today, almost all hedge funds trade derivatives on everything from equities to the vote on a new Pope.

Am I correct that GE, the company that once made toasters, is one of the largest over-the-counter derivative trading groups in the world?


Not to be left out of the banter, Sinclair adds to today's "conversation on derivatives."

R PowellMonthly trade deficit number#1320625/10/05; 18:26:31

is due to be released tomorrow (I believe). I've read that the USA now even imports more food than is exported, although there was no source given in that article. But, hey, nobody exports more money than we do..noooobody!

With rumors of possible hedge fund losses, poor performances in the equities markets, two ever increasing deficits, the continuing inflation of the monetary supply, a tightening supply + demand balance for physical, and ongoing albeit small "wars" in the Middle East, I would have thought that the POG would be higher by now...? But what do I know? Not enough, obviously.

R PowellSilver#1320635/10/05; 19:14:07

I guess the quantites of existing silver stores will remain an unknown, unlike the amounts of other metals like copper, lead or gold. Certainly the market has not responded to or even reported rumors of any shortages even though the silver market draws on existing supply every year to fill the shortfall between production and useage. It is this deficit that analysts like Morgan and Butler claim has consumed billions of ounces of silver that once existed (and presumably counted at one time) but are now supposedly gone. There are claims that thousands of years of accumulation have been "consumed" in industrial applications since the end of WW2. The US government supply is gone. I remember watching the POS drop seven cents on the day that President Bush signed into law authorization for the Treasury to purchase 10 million ounces of silver to continue the silver eagle coinage. Our government once held billions of ounces (pick a number here from 6-8 billion).

I have not been able to disprove any of Butler's fundamental analysis (though I don't agree with some of his price manipulation theories). Perhaps it is because there are no official storage numbers to prove or disprove the existence or lack thereof of silver, that the possibility does exist for the POS to explode violently but such a scenario would, I believe, require at least the rumor of, if not the actual occurance of, an actual immediate shortfall of physical availability for industrial needs. Judging from the market's price action of the past decade or so, I'd say nothing even resembling this has occured other than the late 1997-early 1998 price spike caused by Buffett's buying. This too was short lived and based on speculation only. The more recent price doubling from the $4.01 to approximately the $8.53 level peaking last year at this time, again occured with no specific physical shortage evidence. The subsequent price drop proved Leonard Kaplan right as the only analyst (that I'm aware of) who correctly called that price gain as the result of a speculative bubble. However, the price never did retreat to that $4.00 level so maybe that $4.00 level did represent an undervalued asset. Is $7.00 a fair assessment now?

Whither the price of silver from here? I don't know but I did note that the COT positions are more favorable now than they have been for a long time. That is, there appears to be a more balanced number of long and short positions in each of the three categories of traders rather than the usual lopsided speculative long versus commercial short position. However, this can change quickly with or without much price movement (or it can change very slowly with huge price swings!) So-called overbought or oversold situations can remain such for long periods of time. There are no fool-proof indicators for price predictions, only some than sometimes improve one's odds of prediction....and then only sometimes! But, the COT report is unusual so I thought I'd mention it. I didn't mean to so long winded about it. Any other thoughts or news about the other precious metal?

Liberty HeadWhat's That Smell?#1320655/10/05; 20:24:45

Judge OKs Termination of United Pension Plans, Clearing Way for Largest U.S. Pension Default

The ruling, which carries broad implications for U.S. airlines and their workers, shifts responsibility for United's four defined-benefit plans to the government's pension agency.

That will save cash-strapped United an estimated $645 million a year, part of the $2 billion in annual savings it says it needs to line up enough financing to emerge from Chapter 11 bankruptcy as soon as this fall.

Liberty Head

There it is! Fair is foul and default is a savings plan.
The gov't can't honor it's own Social Security plan and now it gets the tab for the corporate defaults as well.

There won't be any golden years without gold.
Get some.

Best Wishes

MKChris Powell. . . .#1320665/10/05; 20:26:06

Thanks for the article you sent my way on the developing derivatives crisis vis a vis General Motors, Ford, United et al. . . .There will be more.

What 'civilians' in the war on gold do not understand and will not be told is that the crisis at hand is the result of an interlocking web of counter-party agreements. This matrix, if I might employ a grisly metaphor, is like a web of directly connected nuclear power plants. In this web, if one goes it touches off a reaction in the next, and the next, and the next. . . .and so on. That is why you are seeing this extraordinary and bewildering onslaught of rumors. It's because the rolling crisis is in motion. People, including some of our most illustrious pundits, think they understand what is going on, but, in my view most don't . . .not really.

In my last newsletter I tried to point out that I think Alan Greenspan understands this and he's trying to beg off saying that the 'invisible hand', 'chaos,' 'creative destruction' are all part of the market process. What he's really saying is that there's not much he can do about it, so don't drop this disaster at my door. What I've alluded to before in my various writings -- and emphasize now -- is that this may be something beyond the control of the central banks and the government.

I started warning about this process (now engaged) years ago. Alan Greenspan knew the potentialities better than anyone and he refused to recommend the regulation of derivatives. Now the dark angel is at his and the financial markets' door. And this is just the beginning. . . . . . . . . .Let me say it again. If you do not own gold you better get some. If you don't own enough, buy more now. If you own enough, thank the good Lord that you do.

My remarks and Alan Greenspan's statement is linked above.

mikalThose Dreadful Derivatives in Deutscheland#1320675/10/05; 20:27:45

Hedge Funds Accused of "Ripping Heart Out of German Economy"
May 11, 2005
"Cayman Islands", you gotta love it

BulldogMK#1320685/10/05; 21:10:31

What is "enough"?
Chris PowellReply to MK regarding derivatives and the Fed#1320695/10/05; 23:24:47

MK, I agree with you that the "rolling crisis" seems to be in motion but I'm not sure that Greenspan really thinks there's nothing he can do about it. His recent remarks suggesting as much may be meant just to exonerate himself in case of disaster.

Meanwhile, I get the sense that all the major markets are now being very closely manipulated by the central banks -- equities, bonds, gold, and commodities, at least oil.

When Greenspan first articulated the Fed's opposition to regulation of derivatives -- his remarks to the House Banking Committee in July 1998 --

-- he was saying, explicitly about gold and implicitly about everything else, that the derivatives markets didn't need regulation because the Federal Reserve and/or the Treasury Department and other central banks themselves were ALREADY the big players in the derivatives markets. That is exactly what the Greenspan quote famous among gold bugs is about:

"Nor can private counterparties restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise."

That is: "Don't worry, congressmen. We central bankers have the gold market under control."

Further, this was Greenspan's proclamation, still hardly understood today even among gold bugs, that the very purpose of gold leasing is not what the central banks maintain -- to earn a tiny bit of revenue on a supposedly dead asset -- but to control the gold price and, with it, the rest of the currency market.

Why would the Fed, if it was concerned about systemic risk to the financial markets, NOT want ordinary regulation of derivatives? Perhaps because such regulation would disclose that the bigger derivatives positions on the books of financial houses like MorganChase and Citibank and Goldman Sachs were actually U.S. government positions. Upon such disclosure the free markets being preached to the world by the United States would be exposed as not merely phony but a vast imperialistic scheme, surreptitious economic war against the rest of the world.

What was the Counterparty Risk Management Group, formed by the New York Fed after it desperately arranged the orderly liquidation of the Long-Term Capital Management hedge fund, if not another instrument of market rigging, another evasion of anti-trust law, the rescue of the whole derivatives class?

No, far from being powerless to intervene as the fiat money colossus superinflates and begins to topple over, the Fed and the Treasury may be weakening precisely because they are intervening surreptitiously in TOO MANY markets TOO OFTEN. We seem to be at the point where the government of any country with a substantial economy can pull the plug on the rigging at any moment -- Saudi Arabia by not pumping enough oil; China, Japan, even (yikes!) Taiwan and South Korea by not buying enough U.S. government bonds; Russia by buying gold; Europe by not leasing enough gold or by letting the euro get too strong; or even Cuba, by sending the Havana police department to raid Grand Cayman and copy and publish the records of the banks that lately have been buying the U.S. government bonds that the usual buyers have started to decline.

The great scheme seems to have been to flood the world with mandatory dollars while controlling and channeling the inevitable inflation -- capping gold with leasing and commodity prices and interest rates with derivatives. But now too much money is out there and it is sloshing around crazily in pursuit of advantage through leverage that was unimaginable just a few years ago. It's getting to be too much for its creator to control -- it's Frankenstein or "Sorcerer's Apprentice" time. Something is going to give.

Gold and silver have had their shortcomings as money but their virtue has been that they never could get the world into the current danger, never could become infinite money projected into infinity. I don't know what is going to happen but it is impossible for me to imagine a world in which gold and silver will be worth less than they are now -- which will not necessarily be such a great world for a while. But all we can do is the best we can do by our own lights.

TownCrierBulldog, what is enough...#1320705/10/05; 23:29:13

It is different for each person, but is something you'll feel in your bones -- enough is what allows you to rest easy at night.

And if that description still leaves you fishing for the right answer, call one of the representatives at USAGOLD-Centennial for a portfolio consultation and thereby get a better handle on the diversification level and strategy that's right for you.



SundeckBuffett - Derivatives and Hedge Funds#1320715/10/05; 23:51:33

Here is a bit of wisdom/commentary drawn from Warren Buffett several years ago that may be worth revisiting in the light of present rumours (see link for more):

Reading Buffett's letter, it is clear he doesn't understand the derivatives business, and that it is that fact which scares him: "When Charlie [Buffett's business partner] and I finish reading the long footnotes detailing the derivatives activities of major banks, the only thing we understand is that we don't understand how much risk the institution is running." It is Buffett's assertion, and not a bad one at that, that if he doesn't understand how much risk the bank is running, it is likely that the bank's management don't either.

In addition to being generally unintelligible, Buffett's accusations against derivatives include:

* Over-inflated reported earnings based on derivatives contracts, which tend towards the fictional. Derivatives contracts are an asset or a liability on a company's balance sheet, but their true value is mysterious. They are settled often many years hence, and the amount at which they will eventually settle is dependent, by definition, on a secondary variable – the S&P 500, say, or the price of palm oil out of Kuala Lumpur. Managers have to value their derivatives for reporting purposes, and they will naturally tend to value them in a favourable light. As an extension of this criticism, there is an enormous number of derivative transactions in which both sides of the deal report a profit, something it is difficult to do in more traditional businesses like baked bean manufacture.

* Credit requirements specified within derivative contracts can have an amplifying impact on company solvency should a firm run into trouble. This occurs because many derivatives impose their own collateral requirements – should a company suffer a ratings downgrade, under derivative contracts that it holds it might then be forced to ante up collateral to its counterparties, accentuating its own credit crunch, eventually threatening corporate meltdown.

* "Daisy chain" risk. If one company in the chain goes belly up, it may impact the credit quality of untold companies down the line.

These accusations lead Buffett to term derivatives "financial weapons of mass destruction", and to drive his own firm out of the business as far and as quickly as he can. They are valid criticisms of a system that holds risks that few could claim to be totally au fait with.

Sundeck: Mmmm...

* both sides of a contract booking a "profit" (could explain why "losses" in hedge-fund portfolios over the last few months, 'though substantial, have been reportedly "less" than for the S&P500)....

* credit downgrades forcing an increase in collateral (I suppose this might be similar to the consequences arising from the downgrading of Ford and GM bonds)...

* daisy-chaining of credit-quality (MK's nuclear reactor analogy?) forcing a domino-style collapse of interlinked counterparties.

Didn't congress, several years ago, rush through some legislation relating to the "netting" of derivative failures? I vaguely recall them doing so, principally to try to head-off this sort of domino-style collapse...the idea being that you look along the row of dominos and, after all counterparty links have been evaluated, it is only the first and the last dominos that are affected by a systemic default.

Interesting times...ample denials may suggest that there is some fire in the smokey system somewhere...

I read somewhere that there are about 2500 hedge funds operating. Today's Australian Financial Review reports hedge-funds have about $2.5 trillion under management. About 60% of hedge-fund managers operate in the USA and about 33% in Europe. 65% of assets under management are in single hedge-funds with the balance in "funds-of-funds"...(shades of 1929???) Funds under management have surged by 23% in the last six months.

If all these funds are making a profit...who is making the loss? Perhaps "everybody should be rich!".


GoldiloxDerivatives Mess#1320725/11/05; 00:24:29

@ Sundeck

Thanks for the excellent explanation.

I think you've hit the nail squarely.

My take on this inflation/derivatives game is that the banksters are trying to convince us that they have converted a zero-sum game to a "win-win" scenario, a concept that gained huge popularity in marketing "Spin" classes, but seldom concludes as advertised.

"How many Deutche Marks for that there loaf of bread?"

TopazGold, Bonds and whatnot.#1320735/11/05; 02:01:55

Gold looks to be allied with DX here preventing it (Buck)from an upside breakout, whilst Bonds appear to have shaken off the blues and now seem set for another crack at 4.4%.
The sucker that looks toppy is Oil, which is hanging in Wile-e-Coyote type air at present.

Deficits? ...what deficits!

Should be interesting to be sure.

GoldiloxTaxation without representation?#1320745/11/05; 09:07:55

"Suppose an idiot went to Congress," quipped Mark Twain, "but then, I repeat myself."

The US Congress is demanding that China de-peg the Yuan immediately or face about 27% tariffs in goods exported to the US. Now, here's a clever idea. Who in the world really believes that that will help Joe Six-pack better afford all the DVD players and flat screens that have fueled the latest $55B trade deficit? "But the deficit will subside", they say.

How does that work? Some theoreticians say it will stimulate stronger sales of US goods. Can anyone name a US flat screen or DVD player manufacturer off hand that might benefit by this better "price" competition?

Once the tariffs are added to the price of goods imported, the $7.00/hr 21,000 new US jobs (274K minus 253K hypotheticals from the the birth/death model) will be more competitive on the world market - as if anyone making that wage can possibly afford 27% higher prices on goods. If that's not a new tax on the consumer, than I don't know what is.

When Congress not spending like a drunken sailor, we see them increasing EVERYTHING BUT INCOME TAXES, so they appear to support "lower taxes" as a campaign message to the boob tube. Fortunately, the talking heads line up for their deception and produce an infinite number of stock hucksters to justify the convoluted data reports.

At some point Joe may figure out that his income tax bill is only the head on the pimple of other taxes he is paying - sales tax, luxury tax, estate tax, import tariffs, inflated oil prices (admin tribute), transportation surcharges, airport surcharges, new government "service fees", etc. Only, however, if the observation of Richard Prior is not totally prophetic. "N**, that narcotic done made you NULL and VOID!"

More than likely, the authors of that 27% tariff are licking their chops at the opportunity to pay for the 4000 special interest pork projects in the latest $87 Billion off-budget Iraq appropriations bill. So maybe they're not complete idiots - just not particularly interested in honestly representing Joe Six-pack in any of there financial shenanigans.

Bulldogderivitives#1320755/11/05; 09:17:20

Canadian Hedge Fund, Portus Alternative Asset Management based in Toronto went into receivership after two years of operating leaving 26,000 clients out in the cold. KPMG, receiver, has yet to account for C$730 million.
mikalMerril Lynch sees euro performing well#1320765/11/05; 09:36:24 Euro to be unaffected by referenda on EU constitution - Merril Lynch - May 11, 2005
GoldiloxThe Pension Mess#1320775/11/05; 09:42:06

A Federal judge has given the OK for UAL to renege on its Union pensions (not the execs - who have a separate plan) to help it avoid bankruptcy collapse. If these holier-than-thou judges really represent all of the people, they should also order the insolvent federal, state, and local governments to cease payments on their pension plans to promote government solvency.

Make Congress and all the "public servants" retire on the SSI that they are so flippantly skimming in their "pay as you go" pyramid schemes.

Oh, and why should public servants receive twice the number of paid vacation days of private sector workers on top of their lucrative retirement plans?

Aren't these bozos always yapping about a "level playing field"?

What's good for the goose . . .

Gandalf the WhiteWOWSERS !! Could the ESF Boyz be MORE OBVIOUS ?#1320785/11/05; 09:49:34

US$ Chart shows --- NO Manipulation (or Stagflation !)
HA HA HA !!!

mikalGlobe still a dog eats dog world#1320795/11/05; 09:50:12

'Economic spy network' across Europe - iafrica
Chinese infiltrate research labs, corporate databases

USAGOLD / Centennial Precious Metals, Inc.Helping you enter the gold market with grace and confidence.#1320805/11/05; 12:13:34">Get a head start on the gold market!
GoldiloxMy how times have changed#1320815/11/05; 12:22:48

Earlier today, a small private plane ventured into restricted Capitol airspace, and within moments the DC police were hollaring at employees to leave their shoes and run out of the building, all as a squadron of F-18's screamed overhead. Fortunately, no one launched any missles at the intruder that might have injured the hundreds of the people herded outside by the security "experts". One Congressman said "security forces were coming out of the woodwork." Might that be were they reside in our monitor-everything society?

The markets blipped but regained their previous momentum almost immediately.

Only four years ago, four airliners were "lost from RADAR" for better than an hour and a half with NO scrambling of defense forces or even (according to post event reports) any serious concern on the part of the FAA or defense specialists. Those same airliners are purported (with most of the confirming evidence still being withheld) to have crashed into the twin towers and Pentagon, theoretically igniting steel smelting fires with their half-empty tanks of low octane jet diesel fuel.

I'm happy to report that today's scare was but a false alarm, but jitters are currently so strong that any unplanned sneeze in the seat of world power sends measurable Richter events throughout world markets and governments. This environment resembles the "bend over and K**s your A** good-by drills" of the Cuban blockade.

Just how secure (but extremely nervous) are we post- 911, Afghan, and Iraqi invasions?

As Sinclair reminds us, the first drop of Saudi oil that experiences incendiary interruption will send the markets into a serious tizzy!

To add to the insanity, the CNBC geniuses are suggesting that "with a little market Prozac", we'll all be fine.

It should suggest, for anyone concerned about the effects of a real event the the time to get defensive with investments is BEFORE TSHTF.

Got Gold?

Chris PowellSocerer's Apprentice time#1320825/11/05; 12:31:42

An exchange between USAGold's Mike Kosares and
GATA's Chris Powell.

To subscribe to GATA's dispatches, send an e-mail to:

This email address is being protected from spambots. You need JavaScript enabled to view it.

Black BladeWhich Country Experienced The Highest Monthly Inflation?#1320835/11/05; 13:04:26

Which Country Experienced The Highest Monthly Inflation?

Hungary (1945-1946) - Hungary experienced a monthly inflation rate peak of 4,900,000,000,000,000,000% (4.9 quintillion percent) in the aftermath of World War II. Hungary also issued the largest denomination banknote in 1946, the 100 quintillion Pengo.

Yugoslavia (1993-1995)- Yugoslavia suffered hyperinflation rates of approximately 5,000,000,000,000,000% when the country began to disintegrate in the early nineties.

Bolivia (1984-1985)- The Bolivian economy saw the highest annualized rate of inflation, 23,400%, when its government decided to print money in the face of falling commodity prices, rising foreign debt obligations and increased domestic spending demands.

Germany (1920-1923)- Germany, in the aftermath of World War I, saw peak monthly inflation rates of 3,250,000,000%.

Posted for fun and educational purposes.

- Black Blade

Federal_ReservesNO real change in gold.#1320845/11/05; 13:05:51$GOLD

Still consolidating above the long term trend line in an ever tightening triangular formation. This could last for days, maybe weeks, but when it breaks be prepared to make your moves. Should the long term trend line break and gold fall downward out of the triangle I plan to hedge, the target would be $376 (see attached url).

Interesting eco data. Suddenly the government has a quarterly surplus (rev > outlays) in budget and the trade deficit falls. A surge in employment as well. All very interesting indeed.

I believe the policy makers are trying to slow down asset and commodity inflation without hurting the labor markets and consumer spending thu causing a massive slowdown. They are playing with fire.

TownCrierGold sales seen rising on wedding season#1320855/11/05; 13:30:58

MumbaiMay 12, 2005 -- In the last two-three years, the sale of gold, especially the traditional jewellery, has seen a 10 per cent rise, said the Mumbai-based bullion consultant Bhargava Vaidya of BN Vaidya & Associates.

"...we expect the offtake to go up by over 30 per cent this year."

The sale of gold coins through banks have also picked up.

ICICI Bank, which sells coins through its 350 branches, has reported a growth of over 10 per cent in sales over the last fortnight.

^----(from url)----^

In their pursuit of tangible gold, Indians continue to display an admirable no-nonsense approach to wealth management.

In all the world, Americans, especially, would be wise to follow this example, because any shift out of international reserve status for the dollar would reveal that dollar-holders are the ones particularly put in the lurch.

Consolidate the current status of your winning papery position with a prudent diversification into gold. Put a solid foundation under your portfolio.

Call USAGOLD-Centennial today. 1-800-869-5115


TopazInsatiable Dollar Gluttons.#1320865/11/05; 13:36:58

They'll take it any way you dish it up, but have it they must!
Today TPTB "managed" to stem the drop in Yields at just a shade above 4.5%...How? By ratcheting up DX and flat-lining Gold.
Trend will probably resume as you-all sleep but at some point in the near future, when the brotherhood is on the right side of things, DX is going ballistic "despite" all their well-intentioned efforts.

968@ Black Blade#1320875/11/05; 14:00:26

Which Country Experienced The Highest Monthly Inflation?

An important notice : none of these countries issued the the world's only reserve currency !
Therefore not even the famous inflation in the Weimar-Germany can't be compared with a serious inflation in the reserve currency; that's an important difference !

TownCrierFederal_Reserves, on hedging...#1320885/11/05; 14:21:03

It is a unique opportunity at the forum to see you, as a physical gold owner, willing to talk candidly about your desire to hedge -- that is, to effectively join the old ranks of producers and bullion banks who sell paper gold into the market.

Perhaps you would be willing to further share your thoughts on how the rationale to preserve a currency-denominated accounting position ("price"/oz) reconciles itself with a course of action that, when seen in the whole picture of the market and price discovery, tends to reduce the overall market's assessment of your gold holdings from a tangible item of intrinsic value into mere baggage attached as a rider to a contract in an elaborate paper game that assesses its value not on the physical rider but on the contract itself.

Where this is problematic (to physical gold owners) is that experience shows us that contracts tend to be DISCOUNTED by third parties. That is to say, so long as gold continues to be priced by the hedging markets (e.g., COMEX), gold remains essentially unfree to express its unique value as an non-defaultable tangible item of wealth. It boils down to the vast inherent difference between ledger (non tangible and defaultable) contracts versus actual property.

Consequently, there has been a big push to get miners and their investors to recognize the self-destructive practice of hedging the price of their physical reserves. Are you so sure you want to take a piece of this rotting hedge baggage upon your shoulders and carry it forward?

Rather than hedging I honestly think it would be better that you should sell some of your gold -- if indeed the numerical cash position is so very important to your overall book. ...Perhaps you are one of the rare people who are lucky enough to own TOO much gold.


USAGOLD Daily Market ReportPage Update!#1320895/11/05; 15:07:30">
The Daily Gold Market Report has been updated.

If you are considering investments in gold we invite you to">request our free introductory information packet detailing the products and services offered by USAGOLD ~ Centennial Precious Metals. We welcome your inquiry and look forward to working with you.

Wednesday Market Excerpts

Gold unchanged as trade deficits narrows
May 11 (from DowJones) -- Gold futures traded on both sides of unchanged Wednesday before finishing right where they left off on Tuesday.

The metal initially weakened due to a stronger U.S. dollar, but bounced on a combination of factors, including worries about rumored hedge-fund losses and possible revaluation of the Chinese yuan.

June gold settled unchanged at $427.90.

Gold had been slightly higher in the overnight session but turned negative not long after the COMEX gold pit opened.

"The trade number came in so much better than expected, and that was the story," said one dealer. The government reported that the U.S. trade gap narrowed to $54.99 billion in March from $60.57 billion in February, the sharpest decline in three years.

Gold's low was hit roughly a half an hour into open-outcry trading and the market soon started clawing its way back.

At the time, traders said the metal seemed to have some kind of bullish undertone and was resilient, considering the dollar's strength.

George Gero, senior vice president with Legg Mason Wood Walker, cited safe-haven buying due to rumors about possible hedge-fund losses.

"Any time there is some kind of uncertainty -- economic, political or inflationary -- then gold gets safe-haven buying," said Gero.

He emphasized that the market talk of possible hedge-fund losses was strictly rumor. "But markets sometimes move on rumors," he pointed out.

Yet other supportive influences for gold, added Gero, are the inability of the stock market to rally on favorable economic news, along with low Treasury yields.

Gold is also showing a willingness to hold above support levels not far below the market, pointed out Gijsbert Groenewegen, partner with Gold Arrow Capital Management.

"Another reason why the market might also be OK is that there is talk about revaluation of the (Chinese) yuan," he said. "That's more and more in the news. That would mean a devaluation of the dollar."

Groenewegen also noted geopolitical developments could be providing some support, citing worries about North Korea's weapons program and Iran's nuclear development.

"Technically, we (gold prices) are in a triangle. It has to break out either way," said Groenewegen.

He later added: "Apparently, there is also some physical buying in the market."

----(see url for full news, 24-hr international headlines)----

SurvivorMusings On The Trade Deficit#1320905/11/05; 16:30:36

I've been gagging on the trade gap news all day. There must be plenty of desperation to go around in order for so much effort to be spent spinning $55 billion into "good news" when:

> The only reason $55 billion looks good is because $60 billion looked so bad last month, and

> $660 billion plus $55 billion still totals $715 billion (is my memory correct on the 660?), and

> $55 billion still adds more debt on the head of each and every US resident - most of whom are already under water with personal debt.

...and this is only the trade deficit, which pales in comparison to the derivatives exposure and more. Got gold?

- Survivor

GoldiloxThe Chinese Conundrum#1320915/11/05; 16:36:27


For years, China has been using its currency peg to recycle massive dollars back into Treasuries to the US, which has enabled it to continually expand its capital expenditure to overproduce goods that America doesn't need and can only buy on credit provided by its benefactors in Beijing. Whether one terms this dynamic an "unstable equilibrium" or a "stable disequilibrium" has thus far proved no more than an interesting academic question, given that both parties have hitherto been satisfied with the arrangement: the US because it gave the country a seemingly cost free means of perpetuating endless credit bubbles, and China because it gave further impetus to a social revolution, rapidly turning up living standards throughout the countryside and cities, against the political backdrop of an authoritarian regime deeply paranoid about any incipient signs of social instability.
But this process finally appears to be breaking down, at least in political terms, as the Chinese leadership gets increasingly inundated with U.S. demands — from the Bush Administration and ever more prominent members of Congress on both sides of the political divide — to revalue its currency. Speculators have duly taken note. No less than the sustainability of today's global financial architecture may well be at stake depending on how Beijing handles this issue and the world responds.


Marshall Auerbach pens a comprehensive treatise on the issues surrounding the China peg and potential pitfalls in changing the equilibrium.

GoldiloxMEDIA SPINS "RISK AVERSION" TO SELL TREASURIES#1320925/11/05; 17:13:41


The big news in the markets came from the Commerce Department when they announced the second quarter trade deficit unexpectedly shrank in March to $55 billion. Median forecasts called for a deficit of $61.9 billion with the lowest estimate at $58 billion. The number clearly came in much lower than expected. Bloomberg News describes the impact on the markets as follows: "Stock index futures gained, Treasury notes fell and the dollar rose as the report suggested a stronger economy." The report did indeed suggest a stronger economy, especially on the heels of a much better than expected employment report last Friday. On face value, stocks should be headed higher today with less demand for bonds moving bond prices lower and yields higher, but just the opposite is happening. WHY???

Recent economic reports have more jobs being created in America than was expected and in March our exports unexpectedly surged higher by 2.5% indicating economic strength. Normally when the economy is strengthening, bond prices move lower. Today's great news on the trade deficit sent the dollar higher against all major currencies, but bond prices reversed their initial declines from the announcement and have remained in positive territory for the balance of the session. The big spin in the financial media is claiming that today's action with stocks down and Treasuries higher is because of "increased risk aversion." All the recent good economic news and the market is still getting arm-wrestled into buying U.S. Treasuries. The "RISK AVERSION" spin is being used to sell Treasury debt as a flight to safety.


IN today's Market Wrap, Mike Hartman follows the interday moves with an eye on the big basket of T's for sale. Interesting opinion.

Federal_ReservesTOWN> Yes, the hedging process.#1320935/11/05; 18:35:34

Maybe the commercials are shooting themselves in the foot when they hedge their own product. Maybe not. Let's try to understand if their is a logical reason for it. Farmers do they same thing with wheat futures, they write an option to sell at a specific price in the future to lock in a profit and such. Since they have the product their is no risk of non-delivery. The whole idea is to transfer the risk of price fluctuation to someone else, while locking in a profit. It's a logical business like thing to do. That's what created the futures market in the first place. Producers transferring risk to speculators, who frequently get burned or make millions, sometimes in the same year. But like anything, during a period of falling prices, producer hedging, can get out of hand and contribute even more to falling prices. But presumably the other side of the transaction is expecting the price to rise also? In theory at least, the speculators should have no impact on raw demand for the production. So in the fundamental case for gold, as long as policy makers continue their reckless management of the budget, trade, and foreign affairs (wars), gold should continue to rise irrespective of any hedging going on!

Gold Luck my friend!

SmeagolGolden boogie time#1320945/11/05; 19:01:39

"I'll take the Metal" by Steve Dore

Us too!


melda laurePowell 132082#1320955/11/05; 19:01:59

My thoughts exactly.

Credit is an imaginary quantity. Gold a real quantity. If I may abuse our repose with the memory of the algebra of complex numbers, the two are orthogonal quantities.

In dynamic systems (let us suppose a radio transmitter) the real quantity is the "friction" or "losses". The imaginary quantity is just a cyclic "resonance", that is, it does no useful work, (it matches the load imbalance).

To go back to our radio, ther IS NO magic ratio of real to imaginary power. In the ideal transmitter-antenna system, all the power (money) is real- all goes to the antenna. However, a system will still work with some amount of "imaginary" power. In fact as long as the voltages do not exceed the KAZZZAM!! point, a system can have MUCH more imaginary power sloshing around than real(that's all it does- slosh around). In effect, the load is so unbalanced that it will not accept power unless a huge resonance is impressed upon it.

It does seem that derivatives are reaching the avalanche mode where the rate of increase in notional value is 1000 (or is it 10^6?) times the increase in real world GDP.

At that point, the only use for derivatives will be to hedge other derivatives. I fear you will count the months to that event on your fingers and toes (with leftovers) - so swiftly does it approach.

Whatever load mismatch this derivative mountain is holding bottled up, it is about to blow- the medicine has stopped working.

Or so it would seem... To repeat myself. It is not so much a case of insolvency, as a case of a bluff being called. Today that bluff is being called in the oil market. It may also be called with every ounce you order delivered to your doorstep in a little box.

Prices are largely imaginary at this time, as anyone trying to secure a "literal" tonne of money has discovered.

melda laureChips and dips#1320965/11/05; 19:05:12

To paraphrase the "doritos" jingle: Hedge all you want, dont worry, we'll counter hedge more.

"Give us gold NOW! Keep naaasty chips" eh Smeagol?

melda laureIf the producers need barter hedges - aieeeee!#1320975/11/05; 19:11:44

Allong the lines of Russian industry, you barter for what you need, because money can not secure the needed materials.

What the producers need is an over the counter contract with a specific energy and labor producer exchanging x ounces for y megawatt hours and man-years thereby locking in z profit (in ounces).

I submit to comments the assertion that if the above is the ONLY way to profit in the mining business, then we are effectively in a barter economy.

SmeagolYesss!#1320985/11/05; 19:13:39

(Melda Laure)
We couldn't have said it better, precious! (grin)


TevyeContest Gold Arrives#1320995/11/05; 19:53:31

FedEx has once again had to look up the location of my little town of Anatevka in order to deliver the 20 Mark contest gold (although it took them two tries). Many Many thanks to MK and all of the castle staff for their generousity.

I very much look forward to the day when Invisible Hand (or even Lady Waverider with her latest guess) wins the price guessing contest.

Gold. Its Tradition!!


SmeagolDebt ponderings...#1321005/11/05; 20:02:35

...whenever we sees big dollar-numbers posted by all the good Folk here... the monthly trade deficit... added "war" expenses... the additional US-country's borrowings, all that rot...we amuse ourselfs by dividing those numbers by 300,000, find out how many doll-airs they somehow thinks is our "part" (cackle)... and all we has to ssay to that fantasy is:

"Ssigh...sso sorry precious... seeing as we didn't sspend it - we don't owe it! And even if we did, it's not in OUR budget...
...would you like a nice juicy fissh?"


P.S. Congratulations, Ssir Tevye...there's few things as nice as FREE gold (or silver)- and delivered to your door no less!!

OvSTevye#1321015/11/05; 20:41:05

No wonder FedEx had problems. If you
go through your town Anatevka, you
don't even know you have been there...
But if your fine ear hears the fiddler,
that's when you know...Cheers. OvS

TopazDX/Gold#1321025/12/05; 02:06:25

We should start hitting some stops hereabouts with DX (currently 85.25) which could "really" set the Cat amongst the Pidgeons.
88-92...blink and you'll miss it like Teyve's tiny town.

Let's watch how Gold reacts to 85+ DX. Will $425 hold?

TopazWoW! ...CQR Gold.#1321035/12/05; 03:37:27

That was fun, the Golden anchor went out smack on $425 and stopped Buck dead in it's tracks.

Living in "tomorrow-land" sure provides some moments of enjoyment and insight...

TopazLo and Behold!#1321045/12/05; 03:49:54

The instant DX comes off the front burner, ravenous Buck Junkies start chowin down on Bond Yields.

Have you been spiking Buck stew Gandalf??

GoldiloxCorporate Raiders as harbingers#1321055/12/05; 09:11:46

With the news of Kerkorian's bid for GM and Icahn's election to three seats on the BBI board, we see more raiders entering the markets in a large way. Some suggest this is the actions of value investors finding their desired entry point bottoms.

Maybe so, but remembering the raiders' actions a couple decades ago, they tend to dissect their acquisitions to extract value.

With many corporations thick with cash, and not sure where to put it to work, one has to wonder if the real strategy is to get control of those funds before they are dissipated by management.

IPOs like Warner Music are not getting strong support, but M&A seems to be building, which suggests contraction, not growth.

The strong dollar and oil under $49 have so far delivered a DOW that is down 20 points for the morning. Gold, down $3, is none the less holding up pretty well in an environment that might have breached $400 in the recent past.

Ford looks like it is in more finance trouble today, as well.

It's really getting interesting.

GoldiloxUAL Pension ploy could start a trend#1321065/12/05; 09:22:44


Thursday, May 12, 2005 Page B11

NEW YORK -- United Airlines' success at jettisoning its onerous pension obligations may prompt other struggling corporations -- particularly in the auto parts industry -- to do likewise, analysts warned yesterday.

United's parent, UAL Corp., this week persuaded a Chicago bankruptcy judge to allow it to transfer its four underfunded employee pension plans to the federal insurer, prompting strike threats from its ground unions. The decision, which would trigger the largest pension default in U.S. corporate history, is part of UAL's restructuring effort to emerge from bankruptcy protection.

UAL's pension shortfall totals more than $9-billion (U.S.) and some portion of those promised benefits will now be paid out by the federal Pension Benefits Guaranty Corp. (PBGC).

The federal agency's chief executive officer, Bradley Belt, warned recently that the insurance program faces a major risk from the auto sector where companies' pension assets fall an estimated $50-billion short of what is required to meet pension promises made to workers . . .

Receding pension plans

In the heyday of U.S. manufacturing, top industrial unions negotiated gold-plated pension plans. In the past two decades, however, many companies have converted the plans that pay a monthly benefit into savings plans, while others have walked away from their commitments altogether.

$450 BILLION: The shortfall that Corporate America owes its pensions plans to finance existing obligations for future benefits.

7.5 MILLION: The number of workers who were covered by those plans for the past 20 years.

$3 BILLION: The benefits paid by the federal pension insurer to private-sector retirees last year. [up from 0.75B the previous year]

7%: Percentage of private-sector workers covered by defined-benefit plans in 1999.

101k: The number of employers in the past 20 years that have terminated pensions that pay retirees a monthly benefit.

1 MILLION: Number of Americans now covered by the federal pension insurer that steps in when plans are terminated.

$12.1 BILLION: The record loss of the federal pension insurer in 2004.

27%: Percentage of private-sector workers covered by defined-benefit plans in 1979.



More tug-of-war on Federal Funds as the Corporate Pension plans fall like dominoes. Add this to local failures a la San Diego, who just chased out the mayor after a brutal election battle, and it gets really ugly.

CNBC interviewed the CEO of PBGC a moment ago, and he sounded worried.

USAGOLD / Centennial Precious Metals, Inc.Proven Reliability, Longevity, Quality and Professionalism ---- Invest with Confidence!!#1321075/12/05; 09:57:01

TownCrierMiners vs. metal...#1321085/12/05; 10:24:54

HEADLINE: Gold miner Cambior's earnings drop on cost pinch

May 12, 2005 VANCOUVER, British Columbia (Reuters) - Cambior Inc. posted a fall in first-quarter profit on Thursday as margins came under pressure from rising costs despite higher gold output and a stronger bullion price.

-------(end snip)------

The woes of high costs and lower profits is not just a symptom affecting South African mines.

Mining stocks are stock investments which are still subject to all the frailties that affect corporate affairs in any given sector. It all comes down to a big game of balancing cashflow and trying to show enough profit to stay in the game and to attract more shareholding interest than the competitors.

On the other hand, investments in gold metal are always 'good as gold' because it IS gold. Being a consolidation of wealth, cashflow is not an issue for the metal, and therefore it can never go bankrupt. And unlike dollars, there is less risk of dilution and overprinting.

Choose gold.


TownCrierHEADLINE: Gold down on strong US retail data#1321095/12/05; 10:55:00

12 May 2005 (I-Net Bridge) -- SPOT gold weakened to its worst level of the day this afternoon after the dollar strengthened in the wake of better-than-expected US retail sales data.

The commerce department said retail sales climbed 1.4% in April, their best gain in seven months.

"We are seeing a pullback in gold on the back of the euro," a market analyst said.

He explained that euro-denominated funds were finding it more expensive to purchase gold and that the usual inverse relationship between gold and the dollar was coming into play.

^-----(from url)-----^

Why is it that when news reports cite booming retail growth in places like China, the Middle-east, SE-Asia, or India, it is always indicated to be a positive association with gold purchases. And yet when the U.S. has its own boom in retail sales, it becomes a negative association with gold?

Apparently us Americans, the folks with the most to lose if our dollar fades from reserve status, are woefully lackadaisical about it and we do not factor significantly among the world's buyers and owners of gold.

Paper fades, folks. Don't be caught flat-footed with a short-sighted view of the dollar. Choose gold and securely consolidate into fact the essence of wealth represented only transitorily by your papery positions.


Maga CirceReturn of the 30-yr bond#1321105/12/05; 12:32:17,,SB111572849499229176,00.html?mod=home_whats_news_us


The Treasury Department said last week that it may bring back the 30-year bond, after retiring it in October 2001 amid anticipated budget surpluses. The landscape has shifted since then; the government is projected to run fiscal deficits well into the future and the average maturity of the debt has shortened markedly. Reintroducing the 30-year bond would give the government (as well as pension funds and Wall Street) a way to insulate itself from movements in short-term interest rates, analysts say.

Maga Circe
Would anyone explain why the 30-yr bond would help Government, pension funds and Wall Street? I am new to the subjects we discuss on this forum and I need some help understanding. Thanks

CoBra(too)TC - Isn't it just wonderful?!#1321115/12/05; 12:47:50

- Yesterday the better than expected trade numbers - still 55 Billion Dollars in ONE! month - have been explained by a 1.5% rise in US exports and a decline in consumption.

Today we hear that retail sales have been up over the same period ... and the Dollar takes off?!

Orwell hedonics ...

So please tell me what it is! Higher exports? Fine - Still higher consumption? Fine too; Though how does it fit?
Do the PTB get a bit sleazy in reporting their findings or could it be argued away by core and (ir-)reality?
Do I know? As retail sales were 1.4 including autos and 1.1 plus on food ...

Are retail sales now reported outside of China Mart? - And do we feel that things have changed for the better, as more and more jobs have been outsourced to countries, who have been financially degraded by the "economic Hit Man" of the IMF and the WB.

... Or do we propose to have have all corporate liabilities as pensions and social security from now on be taken over by the state - id est in extremis UAL - by taxing the rest of us with inflating the monetary base to neverland!

Meantime, we've arrived there and there's no way way back! The US seignorage,or better its ability to print the globe's reserve currency was more than overextended, along with its deficits in all walks of life.

Unfortunately, the outcome becomes pretty clear - and even if it's not political free way on the forum - it is still pretty clear that the US is going down the ally of all overextended "empires" - towards total control ... as the accumulated debt is never to be paid back!

From here on we've got to be aware of the situation of total obliteration of the thesis of the full credit and faith into the US Government - a thesis, which has been disproven by history anytime - (not to go into the more substantial matter) ... call it misjudgements of some past admins ... or just plain arrogance!

I'd like to think it's somewhere in-between - Arrogance and Ignorance.

Some feel it's an inequitable proposition. A proposition, which just now is reaching its limits. A proposition, with which the world will not be prepared to live for much longer.

After all, we've been flooded with Dollars and we do see the fact that its buying power is receding in terms of real goods.

... OK - I don't want to bore you more than necessary, though the lesson would be to hedge against fiat and in particular against the US Dollar - a paper fiat currency, which may further rise against its competitors (of fiat) in the short term.

... And be happy to pay a lesser price for gold - real money in (most of)all fiat currencies ... and get your personal insurance ... cb2

KenoHave faith don't be shaken#13211205/12/05; 13:30:57

Just as in the movie"The Enemy Below", when Kurt Jergens responded to Hiene's querry"where do we go captain"?We go to bottom Hiene". And what do you know,the hull of the submarine held tight.Hold on, we will come flying out of the water like a rocket very soon.To heck with the Fed.same with the Commerce Dept. this greed is going to kill them all by itself.Hang on we are o.k right now at the bottom.
TopazLike Rain on your wedding Day.#13211305/12/05; 14:09:13

PoG still hanging $9ish above the currency mean so all is not lost...yet!

The irony of situation is that the very thing that provided circumstance for US "recovery" ie: 80-85 DX, is the first pillar to fall when said recovery actually gathers momentum over and above psuedo status.

TPTB really "should" stand on DX here and to hell with Bond yields ...let em go to nought!

slingshotGold at any Price!#13211405/12/05; 14:21:36

Did you buy at $427 and now looking at the POG drop?
Arrrgh! O.K.,O.K. Went to the coin shop to get some and noticed the premium was just alittle higher. Hey, What gives here?,I asked. His answer was they increased the premium on him. Like everything else the increases are passed to the consumer. There were no Gold Eagles. Some Krugs and small Pandas but the buying was in Gold Eagles. Can't keep them in the display. Silver was just the opposite. Bullion was being brought up and the Silver Eagles were somewhat plentiful. Not much to jump up and down for but, the premium went from 5% to 7% on Gold.Shortage? Hmmmm. Anyhow what is a few bucks here or there. Things are still the same and with the Pension Problem coming into the news, P.M.'s will be coming onto the radar screen.
Hang in there.

USAGOLD Daily Market ReportPage Update!#1321155/12/05; 15:41:09">
The Daily Gold Market Report has been updated.

If you are considering investments in gold we invite you to">request our free introductory information packet detailing the products and services offered by USAGOLD ~ Centennial Precious Metals. We welcome your inquiry and look forward to working with you.

Thursday Market Excerpts

Gold down on dollar surge, oil drop

May 12 (from DowJones) -- Precious metals tumbled across the board Thursday, with the declines triggered by another surge in the U.S. dollar and a steep fall in crude oil.

Gold fell through key chart levels that exacerbated losses. "It looks to me like it was a combination of too many factors all at once that really hurt the gold today," said George Gero, senior vice president with Legg Mason Wood Walker.

June gold settled down $5.70 to $422.20.

"We had a direct and clear reaction to the surge in the dollar," said Jim Steel, director of futures research in New York with Refco. The dollar, which had a strong tone on Wednesday due to a narrowing of the U.S. trade deficit, got another shot in the arm from robust retail sales first thing Thursday morning.

Sales rose 1.4% in April, when forecasts had been for 0.8%. Also, sales excluding autos jumped 1.1%, compared to forecasts for 0.5%.

The euro tumbled to a low of $1.2693, which was the European currency's weakest level against the dollar since early November.

The New York Board of Trade's dollar index peaked at 85.60, its strongest level since November.

Yet another factor pressuring precious metals, emphasized Gero, is the continued pullback in oil. June crude has fallen as far as $48.30, its lowest level since Feb. 16.

"As oil comes off this much, and interest rates go up on a steady basis, it becomes more expensive to hold gold," said Gero. "Then, of course, all of the institutional sell stops that have been coming in not just to the oil but also the metals. Everything came together to hurt all of the precious metals." Gero characterized the selling as broad-based, but with much of it from hedge funds.

"Every day, we keep losing open interest [players exiting COMEX postions]," he said.

Gold also is being hurt by liquidation in gold-based exchange-traded funds, Gero added.

-----(see url for full news, 24-hr international headlines)----

HenriQuiz...anybody got a pen?#1321165/12/05; 17:20:23

Toward a better measure of the general economy.

OK where is Joe six-pack in the grand scheme of things.

Start with average salary...2.5 kids aged 6-15...a mortgage on an average home and 0 equity because the bank convinced him he could leverage it and gave him a home equity credit line which was long ago tapped out. Also wife has part-time job, they have 2 cars, 1 late model SUV and a 3 yr old foriegn economy sedan that is leased and now worth less than the balance on the 5 yr contract. Joe works in Construction and is employed by a subcontractor to a large builder but can also find work (but not as lucrative) doing road work for a contractor to the state highway. So can all the other construction workers if need be (Hmmm) Neither smokes anymore. After, food, taxes, home insurance (mandatory due to loan), car insurance (mandatory by law), life insurance (also tapped out in a loan-back)and gas (Joe commutes an average of twenty-five miles /working day and Wife commutes 10 miles/day, is there any $$$ left for that six-pack? How about kids college fund?

Is Joe able to make ends meet? What is his weekly disposable income? Can we plug in some numbers and track this monthly as a "six-pack index" ?

Does anybody still wonder why the govt takes its cut out of Joe's paycheck before he gets it?
Joe is more fortunate than most Joe's out there having only had the one wife and owes no alimony or child support.

Of the above list, which are the non-essential items

MKOf Mouses and Tornados#1321175/12/05; 17:21:10

I don't know about other members of this august table round, but I, for one, am beginning to wonder who we have driving these markets. If recent market behavior has been any indicator, the financial markets are now dominated by a group whose knowledge is five miles wide and an inch deep.

One minute they are stampeding into the stock market because retail sales are; the next minute they are stampeding out because retail sales (at least as far as almighty Walmart is concerned) are bad. As far as gold goes, they stampede in one month because the trade deficit is horrendous; the next month they stampede back out because it is "improved" -- and the improvement is less than 10% on a ridiculously large number to begin with.

Who are these people? Where did they come from? And have they ever heard of investing in anything based on a conviction? What ever happened to analysis -- investing one's money based on a deeper understanding of the economy and where it might take us next?

From afar, it looks like those nature films where the buffalo herd is running like the wind in one direction and then for no apparent reason it veers 90 degrees, only seconds later to veer back in the direction they turned in the first place. The plains Indians used to take advantage of this behavior and run a good portion of the herd over a cliff thus saving on precious arrowheads.

And you know what, I don't blame the American public for this behavior. I blame the advisors. The mutual fund operators. The bank trading departments. The hedge funds. In other words, the so-called professionals. All they have in their minds is to jump on the right trend. What they are finding out is that there is no longer a "right trend." Those days are over. It may not be long until they are run over the cliff, and put out of their misery.

Wall Street worries about retail sales and Walmart while much of corporate America is embroiled in the beginning stages of a systemic debt crisis like nothing's that has ever been seen before. . . .anywhere. It's the equivalent of being cornered by a mouse and frozen atop a chair while out there on the prairie 500 yards away, a tornado bears down on the house. . . . I'm beginning to wonder if it is worthwhile to even watch the markets any longer. No one really knows what they are doing -- least the so-called experts.

Gold today was caught in what looks to me like a reaction to a final spike up for the dollar on what was really less than inspiring news. I don't think it's going stay at $420 for long.

Federal_ReservesGold slightly violated#1321185/12/05; 17:46:06

the triangular consolidation on the downside, which is a negative indicator, but as long as it holds steady above $420, I think it can hang on, maybe even reverse up. Recently some good news is hurting gold, budget surplus, improvement in the trade deficits, and a strong labor report, retail sales - all helped the dollar. Nonetheless, as many have noted, the financial system is still fragile as witness to the massive debt downgrades and pension defaults, and the overwhelming and growing burden of consumer debt. In addition, the situation in the ME is not improving, in fact the insurgents have moved up the level of violence, and the situation with NK is also very serious.
GoldendomeMarket day traders--hourly!#1321195/12/05; 18:24:17

Sir MK: Excellent comment and observation on the markets. I, for one, have pretty well "tuned out" the markets the past few weeks. As I agree, they make absolutely no sense from one week/ one day/ sometimes even-- one hour to the next. We--as you--can only have the conviction that in the long-term [and many of us do have that viewpoint] the "buffalo herd" will run over the cliff, as you so picturescly decribe it.

All the markets now--ALL-- seem only to be hourly day traded by accounts that must be gambling BILLIONS on frequent turns of the wheel. And, ALL, hoping to be riding the same direction as other major traders.

GoldiloxEconomic Strength or Weakness?#1321205/12/05; 18:25:00


Houston we have a problem that is very serious and is in official economic figures.

How can you have a report of booming consumer sales when the largest retail entity in the country reports only a modest 0.9 percent increase for April same-store sales. Wal-Mart has been struggling with weak demand for non-essential items as soaring energy prices curb consumer spending, particularly among lower-income shoppers.

Financial TV is straining like mad to explain away the Wal-Mart report as it is clearly disappointing given the previous levels of 2 to 4 percent increases in same store sales. This is, however, the first time that talking heads are openly questioning the reliability of the US government's figures.

Yesterday's trade report was pushed higher by booking India's aircraft purchases as consummated sales which resulted in almost the entire improvement in those figures.

So there is a clear probability that we are now going to have to work with figures that are so massaged and so spun as to become almost meaningless except as one views them in the form of a trend that takes into consideration revisions of past figures that seem always to be of significance one way or the other. Not that this is new but it has become egregious in terms of the monthly reporting to the point that borders on a "Wag the Dog."

The economic recovery is rolling over at a high level. Consumers are NOT rushing back to the stores with their wallets wide open. Cheap energy is history and the price of gas will not return to a comfortable level for this summer's vacation period. The US trade balance will not make any meaningful shift towards a surplus. All you see now is driven by what amounts to outrageous and apparent statistical adjustments that might be referred to as FABRICATION.


Went for a long motorcycle ride today with two retired policemen and one active duty officer. The pension debacles have them all worried, and even these upstanding servants of the people do not believe anything coming out of either the media or their bosses' mouths.

Credibility is being stretched to rather incredible limits.

GoldiloxHerd Mentality#1321215/12/05; 18:45:01

@MK, et al,

Whether one believes the investing herd is just reacting numbly or dancing to the tune of some very deep pockets, evidence is strong that the SM is being "painted" to support the fraudulent financial calories on our regular media diet, a portrait that may not endure long enough even for the paint to dry.

Probably it's some of both . . . who really knows?

We seem to have progressed in a couple years from reactive markets that make little sense to insane markets that make NO sense. (Got Google?)

Whatever the driving force, it's not well supported by any fundamentals. Events like yesterday's off-course Cessna demonstrate how completely paranoid the markets and governments currently are.

If and when any of the RE/pension/derivatives/deficit bubbles pop, many previously stalwart assets are likely to fall loudly and steeply.

My physical stash stands ready to assist me through whatever turmoil results.

Goldilox"Gold Mines" on Modern Marvels#1321225/12/05; 19:01:40

Just started on the History Channel seconds ago.
slingshotPOG#1321235/12/05; 19:21:05

Aarrrrrrrrgh! $420.Have to a sense of humor
ROFL ;0)

The Invisible HandOf Mouses, Tornados and Unexamined Lives#1321245/12/05; 19:32:21

Our gracious host said:
Who are these people? Where did they come from? And have they ever heard of investing in anything based on a conviction? What ever happened to analysis -- investing one's money based on a deeper understanding of the economy and where it might take us next?

Socrates said in 399 BCE in Plato's Apology in his defense at his trial where he would be condemned to death for perverting the youth:
Someone will say: Yes, Socrates, but cannot you hold your tongue, and then you may go into a foreign city, and no one will interfere with you? Now I have great difficulty in making you understand my answer to this. For if I tell you that this would be a disobedience to a divine command, and therefore that I cannot hold my tongue, you will not believe that I am serious; and if I say again that the greatest good of man is daily to converse about virtue, and all that concerning which you hear me examining myself and others, and that THE LIFE WHICH IS UNEXAMINED IS NOT WORTH LIVING - that you are still less likely to believe. And yet what I say is true, although a thing of which it is hard for me to persuade you.

mikalChina Journal Favors Revaluation#1321255/12/05; 21:49:42

Official Chinese publication supports yuan revaluation - May 12, 2005 - Beijing [Reuters]
TownCrierThe Invisible Hand, on quoting Socrates...#1321265/12/05; 21:54:09

"I have great difficulty... ...For if I tell you... will not believe... ...and if I say again... are still less likely to believe. And yet what I say is true, although a thing of which it is hard for me to persuade you."

Sounds like the same sort of sigh of resignation that has surely been felt by those few who have taken a serious swing at the plate to explain the anticipated shift away from a dollar- and dollar-derivative-centric IMS to an international monetary system based on a mark-to-market principle featuring free-gold reserves with a (non-fixed, non-redeemable) numeraire currency.

Fortunately, no-one makes us drink hemlock if, indeed when, we each fail to convey the message in a concise and digestible manner.


mikalIMF coaching China#1321275/12/05; 22:17:41

Conditions favorable for China to reform currency regime - IMF - AFX News - May 12, 2005
GoldiloxSocrates#1321285/12/05; 23:25:19


"Fortunately, no-one makes us drink hemlock if, indeed when, we each fail to convey the message in a concise and digestible manner."

Does Floride count?

TopazFirst post...#1321295/13/05; 03:16:26

...from my NEW, super-dooper, Pentium 8 (or whatever they're up to) ...Flat as LCD monitor...W H OOOOO S H !! and silken-touch keyboard.
This little rig set me back FAR LESS than it's predecessor did 5 Yr's +or- ago ...and that is an empirical truth.

So, without a "favourites" list yet sorted, I'm kinda all dressed up with nowhere to go.

As it goes, these Professions/Occupations seemingly sprouting from every nook and cranny never cease to amaze me.
Today I came across a Spider Identification Service!
Yes, take your ??? to them and they will ID it for you. I'd imagine probably having to wait "quite awhile" before an "accredited" aracnic purveyor could find the time to inspect my specimen...
...then, with great aplomp he/she would declare, "Yes, that IS a Spider! ...Cash or Charge?

You know, I could do that!

968No RMB appreciation on May 18: top banker.#1321305/13/05; 07:22:14

BEIJING, May 13 (Xinhuanet) -- Governor Zhou Xiaochuan of China's central bank said here Friday overseas media reports on the expected appreciation of the Chinese currency, yuan, or Renminbi (RMB), on May 18 is not "correct."

"Can we take that seriously? Of course not," Zhou said in response to a question raised by Xinhua correspondent at a seminar sponsored by the Chinese Academy of Social Sciences.
"It is foreigners, especially some individual foreigners, who predicted yuan's appreciation on May 18," he said.
Probably due to external pressure, people again discuss the possibility of the yuan's appreciation, Zhou explained.
Currently, the yuan is pegged to the US dollar at a stable rate of about 8.27 to 1. China has maintained a unified, managed floating exchange rate regime based on supply and demand of foreign exchange in the market since 1994. The yuan appreciated 38 percent against the US dollar between 1994 to 1997.
As a big country, China could only reform its exchange rate regime mainly starting from internal pressure and incentives, so "we'll design our reform measures in accordance with the logic of the reform, no matter they concern taxation, interest rate or exchange rate," Zhou said.
However, he said, since China plays an increasingly important role in international finance, China will also pay great attention to the opinions from all sides and the impact on the world economy, especially that of neighboring countries, when it considers taking reform measures, said the central bank governor.
When the financial crisis swept Asia in 1997, China insisted in not devaluing its currency and kept the RMB exchange rate stable in a responsible manner, and narrowed the floating scope of the RMB exchange rate since then.
With the devaluation of the US dollar in recent years, the RMB exchange rate against other major currencies was dropping actually, which some foreigners claimed as a measure by the Chinese government to stimulate its soaring export.
But China did not lower the yuan artificially to pursue its own interests, the country's former foreign exchange chief Guo Shuqing said recently.
Chinese leaders have said on several occasions that there is no timetable for the exchange rate reform, and it is a complicated job and should be done step by step.
"When we're to reform the exchange rate regime, we should take into full consideration the macro-economic climate, the bearing capacity of the country's financial system, the performance of the financial market and the impact on regional and global economies," Guo said.
Chinese economists believe China's current exchange rate needs to be adjusted at a proper time and in a proper way.
"There is little possibility that the government will appreciate the yuan in the first half of this year," said Ha Jiming, a senior economist with the China International Financial Corporation.
Ha predicted the yuan's appreciation might come in the latter half this year.
According to industry insiders, huge amounts of "hot money" have sneaked into China under capital accounts or based on no real trade, betting on the yuan's appreciation in the near future. More than 130 billion US dollars of hot money is believed to have flowed into China by 2004.
This huge sum of capital could cause overheating whatever sector it is invested in, which has been exemplified by the real estate market. The flooding of hot money has added to the pressure on the revaluation of the yuan.
"China is working on a plan for a more flexible exchange rate of its currency, but the specific measures might come around unexpectedly," said Premier Wen Jiabao at a press conference after the conclusion of the annual session of the Chinese legislature in March. Enditem
No quick RMB revaluation in sight !

mikal'revaluation could come at any time'#1321315/13/05; 07:45:58

Big Trade Surplus Keeps Currency Pressure on China - Alan Wheatley - May 13, 2005 - Reuters
KenoSafety near the bottom#1321325/13/05; 08:19:20

If we have not noticed the precious metals have now entered a state of safety near their bottoms. We are now in the enviable position that any old or new excuse will be grounds for a rally. The fundamentals have not changed towards the negative side but on the contrary they have ground steadily more positive. Those footsteps i heard the other night(commercial longs ) might have been a pack of dogs in the back yard. It will be interesting to see the C.O.T report when it comes out. My guess is that short silver and gold positions shrink again. If we have a sharp down spike in metals let us have it now and be done with it today. Above all, don't let go of any core holdings, this present situation in bonds,Sm,$index will not last much longer. All three are due to retreat leaving the natural resources standing head and shoulders above all this paper garbage.
968Taxation, tax reform and monetary policy.#1321335/13/05; 09:04:28

Speech by José Manuel González-Páramo, Member of the Executive Board of the ECB
Universidad Complutense
Madrid, 13 May 2005.

"The present Governor of the Bank of England, Mr Mervyn King, once observed that "Central banks are often accused of being obsessed with inflation. This is untrue. If they are obsessed with anything, it is with fiscal policy."[1] I would not go quite as far as to call it an obsession. But it is certainly true that central bankers in general, and European central bankers in particular, take a close interest in public finances. And this is hardly surprising. Perhaps it is not by chance that having a strong public finance background -experience either in academia or in government, or in both - is not uncommon amongst central bankers.

I would not elaborate more on whether and how the professional career of central bankers affect their interest in public finance issues. But on a more factual note, it is key to remark that in the euro area close to 50% of GDP is channelled through the government accounts and governments are by far the largest issuers in securities markets. Government taxation and expenditure have a considerable impact on the macro economy. And this cannot be ignored when formulating monetary policy."

"In some countries tax reforms have reduced tax revenue without a matching reduction of expenditure. The result in some cases has been to introduce or exacerbate budgetary imbalances that now need to be corrected. Thus, it is important to recall that if tax cuts are to be sustainable and to contribute to raising growth in the long-run, they need to be financed by equivalent reductions on the expenditure side."

"Central banks, including the ECB, have a keen interest - if not an obsession - with public finances. This is rightly so given the size of the government sector, especially in Europe. Today, I have limited myself to considering the ECB's interest in just one side of the government balance sheet, namely the revenue side, and more specifically taxation and tax reform."

"While the central banker's main interest may be in the balance between taxation and expenditure (i.e. the budget deficit), taxation on its own can also have implications for monetary policy."
The differences between the Fed and the ECB are 'again' striking !

geDollar Index breakout#1321345/13/05; 09:22:14

The chart suggests that dollar strength could continue for a couple of months.

Gold shall decouple from dollar at some point. I wonder whether its time has come?

Gandalf the WhiteTHANKS, Sir Topaz#1321355/13/05; 09:28:08

Topaz (5/13/05; 03:16:26MT - msg#: 132129)
First post...
Friday 13th, ---I needed that !

TownCrierInvestors frequently at pains to separate 'bull' from bullion#1321365/13/05; 09:32:46

(Oakland Tribune) -- BUYING GOLD coins as an investment has often been looked down upon by the financial world because returns can be unpredictable.

But those who own the precious metal say that most financial experts don't fully understand the advantages of buying gold and would view it more favorably if they did.

"You hear a lot about this great antipathy from financial experts and at the Wall Street level toward gold, but the truth is the Main Street level likes gold, and a lot of people own gold," said Michael Kosares, author of "The ABCs of Gold Investing."

"Although some see it as an investment, what I try to tell people is that buying gold is really a great hedge," Kosares said. "It is the ultimate insurance policy or defensive mechanism against currency depreciation."

"Gold has been up 15 percent on average each year since 2001, while stocks have basically done absolutely nothing," Kosares said. "I believe those who say that people should not buy gold are biased."

^-------(please see url for full article)------^

USAGOLD's Michael J. Kosares rebuts the gold critics.

If you have an interest in hedging your portfolio against financial uncertainty, please call the staff at USAGOLD-Centennial Precious Metals for more information on the gold acquisition process. They have been helping gold investors since 1973 and they can help you!



USAGOLD / Centennial Precious Metals, Inc.SECOND EDITION: Newly Updated -- Written for Today's Market!#1321375/13/05; 10:06:45">Gold Investing - Second Edition
968US begging for dollar devaluation.#1321385/13/05; 10:28:58

"Pressure from the Bush administration and the US Congress on Beijing to float the exchange rate of the yuan is increasing. But there is no economic justification for changing China's fixed-exchange rate regime. Rather than yuan revaluation, US demands for exchange rate adjustment in China should be seen for what they are: Washington's explicit support for dollar devaluation."
A nice read.

GoldiloxWhat's Wrong With This Picture?#1321395/13/05; 10:54:26


So could Mr. Buffett be right, might derivatives be a time bomb just ticking away, waiting to go off? And more specifically, could the derivative positions in the precious metals of silver and gold constitute a potentially devastating event all on their own?

The reason why we ask this about the derivative positions within the silver and gold market is because, as we have discovered, silver and gold are real honest money, the money mandated by the Constitution.

If there is the potential for a devastating event to occur in the paper futures markets that is based or derived on the underlying physical silver and gold – then shouldn't We The People be told about it? That is what full disclosure means – doesn't it?

Shouldn't the CFTC be doing something about it – as in fixing it? Isn't that their job – to oversee and protect the integrity of the markets under their jurisdiction?


from Part III - The Four Horsemen, in the "Silver is Money" Series by Doug Gnazzo

Lots of references to Fekete.

TownCrierWomen Worry About Having Little Gold in Their Golden Years#1321405/13/05; 11:25:11

WASHINGTON, May 13 -- Women's Institute for a Secure Retirement (WISER) today released results from the National Women's 2005 Retirement Survey, a comprehensive look at challenges facing American women seeking to provide themselves a secure retirement.

Key results of the survey include:

* 38% of women 30-55 years old are worried they will live at or near the poverty level because they cannot adequately save for retirement. The figure increases to 53% for women of color. For men, 33% face the same dilemma;

* 52% of women expect to continue to work once they reach retirement age, including 57% of Hispanic women;

* 54% of women have little to no money left to save for retirement once they pay their bills, rising to 62% among Hispanic women and 62% among African American women.

"The fact that many women do not have enough money leftover after paying bills to save for retirement is no longer just alarming, it is a national catastrophe. Retirement for many women is simply an inaccessible dream. ... The costs of caring for aging parents, as well as grandparents, adult children and grandchildren, combine to make retirement a myth, not a reality."

^------(from url)-----^

The headline says it all.

And to the extent that the underfunded savings and retirement plans indeed rises to the prominence of a "national catastrophe", you can be sure the government will not be far behind trying to offer aid with similarly unfunded social programs.

Thus, the ECB's José Manuel González-Páramo is right to say that central bankers are concerned about government fiscal policy, because government is the single largest monetary player with the ability to undermine the value of a currency over time -- driving up market interest rates with bond issues that it can't possibly repay except with depreciated (inflationary) currency.

The fact that so few have adequately saved for old age -- together with the government's inevitable paper "safety net" -- effectively destabilizes the position of those who have managed to set aside adequate money for retirement. The resulting depreciation of the currency will undermine the purchasing power of cash savings.

That's why it becomes particularly necessary to choose a form of savings such as gold that is safely 'outside' of the currency realm and hence can be free of depreciationary consequences.

Call USAGOLD today and put GOLD into your Golden Years.



GoldiloxDollar rally or opportunity?#1321415/13/05; 12:00:26

All the talk of CB diversification seems to faded into tehbackground of dollar strength of late. Is this the opportunity for CBs to move some dollars into other baskets while they are worth a little more?

For those accumulating PMs in dollars, the value is shifting once again to the buyers' side.

GoldiloxCommodities not helping stocks, trade issues#1321425/13/05; 12:22:42

CNBC is complaining that the corrections of late in steel, oil, and other basic commodities is not helping the SMs, who still see indices staggering in seemingly inebriated sideways movement.

The only real source of dollar strength seems to be Euro weakness and Yuan speculation, so there's not a lot of good fundamental news buoying the greenspan-back.

Things are still teeter-tottering on Wall St.

Rep. Portman, who recently left Congress to take the job of Trade Ambassador, says there are real issues in China-US trade that need to be worked out, suggesting more sabre rattling in the trade arena.

Oh, what tangled webs we weave.

Although hanging on is tough in this environment, everything still looks tentative enough for any catalyst to send gold and commodities back up quickly.

mikalRobert Rubin on 'critical imperatives' and political will#1321435/13/05; 12:52:37

Ex-Treasury Secretary Rubin: US Needs To Fix Fiscal Imbalances NYT
NEW YORK -(Dow Jones)- Snippits: "The U.S. needs to correct its fiscal imbalances, a task that is "an immediate and critical imperative," former Treasury Secretary Robert Rubin wrote in an op-ed piece that was published in Friday's editions of the New York Times."
[You can say THAT again Bob. Make hay while the sun is shining, our weathermen are already battening down the hatches.]

"Independent analysts project the 10-year federal deficit at $4.5 trillion to $ 5 trillion."
[You and your 'Independent analysts' are dependent on the same employers otherwise you wouldn't need to understate deficits and danger. Our analysts are dependent on the Big Employer, not on fraud or extortion.]

"The former Treasury secretary added that tough decisions need to be made on spending and revenues will probably require the president and Congressional leaders to assume joint responsibility for painful political choices."
['Tough decisions' WILL require 'joint responsibility for painful political choices' because things will be so bad that irresponsibility will no longer cut it. Since when were our leaders authorized to exclusively make WEAK and EASY DECISIONS.]

TownCrierGoldilox, a clarification#1321445/13/05; 13:08:28

"The only real source of dollar strength seems to be Euro weakness..."

By saying 'euro weakness' are you indeed informing us that the general price levels in the euro-region are now rising well above the ECB's price stability goal (which is below but near two percent)?

If so, then that would indeed be a fundamental indication of 'euro weakness'.

Or... are you really just meaning to say that the current bout of "dollar strength", per se, is merely relative to an external exchange rate fluctuation (vis à vis the euro)? Because more to the point, it strikes me that the dollar continues to weaken (not strengthen) fundamentally as every time I try to procure additional goods and services the prices are higher much more often than not.

Which brings us around to the prime question -- Why choose gold? Because, as reflected in prices over time, the dollar (and all other currencies) are wasting units of account (each depreciating at various rates). Gold, on the other hand, is a universally recognized reserve asset that stands apart (esp. true under a "free gold" regime) from the chronic wasting.


Federal_ReservesPolicy makers are fighting inflation now#1321455/13/05; 13:37:06

and its hurting gold. Money growth is flat (see URL), and along with the recent fiscal surplus, the reduction in the trade deficit, and sudden jumps in the economic indicators compared to foreign sources make a trend that hurts gold.

The target is the CRB. The policy makers are trying to cool it off and break it down without harming economic growth and damaging the stock market or housing prices.

Its a dangerous game.

TownCrierGovt Measures To Turn China A Net Metals Importer#1321465/13/05; 13:39:53

SHANGHAI (Dow Jones)--As China moves ahead to moderate growth and reduce the consumption of energy and other resources in short supply, the resulting slowdown in metals production could turn the country into a net importer of most metals, analysts said Tuesday.

"China has been a net importer of various metals, such as copper and zinc...It will eventually turn a net importer of other metals as well," said a base metals analyst at BOC International (China) Ltd.

^--------(from url)-----^

What opinion would Joe Sixpack have, and what prices would he have to pay, if China one day on a per capita basis began consuming the world's goods as voraciously as the United States does?

The ability to print the U.S. dollar shall not forever be a free ticket to ride as seems to be the current expectation.

Shift your portfolio toward the universal weight and value of gold.


GoldiloxClarification#1321475/13/05; 13:41:43

Perhaps, more simply, I am refering to the relationship between them in the DX. When traders make the decision to choose currencies, are they only asking "which is short-term lesser of two losers?"
TownCrierReuters report, unspecified 'analysts' say...#1321485/13/05; 14:08:45

NEW YORK, May 13 (Reuters) -
...Recent selling in gold was fueled by declining COMEX open interest, as well as redemptions in exchange-traded funds, which had to be matched with a corresponding amount of bullion sales, and crude oil slipping from its highs, analysts said.

But, ongoing physical bargain hunting at cheaper prices was propping up gold, despite the further currency-related selling seen late this week, said analysts at

^------(from url)-----^

No quibble with TheBullionDesk comments, but the other analysts clearly don't have the first clue about the workings of the exchange-traded funds w/r/t bullion.

And to think, this is how most investors get their info. It's a sad state of affairs.


USAGOLD Daily Market ReportPage Update!#1321495/13/05; 14:31:14">
The Daily Gold Market Report has been updated.

If you are considering investments in gold we invite you to">request our free introductory information packet detailing the products and services offered by USAGOLD ~ Centennial Precious Metals. We welcome your inquiry and look forward to working with you.

Friday Market Excerpts

May 13 (from DowJones) -- Further gains in the U.S. dollar meant further losses for precious metals on Friday, analysts and traders said.

However, one added, physical demand for gold has kept that metal from falling more than it has.

While gold was softer again, a trader said the metal "has held up much better than a lot of commodities."

COMEX June gold futures settled down $1.50 to $420.70.

"It's virtually all related to the dollar," said Peter Grandich, publisher of the Grandwich Letter. "Gold has been trading in an inverse relationship to the dollar since 2001. What some people are calling a breakout in the U.S. dollar index has put a fair amount of pressure on the gold."

The New York Board of Trade's dollar index traded as high as 86.11, its most muscular level since Oct. 22. The euro fell as far as $1.2617, its weakest level against the dollar since October.

As gold was falling earlier this week, said Grandich, much of the selling appeared to be fund liquidation. "Now, I think it's just people trading off of the dollar," he said. "The view is it (gold) rose on a declining dollar. So if the dollar is rising, the national tendency now is to spec on a decline (in gold). I don't think this is a major factor - but the weakness in oil has not helped."

Shortly after gold closed, June crude was up 16 cents for the day at $48.70, but had been as soft as $47.75, its weakest level since the middle of February.

Grandich said the key support for the gold futures is likely to be in the $410 to $415 area. If the market slips further, he said, bulls would look for this area to hold.

The June contract had bottomed at $414 back on Feb. 8 and Feb. 9, and those are the lows for the year so far. On a spot continuation chart, the lows were $410.10 and $410.30 those days.

Grandich said the recent pullback in prices has brought physical buying into the bullion market.

"We saw that the last couple of days, even though the futures market was off," he said.

"The silver lining for gold bugs is that physical offtake remains very strong, especially on (price) weakness."

Liberty HeadThe Chinafication#13215005/13/05; 15:00:17

Justice for those who put their faith in gov't is never pretty.
China needs ways to convert its dollar holdings to true wealth before the inevitable series of hyperinflation tsunamis hit land.
As the U.S. real estate bubble collapses, investors from China will be scooping up condominium projects, military bases, airlines, airports and Pebble Beach at bargain prices.
For much the same reasons GM bonds are now junk, the U.S. dollar will also be junk.
With so many U.S. obligations in default, China is all set to play the role of Snidely Whiplash.

If this scenario does not appeal to you, then get out of debt and own stuff, golden stuff.
Also avoid eating missing fingers and if your bride runs away, let her go. :-)

Best Wishes

TownCrierRecapping some notable highlights drawn from today's Daily Market Report#13215105/13/05; 15:12:47

Gold "has held up much better than a lot of commodities."

The euro has reached its lowest level against the dollar since October.

Oil has reached its weakest level since the middle of February.

June gold (and spot gold) now stand at $420.7 (and $420.5, respectively), which are better than the mid-February levels of $414 (and $410).

So, looking at the short term, while gold is indeed outperforming the euro (back at October prices), it does seem to be generally at pace with oil (at or above mid-Feb prices).

Looking at the mid-term, gold has been not only outperforming, but outright crushing the dollar since April 2001 when the dollar was last seen at the mighty $256/oz level. Doing the math versus today's $420/oz level reveals that the dollar has withered against gold by 64%.

Where do you want to put your bets for the next hundred years?

Physical gold is indeed a good hedge -- insurance against your monetary savings getting completely wiped out by currency depreciation and inflation. And when it comes to other types of insurance -- auto, home, life, fire, health, etc, -- I've yet to meet the man who complains when his premium becomes periodically lower. So, buy the dips in gold, and smile!


TopazDollar/Gold#13215205/13/05; 15:24:31

Whilst imo Dollar strength is hardly Euro specific and mostly an action of necessity to stave off acb T-Yield collapse, the re-action in $PoGold, given S/D fundamentals, is nought but speculative.

It may take some time for the new Gold paradigm to sink into the psyche of PaperTraders and Yes, our beloved PoG may suffer in the interim, but rest assured, as the price drops, demand on the ground for Bullion increases.

We ARE short 1T/Day from Mar30 = 150T and counting.

TevyeGold Nanoparticles May Simplify Cancer Detection#13215305/13/05; 16:25:49

Silver has gotten lots of press for its potential biological uses. This article shows that Gold is not to be outdone.

"If you add this conjugated (gold) nanoparticle solution to healthy cells and cancerous cells and you look at the image, you can tell with a simple microscope that the whole cancer cell is shining," said El-Sayed.

"The healthy cell doesn't bind to the nanoparticles specifically, so you don't see where the cells are. With this technique, if you see a well defined cell glowing, that's cancer" covered with gold nanoparticles.

end snip

And there is a really beautiful picture in the article that can be found at the posted link.

So now we see that gold, when properly prepared and used, exposes cancer in the human body, just as it exposes financial cancer. Now why am I not surprised!

Gold. Its Tradition! (and the future)


Black BladeAnother Good Article From Our Host#13215405/13/05; 17:40:01

Thanks Townie and MK.

- Black Blade

GoldendomeThe Tick, Tick of GM Hedge Fund Derivatives#13215505/13/05; 20:21:17

Excerpt from the article:

...In recent weeks, hedge funds thought they had found an alchemical strategy for making money out of the woes engulfing General Motors.

The trade involved buying GM debt and shorting its stock, or selling shares you don't own. You made money provided bond prices rallied while the shares declined; stocks and bonds don't typically move in tandem, while yields as high as 11 percent on the bonds were supposed to cushion your returns even if the trade didn't work out exactly as planned.

Squeezed on Both Sides

Then two things happened to blow that game plan out of the water. On May 4, Kirk Kerkorian disclosed his intention to build an 8.8 percent stake in General Motors, boosting the shares by 18 percent. The following day, S&P's rating change knocked about 5 points off GM bond values.

``Those who were short of the equity and long of the debt found themselves squeezed on both sides,'' wrote independent market analyst Dennis Gartman in his daily newsletter on May 11. ``This is the perfect storm to implode some hedge funds.'' ...

White RoseRussia prepays another $15b, now becomes a net creditor nation#1321565/14/05; 05:54:08

Russia is using its oil wealth an pre-paying high interest debt. This is precisely the approach recommended by "Black Blade".

I suspect that Russia is also filling its basement with can goods as well.

TopazBond/Oil#1321575/14/05; 06:28:22

Even without the rampaging Dollar, our "best-fit" Oil price is still $3ish above yields. Factor in 'ol-Buck and $40 Spot is on the cards.

Might be a good time for Russia to also collar those out-months too.

Scenario is predicated on a declining Yield and I STILL can't see a reversal here. The System is clearly in receivership now so anything can happen a twinkling.

YGMWhite Rose, besides can goods in Basement (Russia)#1321585/14/05; 08:52:02

Russian Gold Reserves Did Not Make Surprise

13.05.2005 12:02
The Department of Public Relations of Russian Central Bank informed that Russia's gold and foreign currency reserves were at $144.7 billion on May 6, up from $144.1 billion on April 29


Related news:
Belorussia Gold Reserves Grew [12.05.2005]
Russian Gold, Currency Reserves Rose [11.05.2005]
Russian Gold, Forex Reserves Up [22.04.2005]
Russian Gold, Forex Reserves Increased [15.04.2005]
Central Bank of Russia: Gold Reserves Decreased [11.04.2005]
Russian Gold, Forex Reserves [01.04.2005]
Russian Gold, Forex Reserves Increased [25.03.2005]
Russian Gold, Currency Reserves Up [18.03.2005]
Bank of Russia: Gold Reserves Up Again [10.03.2005]
Russian Currency Regained [10.03.2005]

GoldiloxAttention: Deficit Disorder#1321595/14/05; 10:03:21


Now Robert Rubin has issued the same warning as former Fed Chairman Paul Volcker yet the public puts more credence in Bloomberg, Snow, Poole and CNN. This is because they blow in their ears and it feels good.

Please note Rubin's comments on the US dollar. Then cast his statements against the fact that the House seems ready to challenge the president on the Roads Bill because they do not agree the record $284 billion is enough and instead want at least $400 billion.

This bill contains 4,000 pork barrel programs which are simple payoffs to special interest groups imbedded in the first $284 billion dollar construct. Do you really think that these same people will support measures to reduce spending?

If US legislators do not support lower spending policies then you now have both Paul Volcker and Robert Rubin telling you all hell will break loose and the dollar will take the full impact. I will take their advice.


Jim aptly describes our "feel good at all costs" mentality.

GoldiloxTreason in Border Patrol?#1321605/14/05; 10:12:38


The Washington Times has a dynamite piece this morning [Friday] that reports US Border Patrol agents "got the word" that they were not to increase arrests in the area where the Minutemen were volunteering to reinforce the underfunded efforts of Border Patrol agents. This frightening report means to us that someone "upstairs" in Border Patrol is running an agenda contrary to the Laws of the United States - and to our way of thinking the term treason seems to fit. Not the rank and file, mind you. They are among America's finest. What I specifically refer to is anyone who would pass an order that countermands the laws of this Great Country. Unfortunately, we don't expect any patriots are left in DC (except Dr. Ron Paul who's one of the nearly vanished breed os 'statemen") - the land of lobby money and "campaign financing" - the modern day euphemism for corruption.


When the air defenses were ordered to "stand down" on 9/11, their "bosses" were rewarded with a spanking new Homeland Security Department. What will the "bosses" demand from us before they release the BP to actually protect the borders?

Can you spell "Protection Racket"?

GoldiloxCredit Collapse and Will The Dollar Hold?#1321615/14/05; 10:22:30

Doug Noland of PruBear is the 2nd hour guest over at FSN today.

Should be "popcorn and milkshake" good!

Thankfully, many of these internet broadcasters are adding WinAmp MP3 resources, so they are much easier to deal with thanks to the online music revolution.

Just like streaming your latest music download.

"Looks what's happening on the streets.
Counter-revolution of the Revolution"

DruidTime Out#1321625/14/05; 12:10:05

Druid: It looks like some of the paperchangers are trying to take each other out of the paper game. Does anyone really think that the GM stock offer was one for real value? Me thinks not. Now it looks like some other genius was caught short and long in the wrong paper instruments at the wrong time thereby creating some sort of potential paper burn in both the derivative and credit markets.

It must be serious as no other then Maximus himself is trying to extricate himself from the paper monsters that his monetary inflation policies have created over the years by parroting Shumpterean economic philosphy as some sort of workable solution. Creative destruction only works when you do away with the moral hazard (public interference with private solutions)part of the problem which is underwritten by the same people that created it in the first place.

It appears that the markets are in time out right now and will continue on after something is worked out concerning the GM paper debacle.

Oh well, stay tuned, there's more to come....

geStar Wars#1321635/14/05; 12:31:14

Point (May 2005)

What is the "Dark Side" and Why Do Some People Choose It?

Counterpoint ( May 2002)

The Case for the Empire

mikalBig NYMEX Rule Changes?#1321645/14/05; 13:52:17

"Contact: Stephanie Mavronicolas, 212-299-2436
Title: Exchange to Decrease Margins on Gold Futures Contracts

NEW YORK, N.Y., May 13, 2005 — The New York Mercantile Exchange, Inc., announced today that margins on COMEX Division gold futures contracts will decrease to $1,000 from $1,500 for clearing members and members and to $1,350 from $2,025 for customers at the close of business Monday."

Meeting margin calls was made much tougher after Comex
last raised these margins just over two years ago and again whenever forced liquidation gripped the market.
Now this looks to me like some big buyers are stepping up to the plate. Goldman Sachs was buying heavily on Friday.
Just my two cents.

USAGOLD / Centennial Precious Metals, Inc.Hard assets, easy access... gold ownership is just a click or two away!#1321655/14/05; 14:17:19">gold -- a global calling card
Dollar Bill.,.#1321665/14/05; 17:13:06

Yes Druid, I was guessing a crushing of shorts on GM.
mikalChinese exporters caught with trousers up!#1321675/14/05; 17:21:07

China urges U.S. to rethink restriction on clothing imports - May 14, 2005 - Reuters
China says quotas, announced late Friday and expected to take effect, are 'wrong'. But the astronomical increase in various categories of textile exports in just four months are based on a desperate, declining communist-command system. (Europe is contemplating similar restrictions)
And were the exports allowed to continue, the fallout would make America too poor to keep up the buying pace.

CoBra(too)China's Textile Exports - @ Mikal#1321685/14/05; 18:08:39

... So what else is new? ...

"And were the exports allowed to continue, the fallout would make America too poor to keep up the buying pace."

... except that the economic strategies of the division of labor a la' WTO are obsolete.

Could it be that the inventors of the scheme are clue-less?

Got gold - cb2

The Invisible HandECB charter being criticized#1321695/14/05; 18:18:45,6903,1483973,00.html

Can Mervyn keep stagflation at bay?
William Keegan
Sunday May 15, 2005
The Observer
At least in Gordon Brown's creation - the MPC (Monetary Policy Committee of the Bank of England, I, The Invisible Hand, think) - we have an institution that is doing its best to manage demand and maintain employment. The same, alas, cannot be said for the European Central Bank.
In a recent presentation in London, the Nobel Prize-winning American economist Lawrence Klein drew a sharp contrast between the achievements of the US Federal Reserve and the ECB, and said the ECB's brief should have included the objective of 'full employment, or growth, or better employment'.
The eurozone is now suffering, and high unemployment in France is one of the main reasons why President Chirac is having difficulty with the referendum on the new European Union treaty.
Oh, by the way: I understand that Tony Blair advised Chirac not to risk a referendum - then made the president's position impossible by deciding to have a referendum himself.
And the President of France was not amused to have to wait nearly a week for an explanatory phone call from the Prime Minister of Great Britain.

Could it be that the absence of the objective of 'full employment, or growth, or better employment' has something to do with the A/FOA story?

Anyway, if the subjects reject the constitution, the masters (the objects?) will rewrite it. The Danes also tried to reject something European (I think it was the Treaty of Maastricht) in the early nineties. I was rewritten until it was swallowed.
EU constitution can be rewritten, Delors admits
By John Lichfield in Paris
14 May 2005
French Eurosceptics seized gleefully on a statement by the former European Commission president Jacques Delors that a "no" vote in this month's referendum would force a rewriting of the proposed European constitution.

Would the acceptance of the Constitution facilitate the realization of the A/FOA-story?

TownCrierGold, The Weekly Global Perspective#1321705/14/05; 19:27:06


...The talk to date on a Yuan revaluation has been from those outside China pushing the Chinese to do something. Now we have had an authoritative voice giving his opinion from Hong Kong, now, essentially part of China.

Hong Kong Financial Secretary, Mr Henry Tang said this week, "The question now is not if (China will revalue the Yuan) but when. Our speculation is that it will move to a basket system. The contents or propositions of the basket system of course will not be known."

...As China is an importing developing country as well as an exporting country and is growing by the year to a main global player, the days when its prices are always in the U.S. $ are shortening.

One of the greatest fears the U.S. $ has is that oil producing nations will price oil in Euros or in any other currency. This would immediately put the U.S $ on the back foot and force its issuers to be more responsible regarding its Balance of Payments.

If it became easy for the nations to move away from the $ through the foreign exchanges, the U.S $ would have to suffer the consequences of its profligacy through the gradual pullback in the capital investments into the States, as Greenspan said, the nations …"would lose their appetite" for the U.S $.

Could the revaluation of the Yuan be the trail-blazer for international pricing of goods to move away from the U.S $ to a basket of currencies?

Should this happen, the value of gold will be appreciated far, far more. It would be an opportune time for gold's price to move up with the Yuan, not the least prompted by the discounts in Yuan the gold price would present to the Chinese who remain strong potential buyers of gold in the future!

Oil Prices, priced in a basket of currencies?Oil Producers, like us, are intrigued by the latest possibility of the Yuan being valued on a ‘basket of currencies’ basis. Will they be brave enough to follow suit. We doubt that O.P.E.C. will as their lot is tied in with the U.S. But the other oil Producers?

^------(from url)----^

Call me a simpleton. I don't see where a "basket system" gets anyone any further down the road that we really ought to be traveling. The analysts sure do fancy the idea though, don't they!


pannerEpoch Battle Now Underway#1321715/14/05; 22:52:19

In 1934 President Roosevelt raised the official gold price from $20.67 to $35.00 per ounce and then made it criminal for the Common Man to own Gold. The mines were obliged to sell their Gold to the Treasury. The rise in the price created the opportunity for mines to expand. The mining communities in the West, especially here in the back country of Idaho, prospered. Activity in the mining districts expanded until the cost of mining exceeded to cost of the commodity mined. Gold after all was capped at 35.00 per ounce. There were no other legitimate markets for Gold. As the profits died out, the mines died out and the advent of WWII took the men away to war and the memory of the mines, especially the small mines, faded into the mists of history.
In 1971 the ownership of Gold was rightfully returned to the common man.
In 1994, by mutual agreement of the Major Industrialized Countries, a floating cap was placed on the price of Gold by secret agreement of the world's major Central and legacy Industrial Development Banks. Through bogus leasing schemes, futures markets manipulation, reserve overhangs and containment of public opinion the price of an ounce of Gold no longer reflected the pace of fiat inflation or the costs embedded in manufactured and capital goods. The latest round of quarterly earnings of mining companies looks like a replay of the diminishing returns experienced in the 1930's. The resulting mass extinction of mining companies, big and small, because they could not make a profit and requisite impaired access to capital markets portends another mass extinction before the hay day has even begun. Today the big and small miners and refiners are hoping a free market will price their product as free markets should. The Establishments of Fiat wish to fix the price of the Monetary Metals which would destroy their very existence. The miners are in a fight for their lives against an Establishment with virtually unlimited access to public monetary resources with which to wage the EPOCH BATTLE....
To Be Continued>>>>>>>>>

PNBAn explosion of Gold.#1321725/14/05; 22:59:28

Neuton bomb goes off.
TownCrierGold: a universal savings and a Universal souvenir#1321735/14/05; 23:55:13

Thanks for the link, PNB.

"The relative average abundance [of gold] in our Solar System appears higher than can be made in the early universe, in stars, and even in typical supernova explosions. Some astronomers now suggest that neutron-rich heavy elements such as gold might be most easily made in rare neutron-rich explosions such as the collision of neutron stars... a souvenir from one of the most powerful explosions in the universe."

^-------(from PNB's link)------^

Not only is gold a super means of savings no matter where on Earth you make your home, it is also a nice symbolic way of grabbing a significant piece of the Universe by the fistful and effectively saying to the star-dappled infinity, "Out of the chaos I have arrived, and by this token I shall play my part to bring more order with my passage."

It's always a nice day for a walk on that Trail.


Belgian" Basket of currencies "#1321745/15/05; 02:19:27

This idea (basket) pops up again and again, each time there is a disturbing conflict added, between those who "regulate" and those who "de-regulate".

Forcing the yuan to float is demanding the chinese central planning economy to de-regulate, whilst the demander(s) keep on regulating themselves >>> conflict !

The one's who keep on suggesting a basket of currencies, simply "hope" that the idea might arrange more concertation in the regulation/deregulation affairs of the globalizing, inter-dependant economies.

But if the (conflicting) musicians in the expanding (globalizing) orchestra don't play (wish to play) in concert anymore...Another orchestra (IMS) has to be composed. The instruments have to be re-regulated and re-deregulated. >>> FLOAT GOLD, for instance !?

At present we are even unable to conclude anymore wich is more or less inflatory/deflatory...regulation or deregulation. Wich is stabilizing or de-stabilizing, on a the global (macro) scale. The regulators (orchestra dirigents) are increasingly at a loss and take refuge in conundrums. Soon, they will not recognize the music (economy) the orchestra plays, anymore.

And still we all keep counting on all the different regulators that they will keep on managing (fix) the whole "hyper" regulation and coerced deregulation.

When things go hyper, w're getting closer to unmanageable chaos. how can this globalizing world reach any consensus on a basket of currencies !? Who's ready to give in (compromise) some of its actual (future) power and leverage ? Stuff for serious conflict, no.
And all this when economies evolve faster and faster into political (state) economies that are debt-driven at different paces. Not an harmonious pack, imo.

Globally, product-prices and wages keep on deflating, whilst certain categories of assets keep on inflating. The actual result of (hyper) regulation. The rift between under-valuation and over-valuation is increasingly paradoxal.
One cannot let certain things float with the (fabricated) tides whilst other categories are kept under the water.

The global tides should move "all" things up and down, without having the selective regulation. If this is not possible anymore under the planet's dollar-IMS-regime...the only solution is to try a regime-change.

I don't see how euro-dollar-oilprices-interest rates-Asia-gold-infla/defla...can "align"...come in harmonious "concert". Isn't everybody a loser in any war ?
Don't we need more global (globalized) economic peace ? Imo, it doesn't look as if w're heading towards more cool peace and prosperity (self-discipline). On the contrary, imbalances are magnifying. More (hyper) diverging regulation is not going to work out.

Just look around you and realize how much is being "regulated", already.

Belgian@TIH#1321755/15/05; 04:04:58

Growth-stability-employment : How much of this should be achieved by regulation and/or deregulation !? L.Klein would probably answer that it is the FED who should regulate it "all" ! Worth a Nobel price.

All regulation stops "working", once we reach "over"-regulation.

Shall the different regulators continue to increasingly blame each other to the point of stopping all (previous) co-ordination !? I think that this is happening, full swing now.

How much more regulation ( + selective deregulation) can the global economy, supposed to be a market economy, swallow. Can states...really... create genuine, lasting jobs (employment) under a real market economy regime !?
What's the difference between stimulating/organizing a market economy and the "creation" of one ?
What should be the perfect (limited) political content be of the (regulating) CBs (FED-ECB-others) ? Klein is certainly evidencing the fundamental difference between FED and ECB and he leaves the Asian factor conveniently out of the equation. This will certainly lead to more chaotic disorder and more stress on the existing $-IMS. There is no possibility of an easy solution/fix to the "global" structural problems that keep on accumulating.

The new (global) players will not be put easely in the "old" $-basket. They want to play "their" game. Be it on currency, energy or many other very important matters.
I think that a lot of displayed co-operation (intentions) is very pro-forma.

This might end in a giant wave of sudden de-regulation...a towel in the ring event. De-regulation of gold is imo, one out of many other events, that we might expect to happen.

Realize that the general public is totally unaware of the extend that they (we) are increasingly "regulated". That same public will be severely shocked when the deregulation tsunami inevitably comes ashore.

Great Albino BatA bit off topic - although everything that happens is related in some way to everything else...#1321765/15/05; 09:52:58

News this morning:

"Boston's Catholic Archdiocese May Cut Priests' Pensions"

So that's what it has come to? Priests worried about their old age?

What better proof that religion is (practically) dead in the West, where the priests have pension doubts and - I suppose - have their old age to worry about?

In the meantime, Islam is giving us daily examples of the strength of its faith, with its daily quota of martyrs who are sacrficing their lives in suicide attacks, both against the invading super-power and those who collaborate with it, and against rival Islamic sects.

By the end of this century, if things continue along this path - and they might not - Europe will be Islamic.

Islam will fill the religious vacuum in Europe. RIP Western Civilization.


Great Albino BatThe non-existent "International Monetary System"...#1321775/15/05; 11:15:47

May 15 2005

Dear Belgian:

Do you believe in "democracy"? I don't.

I like the essays of Joseph De Maistre, especially the "St. Petersburg Dialogues". I mentioned this to an acquaintance and he dismissed Joseph de Maistre as "somewhat fascist".

Some people are hooked on "democracy" and can't bring themselves to face the fact that it is the worst possible system of government. I guess it's part of the progressively worsening condition of collapse into the Reign of Quantity, which René Guenon wrote about some fifty years ago. So the world worships the "majority", the greatest number.

Humanity is mesmerized with number, and number is associated with matter. To fall into the Reign of Quantity is to fall into Materialism.

How can we possibly have any stability in the value of money, when the ONLY acceptable form of government in the world, today, is "democracy"? The answer is, "we cannot." And we shall not have stable money, as long as we have democratic governments.

Simply because democratic governments have to cater to the majority, and the majority wants its satisfactions TODAY, not tomorrow after hard work. So a pretense is made of granting the demanded satisfactions, by more credit and more money out of nothing. This cannot change while the majority elects the rulers, and the while the rulers manipulate the majority to re-elect the rulers, just changing the names.

Such a situation, as I recall, you deem as sustainable over the long-run, and therefore recommend gold as a haven for "wealth". Of course we agree on the eternal value of gold, but – where I think you have not understood what I have been saying, is that without stable money – which you and others think cannot be gold – our whole world productive structure is in severe jeopardy. Indeed, I think it is already a walking corpse.

We do not have an "international monetary system"! A system implies stability, and stability requires controls that prevent the breakage of the system due to its surpassing certain parameters or limits. Today, we have no limits on the so-called "international monetary system". No limits means, there is no system!

We have had no limits on the "international monetary system" since the breakdown of the Bretton Woods System in 1971. That was a flawed system, but it was a system. There were limits. Now we have no system at all.

The limits on all countries (except the USA) were that they had to discharge their foreign debts with gold or dollars, and if any country goosed its credit creation too fast, or faster than others, then its trade balance became negative and dollars and gold left the country; a dearth of gold and dollars meant that the brakes had to be put on credit creation. So as far as the rest of the world was concerned, there was a system which kept credit issuance under control and an orderly balance in the trade between nations.

For the USA, the situation was different. The USA had an "extraordinary privilege" in the words of General De Gaulle. It could pay for imports with dollars, which the USA manufactured at will! The only limit the USA had, was to redeem dollars in the hands of foreign governments at the rate of one ounce of gold for every $35 dollars tendered for redemption.

"All privileges are eventually abused." Who said that? I did! It's a fact. And the USA's privilege was abused. The limitation imposed by Bretton Woods was all too easy to discard. No more redemption in gold. So easy!

So, the Bretton Woods system ceased to be a system, because it had no longer the required element of self-controlling stability that any system must have.
There is no "international monetary system", I repeat.

What is it that we have? We have a PROCESS. A process differs from a system in that a system incorporates activity which is self-regulated so as not to exceed certain parameters, in order to maintain that activity through Time, within a stable field. The self-regulation implies limits; when the limits are approached, feedback in the system introduces a correction to halt the move towards limits and breakdown. (See "Design for a Brain", by W. Ross Ashby, John Wiley and Sons, N.Y., 1954)

A process is not a stable activity: it is motion from A to C, passing through B. A process has a beginning at A; an end at C, and it passes through a midpoint at B.

We are living through a PROCESS, and not in a system. The process might be called a Revolution or an Explosion in slow motion. The process is the destruction of what we call money; it began let us say, at "A" in August of 1971, when Nixon "closed the gold window". We are currently at "B" and the process will have an end at "C" at some time in the future. When? We don't know, but we know it must arrive, for all processes have an end, and we are living through a process of monetary destruction, and not in a stable system.

I think it is important that we become clearly aware of the fact that we are not living in a world with an "international monetary system" – about which we read every day. There is no such system, and this is not merely a question of semantics, it is a reality. A system requires, sine qua non, internal limits to prevent breakdown. The dollar is the basis of the "international monetary system" and there are no limits to its creation which is in fact exploding. We have no monetary system! We have a monetary process.

Substituting the Euro or any other fiat money for the dollar, would not change the fact that there is no system, for the creation of all these currencies depends arbitrary decisions with no limitation except political will, and in "democracy" that will is simply "More!"

We have a massive boiler generating steam; the control which limits its temperature has been removed. The heat is increasing and so is the pressure inside the boiler; soon the parameter is exceeded, the steel of which the boiler is made gives way, and we have a "step-function" which is an instantaneous explosion which destroys the boiler and kills the bystanders.

The monetary destruction does not affect only money holders! It affects the very foundations of our industrial civilization, as every single economic decision made by all humans today, in which Time is a factor, involves economic calculation of the value of money through time.

As others have exhaustively proved, there is no way to predict the future value of money at a point even as close as 12 months. Thus, every single economic decision made which involved the element of Time, is based upon a pure and simple GUESS. There is no investment going on, only gambling on the future value of money.

A world built on such a foundation is inevitably going to collapse due to mistaken economic calculations. China is miscalculating on a massive scale, so is the USA, so is Europe, Japan – absolutely every country is making huge mistakes in economic decisions.

Owning gold will surely help somewhat, when the collapse comes. But conditions will be terrible…here I must cease, I can see no further. I may add that we shall probably collapse into military tyrannies in diverse shapes and forms around the world. Dictators will impose order; some dictators more enlightened than others. Stability of sorts will return with dictatorship.

Looks like we two are the stalwarts remaining to post in these rather gloomy days for gold. As for me, I have not the slightest doubt that owning gold, if it is not a panacea, it is certainly indispensable for any thinking person as a precaution against what is coming down the road.

With best regards


USAGOLD / Centennial Precious Metals, Inc.Serving gold investors for over 30 years, and now 24hrs/day#1321785/15/05; 11:50:20">gold -- a global calling card
Gandalf the WhiteA "Quick" --- THANK YOU !#1321795/15/05; 12:16:06

Thanks, Sirs GAB and Belgian, for ALL you do !
BUSY times have arrived.

Liberty HeadDemocracy - Ah ha ha ha ha ha#1321805/15/05; 12:39:34

"Democracy is 2 wolves and 1 sheep voting on what to have for lunch."

What surprises me about democracy is, the sheep support it. Perhaps if I spent more time as a shepherd, I wouldn't be so surprised.

With democratic governments, as in any other form of government, it's the government part of the equation that enslaves.

Lucky for the wolves, we are a nation of self perpetuating sheep.
Imagine signing a huge ARM with negative amortization to live in a dinky home, commuting long distances in heavy traffic, in gas guzzling vehicles to work in a plastic corporate office and raising your children to feed to the military. Baaaaa baaaaaa

Insanity run amok!

The wolves can default on every promise, but they cannot default on the gold in your possession.

Best Wishes

mikalBavaria or Bust#1321815/15/05; 13:59:37

Germany To Probe Hedge Funds By Hugh Williamson in Berlin, Richard Milne in Leipzig and Patrick Jenkins in Frankfurt
May 13 2005 - Snippits:
"Gerhard Schröder, German chancellor, on Friday ordered a government review of controls on hedge funds, saying he might consider imposing tighter curbs after foreign investors helped topple the management of Deutsche Börse, the German stock exchange group.
Mr Schröder said there might be an argument "in favour of closer scrutiny" of hedge funds to check whether their philosophy was "compatible" with German society, adding: "This is the issue that needs to be considered."
[Philosophy? Now we're getting somewhere, because you gotta get to the foundation before you can talk reform. Though that would have to be 'compatible' in EVERY society, not just German.]

"The chancellor had ordered three ministries to mount a co-ordinated review "to achieve, where necessary, more transparency, and where possible, tighter controls", his spokesman said.
Hans Eichel, Germany's finance minister, on Saturday echoes Mr Schröder's call for closer scrutiny of hedge funds. In a newspaper interview he proposes "a Europe-wide supervisory body for hedge funds based on the German model".
[Sounds like they're getting serious, which is better late than never. Like Greenspan, it's better to be able to say 'I told ya so'. Gotta do there own due defaults]

"The move comes amid a wave of criticism of short-term investors by leaders of the ruling Social Democrats. Franz Müntefering, SPD chairman, last month accused international investors of acting like "locusts" by picking off German businesses." [Funny, doesn't the Bible say something about swarming plagues?]

"UK and US based hedge funds have been increasingly active in Germany in recent years. The chancellor is to present results of the review on June 13 in Berlin at an SPD conference."['US and UK based-hedge funds'? Sure, where else and don't forget our meteorologists see an unusual tropical disturbance...]

TownCrierGAB, mincing words -- systems and processes#1321825/15/05; 14:02:06

It's a pity you didn't read, think about, or respond to the last post I directed to you a few weeks ago. It might have gone a long way toward helping you recognize the inherent flaw in the "system" that you would have us under.

If you have the time, please consider whether you are actually desiring APPEARANCES over EFFECT.

I have myself given this considerable thought and discussion with friends.

In recent years, especially at times that gold's price was falling, there have been wide agitations among the gold investing community that the government (or a nameless "other") was seemingly involved in the gold market, manipulating the price.

What would be your reaction, and please also try to estimate the typical reaction of all other gold investors, if the government (or "other") had found a way to be so successful in their gold price management designs that any and all fluctuation in the price of gold was arrested. Consequently, you could confidently go to a pawnshop or call a gold broker on any given moment and know that you could exchange a check or cash for ounces of gold at the same price as on any other day in the past or foreseeable future.

Meanwhile, as the price of gold holds still, prices of groceries, clothing, cars, haircuts, etc., would continue to fluctuate freely just as they have always done.

Would our community of forum visitors be pleased with such rigid gold price manipulation (fixation) if it could indeed be successfully orchestrated by the government (or "other agents")?

If your own answer is "Certainly not!", as would be my own response, then why would you (in seeming contradictory behavior) be better pleased by effectively the same net result by a mere superficial alteration of the process or system in which BANK TELLERS took the place of the shopkeepers or gold brokers in conducting the exchange of cash for metal at a fixed exchange rate (price)?

If you still hold that it is good for the teller to be the face of a fixed exchange, then one of us must be missing something vital. I do not see where the superficial appearance of which agent (broker vs. teller) does the gold tendering carries any meaningful weight when the outcome (targeted gold manipulation) is the same.

Apparently you have chosen to overlook the lessons of experience, but nevertheless it remains a truism that a system of gold (or any other guarantees of) convertibility, no matter how artfully crafted, fails to provide meaningful curbs to credit expansion.

If the intangible monetary "process" is causing you this unresolvable distress, might I suggest you seek solace by refocusing your thoughts instead upon the elegant simplicity and comfort of a tangible "system" of savings in which gold plays its best role.

You say, "without stable money our whole world productive structure is in severe jeopardy."

I believe that if you think about it longer and harder, you will realize that the very foundation of our "productive structure" as you call it is based on the stability (our sense of ownership) of tangible nuts and bolts and cogs and wheels and other tangible property -- a definite form of "savings" of which gold can be among the most conveniently mobile of assets.

Going forward, the stability of our "savings" (our tangibles) is by far the more important feature on our social landscape, and to serve that end, money shall ever be just the slippery lubricant that is pumped up or down in subservience to the cogs and wheels which matter most. At the worst, with no monetary lubricant, we have barter to fall back on. At best, the monetary lubricant flows and the cogs and wheels are free to attain their highest value in proper functioning usage. And as the physical machine churns out new and desirable products, nobody but the janitors ought really care much about the drippings of lubricant.

Money is merely a part of the means to the more important end -- one of the various routes you can take to the final destination of goods and services. Don't fall into the trap of valuing it above all else, or of trying to stand the whole world on its head in service of a monetary system just because you think would be quaint, neat, or charming with less drippage.


Belgian@GAB#1321835/15/05; 14:26:25

There definitely is an IMS, dearest GAB ! Otherwise the *** gold-pricing *** wouldn't still be regulated (frozen) anymore and everything else would already have beeen "really" floating, also.

Yes, the regulators and the regulated always want "more" of the same, the easy/easier way. They both have been "exploiting" the originally architected system (or call it -logic- if you prefer). They've mined it almost to the hard rock bottom (your point <-C->).

That (<C>) bottom is reached when any regulation isn't *** delivering *** the tangible results >>> growt-stability-employment-prosperity. Watch the financial media, subtly cultivating the "feel-good" mood. We have been exploiting the monetary system/regime/process at near exhaustion.
We can't afford any kind of alarmism (crisette) anymore. Evidenced by bail out after bail out.
In the past 70 years, we had many big crisisses...because the system was relatively young and vital and could afford to have a crisis.

At your point <C>, when deregulation falls upon us, the free floating of the gold-pricing must happen within a framework of a unit of account. Y're not going to buy anything with being invoiced in gold-weight. The price of things will still be expressed in a numeraire, a unit of account. The previous process (your ABC) ended...transitioned into another process (evolving IMS), where the free pricing of gold, falls upon us as to not exploit this new system in the same way the old one has been exploited.

And it will take a lot more regulation to achieve (reach)that new system...get it up and running. I still think that the gold-tumult of the past decade is phase one in this big "new modern gold" regulation effort ! I keep on repeating that the observed gold-tumult is NOT a regulation as to "save" the existing system...or to continue the exploiting process.

The life of any intrinsically worthless numeraire (unit of account) will be severely disciplined by the very existance of floating gold-prices. In order to achieve this goal, some regulators made the most essential preparation for the installment of a new modern physical gold market. Ad nauseum, I refer again and again to the one and only "marked to market" concept of gold-reserves. The purpose is to have all gold being marked to market and have its price floating freely. Look at what happens to houses, wich are still percepted as one's property. The houseprices are marked to the market, aren't they. Simply because the regulators wanted it to be that way. Raise IRs, sudden and strong...and the regulators alter the houseprices and its pricing.

The dollar wants the yuan to float. Why don't we want the goldprice to float "freely"...FOR THE TIME BEING !?

Dearest GAB, don't let your justified (extreme) pessimism make you blind for the happening stealth changes. Evolution is not a linear event !

WAG I and II are agreed upon goldprice-pricing regulations !
Why should we therefore exclude (a priori) a universalized gold marking to market as the final step (solution-or new point A) !? A period of heavy regulation, preparing the way for renewed de-regulation >>> cyclic (sinusoidal) evolution, Sir.

Why is it that the new kid on the CB block, the ECB, changed adopted this new goldreserve regime, right from the start ? And why is it that the FED isn't following that example ?
It was NOT Duisenberg or Trichet, but Alan who said >>> CBs stand ready...
How come, dearest GAB !?

Who is telling the real truth about the oilprices that inflate much faster than before...since the introduction of the euro - numeraire - new unit of account. Are all these events purely coincidal ? Hard to continue to believe that, Sir.

Whilst the regulators continue to push (to inflate) things to bigger extremes...wise men do have "structually" prepared for the times that come after those extremes. And we are receiving daily new charts evidencing that the mass of extremes continues to pile up. Kerkorian and UAL-pensions flash through my mind. Heavy pessimists blindly believe that extremes (what comes after Trillion) have no turning point and that changes are only for the worst. I'm an optimist Sir.

The regulators (and regulated) do have to face "limits".
Today we reached $6 of debt needed to add $1 to world's GDP. Do you really think this planet can double this figure without a fundamental "structural" change ? Or are you still optimistic enough to think we can bring this monstrous thing back to an acceptable (workable) level ?

May I remind you what FOA already said 5 years ago : When a numeraire has become unfunctionable (unuseable), Another unit of account will take its place.
Modern man will always want to possess a "reserve". A milestone in man's evolution. A state or individual without any kind of reserve is extremely vulnarable. At present, all our reserves are de-value-ing. Are we going backwards or become so extremely sophisticated that we don't need any reserves anymore ? No Sir, w're going to have a brand new modernized ages old reserve, back again in its rightfull place where it belongs. And...this time "properly" valued by dropping the old dogma's (goldprice fixing) of regulation on it. Nice end of your WE, GAB.

MKUSAGOLD Market Update for 5/16/05 is posted. . . .#1321845/15/05; 16:01:00

"The madness of crowds can pop up anytime, anywhere. No era is immune; no individual beyond its unflinching grasp. And crowd madness pays no heed to intelligence or experience. In 1841, Charles MacKay wrote an important book titled "Extraordinary Popular Delusions and the Madness of Crowds -- the book that Bernard Baruch called the secret to his incredible wealth. In it MacKay points out that Roger Bacon, "by far the most learned man of his age" believed that the philosopher's stone could turn lead to gold.
CoBra(too)Hedge Funds probed in Germany - #1321855/15/05; 16:08:07

@ Mikal - Excellent intelligence in uncovering the reality behind this fad Greenspan's FED wants to see unregulated for - as it seems - obvious reasons.

Wouldn't have thought that Germany may be behind the ultimate bursting of the "financial weapons of mass destruction"! They must be aware of DB's own probs and then, some.

Well, some things surface at totally wrong times ...

The derivative scam, scheme or ultimate destruction of fair dealing under the regime of a floating rate currency system based on hedonics has run its course.

Its main executioners, or hatchet men, the IMF and World Bank are now being found out to be just that - executioniors of economic hit men.

The role of the BIS is still to be questioned - while personally I'd vote for nay as Alan G. has joined their board as first American and some recent adverse history, like ending the gold accounting, has severely tainted its standing.

Whatever, we'll find out sooner than later as the PTP has severely overstretched its own capabilities on manifold and too many fronts.

Go figure - cb2

melda laure(No Subject)#1321865/15/05; 18:35:21

Well now, there's quite the discussion GAb/TC/Belgian! I think you'll find the hedgies VERY interested in those lubricant leaks. Gears lash and grind. Pistons getting slappy or stuck. The whole "contraption" is increasingly creaky and perhaps the hedgies are tapping on the fittings saying: "look here, this valve is just about to pop, If I only give it a jolly good whack then it's JACKPOT time." At which time the head orc says "now, sonny, dont start messin' with the master valve or we're all dead meat, go find a nice MBS hose and stick a pin in it."

Yes if the fittings were well made, we'd need less steam pressure, and have less friction. It reminds me of that Terry Gilliam flick "Brazil"

As measured by the size of its very icky oil pan, Engine USA only seems to be the biggest. Not so when you measure the torque at the other end of the shaft. Should I be measuring oil pan capacity? Pressure? Volume? Temperature? Given that the dollar/euro/yuan engine designs are all different (and in differing states of disrepair/wearing) these measures are potentially very misleading. No amount of lubricant will unstick a blown cylinder head.

The problem for the euro, is all three engines are tied to the same drive shaft (world economy) and the clutch is heating up.

Belgian, I wonder if some (small minority) of "stock prices" are reflections of a "post extremes" environment. Certainly the premium on the stock of Iraq seems to be far in excess of its worth. Of course it's hard to say who owns what. A problem not shared by physical.

MKCobra, GAB, Belgian -- Systemic risk which transcends the currency issue#1321875/15/05; 19:50:42

What's going on with the hedge funds as we go into Monday trading has similarities to the Bankers'Trust/Deutschbank situation we discussed here over the years. When D-bank acquired BT it assumed its book -- for better or worse, in sickness and health. If D-bank inherited a problem that brought it down, Bundesbank would have been the institution responsible for solving the problem, even though the problem was essentially American in the making.

Shroeder says he wants "the probe" to examine whether or not the hedge fund culture is compatible with Germany's. What he's really saying is: Do we want these international speculators operating within the confines of our country. reliant on our banking system and thus our responsibility if they threaten the German financial system as a whole? I would say that they do not want this responsibility. Who would? The returns to the German people vis a vis hedge fund operations are nominal; the risks enormous.

Case in point:

Chris Powell just forwarded me an article which appeared in the London Times over the weekend about GLG, the hedge fund that is probably the source of most of the rumors in the markets last week. GLG was started in 1995 by a split-off group from Goldman Sachs, an American firm. Hedge funds are internationalized operations with local headquarters. GLG has $13 billion under management from investors presumably all over the world. GLG is now experiencing, according to the article, what amounts to a run on the bank -- investors want their money back.

The article states that there is more than one London hedge fund in trouble. That has to do with the matrix of counterparty agreements I alluded to in an earlier post.

Here's the crux of the issue:

Since GLG is a London-based firm, who is responsible for the bailout should one be required? Can the Bank of England handle the exposure GLG presents let alone a half-dozen or more interlocked funds that will be pushed to the wall if GLG becomes insolvent? There is no international consortium established to deal with this systemic risk. What is the BOE to do? I am sure this threatens the entire British banking system. When we read "Prime brokers and the credit departments in investment banks have been calling clients to check their capital strengths as rumours of a big hedge-fund blow-out grip the industry," we know what that means. They are making margin calls.

As I said in a previous post, I am reminded of the period in American history prior to the establishment of the Federal Reserve when there was no response team save JP Morgan himself should a bank or banks find themselves in a liquidity crunch. Bank runs were followed by financial panics, secret meetings, and private bailouts.

How are these hedge funds going to be bailed out? Who's responsible? I sincerely believe this why Alan Greenspan begged off two weeks ago citing Adam Smith, "chaos" and "creative destruction." What he was really saying is "We aren't going to bail you out." You do not come under our safety umbrella.

These are smoke signals on the distant butte. We either read them or we don't. I can't blame either Schroeder or Greenspan for their positions. I would approach it pretty much the same way.

In the future we will see the equivalent of an international central bank to deal with this sort of problem, but for now there is nothing that stands between the hedge funds and disaster. That risk will accrue to the investor. With no bailout mechanism, the weight on the stock and bond markets will be enormous.

It will be interesting to see how this whole thing plays, but as several commentators have pointed out over the past several days, it is unlikely that this stops at the hedge funds.

Dollar Bill.,.#1321885/15/05; 20:21:25

MK, in some quarters, there has been and is a view that Germany is still due for any and all payback for their Jewish dealings in ww2.
Saddleing Germany with a good amount of derivitive risk would be a goal of these men, and also, I would imagine, others in a pro dollar faction. While I think Germany is, post iraq, on board the dollar reality, factions out to harm Germany do exist. In my opinion. I think they got snookered into gold hedgeing before they knew really what that tied them to.
The globalists will accept no real opposition. I am guessing.

DruidHedge Funds and Systemic Risk#1321895/15/05; 20:51:00

Druid: If this hedge fund problem should domino into a problem of this magnitude and the US Fed can't(or won't) come to the rescue, would this not be an opportune time for the ECB BIS network of banks to step in and force a deal with the big London banks in terms of joining the Euro faction? Am I way off in suggesting such a move?
Great Albino BatComment for MK, perhaps will extend further to Towncrier and Belgian as well...#1321905/15/05; 22:49:19


VERY interesting post regarding the hedge funds that are in trouble in the UK! Thanks for that post!

I mentioned an important book in my earlier post. From that book, worthy of diligent study by younger and more agile brains than my own, I take a few seminal ideas and apply them to the so-called "International Monetary System", which I affirm is today not a "System" at all, only a Process which is occuring in time, and which differs quite essentially from a System, in that a Process has a beginning, a middle and an end, whereas a System presents the condition of "homeostasis" or self-maintained stability.

The hedge fund threat represents, in terms of W. Ross Ashby's book - this is my humble opinion, of course - an uncontrolled "critical variable" which, upon passing a limiting parameter, threatens to trigger a "step-function" which carries the defective System to collapse into an entirely different mode, which in the case we are dealing with, would be a severe, perhaps deadly banking crisis - which might in turn perhaps be the prelude to a severe depression; worse than any ever experienced, because the system has been so ravaged with excesses - all limiting corrective mechanisms having been tied down - that it has effectively ceased to be a System and the consequences of breakdown will be all the more devastating.

I affirm again we have no International Monetary System, because the critical variables are no longer held down by "feedback" from GOLD. The critical variables which can produce a collapse are NOT being prevented from going beyond the parameters which protect stability: I may mention such critical variables as interest rates, trade deficits, fiscal deficits, credit expansion and money creation, massive speculation. The one single parameter which guaranteed "homeostasis" or stability in the past, was the price of GOLD. It has been prevented from exerting any limiting influence on monetary affairs since 1971.

All these critical variables are running wild and have been out of control for decades. Interest rates are not market rates but set by decree; trade deficits do not elicit corrective action; fiscal deficits are also free of constraint; credit expansion and money creation is running free; speculation is unrestricted - and the key limiting parameter, the price of GOLD, is manipulated out of significance and efficacy.

Since we HAVE NO MONETARY SYSTEM in reality, those in charge of these affairs are working night and day to prevent the critical variables which I mention, from reaching the point where they will trigger a "step-function" which will be a general breakdown in the economic system.

I repeat again, we are living in a PROCESS. The process is a process of dissolution, of destruction of money and consequently, of the whole world productive system upon which that productive system has been built. Those in charge are trying to keep up the appearances of the existence of a stable System, but actually all they are doing is attempting to put out dangerous fires which are now popping up: the hedge funds up against the wall in London and which apparently are also about to appear in Germany.

The Process will go on; nothing can stop the reality from presenting itself and eventually, all attempts at controlling the critical variables will fail, and collapse will ensue.

I could go on to respond to Belgian and Towncrier, but this post is long enough at this point.


Dollar Bill.,.#1321915/16/05; 02:27:58

GAB, The europeans will awaken from thier stupor over =what is reality= and not just roll over and be islamizized.
Like those that are Christian yet have not and never will read all the bible or care what some of the sentences say, Muslims for the most part also dont read the koran completely and dont go off and kill themselves for any cause.
You and I arent doing the saint francis thing, or the mother theresa thing, because the bulk of us arent going to be all that moved by "inspiration". Men will fight over anything. If there is nothing to fight about over religion, like the tutsis and the hutus, we will fight over who is taller.
There will always be fighting. Heck, us on the forum will fight over a mistyped sentence!
I would not look to see the "end of western civ. ", that would mean to me to be an end to war, and that will not happen! Get the popcorn, and await the coming european battles. If god wanted us to stand around and restate the obvious, the fog would vanish and so would war. The chances of the europeans bowing several times a day, when they cant muster up the reason to go to a nice building once a THAT is going to be a challenging mission field for muslim missionaries!
Europeans wont bow at the point of sword.
At least not the eastern europeans! They are sick of tyranny

TopazWhat the!!#1321925/16/05; 02:57:49


Yup, they've done the Math and have got Sep/Oct running a 50% higher drop over June.
Large positional reset swings in ALL commodities could be expected as the Market adjusts to the composite strong Buck.

Topazcrook link#1321935/16/05; 03:26:52

The E-Oil Paper traders are bailing out now, let's watch the "real" Paper traders on the open.
REAL Paper-man , him made of stronger stuff!

SpartacusCity hedge funds head for domino collapse#1321945/16/05; 03:57:45,,8209-1612390,00.html

--BAD investments by some of the biggest hedge funds in London have triggered unprecedented losses, record demands for money back and talk of a death spiral weighing heavily on stocks and bonds.

GLG, a hedge fund started in 1995 by a group of former Goldman Sachs bankers, has in recent weeks had demands for more than $500m (£270m) from investors wanting to pull out of its $4 billion market-neutral fund.

The predicament of GLG, the biggest group in Europe, with $13 billion under management, highlights the stress being felt at many hedge funds in Europe and America after four months of deteriorating results.--

968@ GAB#1321955/16/05; 05:22:52

Goodmorning Sir GAB,

Do you think that it is possible to have gold and fiat money in the same monetary system without a gold standard ?
How do you see this ?

mikalPension bomb#1321965/16/05; 05:39:34

Pension Trouble Is Widespread - Alexandra Marks - Christian Science Monitor - May 16, 2005

With more than 75% of the nation's traditional private pension plans underfunded and the PBGC(Pension Benefit Guarantee Corporation) operating with a deficit of
'30 billion'(it is much higher), Bush's proposed changes
are too little too late. What's more, employers are
wary of the damage to their bottom line a drastic
increase in funding will cost them. Many will have no
choice but to close down or be bought out for
pennies on the dollar. As the economy comes to
grips with multiple challenges, this will would
further rip into employment levels and leave
fewer pensioners receiving full benefits.

mikalAsians structuring monetary defenses, reforms#1321975/16/05; 06:16:25

Monetary Cooperation In East Asia Moves Forward - Oxford Analytica - May 16, 2005
With massive multi-trillions in foreign currency
reserves and new agreements in currency stabilization,
trade, lending etc with plans for more such as additions to the Chang Mai Initiative, gold will return to
play a most prominent role in Asia.

Caradoc@ Dollar Bill#1321985/16/05; 07:34:26

Western Europeans don't have to convert to Islam, just keep on having a birth rate that fails to replace the death rate. Recent immigrants of the Islamic persuasion will more than make up the difference. Throughout most of Europe, loudspeakers already blast the call to prayer five times a day. Sharia law is quietly being enforced -- at least among Muslims -- throughout much of southern France. In that environment, young females (whether Christian, Jewish, Bahai, atheist, or militant vegetarian) are smart to wear their skirts down to ankle level as if they were Muslim.

There's some point (15 or 20 percent of the population?) where you not only get to hear the call to prayer, you have zealots with sticks forcing people out of stores during Salah.

Here's hoping Western Europeans DO wake up and smell the coffee. Otherwise, a culture comes to its end.


mikalCapital inflows disappointment#1321995/16/05; 09:07:53

U.S. capital inflows slow in March
Foreign central banks net sellers first time in 19 months
By Rex Nutting, MarketWatch
Last Update: 10:40 AM ET May 16, 2005
(This is an update to correct that March capital inflows were the lowest since October 2003.)
WASHINGTON (MarketWatch) -Snippits: "Foreign central banks became net sellers of U.S. assets for the first time in 19 months in March, helping to slow foreign capital inflows into the United States, the Treasury Department said Monday."

"Chinese holdings (both official and private) of U.S. Treasurys dropped for the first time in just over a year. Japanese holdings fell for the second time in the past three months, while investors in the Caribbean banking centers increased their holdings by 31%.
Private foreign demand held up better in March. Net purchases fell to $74.5 billion in March from $79.4 billion in February. Private purchases of Treasurys rose to $42.9 billion from $31.2 billion, while net purchases of U.S. equities fell to $1.7 billion from $7.4 billion."

GoldiloxFighting Over Religion#1322005/16/05; 09:08:59

@ Dollar Bill,

Both Jesus and Mohammed implored their followers to stop fighting each other - completely ignored by those who manipulate the message to support their worldly power structures.

The history written by those who instigate wars tells us that their wars are fought over religion, but a better examination of the facts shows that the power brokers motivate their minions to fight over their own "control of religion". Organized religion is still used by modern controllers as it was in Roman times to control the people - their most important resource.

It is no wonder that the NeoCons welcome all the Bakkers, Swaggerts, and Elmer Gantrys who prey on the TV-addicted Grandmas to support their cause of conquest - not unlike Pope Pius VI who promised "Heaven" to all who fought in the conquest of Jerusalem (of course, sacking trade-rich Christian Florence was just a warm-up exercise).

On the other side of the fence, Muslim war mongers have taken a page right out of the Crusaders' script, promising "Paradise" to revolutionary martyrs who resist the Judeo-Christian invaders. The Muslim warlords who cried "Revenge the Crusades" proved to be a great tool to manipulate as intelligence-backed anti-Soviet forces until they also revolted against those who armed and trained them to magically morph from Reagan's "freedom fighters" to Bush's "terrorists".

The same people who devalued the dollar by 95% in 80 years and annually divert some $180 Billion of SSI funds to their overseas adventures exhort us that the "Axis of Evil" wants to steal our "freedom", but I'm daily witnessing erosion of my wealth and freedom right here at home.

Why do I support gold ownership? For me, it represents a safety valve against those erosions and their very economic consequences. A product of creation rather than politics, gold is likely to endure far beyond the political machinations.

Great Albino BatGood question, Sir 968! Thanks for asking...#1322015/16/05; 09:12:27

Your question:

"Do you think that it is possible to have gold and fiat money in the same monetary system without a gold standard ?"

YES, I do think it is possible, and I think it would be helpful, both for savers AND to point the way to an eventual restoration of redeemability of paper money into gold at sight. (See the work of Hugo Salinas Price at and look for the articles in English)

Here is where I am chastised by Towncrier, for example.

Mr. Towncrier - as I understand what he is saying - feels that gold is for conservation of wealth, and that money is quite something else, useful for transactions and that it is impossible and/or inconvenient to tie money down to gold.

My view is that, certainly gold is for the conservation of wealth, no argument with that! But, the abandonment of gold as money implies that we are also going to have to abandon a world of industrialization and world commerce!

If we continue down the path we are following - and I don't see anything on the horizon to change the trend, yet - then we can kiss Western style industrialization and world commerce goodbye!

Also, our present situation (I speak of the whole world) is of such indebtedness, of such heavy investment in industries that have grown up in the hot-house atmosphere of credit expansion and continuous money creation, that IF WE CUT OFF THAT CREDIT EXPANSION AND MONEY CREATION, in order to resotre a world money redeemable in gold, then we will have a mega-collapse, and nobody dares attempt that!

I must add that money redeemable in gold is impossible under "democracy", for the reasons I have given in my previous posts yesterday. So, as long as we are hearing of the wonderful religion of "democracy", we can forget about any plan for money redeemable in gold.

So where does that leave us? Not in a nice place! It leaves us facing a prospect which some reject as "too pessimistic". Well, it may be ultra-pessimistic but that is not a disqualification if it is realistic. Do we really want to face the FACTS?

The FACTS are not good for the survival of the magnificent material achievements of our age, which we have enjoyed. We can fly at 37,000 feet over the North Pole and enjoy an excellent meal with wine and a movie, and a reclining seat that becomes a berth we can sleep in quite comfortably while we arrive in London.

Enjoy this, for our age will be regarded by future generations as the age when Men were as gods...when humans circled the Earth in space ships, when some went to the Moon, when men were as gods, truly!

That cannot survive irredeemable money! Irredeemable money will kill it! That is the terrible fact we don't want to face.

And please, don't anyone tell me we can "muddle through", that somehow, a new money will be adopted. All that is offered is bunkum. That will not do!

It's either money redeemable in gold, or kiss western style industrialization and world commerce goodbye.


mikalCapital inflows link#1322025/16/05; 09:13:58 The link to the excerpted story below
[U.S. foreign capital flows slow in March]

GoldiloxEurope falling to Muslim influence - US to TV political-evangelists#1322035/16/05; 09:33:41


If what you describe in Europe is widespread (although no one chased me out of their shops on my last trip to southern France), it is a sad state of affairs. Not unlike the ex-communication of those who voted against the incumbents recently in a Bible Belt church.

From social institutions normally promoting "love, forgiveness, and tolerance", we are witnessing an alarming growth of hatred, bigotry, and derision.

How quickly does the "freedom to worship as I choose" become the "need to force my dogma on others" when religion is mixed with politics.

Interesting times, indeed.

TownCrierGAB, another question#1322045/16/05; 09:46:56

Your comment: "It's either money redeemable in gold, or kiss western style industrialization and world commerce goodbye."

What exactly does the redeemability aspect do to miraculously cure the system of its ills as you see them?

History shows the one thing we can count on while your system of fixed-convertibility lasts (prior to delegislation) is that the monetary price of gold becomes fixed, whereas the prices of everything else are free to (and do) rise. Why? Because the convertibility factor that you seek does not effectively limit the extension of credit from blowing out the money supply well beyond the availability of gold in the system which theoretically backs it.

So what has been accomplished by your design? Isn't it better that gold be made available for monetary redemption on the open market at floating prices? That allows the market price of gold to always stand as an independent and reliable judge and jury over the competence of the floating monetary system and its banking managers.

As the money supply expands either slowly or recklessly and the value of the money depreciates accordingly, the price of gold will signal this by rising accordingly -- and everyone with independent gold savings will be protected and compensated accordingly.

The system you are asking for is to lock down the market value of gold, turn it over to the bankers, and let them make a shell game out of the affair with the extension of more credit than the gold chips to redeem it.

Gold must remain free to float because, as I indicated in a previous post, the security and reliability of our savings is more important to the preservation of society than is have an odd rigidity put into our money whose only purpose is lubrication of commerce.


USAGOLD / Centennial Precious Metals, Inc.USAGOLD Market Update for 5/16/05 is posted. . . .#1322055/16/05; 10:00:33

"The madness of crowds can pop up anytime, anywhere. No era is immune; no individual beyond its unflinching grasp. And crowd madness pays no heed to intelligence or experience. In 1841, Charles MacKay wrote an important book titled "Extraordinary Popular Delusions and the Madness of Crowds -- the book that Bernard Baruch called the secret to his incredible wealth. In it MacKay points out that Roger Bacon, "by far the most learned man of his age" believed that the philosopher's stone could turn lead to gold. "

Link to the book:

Extraordinary Popular Delusions and the Madness of Crowds by Charles MacKay


All new Short & Sweet (picks up where we left off last week)

"There is great fear within the pension industry that the United case is but one in a series of dominoes that will fall throughout the airline and, possibly, the auto industries. " Boston Globe

The MISERY Index returns. . . .See the chart


An interesting Letter to the Editor and a different take on the yuan


Even if the French vote 'yes', their Euro-dream has soured by Charles Moore/The Daily Telegraph

GoldiloxGolden Age of Modern Civilization?#1322065/16/05; 10:18:14

@ GAB,

Your quote, "Enjoy this, for our age will be regarded by future generations as the age when Men were as gods...when humans circled the Earth in space ships, when some went to the Moon, when men were as gods, truly!"

reminds me of the suggestion by those who study very ancient texts and ruins that there have been advanced pre-historic "golden ages" a la Atlantis, Mur, Vedas, pre-Incas, et al.

Perhaps our civilization is beginning one of those metamorphoses that every society in the past has met with. Some say the ancients were destroyed by catastrophes beyond their control, but others suggest that they were victims of technological advancement that overtaxed their social skills and they destroyed each other in great wars.

The Vedic texts describe a great aerial war between two ancient civilizations, suggesting their technologies rivaled our own. One of the examples of "war booty" from Baghdad is rumored to be 5000 year-old batteries from ancient Sumeria. If we unleash the Nuclear nightmare of which we are uniquely capable, how will the next generation's mythology describe the carnage and remains?

McCanney sees a description of comet close encounters in the mythology of the ancients - as did Velikovsky. Almost none of our space efforts have been dedicated toward cosmic defense, as we are too preoccupied battling each other for supremacy.

Unfortunately, we seem poorly prepared to manage either scenario.

Will our "history" become the "mythology" of the next great civilization as a few surviving descendants crawl out of the caves once again? It is certainly the most drastic of scenarios, but again, not to be dismissed as completely impossible, given the current geo-political turmoil.

Notice that of the items to survive whatever befell the ancients, golden icons and jewelry have best endured the vagaries of time.

GoldiloxDX Rolling over?#1322075/16/05; 10:20:02

Is this a topping pattern or just a breather from the dollar's recent upward march?
TownCrierGAB, your discussion in msg#: 132201 is circular and self-contradicting#1322085/16/05; 10:20:59

You wrote:
[Square 1] ...the abandonment of gold as money implies that we are also going to have to abandon a world of industrialization and world commerce!

If we continue down the path we are following - and I don't see anything on the horizon to change the trend, yet - then we can kiss Western style industrialization and world commerce goodbye!

Also, our present situation is of such indebtedness, of such heavy investment in industries that have grown up in the hot-house atmosphere of credit expansion and continuous money creation, that IF WE CUT OFF THAT CREDIT EXPANSION AND MONEY CREATION, in order to resotre a world money redeemable in gold, then we will have a mega-collapse, and nobody dares attempt that!

That cannot survive irredeemable money! Irredeemable money will kill it! That is the terrible fact we don't want to face.

It's either money redeemable in gold, or kiss western style industrialization and world commerce goodbye.
[Which puts us back at square one]


In these past three posts of yours, there doesn't seem to be much offered to back your bald concluding statement that western civ will end if money is not redeemable in gold.

To the contrary, your own observation (see longest paragraph cited above) indicates that restoration to redeemable money would be the very thing that would kill it.

So which is it? Your observations do not support your conclusions and prescriptions.



Federal_ReservesDr. Snow, Sec of Treasury, was on CNBC this am.#1322095/16/05; 10:54:16

He was asked if any of the hedge funds had called him and reported liquidity problems.

His answer, "No, and even if they did, I wouldn't tell you". This is your public servant at work, ready to deceive you, keeping you in the dark to prevent panic. By his own self admission, he is a liar.

On the same show, he practically ordered the Chinese to start floating the yuan. "Now is the time", he declared.

Great Albino BatGoldilox - I agree with your view#1322105/16/05; 11:29:18

You wrote in your post addressed to me:

"Will our "history" become the "mythology" of the next great civilization as a few surviving descendants crawl out of the caves once again? It is certainly the most drastic of scenarios, but again, not to be dismissed as completely impossible, given the current geo-political turmoil."

Yes, that is my feeling.


Great Albino BatSir Towncrier -#1322115/16/05; 11:55:07

With all due respect, I cannot undertake to enlighten you on the intimate and indispensable relation that exists between a highly industrialized world economy with a high degree of division of labor, and sound money, which means nothing else than money redeemable in gold coin.

This crucial relationship, strangely enough, you apparently ignore.

I refer you to the works of the great Ludwig Von Mises, such as "The Theory of Money and Credit" and "Human Action", for your enlightenment.


As for your criticism that my argument is "circular".

Yes, it is circular. Because we are talking about a dilemma, and you know, in a dilemma BOTH ALTERNATIVES ARE UNPLEASANT. As I said, "Do we really want to face the facts?"

The fact is, the world economy is, in reality, already so distorted, that to cure the distortion by means of a return to sound money, as defined above, means an ordeal which is politically unsustainable at this time, and will remain so until we get over this "crush" we have with "democracy", since "democracy" implies printing money to keep the voters happy and re-electing their rulers.

So, that avenue is closed, and how long it will remain closed cannot be known.

And on the other hand, if we continue on the path we are following, we are ANYWAY going towards an inevitable world collapse of the econmy.

So, yes, we are damned if we do, and damned if we don't.

Circular reasoning. Yes, but I didn't make the FACTS. The facts are what lead us to this DISMAL CONCLUSION.

"Do we really want to face the facts?" I ask again.


So what is my solution? I have none. I am just stating the ugly facts.

The Spanish thinker, Ortega y Gasset, wrote in "The Revolt of the Masses" words to this effect: "Men do not think, to really think, until they realize they are lost."

Or as Dr. Samuel Johnson once said, "Nothing so wonderfully concentrates the mind as the prospect of imminent death."


Whatever the future, owning physical gold is a very sensible precaution and the best thing we can do for ourselves and loved ones, is to have a stash in possession.


TownCrierGAB, we certainly can't turn to von Mises for the facts#13221205/16/05; 12:44:05

He died in 1973.

His "Theory of Money and Credit" was written in 1912.

"Human Action" was written in 1949.

There is a litany of worldly facts and practical experiences that came into play long after he put pen to paper, and even moreso after he lost all ability to further do so.

That doesn't mean we can't uses Mises to draw inspiration where appropriate, but it does certainly mean we can't use Mises to draw a roadmap for modern times.

Perhaps this is another example of one of the "ugly facts" you've been speaking of.


GoldiloxRoman War Machine#13221305/16/05; 12:58:57

On the History Channel now, and hopefully to be repeated, is one of the better histories of Roman military expansion and decay I have seen.

One of the worst problems they faced, according to the authors is that the barbarians they faced were more and more trained by the Romans for assimilation into the Roman Army and they found their own military tactics used against them.

Except for the Huns, the other tribes weren't out to destroy Rome, but wanted to experience Rome's affluence.

Once the Western army could no longer be maintained (or paid), the Western Empire faded into disrepair and the Byzantine Empire was all that remained until the Ottoman Turks took them down in the second Millenium.

Great stuff.

geTowncrier#13221405/16/05; 13:47:37

With gold as money, twin deficits (budget deficit, current account deficit) would not be able to increase without bounds. Gold scarcity would automatically start inducing tight monetary policy – gradually, step by step, incrementally.

An important point: When gold is in control, it puts pressure in the opposite direction of the excess. While credit is increasing, gold forces it to decrease. While credit is decreasing, gold forces it to increase.

With the current system, there are no bounds. Government starts increasing the Credit. It increases exponentially. Government tries to manage here and there. Then, bang, everything comes to a stop.

An important point: The fiat system puts pressure in the same direction of the excess/abuse. As credit increases, it tends to increase it more. As credit decreases it tends to decrease it more.

I think GAB has very valid arguments.

Great Albino BatSome things never change, Townie...#13221505/16/05; 14:13:43

Human action is ever the same, because it derives from human nature.

The real laws of economics - not the statistical formulas that pass for laws in economic studies today - are invariable.

So what was written in 1912 is no longer valid? The execution may have varied - transmission of monetary property can be done instantaneously today, where before it was done by much slower methods. But the economic theory involved does NOT change.

Excuse me for saying so, but your thoughts are "parochial in time"; you think your period of time is special, just as special as the parish you happen to live in. And that was said out of your Parish in Time, is no longer valid.

Economic laws today are the same as they were two, three thousand years ago or more. Humans do not change in nature, though they may change culturally, intellectually and morally.


Thanks "ge", for your kind remark. Although I am not here competing for any special position, only trying to bring forward a point of view.


BelgianQuestion for Ge :#13221605/16/05; 14:32:41

You : >>> An important point >>> "When gold is in control ".
Please Sir, can you elaborate on this important point.
Are we controlling gold or is gold controlling us ?
Are we controlling gold so we can do uncontrolled actions ?
Do we agree to let gold control ?
Will gold take the control all by itself ...and exactly how will this happen ?
TIA. B. is impatiently looking forward on the exchange of ideas about this very important (fundamental) statement (premisse).

TownCrierge, rule and money#13221705/16/05; 14:53:10

GAB has done very well to recognize that a gold standard under rule of democracy is generally not a sustainable combination.

However, it would seem to me that he is willing to chuck democracy out the window in order to have the illusion of a monetary system with redeemable currency (which is really only an elaborate shell game).

Personally, I'd rather cling to democracy, and toil these long hours for the best that it has to offer. And if the price I had to pay was this shift of my financial emphasis to that of a monetary system of fiat currency along with a counterpart of free (floating) physical gold savings, then so be it. In fact, it has already been implemented on my part. Now I merely wait for the IMS to more completely embrace what I already know -- the benefits of a "free gold" reserve asset.

GAB rails against democracy because it stands in the way of his fixed gold standard. That begs the question, what form of rule does he foresee all of to live under as the price to be paid for his superficial standard? (I say 'superficial' because the backing is never 100%).

It seems to me that he is tilling the field to plant us all under an oligarchy of bankers who artificially control the market value of gold.

No thank you.


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Monday Market Excerpts

May 16 (from Reuters) -- U.S. gold futures ended at a three-month low Monday, falling for the third straight session, on overall dollar strength and lower oil prices, though overseas physical demand offset the selling, traders said.

COMEX June gold contracts sank $1.40 to end at $419.30, its lowest close since Feb. 10.

Gold attracted speculative and dealer selling in early trade as the dollar extended its recent broad rally due to strong U.S. economic data, hitting a seven-month high against the euro overnight.

The euro held firm late Monday after data showing capital flows into the United States in March were the weakest since October 2003.

The report showed a net inflow of $45.7 billion in March compared with a downwardly revised net inflow of $84.1 billion in February.

"Gold is under pressure here, but there is still strong demand from the Far East providing support," a New York precious metals desk trader said.

Physical demand from India was coming in strong at the end of March-to-May wedding season, while recent buying in Tokyo gold futures also helped prop up gold prices, he added.

Traders were awaiting inflationary data later this week for further direction, with the Producer Price Index due on Tuesday and the Consumer Price Index coming out Wednesday.

----(see url for full news, 24-hr international headlines, market quotes)---

GoldiloxDemocracy and Gold#1322195/16/05; 15:55:12

Interesting Discussion. Without trying to put words in anyone's writings, I wonder if the "democracy" of which GAB is complaining is one wherein the Constitutionfiduciary safeguards are ignored in favor of the "oligarchy of FIAT".

While leaders like Cheney still encourage us with barbs like "Deficits don't matter", the serious financial problems build to fever pitch.

I am not completely convinced about GAB's gold standard ideas, but the Constitution (which seems out of vogue today) does define money as gold and silver. I don't think I would blame democracy for the troubles of FIAT, as every previous form of government seemed to abuse FIAT with the same inflationary results. The troubles of USA Inc. seem to have been exascerbated by the loss of gold standard, although many have argued that the previous gold standard did not head them off.

Lack of fiduciary discipline is hardly a uniquely democratic problem, although it represents some specific challenges to a democracy - those that have been vividly enumerated on this forum many times.

When the private sector over-extends its credit, it results in bankruptcy. Nations are not immune to this, either, but with its reservve currency status, the USA seems to be flaunting any idea of limits. The spending limit has become a joke, as Congress and the media have brought us to "expect" it to rise like clockwork. The FED, our inflation "watchdog", has substituted "control of inflation" for "fighting inflation".

Perhaps what our democracy really needs is a Constitutional 'balanced budget amendment" even more than a gold standard.

TownCrierU.S. to send currency report to Congress on Tuesday#1322205/16/05; 16:15:10§ion=investing

WASHINGTON, May 16 (Reuters) - A hotly awaited report on whether U.S. trade partners, including China, manipulate their currencies to gain a trade advantage will be sent to Congress on Tuesday [2:30pm EDT], a U.S. Treasury Department spokesman said on Monday.

A U.S. trade law requires the U.S. Treasury to assess exchange rate policies of major trade partners in a semiannual report and to gauge whether the policies are unfair or restrict adjustments in the balance of payments between countries.

The last report, issued on Dec. 3, concluded that no major trading partner was manipulating its currency.

But interest is high this time because U.S. lawmakers have stepped up threats of retaliation against China in the face of soaring U.S. trade deficits that American firms claim stem from China's practice of pegging its currency at about 8.28 to the dollar.

The Treasury Department consults with the International Monetary Fund before reaching conclusions about exchange-rate policies. While advocating the use of flexible, market-driven exchange rates, it generally notes that "a peg or intervention does not in and of itself" imply a manipulative practice.

^------(from url)----^

China is surely saying, "You hypocrites. We're only doing that innocent 'peg' thing -- the very thing your own people crafted as the framework for the IMF/Bretton Woods style monetary system. And now you're telling us you had it all wrong??? You can't have it shift back and forth according to what suits you (uniquely) the best at any given moment in time."

Out of irreconcilable political differences, the free gold solution awaits patiently and ready in the wings.


Great Albino BatI am not an apologist for crooked banking, certainly!#1322215/16/05; 16:39:52

I am certainly not in favor of setting up a crooked business for bankers!

I am in favor of sound money.

Crooked, fake money makes things extremely easy for crooked bankers.

Real, redeemable money makes things much more difficult for crooked bankers.

Banking can and should be an honest business. Whether it is or is not honest at any moment or place, is not my concern. It has become the business of crooks, but it need not be so.

Under sound money, the potential wickedness of bankers is at any rate, kept in check, because credit expansion under sound money is limited by the need to redeem banknotes in gold.

Much less evil, under a redeemable money system! This is an imperfect world and - Should we not choose the lesser of two evils?

This discussion is tiring, Sir Towncrier. I have stated my case and will let it rest.


The StrangerMessage to Eric#1322225/16/05; 17:00:34

I don't know what the dollar is going to do versus other currencies, but I think the secular bull market in gold still has a long way to run. Unfortunately, everybody and his grandmother were short the dollar as the Fed went about raising interest rates over the past year. Now there is an apparent rush to cover as concern mounts that Greenspan has achieved monetary discipline, and the rising dollar, almost by definition, means falling gold. To compound the problem, everybody and his grandmother were also betting that Chinese demand for basic industrial materials, including oil, were set to expand into the stratosphere. That trade, too, now appears to have turned upside down, hurting the stocks of commodity producers, including those which mine gold.

But I don't think the Fed can go much further with interest rates. If they do, they will invert the yield curve, which would almost certainly bring on recession. And even a hint of recession would set the soon-to-retire Greenspan back on his heels. There is simply too much debt in the system for such a thing to be contemplated. Besides the back of the commodity boom appears to have been broken already, anyway.

So, as painful as things have been lately, I still foresee a continuation of zero to negative real interest rates. And, to me, that spells higher gold prices.

otish mountainGAB "sound money"#1322235/16/05; 17:04:14

is an oxymoron.
melda laureAs above, so below. Glox 132200...#1322245/16/05; 17:22:08

Well well, I thought to save this for later.

Sir Bat, this discussion will require much thought- several days worth. Though, I dont particularly like democracy, (a republic- that's different...) you have to admit that the present messy sad sorry excuse for a "system" has held up for almost 90 years (since 1913). So, in spite of almost continuous shrapnel wounds and aak aak, it has taken many decades for the "poison" to work up to terminal levels. Why our system has held so long whereas the weimar cancer strain did not is a long story.

Of course in a republic you have almost continual board-room upheavals, not always executed in decency and good order. Though it comes to mind that our system has evolved into a kind of cryptocracy where the real power seems to have re-assembled itself into various loci that are difficult to identify.

Cryptocracy: rule by unidentifiable anonymous power elites via proxies- UN/NGO's/think tanks/and so called "democratic institutions". The ultimate shell game.

Cynics will say this is the way it has always been. Regardless, if indeed we do have a cryptocracy then it is safe to assume that somewhere in it are large "investors" or "wealth holders" interested in the stability of their holdings. While this does not by itself obviate a second dark age (or is that the third, fourth? Yet another long story) it is cause for some confidence. There are other reasons.

Lady Goldilox, may I interest you in a good tale. Try looking up a good translation of psalm 82. The septuagint is fairly close, the RSV is not too bad, I like the old spanish version (mostly for the odd translation of verse 8) This is in regards to your #132200. This particular bit of text is one of the more controversial bits of scripture since (on the face of it) seems to show God berating the "lesser gods" for their excessive... well, I suppose the best word is downright wickedness@! Apparently the angels in heaven are not above a bit of market mayhem nor stealing from widows and orphans. Or so it would seem. Their doom of course is to "die like any (human) tyrant" in spite of being "sons of the most high". Naughtiness and evil are not the sole province of the mortal realms.

If this has ruined your day, you can always write it off as a borrowed psalm from those "wicked" barbarians to the north, (or wherever).

melda laureBalanced budgets, what is balanced?#1322255/16/05; 17:43:22

Your balanced budged amendment must include basic ideas such as no trust fund shennanigans. Even then I have doubts.

Actually the problem is not in all the varied novel ways of hiding things off book. The basic problem is that today's congress always looks for new loopholes. As a nation, (at least as far as taxes are concerned) we always look to the letter of the law, not the spirit of the law.

Considering all the gold swaps shenannigans I do not see that we can a priori keep government from inventing new forms of credit. It is not credit that is out of control, but the people who issue it. And, arguably, they are acting "legally". That which is legal, is not necessarily lawful. Ultimately, the problem has a moral dimension, and as Neville Chamberlain found, it is thus not a problem that can be solved by more scriblings or legislators. Though it is possible to use force - i.e. demand physical payment.

Lechery is not a matter of incontinence, but of will.

That is I think a question not adressed here yet. How will we regain the moral foundations we lost? Especially since their absence is invisible to all but a few? Perhaps that is subject matter for a future contest?

Belgianyuan-dollar-peg#1322265/16/05; 17:56:16

With the yuan (and other Asian currencies) pegged to the dollar...a dollar-devaluation (or revaluation) would change very little (essentials) to the US - Asia, economic relationship.
An unpegged-floating yuan, would make a big difference. Then, a dollar-devaluation would mean an advantage for the US.
Can we conclude that the dollar wishes to devalue the hope that might change the US deficits-trend (trend !!!) and give the dollar some credibility !?
But why should the Asians be willing to provide more (longer) credibility to the US dollar, when their (Asian) economies are fastly becoming increasingly important vis à vis the US economy !?
US protectionist trade sanctions will probably not affect US imports from Asia. How "effective" can the policy of tariffs be on Asian products (and services) and their currency's exchange rate ? Very little imo.

It is not China that has a problem with its yuan-dollar is the dollar that has a problem...of not being able to devalue without causing more damage to the $-currency's reserve status.

This currency reserve status would never be a problem...if the currency was used in parallel with a floating goldprice.
CB Gold-reserves, under a free floating goldprice, would compensate the loss of purchasing power of the $-currency in reserve.

Gold, as a reserve in CBs, should have a purpose, no. Goldreserves, stored in CB vaults at a fixed price, has only a "symbolic" meaning (no function), at best.
I don't think that Asians look at gold as a symbol. I strongly suspect they have a rather different approach towards the "function" of gold ! >>> WEALTH RESERVE !
And under the given dollar-pressure on the yuan...I can hardly imagine that Asians are ever going to look at the dollar as "the" wealth reserve.

When the dollar wishes the yuan to revalue (peg-change)...what about the other currencies (non $) who did not wish to have a more expensive yuan (chinese imports)...and a cheaper dollar ($-reserves) !? Is that another price that all the members of this planet have to pay for having a dollar-world ? What if a yuan depeg changes nothing on the US-"$" deficits trend ?
Will it be easy to have new "accords" and coordinate globally on the dollar's in the good old times of the Plazza and other accords ?

Asia has no intention to live for ever under the dollar-regime. Freegold would suit them very, very well.

R PowellThe Stranger#1322275/16/05; 19:52:40

It is nice to hear from you again. You mentioned.....

"To compound the problem, everybody and his grandmother were also betting that Chinese demand for basic industrial materials, including oil, were set to expand into the stratosphere. That trade, too, now appears to have turned upside down, hurting the stocks of commodity producers, including those which mine gold."

I'll certainly have to agree with you here but maybe only on a short term basis. Jimmy Rogers offered some strong opinions in his latest book, on a long term basis, for many raw materials. He also did mention that there would probably be some rumors, discussion or press releases suggesting that the Chinese might try to slow their expanding economy, perhaps to curb inflation or avoid the many problems that often arise from too much growth over too short a time period. Roger's view, at the time of the book's publication, was that there would not be much of a slow down at all..just talk of one.
I offer this as just one opinion in regard to future demand of those items that the Chinese economy will need to continue to grow. Myself, I wonder how much of the current prosperity is being "trickled down" to the general population. Perhaps the sustainability of Chinese growth might depend, at least in part, on China's ability to enhance its own domestic consumer spending.
So, maybe everyone and everyone's grandma may have, as often happens with raw materials, incited a price spurt that took (with the aid of the funds) prices too high. A small mania if you will. The CRB is now well over 30 points off its recent high. Roger's was very opinionated it his book recommending that every price drawdown will be a buying opportunity. I wonder how much the reportedly new money supply investment in commodities will increase volatility and whether hindsight will prove Roger's correct or not...??
As for our gold market...I'll agree again with you that there is a secular bull ongoing. I just wish it weren't such a long term affair. I now feel that goldbug sentiment is being sorely tested, along with other markets. Early last summer Sinclair declared that he was the open interest in the August gold 430 calls. Sinclair was adament about a POG of 480 for 2004. Once again the turtle pace of the market outfoxed him. I wish (in hindsight, of course) that I had sold Mr. Sinclair those 430 calls. But, although it took quite some time, the turtle did win that race, didn't he?
Thanks for the thoughts

GoldiloxResponse to melda laure#1322285/16/05; 20:29:20

Who you calling "Lady", dude? Don't worry, your're not the first and probably won't be the last. It stems from your literal interpretation of "Goldilox" without fully checking the source of the screen name.

Don't take this as an attack, but merely an alternative view! A spirited discussion NEVER ruins my day! As the ball players say, "Yo vivo por este!"

It's convenient to take three or four of the many Bible translations and say it covers the whole of history, but these should additionally be compared to other ancient texts and archaeological finds. Many of these existed when the Hebrews were still pre-literate themselves, especially the Vedic, Chinese, and pre-Inca civilizations - all of which may have long preceded the so-called "cradle of civilization". Fourteen billion years minus 5000 leaves a very big "hole" in history.

Ancient western peoples often called anyone more advanced or powerful than themselves "gods", and later took to calling their own leaders "gods", or "lords", a practice still continued in the UK today. So much for etymology.

It's difficult for me to believe that cultures who possibly had flight, energy technologies and advanced medicine before the Hebrews were ever organized descended from Abraham any more than the African pygmies or Aussie aboriginals were descended from Adam and Eve in the brief 5000 or so years covered by the Torah. That's just not enough time to accomplish the required phenotypical changes from a purely genetic perspective. I'm coming to the conclusion that after the Oceanic civilizations were destroyed (by whatever means), the mountain peoples who "barely survived" began new civilizations with only a few remaining "legends" to describe the "lost litany".

For an interesting account of how the Romans "managed" the growth of the Judeo-Christian heritage in their Empire, eliminated the Essenes and Gnostics, and revised many of the texts to include the Dionysis, Osiris, and Sumerian legends to fit their political purpose, see the 2003 book "The Jesus Mysteries" by Timothy Freke and Peter Gandy.

It's likely you will disagree with many of their conclusions, but they have unearthed some evidence that's worthy of examination.

Have a golden day, sir.

GoldiloxTiming#1322295/16/05; 20:34:26

Gold, and markets in general, certainly seem to be setting their own timing pace. Secular bears and bulls are not very visible on a day-to-day, or perhaps even a year-to-years basis.

Current levels of market management suggest that they will be allowed to resume more natural movement when the majority of the politically correct players are properly aligned.

Unfortunately, none of us knows who those PC players actually are.

SundeckGold, dollar, yuan peg, yield-curve and everything...#1322305/16/05; 20:48:47

Belgian #132226...good summary Sir Belgian. Protectionist trade sanctions directed against China may be a boon for some of China's competitors who can probably expect to reap an increase in their exports to the US (no sanctions directed at them); given that Uncle Sam's compulsion to consume is not likely to abate. In addition, any loss of "easy" US markets for China's export engine will likely prompt China to step up marketing to the rest of the world. Thus, while the US may get some direct relief to its trade deficit by restricting imports directly from China, it is going to give some of that back by a reduced demand from other countries for products that those countries will source from China instead of the USA. From China's stand-point, domestic consumption will help take up some of the slack as well, as "inflation" rate (= rate of general price increases) in China has reportedly fallen in the last quarter (not being too greatly affected by China's trade surplus with the US).

I feel that the USA's bargaining platform is rather weak and mostly intended for domestic influence (China the big bogeyman, deflect attention from the Iraq mess, blame someone else for one's own profligacy, etc).

The Stranger #132222. Yes...the unwinding of dollar shorts has undoubtedly assisted the present dollar updraft. It will be interesting to see how much longer the hot air (speculative unwinding) can keep the dollar-baloon aloft before the air cools and gravity (deficits) starts to exert its downward drag. So far these last six months of dollar levity do not differ qualitatively from the other major "corrections" in the dollars descent over the last few years (see link). Dollar updrafts of 7 to 8 units in the dollar index are the norm during a major correction, rather than the exception. The present break in descent has yet to show how it is different from several earlier ones. (Note: one difference is the stagnation in growth (decrease) of MZM, which coincides pretty closely with the latest period of dollar levitation - see this link, provided recently by another forum member - )

On the yield curve, I suspect the recent talk by the US Treasury concerning reintroduction of the 30-year T-bond may have something to do with their concern about the yield-curve inverting. At present, outstanding debt is strongly concentrated at the short end and it is thought that one reason that yields on the 30-year bond are so low is because demand for it is frustrated by its reduced availability; thus keeping its yield "unrealistically" low. Increasing the supply of the long-bond would be one way to relieve some of this demand/supply imbalance. Of course, anyone buying new long-bonds (in my view) is going to insist on a healthy yield to compensate them for the inflationary threats that reside in the dollar monetary system. If TPTB can get the yield on the long-bond to increase, they will then be in a position to maintain "measured" increases at the short end. (Would this allow them to prolong credit expansion by means of the carry trade between short and long rates??? Would this address the stagnation in MZM??? and would this help the dollar continue its controlled descent???? while simultaneously maintaining foreign-financing of the current-account and fiscal deficits??? I don't know...don't understand sufficiently.)

Capital inflows to the US must be an increasing concern ( - definitely worth a read) to the administration and the FED. Somehow the administration and the FED have to increase the appeal of US securities while at the same time not killing the economy..a delicate job for a deft performer (Greenspan's swan song? Bernanke's debut??).

Meanwhile OPEC have indicated that they are happy with oil at about $50 per barrel (who can blame them, given the decline in purchasing power of the dollar). All the blather about the "high price of oil" and "increasing production" to allay price is revealed as just blather...what is at issue of course is the "low value of the dollar", but noone is allowed to openly question the integrity of the "dollar standard".

Loss of dollar value is one component in the "resource boom". The other factors of course are genuine demand increases (from China, in particular), delay by producers in ramping up production (look at the reserves of nickel, for example, on the London Metal Exchange) and the ever-present speculation by hedge funds et al. Unless the economies of China, India, Brazil and a half-dozen other countries get stymied somehow, it is hard to see the resource boom ending until producers catch up with demand pressures. (Same probably applies to gold and silver.)

On a separate issue. today's Australian Financial Review has a brief article about overnight raiding of the Chinese Central Bank in Shanghai, immediately prior to Shanghai's fall to Mao in 1949, and the shipping of its assets (gold) to Taiwan. A human chain of coolies laboured all night in darkness to move the gold from the vaults to waiting transport. (Funny about all the paper note/IOU would have been much easier to move.) China was basically bankrupt then, five decades ago, but now it has reserves of $600B, a burgeoning trade surplus and the fastest growing major economy in the wonder the US is worried!!

On sill a separate issue...I have never seen the Australian Stock Exchange so such a state of malaise. People are waiting...waiting...waiting; but they are not sure what they are waiting for. (Just my feeling.)



SurvivorMore Democracy and Gold#1322315/16/05; 21:00:19

The thing with democracy is, candidates for office soon realize that its easier to get elected with promises of handouts than with promises of character. Soon politicians are looking for a way to finance their always increasing campaign handout promises. If an economist comes along with a hairbrained scheme to corrupt the monetary tender and provide politicians with abundant resources in the process, that economist will have the ears of the politicians. Those politicians just happen to have the power to change the statutes, appointments, and structures that determine the nature of the monetary system.

Somewhere along this path, gold becomes discredited as a barberous relic. The rest is 200 years of history.

Now, democracy seems to have enough things to its credit that the cost in terms of monetary fiasco is probably worth the pain to most. But to a monetary purist (Hello GAB), democracy is easy to identify as the root of economic evil.

FWIW - Survivor

TownCrierHEADLINE: Norway dumped US bonds in March in mystery move#1322325/16/05; 23:09:39

WASHINGTON, May 16 (Reuters) - A surprisingly small flow of foreign money to the United States in March was due mainly to a halving of oil-rich Norway's U.S. Treasury bond holdings, raising questions about whether overseas governments are cutting huge holdings of U.S. assets.

A U.S. Treasury report on Monday showed the net flow of foreign investment to U.S. securities at $45.7 billion in March -- more than $20 billion below expectations and less than needed to cover the $55 billion U.S. trade deficit that month.

Foreign official institutions, consisting mainly of foreign central banks, were net sellers to the tune of $14.98 billion.

Close examination of the data shows these sales were dominated by Norway's more than halving its holdings of Treasury bonds to $16.9 billion from $33.8 billion.

^-----(see full article at url)------^

Without looking up the exact dates and amounts, my recollection is that Norway in the past dozen months or two was previously involved in the reallocation of the better part of 37-ish tonnes of gold reserves.

I would not be surprised to learn that the same set of evolving elements that allowed for the gold reallocation of oil-rich Norway also provided compelling enablements for this liquidation of nearly $17 billion in its U.S. Treasury holdings.


TopazSomething surely DID change in mid-March#1322335/17/05; 00:31:55

Seem to recall murmourings re: Treasury Ponzi schemes, Carribean Banks and whatnot. Gold had a rise in ALL currencies, Bonds turned, Oil came off it's highs and Global Markets ALL (to varying degrees) started to head South {see Link}.

"SomethinG" spooked the Herd.

Get a look at Shanghai! Those souls who thought they'd ride the China growth wave via direct investment have fared pretty poorly what?

SmeagolBut will the MTM IMS fix the present mess?#1322345/17/05; 01:45:00

O! Ssuch interessting discussions these lasst few days! Sss... it is too much to reply to each of the fascinating posts... we wishes we could talk rather than type... Ragnarok! Kindly give poor Smeagol an assist composing our Thoughts, eh, precious? Thank you...

Theoretically, all governments and fiat money schemes that Man has devised will function, but theory fares badly under chaotic, short sighted and self-oriented human influence, by which NO government or fiat money scheme works 'for the people' for very long, whether on a gold standard or not! On paper the USA still exists as a republic, but very few are now living in that house - almost all, even 'republic-ans' have registered at the posh democratic District of Columbia Hotel across the street to enjoy all the "!FREE!" buffets, benefits, subsidies, privileges and entertainments to be had therein. But the central banks are the real gold control freaks; they hold governments by the leash, and in light of past experience I do not trust ANY government OR central bank. If only we lived long enough to be able to remember the pain of all their economic injustices!

Sir Belgian, the way I see the mark-to-market IMS is simply that each country allows the price of gold in its currency to float or sink to a value determined by demand. All currencies may be compared to each other under a 'golden' light at that point. (I posted my own ideas on this a while back and was mildly surprised to get almost no feedback (thank you Sir Henri et al!)).

I assume two ways of doing this.

In the first, the price of gold in each country is allowed to float to a natural value in that country's currency. This would also determine an exchange rate between currencies. Each country would prefer to have some gold reserved ahead of the MTM phase, of course (this is what the gold sales are accomplishing).

In the second, somehow the world ends up with 'Another'universal unit of account. The gold price is allowed to naturally float to 'Another' market price. Local currencies then exchange against 'Another' currency. I haven't really thought this through.

The uncontrolled market price of gold would then show the growth or shrinkage of the amount of any single currency and supposedly the percieved stability of same. As a currency is debased (or strengthened), or credit is loosened (or tightened) or the people gain or lose faith in it, it will show on the MTM gold 'barometer'. It is assumed that the more stable a currency is, the more attractive it will
be, and that countries will strive for stability to attract use of their currencies? Peer pressure. But... will they?

What determines the gold price? Bids in the pits? What makes the MTM IMS stable and free from influence? Will speculative trading in gold and currencies be outlawed? Or impossible?
Why would paper gold not trade in the MTM regime? Could it? I assume that the price of gold in either scenario would ideally be high and stable for long enough periods to not be worth trading on.

(as an aside I believe that 'non-physical' speculative trading in the markets must end, for real stability to
return - every trade takes delivery or delivers, otherwise you can't trade. No derivatives either - but if you want to bet on where the price of gold or soybeans or a stock is headed - see you in Las Vegas! Hmmm... maybe that's where all the 'hot money' will end up. Grin.)

It appears to me that we are now on a long gradual incline toward MTM gold, preferably without a major mishap along the way. But even if much debt evaporated or was defaulted on over that timespan, is the 'value' of all existing currencies eventually to be represented by the
price of all gold above ground, or just that which is in central bank vaults? (I assume the first, because dividing the supposed US gold reserve by the total present amount of dollar-denominated obligations results in a dollar-per-ounce gold price in the millions!).

Perhaps most importantly, under the MTM IMS,

Who will manage the CB gold reserves?
Will CB gold reserves be available to loan?
Will CB gold reserves be available for verifiable physical audit?
Will the purchase, ownership and sale of physical gold be
available to everyone (even if expensive) with NO strings or taxes attached (after all, we are talking 'FREE-gold', yes)?

Answers to these questions will reveal MTM's intentions to we lowly ones who keep the REAL wheels turning in the world.

Note to Sir Goldilox (132206 "Notice that of the items to survive whatever befell the ancients, golden icons and jewelry have best endured the vagaries of time."):

Perhaps the transience of lesser metals and their industrial utility explains the near total absence of ancient artifacts of 'modern' technology, despite the writings of diverse cultures. Machinery and parts made of copper, zinc, aluminum, iron, etc., would be considered valuable and would be plundered, recycled and corroded out of existence in a few thousand years... consider how few machines made only 200 years ago are still with us today... museum pieces temporarily reserved from the smelter... will they survive another 4800 years intact?

Note to Sir Town Crier (132182 "Going forward, the stability of our "savings" (our tangibles) is by far the more important feature on our social landscape, and to serve that end, money shall ever be just the slippery lubricant that is pumped up or down in subservience to the cogs and wheels
which matter most. At the worst, with no monetary lubricant, we have barter to fall back on. At best, the monetary lubricant flows and the cogs and wheels are free to attain their highest value in proper functioning usage. And as the physical machine churns out new and desirable products,
nobody but the janitors ought really care much about the drippings of lubricant."):

Having figured out that only a few liters of lubricant was needed for maximum efficiency (and not minding wiping up a drop or two a day), while the massively inefficient (and proprietary) 'aftermarket' pumps and filtersystems that have been installed, requiring thousands of liters of fluid just to fill them and requiring constant (and messy!) repairs, are leaking a year's worth of lubricant in one hour, as a (salaried) janitor, yes, I WOULD care! (grin)


"Storm's a comin'. Get you goldside." - Captain Goldheart

968Venezuela halts US dollar cost payment to oil firms.#1322355/17/05; 02:28:15

"He added that oil field operating contracts in the 1990s included clauses under which state oil company PDVSA was obliged to pay foreign partners in dollars for local costs like work clothes, vehicles, food and other expenses."

"From now onwards, we won't be paying a cent in dollars (of costs) to these transnational companies," he said, without identifying individual contracts or giving figures.

"That's why they invaded Iraq ... they're desperate for oil, they're like oil vampires," he said. U.S. officials have dismissed these accusations as "wild" and "ridiculous."
It's funny that Chavez doesn't mention Another currency in which the payments can be made...

Kenotest#1322365/17/05; 03:33:19

KenoLooking Up#1322375/17/05; 03:41:33

Hopefully all have kept some semblance of sanity through this latest of fire.Gold seems to have broken out in Rand quietly. The market feels good to me this morning. Things are looking up.
SundeckChina gold...#1322385/17/05; 03:42:25

This will make you smile...

Apparently a group of Chinese home-unit purchasers who bought off-the-plan units in Melbourne are mounting a class action against the developer of their high-rise home-unit tower because they were promised that the building would be coloured gold, "the colour symbolising prosperity", instead of brown which was the colour delivered.

Now that says something about Chinese attitude towards gold.


TownCrierPsssssstt... an 'early bird' alert#1322395/17/05; 03:54:04

Get out your sticks, folks, because it's the only way you're going to beat this offer.

German 20 Mark gold coins -- the currency of the land didn't survive the nightmare hyperinflation of 1923, but the value in these coins sure did!

Now, thanks to USAGOLD-Centennial's network of connections, volume discounts are yours to be had on these very special and attractive coins. The craftsmanship in their minting is truly a marvel -- must be held to fully appreciate.

Whether you're a long-time client or new arrival, coins to fill your hands are just a click away. Take advantage of this month's special offer!


SundeckHedge Funds#1322405/17/05; 04:40:29


Tuesday, May 17, 2005 Page B6

Securities regulators have launched a "co-ordinated review" of the operations of Norshield Financial Group Inc., the Montreal hedge fund company that froze about $375-million in assets last month.

Sundeck: Of the 8000-odd hedge funds (more than the figure I mentioned in msg #132071) operating throughout the world with about $2.5T under management (an average of $313M each). Most of these funds have been put in place less than ten years ago. It is hardly surprising that the odd one is going to encounter difficulty from time to time.

After all, pick 8000 companies (with comparable capitalisation) world-wide at random, and see how many of these fail per year. More than one or two, I'll bet. Are hedge-fund managers any more astute than normal company boards? I think not! ...and they probably operate in a riskier environment, with less regulation and greater expectations on the part of both their managers and their investors. It's surprising, in a way, that there hasn't been greater carnage so far. Perhaps the accounting and the use of derivatives has disguised the true nature of these beasts...up until now???

See also this link:

Talks about the supposed spread of risk afforded by hedge funds. Sure, they may spread the risk, but they don't remove it...large insurance companies spread risk, but they sometimes go belly up...witness HIH in Australia a few years ag...the largest-ever Australian financial disaster...not what I would call "spreading risk" very effectively, eh?


"Hedge funds," it continued, "have become such large and integral players in the global financial system in recent years that their exposure and investment strategies need to be better understood by regulators. Hedge funds regularly account for a quarter to a third of equity trading volume in New York and London. They have become some of the biggest and most profitable customers for investment banks".


A quarter to a third of regular equity trading (both short and long no doubt). Bodes poorly for the market if people develop a hearty mistrust in hedge funds and start pulling out their dough...the jolly old loaf might go flat in the middle...



CoBra(too)Free Market News Interview of Rob Kirby -#1322415/17/05; 07:09:35

has essentially closed by endorsing MK's exchange on derivatives with Chris Powell.

An exchange I've personally felt to be extremely powerful at the time and I also took the liberty to re-post it on a German Gold website ( done friends!

As a matter of interest there was some speculation on the SNB quietely buying back most of the gold they've been "compromised" - in avoidance of a stronger expression - to sell. Some of my sources have been actively pursuing this rumor for a while and as it seems there is more and more hard evidence appearing to add credence to this bizarre story.

I uderstand that an article to that end is being put together in Germany and I was asked to traslate it, when available.

Tku for reading cb2

BoilermakerTo Everything there is a Season#1322425/17/05; 07:31:26

I've enjoyed reading the passionate debate here at the forum and thought it time to throw out my two cents. In my humble opinion, you're all right! Now before you stop reading further thinking that the old boilermaker has morphed into a blathering idiot not worthy of serious consideration here is my theory and solution. My view is that all things including the issues we discuss have seasons. Pete Seeger, inspired by the Book of Ecclesiastes, Chapter 3, said it best with his tune "Turn Turn Turn" aka "To Everything there is a Season", sung by The Byrds.

Our big problem today is that the PTB and the rest of us (the electorate) are too arrogant or stupid to understand the wisdom of the ages, that all things great and small have seasons. We expect and demand continuous prosperity. This has become the misguided mandate for the FED. Like force feeding a plant that needs a dormant period we force our economy beyond its natural limits for growth and need for occasional pruning. Our economy is like an athlete on steroids. There's hell to pay when the body finally can take no more.

Here's my recommendation to usher in the coming economic winter about to be thrust upon us. In his next Congressional Testimony, Alan Greenspan should come to the chambers, not with his famous briefcase but a small tape player. He would open his presentation by playing the aforementioned tune and then, with congress members agape with awe, launch into his own verses that would go something like this;
To everything - turn, turn, turn
There is a season - turn, turn, turn
And a time for every purpose under heaven

A time to save, a time to spend
A time to tax, a time for relief
A time for bulls, a time for bears
A time for plenty, a time for want

Then, with his audience in stunned silence, Alan would offer to the frozen group the following advice. "The time has come for the FED to die and in its place let gold and fiat be freed from each other, let gold, the dollar and the economy be guided by free markets, and let the devil take the hindmost." Then he would gather up his tape player and walk from the chambers with a huge smile on his radiant face.

TopazYes Sir Smeagol...#1322435/17/05; 07:47:39

...It is US who decide our own fate, contrary to the philosophical waxers who would have us believe we are at the mercy of "management".

Linked is Russell in defence of his deflationary prognosis.
My sentiments exactly.

The one great hole in "deflation is impossible" is the notion that money is created from nothing....WRONG!

Inflate or Die? Option 2 it would seem looms larger by the minute.

CometoseCobra#1322445/17/05; 08:05:01

SNB????????stand for Swiss National Bank??????
CoBra(too)@cometose#1322455/17/05; 08:22:03

SNB - yes that's correct - Swiss National Bank!

Got to give it to the Swiss - tey're not easily swayed in their beliefs in real money.

CoBra(too)More on Derivatives from "The Privateer"#1322465/17/05; 10:01:33


A Rising Tide - Or A Sinking Ship?
According to the BIS, the global total for exchange traded derivatives is now $US 279 TRILLION while the total for over the counter derivatives is $US 220 TRILLION. Combined, that's $US 499 TRILLION. But that's no problem, according to the world's major banks, because "only" about $US 25-35 TRILLION of these derivatives are currently "at risk".

Heck, that's only 161 to 265 percent more than the US broad money supply (M3), currently $US 9.59 TRILLION.

Unquote - Heck even there would be a lot more Bill Buckler has to say, though we'd have to go along with his rules to quote only short paragraphs of his vision.

A vision for all to see in real terms as notional values become more and more suspect, due to the lack of counterparties of size.

The derivative game is already obsolete in my book as it has by far outstripped any "notion" of reality as it has to grow exponentially for ever just to keep up pretenses.

No wonder AG has "washed his hands" and warned the mega players not to dump the sacrificial lamb in front of his door.

He has protected the notionals as national heros for too long as to have them destroyed prematurely for the scam they are. A scam, which in itself as MK mentioned may ignite a series of nuclear reactions - a sacam which has ignited.

Sweet dreams - and don't forget Gold protects from some of the fallout!

GoldiloxThe Dollar's Wild Ride#1322475/17/05; 10:02:48

The DX is exhibiting some very interesting oscillation today. Have we found a new resistance level?
KenoGold#1322485/17/05; 10:15:35

Nice to see gold above 2700 rand. This will make all the South African share holders very happy very soon. Your just payback for holding the line. I AM HAPPY FOR ALL OF US.
Clink!Turnings : @ Sundeck, Melda Laure, Boilermaker, et al.#1322495/17/05; 10:31:22

I'm rereading "The 4th Turning" at the moment (well, reading, actually, as the first time was an audiobook). It has been discussed on a number of occasions here at the Forum in the past so I won't go too much into the theory except to say that the basic premise is that societies move in 4-generation cycles, with each phase, or turning, being similar in mood to the 20-odd period starting just over 80 years previously. The turnings are High, Awakening, Unraveling and Crisis.

One of the characteristics of unraveling periods is that they are the nadir of public institutions. So, to answer Melda Laure, there will be a mood swing back to public integrity, but that is only when we have passed through the catharsis induced by a Crisis (to give you an idea of the scale of what is approaching, the last two were the Depression/WW2 and the Civil War).

The book was published in 1996 (if memory serves me correctly) and some of the predictions the authors made then for what was to happen in the rest of the Unraveling were spot on, others dead wrong - a case of the coin-flipping chimpanzee likely to be right half the time ? I am obviously sensitized to the kind of event which ushered in the previous 4th Turning (1929-46) and this caught my eye :-


Interest Only Mortgage Deja Vu
When my mailbox first started to fill with questions about interest-only mortgages a few years ago, I smiled; I knew a flash in the pan when I saw one. Interest-only mortgages were the standard mortgage in the 1920s, but they disappeared during the Great Depression, and for good reason. This sudden renewal of interest would not last -- or so I thought.


Or to use another French expression, plus ca change, plus c'est la meme chose.

So it seems we are in a holding pattern, waiting for something to happen (As Sundeck mentioned). 2005 is the year that we enter the next Turning. Where will that series of sparks come from that will ignite the fuse ? Will it be a global derivatives meltdown ? Will some nutcase think that a nuclear explosion will solve things ? I must admit that I thought that 9/11 was going to be a spark, but subsequent events have shown that business still carries on pretty much as usual. Invasion/Occupation/Liberation/Destruction (use your own term) of Iraq a second ? Nah, I'm still more interested in buying my third investment condo and pulling out the capital to pay for the gas in my SUV. The thing is, these events, while not unimportant, came too soon, and didn't really affect enough people in a big enough way. To paraphrase Sir Federal Reserves, I feel as nervous as a guy with a degree in Earth Sciences lying on the beach in Banda Aceh on Christmas Day. I know something will come in the the not too distant future, but sheesh, how bad could it be ?

I have a question for the Forum : In the years leading up to the 1929 debacle, was there anyone who was predicting that Bad Things would happen, and, if so, what were the specific danger signs they pointed to ?


PS. As you may have gathered, I have found the postings at the Forum in the past couple of weeks most stimulating. Keep up the great work, guys !

geBelgian#1322505/17/05; 11:17:02

***Are we controlling gold or is gold controlling us ?***
Currently, we are controlling gold imo.

***Are we controlling gold so we can do uncontrolled actions ?***
Yes, that is what I exactly believe.

***Do we agree to let gold control ?***

***Will gold take the control all by itself ...and exactly how will this happen ?***
Gold standard and coin circulation, imo.

I would propose to discuss the following question: Let us assume that we have "freegold", and ECB initiates a credit expansion. What is next?

Gold price in Euros increases. ECB marks reserves to market. Balance sheet of ECB begins to look great. Now what?

Credit contraction? No, imo. Stop creating credit? No, I do not think so. ECB would initiate another round of credit expansion.

Do we agree? If yes, our difference is in policy goals. Your policy goal is to protect the gold holders. My policy goal is to limit government. Now I guess you will tell me that I am a dreamer. You might be right.

USAGOLD / Centennial Precious Metals, Inc.Reminder... USAGOLD Market Update for 5/16/05#1322515/17/05; 11:53:01

"The madness of crowds can pop up anytime, anywhere. No era is immune; no individual beyond its unflinching grasp. And crowd madness pays no heed to intelligence or experience. In 1841, Charles MacKay wrote an important book titled "Extraordinary Popular Delusions and the Madness of Crowds -- the book that Bernard Baruch called the secret to his incredible wealth. In it MacKay points out that Roger Bacon, "by far the most learned man of his age" believed that the philosopher's stone could turn lead to gold. "

Link to the book:

Extraordinary Popular Delusions and the Madness of Crowds by Charles MacKay


All new Short & Sweet (picks up where we left off last week)

"There is great fear within the pension industry that the United case is but one in a series of dominoes that will fall throughout the airline and, possibly, the auto industries. " Boston Globe

The MISERY Index returns. . . .See the chart


An interesting Letter to the Editor and a different take on the yuan


Even if the French vote 'yes', their Euro-dream has soured by Charles Moore/The Daily Telegraph

Great Albino BatCLINK! - Re your question...#1322525/17/05; 12:14:11

You asked:

"I have a question for the Forum : In the years leading up to the 1929 debacle, was there anyone who was predicting that Bad Things would happen, and, if so, what were the specific danger signs they pointed to ?"

Yes, indeed there were individuals who saw what was going on and warned about the consequences.

In general, they did not receive serious attention and were scoffed at.

Unfortunately, I can't locate the sources in order to tell you exactly who warned and who got out before the crash.

I believe I recall that Pres. Hoover - a man unjustly treated by history, in my opinion - but who was a clear thinker, saw that a speculative bubble was building and tried, without success, to halt its progress.

"During 1928 and 1929, Hoover headed a crusade to curb speculation, which he feared would lead to a fierce correction in the market. He encouraged the media to warn about the perils of speculation and newspapers and radio news programs responded with frequent predictions of doom should the wild speculation continue. Hoover also encouraged the Fed to take measures to slow the economy. The Fed responded by increasing the discount rate from 5 to 6 percent, effectively increasing all interest rates. However, the warnings of the news media fell on seemingly deaf ears, as the market continued to provide lucrative profits for speculators, and the increased interest rates on loans did little to deter speculators who expected much higher returns on investment. Considering the lack of immediate effects, it is difficult to see how the crusade against speculation could have directly triggered the crash, but it no doubt helped to set the stage for the reversal of fortunes in late 1929."

Dig around in the literature of the times, and you will find what you are looking for. I found the sample above through


Belgian@Ge#1322535/17/05; 12:34:29

If and when, a coalition of the willing, agree on the complete and unequivocal separation of currency markets and gold market ...we have organized a "fair" competition between units of account (currencies) and goldmetal as the universal consolidator of wealth. Fair competition imposes discipline on the currency managers (regulators) and their political associates.

Goldmetal back into the public's hand and encouraged by all those who want to adopt the freegold concept, is a correct discipliner. Then one will use, what we call money today, as a unit of account for trade settlement. We will chose the most reliable (disciplined) currency or rush into the metal as soon as we intend to save available excess of units of account.

Up until now, in almost the entire world, individuals who wished to put some savings aside, does this in $-units that aren't even legal tender outside the US ! You would be surprised to know in how many impossible places you find those green $-units...virtual savings.

And the euro doesn't want to change that situation from green dollars into yellow euro !!!!! But the euro wants to compete as a currency with freegold metal as a wealth tangible !!!!! It is for this reason that if freegold falls upon us, people will associate the euro with gold, because the euro wants to be a little bit as good as gold, just like the dollar always was percepted as good as gold...BUT under an impossible regime of fixed gold !!!!!

Fixed or semi fixed (regulated) gold cannot function properly as a correct wealth consolidation !!!!! Under such conditions, you are forced to stick with the fraudulent currency that dominates the goldpricing by framing gold into the money play. >>> Lots of gold for little fiat.

Freegold gives the individual the genuine choice between the differently managed fiat currencies and the metal.
Under these circumstances, the fiat currencies can continue to compete with each other and all against goldmetal moving in an agreed freemarket. Manipulating the goldprice in a metal only market will become a complete different play than the actual goldprice regulation through a paper market.

If you continue to exclude this possibility simply accept that the fiat regime can go on with the goldprice regulation. Then I don't see any reason why you should speculate on the goldprice per sé...and I would suggest to speculate on the currencies' exchange rates, with a hell of a lot of leverage possibilities.

But the Norwegians made it public that they diversify (hum) --- out --- of the (petro) $-unit. Andddddd, the Norwegians are definitely not the only ones. Does one has to wonder that when the $-POO rises...the euro exchange rate rises with it...against the dollar ! How come ? Think deep, Ge.

Thanks Ge.

TownCrierge, gold and ECB credit#1322545/17/05; 12:46:13

You said, "Let us assume that we have "freegold", and ECB initiates a credit expansion. What is next?
Gold price in Euros increases. ECB marks reserves to market. Balance sheet of ECB begins to look great. Now what?
Credit contraction? No, imo. Stop creating credit? No, I do not think so. ECB would initiate another round of credit expansion."

What makes you think the ECB would be so thick-headed in its management and would expand credit by rote with every increase in the marked value of its gold reserves? Why would the governing council shoot itself (and its credibility) in the foot?

Such mindless credit expansion on their part would undermine the Governing Council's mandate for maintenance of price stability as the primary objective of the ECB -- more precisely defined as a year-on-year increase in the Harmonised Index of Consumer Prices (HICP) for the euro area of below 2%.

That they could expand credit right NOW if they wanted to, and especially the fact that they don't, should go a long way toward letting you know your fears of runaway credit expansion under a "freegold" system of reserves are unjustified on the basis of present evidence.

Hope this helps.


TevyeCLINK! - Re your question...#1322555/17/05; 12:48:06

I recall hearing the story of a financier (a famous man whose name I have forgotton) who said "when I got a stock tip from the shoeshine boy I knew it was time to get out of the market".

The smart money 'knew' then, and they know this now:
Gold. Its Tradition!


White RoseThe story is about President Kennedy's dad#1322565/17/05; 13:13:54

Joe Kennedy was quite an operator. He noticed that the shoe shine boys would tell him what was going to happen that day in the stock market. And it usually followed the script. He pondered what it meant that the daily script was known so far and wide. He decided that at one point, it would blow up in everybody's face. He decided to sell all his stock. His wife pleaded for him not to do it, his broker pleaded, his priest pleaded. But Joe persisted because he knew he was right.

He sold about 2 months before the crash.

For the crash of 1929, the slogan was "if we all know what is going to happen, then who is the sucker?".

For the comming crash, the slogan will be "the entire market cannot hedge itself".

It will unfold in a different way, with different dynamics.

The StrangerR Powell and Sundeck#1322575/17/05; 14:00:27

Thanks for your reactions to my post. Given the history of paper money, presumptive future growth in worldwide living standards, and the finite nature of natural resources, I don't doubt that the ultimate outlook is for higher industrial commodity prices. But commodity trends are never inexorable. Inevitably, as you know, too many speculators with unrealistic expectations drive prices to levels which the real economy will not accomodate.

This time, the cover story has been China, but I'm no longer buying it. I think we expect too much of the Chinese economy. We seem to forget that neither the Chinese market, nor the Chinese people, are free. Instead, the entire country is run by a cabal of "former" communists whose sycophantic subordinates, no doubt, tell them whatever they wish to hear. By promising cheap labor and lax business regulations, they have managed to beguile a lot of western industrialists into setting up shop there. But even that won't immunize them against the constraints of the common business cycle.

As I said earlier, I think gold should be the exception in the current commodity environment. As R Powell says, the bull market there has, if anything, been maddening slow. Some six years on, and in a protracted period of negative real interest rates, we still find ourselves nowhere near historical highs.

I'm staying tuned.

GoldiloxChina may be named a "Manipulative Trade Partner"#1322585/17/05; 14:12:28

CNBC warns that the Trade Commision may name China a "Manipulative Trading Partner" if it does not depeg its currency. This politicizing raised the dollar and SM indices in the final two hours of trading.

What a joke! Between the Bullion banks, ESF and the BOJ, they make China's "manipulation" look truly bush league.

Of course, when Bush OWNs the league, negative things only happen to those who oppose his policies. Manipulation in support of the admin is "patriotic".

Once again, the non-manipulative ESF rescues the SM right on cue, as CNBC had just commented that this was the 11th time in the quarter that we had had a 100 point gain with no follow-through.

CNBC's JP Morgan guest just said "the FED is trying to cool things down, and may just get what they ask for. The FED actions will determine the market for the rest of the year."

TownCrierCurrency Report: U.S. warns China on currency practices#1322595/17/05; 14:35:33

WASHINGTON (Reuters) - The United States, in its toughest warning to Beijing yet, told China on Tuesday it will be named a manipulative trading partner unless it moves fast to make its currency more flexible.

While the U.S. Treasury, in its semiannual report on currency practices of trading partners, said no country was currently gaining an unjust trade edge by keeping its currency artificially low, China came in for pointed criticism.

The report to Congress comes as anger mounts on Capitol Hill over China's practice of pegging its currency at about 8.28 to the dollar.

[Hypocrisy alert:] "While the benefits of China's ten-year-long pegged currency regime may have at times served well the Chinese economy, this is no longer the case for the large, increasingly market-based economy that China has become," the report said.

...Last week, the Bush administration announced plans to reimpose curbs on imports of Chinese trousers, shirts and underwear, a move denounced by Beijing as flouting world trade rules.

For its part, China has vowed it won't be pushed on currency reform but says it is working toward the move.

^-----(from url)----^

U.S. is decisively throwing in the last towel on old-fashioned IMF/dollar/"Bretton Woods"-style management? Well, only so far as it suits the decision-makers.

When China decides to move away from the peg, can a new regime of IMS freegold reserves be following very far behind?

Choose gold. It'll serve you well, and you'll wonder how you ever overlooked the obvious for so long.


TownCrierInvestor gloom gathers over world economy#1322615/17/05; 14:46:34

LONDON, May 17 (Reuters) - Investors are becoming increasingly gloomy about prospects for the world economy and have been rolling back their expectations for growth, corporate profits and inflation, a Merrill Lynch poll showed on Tuesday.

The investment bank said its May poll of fund managers showed the most negative growth expectations since 2001 and indicated that a dramatic reassessment of investment strategy and economic views was under way.

It said that changes in investor thinking in the two months since its March survey had been "truly breathtaking".

"We have got a major shift in how fund managers perceive the world," said David Bowers, Merrill's chief global strategist.

^-----(from url)-----^

Change happens. But sometimes people are slow to wake up to it because they only see what they want to see or can only interpret the change according to the context of their pre-programming.

A freegold reserve regime for the IMS, when in place, will probably seem to most like a bolt from the blue. "How and where did THAT come from?"


TopazTC, a change HAS occurred.#1322625/17/05; 15:19:49

I'm am firmly convinced now that the currency tether so restrictive to PoGold these last 5odd years has been severed however, like a wild animal who for so long suffered the pain of the "Yank" when stretched to the limit of said tether, it is finding it difficult to extend beyond the (now illusory) bound.

Watch altDX-Pog...the next seperation will prove my point.

USAGOLD Daily Market ReportPage Update!#1322635/17/05; 15:23:43">
The Daily Gold Market Report has been updated.

If you are considering investments in gold we invite you to">request our free introductory information packet detailing the products and services offered by USAGOLD ~ Centennial Precious Metals. We welcome your inquiry and look forward to working with you.

Tuesday Market Excerpts

May 17 (from MarketWatch) -- Metals futures closed broadly higher Tuesday but faded somewhat late in the session. Still, the gains came as a welcome respite for metals traders, with some analysts of the view that the worst of the recent selling in the sector may be over.

Traders said they see gold as representing good value at current levels.

"Buying gold at these levels looks to be a relatively low-risk trade," said Dale Doelling, chief technician of Trends In Commodities.

At the close, COMEX June gold futures stood at $419.80, up 50 cents.

U.S. economic data issued earlier Tuesday -- on wholesale-level inflation, industrial production and housing starts -- gave the dollar a boost, but it didn't last.

This pattern may indicate that the greenback's close to topping out, which would work to the benefit of the precious metals, Doelling said.

Strategist Peter Grandich sounded a similar theme, noting that while gold's retreated back toward levels seen at the beginning of 2005, the U.S. Dollar Index was at the time 7% lower.

"This hidden strength of gold, plus strong physical offtake, strongly suggests gold is consolidating and not beginning a bear market," he said.

TownCrierSmeagol, feedback#1322645/17/05; 16:16:22

You suggest in msg#: 132234:
"the way I see the mark-to-market IMS is simply that each country allows the price of gold in its currency to float or sink to a value determined by demand. ... the price of gold in each country is allowed to float to a natural value in that country's currency."
"The uncontrolled market price of gold would then show the growth or shrinkage of the amount of any single currency and supposedly the perceived stability of same."

How about taking this much further. I think the essential task in a physical freegold regime will be in regard to the issues surrounding the surety of getting the gold into the hands of the buyers.

And further to this same end, rather than expecting a country to be responsible for the tempting opportunity to set and manipulate the all-important price of gold of their own currency, please consider the next point for an encompassing solution to this and the above surety issue.

A market can be made anywhere, and it is not necessary that gold be pricing (judging) dollars in New York whereas likewise only in Beijing may gold be pricing (judging) yuan.

Think instead of the excessive dollars which are overthere -- held in China. These dollar holders conceivably have with themselves a certain power to pronounce the gold-dollar exchange rate, however, to more firmly address the surety issue, rather than entrusting their cash payment for the uncertainties of reciprocal overseas delivery and a long slow boat ride of gold to China, imagine instead that they use their dollars to bid for whatever gold happens to already be right there in China on the barrelhead.

Imagine further that all other overseas currencies are in play, and additionally that this process repeats itself at all geographies around the world.

Thus, the dollar-price of gold will be determined, for one example, by the excess of dollars that we've shipped to China, together with their level of faith in our management of the dollar value, together with the limited availability of free gold supply reaching the barrelhead in China.

If the dollar-price of gold in China, for example, begins to soar, New York (or other traders) might find it desirable to run arbitrage between geographic markets by electronic buying and selling of currencies (which will influence direct exchange rates) or, ultimately, by arranging physical shipments of gold among the barrelheads of the world.

The key improvement is that, ultimately, where gold pricing is involved, the physical must reach the barrelhead before it can judge a currency -- or stated in a more conventional way, physical gold must reach the barrelhead before a currency is able to establish the gold's price. (Contrast this with the current system in which the price is established by the bids on a vast supply of paper gold backed by nothing physical at all.)

I could say more, but I fear I have already tried the patience of the majority of our readers here.


MarkeTalkCoBra(too); BIS figures on derivatives#1322655/17/05; 17:00:46

Thank you so much for posting this information. Just yesterday one of my "elephant" clients was questioning me about the size of the derivatives figure. Recently, another client who lives in Germany told me the figure had risen to $220 trillion. I was astonished that the figure was that high. Your post suggests a much larger number, which will certainly cause all non-gold holders more sleepless nights.

My client in Germany works at a large German bank and thus he has a bird's eye view of world economics. He told me that, sooner or later, one day the masters of finance will make a mistake (or their computers will encounter a situation for which there is no 'default' program) and the meltdown will commence. It will be a repeat scenario of the Long Term Capital Management debacle magnified ten times. In his opinion (as well the stated opinions of other esteemed posters, such as yourself, on this forum), gold will go limit up and it will become very difficult to obtain. I sense that we are close to something big happening in this regard, maybe as soon as next week or the week thereafter which is Memorial Day weekend here in the US. Many times I have seen weird things happen around this time of year.

Technically speaking, the weekly gold chart is showing a beautiful uptrend channel. The gold price is resting right at support on the lower parallel channel line. Today's PPI number at 0.6% inflation was a bullish sign, even after the spin doctors at the government did their level best to blunt the true number. Tomorrow the CPI comes out which I expect will show inflation even after food and energy are stripped out of the equation. From a cycle perspective, this week and next week should be the low water mark before the next price advance. Market sentiment has now turned short-term bearish on the metals and short-term bullish on the US Dollar. What a contrarian play. All in all, we could not ask for a better bullish setup than what we have today. We will probably look back in hindsight and wonder why we were not backing up the truck to buy gold at these bargain-basement prices.


melda laure(No Subject)#1322665/17/05; 17:26:22

Most worshipful SIR Goldilox, my sincere apologies! Yours is not the only handle subject to such confusion, culpa meum. What I meant to show was that if we stipulate your ancient civilization then the message of Ps. 82 is that corruption was endemic even in that distant era, and some memory of that corruption was retained in the much later time when ps. 82 was compiled.

Sir MarkeTalk, the figure that still amazes me is that the Value at Risk for the 220T in derivatives (or is it 400-something) is still a very large number. I saw one estimate of VAR as 5% of notional. For 220T this is still 11 trillions.

Even if the central banks of the world are the chief "bag holders" that is still an enormous bailout.

Hard to belive that the daily fluctuation in this mess is 11T when global GDP is in the few tens of trillions. That is a veritable flood of lubricant.

Federal_ReservesGold and The Unpegging.#1322675/17/05; 17:52:01$GOLD

Gold has been on the ropes having broken (only slightly) the long term trend line. For longs, best bet is to hope gold can find support above 415 and around this 420 area and carve out a bottom over the next few days. At a minimum a retest of the broken trend line is in order.

The situation with CHINA is interesting to watch. On the one hand having CHINA stop pegging the YUAN to the USD could lead to a smaller trade imbalance. This
would be bad for gold. Large trade imbalances weaken the dollar, and support gold. On the other hand, CHINA's exports may weaken causing economic crisis of unknown proportions, particularly if the a large move results from the unpegging (YUAN skyrockets in value versus the dollar ). My best guess is the unpegging will not be large, only a nominal or insigificant expansion of the existing microscopic trading range, more a less a symbolic thing. As such, no real help to the trade deficit and not hurting gold much at all. And in the end, if one believe the trade deficits are now "structual" and can't be fixed by currency exchange rates, and the huge fiscal deficits can't be fixed by tax cuts (no political will), policy makers are helpless to reduce the deficits, and we are merely on the road to bankrutpcy.

R PowellTopaz#1322685/17/05; 18:28:54

Your opinion given earlier (132262) really got my attention. And indeed, the $ index versus POG will show when (if) this occurs. My question: Why do you think now is the time? What indicators have changed, what event has transpired, or what supposition is now assumed that has lead you to this conclusion?

I believe such an event, if indeed, accomplished, would/could cause gold (and silver?) to become more price determined by supply/demand, no?

The Invisible HandIt's influenza, stupid!#1322695/17/05; 20:27:23

Bad vibes but no meltdown yet
18 May 2005
Like a developing case of flu, there is a growing sense of unease and suspected ill-health in hedge fund land. Something is wrong, yet nobody can say quite what, who's exposed and how serious it might be. Is it as bad as Long-Term Capital Management (LTCM), where the Federal Reserve had to organise a rescue for fear that any collapse would cause multiple bankruptcies across the capital markets, or is this no more than a small number of minor players losing their shirts and a few bad months for everyone else?

physicalmanMELDA LAURE, , R POWELL#1322705/17/05; 20:52:51

Melda laure, on total value of derivatives, i believe i read somewhere here last summer, late, that the total value had gone to 480 trillion at the end of the 2nd quarter of 2004. So it would be safe to assume that the total is over 500 trillion, what with 2 spikes of oil futures over 55/barrel in the last 11 months and you know that the hedge funds were hedging on both sides of those trades to protect their positions. That would be 13-14 times the world's gross national product for a calender year! WOW!
Rich, just caught up on 5 weeks of posts, i measure my metric tonnes at 31,152 ozs. I like silver very much too!

GoldiloxAncients vs. current policy#1322715/17/05; 22:11:34

@melda laure,

If the suspicions of ancient civilizations are true, there is no reason to believe they were any more socially developed than ours. The Vedic texts speak of massive high-tech wars, perhaps between two separate oceanic civilizations that accomplished MAD many thousands of years past.

Like the dangers threatening our modern society, technological advancement beyond the capability of social restraint can be terminal.

From McCanney's perspective (also reflecting Bucky Fuller), too much concentration on defense from ourselves may also lead to myopic neglect of any external threat that may exist in the wider cosmic realm.

Not unlike Carter's opinion (recently echoed by Dubya) that oil myopia has put us in the geopolitical mud we currently navigate.

Alternative energy sources have existed for decades. The same short-sighted mentality that risks the long-term health of a company in lieu of quarterly window dressing has greatly affected our "energy policy", and is currently demonstrating its vile effects on currency policy.

GoldiloxConspiracy of Fools#1322725/17/05; 23:35:39

Kurt Eichenwald was on UCSD-TV talking about his investigative ananlysis of ENRON's rise and fall entitled, "Conspiracy of Fools".

In it, he surmises that ENRON was indicative of the greater mania mentality that suggests that it is "normal" to create instant millionaires with bookeeping and opaque business practices.

He further suggests that as long as the SM bubble was in full force, no one would be willing to even hear about those practices, and it took the NasDaq destruction of 2002 to make it important enough for people to care.

It sounds like it might be worth reading.

Belgiandollar-yuan-gold#1322735/18/05; 01:23:37

The dollar wants the yuan to >>> unpeg a little >>> to float a little >>> to be a little pregnant as to have a fair planet.
The dollar actually wants the yuan to become like himself. Float a little and never, ever, represent its "real", objective values. Currency regulations can never be objective and always favor or disfavor one or another.

The dollar regulates its (floating) position with the one and only means of "regulated goldprices" and derivatized gold-market. Now, the dollar wants the chinese to join the causy club of < dollar-(regulated gold)-regime > and be nice and fair, like all the other members of the $-club .
And if the chinese don't bow,..."conflict" will be "arranged" !!!

And herein lays the answer "WHY" China liberalized its gold market and why the ECB changed the concept of its goldreserves.

The "dollar-gold-regulation" (fixing) ...***was*** the dollar's strength. One cannot de-regulate (POG fluctuation)a little bit and become a little bit more or less pregnant.

It is the goldprice that says what the dollar's functionality is worth. Regulate the goldprice and you tell the world how good or bad te dollar is (is supposed to be).
The present obscene low goldprice, pictures the dollar unit as extremely good. Why aren't the chinese allowed to peg their currency on such a good dollar-locomotif ? Funny (inconsequent) reasoning, no !

Freegold will solve the inconsistancies of the present IMS.
Curious to know how the chinese think about this.

Topaz@Rich#1322745/18/05; 03:05:39

Since mid-March "everything" is negative $/Bond Rich. To my mind this is a sign that "management" has in fact now abandoned all or most containment efforts and "free-market" principles hold sway.
This action (or lack of) should allow specifically Au (and certainly Ag) to "freely" attain their proper value as the trend (dis-inflationary) re-matures and ripens.

The "other" AG (the un-attractive one) has fought a good battle but, well, it's simply too big NOT to fail.

We now watch/wait for the next ...and probably LAST Bond reversal to power Dollar and Gold in tandem.

Gold "pricing" MAY run up, then reverse as marketeers realise their fate Rich, should be entertaining!

968Some new trends in financial markets#1322755/18/05; 03:53:25

Keynote address by Dr Jurgen Stark, Vice President of the Deutsche Bundesbank, at the symposium
on building the financial system of the 21st century - an agenda for Europe and the United States,
Eltville, 23 April 2005.

"I would like to comment today on two trends in financial systems: the phenomenon of risk transfer to private households and the recent strong growth in unregulated financial business."

"The fact that these imbalances have been around for quite some time without spelling trouble must not lull us into
complacency. Potential triggers - diminished expectations as to growth and inflation performance or reserve policy in Asia, to name but a few - are real, and they warrant attention."

"New techniques of risk transfer have greatly enhanced one of the core functions of the international financial system: the process of risk allocation and risk reallocation. A vast array of formerly non-tradable risks have become tradable. Financial institutions can now shed risks that used to be stuck in their balance sheets."

"The flip side of the constant risk reallocation is a certain reduction in transparency. More and more often, risks end up in portfolios where you wouldn't expect them in the first place. Tracking the flow and the location of risks has become trickier for market participants as well as for supervisory authorities. The question is whether today's statistics are keeping up with this dynamic development and whether they accurately reflect reality, ie the overall risk allocation and risk concentration in
financial systems."

"At the end of the day, all financial risk is borne by private households. All the risks that financial
institutions carry in their balance sheets are effectively held by their shareholders. These shareholders are ultimately private households, even if a chain of ownership relations may conceal this fact. The same holds true for risks assumed by the government or its institutions. The taxpayer, ie again private households, is the true holder of governments' financial risk."

"As ultimate bearers of all financial risk, private households also feature as the ultimate absorbers of
shocks to the financial system."

"The growth of the hedge fund industry has drawn particular attention and controversy. As this industry is not subject to official reporting, we can only guess its true size. Commercial hedge fund databases tend to provide only partial coverage of the industry. Therefore, we cannot preclude that this industry is considerably larger than the well-known ballpark figures of 8,800 hedge funds with USD 1 trillion assets under management [IMF GFSR Sept 2004] suggest. The fact that these investment entities are
often domiciled in off-shore locations does not help their transparency either."

"For they typically make extensive use of derivatives and hold leveraged positions, not least in rather illiquid
markets. A partial industry survey conducted by the FSA in the UK found out that hedge fund equity of USD 250 billion translated into gross counterparty positions in the range of USD 860 billion."

"What does all this mean for the international financial system?
* There are some blind spots in the system.
* These blind spots have recently grown in size and number.
* And more and more often, these blind spots are related to systemic players."

"The financial industry is one of the most globalised industries in the world. Supervisors cannot limit their attention to what is going on within their national boundaries. If they don't see beyond the ends of their noses, they will not be up to dealing with financial stability issues."
Thoughts anyone ?

Sundeck968 Msg #132275 - Jurgen Stark on Risk#1322765/18/05; 05:18:25

Sir 968, a few thoughts that pop to mind...

1. Paraphrasing and condensing the first sentence of 968's snip yields: "Unregulated risk transfer to private households".

Does this send a chill down anyone else's spine? Put another way, unlimited moral hazard transferred to the unknowing citizen. Not everyone loses...a few will gain vast fortunes; extracted from the many much smaller fortunes of the masses. Such transfer of "moral hazard" is not new and is not limited to finance. Another form relates to governments (rulers) electing to engage in ill-conceived, nugatory armed conflict with enormous loss and suffering, not to themselves, but to the common person. There are many examples. Staying in the financial domain, the cost (monetary and otherwise) of any "bailout" of institutions by governments eventually rattles down to the common person via taxes and reduced communal benifits. And when there is no bailout, the rattle-down becomes a roar (cf Enron) where people instantly lose their jobs, their entitlements and parts of their lives, usually for the privilege of enriching a few.

2. Aother snip: "The fact that these investment entities are often domiciled in off-shore locations does not help their transparency either." ...and, I would add, does not conform with any notion of traditional loyalty to nation, to state, or to community. These selectively domiciled entities owe allegiance to no-one but themselves (the managers and the investors...and the "investors" come a poor second). If profits are made, they do not care a tinker's cuss from whom or from where they arose. If losses occur, they don't care who suffers, and neither are they accountable to any jurisdiction. (You can see now why Greenspan was reluctant to get into the regulatory debate.)

On the other hand, it is not inconceivable that purpose-built hedge-funds, employing selective derivatives put together by clever and unscrupulous people (maybe even state-sponsored), may be used to very-deliberately target other entities; be they other financial institutions, the treasuries of particular countries, or the population of a particular country or state in general. Welcome to the brave new paradigm of "globalisation".

3. The fact that Dr Stark is giving this, relatively frank, talk in 2005 is, itself, a little alarming to me. It seems that the horse may have bolted...but he is to be commended for such a frank and focussed presentation.



Boilermaker@968 , Jurgen Stark Speech#1322775/18/05; 05:47:20

Many thanks for posting that revealing speech.

I noticed that it was given to Harvard University's Law School's "Program on International Financial Systems". Harvard is the place presided over by Larry Summers who is thought by many to be the originator/orchestrator of gold suppression to implement "the strong dollar policy". Poor Larry has recently been under heavy fire for suggesting that women don't seem to be inclined to study the sciences which suggests to him that women are different from men. He was subsequently coerced into allocating $50 million to fix that problem. It would be ironic if Larry, perpetrator of the strong dollar and master of financial opacity, were to be taken down by a controversial but accurate observation about men and women.

Another observation is that this is presumably meeting of lawyers, not economists or financial people. I smell trouble whenever lawyers gather to discuss things like international financial systems.

The other point I would make is about Stark's following statement.....
"In a market economy, transparency is a key tool for preserving financial stability. If a high degree of
transparency prevails, market discipline can largely replace regulatory intrusion. Transparency
enables market participants to monitor their counterparties and to manage their risks effectively. As
long as incentives are undistorted, transparency can do its job.
Transparency also facilitates the supervisors' job of identifying possible weaknesses early on.
Supervisors need to have a clear picture of where risks are allocated and whether and where undue
risk concentrations might be growing. Hence, developments in the financial system that impair
transparency warrant scrutiny."

In the real world there is a rapid trend to less transparency in international finance. Stark expresses his concern about the growth of non-transparent hedge funds but only suggests that...
"However, direct regulation of the hedge fund industry is hardly feasible, if not impossible, and the
efficiency of indirect regulation via the regulation of counterparties is limited. This means that
authorities responsible for safeguarding financial stability have to rely on banks monitoring their hedge
fund credit clients. However, aggregating their total hedge fund exposure and assessing their hedge
fund clients' total risk profile have become more difficult for lending institutions since hedge funds are
being served by multiple prime brokers."

In my judgement asking banks to monitor their hedge fund clients is naive and not going to work because there is competition among banks to find and keep large clients. Stark stops short of predicting a blowup but makes it clear that if/when it does the buck stops at "private households".
Your pension funds and other financial assets are destined to disappear in the black hole created by our present IMS.

Clink!A Kinder, Gentler Sort of Trade War#1322785/18/05; 06:53:36

I don't follow Rick Ackerman's trading schemes, but his daily commentary is often worth the visit. This is today's :-

That's gratitude for you. The Chinese have been selling us nearly everything we need to live the life of Riley on the cheap -- flat-panel TV sets, stainless steel patio grills, down comforters, graphite-frame trail bikes, silk scarves, custom furniture, computerized running shoes, robotic vacuum cleaners, laser pointers, you name it. Not only that, they've been lending us the money to buy all of this stuff and much more in return for IOUs that have been piling up like frequent flier miles in the account of some globetrotting salesman who has pledged his business to U.S. Airways. So how do we show our gratitude? By threatening trade sanctions, is how. And the crime? Underpricing their currency, the yuan. According to the Bush administration, this practice is 'highly distortionary' and 'pose[s] a risk to China's economy, its trading partners, and global economic growth.'
Apparently, this is how tariff wars are fought nowadays. Instead of slapping a surcharge on Chinese imports, we cajole them into raising the price of their money. Good thinking, guys. After all, didn't the Smoot-Hawley tariff trigger the 1929 Crash? Regardless, why take chances on how historians will apportion blame for the next crash? Just put on a fright-mask and make scary noises until Beijing gooses the yuan sufficiently to give what's left of American manufacturing a little breathing room. Of course, the Bush administration could probably achieve the same affect by leaning on Wal-Mart to raise its prices by 30 percent. As we know, that's not something our local congressman could or would support. But monkeying around with Asia's currency peg? Perhaps only the ruinous policy of inflation is more subtle in the ways that it deliberately obscures economic truth.


PS. Thanks to all who replied for info on the 1929 crash - (goodness, it has just cropped up again ! Is it time for a repeat ?)

SmeagolSir Town Crier, thank you, we'll have a crack at your 132234 :#1322795/18/05; 07:50:36

... it's a worthy ponderer, to be sure! Ssss... now we owes Ragnarok an extra ale for helping uss write thiss one! Our humble opinion as ever, precious...

Sir TC : "How about taking this much further. I think the essential task in a physical freegold regime will be in regard to the issues surrounding the surety of getting the gold into the hands of the buyers."

Much further? How about this: are you assuming that everyone agrees to leave the freegold regime alone over generational Time-spans?

I think the task of keeping any physical freegold regime out of the reach of fickle political will over many generations to be of far greater concern... many orders of magnitude more difficult than counterfeiting or physical security issues or ensuring delivery of a gold shipment. I feel there will be many working to discredit the proposed benefits of a free-ranging gold price in a MTM IMS (mark-to market international money system), IF it ever arrives.

Wait a minute... side trail - scratch 'free-ranging gold price' and replace it with 'uncontrolled gold price'. Sounds a little more ominous; I like it. I choose those words now, instead of 'freegold', because nowadays, 'Free' means 'Free' (within these limits). 'Free' (as long as you play by the rules). 'Free' (so long as you remain a member). 'Free' (if your papers are in order). Free control ad nauseum. I'm sick of it! This will not do, so I give you - Uncontrollable-Gold! Muahahahahaaa!

Will a MTM IMS guarantee that? Not only for us, but for our children, and theirs?

To be a truly impartial wealth-reference and currency diagnostic tool, just as the meter and gram references are never altered, gold once released must remain out of control. Period. F-O-R-E-V-E-R. Suddenly, simply getting gold into the hands of buyers seems a cake-walk by comparison.

"Now when first Vingilot was set to sail in the seas of heaven, it rose unlooked-for, glittering and bright; and the people of Middle-earth beheld it from afar and wondered, and they took it for a sign, and called it Gil-Estel, the Star of High Hope. And when this new star was seen at evening, Maedhros spoke to Maglor his brother, and he said: 'Surely that is a Silmaril that shines now in the West?'
And Maglor answered: If it be truly the Silmaril which we saw cast into the sea that rises again by the power of the Valar, then let us be glad; for its glory is seen now by many, and is yet secure from all evil".
- J.R.R. Tolkien, 'Of The Voyage Of Earendil'

Sigh...hope springs eternal. But back to the main path. Who benefits? Who or what do you mean by buyers? I make a BIG distinction between the current (and historically very untransparent) government and CB gold dealings and their use/abuse of gold, and the soul on the street who simply wishes to exchange tax-stripped, rapidly evaporating fiat for a precious bit of independent true-wealth at our generous Host's gold-window. I find it suspiciously and uncharacteristically altruistic that governments/CBs would, rather suddenly from a historical viewpoint, drop the reins on gold - ALL gold - and let it run... ANYWHERE it can (ponder this awhile)... whether to disuse, unwanted except perhaps for fishing weights... or to the opposite extreme, which must be considered part of absolute 'uncontrol', of emptying their vaults to the last ounce, selling all their gold into the hands of the people if need and demand goes that way?

Is all this allowed for in the MTM IMS? If not, it's just a 'new and improved' gold-plated rebuild of the same old rotten game that eventually must have the same result.

A thing that bothers me is that there appears to be no 'official' gold MTM IMS 'plan' available for public comment, only theory and speculation fed by more-or-less indirect hints parceled out by those-in-the-know; Joe Sixpack may be ignorant, but in places of power, who DOESN'T know about it? This 'translucency' raises my warning flags.

Sir TC:"... please consider the next point for an encompassing solution to this and the above surety issue. A market can be made anywhere, and it is not necessary that gold be pricing (judging) dollars in New York whereas likewise only in Beijing may gold be pricing (judging) yuan ....Think instead of the excessive dollars ... held in China. These dollar holders conceivably have with themselves a certain power to pronounce the gold-dollar exchange rate ... imagine ... that they use their dollars to bid for whatever gold happens to already be right there in China on the barrelhead .... that all other overseas currencies are in play, and additionally that this process repeats itself at all geographies around the world.... the dollar-price of gold will be determined, for one example, by the excess of dollars that we've shipped to China, together with their level of faith in our management of the dollar value, together with the limited availability of free gold supply reaching the barrelhead in China."

When I wrote the last post, for brevity and in ignorance I deleted a question that you now point up - 'what about central bank reserves other than gold?' (thank you!) Yes, I believe the dollars (and all other currencies) packed in every vault, nook and crevice (a la Belgian: "You would be surprised to know in how many impossible places you find those green $-units...virtual savings.") must also figure in the MTM equation somehow. I'd rather not imagine - I prefer to know for sure what would happen, but I can see that part of it could read: big foreign reserve bucks / limited gold = big gold price. If we add derivatives, and private debt, and off-budget items, and unfunded liabilities, etc. - the rest of the dollar pie - the dollar gold-price goes way PAST the Moon! (grinning at Alice and Sir Gandalf).

But again, for example, who are the Chinese dollar-holders? Corporate entities/owners, banks, regional governments - or the ones busting their butts for a pittance in the rice fields? I am more interested in how a MTM IMS affects the latter in comparison with the former.

Sir TC: "If the dollar-price of gold in China, for example, begins to soar, New York (or other traders) might find it desirable to run arbitrage between geographic markets by electronic buying and selling of currencies .... or, ultimately, by arranging physical shipments of gold among the barrelheads of the world.
The key improvement is that, ... stated in a more conventional way, physical gold must reach the barrelhead before a currency is able to establish the gold's price. (Contrast this with the current system in which the price is established by the bids on a vast supply of paper gold backed by nothing physical at all.)

Got it. "No gold, no price. You have some gold... ah, yes, and it is authentic. Now we may negotiate. Oh, you don't want dollars? All right, how about..."

If it works for gold, then maybe we should do the same - MTM - with all goods.

Sir TC: "I could say more, but I fear I have already tried the patience of the majority of our readers here."

A frictionless world offers neither grip for the hand nor stimulation for the mind. Say on, and feel free to try mine (grin). I confess ignorance of many matters involving finance and trading (perhaps the MTM IMS will simplify that too?). That's one reason I'm here - to learn - and I appreciate every single Thought (and the patience) that everyone takes the time to post here, even if it raises the thermostat a bit. I just wish I could recall it all when needed!


968The macroprudential approach to financial stability#1322805/18/05; 07:58:37

Keynote address by Mr Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), at the conference entitled "Monetary Policy and Financial Stability", hosted by the Oesterreichische Nationalbank (Austrian National Bank), Vienna, 12 May 2005.

"In the 1980s, direct regulation of credit markets and capital flows was dismantled in many countries. This has prepared the ground for an expansion of the financial system at a faster pace than other parts of the economy. In this process, the financial system has gone through important structural changes and become more complex. The instruments have become more intricate, the activities more
diversified and the risks more mobile. As a result of increasing cross-industry and cross-border integration, financial systems have also become more interwoven, both nationally and internationally.
In parallel with the strong growth of the financial system, we have seen more frequent instances of widespread financial distress. The resulting macroeconomic costs have often been sizeable. Financial crises have typically been associated with boom and bust cycles in asset prices and credit. Due to sharp growth in house prices and household debt in several countries in recent years, the question of
whether monetary policy should be used to mitigate such developments has received increased attention."

"Given an understanding of what financial stability should imply, the authorities can analyse potential threats to financial stability. There are two complementary approaches:

In the first approach, we need to focus on risk factors originating within the financial system. Institutions, markets and infrastructures are continuously faced with risk factors such as credit, liquidity and market risks. Analyses have become even more challenging in recent years as the financial system has become more complex and interwoven both across industries and borders. The increased complexity of the financial system is illustrated by the rapidly expanding market of credit derivatives.

The second approach deals with risks originating from outside the financial system. This field has increasingly been recognized by researchers and policymakers in later years. Strong growth in debt and asset prices, as well as macroeconomic disturbances like a surge in commodity prices or the unwinding of large imbalances in the world economy, can ultimately affect financial stability in a negative way."

"The evolution towards larger cross-border banks makes the issue of responsibilities more complicated. In the event of a crisis, central banks, supervisory authorities, political authorities as well as deposit guarantee funds in several countries will be involved. In contrast to the national banking crises in Norway, Finland and Sweden in the early 1990s, a similar crisis today would most likely involve authorities from all four Nordic countries. Therefore, it is
important to establish guidelines in advance to ensure effective crisis management. A special challenge will be to establish leadership. With four ministries of finance involved, the choice of leadership will not be straightforward."

"The traditional view is that the host-country authorities are responsible for subsidiary banks, while home-country authorities are responsible for branches. This view is closely linked to the legal difference between subsidiaries and branches. Subsidiaries are independent legal entities, while branches are not legally independent from their parent bank. However, host country authorities have little influence over foreign banks' crisis management. One of the key issues is whether the home country authorities, in a crisis situation, should be obliged to take into account the effects of the crisis in other countries where a bank has branches with extensive activities.
There are arguments to suggest that home-country authorities should have more responsibility for host
banks also in a subsidiary bank structure. This would reduce the number of authorities that banks
have to relate to. It is also in line with developments in banking where an increasing number of
cross-border banks are organised as global firms with subsidiary structures under central
The question of coordination is far from being solved. One possible way forward is to transfer some responsibility to supranational institutions. As transfers of responsibilities imply transfer of control, this solution is not a simple one in political terms. In the EU, the idea of a European supervisory authority has so far met resistance. A fundamental problem -- especially in the case of a financial crisis -- is the lack of a corresponding supranational fiscal institution. Today, any financial support must be granted by national authorities. Without formal supranational solutions in place, it is all the more important to ensure cooperation between the central banks and supervisory authorities involved. The fact that a
large share of the financial institutions in the new EU member countries are foreign-owned makes this issue even more relevant."

"Also, whileauthorities may regulate financial institutions, market outcomes are difficult to control. Risks may be transferred through the market, away from the regulated institutions, only to show up somewhere else."

"One view is that an explicit and proactive monetary policy response to financial imbalances is neither desirable nor feasible. A number of concerns have been raised to explain this view.
First, it is well documented that asset price bubbles and financial imbalances are very difficult to identify ex ante. Second, the appropriate timing of a proactive monetary response is likely to be difficult to determine, given the lags in the impact of monetary policy. Third, even in the case where the central bank knew that financial imbalances were building up, the size of the interest rate rise needed to reduce the imbalances might be so large that it could lead to a severe economic downturn."

".... investors may "undervalue" the risks they take
on if they expect that the central bank will act to offset future financial instability concerns."

"Mr. Bernanke's quote recognises the channel between the stock-market boom and incipient inflationary pressures.
Mr. Issing focuses attention on financial imbalances on the grounds that strains in the financial system may conflict with price stability in the long run.
Mr. Heikensten calls attention to the possible repercussions of financial imbalances on the real economy in a situation where the household debt burden is high and interest rates are increasing rapidly."

"Seen from an institutional perspective, flexible inflation targeting is becoming an increasingly common monetary policy regime. With a target horizon that is forward-looking and sufficiently flexible, it is possible to take into account the impact of potential financial imbalances on future inflation and output."

"The financial system in itself has changed. Its instruments have become more numerous and more sophisticated. Positive welfare effects are gained because of greater efficiency and more opportunities in the market. The flip side of the coin is that increased complexity makes the system less transparent and harder to follow. This development is bound to influence the way authorities pay attention to financial stability issues."
Please, share your thoughts...

968Reversing the Polarity -- Bretton Woods revisited ?#1322815/18/05; 08:12:20

"Is oil priced in dollars or are dollars priced in oil?"

"In order to do that we need to re-examine the monetary unit itself. It is possible to conceive of a global "petro-dollar" - based upon a set amount of energy - which would be capable of fulfilling a role as a genuine alternative to the dollar as a global means of exchange."

"This would literally "reverse the polarity" of Money to base it upon Value, rather than upon a claim over Value created by a Bank out of thin air."
The current IMS is desperate !

KenoSilver#1322825/18/05; 08:22:11

On top of all that has been written this morning,and all that is beginning to transpire in the bond pits'someone or some group is calling for delivery of this months silver in a rather large way. Gata love it. Good luck to all.
968Addendum#1322835/18/05; 08:28:22

What a thought ! To prolonge to life of the $-numeraire by putting it on an 'amount of energy-standard'. They don't understand that 'energy/oil' favorises Another currency as means of exchange.
Galearis@ Keno, all: a silver heads-up#1322845/18/05; 09:21:49

Been watching the developing crisis at the COMEX silver vaults all month, and after day three of this (delivery) month the conclusion seems to be holding that there is a run developing on the remaining silver stocks at the COMEX. On Friday the 13th there was a story (sorry no link) out of India that that countries silver stocks would be made available to the market. This amounted to 5 tonnes of gold and 1,670 tonnes of silver. Thats about 53,000,000 ounces or perhaps 3/4 of their central bank supply. Quite the coincidence.

At the same time we have suddenly some 11,000,000 ounces of silver being called on for delivery out of the COMEX warehouses. To put this into proper context, the average delivery of physical runs about 1,500,000 ounces. 11,000,000, if it changes ownership, will represent about 1/4 of the remaining registered (available) stockpiles of silver on the COMEX and roughly 7% of the remaining above ground world silver supplies . This includes the remaining India stockpiles (which cannot be sold without parliamentary consent). The India story would seem to be a scare tactic that we have all seen to often in the gold market arena.

In other words, it would appear that the run on the remaining COMEX silver may have begun. It is Ted Butler's contention that if people desire to take delivery of COMEX silver,,,,that delay would be inadvisable. Which to me is saying the same thing.

I believe that this is news to the folks on USAGOLD so I thought I should drop in for this little heads-up.

Can we say "dead market"? Yes, I thought we could!



968ECB Press Release : 18 May 2005 #1322855/18/05; 09:55:28

18 May 2005 - Memorandum of Understanding on co-operation between the Banking Supervisors, Central Banks and Finance Ministries of the European Union in Financial Crisis situations.

See link.

It seems that suddenly everyone is preparing for a financial crisis ???

USAGOLD / Centennial Precious Metals, Inc.This offer is open to newcomers and clients alike. Great Prices -- Call Today!#1322865/18/05; 10:07:00

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GoldiloxDx Oxcillations#1322875/18/05; 10:09:02

It seems like the swings are getting wider and the frequency higher.
CoBra(too)@968 - Re: Jurgen Stark #1322885/18/05; 10:14:32

A most powerful message, meaning that securitation only means shifting the real risk to the "Endverbraucher", the consumer of last resort and some; In effect we're talking of socializing the risk on the broadest base! - And loading it off on the totally unsuspecting and unaware public and households.

A game of poker played by governments, bankers and corporocracy clearly played by card sharpers wishing to prolong the charade. A charade, which may be in the throes of its endgame; And that may be exactly why it has become so dangerous to our liberty, freedom and not least to our financial health.

A phenomenon, which may not be new though at these horrendous levels of debt at least unprecedented in the history of mankind.

As you also brought to our attention the ONB (Austrian National Bank) seminar earlier this month, I'd like to applaud you for your perserverance, as I concluded monitoring the event after hearing what Klaus Liebscher (gov. of ÷NB)had to say in his wellcome address.

Thanks for posting it - as we the sheeple may take solace of still being able to acquire real value at (officially) depressed prices.


PS: GC, thanks for your post. Will have the first instalment of the SNB Gold Saga online in a few days. Stunning - and I believe it's real, as you may conclude from the evidence provided.

GoldiloxJapan says cannot easily change FX reserves makeup#1322895/18/05; 10:24:58


TOKYO, May 16 (Reuters) - Japanese Finance Minister Sadakazu Tanigaki reiterated on Monday that the ministry cannot easily change the currency components of its massive foreign exchange reserves, most of which are believed to be in U.S. dollars. He added that keeping foreign currency-denominated assets in the reserves stable and liquid comes before seeking profits. Japan's reserves are the world's largest and stood at $843.6 billion at the end of April.

"We cannot easily change the basic makeup of foreign reserves," Tanigaki told a parliamentary committee when asked about the ministry's portfolio management of the reserves.

Sinclair Comments:

There is no way that central banks can sell dollars for the reasons you outline. They can, however, hedge their dollar positions into strength, are doing so now, and will continue that practice. However, that is not the salient point. As you can see from the charts of Japanese reserves in the article below they have gone geometric with respect to the rise in their US dollar reserves.

Markets are made by momentum and not by absolute levels of supply or demand. The momentum of accumulation of dollar denominated items has tanked. Rather than selling US treasury instruments, they are hedging them into this rally and cutting back or simply stopping buying new US dollar denominated instruments.

This is revealed in the TIC figures and will in time bring the TIC figures from net buying of US dollars to zero. There is no more important figure than the TIC yet it is somewhat over the head of most observers.

GoldiloxChina broadens forex system#1322905/18/05; 10:31:00


SHANGHAI, China (Reuters) -- China launched a new foreign exchange dealing system on Wednesday that allows domestic trading in currencies other than the yuan, a milestone in the country's effort to reform its tightly controlled currency regime.

The system, allowing trade in China in eight more currency pairs, came as the U.S. Treasury warned that Beijing could be labelled a manipulative trading partner unless it took swift steps toward a more flexible yuan.

The China Foreign Exchange Trade System (CFETS) said the new system hosted trading in the U.S. dollar against the euro, yen, Hong Kong dollar, British pound, Swiss franc, Australian dollar and Canadian dollar, plus the euro versus the yen.

Sinclair Comments:

An upward revaluation of the Chinese Yuan will put irresistible upward pressure on the currencies of China's Asian trading partners for speculative and trade reasons and will relieve China of the need to buy dollars upon which the US is so seriously dependent because of its massive Budget and Trade deficits.

There is no fundamental question that an upward revaluation of the Yuan or its float against a basket of currencies would be a major blow to the dollar by the natural reaction to reduce international dollar demand that will not be offset by higher US interest rates. Therefore, no matter how the market reads it please be calm in your positions as long as you avoided the evils of credit. If your positions are on margin, then you have not taken my advice in gold anything.

At the very least, opening China to world markets for speculation in various currencies is like opening Pandora's box. The Chinese are the world's greatest speculators and they are proud of it. The $2.6 trillion dollar per day currency market just got a boost to probably $4 to $5 trillion per day.

In retrospect, the US hard line against China today opened the Pandora's box that will in time eat the dollar to pieces. The Chinese are master chess players and their reaction will in time be known as the Yuan to Dollar "Check Mate."


Concern in the Far-east about the levels of US Dollar reserve ratios is an interesting story to watch. The shorter-term market seems to be either ignoring this, or expecting it to somehow aid the dollar. Sinclair seems to differ with this analysis.

geTownCrier#1322915/18/05; 11:16:17

I think we agree that, in the "freegold" regime, gold does not check or dampen the credit expansion.

That means, the "Council Managers" shall decide whether to restrain the credit or to let it run free. There was a link to MacKay's book at this site, a few days ago. Past managers were terrible, how shall the future managers perform?

TownCrierge, how shall the future managers perform?#1322925/18/05; 11:46:35

Insofar as a market-oriented system prevails around the world, some managers may be more focused on domestic objectives while others are more focused on a wider scope, but generally each group will find itself under competition from each other. Insofar as there might be advantages in expanding the customer base, the managers will have more or less an incentive to deliver a useful (stable) product.

And insofar as we customers are free to take independent action in our selection of savings, by choosing a larger or smaller portion of gold savings vs. currencies as a component of our portfolio we effectively cast our votes in rating the performance of the various aforementioned managers.

Bottomline: While we can't stack the deck, at least we can make the best of the hand we are dealt.


Gandalf the WhiteSir Smeagol says ---#1322935/18/05; 11:50:45

"I could say more, but I fear I have already tried the patience of the majority of our readers here."

A frictionless world offers neither grip for the hand nor stimulation for the mind. Say on, and feel free to try mine (grin). I confess ignorance of many matters involving finance and trading (perhaps the MTM IMS will simplify that too?). That's one reason I'm here - to learn - and I appreciate every single Thought (and the patience) that everyone takes the time to post here, even if it raises the thermostat a bit. I just wish I could recall it all when needed!

Please continue, Sir Smeagol !
DEEP thinking is always needed.
Thanks from "The Wiz" and ALL the Hobbits.

TownCrierNEWSFLASH -- German 20 Marks#1322945/18/05; 12:00:25

USAGOLD-Centennial has been able to offer great pricing on these gold German 20 Mark coins because, knowing a good deal when they see one, they committed to a very large allotment. It's all about transactional efficiency -- along with cooperative spot prices and a network of who you know.

Anyway, the point of this post is that in this first 24-hours of the offer, this multi-thousand coin cache is 75% sold out. Direct evidence that that's how popular they are, and also evidence that USAGOLD-Centennial's clientele also know a very good deal when they see one!

Don't delay, phone in your orders today!



USAGOLD / Centennial Precious Metals, Inc.Avoid the crowds; buy right and prepare your portfolio BEFORE the panic#1322955/18/05; 12:23:55

TownCrierGreenspan could stay at Fed a bit longer -- Wash. Post#1322965/18/05; 12:52:28

WASHINGTON, May 18 (Reuters) - The Bush administration is considering whether to ask Federal Reserve Chairman Alan Greenspan to stay in office a few months past the end of his Fed board term, which expires on Jan. 31, The Washington Post reported on Wednesday.

The newspaper said the delay would give the White House more time to conduct the search for a successor, which could include corporate leaders.

^-----(from url)----^

PRocrastination... fearful that the system won't react well with the "shock" of a new pilot?


KenoGalearis Silver Squeeze#1322975/18/05; 13:07:43

You have hit it on the head fine sir. Silver will now lead the way up for all metals.Possibly time to throw out the T.A. charts. Mind you, not for good but just for a while.
Federal_ReservesCPI#1322985/18/05; 13:31:57

Despite YOY inflaton rates of 3.5%, and a whopping last 3 months annualized average of 6.2%, just about ever pundit was crowing about how low "core" inflation is. This is good news for gold holders, silver even more - it means the policy makers continue to fool themselves and the public about their irresponsible policies such as holding the FF rate (3%) below the inflation rate. Back in more conservative times (30 years ago), there would have been a panic about CPI rates this high, in fact NIXON slapped on price controls when they hit these rates. For now, the policy makers only consider wage hikes inflationary. Well COLA and other increases are not based on the the core, they are based on the all items index. And inflation in goods often leads wage hikes. The old cost push model.
TopazSilver delivery.#1322995/18/05; 13:57:12

This one came out of the blue, 1600 and with 2000 odd contracts still on the table for May ...what can you say but "Hi-Ho"

Augurs well for Jun Au and could cause a pre-delivery runup in PoG as shorts cover to negate delivery exposure.

SmeagolGold lease rates...#1323005/18/05; 14:33:46

...are beginning to show an upward bias lately.

Are there lease rates on silver, and if so, what are they doing?


TownCrierSmeagol, comments#1323015/18/05; 14:55:35

Smeagol said:
"I find it suspiciously and uncharacteristically altruistic that governments/CBs would, rather suddenly from a historical viewpoint, drop the reins on gold - ALL gold - and let it run..."

Randy response:
Given your realistically suspicious perspective, rather than see this as an altruistic gift of governments and monetary authorities to us lilliputian gold savers of the world, maybe you should see it from the angle where it benefits themselves.

Almost anywhere you look these days in the news it is not hard to find comments where governments/central banks (South Korea, Japan, etc) seemingly have excessive dollar assets with no easy way out of the tightly controlled position.

Maybe you should look at a freegold regime as their "self-serving" solution to this old and growing problem -- a solution that also happens to benefit us humble yet fortunate gold savers below the radar screen.


I suggested an essential key of the freegold regime will be centered around the surety of gold reaching the hands of the buyers, you suggested the following.

Smeagol said:
"I think the task of keeping any physical freegold regime out of the reach of fickle political will over many generations to be of far greater concern... many orders of magnitude more difficult than counterfeiting or physical security issues or ensuring delivery of a gold shipment. I feel there will be many working to discredit the proposed benefits of a free-ranging gold price."

Randy response:
I wonder if you are foreseeing complications that are actually trumped by more simplistic and basic truisms.

The reason the goldmarket isn't free (uncontrolled) currently is because there remains somewhat more than a modicum of cooperation in the present international SYSTEM (sorry GAB) as covered by Belgian in a couple recent post, one most recently being Belgian (5/15/05; 14:26:25MT - msg#: 132183). There are ample systemic avenues for the rerouting and diversion of physical market pressures into the web of "undeliverable papergold" -- a vast array of derivatives which serve to dictate the price of the metal.

Human nature being what it is, people tend to like to GET what they pay for. However, Nixon's decision to cease gold redemptions in 1971 posted an enduring signal that along with national sovereignty comes a "default privilege" which trumps international contracts regarding who gets what in the case of mutually desired physical assets.

That is all to suggest the truism that if international law cannot compel the cross-boarder delivery of gold, then, in fact, the legs have effectively already been cut out from under any "REAL" value that papergold contracts might have ever had.

You see, it is only the vestigial remnants of cooperation in our international monetary system that continues to provide a market for this web of diversionary papergold derivatives. It goes hand in hand with the vestigial support for the dollar-centered IMS itself.

Thus, if the international parties participating in the dollar-system are agitating against its flaws and limitations, the same maneuvers that will allow it to be cast aside will also provide an opportunity (nay, a NECESSITY) to cast aside the counterpart papergold illusion to unleash the present value of all gold already in hand.

It then becomes a small matter (learned definitively from 1971) that an international papergold system is not worth the paper it is written on, and human nature on every level being what it is to get what you pay for, a barest minimum of (Trail)"guiding" international framework will help ensure that an insistence on physical gold will trump an internationally unsupported market of ambiguous papergold. That is, in an IMS paradigm shift that brings about an absence of internationally supportive architecture for the present system of papergold, the system of papergold will surely wither to the point of insignificance; the paper being only as valid as any rule of law that's willing and able to support it.

Just a few more thoughts.


R PowellGalearis // Keno // Topaz // Mrs. Calabash....#1323025/18/05; 14:59:03

Thanks for the heads up on (11,000,000 divided by 5,000) 2,200 longs standing for silver delivery. During years of mostly unsucessful efforts on my part to find, let alone analyse, definitive existing silver supply numbers, I was forced to accept the anual Silver Survey numbers and those of Morgan and Butler.

I did decide, years ago, that physical industrial supply was NOT being processed through the Comex. A simple comparison of deliveries versus industrial use confirms this fact. So, I thought, (and often opined) whatever eligible supply Comex offers is the "physical silver supply of last resort". If there are now longs standing for delivery, this might be the event we have long awaited. However, I remain suspicious as I have thought that the POS would spike up sharply before rumors (or confirmation) leaked out of large take-off from Comex. However, ..????

Thanks also to Keno for the encouraging words of late. I guess we'll certainly puzzle and bedazzle the technical traders if end users are really taking the last few 50 million or so ounces from Comex. Their charts will be totally useless. (big grin!)

Thanks too to Topaz for explaining his basis of why the stubborn dollar/POG may possibly break soon. The conundrum of bonds/rates/POG/etc. remains to be resolved. I hope you are correct! Thanks too for the link you posted which is my next read.

USAGOLD / Centennial Precious Metals, Inc.FREE Gold Information Packet...#1323035/18/05; 15:05:44

Galearis@ Keno re silver#1323045/18/05; 15:06:08

I should have said that so far it's at least 11,000,000 ounces changing hands. I haven't looked at the silver O.I. for today, but most of the damage has likely been done. There is a school of thought that speculates that the silver manipulators control only about 10,000,000 ounces of the silver in the registered catagory. If true, then already they are sorely pressed.

There are still some 51,000,000 ounces available in the registered catagory. O.I. is at record highs for a this time into the delivery month, shaking out the O.I. with low spot did not work and now with silver coming up off its lows is this to encourage a cash-out of contracts over standing for delivery? Anything is possible when the CFTC is part of the PPT.

T.A.? T.A. does not work with manipulated markets, any markets. Most are presently finding out the hard way. In a rigged financial system dominated with derivatives and chart motivated behaviors, it is relatively easy to develop a chart reality that is at odds with the truth.

In commodities like silver,,, there is so little of the metal left to underpin the reality of the derivative storm circulating around it, that the end game is inevitable when the smart players realize that the end game is at hand. At this point the money stops chasing more paper and instead chases the metal; the whole thing then collapses back hard on the real fundamentals.

The physical buyers, the minority, proceed to vandalize the majorities' private but crooked little money game. That is a upside-down world that has defied a real market for much too long. No more having the cake and eating it too. The piper gets paid in the end too.



MKAll. . .the new USAGOLD information packet#1323055/18/05; 15:28:25

Since this info packet is now online, you can request it again even if you've already received a packet in the past and Jill will put your through to the page. Those of you who haven't read some of the materials included in the packet, this is truly a first-class education in practical economics, gold and why it should play a role in every investment portfolio.

We welcome your friends and family. Just have them get in touch with This email address is being protected from spambots. You need JavaScript enabled to view it.

Many thanks and best wishes. . . . MK

MKHere's that info packet link#1323065/18/05; 15:31:02

All are welcome
USAGOLD Daily Market ReportPage Update!#1323075/18/05; 15:35:00">
The Daily Gold Market Report has been updated.

If you are considering investments in gold we invite you to">request our free introductory information packet detailing the products and services offered by USAGOLD ~ Centennial Precious Metals. We welcome your inquiry and look forward to working with you.

Wednesday Market Excerpts

"The big story for financial markets today was the Hong Kong Monetary Authority news, and whether that's a precursor to what China might do," said a desk trader in New York.

Markets were caught off guard Wednesday after HKMA said it would tweak the territory's currency peg to fend off upward pressure on the Hong Kong dollar from speculation over possible revaluation of the Chinese yuan.

Some in the market felt this might be a prelude to Beijing loosening controls on the currency long pegged to the dollar.

Precious metals posted gains in New York on Wednesday, boosted during the latter part of the session when the euro accelerated to the upside against the U.S. dollar, traders and analysts said.

Gold also seems to have some decent underlying physical demand, they added.

COMEX June gold futures settled up $2.10 to $421.90.

"Gold continues to trade inversely to the dollar," says Peter Grandich, publisher of the Grandich Letter. "The market is fixated on that.

"Gold also continues to hold above key support levels, which is bullish long term."

He put this support in a range of $415 down to $410.

Dave Meger, senior metals analyst with Alaron Trading, also cited currency factors. He pointed out that the dollar index was unable to extend its recent several-month highs and has pulled back.

"That allowed the gold to move higher, as the gold is still attached very closely to the dollar."

Grandich commented that the gold market also seems to have some underlying physical demand.

"Physical offtake is really strong on any pullbacks," Grandich said.

After gold's recent pullback, Meger said he anticipated gold below $420 would result in some differential in how the metal reacts to the dollar.

"We felt if you saw continuing strength in the dollar, yes, it would add some light pressure to gold. But we felt if you had any downside move in the dollar, gold would make a larger reaction to the upside than the downside."

----(see url for full news, 24-hr headlines, market quotes)---

GoldiloxPension Mess#1323085/18/05; 15:43:26

A couple of republican congressman are on Kudlow and Co. touting the latest Congressional pension reform plan. Wexler is ready to lift the payroll cap on SSI.

The Republican pension reform plan hikes the contribution of employers to the PGBC, essentially expecting that pensioners will have to rely on the government for both SSI and pensions. No mention of Government pensions being lumped into the pot, as these guys want to play roulette with everyone's pension but their own.

Larry thinks that purely private funded plans are the answer, but he ignores the fact that these plans are continually underfunded by companies who maintain huge cash reserves while skipping the act of funding their plan.

Everyone thinks that paying more in is the answer. No talk about returning SSI funds to their original purpose.

Gee - I wonder which crooks we can really depend on?

SurvivorPension Mess and SSI#1323095/18/05; 16:41:15

". . .Everyone thinks that paying more in is the answer. No talk about returning SSI funds to their original purpose."

Granted that most of the "official" SSI rhetoric sounds like double-talk, but even with that caveat, the discussion sounds to me like the fund goes dry in 2042 because thats when all those T-bonds have been sold back. If the bonds are sold back, then the funds have been returned to their original purpose haven't they? (This doesn't address where the money would come from so the treasury could buy back the bonds, but that's a separate issue.)

On a related note, it seems to me that by 2042 the demand on SSI would be declining since the baby boomers would mostly be pushing up daisies. Granted the boomers will have put a pretty good dent in SSI by that time - but I never hear a word about declining SSI demand due to the population leveling out. I suppose the changing population factor doesn't play into the SSI doomsday scenario we are supposed be lapping up.

- S

CometoseGold's future by Jim Sinclair#1323105/18/05; 17:01:02

Mr Sinclair covers many facets of Gold's opportunity and identifies crack after crack after crack in the world's financial fortifications......
Says we need Gold for insurance ......and in his underlying foundational statements relates that there are specific standards and principles for conducting business corporately and individually . It is the abandonment of these bedrock foundational parts that beg the individual to investigate the need and evaluate the level to which one would ascribe to said insurance.

Mr Sinclair covered a little history and related price points that are associated to U S DEBT .....and stated that Gold took off in the seventies after the US failed to balance it's trade in money flows for three months in a row ... He called this TICS ....said you could look this up on the web. I think we had our first miss last month .
Gold will then begin seeking a price that matches the price necessary for our treasury Gold to pay off our Treasury obligations. In this regard he said that 529 is a tipping number.....

He said that 1650 is the price that suits our current treasury obligations and that the number is rising with the fiscal irresponsibility .

He said that this time , he is sure after breaking the old high which Gold may have several tries at that it will move higher and remain at higher levels for a period of extended duration ....

All of this is all the more interesting today, in light of the latest Chinese forex opening to trading of foreign currencies.

GoldiloxSSI #1323115/18/05; 17:26:01

@ Survivor,

I'm not talking about the supposed trust fund that is pretty much "water under the bridge".

My concern is the $180B that annually continue to be diverted to off-budget adventures, guaranteed government pensions, etc., while Sir AG speaks almost flippantly of "Pay-go" to Congress.

As long as the admin cuts income taxes and replaces their loss with excess SSI and excessive borrowing, there is NO solution - only more PR.

The problem has nothing to do with demographics, as it is really about PR fraud on the tax front.

Fixing SSI means fixing the budget-tax imbalance so that the funds workers pay to fund their retirement are NOT being distributed to Iraqi contractors, sovereign bribes, and other government pork projects (like the $100M bridge to an island inhabited by 50 people in the latest Allocation bill).

No one of political substance suggests that their own government pensions be re-evaluated, or that using SSI to fund special-interest wars where up to 1/3 of the funds are untrackable, or adding 4000 pork riders to an allocations bill might be indicative of the problem itself.

A tax-payer sponsored initiative to reform allocation might be in order, as Congress sure isn't addressing any of the issues. Notice Congress invites high-profile ball players to testify, but NEVER ordinary tax-payers.

They're too busy trying to get PR brownie points by latching onto Terry Schiavo's plight and baseball's steriod issue. Never mind that the food industry pumps us all with the same steroids daily! They sure don't want to interfere with a profit center of that magnitude for the sake of public health.

Mark Twain once said. "suppose an idiot went to Congress", but that might be a refreshing change from the bought-and-paid-for crooks who now inhabit those hallowed halls.

When the pensions all fail and SSI is watered down to be worth about a loaf of bread a week, everyone will ask, "Where did all the money go?"

DruidPIRATES REPRISE#1323125/18/05; 18:53:20


"To say that today's news headlines are chock full of reporting about possible hedge fund problems arising from the downgrade of GM and Ford's credit ratings is an understatement. In fact, news outlets like yourselves at CNBC have flooded the airwaves with reports and have even gone so far as to investigate this story and question names like GLG partners as to whether or not they have been negatively impacted by this developing situation with the automakers' debt. We aren't the only ones who have noticed this development, with folks such as Eric Fry at the Rude Awakening reporting,

"..If a few big hedge funds are in trouble, as CNBC's Maria Bartiromo has been breathlessly reporting, are a lot of us little investors also in trouble?.."

I say Kudos to both the Rude Awakening and CNBC on this point. Now I have a question along these same lines that we are all owed an honest and frank answer to:

When officialdom boldly claimed that a huge increase in January 05 TIC data was in response to Caribbean Hedge Fund buying of long US Treasury obligations back in March of 05 -- Why did news outlets like CNBC fail to report concerns regarding massive implied hedge fund losses in these Caribbean based funds then? If anyone cares to recall, the yield on 10 year treasuries was about 4.00 % in January, when these subject securities were allegedly purchased by hedge funds - and by the beginning of March the 10 year yield had ballooned to 4.50%? Blood should have been running in the street then, which media outlets like CNBC should have been reporting on. Instead, they remained silent.

I would like to draw your attention to January TIC data that was published by the US Treasury March 15, 2005. Make special note of the reserve holdings of China, Japan and Great Britain for the month of Jan. 05. This data set [which appeared in the Pirates of the Caribbean article] was copied from the Treasury's web site in March 05:"

Druid: Go to link for the data sets and the rest of this excellent commentary. In a nutshell, if you're new to this site and haven't been doing so, bypass the idiots on the parrot box and go directly to the Fed's and Treasurey's websites to mine data that might remotely resemble factual data. And even then, parse with care.

SurvivorSSI, cont.#1323135/18/05; 19:09:31


So, you can see where SSI funds are getting diverted apart from the money used by SSI to purchase T-bonds? That's the part I'm not clear on. Can't figure out how to get a view of the diversions happening. No problem believing it, however.

In the long run, I'm depending on the Golden Path as my primary fall-back position of course, but I have as much interest in getting back my SSI contributions as anyone who has watched those involuntary contributions for a lifetime. As someone born before WWII, I may still have a chance.

- Survivor

Chris PowellGreenspan may be asked to stick around#1323145/18/05; 20:12:11

Long enough to take the blame?
Chris PowellAlteration of U.S. govt. bond data gives the game away#1323155/18/05; 20:13:21

Latest GATA dispatch.

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Smeagol968's post, comment (snicker)#1323165/18/05; 20:27:16

(still no Smeagol mask, for now. Having too much fun.)
Keynote address by Dr Jurgen Stark, Vice President of the Deutsche Bundesbank, at the symposium on building the financial system of the 21st century - an agenda for Europe and the United States, Eltville, 23 April 2005.

I'm still trying to figure out if this is satire.

"The taxpayer, ie again private households, is the true holder of governments' financial risk."

Hahahaha! That pipe-weed you're smoking, it must be very good. Risk? Caveat emptor! They should have checked with me first. I would have told them it was an awful risk, and that they would likely lose most of not all of their money!

Stark: "As ultimate bearers of all financial risk, private
households also feature as the ultimate absorbers
of shocks to the financial system."

I feel so privileged to hold the title of Ultimate Bearer of All Financial Risk! Hahahaha! And look! My home comes with a unique debt shock absorption system FEATURE? Ooooohh...Ahhhhh... Hahahaha!

Mr. Stark, you should do stand-up comedy. Surely you jest? For one example, taking the amount of dollar debt IOU's extant (what, 1,000,000 billion maybe) and dividing them up for 'value redemption' by the number of slaves -er, homeowners in the dollar's home country
(140 million maybe) comes out to a laughable amount (7,150,000) that for my part simply will not be paid - I won't live that long (snicker). At best I can absorb what debt I have incurred (about $35,000), and all my worldly possessions may absorb ten times more. Having fulfilled my official duties and shock absorbing function to my utmost, I fail to absorb any more than a small fraction of what 'someone' thought I could. Again, I could have TOLD them it
wasn't worth it if they had asked me. Oh, well. Easy come, easy go, right? But maybe in Germany things are different?

Stark: "New techniques of risk transfer have greatly enhanced one of the core functions of the international financial system: the process of risk allocation and risk reallocation. A vast array of formerly non-tradable risks have become tradable. Financial institutions can now shed risks that used to be stuck in their balance sheets."

I didn't know one of the core functions of the IFS was to try to foist risk onto unsuspecting people or to shuffle it around and hope it goes away. Thanks for enlightening me. Are there other wondeful functions?

The IFS would be funny if there weren't so many people dying of the consequences.

Thank you, Sir 968!


The Invisible Hand1,600 hedge funds will go bust#1323175/18/05; 20:32:32

We are heading into a slowdown and slowdowns inevitably put pressure on the world's financial system. So where will this hit?
Banks and other financial institutions will have put themselves in such a position that whatever happens, they will be secure. So a systemic breakdown in the financial markets triggered by something big like that is unlikely. Even a spike in the price of oil, now less likely with the downturn, could almost certainly be accommodated.
If, however, you ask anyone in the City where the crash will come, the answer at the top of the list will be hedge funds. Today the London-based Centre for Economics and Business Research predicted that 1,600 hedge funds would go bust over the next two years and cheerfully suggested people put their money on the horses instead.
Alarming, but is the alarm justified? The starting point is to be clear that hedge funds do not hedge. In fact they do exactly the opposite, for to hedge in normal usage is to reduce risk by laying off a bet. Hedge funds make bets.

GoldiloxSSI Diversion#1323185/18/05; 21:27:50

@ Survivor,

Each year, the SSI proceeds generate about $180 B more than is paid out. This money is then "borrowed" by the general fund and replaced with bonds that given the inflation that will be necessary to cover them are next to worthless. Think of what these excess SSI funds would be worth today if they were regularly put into physical for safekeeping, instead of the War Bonds that inspire TPTB to "borrow" even more for their power plays.

What this means is, as the admin is parading around like barnyard cocks crowing about "reducing" income and cap gains taxes, what they are really doing is cutting the income tax and replacing as much of the deficit as possible from the SSI fund. Representatives who suggest higher SSI collection rates are essentially co-signing the rape of the wage earner.

This not only shifts more of the burden to the worker bees, but leaves the SSI retirement vulnerable to failure by well known demographics issues.

As usual, TPTB are spending everything thay can and passing the debt burden off to John Q. like a hot potato.

As long as unlimited borrowing is the main revenue source for the federal government, the risk to the global financial system will continue to grow, and the taxpayer will continue to be saddled with that risk.

BelgianRe:#1323195/19/05; 01:06:39

Towncrier msg #132301 >>> "Brilliant " !
Your post + J. Stark (BIS) are fitting nicely together.
Stark is "adding" to the general idea that all casinos...included the financial ones...should be regulated...(read flushed). What a nice intro for the stability of freegold.
986 (the new Belgian Poirrot) has much more of this " responsible " Banker's stuff.
Please, 986...send the "Geruchte uber die activitaten der SNB in 2004" (Dietmar Siebholz) on the forum (in German).
If there only is the slightiest evidence for this rumor to be true...freegold is on its way.

TIH : Trillions of savers' units of account, that are pooled in "Funds", are getting their "return" (?) by outsourcing a fraction to the hedging gamblers. That's the reason for Stark's speach (loaded message).

968On Belgian's special request :#1323205/19/05; 01:28:02

Gerüchten über die Aktivitäten der Schweizerischen Nationalbank in 2004

In den Jahren meines Engagements bei Investitionen im Edelmetallbereich habe ich schon viele "vertrauliche" Hinweise erhalten und gut formulierte und wohl konstruierte Vermutungsketten zur Kenntnis nehmen müssen. In der Regel waren bislang diese Schein-/Informationen jedoch nur in der Fantasie des Kolportienden entstanden.

Aufgrund dieser Erfahrungen habe ich die nachstehend beschriebenen Informationen nur mit größter Zurückhaltung zur Kenntnis genommen; ich hätte die Informationen sofort verworfen, wenn der langjährige Geschäftsfreund, der mich über die Besonderheit der Informationen unterrichtete, sich bisher nicht als außergewöhnlich seriös erwiesen hätte.

Dieser Schweizer Geschäftsfreund, der über gute Kontakte zu Banken, zur Politik und zur Schweizerischen Nationalbank verfügt, unterrichtete mich über folgende konkrete und gut belegte Vermutungen. Ich gebe sie unter den üblichen Vorbehalten an Sie weiter.

Nach diesen Informationen hat die Schweizerische Nationalbank im Zeitraum vom 01.01. bis zum 30.06.2004 insgesamt ca. 1.150 Tonnen Gold, überwiegend in Form von Future-Kontrakten und Gold-Derivaten, aber auch in geringem Umfang in physischem Material erworben. Mein Informant konnte keine Bestätigung darüber erhalten, ob diese Anschaffungen nur für eigene Rechnung der SNB oder für Rechnung von Dritten, z.B. Bankinstituten oder Gesellschaften, die der SNB nahe stehen, erfolgt sind; lediglich die Menge der Anschaffungen scheint als gesichertes Faktum anzusehen sein.

Derzeit bemühen sich einige Partner in der Schweiz, den erst kürzlich veröffentlichten Jahresbericht der SNB nach Bestätigungen dieser Anschaffungen z.B. in der Berichterstattung über Derivate zu untersuchen und Nachweise sog. "Footprints" - also sogenannte "Fußabdrücke" im Bericht zu finden.

Ausgehend von der Annahme, diese Information könnte realistisch sein, stellt sich die Frage nach den Motiven. Hier ergibt sich nur eine Erkenntnis: Die Schweizer Notenbankiers sind ungeheuer clever! Wo alle Welt sich brüstet, ihre Goldbestände zugunsten zinsbringender Anlagen zu tauschen, wo ein Finanzminister (Großbritannien), der Hunderte von Millionen Euros an Schaden für sein Land wegen des Verschleuderns von mehr als der Hälfte des Goldschatzes zu verantworten hat, immer wieder den IWF anregt, sein Gold zu veräußern, handeln die Verantwortlichen der SNB bedacht und weise. Zwar wurde die Schweizer Regierung und die SNB durch die politischen Aktionen von verschiedenen Seiten und mit Hinweis auf die Rolle der Schweizer Banken zu Zeiten des Holocausts zur Teilliquidierung ihres Goldschatzes veranlasst (das dürfte noch sehr milde ausgedrückt sein), aber ihr nachfolgendes Handeln zeigt die Weitsicht der Schweizer Notenbankiers.

Es ist bekannt, das die SNB nahezu 1.300 Tonnen Gold (also ca. 50% ihres Bestandes von ca. 2.600 to) veräußern wollte, um einen nationalen Fonds zu bedienen, aus dem Sozialleistungen verschiedener Art gespeist werden sollten. Mit der Entscheidung zum Verkauf haben die Schweizer viel Druck aus dem Kessel genommen, der durch die diversen Interessengruppen systematisch aufgebaut worden war.

Wenn nun die Bankiers einen Teil der Erlöse dazu verwenden, einen geringen Teil der veräußerten Goldmengen physisch, den weitaus größten Teil aber mit Hilfe von Derivaten quasi zurückzukaufen, dann haben sie ihre Grundsätze (Gold gehört zu den wesentlichen Reservemedien) nicht aufgegeben, aber die Weltöffentlichkeit durch ihre Verkäufe ruhiggestellt.

Wirtschaftlich hat diese Aktion noch diverse Vorteile. Durch die geringen Rückkäufe von physischem Material wird der Kassamarkt nicht belastet, die aus den Verkäufen resultierende Liquidität wird nur in geringem Umfang in Derivate investiert, die quasi den "Rückkauf" des verkauften Goldes darstellen können und die SNB verfügt dazu noch über ausreichende Mittel, um aus den Liquiditätsüberschüssen die eventuelle Erfüllung der Future-Kontrakte oder Derivate bedienen bzw. einen geordneten Roll-Over sicherzustellen. Welch geniale Ausführung nach dem für die Schweiz so katastrophalen Medien-Vorspiel. Man kann den Schweizer Bürgern zu dieser Notenbank nur gratulieren.

Wenn diese recht konkreten Vermutungen zutreffen, kann auch eine bisher noch nicht beantwortete Frage der US-Commodity-Spezialisten beantwortet werden. Diese hatten bei der Auswertung der wöchentlichen COT-Statistiken (Commitment Of Traders = Offenlegung der Future-Geschäfte und der offenen Positionen aller Waren an der COMEX) ein bislang nicht bekanntes Phänomen beobachtet. Dieses Phänomen war die weitere Erhöhung der "Commercials" Shortpositionen in Gold bei gleichzei-tigem Aufbau größerer Longpositionen bei den "Large Speculators". In dieser Kategorie werden große Anleger, vor allem aber Hegde-Fonds, aber auch sonstige große Marktteilnehmer, die nicht in die Kategorie "Commercials" gehören, statistisch erfasst.

Bislang war der Aufbau von Longpositionen bei den "Large Speculators" (=Hedgefonds) immer in Gleichklang mit der Erhöhung der Short-Positionen bei den "Commercials" gesehen worden. Seit einiger Zeit wird aber am Markt vermutet, dass andere bislang am Markt noch nicht wesentlich in Erscheinung getretene größere Teilnehmer auftreten, die nicht den Hedgefonds zuzurechnen sind.

Zum Nachweis dieser Vermutung wurde aus den Daten abgeleitet, dass aus den Berichten der Hedgefonds deren Zurückhaltung zu Long-Engagements am Gold- und Silbermarkt (nachdem die Hedgefonds in der nahen Vergangenheit mehrmals von den "Commercials" vorgeführt worden waren) abzulesen sei. Wer - wenn nicht diese Hegdefonds sollte in immer steigendem Masse Longkontrakte im Goldmarkt anschaffen? Vielleicht ist diese ziemlich konkret geäußerte Vermutung eine Erklärung für diese statistische Besonderheit. Die starken Hände in der Kategorie "Large Speculators" könnten die der Schweizer Nationalbank sein.

© Dietmar Siebholz

GoldiloxMining stocks extend rally on weak rand#1323215/19/05; 02:19:31


South African stocks lit up on Wednesday with diversified miners Anglo American and BHP Billiton ignited as the rand maintained a weaker tone, but insurer Old Mutual and retailers fell.

Mining stocks rose on prospects of more profits from their metal exports, with the rand currency remaining limp a day after hitting a seven-month low as the ruling ANC called for a more competitive exchange rate.

"We have the story of the rand for the second straight day, BHP Billiton and Anglo have carried the market, and there has been a switch from retailers and industrials into resources," Kevin Barlow-Jones, a trader at Afrifocus Securities said.


Looks like exchange rate complaints are spreading.

TownCrierChina slams US and EU over textiles, denies currency manipulation#1323225/19/05; 02:59:01

(excerpts) -- Commerce Minister Bo Xilai blasted developed countries for arguing for global standards on free trade when they enjoyed absolute advantages but then placing restrictions when their interests were threatened.

Under World Trade Organisation (WTO) rules, such "double standards are not allowed," he said.

The US and the EU were unreasonably blaming China for rapid growth in its exports and were taking "protectionist" actions to counter this.

"This is unfair," he said, adding that these kind of moves "undermine the solidness of WTO rules and generate a negative impact on the ongoing round of (WTO trade liberalization) talks."

At the same time, China said the United States should first get its "own house in order" before charging that Beijing's currency regime poses a risk to its trading partners.

...US critics claim that Chinese exports in general have enjoyed a massive boost from an artificially weak yuan, placing Beijing under mounting international pressure to revalue the currency.

The US Senate is due to vote in July on a bipartisan bill that would slap a 27.5 percent tariff on all imports from China if Beijing does not scrap the yuan-dollar peg within six months.

^----(from url)-----^

The present system is grinding down with internal frictions because the 'lubricant' is of poor quality -- excessively sticky and not of uniform service.


PS. Thx B.

The CoinGuyInteresting Article#1323235/19/05; 04:11:40

Through the translator:

On Belgian's it special request:
Rumors over the activities of the Swiss national bank in 2004

In the years of my engagement in investments in the noble metal area, I have must receive already many "confidential" references and take well formulated and probably constructed supposition chains to the knowledge. As a rule these certificates had emerged until now-/information however only in the Fantasie of the Kolportienden.

Based on these experiences, I took the following described information only with largest restraint to the knowledge; I would have rejected the information immediately if the long-time business friend, who instructed me over the peculiarity of the information, had not proved, previously to be extraordinarily serious.

This Swiss business friend, that over good contacts to banks, to the politics and to the Swiss national bank orders, instructed me over following concrete and well belaid suppositions. I give it under the usual reservations at you further.

After these information, the Swiss national bank in the period of the 01.01 acquired. to the 30.06.2004 altogether ca. 1,150 tons of gold, predominantly in the form of future contract and gold-derivatives, but also in slight circumference in physical material. My informant could received no confirmation about whether these acquisitions followed only for characteristic calculation of the SNB or for calculation from third, for example bank institutes or companies, that nearly stand the SNB; solely the quantity of the acquisitions seems to look at as a secured fact be.

Presently some partners in Switzerland strive to examine that first recently published year report of the SNB after confirmations of these acquisitions for example in the report reimbursement over derivatives and to find proofs so-called "Footprints" - therefore so-called "foot impressions" in the report.

Coming from the acceptance, this information could be realistic, stands ask about that the subjects. Here only a recognition arises: the Swiss note bankers are enormously clever! Where all world to trade itself brüstet, its gold supply for the benefit of interest-bearing units, where a Treasury Minister (Great Britain) has to answer for, the hundreds of million Euros at damage for its country because of the dissipating of more than the half of the gold treasure, again and again the IMF encourages to sell its gold, act considered the responsibles of the SNB and wise. To be sure the Swiss government and the SNB became the Holocaust through the political actions of different sides and with reference to the roll of the Swiss banks at times the part liquidation of its gold treasure caused (that might yet very mild expressed its), but its following acting shows the expanse visibility of the Swiss note bankers.

It is confessed, sell wanted that the SNB almost 1,300 tons of gold (therefore ca. 50% of its existence of ca. 2,600 to) in order to serve a national foundation, out of which Social Security benefits of different type should be fed. With the decision for sale that took Swiss much pressure out of the boiler, that systematically had been constructed through the various interests groups.

If now the bankers use a part of the proceeds in addition, a slight part of the sold gold quantities physically to repurchase the by far largest part however with the help of derivatives quasi, they did not abandon its principles (gold belonged to the essential reserve media), but the world public through its Verkäufe quiet place.

Economically this action has yet various advantages. Through the slight redemptions of physical material, the cash market is not burdened, the liquidity resulting out of the Verkäufen will invest only in slight circumference into derivatives, controlled, that can represent quasi the "redemption" of the sold gold, and the SNB in addition yet sufficient means, around out of the liquidity excesses the possible fulfillment of the future-contract or serve derivatives and/or to guarantee an organized roll-Over. What brilliant execution after the media-prologue so catastrophic for Switzerland. One only can congratulate the Swiss citizens to this bank of issue.

If these quite concrete suppositions are true, also a previously not yet answered question of the US-Commodity-specialists can be answered. These had observed in the analysis of the weekly COT-statistics (Commitment Of Traders = disclosure of the future-businesses and the open positions all were at the COMEX) a phenomenon not well known until now. This phenomenon was the further increase of the "Commercials" Shortpositionen in gold in gleichzei-tigem construction of larger Longpositionen in the "Large Speculators". In this category, large investors, above all however Hegde-foundations, but also other large market participants, who do not belong into the category "Commercials", statistically are grasped.

Until now the construction had been seen by Longpositionen in the "Large Speculators" (=Hedgefonds) always in same sound with the increase of the shorten-positions in the "Commercials". For some time is assumed however at the market that other participants stepped larger until now at the market not yet substantially in appearance appear, who are not to be assigned the Hedgefonds.

To the proof of this supposition was diverted out of the data that out of the reports of the Hedgefonds its restraint is to be read to Long-engagements at the gold market and silver market (after the Hedgefonds in the near pasts repeatedly of the "Commercials" shown become were). Who did - if this Hegdefonds not should in always increasing mass Longkontrakte in the gold market anschaffen? Perhaps this rather concrete expressed supposition is an explanation for this statistical peculiarity. The strong hands in the category "Large Speculators" could be that of the Swiss national bank.

968@ TCG#1323245/19/05; 04:31:23

Thanks Sir Coinguy !!!
BelgianObservations + opinion :#1323255/19/05; 04:55:04

- When the dollar (exch. rate) weakens, an upholding Dow-index seems to follow immediately (ESF-PPT). Dollar support (defense) with stockmarket paper.
- When the dollar strengthens, the $-POO goes up, and devalues the dollar. Oil value needs/DEMANDS equal value, NOW !
OPEC will cut output in June, if OPEC thinks that there are enough oilstocks >>> Oil - its pricing !!! - is a SUPPLY market.
Opinion : The euro is already acted upon as a reserve currency.
Prodi and China : The EU likes a multi-polar world.
China : China and the EU share similar vieuws (wonder what that could be !!!) on "major" issues and have no unresolved problems. Wonder why Belgian (not mine) gold went to China !?

A nuclear Iran wishes to defend its "wealth". Iran/EU talks >>> think "between" the lines on these evolving events.

Thanks TCG.

Topaz3 Musketeers.#1323265/19/05; 04:58:43

Bond/Oil/DX are still out of whack somewhat with current Oil still owing me $5.
Dec05 Oil is holding up the front months in anticipation of a Bond reversal, with such a solid build-up into 4.4%, ain't gonna happen ...just yet!

Dartanyon (Gold) as expected is warming up for a pre-delivery month rally ...could get REAL interesting.

PNB@Goldilox#1323275/19/05; 06:09:05

What a Joke the ANC are!

It wasnt 3 years ago the government sued (was it Deutse Bank?) for driving the currency too low!

HenriThis must be the bottom#1323285/19/05; 07:53:57

Yesterday a random commodities broker was bending my ear about how I should be buying gold puts...his spiel was that he was just riding on the coat tails of another large trading group (I guess thereby distancing himself from any blame on outcome).

So I am only guessing but perhaps the real traders are looking to offload their puts onto the unsuspecting and not finding much of a market...too bad...I hung up on him

GoldiloxANC and rand#1323295/19/05; 09:26:45


So does that make the ANC a joke or the currency market a joke?

The currency raiders have ruined more countries in the last 20 years than all the wars have.

No wonder China soesn't want to pay the game by their rules.

USAGOLD / Centennial Precious Metals, Inc.See URL for more info on this popular coin!#1323305/19/05; 09:29:33

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Special discount pricing on German 20 Marks
German gold coins

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Call today, save today!

TownCrierFed open market ops -- $15.5 billion#1323315/19/05; 09:44:11

Federal Reserve today added $12 billion largely at sub-target 2.94 percent through 14-day repurchase agreements, another $3.5 billion at 2.96 percent via overnight repos. Market had been trading fine the FOMC target of 3%.


TownCrierHEADLINE: Russia proposes economic forum with MERCOSUR#1323335/19/05; 10:04:53

MOSCOW. May 19 (Interfax) - ...MERCOSUR comprises a number of Latin American nations, including Argentina, Brazil, Paraguay and Uruguay.

MERCOSUR plans to create its "unified physical infrastructure" and a common energy system in the near future, he said, adding that Russia could play a key role in these projects...

"We have brought materials about these projects and handed them over to the Russian party so that Russia's business circles can join them..."

^-----(from url)-----^

A small example... Sometimes an American-centric mind can forget that extra(outer)-American "globilization" can occur without a finger of the United States necessarily being in every pie.

How badly (desire) do outsiders need to maintain the reserve dollar is set against how badly (rotten) is it serving outside interests.

The fate is not in our (US) hands. Choose gold.


R PowellThe CoinGuy#1323345/19/05; 10:32:56

Thanks for the translation which was still somewhat hard for me to discipher. I guess I got the main point in the last line....

"The strong hands in the category "Large Speculators" could be that of the Swiss national bank."

Supposedly, those included in the "commercial" group in the COT reports are producers and/or end-users. All others are speculators with anyone either long or short more than 100 contracts (in gold) considered a "large speculator", sometimes refered to as the funds. Anyone else with less than the required size of contracts is placed in the "small speculator" category.

This system is fairly cut and dry for comodities such as corn, coffee or cotton but the differentiations when applied to a commodity such as gold become somewhat murky. Banks certainly are not producers but are they end-users or do they hold their gold as speculators? I would tend to think of the actual physical holding of metal as an end unto itself as that possession serves a specific purpose so I'd classify them as "commercials" but, the commodity is not consumed so are they end-users? Hey, are we spliting hairs here? To what end other than that we now know, I guess, that the SNB holds some of its reserves in derivative form and that position is listed under the speculative category reports. The overwhelming consensus here is that all derivatives are unstable speculation, so what's new? And so it goes, and so it goes, and....

R PowellHenri#1323355/19/05; 10:38:07

May I ask a question in regard to that broker who advised you to buy gold puts? Has he ever approached you with advice to sell options...options of any kind?
TIA, just curious.

USAGOLD / Centennial Precious Metals, Inc.Proven Reliability, Longevity, Quality and Professionalism ---- Invest with Confidence!!#1323365/19/05; 10:56:26

Clink!@ R Powell#1323375/19/05; 11:12:21

Maybe you have the problem of classification of actors in the Comex market the wrong way around. The reason is that gold and silver aren't really commodities in the first place ?!

R PowellClink#1323385/19/05; 13:13:41

As to the classification issue with Comex.
You may believe that gold is not a commodity if you wish. Call it whatever you like. I was merely stating the facts of the matter as they exist, to the best of my knowledge, in the hopes that I might add some information of value. Whether gold is a commodity or not does not change the reality of the Comex Exchange on which gold is traded or the manner in which positions on that exchange are reported.
Believe whatever you like, the whole economic situation is more than complicated enough for me so that I strive to assess the facts as they exist, not as someone else would like them to be.
Perhaps as you so vehemently believe, gold will someday be universally declared as NOT a commodity and it will cease to be traded as one. When that day comes, then we will have new facts and a new situation to deal with. Until then, I choose to deal with reality. My mind bending days of self illusion are long behind me. I strive to find and understand, as best I can, the truth. I can handle the truth.

TopazHey Rich.#1323395/19/05; 15:27:47

Whilst I too consider myself a "realist" and try not to stray into the La-La Land too often, I do have a soft spot for Gold (and Silver) that warrants a little slack.

Comparative Analysis shows us Both Gold and Oil are currently and persistently out-performing their associates at present ...Oil above its Bond, and Gold above it's alt-currencies.

We could-well be witnessing the early stages of a dual transition here, Gold from the alts and Oil from the Buck... long as we're aware of the possibility, the NEW realism, when it transpires, will not leave us with our Jaws agape.

R PowellTopaz#1323405/19/05; 16:31:42

"Whilst I too consider myself a "realist" and try not to stray into the La-La Land too often, I do have a soft spot for Gold (and Silver) that warrants a little slack."

Of course, yes. I'll agree with that. But I've never seen your "soft spot" cause you be state that someone's information is wrong simply because it doesn't fit in with the way you would like the world to be, no? Opinions are fine but they should be based on facts. The facts can be simply ignored when they contradict with our wished reality, indeed, people usually believe exactly what they wish to believe. We all get to choose. I choose to base my opinions on facts + information rather than to perceive that those facts that don't fit into the theory must be wrong.
I suppose that if I were a high school history teacher, I'd be draw + quartered or tared + feathered by irate parents who insist on defending their own righteousness. Oh well, don't worry, I don't teach. (G)
Keep watching those conundrums for us! Thanks

Clink, sorry if I have offended you.

GoldiloxTeaching#1323415/19/05; 16:52:35

@ Rich,

Don't worry. Even if you did teach, nothing about finance, gold, or government sponsored inflation is EVER mentioned in schools.

We learn that "Honest Abe" was born in a log cabin, but NEVER NEVER that he sponsored a failed hit on Jeff Davis only a year before the hit succeeded on him.

Too much rote memorization in schools, and not enough stimulus to thought! Can't let Joe Sixpack hear anything controversial!

TopazTrue as.#1323425/19/05; 16:58:29

Lordy Rich,
The essence is not so much to be right or wrong as to know WHY we're right or wrong ...and apply this knowledge at the next go-round...
...with time, rights outnumber wrongs and we're the better for it.

Speaking of Wrongs, my Boat is on the Slips and @$250/Day, it's WRONG to be sitting here wiling away the minutes...
...I've got FOWL to ANTI!

TopazG'lox#1323435/19/05; 17:02:24

Youn been watching the Quakes lately, seems to be building again 217 and getting stronger.
Great Albino BatInternational Monetary "System", more....#1323445/19/05; 17:11:50

On a neighboring Forum, I see a heated discussion of the convenience of Tariffs to protect American industry against the predatory practices of China.

My view of this problem:

Tariffs are beside the point. Like talking about the convenience of aspirin when you are suffering from T.B.

The US has economic T.B., it is being hollowed out industrially by the Chinese and others. Japanese autos have practically killed the US auto industry.

The real, fundamental problem is that China is applying a kind of "economic jiu jitsu" or "kung fu" tactic: use the advantage of the enemy, to overthrow him.

The great American advantage of being able to buy, and pay for, anything in any amount in any part of the world in US "manufactured" dollars, has been turned into the greatest threat to the US!

The Chinese are in fact saying: "Great US, buy all you want from us, cheap! We will take all your dollars, without limit, in payment, even if it means we get to keep I.O.U.s we really don't need."

The Japanese are saying the same thing. They now have foreign currency reserve, the great bulk of the US dollars, in the amount of…$884 billion dollars! In effect, they are destroying the auto industry, among other activities. Is this revenge for losing WWII?

As long as the US has the world's reserve currency, it can go on destroying itself by buying CHEAP and being able to pay for anything in any amount, with dollars. Yes, the goods come in CHEAP for the consumer, but the related industries are going, or have gone out of business. A deadly condition.

There is nothing to stop this process – remember I wrote recently about the International Monetary System as not a "System" at all, but a Process – until payment becomes once again, something that is effected either by a corresponding SALE of a product, or a delivery of an amount of money redeemable in GOLD. Either merchandise, or if not merchandise, then a tangible substitute for merchandise: gold to cover the imbalance in trade.

I guess that, under certain circumstances, a Tariff can be a reasonable measure.

Japanese rice costs seven times (I read this recently) what international rice costs.

Japan does not have a "Rice Tariff", that I know of, but it has placed obstacles in way of importing rice, which amount to the same thing.

I find it reasonable that the Japanese insist on this policy. Imagine what would happen to Japan, which has rice paddies from one end of the country to the other, if rice - a mainstay of its diet and the livelihood of an important sector of the population, not to mention that rice-growing is a symbol of the Japanese nationality – I say imagine if rice-growing became uneconomic in Japan and vast sectors of its countryside were abandoned. Imagine what would happen to the Japanese mentality! They simply cannot allow that to happen!

However, for the US, the problem is that the US dollar can and does buy anything in any amount in any part of the globe. A great advantage, has turned out to be a deadly threat to the economic well-being of America. A kind of poetic justice, indeed!

Tariffs are not any solution. There must be, once again, an International Monetary System, and redeemability in gold must be its foundation.

But, since this is politically impossible, where are we? The US is in a great dilemma, where no alternative is acceptable. So, what happens?

You tell me!


USAGOLD Daily Market ReportPage Update!#1323455/19/05; 17:15:00">
The Daily Gold Market Report has been updated.

If you are considering investments in gold we invite you to">request our free introductory information packet detailing the products and services offered by USAGOLD ~ Centennial Precious Metals. We welcome your inquiry and look forward to working with you.

Thursday Market Excerpts

May 19 (from Reuters) -- Gold futures in New York closed down and off from one-week highs on Thursday, as a higher dollar and a lack of momentum kept the metal within its recent narrow trading range, dealers said.

COMEX June gold contracts fell $1.10 to settle at $420.80 after trading from $423.30 to $420.60.

Market sources said gold was consolidating after a bout of fund liquidation in metals early this week, while commercial activity in futures appeared to be minimal.

"Gold has set a base around the $420 level. It has been trading in a $3 range, very closely watching the dollar and euro," said Frank Aburto at FC Stone in New York.

"It's bound to remain steady and quiet over the next few days. I think $415 to $420 is a good buying area."

"We are currently predicting a gradually depreciating dollar and given the relative inelasticity of global gold supplies, it is likely that gold will move sideways or increase slightly over the next year," Wachovia Corp. said in its Metals Report 2005.

Wachovia forecast an average gold price of $430 for this year, with the metal rising to $434 by the fourth quarter.

The Philadelphia Federal Reserve's business conditions index for May slumped to 7.3, almost a two-year low, from 25.3 in April. Economists had expected the headline index to fall to 19.0.

Soft employment, prices paid and new orders components were also dollar-negative, since they suggest the pace of U.S. interest rate hikes will not be quickened.

Town CrierZipping busted links#1323535/19/05; 20:24:12


(5/19/05; 20:14:24MT - msg#: 132352)

Is all the gold ever mined still "available"?

Is all the gold ever mined still "available"; or has it been "used up"?

I don't particularly want to buy into the commodity versus "something else" debate, but this notion of all the gold ever mined still being available has me a little intrigued. It is mentioned all over the place and is usually invoked by the gold sceptics as an argument why gold is a lost cause and that owners of gold are really just head-in-the-sand ostriches waiting for God...that is, for gold to be priced at the same level as stone axes in the industrial age...

One could argue that nearly all the stainless steel (for example) ever produced is still available...after all, it has very long-lasting durability (like gold) and universal application around the world, both functionally and as an item of decoration and adornment (architectural applications and, yes, you can buy stainless steel jewellery).

In the case of gold, sure, there are about 30,000 tonnes on the books of the world's central banks (probably significantly less in the vaults, however), but where is the remaining 130,000 tonnes, or there-abouts?

Believe me, it is not sitting in some ready-repository from which it can ooze onto the market, at no cost, and drive the price towards that of stone.

Almost certainly the largest proportion of that 130,000 tonnes has been manufactured into jewellery. Of this component, very little is likely to still be in pure form (0.9999 purity, 24 carat), but most of it will be alloyed with nickel, or platinum, or copper, or silver, or perhaps other metals, to increase its hardness, its appearance or some other quality. It is then worked over by the gold-smith , ending up as a ring; a necklace; a brooch; as ear-rings or toe-rings or belly-button rings or a thousand and one other items of adornment in this (brave new!!) age of body-piercings. All this stuff has been made for thousands of years and is still being made in ever increasing quantities and finds its way into jewellery cases, and assorted individual's and family treasure troves and is essentially locked away for sentimental reasons, for reasons of betrothal, or for reasons of power and ego and self-agrandisement...and is not likely to come flooding back into the market with gusto for those same reasons.

Even if it did (and the scrap gold industry is significant) it still has to be refined and refashioned and re-marketed and resold before it makes its new appearance on the scene. All that expends human effort and energy and time...and costs money; which is then reflected in the "price" of the resulting items and in the "value" to whomsoever acquires them.

Of the remaining portions of gold that has been mined, aside from CB's deposits and jewellery, there are industrial applications, such as plating, dentistry, electronics and medicine. These are the areas normally associated with the concept of "using up", because it is more difficult/expensive/uneconomic to recover the gold. Teeth of dead relatives are not usually raided, and scraping the coatings off electronic components and shiny nick-nacks and other plated gadgets is a hopeless endeavour. Similarly, lots of stainless-steel items are "used up" in that sense, because the cost of recovery is a lot more than the cost of new production.

Then there is the gold lost to buried hoards or on the bottom of the sea. That gold is "used up" in the sense that it cannot easily be located and recovered.

Finally, there are private hoards of gold. I don't know what proportion of gold rests within private hoards, but the fact that the gold is "hoarded" to me indicates that it is "used up", in the sense that it is fulfilling someones desire (preservation of wealth, enhance their ego and power, etc) in pretty much the same way that houses (for example) are "used up". Until there is a widespread and general perception that gold has become worthless, then (like houses) it is not going to come flooding back onto the market in a vain attempt to recover a few lousy paper promises before it is devalued to become the equivalent of just another stone that one might find lying on the beach.

Even the 15,000-30,000 tonnes (whatever the figure is) held by central banks has been "used up" in the sense that it is being "used" as a financial reserve in just the same way as the CB's holdings of foreign currencies. We see this most clearly in the MTM of the European Central Bank.

Thus, the bulk of the gold ever mined HAS been "used up", for all intents and purposes, just like all the stainless steel ever produced has been used up, or the houses in which we live have been "used up".

Hope this helps...


(5/19/05; 19:03:08MT - msg#: 132351)


melda laure and GAB,

Tarriffs do nothing to lower the burden on the consumer, but instead raise prices for everyone by adding extra taxes raised by the tariff into the ever-expanding pile of government sewage.

More critically, they feed the global monetary inflation monster causing the problems to begin with.

It's one more heaping helping of "anti-deflation medicine", never allowing the excess fuel to be burned off in the system.

(5/19/05; 18:52:36MT - msg#: 132350)

SSI "Fraud"

@ melda laure,

Your quote, "while in past years additional payroll taxes extended the fraud, today more taxes are not an option."

I would humbly submit that not a penny of the new SSI taxes went to fund SSI, but instead ONLY continued the general fund deficit fraud, and rendered the potential for more SSI taxes when needed completely moot.

Even Clinton's so-called "balanced" budget" ignored the fact that About $150B of the balance came from robbing SSI to pay for other pork.

"Robbing Peter to pay Pork" - it has a nice ring!

melda laure
(5/19/05; 18:49:56MT - msg#: 132349)

Jurgen Stark, smeagol 132316

Hilarious! Caveat emptor?

More like caveat spectator! These roman games can get rough! Better wear the golden armor under your tunic.

(5/19/05; 18:28:00MT - msg#: 132348)

@ Rich Powell

Heck, Rich, I wasn't being vehement - I don't even know if I can do vehement - I was only trying to inject some wry humor there. My point was that I, too, have had difficulty trying to place the gold market players in the Comex. For me, a commodity is something that is consumed in some fashion, be it an agricultural product or an industrial metal. The idea of a market is therefore to be able to hedge variance against changes in the supply and demand of that commodity. The fact that the vast majority of all the gold ever mined is still "available", i.e. never used up, means that there is only a demand "to have" and not "to use". There is equally no notion that the commodity has a shelf life, either because it will spoil, or that storage costs are a prohibitive percentage of its value.
That's all, no offense taken.

melda laure
(5/19/05; 18:25:20MT - msg#: 132347)

Tarriffs vs Subsidies, sir GAB.

It would seem to me that tarrifs and subsidies are futile when BOTH sides take extreme recourse to the printing press.

melda laure
(5/19/05; 18:18:15MT - msg#: 132346)

TC, Smeagol #132301

"Thus, if the international parties participating in the dollar-system are agitating against its flaws and limitations, the same maneuvers that will allow it to be cast aside will also provide an opportunity (nay, a NECESSITY) to cast aside the counterpart papergold illusion to unleash the present value of all gold already in hand."

It will also unleash the POWER of PHYSICAL DEMAND. And it is the unstoppable (in that day) demand for physical that enforces the standard over many long years. Because any form of paper gold contract at this point becomes ipso facto DEFAULT, not payment.

"if a man speaks of his honor, make him pay cash..." Robert Heinlein.

Too bad such an option is not available to the creditors of the SSI fund! Every time I hear the year 2042, (or 2058 or whatever) I want to smash something (most unbecoming!). The trust fund will blow up in less than a decade. It will wither at the first withdrawal: while in past years additional payroll taxes extended the fraud, today more taxes are not an option.

Always the paper chase! Always the deferred day of judgment. Even the chinese do this! Do not think for an instant that the chinese manufacturer wishes to work for free nor would he willingly return all his profits to the US treasury market! This is rather the action of the chinese BANK- they merely PRINT their own so that they may buy OUR PAPER.

But when the same chinese manufacturer goes to buy oil- THAT is a different story. Physical oil must be delivered. A Contract will not turn the wheels nor feed the machines. And the prices go ever higher. Debt CAN be netted against debt, but at the end of the day it is bread which we demand for our supper. And increasingly, those who have won their daily bread will want to eat it too!

TownCriermelda laure, a request#1323545/19/05; 20:31:25

Broken links are beneficial to no one. Out of courtesy, please refrain from using the hyperlink field as an auxillary comment line.


GoldiloxQuakes#1323555/19/05; 23:56:48

@ Topaz,

Actually, I have been more closely monitoring the CA-NV map, which has grown from an average weekly number of 300-350 up to 400-450 in the reportable range - most not sensorally detectable.

I have also been watching the Indonesian coasts, as they have been getting regular 6+ shakers. Aftershocks, or new activity?

I'm no seismologist, but I wonder if the increase in NA activity (especially in CA and AK) is enharmonic to the shakers over there or indicative of separate tension buildups and releases here at home.

McCanney has been talking about draining Yellowstone Lake to remove the steam component from Jellystone caldera. Reports are that the fish have already died from sulfer excess in the lake, but I don't have reference to a source or timetable for that datum.

The Webbot project covered by urbansurvival is also talking more quake activity -potentially Japan.

I purchased a few extra cases of bottled water. It's not going to spoil sitting around "just in case".

GoldiloxSNL Investment skit#1323565/20/05; 00:09:37

Puplava has posted a really funny SNL clip satirizing the brokerage commercials.

Scroll down past the Daily Market Wrapup to find the link.

Druid@Sundeck#1323575/20/05; 00:37:48

Druid: Thanks for the excellent comments on "available" gold. I always cringe whenever I read in print or hear someone suggest this "available" gold as some sort of quantity in trying to ascertain or project some sort of future gold price.

Whenever I come across this type of commentary, the first thing that comes to mind is a reversion back to flat out confiscation where all the "available" gold is seized and thrown into the supply demand mix that some analyst will use in trying to derive a future price. No good Sir, what you so eloquently described is more along the lines of UNAVAILABLE gold and the complement to that is AVAILABLE gold which is VOLUNTARILY exchanged in a market place wherein the continuous process of price discovery takes place in reflecting this limited quantity.

Thank you good Sir.

968Government-sponsored enterprises#1323585/20/05; 03:01:03

Remarks by Chairman Alan Greenspan
Government-sponsored enterprises
To the Conference on Housing, Mortgage Finance, and the Macroeconomy, Federal Reserve Bank of Atlanta, Atlanta, Georgia
(via satellite)
May 19, 2005

"Although prospectuses for GSE debt are required by law to stipulate that such instruments are not backed by the full faith and credit of the U.S. government, investors worldwide have concluded that our government will not allow GSEs to default. As a consequence, market participants offer to purchase GSE debt at interest rates substantially lower than those required of comparably situated financial institutions without direct ties to government. Given this advantage, which private competitors have been unable to fully overcome, the housing-related GSEs have grown rapidly in recent years."

"The strong belief of investors in the implicit government backing of the GSEs does not by itself create problems of safety and soundness for the GSEs, but it does create systemic risks for the U.S. financial system as the GSEs become very large. As I have recently testified before the Banking Committee of the U.S. Senate, systemic risks are difficult to address through the normal course of financial institution regulation alone. But in the case of the GSEs, these risks can be effectively handled by limiting their investment portfolios, which are funded by implicitly subsidized debt."

"The government guarantee for GSE debt inferred by investors enables Fannie and Freddie to profitably expand their portfolios of assets essentially without limit."

"Unlike subsidies explicitly mandated by the Congress, the implicit subsidies to the GSEs are initiated wholly at the discretion of the GSEs. They choose when to borrow and gain the advantage of the subsidy, and because markets perceive such debt as government guaranteed, GSEs can effectively borrow without limit."

"Investors have provided Fannie and Freddie with a powerful vehicle for achieving profits that are virtually guaranteed through the rapid growth of their balance sheets, and the resultant scale has given them an advantage that their potential private-sector competitors cannot meet. As a result, their annual return on equity, which has often exceeded 30 percent, is far in excess of the average annual return of approximately 15 percent that has been earned by other large financial competitors holding substantially similar assets. Virtually none of the GSE excess return reflects higher yields on assets; it is almost wholly attributable to subsidized borrowing costs."

"Because the many counterparties in GSE transactions assess risk based mainly on the GSE's perceived special relationship to the government, rather than on the underlying soundness of the institutions, regulators cannot rely on market discipline to contain systemic risk."

"Today, the interest rate and prepayment risks inherent in mortgages with a low-cost refinancing option is concentrated in the large portfolios at Fannie and Freddie. These concentrations cannot be readily handled by private-market forces because there are no meaningful limits to the expansion of portfolios created with debt that the market believes to be federally guaranteed."

"The borrowing edge of the GSEs prevails even though the biggest banks must maintain at least twice the capital ratio of Fannie and Freddie and smaller banks hold even more. Moreover, with the additional capital available at banks to absorb the inevitable hedging misjudgments, reversals of fortune are likely to create less disruption to the banking system relative to the disruption possible at Fannie and Freddie."

"The Federal Reserve Board has been unable to find any credible purpose for the huge balance sheets built by Fannie and Freddie other than the creation of profit through the exploitation of the market-granted subsidy. Fannie's and Freddie's purchases of their own or each other's mortgage-backed securities with their market-subsidized debt do not contribute usefully to mortgage market liquidity, to the enhancement of capital markets in the United States, or to the lowering of mortgage rates for homeowners."

"Indeed, during a crisis, the GSEs' portfolios of mortgage-backed securities (MBS), in contrast to portfolios of liquid assets such as Treasury bills or cash, cannot provide liquidity to either the primary or the secondary mortgage market. To sell mortgaged-backed securities to purchase other mortgage-backed securities clearly adds no net support to the mortgage markets."

"Thus, if the Congress legislates a mission-only need for GSE portfolio assets, a substantial liquidation of MBS over time, coupled with an equivalent redemption of GSE debt, will doubtless be required. Such liquidation would entail not solely a removal of demand but an equal removal of both supply and demand for MBS."

"However, if legislation takes only these actions and does not limit GSE portfolios, we run the risk of solidifying investors' perceptions that the GSEs are instruments of the government and that their debt is equivalent to government debt."

"Without the needed restrictions on the size of the GSE balance sheets, we put at risk our ability to preserve safe and sound financial markets in the United States, a key ingredient of support for housing."

"Financial instability coupled with the higher interest rates it creates is the most formidable barrier to the growth, if not the level, of homeownership. Huge, highly leveraged GSEs subject to significant interest rate risk are not conducive to the long-term financial stability that a nation of homeowners requires."
Maybe AG hasn't read Starck's speech...

USAGOLD / Centennial Precious Metals, Inc.Avoid the crowds; buy right and prepare your portfolio BEFORE the panic#1323595/20/05; 05:42:56

TownCrierFREE gold info packet#1323605/20/05; 05:50:04

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Great Albino BatRequest for information....#1323615/20/05; 11:41:30

Will someone please tell me what the "TIC" index refers to?

With thanks,


DruidGreat Albino Bat (5/20/05; 11:41:30MT - msg#: 132361)#1323625/20/05; 12:22:48

Druid: GAB, I hope this helps.
Druid@GAB#1323635/20/05; 12:32:37

Druid: GAB, if the previous link doesn't provide enough of an explanation, this link should.
mikal@GAB, Druid#1323645/20/05; 12:34:51

Monday, May 16, 2005, 9:51:00 PM EST
Gold and Dollar Market Summary - Jim Sinclair - Excerpt:
"Dear CIGA:
Chinese and Japanese holdings of US Treasury instruments declined in April. Someone should tell the US media because this development is earth shaking in a financial sense.
Clearly the most important news of the day got little play in the financial media. The Treasury International Capital (TIC) report reflects the ability of the US to finance its Federal Budget, Trade Deficit and therefore the Current Account Deficit - all of which are out of control. Everything most certainly hangs on the TIC figures including the future of the dollar and therefore the price of gold.
March Treasury International Capital data reported that foreign net purchases of domestic securities amounted to US$60.1 billion, down from a net $98.1 billion in February. This was way below the forecasted consensus of $72.0 billion. Foreign central banks sold a net $14.4 billion, down from net purchases of $18.7 billion in February.
Most important was the fact that Chinese holdings of U.S. Treasuries declined for the first time in a year, while Japanese holdings fell for the second time in the past three months.
The report from the NY Fed economic index returned the worst number since 2003. This is another piece of evidence that the USD recovery is rolling over. That puts the Fed directly in between a rock and a hard place.
That being said, I believe you can take to the bank that the decision between the Fed acting to hold up the equity market or the dollar favors the equities while damning the dollar.
You have heard now from Reuben and Volcker but hey what do they know compared to charts and star gazing?"

USAGOLD / Centennial Precious Metals, Inc.Priced right for filling your vaults.#1323655/20/05; 15:07:25

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Special discount pricing on German 20 Marks
German gold coins

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Topazalt-currency Gold.#1323665/20/05; 15:12:31

Just another Ground-hog Manic Saturday Morning here in Oz as Gold comes back to the fold somewhat.
The curious action in todays trade was that from 6-9am NY-time, as $gold lost approx half it daily amount, it (gold) actually traded UP in the alts!
The ugly Duckling today was Rand as $-RPoG ratcheted higher all day 'till giving a bit back late.

TopazThe silver lining...#1323675/20/05; 15:22:44 that this little set-back might well be a precursor to solid + action next week as Comex sets about neutralising their exposure to delivery come June 1.
USAGOLD Daily Market ReportPage Update!#1323685/20/05; 15:31:28">
The Daily Gold Market Report has been updated.

If you are considering investments in gold we invite you to">request our free introductory information packet detailing the products and services offered by USAGOLD ~ Centennial Precious Metals. We welcome your inquiry and look forward to working with you.

Friday Market Excerpts

May 20 (from MarketWatch) -- Strength in the U.S. dollar brought fresh pressure to bear on metals contracts Friday, ending a spirited week of tug of war between bears and bulls in the futures pits.

With little in the way of economic data for the metals market to play off of, the trading tone on New York Mercantile Exchange was largely dull as futures sellers prevailed ahead of the weekend.

Toward the close of trading, traders fixed on remarks by Federal Reserve chief Alan Greenspan on China's moves toward a revaluation of its currency and what this would mean for the U.S. trade deficit (little) and domestic prices (inflation).

However, the move higher by the dollar ranked as the primary catalyst for metals trading. Against this backdrop, convictions grew that gold will have a struggle on its hands to be able to mount a meaningful move to the upside. Gold for June delivery fell $3.10 to close at $417.70 an ounce.

----(see url for full news, 24-hr headlines, market quotes)---

melda laureTIC Data. the Pirates Reprise#1323695/20/05; 17:27:34

The Carribean hedge fund machine has shifted into LUDICROUS SPEED!...


A quick comment re the latest TIC data. There are so many errors that it is certain that there will be an update. Those with sharp eyes and keen noses will discover that Canada and Mexico are listed TWICE- and with different numbers to boot!

Also, the "Grand Total" row is completely bogus. Even accounting for the double inclusion of those two countries, the totals for March 2005 are short by over 200Billion (and that's on top of the outsize UK and Carribean increases).

The previous report had no such errors (I did note a few rounding errors in the final digit). There are so many errors that it is certain that there will be an update. That said, I have to wonder from what original sources this cut and paste job was cooked up. Also, the wording in the footnotes has changed, but what the changes mean is rather opaque.

Thus it is pointless to make further comment until the corrected (and doubtless sanitized) version is released. A link to the UST data is found at the article.

Also recommended the Pig Pen article at same site by John Mackenzie, which echoes comments from yesterday:

"The issues remain capital & cash flows. FREE FLOWING PROPERTY (my emphasis) ... we do not have this, what we have is a constricted system designed to channel flows.

When an economic system can no longer perform due to dislocations, it matters little how much money you print or credit you facilitate. It remains tightly within the domain of ‘First Abusers,’ namely the Fed's shareholders. This privilege only serves to exacerbate the dislocation in terms of price, function, flow and form"

As I said, unlimited recourse to the printing press.

Aure entuluva!

melda laureData for previous post.#1323705/20/05; 17:36:17

For entertainment, add up the numbers in the left most column. The 1977. billion figure is wrong. Why it is wrong is a different matter.
melda laureOooh, look, the numbers have changed!#1323715/20/05; 17:41:09

My bad. time to recalculate!
GoldiloxPuplava's "Storm Watch" Update#1323725/20/05; 18:49:28


As the Fed rate hikes continue, risk to the financial system increases because all markets are interlinked. Systemic risks to the financial system have increased and may converge. A misplaced bet in structured credit could backfire—causing interest rates to rise. Narrowing credit spreads could cause the carry trade to unwind—forcing leveraged players to dump their bond holdings—leading to a jump in interest rates. A trade war could create friction in the credit markets—forcing central banks to dump their Treasury holdings or go on strike with new buying. A rise in interest rates could make mortgage payments untenable for overburdened households—triggering bankruptcy. Increased bankruptcies would bring more homes on the market—increasing supply and causing home prices to fall. Falling home prices would increase homeowners and lenders risk as equity evaporates. Each tipping point could lead to the next as they are all connected in a daisy chain.

What is clear is that this rate cycle is different. The Fed has very little room to maneuver nor can it afford to make a mistake. The economy is more leverage today than back in 1999. Outstanding debt has grown by $10 trillion since the last time the Fed raised interest rates. The leverage in the financial system has grown exponentially with derivatives and the carry trade. The homeowner has gone deeper into debt, the government is running large budget deficits, and the trade deficit is the worst it has been in this country's history with no sign of improving. We have no margin of safety. Things will have to workout perfectly in order to avoid a crisis. Will we be that lucky?


Insightful analysis of the systemic risks in JP's latest release.

mikalMore numbers that don't add up... and some that do#1323735/20/05; 18:55:12

Economic Preview: Is the economy half full? - Rex Nutting - May 20, 2005
A glowing preview of next weeks economic numbers is contrasted starkly against many examples of
poor prior numbers and readings from
a wide wide array of sources.
I had to give the author much slack as he parrotted
official 'expectations of a majority of economists' for a great week of data showing nothing wrong (and nothing new), which can serve enough ammo to the 'robust growth'
peanut gallery to regurgitate for days on end,
amidst the background marching music of
the Fed's latest meeting minutes.

Great Albino BatThanks for info on TICS!!!#1323745/20/05; 18:57:49

Thanks to Druid, Mikal and Melda Laure for the most interesting facts on the TIC!

Fascinating hi-jinks at the Treasury! Too much dope going around, methinks.


melda laureMy apologies to the boys at US Treasury. the May 17 data are much better#1323755/20/05; 19:11:29

Yes my numbers add up now, more or less. The changes for the months of Jul 2004 to Jan 2005 are roughly about a 20Bn less for Japan, 29Bn more for China and a whopping 62Bn less for the UK. Of course the percentage changes for some of the smaller countries is equally disturbing eg, Luxembourg, almost a 25% change. Austrailia and Spain are removed and Norway and Poland have been added (poor choice of Norway, they're dumping it seems!)

The grand totals seem to be about 50Bn less for those months mentioned.

Take this with a grain of salt. The numbers on Rob Kirby's article are a bit scrambled. The 200Bn error I mentioned earlier seems to be a typo, 1777.1Bn instead of the corrected 1977Bn that appears on the may 17 revision, and so on.

As for the carribean death star, that may well be true. 137Bn in March vs 104Bn in February, and compare that to 70Bn or so back in december. The clones or droids running those hedge funds must be utterly fearless morons, unless this is the other half of a short trade.

Maybe Treasury Secretary Snow should beg the hedgeies to un-peg their terminals, they're eating up more bonds than the chinese!

Utterly bizzare!

GoldiloxPirates of the Carib#1323765/20/05; 20:22:39

@ melda laure,

Your quote, "The clones or droids running those hedge funds must be utterly fearless morons, unless this is the other half of a short trade."

is interesting, assuming the P's are "free market traders". Another alternative is that a large portion of that trade is in "directed accounts" - those with a specific agenda.

Maybe not so different from the second half of your statement . . .

NedWhat's REALLY happening?#1323775/21/05; 03:25:12

Despite all the ramblings and rumblings of the upcoming hedge fund collapse and the pension debacle and the so-called TIC report(s) the dollar is STILL motoring along tacking on an impressive 6/10 of a point on the DX yesterday while gold broke through another support level.

Gold now hangs precariously close to major, major support levels as many have been alluding to in recent weeks. A DX chart shows the dollar marching from 80.5 in late December 04 to 86.6 yesterday.

Despite the often-times gold perma-bull disposition on this forum, this begs the question, WHAT IS REALLY HAPPENING??????


NedHussein ( forum)#1323785/21/05; 03:32:20

So Saddam Hussein got caught with his pants down, literally.

A British tabloid publishes a photo of Hussein in his underwear holding his pants.

a) why? really.

b) Hussein has been in custody for 17 months. Just what are the intentions of the captors?

SundeckGreenspan: China Revaluation Won't Help#1323795/21/05; 03:36:49


A move by China to revalue its currency "does not follow that that will lower our overall trade balance," Greenspan said. "Indeed, it's probably quite unlikely."

That's because companies are likely to turn to other countries, such as Thailand or Malaysia for goods, rather than U.S. producers. "So essentially what we will find is we're importing from a different area, but we will be importing the same goods," Greenspan said.

Sundeck: Well, there you have it. US imposing quotas and China implementing export tariffs is not going to change things much...textile items will be sourced elsewhere. Not only the US is screaming, 'though...Europe is hurting from the flood of textiles from China as well.

There was a documentary on SBS (public TV, Australia) television a few nights ago on the trade deal struck between the US and China under the Clinton Administration. Very interesting. WalMart featured significantly along with its role in driving down prices with impunity. The impression I came away with is that the trade deal did not appear to be working out quite like what was intended. A representative of the port authority in Long Beach, Ca. was interviewed...pointed out that for every $3B of exports moving throught the port to China (mostly scrap metal, recycled paper and cardboard and other basic materials) there is over $30B of imports from China (plasma TV screens, electronic goods, textiles and other manufactures).

OK, so if import quotas and tariffs on China won't help, why still the rancourous row in Washington directed towards China?? All I can think of is that it is for public consumption, attempting to paint China as the evil dragon causing all the ill's that pervade the US economy (deficits, job losses).

Perhaps the US is also seeking to destabilise China's financial system??? On that issue, China appears to be making steady progress...commenced trading in eight currency pairs a few days ago (but still no adequate futures trading apparently). Many commentators here (in Australia) agree that China is not ready to move towards a flexible yuan at the moment and feel that the US rantings are counterproductive.



SundeckWhat's happening?#1323805/21/05; 05:19:51

Sir Ned at Msg #132377 asks "What is really happening?"

Well, gold bugs are hurting a they did about a year ago when the major "correction" took the POG from over $420 to under $380, see this link:

Then there was that correction back in early 2003 when POG fell from over $380 to under $325...I can still remember some of the gasps back then too.

The present updraft in the US Dollar index still does not differ substantively from the last two updrafts back in 2004 and 2003 (see the attached link); so I am not prepared to lower the lifeboats and sail away just yet.

On the Australian stock exchange, gold stocks have come off their highs well and truly over the last several months. I interpret some of this to the shares running up over-optimistically and some to the uneasiness in the markets generally (hedge-fund worries, French vote worries, China revaluation uncertainties, world economy worries, US deficit name it, it is impossible to separate the effects).

Why has the US dollar "strengthened" (not that it is very strong)? Again shrouded in mystery, but I notice MZM (money zero maturity) has been flat or declining for the last six months, and I suspect that, in itself, is providing lift for the dollar through normal FX demand from international contracts denominated in dollars...similar to the "strength" in the long bond...brought about mainly by reduced availability rather than intrinsic "strength". But also, there may be some weakness in the Euro leading up to the French vote (yes or no). Also the Japanese deflation is continueing, but I don't know if Japan has increased its trashing of the Yen. Finally, there may be speculative lift (momentum trading) driving the dollar up, and that might go further until some big players blink. But I am only guessing...I really don't have much of a clue.

I still don't see much change in the overall climate for gold from the way things were last year, or the year before...except, perhaps, that many people expected events to have unfolded more rapidly than they have.

Let's wait a few more weeks and see what happens...



Sundeck@Druid Msg #132357 - Unavailable gold.#1323815/21/05; 05:45:35

You are very welcome, Sir Druid...

Most of the signs point to the "unavailability" of gold to which you refer.

There is Gordon Brown's attempts to release IMF gold; there are also the (British driven??) attempts to free up gold in India by trying to get the locals to surrender their metal in exchange for money to invest; there is the decline in production driven partly by increasing costs of production and partly due to the hiatus in exploration over the last decade; there is the WAG II; there is the end of Swiss sales; there is expanding consumption in China, relaxed trading of gold there and overt encouragement by the Bank of China for the citizens to accumulate gold; there is the opposition by the US towards IMF gold sales (perhaps they don't want to add to the "deep storage" problem???); there is continued pressure to unwind hedge books amongst miners; etc etc

Indeed, the climate seems to be one of "unavailability"...

Take care, Sir Druid


SmeagolWhat's happening?#1323825/21/05; 08:51:50

...we thinks that a good part of it is merely seasonal... It is almosst always lower in price this time of year, no matter what else is going on...

...what's going on is, a good time to get more of it! (grin)


CometoseJaundiced Eye#1323835/21/05; 09:00:02

Because of culture and National ties , it is hard for people of the universe / planet to percieve of themselves as global participants rather than national citizens....

Politics and politicians oftentimes sell/ market biases that reinforce their constituents best interests and the gov'ts best viewpoint which needs to be espoused by the constituent........

to justify our divisions and our actions........if we are going to have become agressive to lay claim on some right ( perhaps it should be called white and banking right ) . When I was teaching history ,i remember it was called ....
manifest destiny ......that's what the school books still call it .....Nice Packaging.....

Today , we have rights as citizens of Democracy and we THE USA want to spread that democracy far and wide .......The world and the people of the world deserve to have some semblance of Peace.....but since that doesn't work , we can have war...........

Problem is while the US has a bucharoo for a president and a bunch of priveledged lobby fed legislators for representatives.......or the Military Industrial Complex as shadow govt' , Vision and Identity in what we represents is being lost or downgraded what can be known of us from watching TV....

I AM NOT WHAT I WATCH ON TV........the tv is turned off....

but the world doesn't know the difference between what we do (POLITICALLY and MILITARILY ) OR what we appear to be(WATCH TV) and what we really are.....


Our God given media is doing a good Job of trying to convince us the we are RIGHT ......and MIGHT IS ALSO RIGHT ... Michiavellianism teaches the THE END JUSTIFIES THE MEANS ..........Sometimes , it appears that this might be two sides of the same coin ....

I don't want to be the brunt of the WORLD's Disdain because of failures of diplomacy and Agressive behavior of a mysterious the backdrop context of peak oil.....
Because of Terrorism , the rights we once had are less and therefor we have less to citizens of US ....if we decide to become more OUTSPOKEN as WORLD CITIZENS>......

Shedding national biases , prejudices, programming .......makes a more objective view
It is very important to see and understand the MEGATRENDS that are unfolding ........

A couple of things context.....

Larry Edelson (Martin Wiess protege at Safemoney Report) has been taking a lot of interest and trips to CHINA....)
Yesterday he was quoted on Kitco in the tone af an authority ...... about the beginning salvo's in a cold economic war between US and CHINA ....and apparently the Winner takes all ....

This morning there has been some talk about here at the forum about what is going on ......

Earlier this week someone pointed out tha Point and Figure Charts take only price into account without time ....
(we need to perhaps remove time from our view of world economics gold, Mining stocks , etc /to look at things in a vacuum ) .

What I find most intersting in light of all the current circumstances .......

Bourgeioning DEFICITS
OIL out of the BOX as it was in the seventies....
Peak oil projected by Simmons
U S ACTING OUT UNILATERALLY AS WORLD BULLY with backing from Britain and Israel....
Trade alliances happening globally between trade partners and CHINA in South America Africa / Oil Partners in Russia , South America ... ( How are America's leaders planning to particpate in the greatest Economic development in History perhaps?????? How is our Economy going to participate in the flow of goods and services??? Trade + JOBS or TRADEWAR????
Warren Buffets big BET against the DOllar....
A time that looks like the changing of the Guard with regard to World Reserve Currency .....Nations moving toward trading oil for EUROS. Last time severe dislocations occured.

INDIA saves with GOLD ....CHINA MIDDLE CLASS GROWING ..(CHINA's MIDDLE CLASS will soon look like our whole country ) CHINA PLANNERS on every turn are promoting saving with and holding GOLD BULLION ....
against a tide of


DERIVITIVES EVERYWHERE (between 300- 500 TRILLION notional value)
Cracks in Financial Fabric .....FNMA , GM , FORD , BOnd Market vulnerability .....woven into networks weave....

VERY VULNERABLE .............precarious conditions exist all around the globe.......

Paper saving the economy by printing ourselves out of deflation is about the same as the concept of Darkness extinquishing light......

Capitalism Works(in Free market economies) When GOld is held as a INCREMENTAL TOOL in the NAVIGATION of GLOBAL ECONOMIES participating.........

When GREED AND BANKING , MONEY PRINTING TAKE OVER ,without GOLD as a balancing and agreed upon STANDARD....imbalances occur..........and then extreme imbalances and then corrections....

From a purely Economic perspective , without regard to national biases or prejudices , or perspectives.......
it looks like the Chineze people are being set up to PROSPER their economy grows and as they save in GOld .....

If I were a Citizen divorced of political views making Economic decisions on what I believed to be Long term trends, I' would follow the example and planning being promoted by the planners to the Chinese people ....

As the dollar's percieved value becomes less and less ,
and as we switch to new world reserve currency ....(which will inevitably hurt TREASURY VALUES, GOld must rise...and silver too.......

WORK HARD AND SAVE IN GOLD ..................
can we not also FOLLOW IN THE FOOT STEPS OF GIANTS........
by following this simple plan ........This simple Plan will save the economic future of many families globally
That would be American families , Australian Families ,
British Families , African Families, New Zealand Families... European Families.....
THIS saving plan has not prejudice against any Nationality , Culture , Tongue.....It will work for all as a hedge against .....the CARELESS IRRESPONSIBLE ACTS of CENTRAL BANKERS GLOBALLY and the FEDERAL RESERVE...

I believe that we should begin to think and act for ourselves as a global community as we figure out who the real enemy is . This will turn to our economic good .

mikalRFID chip use accelerates#1323845/21/05; 09:11:35

JP Morgan Chase Opens Field With 'Contactless' Credit Cards
- May 20, 2005

Despite a world of slowing 'real' growth, "rapid growth" is
expected in certain financial sectors. By announcing "...the race to redefine cashless payments is on.", the banking world moves to consolidate it's tenuous hold on the sheeple.
Gold- make serious 'contact' with it!

USAGOLD / Centennial Precious Metals, Inc.Gold ownership is a simple click away...#1323855/21/05; 09:17:19">gold -- a global calling card
GoldiloxIntentions for Saddam#1323865/21/05; 09:28:27

@ Ned,

Certainly NOT a public trial. Like Noriega, another NeoCon puppet who performed a Pinnocchio-style cutting of the strings, he will be "quietly" retired.

The same will be true for bin Laden, should he ever be captured. The deals these guys could share in a public forum would curl the toes of John and Jane Q. Public.

I was watching a "West-Wing" rerun last night, where the lady on staff that was so adamantly against selling arms to some ficticious middle-eastern country with poor women's rights asked some WWII vets how they'd like it if they knew their gov't was selling arms to Nazis.

Not much, likely!

But Hollywood, a White House staffer asking the public a question like that?


O'Neill was dumped for publishing answers before anyone even asked the questions. Powell was dumped so the dragon-lady could add some new teeth to her bark!

The White House staffers got more combat medal than the soldier's Hum-Vees. Mom and Pop, you want your reservist to wear a "real" flack-jacket? Go the surplus store and BUY ONE! Rummy can't be bothered with such trivialities.

These guys must be soooo glad to finally bury Colonel Hackworth! Now they can re-invent some drinking buddy from the Alabama reserve to pretend he's the new soldier's advocate. Whoops, I must be looking at the "plan B" script.

mikalGold's notable supply/demand change#1323875/21/05; 10:10:07,5936,15369343%255E913,00.html

Gold shines again by Jim Dickins in Sydney - Sunday Mail - May 22, 2005
Great Albino BatSaddam Hussein is NOT in jail...#1323885/21/05; 11:30:23

Whoever is being held in jail, it is not Saddam Hussein.

His wife visited him in jail - we heard about this a couple of years ago - and she said: "That man IS NOT MY HUSBAND."

I guess she ought to know...

I think this was reported by Joe Vialls.

The remark by Hussein's wife has been completely forgotten.

It figures.


968OTC derivatives market activity in the second half of 2004.#1323895/21/05; 12:07:42

According to the data released by the BIS, positions in the global over-the-counter (OTC) derivatives
market recorded a robust expansion in the second half of 2004.

Keep J. Starck's words in mind !!!

968Oops, I forgot...#1323905/21/05; 12:09:26

In addition, the BIS is publishing for the first time statistics on credit default swaps. Notional amounts outstanding of credit default swaps were $6.3 trillion at the end of 2004.
mikalQuiet acclaim for tireless activists#13239105/21/05; 17:25:45

Imperial Poison by Charley Reese
Storyteller, essayist and activist extraordinaire
Reese reveals the true public servant.

NedGAB#13239205/21/05; 19:14:48

The link I posted this AM states Hussein has been in prison for 17 months yet you say his wife said it wasn't him "a couple years ago".

Are you just being loose with your timing? I never heard about this wife business saying it wasn't him in the prison. I quickly checked the site you provided, I don't see any Hussein not in jail stuff.

What's up with that?

The Invisible Hand'the catastrophe that never happened' is being denied#13239305/21/05; 20:15:26,6903,1489227,00.html
US investors seek a hedge against hedge funds
Sunday May 22, 2005
The Observer
Nothing disastrous has happened - yet - but the sense of foreboding about the state of the American market is growing, reports Edward Helmore in New York.
In some quarters it is being called 'the catastrophe that never happened'. Not yet, anyway.
'Rumours are nothing new, but you don't hear anyone throwing around any names,' said Bill Hornbarger, head of fixed-income investing at AG Edwards. 'There is a sense of unease. But no one can put their finger on it and say "here is the problem".
Arroyo: Philippines is no Argentina
Sunday May 22, 2005
The Philippine Daily Inquirer
PRESIDENT Macapagal-Arroyo yesterday assured the public that the Philippines was nowhere near the debt crisis suffered by Argentina in 2001.
Ms Arroyo was apparently trying to downplay a warning issued last week by Tom Byrne of Moody's Investor Services who said the Philippines' finances were in worse shape than Argentina's in 2001.

balzacSADDAM#13239405/21/05; 21:05:54



balzacSADDAM#13239505/21/05; 21:06:26



Great Albino BatNed: About "Saddam Hussein" being held in jail...#13239605/21/05; 23:41:41

Well, Ned, we read so much stuff and time goes by, so I made a mistake saying "about two years ago"...

But I can assure you that I did read comments by Saddam Hussein's wife, "The man being held IS NOT MY HUSBAND". The wife should certainly know!

Quite naturally, no more was reported regarding this very embarrasing revelation. So, the wife has passed out of the picture. The news must be controlled and public perceptions with it.

I am pretty sure that it was Joe Vialls who published pictures of the "Saddam" who is being held, and also of Saddam Hussein the real one. (Pre-war pictures). When I - and others - looked closely, we could see very evident differences.

For instance, the dental formation of the teeth is totally different in the two cases. The real Saddam had a fine set of teeth. The guy being held does not.

Then again, there is a simple way we could be assured that it is really Saddam Hussein who is being held, and that is via a tally of fingerprints.

I remember reading about Saddam Hussein, when he was in power, that he had several "doubles" whom he moved around to appear in his stead, with the intention of misleading his enemies as to his whereabouts. I read this in the US press.

Maybe the guy being held is one of Saddam's doubles?

Furthermore, this time we are living is one of GENERAL DECEPTION and LIES, so, we have to be very careful in what we accept as fact. Very.

When I feel like doing it, I'll check out the Vialls site and look for the piece on Saddam Hussein. I believe it is there, haven't looked for it since I read it.


geNo oil bourse in sight: Iranian official#13239705/22/05; 02:20:48

SundeckHedge funds' underpaid managers...#13239805/22/05; 03:48:37

According to this article in the NYT, on average, the 25 best-paid hedge fund managers each received $207 million in 2003, about double what they made a year earlier.

Management fees amount to about 2% of funds. Approximately 20% of profits are also taken. Not bad for risking other peoples' loot and endangering the global financial system in the bargain.

My, my...such a selfless lot in the face of sagging profits for the real risk-takers (the investors).


geMajor Foreign Holders Of Treasury Securities#13239905/22/05; 07:45:06

1)Japan $679.5 billions 2)Mainland China $223.5 billions 3)Caribbean Banking Centers $137.2 billions 4)United Kingdom $122.9 billions.

Buying of Asians seems to be stalled. UK & Caribbeans working hard.

The data has undergone some revision.

Chris PowellBIS data shows sharp rise in government intervention against gold#13240005/22/05; 10:03:37

Latest GATA dispatch.

To subscribe to GATA's dispatches, send an e-mail to:

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ArcticfoxThis is one to remember..#13240105/22/05; 10:37:40

You have to choose (as a voter) between trusting to the natural ability of gold and the natural stability and intelligence of the government. And with due respect to these gentlemen, I advise you, as long as the capitalist system lasts, to vote for gold. -George Bernard Shaw
CometoseVoices from the Past #13240205/22/05; 11:33:08

Cometose (Marty Schwartz/ Market wizard speaks / Market Wizards copyright 1994) ID#139261:
Copyright © 2002 Cometose/Kitco Inc. All rights reserved
Q: You were seriously worried about the banks goin under? ( RE: 1987 crash )

A: Why not? The stories I heard, subsequently , from people on the operations side of the business would have stopped the hearts of the public if they had knwon what was going on . The banks weren't meetign any of the calls at that brokerage firms. On Tuesday morning , we were within hours of the shole thign totally collapsing. So my caution was well advised. I think my fear of a depression is rlated to my father graduating colleg in 1929. If you talk to people who got out of college at that time, it is as though a ten year period is missing from their lives. There was just nothing substatial goin on in this coutnry. That always stuck with me, because I feared i so much . I think that is one of the reasons wh I don't try to increase my earning geometircally. On the day of the crash when I looked at my son in his Crib , I thought, I don't want him ever to ask me, "DAD, why didn't you do everything you could have done?"

2 questions.....

anyone see any fear today ?????????
are we better off or worse off in todays' economic and financial context than we were then ( 1987 ) ????????????

How is the PPT in conjunction with the formulation of DERIVITIVES market operations......
doing in their management / manipulation of these markets.....??????

Can these OPERATIONS control the SUPPLY of SILVER in the Market????
Can these OPERATIONS CONTROL the Supply of OIL???
Can these OPerations control the supply of COFFEE? or the Demand for these items....

Plan according to your conclusions in this matter.( I believe there are others that have already identified supply shortages in the areas mentioned and other areas as chinks in the armor of the fed based plan to use the PPT and allow the pandora's box of derivitives to open to the further objective of extending the life of their control in areas of Financial Engineering)

I am convinced that these supply shortages will unfold in a natural manner.....without the help of speculators....
Add to this picture the possibility that Speculators will enter the market to take delivery of these items , and the time horizon before we get into a squeeze and mamoth derivitives time bomb problems going off is shortened....

( I'm taking books out of boxes this morning to put them back on the shelves because of my moving earlier this winter )

I found a copy of a vhs tape I recieved that has a 1987 copyright on it . It is a documentary on Paul Tudor Jones who is also a successful trader and was also written up in Market Wizards, the first edition.

ON the back of this tape which I am going to watch in a moment ....this quote:
"It also examines Jones' prediction that America is nearing the end of a 200 year bull market ,. If he's right and he almost always is , this country and the world are about to experience economic changes of unprecedented proportions."

and now a quote from Paul Tudor Jones from the same book Market Wizards:

"Everything gets destroyed a hundred times faster than it is built up,. It takes one day to tear down something that might have taken ten years to build. If the economy starts to go with the kind of leverage that is in it, it will deteriorate so fast that people's heads will spin. I hate to believe it , but in my gut that is what I think is going to happen .
I know from studying hsitory that credit eventually kills all great societies . We have essentially taken out our American Experess card and said , we are going to have a great time. Reagan made sure that the economy would e great during his term in office by borrowing our way into prosperity . We borrowed against the future, and soon we will have to pay. "(REMEMBER: THIS WAS WRITTEN over 10 Years ago )

These are two traders who have an inside awereness of our markets.....speaking in the early 90's .........Whatever it was that they saw that has made them gravely concerned has been put on hold for 15 years..

This might also be a platform from which to raise the banner .....that says : RED ALERT WARNING ....Imbalances in the EXTREME have now been achieved by IMBECILIC BANKING POLICYMAKERS...

USAGOLD / Centennial Precious Metals, Inc."I survived the hyper-inflation." --Will YOU survive the next one?#13240305/22/05; 12:21:32

May Buyers' Group
Special discount pricing on German 20 Marks
German gold coins

Shop online or phone for addtional savings.
Call today, save today!

MKThe 5/23/05 USAGOLD Market Update is now posted#1324065/22/05; 14:29:38

The threat of a dollar crisis and rolling financial breakdown continues to dominate the financial pages. This issue, like the last two, focuses on the reasons for this concern and related developments around the world. Our intent is to keep you informed so that you might position yourself ahead of Mr. Buffett's "stampede" as referenced above. In my more than 30 years in the gold business, I cannot recall a time when there has been more legitimate justification for concern about the financial system matched by a more widespread complacency on the part of the general public. In many of the articles I read preparing for this issue, I kept running into this sense of foreboding among market professionals. One American analyst said it best: "There is a sense of unease. But no one can put their finger on it and say 'here is the problem.'"

Ned@ Cometose#1324075/22/05; 20:43:06

I love when you get on a roll buddy !

Line after line, phrase after phrase of relentless "what the hell is going on " stuff. It's always awesome!

I gotta hand it to ya, every word you say is the gospel. I have said it almost every day too......since 1998. I wonder what holds this thing together. Surely its ready to pop? Or is it?

I think of poor old Doug Nolan writing that 'Credit Bubble' weekly update. I mean the guy is absolutely correct, Greenspan puffs a little more into it each week, good 'ol Doug updates us each and every week for the last 300 or 400 weeks ! Imagine the conviction of this guy, week after week for 6 or 7 years this guy believes will be the last and he wholeheartedly sends us the news.

Doug is not alone, dozens of other analysts and writers, reporters, experts and whomever remind us week after relentless week that the end is near. It, yes IT is unsustainable !

Yet IT keeps going.

IT was supposed to pop after 3 years of SM losses. IT was actually supposed to pop DURING the 2001-2003 SM crash. Then during the elections IT was supposed to crash. Oh Hell! IT was supposed to crash a dozen times in the last 2 years.

On IT goes....................

The DX reversed in December, saved by a whisker. The naysayers said the DX would not reach 82......84......86 and now 90.

What is all this craziness?

When do we REALLY crash?


SmeagolO, but Ssirs Ned and Cometose...#1324085/22/05; 22:15:43

...when it does happen we thinks it will yet come as a surprise, and we will all find out jussst how un-ready we all were, hypnotized by the waiting for it...


GoldiloxRemember a few things:#1324095/22/05; 22:40:04


1. When you think the US Administration is stupid, you are naïve.
2. The critical ingredient for the transition from Capitalism to Authoritarian Free enterprise is the reduction and ultimately the elimination of entitlement spending in the Federal Budget.
3. There must be a means by which the voters will accept the significant reduction of entitlements.
4. There must be plausible denial by US economic management when a condition arises that justifies and forces acceptance of the elimination of entitlement spending. That would be: "China did it," "Asia did it." or the "cost of defending the nation did it."
5. The means of accomplishing this is the US dollar at .5600.
6. The trigger will be the TIC report versus the triple deficits and the impact on interest rates.
7. Finally, if you believe the US economic management is stupid then you are naive.

Should a trend be established as defined by a consecutive three months whereby the TIC report of net purchases of US financial assets falls below the Balance of Trade with or without services then foreign creditors will be turned off US Treasuries and diversification into reserve assets (i.e. dollar) will turn from simple net buying into serious net selling. For gold, this is a key trigger.


Sinclair's constant reminder that things are not always as they seem!

GoldiloxChina likely to revalue Yuan; move may fuel inflation: Greenspan#1324105/22/05; 22:44:15


NEW YORK : Federal Reserve Chairman Alan Greenspan said Friday he expects a revaluation "at some point" of the Chinese yuan, but noted that the move could impact inflation in the United States.

"I will accept the premise that the (yuan) will be at some point revalued," Greenspan said in response to a question after a New York speech.

But the powerful US central bank chief warned that this may have unintended consequences for those in the United States who blame China for global trade imbalances.

A revaluation would likely mean higher prices for imports, stoking inflation. Manufacturers may simply shift out of China to other low-cost nations, he added, There could be other impacts," Greenspan" The effect will be a rise in domestic prices in the United States and as a consequences of that there will an said.

Following a revaluation, Greenspan said, "the price of imports in the United States from China will rise ... it does not follow that it will lower our overall trade balance."


Finally, someone answers the question that has been naggin me?

"Jut how does a YUAN revaluation really help the dollar?"

It doesn't!

djacthe federal reserve note#1324115/22/05; 23:01:21

just doesn't give a perspective for centuries :-)
Goldilox Are Airlines Obsolete?#1324125/23/05; 00:36:36

On May 10th, Alex Merklinger interviewed Jim McCanney on a number of topics, including Bert Ruttan's X-prize flight.

Using the priciples of sub-orbital "gliding", the fuel cost of flying to Paris from a US origination would be the equivalent of a 200 mile flight using current jet technology.

By "gliding" back into the troposhere, the re-entry path can be managed to place you at whatever destination required with ease of a glider controlled by computer navigation.

Since Rattan's flight cost about 10 million to design and another 10 million to "pay off" FAA regs for a "one-off" effort, these billion dollar escapades into large, wasteful commercial carriers start to look foolish.

It's definitely past time to rethink our twentieth century monopolistic technologies into 21st century thinking, using smaller teams of bright, efficient people in place of the military-industrial financial black hole that Ike warned would be our undoing.

The airlines' incredible financial losses and inability to execute a basic business plan leave us with a transportation industry rapidly being absorbed by the government. Is this an economic issue or something more political in its true nature?

The answer lies in garage technolgies, the same way we invented the personal computer. If the US red-tape machine forbids the efforts, they will move offshore. Space will NOT be a singularly military environment.

USAGOLD / Centennial Precious Metals, Inc.The 5/23/05 USAGOLD Market Update#1324135/23/05; 00:44:48

The threat of a dollar crisis and rolling financial breakdown continues to dominate the financial pages. This issue, like the last two, focuses on the reasons for this concern and related developments around the world. Our intent is to keep you informed so that you might position yourself ahead of Mr. Buffett's "stampede" as referenced above. In my more than 30 years in the gold business, I cannot recall a time when there has been more legitimate justification for concern about the financial system matched by a more widespread complacency on the part of the general public. In many of the articles I read preparing for this issue, I kept running into this sense of foreboding among market professionals. One American analyst said it best: "There is a sense of unease. But no one can put their finger on it and say 'here is the problem.'"

**Speculation: The Return of the gold carry trade? **

The last two weeks have produced a gold deja-vu that long time gold owners and advocates will recognize. While reports filtered through financial markets that the hedge funds were liquidating dollar-funded carry trades last week thus pressuring the dollar higher, the gold market action was reminiscent of the old gold carry trade days when rallies were snuffed before they got started and the market trended sideways to down for extended periods of time.

Besides the suspect gold market action itself, gold and silver lease rates have begun to move higher -- a sure sign that something might be afoot. This comes at a time when mining companies are dehedging and thus unlikely culprits.

It could be, and I emphasize the "could be," that the hedge funds and bank trading desks, looking around for a new carry trade, have gone to borrowing gold to finance some of their highly speculative investment operations. If so, it wouldn't be the first time. LTCM was widely suspected to have been involved in the gold market prior to its blow-up in 1998.



New Short & Sweet

Timely Nuggets/Links


Much to ponder. . . . . . .

TownCrierWelcome Back Kotter... er, I mean, Professor von Braun#1324145/23/05; 02:12:04

NEW commentary after a 2-1/2 year hiatus--

TITLE: Real Money, Funny Money and YOU
(part 1 of a four-part series to follow)


"Since 1932 the US dollar, currently the pre-eminent reserve currency of nearly all central banks, has been losing purchasing power, estimated by some as being as much as 95%. Or put another way, what cost a $1.00 in 1932 now needs $19.00 to acquire. From a purchasing power point of view it has already collapsed. During that 73 year period much has happened when it comes to financial markets, currencies, debt, taxes and the concept of wealth.

"...Since that time we have witnessed the expansion of financial markets to a degree never seen before. Asset inflation has been taking place at a very rapid rate, with the Federal Reserve printing 'money' -- essentially swapping paper for paper, IOU's for IOU's, creating the appearance of 'value' merely by inflating prices by creating more IOU's.

"The perceived value of an individual's assets has of course risen dramatically during this period with hardly a market being missed out. Stock prices, house prices, gas prices, new car prices, art prices, meal prices, education prices, medical costs, etc, all have risen in either value or cost."

^------(from url)----^

Click the hyperlink for full text, and for access to the "Rocket School of Economics" archives.


TopazWe approach...#1324155/23/05; 02:52:33

...a series of unfortunate events, any one of which could upset the applecart. If they all occur together or as a consequence of one another, all hell will break loose.

Bonds:- The 116/4.4% level on the Long Bond is regarded as Ground Zero where any move to a lower Yield is effectively losing money. If the recent past is any indicator, reversal will be swift and brutal.

Dollar:- We are knocking on the door of DX87 ...also regarded as a potential Maginot-Line for Dollar shorts. If 87 goes, we're in big-time short covering territory. Look-Out Above!!

Gold:- With 116K Contracts (at Friday) still open for June, I'd be very surprised not to see PoG updraft here into next week. In the context of the alt-Dollar a nice diversion a-la April could be expected, if not guaranteed.

We Watch!

USAGOLD / Centennial Precious Metals, Inc.Avoid the crowds; buy right by preparing your portfolio BEFORE the next panic#1324165/23/05; 09:06:30

TownCrierFed buys U.S. Treasuries outright#1324175/23/05; 09:28:03

With the market in fed funds trading in line with the FOMC 3% target this morning, the trading desk responsible for policy implementation for the Federal Reserve System stepped into the open market anyway to boost liquidity, adding $7 billion dollars to the reserves of the nation's banking system (thus goosing the money supply) through a round of overnight repurchase agreements at 2.96 percent.

More significantly, with a 'permanent' addition to the money supply, the trading desk also engaged in the outright purchase of $1.098 in Treasury coupons, targeting maturities of August 2007 to September 2008.


TownCrierUS Treasury to sell $18 bln 4-week bills Tuesday#1324185/23/05; 09:31:13

WASHINGTON, May 23 (Reuters) - The U.S. Treasury Department said on Monday it will sell $18.00 billion of four-week bills on Tuesday, May 24.

Proceeds from the sale will be used to refund approximately $8 billion of publicly held four-week securities maturing on May 26 and to raise new cash of approximately $10 billion.

^-------(from url)-----^

A day in the life...

Not a pretty snapshot of the fiscal position.


TownCrierU.S. Treasury to sell $22 bln 2-yr bills Wednesday#1324195/23/05; 09:41:39

WASHINGTON, May 23 (Reuters) - The U.S. Treasury Department said on Monday it will sell $22 billion of two-year notes on Wednesday, May 25.

Proceeds from the sale will be used to refund an estimated $23.91 billion of publicly held notes maturing May 31 and to pay down about $1.91 billion.


Again, not a pretty snapshot of business-as-usual.

Consider, how does one "pay down about $1.91 billion" when one is borrowing to do it? (See previous post). They are simply reshuffling and in this case increasing amount yet shortening the maturity terms of the debts.

The fiscal problems will only get worse as the baby boomers move into retirement. There is a vital difference between simply having MONEY (i.e., large piles of it can be worthless) and having WEALTH. Choose tangible wealth -- choose gold.


GoldiloxMore Pension Talk#1324205/23/05; 10:21:53


"While United stands to save $645 million a year by dumping its defined-benefit plans, the PBGC — ultimately taxpayers — will pay reduced benefits. United underfunded its pensions by $9.8 billion, PBGC guarantees $5 billion.

That agency is not in the best fiscal shape itself. Multiplying pension defaults have transformed a 2001 surplus into a $23.3 billion shortfall. The 30-year-old agency could get stuck with a $200 billion bill over the next decade if defaults continue.

An increasingly insecure public is waking up to the trend. More and more Americans have seen 401(k)s subbed for pension plans in an economy where the stock market sputters. Workers pay ever-larger amounts for health care as employers spread the pain. It's fueling citizen resistance to privatizing Social Security.

Governments have ignored the gathering storm. If pension problems spin out of control, requiring a massive bailout, it would shift the problem to unsympathetic taxpayers without pensions and diminished health plans."


John Q. Public is awakening to the fact that private employers are bailing out of pension commitmnets while government pensions continue to tax the state and local budgets - who are all deeply in the red.

GoldiloxTillman's Parents Lash Out at Army#1324215/23/05; 10:45:45


Former NFL player Pat Tillman's family is lashing out against the Army, saying that the military's investigations into Tillman's friendly-fire death in Afghanistan last year were a sham and that Army efforts to cover up the truth have made it harder for them to deal with their loss.

More than a year after their son was shot several times by his fellow Army Rangers on a craggy hillside near the Pakistani border, Tillman's mother and father said in interviews that they believe the military and the government created a heroic tale about how their son died to foster a patriotic response across the country. They say the Army's "lies" about what happened have made them suspicious, and that they are certain they will never get the full story.

‘A sign of disrespect’
"Pat had high ideals about the country; that's why he did what he did," Mary Tillman said in her first lengthy interview since her son's death. "The military let him down. The administration let him down. It was a sign of disrespect. The fact that he was the ultimate team player and he watched his own men kill him is absolutely heartbreaking and tragic. The fact that they lied about it afterward is disgusting."

"After it happened, all the people in positions of authority went out of their way to script this," Patrick Tillman said. "They purposely interfered with the investigation, they covered it up. I think they thought they could control it, and they realized that their recruiting efforts were going to go to hell in a handbasket if the truth about his death got out. They blew up their poster boy."


Normally a topic more suited to open forum, I'm posting to show that even in VERY conservative forums like MSN, the wheels are falling off the admin's Dog Wagging machine.

First the Jessica Savage fiasco to create a phony hero, then cover-ups of the potential "fragging" of the poster child for their Iraqi nightmare.

All this while recruitment efforts are garnering feeble results. A report on the Boob Tube the other night told about recruiters who have flipped out over their inability to meet quotas.

Are they losing control over their truth-spinning machine?

TownCrierLooking for helpful commentary and guidance?#1324225/23/05; 10:59:24

You will find it here... immediate e-mail access.

It couldn't be simpler, and the cost is right -- FREE!


GoldiloxCorrection#1324235/23/05; 10:59:29

My Bad - It's Jessica Lynch
GoldiloxHow many T's bought by the Caribbean Banks and Hedge Funds?#1324245/23/05; 12:05:29


Today is a BIG DAY, for the dollar bulls, as today is the day the Net Foreign Security Purchases data is printed... The NFSP has been a real strange duck lately in that the purchases from the Caribbean have pushed the purchases of Treasuries higher, thus giving everyone a warm and fuzzy that the deficit can be properly financed each month... Right now, the NFSP is expected to come in around $70 Billion, which is less than last month's $84 Billion, but still sufficient to cover the deficit... It will be interesting to see how many treasuries were bought from the hedge funds in the Caribbean in March... Or if their appetite has waned...


Chuck Butler from Everbank is watching the T's and CBs (Caribbean Banks) with interest this week.

TownCrierRemarks by Governor Mark W. Olson: The Federal Reserve in an Electronic World#1324255/23/05; 12:18:06


Let me begin with a review of marketplace changes. It is clear that a market-driven change is under way within the payments system. Overall, users of the payments system are moving away from the use of paper checks and toward much greater use of electronic payments. A recent Federal Reserve study shows that in 2003, for the first time ever, the number of electronic payments in the United States exceeded the number made by check. Although checks are likely to remain an important part of the payments system for some time to come, a long-term decline in the use of the check appears, finally, to be taking hold. Still, it is important to remember that this changeover has been a long time in coming. After all, electronic wire transfers have been around for most of our lives and debit cards and the automated clearinghouse (ACH) system were developed three decades ago.

There is, of course, more to the story of increased use of--and confidence in--electronic payments by consumers, businesses, and governments. The payments industry itself is taking innovative steps to collect more payments electronically. Let me highlight two of the most significant innovations. The first one, which was discussed earlier at this conference, is electronic check conversion. Simply put, electronic check conversion amounts to using the bank account and routing information printed on a check to debit a consumer's bank account electronically via the ACH system or a debit card network. In 2004, more than 1 billion checks were converted to electronic payments using the ACH system, reducing the number of checks that would otherwise have entered the paper collection system.

...Overall, a more electronic payments system will benefit society and will help improve payments system efficiency. The need for physical transportation of paper checks will decrease. With more channels for processing payments, the payments system infrastructure will become more diverse and more resilient. At the same time, however, the payments industry will have to rely more heavily on key telecommunications networks and computing systems. Mitigating the risk associated with greater reliance on electronic processing is vital and should be a top priority for the payments industry.

...the Federal Reserve will continue to have an important role within a more-electronic payments system. We will continue to monitor developments within the payments system to better understand their implications. As a policymaking body, we will continue to promote the integrity and safety of the payments system while also supporting improvements in efficiency and accessibility. We will facilitate private-sector efforts to improve the payments system through a combination of dialogue and leadership. Where appropriate, we will work cooperatively with the private sector to identify and remove regulatory barriers to innovation and efficiency within the payments system. And, finally, when necessary, the Federal Reserve will act as a catalyst to greater efficiency, safety, and accessibility within the payments system.

^-----(from url)----^

As a vision of all of these electronic payments buzzing hither and yon takes shape in your mind, I hope it brings home the point that money (our accounting system of credits and debts) is a sort of utility -- not to be "acquired" (saved) as a swelling number in and of itself, but rather to be USED (spent) for the services and tangibles that actually provide the quality of life and security that money cannot provide. Exchanging notional paper/electronic money for tangible gold is a natural plan for savings and security able to outlast a lifetime.

Notional interest on deposits and bonds are merely gimmicks to entice the easily-duped monetary players into letting others make use their money to buy up the tangibles which they have remarkably chosen to forgo. A new one born every minute.


TownCrierGreenspan: Comments on historical pricing power (energy)#1324265/23/05; 12:50:59


The extraordinary uncertainties about oil prices of late are reminiscent of the early years of oil development. Over the past few decades, crude oil prices have been determined largely by international market participants, especially OPEC. But such was not always the case.

In the early twentieth century, pricing power was firmly in the hands of Americans, predominately JohnD.Rockefeller and StandardOil. Reportedly appalled by the volatility of crude oil prices in the early years of the petroleum industry, Rockefeller endeavored with some success to control those prices.

After the breakup of Standard Oil in 1911, pricing power remained with the UnitedStates--first with the U.S.oil companies and later with the Texas Railroad Commission, which raised allowable output to suppress price spikes and cut output to prevent sharp price declines.

Indeed, as late as 1952, U.S.crude oil production (44percent of which was in Texas) still accounted for more than half of the world total. However, that historical role came to an end in 1971, when excess crude oil capacity in the UnitedStates was finally absorbed by rising demand.

At that point, the marginal pricing of oil, which for so long had been resident on the GulfCoast of Texas, moved to the PersianGulf.

To capitalize on their newly acquired pricing power, many producing nations in the MiddleEast nationalized their oil companies.

But the full magnitude of their pricing power became evident only in the aftermath of the oil embargo of 1973. During that period, posted crude oil prices at RasTanura, SaudiArabia, rose to more than $11perbarrel, significantly above the $1.80per barrel that had been unchanged from 1961 to 1970. A further surge in oil prices accompanied the Iranian Revolution in 1979.

The higher prices of the 1970s brought to an abrupt end the extraordinary period of growth in U.S.consumption of oil and the increased intensity of its use that was so evident in the decades immediately following WorldWarII. Between 1945 and 1973, consumption of petroleum products rose at a startling average annual rate of 4-1/2percent, well in excess of growth of real GDP. However, between 1973 and 2004, oil consumption grew, on average, only1/2percent per year, far short of the rise in real GDP.

Although OPEC production quotas have been a significant factor in price determination for a third of a century, the story since 1973 has been as much about the power of markets as it has been about power over markets. The signals provided by market prices have eventually resolved even the most seemingly insurmountable difficulties of inadequate domestic supply in the UnitedStates. The gap projected between supply and demand in the immediate post-1973 period was feared by many to be so large that rationing would be the only practical solution.

But the resolution did not occur quite that way.

^-------(from URL)------^

And as it turned out, Greenspan attributed the 'solution' as follows:

" The failure of oil prices to rise as projected in the late 1970s is a testament to the power of markets and the technologies they foster. Today, despite its recent surge, the average price of crude oil in real terms is still only three-quarters of the price peak of February 1981."

Perhaps the most significant "technology" in bringing about the U.S.'s desired pricing solution was the inovations among derivative instruments in the financial (and commodity) markets -- effectively a tradeoff of nominally "cheap" gold for nominally "cheap" oil which, despite the outward illusions of low price, was nonetheless a provision of tangible value (gold) in exchange for tangible value (oil) for the parties sharp enough to be in on the deal.

Buying gold outright with dollars at the cheap price (while it flows) puts you among the sharpies, even if you have no oil to trade.

Seemingly a long time in the making, the revaluation reckoning will come soon enough. Have gold in preparation for the day.


TownCrierConcluding remarks from previous#1324275/23/05; 13:09:03

"To be sure, energy issues present policymakers and citizens with difficult tradeoffs to consider and decisions to make outside the market process. The concentration of oil reserves in politically volatile areas of the world is an ongoing concern. But that concern and others, one hopes, will be addressed in a manner that, to the greatest extent possible, does not distort or stifle the meaningful functioning of our markets. We must remember that the same price signals that are so critical for balancing energy supply and demand in the short run also signal profit opportunities for long-term supply expansion. Moreover, they stimulate the research and development that will unlock new approaches to energy production and use that we can now only barely envision."


An oblique "clearing of the conscience" in the remaining months prior to retirement, maybe?


968Testimony before the Committee on Economic and Monetary Affairs of the European Parliament#1324285/23/05; 13:26:04

Introductory statement
by Mr Jean-Claude Trichet,
President of the European Central Bank,
Brussels, 23 May 2005

SNIP : "The outlook for economic activity continues, however, to be surrounded by relatively high uncertainty. On the domestic side, uncertainties relate in particular to the evolution of private consumption in relation with consumer confidence. On the external side, persistently high oil prices and continued global imbalances pose downside risks to growth. With regard to those global imbalances, let me note that I fully trust that they can be progressively alleviated only by embarking actively on the homework that has to be done in all G-7/G-3 economies, in particular by correcting the lack of savings in the US and implementing structural reforms in Europe."

968About the 50% cut in Norway's dollar reserves.#1324295/23/05; 13:50:50

Mr. Greenspan explains himself :

Speech by the Chairman of the Board of Governors of the Federal Reserve System, Alan Greenspan, at the World Bank's conference on Recent Trends in Reserves Management, Washington, D.C., on 29 April 1999.

SNIP : "Arguably, immediately following the dollars float in 1973, U.S. Authorities did not intervene and left it to others to adjust their currencies to ours. We did not sense a need to hold what we perceived to be weaker currencies in reserve because presumably we could always purchase them in the market, when, and if, the need arose. We held significant reserves in only that medium we judged a "harder" currency that is gold.
It has become a general principle that monetary authorities reserve only those currencies they believe are as strong or stronger than their own. Thus, central banks reserve balances except in special circumstance hold no weak currencies of which I am aware, other than standard transaction balances that are not viewed as stores of values.
We in the United States built up modest reserve balances of DM and yen only when we perceived that the foreign exchange value of the dollar was no longer something to which we could be indifferent, as when, in the late 1970s, our international trade went into chronic deficit, inflation accelerated, and international confidence in the dollar ebbed. The choice of building reserves in a demonstrably harder currency is almost by definition not without costs in real resources. The budget cost of paying higher interest rates for the domestic borrowings employed to purchase lower yielding U.S. dollar assets, for example, is a transfer of real resources to the previous holders of the dollars. The real cost of capital because of risk is higher in a weaker currency country. Countries with weaker currencies apparently hold hard currency reserves because they perceive that the insurance value of those reserves at least equal they recost in real resources. Reserves, like every other economic asset, have value but involve cost. Thus, the choice to build reserves, and in what quantities, is always a difficult cost-benefit tradeoff. In general, the willingness to hold foreign exchange reserves ought to depend largely on the perceived benefits of intervention in the foreign exchange markets. An evaluation along these lines would appear to require a successful model of exchange rate determination, and a clear understanding of the influence of sterilised intervention. Both of the above have proved to be a challenge for the economics profession. The two main policy tools available to monetary authorities to counter undesirable exchange rate movements are sterilised intervention operations in foreign exchange markets and monetary policy operations in domestic money markets."
"We in the United States built up modest reserve balances of DM and yen only when we perceived that the foreign exchange value of the dollar was no longer something to which we could be indifferent, as when, in the late 1970s, our international trade went into chronic deficit, inflation accelerated, and international confidence in the dollar ebbed." ??????????????????????
Well, judge the current situation yourself. Mr. Greenspan indirectly advises to take stronger currencies in reserve then your homecurrency. I don't think he dares to make that same statement today !
I wonder what currency reserves the Federal Reserve holds at the moment.
Maybe slip of the tongue : "We HELD significant reserves in only that medium we judged a "harder" currency that is gold."

TownCrier968, Trichet follow-through#1324305/23/05; 13:55:44

He'll be glad to know I'm doing my "homework" -- ounce by shiny metal ounce. Unlike many alternative investment options, its a commitment to an unflagging program of personal savings confidently built on years of research and rational expectations.


USAGOLD Daily Market ReportPage Update!#1324315/23/05; 13:58:32">
The Daily Gold Market Report has been updated.

If you are considering investments in gold we invite you to">request our free introductory information packet detailing the products and services offered by USAGOLD ~ Centennial Precious Metals. We welcome your inquiry and look forward to working with you.

Monday Market Excerpts

May 23 (from Reuters) -- Gold futures in New York ended at a fresh three-month low on Monday, as a still-strong dollar capped bullion demand from overseas investors, dealers said.

COMEX June gold contracts fell 80 cents to finish at $416.90, after dealing within a $418.50-to-$416.80 range. The session low equaled the three-month nadir reached on Friday, which is the contract's weakest price since Feb. 10. Analysts believe support is strong at $414-410 an ounce.

The euro was last near $1.2579, above the multimonth low at $1.2533.

Andy Brosoff, vice president of precious metals at Mitsubishi International Corp., felt that with volumes thin in markets heading into next Monday's U.S. Memorial Day holiday, the dollar might stage a correctionlower after its two-week rally, with the euro maybe targeting the $1.2750 area.

"I don't expect the dollar to break down too much, but if it happens I feel gold could get back up to $425 by the end of the week," he said.

South Africa's biggest mining union demanded a 20 percent wage hike for miners working at the country's major gold producers, sparking a warning by employers of tough negotiations since the demand is for five times the inflation rate.

Sweeping wage and benefit talks, held every two years, get going in May and June before the new contract period begins in July.

On the calendar this week are the release on Tuesday of the minutes from the U.S. Federal Reserve's latest meeting, while the Fed's preferred inflation gauge, the PCE index, is Friday. Also scheduled are first-quarter GDP and durable goods orders and consumer sentiment.

------(see url for full news, 24-hr headlines, market quotes)----

968@ Townie#1324325/23/05; 14:14:48

Mr. Trichet wishes to thank you for your efforts to correct the global imbalances !!!
968@ Towncrier -- Open Market Operations.#1324335/23/05; 14:22:56

Do you have any knowledge that an Open Market Operation Bureau is active in the US Treasury Department today ?

See link above.
See also :

Clink!What the heck ?!#1324345/23/05; 14:56:48

On a day when the POG and POS were slightly down and the USDX firm, the PM shares go ballistic with the HUI up 3% ? Somebody scrambling to cover before something comes down the pike ?


slingshotTurning point in one's Life#1324355/23/05; 15:13:03

I have been sitting back and reading all your posts.The amount of information is mind boggling.There has been an increase of commentary by Sir M.K. and Sir Towncrier. Even Sir MarkeTalk has come on line to my delight. Times are changing. The market is changing. We will have to change in some form or another to meet our needs in the future. Visiting many castles, the amount of information exchanged has at least doubled, maybe tripled. Leaving us to take this information and IMO, formulate an educate guess at best with all the unknowns and knowns calculated. These uncertain times can try our patience and stamina to the brink of insanity. We search the halls of each castle to find an equalibrium to fend off the uncertaincies that pull us down in life. Call it Luck or the Survival of the fitest,I do know some will do better than others. My intuition says you have to have some of each attribute in order to make your way through this market that is manipulated and prone to unseen events. Those of us who have believed in sound investment principles have had our foundations shaken by those entrenched within Government and corporate empires that steal our wealth by a stroke of a pen. The relentless attacks by Taxes and inflation serve only as an incubus. Draining our financial stability till it is no more and this herd mentality that the government will save us, will prove that we failed to think for ourselves! The only saving grace comes from those who have lived long enough to pass their knowledge and experiences to the young, provided they LISTEN. The sirens of recklessness are strong and sway many. I have learned to resist their calling. My preparation, GREAT.

My Fellow Knights and Ladies of The Mighty Oaken Table of Yore, I now inform you, that I AM RETIRED.

A decision not taken lightly but with full confidence.

It would not have been possible without Gold Insurance.

I do this on my own with full knowledge of my actions.

Federal_ReservesCrash of October 1987 Challenged Fed Chief#1324365/23/05; 16:10:27

Greenspan. Some call him a political hack, other's call him the great maestro and genius, some think he is just lucky, but IMHO the key to his success and the reality of it all - Greenspan is a stooge of the NYSE banks, the large global corporate interests, and the rich oligarchy that runs the country. As long as he does what they say, he stays in power, including looking the other way and generating excuse codes for the credit imbalances in the economy. In fact, they are so pleased with his lap dog nature, they want him to continue on past the time when his term expires next year. They have trained him well. Greenspan's training started in 1987, when only in office for a few months, the SM tanked. Reportedly unconcerned at first, the masters of the universe soon changed his tune and no doubt engineered the secret buys that buoyed the SM.

Crash of October 1987 Challenged Fed Chief
By Bob Woodward
Washington Post Staff Writer
Monday, November 13, 2000; Page A01
This is the second of four excerpts from "Maestro: Greenspan's Fed and the American Boom." Copyright © 2000 by Bob Woodward, Simon & Schuster.
"Alan, you're it," E. Gerald Corrigan, president of the New York Federal Reserve Bank, said in a telephone call to Federal Reserve Chairman Alan Greenspan. "Goddammit, it's up to you. This whole thing is on your shoulders."

It was the evening of Oct. 19, 1987, and the stock market had just crashed that day, the Dow Jones industrial average falling a stunning 508 points – 22.6 percent. The Black Tuesday market crash of Oct. 29, 1929, had been only an 11.7 percent drop.
Corrigan, an ally of Greenspan's, believed there was no time for procrastination and little for analysis. In one form or another, Wall Street securities and brokerage firms, and their clients, would need credit to cover their losses and keep the system flowing.
"Thank you, Dr. Corrigan," Greenspan said. The chairman was in Dallas, where he was scheduled to speak at an American Bankers Association convention the next morning.
Greenspan knew how the financial system's plumbing worked – an elaborate series of networks involving regular banks such as Citibank, investment banks such as Goldman Sachs and stock brokerage firms such as Merrill Lynch. Payments and credit flowed routinely among them. The New York Fed alone transferred more than $1 trillion a day. If one or several of these components failed to make their payments or to extend credit – or even just delayed payment in a crisis – they could trigger a chain reaction and the whole system could freeze up, even blow up.
Before Greenspan hung up with Corrigan, he told himself: I'm going to find out what I'm made of. He was 61 and had been Fed chairman for just two months. The first challenge: Could he sleep? He did, for roughly five hours. He was amazed.
A Call for Help

"Help!" said a new voice on the phone first thing the next morning, Tuesday, Oct. 20. It was Howard Baker, the former Tennessee senator who was President Reagan's White House chief of staff.
"Something bothering you, Howard?" Greenspan attempted to deadpan.
Baker was feeling pretty lonely. "You've got to get back here," he said. The Treasury secretary, James A. Baker III, was in Europe on a hunting boondoggle with the king of Sweden. "I looked around and there's nobody in town but me, and I don't know what the hell I'm doing."
Greenspan said he couldn't get a flight until after his speech.
"Alan," Baker said, "we've still got airplanes, and I'm going to get you back up here." He promised to send a military jet with continuous secure communications to bring Greenspan back to Washington. A Gulfstream was dispatched at once. Greenspan still wanted to give his speech before leaving Dallas to convey a sense of business as usual, but Corrigan and Federal Reserve Board Vice Chairman Manuel H. Johnson Jr., a 38-year-old former Green Beret intelligence specialist and former assistant Treasury secretary, said Greenspan had to go to Washington immediately. A routine speech to bankers in the midst of an obvious crisis would send a signal that the chairman was out of touch with reality. Greenspan canceled his speech.
Corrigan, 46, a beefy, profane, smart Jesuit-educated Irishman, had been in his office at the New York Fed since 5 a.m. that Tuesday. He was Greenspan's eyes and ears on Wall Street. The 15 phones in his suite of offices were jumping off the hook with calls from the bankers and players in the financial markets. The immediate and pressing question was who would finance or give credit to the banks, the brokerage houses and others in the financial system that needed money. For practical purposes, the Fed was already giving credit in the hundreds of millions of dollars at the current interest rates in routine overnight loans. What were the limits? Would it pull the plug? Would the Fed's lending system be overwhelmed? There were both technical and policy questions.
In a conference call that morning, Greenspan and his colleagues debated what the Fed should say publicly. The Fed lawyers had come up with a lengthy statement.
Goddammit, Corrigan said emphatically, we don't need a scholarly, legalistic thing. We've just got to say in one sentence that we're going to put a lot of money in the market. Everyone needed to be assured they could get money – in other words, liquidity or credit. The Fed also had to address the confidence problem, he urged. They had to show their hand early.
A key question was whether there was a major hole in the system. Was some firm in trouble and maybe insolvent? In the short run, Corrigan argued, there was no way to tell the difference between short-term liquidity problems and outright insolvency.
They finally agreed on a one-sentence statement. Greenspan issued it in his name at 8:41 a.m. on Tuesday, Oct. 20, before the markets opened:
"The Federal Reserve, consistent with its responsibilities as the nation's central bank, affirmed today its readiness to serve as a source of liquidity to support the economic and financial system."
"Alan," Corrigan said in a personal follow-up call to Greenspan, "we're going to have to back this up. I just want you to know that I'm going to start making calls." His phones were still going crazy. He had to talk to the heads of the banks and brokerage houses.
What are you going to say? Greenspan asked.
Corrigan said that he was going to have to talk very tough, and he was going to have to talk in code. He couldn't give them orders, and he couldn't beg.
Greenspan wanted the exact words. They couldn't tell banks to lend to bankrupt institutions; they could be sued for huge amounts of money if bank shareholders could show that the Fed, a key regulatory agency for banks, had improperly directed unsound loans. How would it work?
Corrigan offered a hypothetical call to the head of a big bank. He would say: "You've got to make your own business and credit decisions. . . . But there is this bigger picture out there. If the system becomes unglued, you won't be insulated. . . . If for God's sake there's anything I should know, let me know." In other words, let him know if you're not going to make your payments or aren't getting payments from others, or if you're in trouble. Corrigan needed immediate, high-quality information if he was to discover a hole that might collapse the system. They couldn't plug a hole they didn't know about, so they would have to address everybody.
Greenspan preferred a more subtle approach. The argument should be more calibrated, assuring the banks that the Fed was not trying to force them to lend on an irrational basis or to take extreme risks. The argument should be: Remember that these people who want money have long memories. If you shut off credit to a customer who has been a good customer for a number of years because you're a little nervous, the customer will remember that. Think of the longer-term interests and the customer relationships. Corrigan should clarify to the banks where their self-interest lay.
Corrigan understood, but he would have to speak in his own voice – and his style was loud and clear. He knew he would have to make sure the payments and credit extensions were voluntary. At the same time, it would be his job to make certain they happened.
Greenspan was aware of how tricky it would be to strike the right balance. With so much power over the banks, they had to be careful about using heavy-handed methods. If they forced actions with implied threats, they could eviscerate the vitality of the banking system, which had to operate freely. At the same time, he knew Corrigan was going to bite off a few ear lobes. That was okay. The Federal Reserve needed an enforcer at this moment.
Corrigan, his stomach churning, called Bankers Trust. It was a very tough presentation. Goddammit, you've got to fall in line, you've got no choice.
The bankers on the other end of the phone felt pressured, but they knew that they didn't really have any choice but to do what Corrigan wanted.
Corrigan's call to the Bank of New York was also on the tough side. After some negotiation, it fell in line.
One brokerage house owed some $600 million to $700 million to another brokerage house and was delaying the payment, unsure of the other firm's condition or even its solvency. If it paid, would it in turn be paid what it was owed by other firms?
This was precisely what Corrigan feared – one firm choking, stopping the flow. Rumors were flying.
He argued that there was no insulation for any one bank or firm. If the system came down, everyone would go with it. Clinging to $700 million would not save the firm. Goddammit, he knew what could happen, he said. He tried to sound calm.
The payment was made.
Assessing the Danger

That morning on the jet to Washington, Greenspan considered his options. The stock exchanges were open and share prices were cautiously rising, but the entire system could crumble. It could happen in 10 minutes.
He particularly didn't want anyone from the Fed to sound like Herbert Hoover, president in 1929, declaring with historically memorable stupidity after Black Tuesday that everything was terrific. Everything wasn't terrific. They were in a real crisis. Failure to acknowledge even this simple state of reality would cause the knowledgeable players in the market to think the Fed ought to go to the loony bin.
After all, the Fed was in charge of the sovereign credit of the United States. It had the legal power to buy up the entire national and private debt, theoretically infusing the system with billions, even trillions, of dollars, more than would ever be necessary to restore liquidity and credit.
In addition, there was an ambiguous provision in Section 13 of the Federal Reserve Act, the lawyers told Greenspan, that would allow the Fed, with the agreement of five out of seven members of the Fed's Board of Governors, to lend to institutions – brokerage houses and the like – other than banks. Greenspan was prepared to go further over the line. The Fed might lend money, but only if those institutions agreed to do what the Fed wanted them to do. He was prepared to make deals. It wasn't legal, but he was willing to do it, if necessary. There was that much at stake. At that moment, his job was to do almost anything to keep the system righted, even the previously inconceivable.
Trading Slackens

By about 11:30 a.m. on that same day, stock in IBM, one of the big blue-chip firms, stopped trading. All the orders were to sell. There were no buyers. Soon dozens of other stocks stopped trading. A stock is only worth what someone is willing to pay at a given moment. If no one was willing to buy, the stock was, on a theoretical level, worth nothing or heading to nothing. By 12:30 p.m., any ground gained during the morning trading had been lost. There was very little trading, a sign the system might be freezing up.
Corrigan spoke with Johnson in Washington. This was the moment of direst need.
We can't hold it, Corrigan said, with real panic in his voice. It's falling apart. There's not enough trust in the market, and it's going to melt down.
He came up with a desperate contingency plan. Instead of just lending money — guaranteeing liquidity to the banks — the Fed would directly guarantee the payments between brokerage firms. But it would be a last, desperate measure. The plan, and the Fed's willingness to embrace it, had to remain a deeply guarded secret. If word got out, banks and brokerage houses would just seize on the guarantees and use them instead of their own money. It would give everyone an easy way out.
The Chairman Arrives

Greenspan's plane landed at Andrews Air Force Base outside Washington in the afternoon, and the car that was bringing him into town didn't have a secure phone. To hell with it, Greenspan said to himself. He called in to the Fed, even though his conversation might be overheard.
Johnson said he had just received a call from New York. There was a plan being discussed to shut down the New York Stock Exchange within the hour.
"That would blow it," Greenspan said. The head of the Securities and Exchange Commission, David Ruder, had gone on television and mused that there was a point at which he would favor a "very temporary" trading halt. Ruder later denied that he'd even contemplated a trading halt, but his statement was fact. Awfully dangerous to go on TV, Greenspan thought, if you didn't want to be quoted. Closing the New York Stock Exchange was really not an option in Greenspan's mind. Once it was closed, how would it be opened? What prices would stocks trade at? The Hong Kong exchange had closed once and it had taken a week for it to be reopened. Markets set prices, and if there were no market there would be no price. It was almost unthinkable.
Johnson worried, if New York shut down, what would happen to the futures market? A futures contract is an agreement to buy or sell something — wheat, gold, bonds, stocks — at a future point. With no basic stock market trading, there would be no future. The stock futures market would collapse. That would trigger general panic, he believed. They were truly about to go over the precipice.
Shutdown Urged

Howard Baker didn't have the foggiest notion of what was going on. John Phelan Jr., chairman of the New York Stock Exchange, had been arguing in favor of a suspension of trading. He urged Baker to have President Reagan issue an executive order suspending stock trading. The 1933 Securities Act gave the president the power to do so.
Baker took the proposal to Reagan.
What do you think? Reagan asked.
"What I think is I don't know," the chief of staff replied. He said his instincts told him it would be a lot easier to suspend trading than to resume it. He proposed that the White House counsel draft an order to suspend trading, just in case. "I'm going to put it in my desk drawer," Baker said, "and I'm not going to bring it to you, and we're going to wait and see how this day goes."
That's fine, the president said.
Phelan kept beating the daylights out of Baker on the phone. He was fierce and certain. Suspend trading. Things are out of control. There's a disconnect. The specialists on the stock exchange floor who kept active trading going for the major stocks were starting to go crazy. If they lost the specialists they would lose the whole place, Phelan said.
Baker took to the phones. He talked with the heads of General Motors, Salomon Brothers and Merrill Lynch. They all opposed a suspension of trading. Baker reached Donald Stone, one of the most prominent specialists on the New York Stock Exchange floor.
"I owe so much money," Stone said, "I can't count it. This place is knee deep in panic."
Alarm Sounded

At the Fed, Greenspan reached a key executive at the Chicago options exchange, who said the market there was about to collapse as well.
"Calm down," Greenspan said. "It's containable. Don't worry, don't panic." He was fascinated to see how powerful people functioned under stress. It reminded him of the Apollo 13 astronauts who successfully repaired their spacecraft in outer space by manufacturing a replacement part they had not brought along. Does your mind or psyche freeze over? he wondered. He was going to find out.
He also spoke directly with a number of big players from the largest financial institutions. Their voices were shaking. Greenspan knew that scared people had less than perfect judgment.
He didn't pray, and he didn't cry – though he admitted later that he would have wept if he had thought it would keep the markets from deteriorating further. If he didn't intervene, this crash had the potential to devastate the American economy.
But soon after 12:30, there was one positive sign. A number of prominent companies had announced that they were entering the market to buy back their own stocks at the lower prices, in effect saying that their stocks were such a bargain that the companies were willing to put up their own cash to purchase the stocks. It was a message of confidence.
Then, at about 1 p.m., the Major Market index futures market staged its largest rally in history. Several major Wall Street firms bought a mere $60 million in future contracts on stocks, and the action sent a shock of brief optimism through the market. Because the buyer of futures contracts had initially only to put up a small portion of the money, the cost of these transactions was only a fraction of that $60 million. But the positive movement apparently triggered a significant number of buy orders in the underlying stocks. Some big institutions or wealthy investors had perhaps decided to gamble in order to stabilize or even save the market. Soon the Dow itself rallied, ending the day up 102 points, a record gain.
Many Involved

Howard Baker had lived through one of the tensest days of his life. He sensed but did not know — not a soul ever told him — that some big companies and investors had gone into the market to buy stocks and drive the prices up. By law and tradition, the White House, Treasury, the Securities and Exchange Commission, the free markets, the New York Stock Exchange, and the Fed all had a role in solving the problem. There was no single stock market czar, a person or institution fully in charge. Baker was pretty sure it was one of those moments when fractured responsibility made it as dangerous as it ever got.
But the greatest achievement, Baker believed, was Greenspan's one-line press release. The Congress could have met in extraordinary session and passed legislation without hearings to reassure the markets, but that would have had little impact. The president could have suspended trading or acted somehow, but that too would have done little. There was only one part of the government that could have turned it around, and that was the Fed offering unlimited credit. In the end, money talked – or, at least, the Fed's openly stated willingness to provide it.
Treasury Secretary Jim Baker had flown back to the United States on the Concorde. He too thought the one-sentence statement was brilliant. They were lucky to have Greenspan at the Fed. Baker wasn't sure that Paul Volcker, Greenspan's predecessor, would have been so quick to act.
Corrigan never figured the whole thing out, and part of him didn't want to know. If it was a major miracle rescue of American capitalism, several people or firms might have operated in concert to manipulate the market. That was technically a scheme, and possibly illegal. And if someone in the government or the Fed had given tacit approval, encouragement or even just a wink, that would make it worse. Corrigan decided that he didn't want to pursue the matter.
For all Greenspan knew, it might have been a handful of individuals who made the move. There was no telling whether the transactions were made out of knowledge or desperation, skillful calculation or serendipity. Was it possible that American capitalism was given a reprieve by the strategic — or accidental — investment of several million dollars? It was possible, of course.
Or perhaps the bottom had been reached and the market had pulled out naturally. Whatever the answer, Greenspan's largest realization was that they hadn't known what to do. They could set up a crisis committee, confer, send messages to the financial markets, seek intelligence, talk tough or smart, look at the data until they were blue in the face and try to project, but they were all novices, given the problem they faced.
That wonderful, nebulous space between the free markets of capitalism and regulations of government was the land of the unknown. It was Greenspan's first major lesson at the Fed, and he had been chairman only 72 days.

Boilermaker@ Slingshot#1324375/23/05; 16:19:21

Dear Sir Slingshot,
From one retiree to another, welcome to the world of limitless opportunity. May your days be filled with the excitement of unbounded creativity and tempered with the knowledge that on any bad day you can just take a nap (as I often do). Enjoy!!

TownCrier3,400 Wilhelm II gold coins nearly sold out!#1324385/23/05; 16:21:48

A quick chat a few moments ago with Jonathan revealed that 3,100 of the original 3,400 brilliant uncirculated German 20M gold coins have so far been snatched up by value-conscious clients and newcomers alike.

At these prices we expect the remaining 300 will be gone in a jiffy.

If you'd like have some of these handsome coins to improve the weight and appearance of your portfolio, don't delay. These very special prices will run out when the present allotment does.


Dollar Bill.,.#1324395/23/05; 16:58:03

Goldilox, any chance guys were trying to help the family in thier grief? Any chance the parents are just guessing wrong about the motives of the guys in the service who also are human and as any of us would, try to minimize the pain of the next person? I say it was with good intent and sympathy and also knowing that the guys that shot wrong felt terrible about it. I cannot be convinced otherwise.
Farenheit freaks can embrace the demonizing version.

slingshotSir Boilermaker#1324405/23/05; 16:59:56

Thank you kind sir. True, there is life after retirement,limitless opportunity. All the years I have visited the forum I have not read of anyone retiring. We all have discussed the way to get there,yet nobody came forth to say they have achieved the Golden Ring. This Golden Ring is different for each of us. Our comfort zone in which we will live out our lives. I live a modest life not asking for much. Relish in the extras and prepared to fight against the downfalls. Pay off debt, House/cars/credit cards. Put some in savings. Diversify my portfolio and pay in cash. Don't buy on a whim only things you need and in some cases thing that have dual value or use. There are many things I do not need and in so have no need to keep up with the Jones. No Ford Explorer. No 2400 sq.ft. house. No 60 inch plasma T.V. I just need some smokes/beer and do my hunting. I have been blessed with a good Wife and Son and fortunate no great harm has come to me or my family.

To the Lurkers of the Forum. What has Gold if any, played in your retirement plan.

I did it.


TownCrier968, an "Open Market Operation Bureau" at the US Treasury#1324415/23/05; 17:47:43

I guess I'd never really given much thought or attention to the particular names of the specific office and/or managers that control the fate of the Treasury Department's funds as related to various balances (as especially in regard to the more commercial side of its Tax & Loan program).

As a major player in the monetary scene, I guess I had assumed that the Treasury had been a player in the fed funds market for quite some time -- but there I guess I have given them more credit than warranted; for it appears that this capacity and function has only recently come into full bloom (rather than being just a passive interest-taker from accounts at depository institutions).

Given the timing of development and implementation of the Department's Treasury Investment Option facility, it certainly makes perfect sense that this coincided with bright young Peter Fisher's stint at the Treasury -- bringing him on board to provide enough in-house expertise to get this off the ground.

Tracking down the lead bureau for the TIO program led me to the following page which seems to answer your question -- the so-called "Open Market Ops Bureau" which your commentator speculated on in 2002 is more properly identified now as a duty of none other than the old familiar Financial Management Service (FMS) wing of the Treasury Dept.

Is this all you needed/wanted to know?


YGMSlingshot#1324425/23/05; 19:01:47

Not far behind you (couple yrs) Congrats! Enjoy the 'Gold'en years!
GonlyoldThe Federal Reserve in an Electronic World#1324435/23/05; 20:59:19

@ TownCrier

Ever so closer to a system where one cannot buy or sell without having the approval of an self-appointed master. You are correct TC when you say, "...gimmicks to entice the easily-duped monetary players...A new one born every minute."

Using credit cards or electronic transactions is the equivelant of being required to "show us your papers commrade".

GoldiloxTillman story#1324445/23/05; 21:40:27


This story is more about the way the info was "managed" than how the battle events actually unfolded. The family has resigned themselves to this fact.

It doesn't take a conspiracy theorist to understand that releasing a phony story of "died at the hands of the enemy" so the President could offer his very first Iraqi eulogy at a pro football game, and then changing the story to "friendly fire accident" three weeks later does not in any way constitute "helping the family in their time of grief."

Read the family's responses again. This was not a family who had second thoughts about their patriotism just because they were unlucky enough to lose one of their own. This is an educated group of people who asked for truth and got treated like "Press Fodder". Notice they are not blaming the field soldiers, but want accountability from those who spun the tall tales at their expense.

These are the same "spin doctors" that tell us the $180B of SSI they are diverting to "contractors" and off-budget "programs" is better spent fortifying their corporate bottom lines than actually insuring a retirement pay-out for the people that paid the money in.

GoldiloxYour Papers, Please#1324455/23/05; 22:17:47

@ Gonlyold,

So true.

Lost in the info barrage is the fact that phase 3 of the Patriot Act's "border protection" requires physical ID for anyone leaving the country as well as those who enter.

My personal pet theory is that embedded RFID will be the final insult, thus fulfilling the prophesy of "mark of the beast" by whatever method of insertion is mandated. Lifetime RFID is being legislated and tested on some felons now, so it will certainly spread as they demonstrate how well it "works".

The irony is that so many "believers" will be hoodwinked by the Elmer Gantry preacher-politicians setting this up and a Congress that doesn't even read bills prior to passing them. We will be told that a "Benevolent Babysitter" is the best form of government - as previous guarantees of freedom grant too much license to the "lawless ones".

Oh, gold bars and coins will also get chips embedded to protect them from thieves and "counterfeiters" and track their movement.


GoldiloxGold and the Dollar#1324465/23/05; 22:28:47


One needs only to read the Malpas reports of Bear Sterns to see how inflation, run away inflation, deflation and run down deflation is measured by the price of gold versus the ten year moving average of the gold price. This is an expression of establishment thinking.

The range points on the price of gold in present time measured against the ten year average called for levels of $350 then $400, then $450 and the price now. This range spoke to the marketplace for other items concerning the past defined risk of deflation, the project to offset deflation, the entrance of inflation and now the perception that inflation is under control according to the massaged indices of CPI & PPI plus the skewed deflator figures based on more whacked out assumptions.

Gold will be part of the dollar crisis to come and will eventually be used in the US currency in a way the Gold Community will not agree with. However, it will stabilize the US dollar, preventing inflation again for two decades or more when the US federal Budget is drastically cut by what in a practical sense will be the elimination of entitlement spending. My job is neither to welcome nor condemn what is happening but rather simply follow the money.

Further to our discussion of the transition from Capitalism to Authoritarian Free Enterprise, which is an economic system that is designed to extend and flatten business cycles thereby contributing to more predictable profits for major enterprises.


Sinclair sees the ongoing manipulation as having a greater plan in some "dollar transition".

PRITCHO@ GOLDILOCK - - - RE THE TILLMAN STORY #1324475/23/05; 22:57:54

Thanks for bringing that story to the forefront -a terrible travesty for the family. I hope it's a story that gets wide publicity in the USA. However knowing your press I doubt it.Only a $Bill would give the liars any credence

The same band of thieves manipulate the PMs on a daily basis. Outside of the USA the price of Gold is much lower today than 4 years ago! (Well at least here in Australia.) Every tick of the US currency brings a corresponding tick (usually lower) in the $ price of Gold in say Oz currency. Try living with that on a daily basis & still hang on to the yellow. It ain't easy.

And still GATA won't go public. Still bleating the same cry to the same audience --what's the key to that?

PRITCHO@GOLDILOX - - - -#1324485/23/05; 22:59:45

Got the spelling right this time. Sorry about that.
YGMPritcho....what#1324495/23/05; 23:45:41

"And still GATA won't go public. Still bleating the same cry to the same audience --what's the key to that?"

........what's the key to what you are saying? Go public? GATA has been as public as finances will allow. The audience has vastly expanded since inception. Many well known and respected Mining industry writers and spokespersons are members of GATA, as are many miners. Maybe you have fallen behind the times in respect to GATA progress. Goldrush 21 in August, Dawson City Yukon is another broad stroke for GATA and Gold. No unless I've mistaken your meaning, I'd totally dissagree with your statement....YGM

GoldiloxGATA#1324505/24/05; 00:20:15

@ YGM,

I think Prichco's real concern is that GATA and other beacons of gold truth are still confined to theri roles of "preaching to the choir".

Your evidence of wider acceptance of their investigations is growing is good news, but the plight of gold and the dollar is still VERY much repressed in the general bought-and-paid-for media.

One other light in the wilderness . . .

CNBC's Contrarian piece yesterday by Bill Fleckenstein was entitled, "Gold and Equities will not Stay Down for Long".

GoldiloxThe Weekly Gold Perspective - Julian D.W. Phillips#1324515/24/05; 00:25:01


One perspective that seems to be missed on this front is the very nature of China. Many in the West assume that China is moving quickly into the Capitalist world and will slot in with the way of doing things there. As though Capitalism of itself will overcome the inherent nature of the ex-communist system and another major world player will arrive on the scene, touching a forelock and taking its place alongside other new players. We believe China is and will write the rules to suit itself when it sees fit. We mentioned the archaic banking system, which when put next to a Western style banking system just won't do the job. It works in China because it is subject to the government. In the West the banks have moved into a dominant position that rules all our lives. An interest rate move alters the economic climate almost overnight. But the developed banking system is not the reflection of the advancing system of civilisation we have, it is a form of economic management that has evolved within the context of the Western economic cultural demands. Money is the cornerstone of Western civilisation with government an equal and often not dominant partner. Government in China dominates and the banking system, the very nature of credit and the economy, will have to obey it. We have seen this system work [even if not approved by us]. The government control of growth both locally and globally has brought a focus and vigor to China that has bulldozed it onto the global screen shoving aside the interests of those already in that picture. China will not touch a forelock to the U.S. unless there are distinct short-term advantages to it doing so. We have to factor in this side of China's nature to understand what lies ahead. Western rules governing Capitalism cannot be applied to China! To ignore this will be to get the future hopelessly wrong!


While not pretending to be any kind of expert on currency economics, I would bet that the Yuan-Dollar conundrum is truly more complex than anyone admits, and the fallout will surprise many who DO claim expertise.

968@ Towncrier msg#: 132441#1324525/24/05; 00:31:04

Thank you !
GoldiloxLies of good intention#1324535/24/05; 01:16:37

@ Dollar Bill,

I grew up being taught that "lies of good intention" are still, well, lies. . . that once the light of truth is shed on the prevarication, the damage is compounded by the deceit, as trust is deprecated.

You are welcome to believe that the Pentagon PR machine's primary motive was to "protect" the Tillman family, but it is more likely to be wishful thinking than accurate, given what we've already witnessed from said PR machine.

Read Sinclair's comments re this story on his site today.

As I mentioned in the original post, this subject in and of itself is askew of the topic, but demonstrates significance when one makes the connection that the same upper echelon PR machine controls economic data releases, inflation numbers, employment figures, and basically "what stories are newsworthy" for the mainstream media.

Ever wonder why we got bombarded by months of Martha Stewart's fairly trivial case when the Barrick-Blanchard gold manipulation case never saw the light of day in even the financial media?

GoldiloxDX sell off?#1324545/24/05; 01:22:16

Another attempt at dollar sell off as of London open.

Gold moving up in sympathy, but silver has not yet responded.

TopazBonds and Gold.#1324555/24/05; 01:32:42

At the second bite of the cherry, Bonds (long) drove effortlessly through the 116/4.4% "waterlevel" and are now submerged. Given the strength of this yield downdraft, I can't see them coming up for air just yet.

Gold (comex) is a real curiousity tho. Maybe I read it wrong yesterday, but to go from 116K OI to 158K on 50K T-O today ...given the time of the Month is MOST interesting.

TopazBond/Oil#1324565/24/05; 02:44:24

Clearly, Oil is looking for a Bond sell-off as these two tack away once again. Even accounting for the July roll-over, Oil is probably 5 or 6 Boatlengths off-course.
Close cover is the order of the day and we should see quite the turnaround as Bonds consolidate "down here".

KevNational Bank of Belgium: BIS revisited#1324575/24/05; 03:48:17


More openness at AGM ahead of first court date

THE National Bank of Belgium made slow but welcome progress in its attitude to good governance at its 2005 AGM on March 29, with a display of tolerance towards dissenting shareholders that has hitherto been lacking.

Opinions remain very divided on the fundamental questions regarding beneficial ownership of gold and foreign exchange reserves, and the bank's loss of its right to issue bank notes, however.

NBB included in its annual report a written statement of its position on the beneficial ownership of capital gains on gold and foreign exchange reserves. This was the first time NBB has done this since the dispute began with private shareholders, represented by Deminor.

In essence, NBB's position is that the bank has the right to distribute capital gains on its massive gold and foreign currency reserves to the Belgian state, its 50% owner – as it has on numerous occasions in the past, most recently in February 2004. This is despite this ‘rule’ of NBB's capital structure never having been made explicit previously to its overwhelmingly retail private shareholder-base.

Deminor is nonetheless heartened by the attitude of NBB staff at the AGM, which was in marked contrast to the three previous meetings it has attended on behalf of shareholders. NBB staff were clearly better-prepared than in previous years for the long list of questions Deminor submitted on behalf of clients.

Shareholders represented by Deminor are currently suing NBB in two cases before the Commercial Court of Brussels. September 20 has been set for a hearing on the first case, which concerns whether the NBB's right to issue bank notes has expired, now that Belgium has adopted the euro. If the right has expired, it would be compelled under its articles of incorporation, to distribute its reserves to shareholders. Deminor hopes both cases – the second concerns who owns NBB's assets, in particular capital gains on its reserves – will be resolved this year.

For more information, please contact Erik Bomans or Charles Demoulin in Brussels.

TopazLast one, I promise.#1324585/24/05; 03:54:04

Unlike Bonds, where Cost of Carry Considerations undermine Yield, Gold (even the paper variety) is a REAL paper option when said CCC's reduce Bond "returns" to Zero.

An unintended consequence of low (and lower) Yields is the attractiveness of investment in "chronically Zero yielding Gold"

Wouldn't that be a Hoot! ALL those Bond Junkies getting a whiff-high from something "outperforming Bonds at ZERO PERCENT YIELD"

The mind boggles!!

SundeckUS dollar back in fashion?#1324595/24/05; 05:04:20

According to today's Australian Financial Review, data from the Chicago Futures Exchange for the week ending May 17 show net long dollar positions increasing from 5402 contracts to 107,572 contracts; the highest net long position since 1999.

Looks like someone is expecting the dollar to strengthen...

1. possibly betting on a "non" vote from the French in the coming election and some negative pychological impact on the Euro as a result???

2. coupled with the effects of a flagging European economy???

3. Other??

Could be a rout if the hot air runs out and the old buckaroo decides to ditch instead of fly...


The Invisible HandQuestion to Deminor #1324605/24/05; 05:10:09

Apparently you filed a case asking that since the NBB's right to issue bank notes has expired, the NBB be compelled under its articles of incorporation, to distribute its reserves to shareholders.
Will you once the Constitution of the EU will have come into force also ask the state of Belgium to dissolve itself as it will no more make sense?
Has it ever?
What will happen to Deminor if there is no more Belgium? Is Deminor not fighting for its own dissolution?
Asking for the dissolution of Belgium with names as Nothomb and Thuysbaert among the Managing Partners, on aura tout vu! Or, did we? Please do it, then I will consider you human.


Up until 18 mths or so ago I have for many years been a DEDICATED GATA supporter. Even now I get their up to date announcements daily.

My beef is this. The choir( Gold bugs & those that know what's going on) don't need any more of the same that gets dished up daily by GATA & Le Cafe (Used to subscribe there too)

We need a wider audience --which can be reached without spending a fortune --by means of well designed PAID ads to direct the curious to "the message". The "message" could be on a separate web link that has "factual" info re the manipulation that is ongoing. Fire should be fought with fire and things will only change in our favour once the mainstream gets a whiff of what's going on.

For what it's worth I've offered to put in money --and I'm sure others would too (world wide) IF a credible voice offered to hold the advertising kitty for such a campaigner.
Who better than GATA? -BUT they're NOT interested. WHY?

And to YGM re the much ballyhooed Gold Rush 21 in Dawson City Yukon let me tell you this. I saw the advertising for this & contacted a GATA Board member in March.
I asked IF they were making a point of asking other countries (ie Australian Miners) to attend & if this had been attended to? I suggested that the published invitation letter should be crafted more to appeal to regional needs etc--I would be willing to send such an invitation.

THE REPLY stated: "I don't know anything about Australian Miners --If YOU want to send something to all of them that would be terrific!

My reply was: "I had something else in mind than REHASHING an Internet letter. You know something a bit more personal-like an overseas visitors contact link AND most importantly an "Organisers" letter specifically welcoming overseas participation. Gold Mining is not just an N.American thing! --So forget it"

WHY were NO invitations sent to Australian Miners? I'm buggered if I know --it just doesn't make sense. A well written letter of invitation sent to the MDs of all the OZ miners should NOT have been beyond GATAs competence!

I have no ulterior motives in bringing up these issues except to get GOLD really on the world agenda.

Dollar Bill.,.#1324625/24/05; 07:11:46

Pritcho, While I think GATA has at times left itself open to comments, I am not sure I understand this time.
You said "I am willing" and they said "terrific".
Which is revealing that they trust you to represent them in a letter writing effort. That is not typical organization behaviour, and that is a positive. As others could vouch, I am not responding as a GATA representative. They will probably respond.

mikal@Pritcho#1324635/24/05; 07:12:44

Re: GATA - I think you could do better than to allege "more of the same that gets dished up daily".
The volunteers at GATA have exceptional experience, dedication and talent with a long list of accomplishments including bring GATA to fruition. And I and many others
believe a subscription to lemetropolecafe is worth it's weight in gold and then some. Bill Murphy's 'Midas' commentaries are especially relevent and very exceptionally
well documented. Chris Powell's dispatches are another
GATA's many services include research, lobbying and email communication. GATA DOES reach overseas
in radio interviews, meetings and communications of every kind. They were on national television in South Africa several years back. The Gold Rush conference will feature great speakers such as Ferdi Lips of Switzerland, Peter George of South Africa and many others. Let's continue to support them together and look forward to their growth and the growth of this website. Thank you.

Chris PowellReply to Pritcho re GATA#1324645/24/05; 07:14:45

Pritcho, some Australian mining companies HAVE been invited to GATA's Gold Rush 21 conference, and if you would care to identify some you think would be receptive and they have not received an invitation, I will see that they'll get one.

As for a major advertising campaign, nothing like that will be possible until GATA's treasury balance increases many, many times above its present level. We hope that GR21 will be a step toward raising substantial money.

My impression from GATA's efforts to recruit mining companies for GR21 is that most of them are too scared of their governments and their bankers to take the revolutionary step of attending and that they don't WANT to believe what GATA produces more and more evidence of -- that their own bankers and governments are determined to destroy them and their product. I regret that but I can understand it.

You write that you'll help GATA financially when someone with a lot of money swoops down to make the decisive contribution. Of course your contribution will hardly be needed then.

Some of us do what we can, and some of us grouse. The more money GATA has, the more it will do. We'll always welcome your contribution at any time, and will try to make good use of it -- as I think we made good use of contributions when, this week, we disclosed and publicized the explosion in bank-held derivatives that cap the gold price.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Clink!Dr Paul launches another broadside#1324655/24/05; 07:22:01

It's such a shame that not not everyone from Texas talks as straight as this man, this time on China. I particularly like the first paragraph below - it's funny how this aspect has not been mention either by other politicians or the press :-

If anything, the US government should be embarrassed that another nation has depressed its currency by tying it to the US dollar. An economically sound nation would take pride in its currency, one that maintains a stable value and provides incentive for savers. Yet here we are, mad at China for our own sin of flooding the world with cheap dollars.

The root of the problem is the Federal Reserve and our fiat monetary system itself. Since US dollars and other major currencies are not backed by gold, they have no inherent value. Their relative values are subject to political events, and fluctuate constantly in highly volatile currency markets. A fiat system means every dollar you have can be eroded into nothing by the actions of politicians and central bankers. In essence, paper currencies like the US dollar operate as articles of faith-- faith in the policies of the governments and central banks that issue them. When it comes to a government as deeply indebted as our own, that faith is sorely lacking among investors worldwide. Politicians often manage to fool voters and the media, but they rarely fool financial markets over time. The precipitous drop in the US dollar over the past few years is proof that investors around the globe are very concerned about American deficits and debt. When investors lack faith in the U.S. dollar, they really lack faith in the economic policies of the U.S. government.

mikalGATA plans presentation#1324665/24/05; 07:24:12

To: This email address is being protected from spambots. You need JavaScript enabled to view it. Subject: [GATA] GATA plans presentation at Vancouver conference June 12 and 13
Tuesday, May 24, 2005
Dear Friend of GATA and Gold:
What, the poet asked rhetorically, is lovelier than
a day in June?
How about a couple of days in June in Vancouver,
British Columbia, Canada, with GATA Director
Ed Steer's daughter, Kathy, staffing the GATA
booth at the World Gold, Platinum Group Metals,
and Diamond Conference?
Beat that, Greenspan and Trichet!
The conference will be held Sunday and Monday,
June 12 and 13, at the Vancouver Convention and
Exhibition Centre, and besides Kathy at the GATA
booth the speakers will include:
* GATA Chairman Bill Murphy and consultant
Frank Veneroso of Veneroso & Associates.
* Bob Bishop, editor of Gold Mining Stock Report.
* Frank Holmes of U.S. Global Investors.
* Jason Hommel of
* Michael Levy of Border Gold Corp.
* Joe Martin of the conference's sponsor,
Cambridge House.
* Jay Taylor of J. Taylor's Gold and Technology
Stocks newsletter.
* And many more market analysts and exhibits
from dozens of mining companies.
As always, admission to the conference is free
for those who register in advance. All you have
to do is get to Vancouver and find a place to
stay. But the conference has arranged for group
rates at the Pan Pacific hotel adjacent to the
convention center -- or, as our Canadian friends
affect to spell it -- "centre."
You can register for the conference and find
out all about it here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
To subscribe to GATA's dispatches, send an e-mail to:
This email address is being protected from spambots. You need JavaScript enabled to view it.

Dollar Bill.,.#1324675/24/05; 07:40:03

Goldilox, you also said;
"I grew up being taught that "lies of good intention" are still, well, lies. . . that once the light of truth is shed on the prevarication, the damage is compounded by the deceit, as trust is deprecated."
Well, now that is quite a topic Goldilox, and not off topic actually. In chess or sports, if you can fool the competition to think that you are doing one thing while you are doing another, we accept that. If you win as a result, you are cheered as long as you are playing by the rules. If you are in a game where you get to change the rules as you go, it is up to the competition to be your equal or your better. Hey, I WISH we lived in a world of no waste, no repetitive mistake making, but we do.
If guys are building a globalist model, they must have either cruelly decieved the oil owners or made a deal to provide food for eternity to the saudi people. As they move to a globalist model, there is deciet all over the place.
Is is cruelty on thier part? Is is a decision they made when faced with either financial chaos of community? Can you get to a globalist model if everyone knows you are doing it?
If everyone knows that the next recession will reveal in its aftermath that the multinational companies are all that will be left standing in the new future, will we object? Will we obstruct? Will we make it harder for them to pull this off and will we sabatoge it? Would losing national soveriengty tick off people? So isnt it better to do it under cover of darkness for ..........the good of the whole?...........
Is it better to not lie and not get to the one world future?
Does it mean less misfortune to go to the one world thing?
Does it mean less war? Does it mean less starvation and war to go to the globalist united states of earth?
Can we defeat the devil by ant colony or bee hiveing ourselves? Or at least lessen his methods of harm?
You dont see Nevada invading california, so the US of Earth, might mean less war down the road, is this effort to blindside and blindfold us as we walk towards one global economy and govt a net positive?
Financial lying is the way of the day, I wonder if the lie to keep fiat alive is the greater or lesser harm.
I just dont know.
Although I do believe a house with a acre or more of farm-able land is what people will wish they had in the future. After the next recession, yipes!

I dont read Sinclair anymore as his limits became my limits and so his usefulness ended.

PRITCHO@ CHRIS POWELL - - - RE GATA #1324685/24/05; 08:22:20

Hi Chris nice of you to respond. It would have been even nicer if you had stuck to the facts. You said:

"You write that you'll help GATA financially when someone with a lot of money swoops down to make the decisive contribution. Of course your contribution will hardly be needed then."

I NEVER said a word of the above! What I have tried to do is get GATA to run with the idea of seeking contributions from ordinary Goldbugs. Contributions that would be ear-marked to pay for a very selective media advertising campagne.

Who says you need a "decisive contribution"? I believe that thousands would contribute anywhere from $20- $100 for such a campagne --if it was being run by a credible source. After all all of us who have invested in GOLD & SILVER are being shafted for many $$$$ week after week & year after year.

The btm line is that ALL Australasian Mining Co's should have been FORMALLY invited! What a crock to suggest otherwise. There's not that many of them for starters & even if none took up the offer --at least communications have been established. What a cop out to suggest that I should inform you of any that I feel had been left out. I mean really --get serious Chris.

GATA would get a conntribution from me & I'm sure many others if it needed the money for a specific campagne - -
like getting the message out to the 95% of the population who've never heard of them.

USAGOLD / Centennial Precious Metals, Inc.FREE Gold Information Packet...#1324695/24/05; 09:14:10

Chris PowellAustralian miners and GATA#13247005/24/05; 09:39:27

Pritcho, here's what you wrote:

"For what it's worth I've offered to put in money -- and I'm sure others would too (worldwide) IF a credible voice offered to hold the advertising kitty for such a campaigner."

I'm sorry if I misunderstood you, but if you're saying that someone else should be in charge of or in control of money raised in GATA's name, that GATA should be putting money in escrow, we don't need that kind of help. Like any other federally tax-exempt non-profit organization, we can manage our own money, and having been extensively audited by the IRS last year and achieved renewal of our tax-exempt status, we'll continue to do so.

You do seem to be saying that someone else should do something more to advance the gold cause. Do you propose to do anything yourself?

Further, GATA's raising money in small amounts for a big advertising campaign, as you suggest, would, of course, take forever. A large ad in The Wall Street Journal and New York Times easily could cost hundreds of thousands of dollars. GATA welcomes small contributions and I spend a lot of time writing and mailing letters of thanks for them. But we're a small group and have no secretarial staff, and getting to a half-million dollars in increments of $5, $10, and $20 is going to take us a while -- so long as to be, probably, misleading to people whose contributions are solicited exclusively for advertising.

In any case, while GATA has not taken out any paid advertising lately, we did incur a sizeable fee yesterday for international distribution of our press release about the BIS gold derivatives report, which is a form of advertising. The link to the press release is posted above.

Indeed, this seems to be the most we can do at this time to spread the word, and the word does seem to be spreading. It is more than the World Gold Council does with an annual budget of something more than $60 million.

As for inviting Australian mining companies to Gold Rush 21, I repeat: Some HAVE been invited, and if you know of any that you think might be sympathetic, please identify them and I'll see that formal invitations are sent. Of course a general invitation to the mining industry already has been posted through the Internet, and GATA has urged its supporters to contact mining companies in which they own stock and ask the companies to inquire about sending representation. We have NOT sent formal invitations to all mining companies in the world because we simply can't afford to do so; as in many things, we have to take our best shots. Australian companies are hardly the only ones who have no received formal invitations. There is no special omission here.

You can direct anyone interested in Gold Rush 21 here:

Indeed, we wish you would. That would be a way you could help the cause for very little expense on your part.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Max RabbitzConfirmation of junk#13247105/24/05; 10:15:50

Fitch downgrades General Motors, GMAC ratings to junk

"Fitch Ratings on Tuesday downgraded the senior unsecured ratings of General Motors Corp. (GM) , GMAC and the majority of affiliated entities to BB+ from BBB-. Fitch said the move reflects the continuing decline in GM's North American sales of key mid-size and large SUV products, increasing product and price competition in the large pickup market, and the corresponding impact of these two segments on consolidated profitability. The agency also said it believes that declining volumes and profitability, coupled with lack of tangible progress in attacking manufacturing and legacy costs will result in negative cash flow through at least 2006. The rating outlook for GM remains negative, Fitch said."

TangoThe Invisable Hand #13247205/24/05; 10:19:08

Deminor defends the rights of the minority shareholders of the NBB. In the past and even these days, the NBB isn't threating the minority ( 50% - 1 ) equal to the Belgian State who owns the majority stake. When, not if , Deminor wins in court ( European at Strasbourg after exhaustion of the legal procedures in Belgium ) the shareprice will triple (now at 3450 Euro, with a free float of 200.000 shares and a daily trade of prox 75 shares). A small "investment" from a fund could make the shares fly.
The NBB is one of the CB's that sold or swapped his gold and made a "donation" to the Belgian state whithout sharing with the minority holders. This is only one aspect of the suing of the NBB by Deminor and therefore not off topic on this excellent forum.
The "dissolution" of Belgium and/or Deminor isn't going to happen and is not part of the case.

Dollar Bill.,.#13247305/24/05; 10:19:50

Well, whodathunk religious men could cause such problems for thier country.
Carter, who gave us the iran tyranny by flying in the ayatollah, carter said "yeah but he is from the same ahbramic tradition as us christians and the jews."
Blindly helping religion and state combine into a typical result, which is tyranny and madness, and of course, war.
Now, Carter has given us chavez by hosting a fraudulent election in Venezuala. Latest? Chavez is talking to iran about them setting him up with nuke power. Great. Castro now has his dream come true, an infection in South America. How will this effect the globalist boys? I am guessing.......hmmmm..........result will end up the same.
Just how we get there will be uglier.
Iran, tyranny. Chavez, tyranny. And socialism..again.
One world order guys? I am guessing they will prevail in time to use socialism in thier globalizing, so they will blend in the various socialists into thier greater good type lingo. Gold owners? believers in individual sovreignty? Free lazzia fair types? They will eventually have to make some big decisions. I am thinking the crushing by agribusiness, and global megacorp product suppliers, will free men up from livelihoods, and freedoms.
What is a post major recession, post globalist institution, man supposed to do? He cannot feed others, cannot produce products for others. Slaves do that for free in the dark in china, cannot use his distant suburban house for growing food. All them dang trees and shrubs and lawn.
How does the globalist future work for the future unemployed? What is the post globalist destiny?
Other than reliance on the state and its providing, how can the men ride the cycles of economics when there are none?
Are the arabs going to cry {foul!) when future meager rations from the one world order get allocated?
Hey, we traded all our oil for a future food supply, but this is insufficient! We also want more.
If the french deny the open border future of the eu, and if I was a frenchman, I would, and all other alliances break, still, I think the dollar will remain the foundation.
As long as the globalists dont lose control of the currency, I think they will win out. But, my vote goes to the gold men, who in my idealized version, think that freedom is tied to an honest currency. And local economy.

Goldilox"Good of the Whole"#13247405/24/05; 10:59:20

@ $ Bill,

Your quote, "So isn't it better to do it under cover of darkness for ..........the good of the whole?..........."

sure sounds like Goebbels to me.

I play chess, and somehow I can't compare dsiguising my strategy in a recreational game to lying to a loyal set of parents about how their son died to accomplish some "greater political gain." Apples to Oranges?

This "Good of the Whole . . . under the cover of darkenss" stuff makes my skin creep. Apologetics rots a free society into a dictatorial slaughterhouse every time. "What they don't know won't hurt them" . . . until it does.

"It's better to light just one little candle than to stumble in the dark".

Gandalf the WhiteRe: US$ ----NOT to worry, Sir Goldilox ---#13247505/24/05; 11:00:14

The US ESF Boyz have taken care of the London US$ action, and pumped in lots of those DIGITAL dollars !
You know that they get them out of very thin air -- so that there is NOTHING to worry about.
Gather the YELLOW while we may.

GoldiloxHUI#13247605/24/05; 11:11:11

Someone noticed that yesterday's HUI action was bold. It looks like more of the same today, albeit less pronounced. Let's see if it precedes the metal moves as it often does.
Shapurrequest #13247705/24/05; 11:13:02

This gata/poster fight, tit for tat is a waste of bandwidth and beneath the high standards of this site. I urge the site administrator to remove the posts and have the posters take their private problems....well, private.
Quixotea question#13247805/24/05; 11:14:37

chis powell from gata said "we disclosed and publicized the explosion in bank-held derivatives that cap the gold price."

sorry, but are you taking credit for all the hard work, disclosure, and publication which was done by the BIS for its semi-annual report?

Chris PowellAnswering Quixote#13247905/24/05; 12:03:25

GATA takes credit for analyzing and drawing conclusions from the BIS report and publicizing them. If anyone else did anything with the BIS report, please let me know.
Chris PowellQuestion for Quixote and Pritcho#13248005/24/05; 12:16:12

If not for GATA, how would you have known about the sharp increase in bank-held gold-capping derivatives as compiled by the BIS? Did the BIS publicize this? Did any financial news organization report it? Do you follow BIS reports closely yourselves?
Quixotechris, gata, thank you#13248105/24/05; 13:03:18

thank you for suggesting that i'm out of the information loop, financially disconnected and illiterate, and for reminding me that BIS press releases and data have no value until confirmed, massaged, and republished by gata with reg howe's sophomoric and spurious analysis. all i'm saying is have care what you're taking credit for.
968@ Chris Powell -- GATA#13248205/24/05; 13:04:07

I follow BIS-reports, and I published this report ( msg#: 132389)on the USA-gold forum.
I'm sorry Chris, but GATA's statement is nothing more then an assumption.
Yes, it is possible that more gold-derivatives cap the POG, but is this proof ?????
The amount of derivatives on currencies has also risen dramatically, but what does this say about the possible direction of these currencies ?
The number of derivatives on other commodities has also risen : is the POS, the price coffee, porc-bellies,...and so on also capped because of this fact ?
Aren't the LBMA-statistics ( more revealing then the BIS-OTC statistics on gold derivatives ?

Chris PowellBIS press release#13248305/24/05; 13:23:22

Quixote, the BIS press release whose link you cited doesn't seem to mention anything about gold. At least I couldn't find it. If I missed it, please let me know. If it does not mention gold, I'd still be curious to know how you learned of the gold derivatives figures in the latest BIS report if not for GATA.
Chris PowellReply to 968#13248405/24/05; 13:28:35

968, GATA's statement on the BIS numbers is something more than an assumption. It is more like a deduction.

We know that mining companies have been reducing their hedges.

We know from Fed Chairman Greenspan that central banks use gold lending to suppress the gold price. That's public testimony to Congress.

So if the increase in bank-held gold derivatives aren't really central bank positions suppressing the gold price, what else can they be?

Frank Veneroso, James Turk, and Mike Bolser are very confident that the increase in bank-held gold derivatives recorded by the BIS represents gold-capping activity. Is there evidence to the contrary?

Federal_ReservesOUTRAGE!#13248505/24/05; 13:40:32

Curtains Ordered for Media Coverage of Returning Coffins
By Dana Milbank
Tuesday, October 21, 2003; Page A23
Since the end of the Vietnam War, presidents have worried that their military actions would lose support once the public glimpsed the remains of U.S. soldiers arriving at air bases in flag-draped caskets. To this problem, the Bush administration has found a simple solution: It has ended the public dissemination of such images by banning news coverage and photography of dead soldiers' homecomings on all military bases. In March, on the eve of the Iraq war, a directive arrived from the Pentagon at U.S. military bases. "There will be no arrival ceremonies for, or media coverage of, deceased military personnel returning to or departing from Ramstein [Germany] airbase or Dover [Del.] base, to include interim stops," the Defense Department said, referring to the major ports for the returning remains.

# I just read this today. This is an absolute outrage! A service should be offered! What do they think they are doing, processing shipping containers from CHINA? OUTRAGE!

Quixotechris#13248605/24/05; 13:59:31

my link was only an example that BIS gathers info which it makes readily available in press releases and pdf statistics for anyone with the good sense and interest to tune in. i wouldn't have complained if you said gata were _highlighting_ data, but in answering pritcho you swelled the significance of your analysts' value-added contribution to an existing commodity. that's all.
GoldiloxBIS data#13248705/24/05; 14:23:30

@ Quixote,

Your statement seems to suggest that the financial media has neither good sense nor interest. GATA suggests that they have an agenda.

Perhaps both are true?

968@ Chris Powell -- GATA#13248805/24/05; 14:40:21

We know from Fed Chairman Greenspan that central banks use gold lending to suppress the gold price. That's public testimony to Congress.

--> Don't mix lending with derivatives.

Make no mistake. I agree fully that the POG is frozen by TPTB, but the BIS-data is far from irrefutable evidence.

BTW, you have avoided the LBMA-question.

Chris, can you please tell me exactly the reason(s) **WHY** GATA thinks the POG has to rise ?

Thanks for the dialogue.

P.S. : today the OeNB revealed they sold 10 tonnes physical in 2004 (

GoldiloxContainers from China#13248905/24/05; 14:55:41

@ Federal Reserves,

Not to downplay your outrage at the war news "blackout", as I am in 100% agreement, the containers from China that return empty also get little airplay, even though they are so demonstrative of the current trade conundrum.

As our jobs continue to be exported, our previously world class labor force continues to be re-imported in body bags . . . both as quietly as the admin can accomplish.

The admin wants us to believe that this war has been a "win-win" scenario for all involved, but the Iraqi people don't seem to share that view as they bury their dead in the hundreds of thousands and continue to ship our young'uns home in "containers".

Trade imbalance cannot be logically managed by escalating war drums, as we just destroy as much infrastructure as possible to "create growth" in the industries that purchase political lotto tickets in the rebuild. Continuing expansionist wars and deficit spending in troubled economic times will eventually cost incumbents their jobs, no matter how capably they skew the "news" and election results.

968@ Chris Powell -- GATA#13249005/24/05; 15:34:25

"So if the increase in bank-held gold derivatives aren't really central bank positions suppressing the gold price, what else can they be ?"

--> it could be contracts from a LTCM-like investment vehicles for example... (cfr. Jurgen Stark : ..."strong growth in unregulated financial business.")

Why use derivatives if lending like Greenspan stated in Congress can do the job ?

Who/what is according to GATA the beneficiary of a capped POG ? Why is it a problem for Greenspan to cope with a high POG ?
GATA can claim that the POG is capped, but maybe everything becomes more clear when you provide us with the big picture ?
Suppose the POG goes to 1500 US$. How does GATA sees the monetary/economic environment at that moment ?
Can GATA explain us why Greenspan emphasizes in his speech in msg#: 132429 that the US holds reserves in the only medium they judge a "harder" currency : gold. If this must be the US-RESERVES, why is it valued at a ridiculous fixed price ?????? Doesn't this look a bit odd ?
Why is it not valued at market prices ?
Has GATA done any research on the rumors that the SNB is a the goldbuyer at the moment (D. Siebholz) ?
What's GATA point of view on Gordon Brown's role in the IMF-gold saga ? Why was he in favor of selling gold before the last meeting, and why was there radiosilence on goldsales after the meeting ?

R Powell968 // derivatives#13249105/24/05; 17:01:58

I hope you don't mind another Powell adding his 2 cents to this derivative question.
Your words here from post 132482....

"The amount of derivatives on currencies has also risen dramatically, but what does this say about the possible direction of these currencies ?
The number of derivatives on other commodities has also risen : is the POS, the price coffee, porc-bellies,...and so on also capped because of this fact?"

Yes, sir, well said!
There's an old adage about waiting long enough for things to come full circle. I have expressed the exact same theory that derivatives do NOT determine price but also added that it is the forces of supply and demand that do. I was nearly disembowled, tared and feathered and given the bums rush out the door. This was some time ago and I found myself in a very small minority here...basically alone.

To be sure, in a very short time cycle (days, maybe a few weeks), market shorts or longs sometimes "defend" their positions or perhaps the technical signals that guide so much of the money flows in these markets and thus determine (again short term) the positions of so many traders SEEMS to give this image of "defending" positions, but the invisible hand streaches out from the cash-on-barrelheads physical markets all the way back to the paper hedging and speculative price pits. Also, most commodities are subject to mini-manias and investor spurts of greed and/or fear just as all markets are. But, overall, and certainly over a good length of time, the paper price does not differ greatly from the cash price determined by the seller who wants to sell and the buyer who wants to buy. I will grant that the gold market may be one of the least transparent + most political of markets but it still trades on a bid-ask basis. Let's not take supply and demand transactions and transmute them into incomprehensibly complicated conspiracies.

It is illogical to believe that the physical transactions would be enacted at prices drastically different from the paper prices without arbitragers immediately entering to profit from the differences, thus forcing the prices back toward equilibrium. The price at a million pawn shops and from millions of physical transactions determines the price.

Derivatives are nothing new. They started in the coffee houses of 16th or 17th century England which, many claim, were the first stock exchange markets of the Western world. There is nothing magical, mystical or price suppressing (controling) about them. Just the humble opinions here of an old concrete finisher and derivatives trader, as always. How old? I'm as old as my tongue and a little older than my teeth.

Chris Powell(No Subject)#1324925/24/05; 17:58:38

To try to answer 968's comments and questions.

-- "Don't mix lending with derivatives."

GATA's belief is that most gold derivatives are backed by central bank gold lending and that the central banks often work in the markets through intermediaries.

-- Are the LBMA's reports more revealing that those of the BIS in regard to gold?

I don't know what GATA's experts think about that but if it's important to you I can ask them.

-- Why does GATA think the gold price will rise?

Because central bank dishoarding of gold is the main factor in setting the gold price at the margin right now and at some point the central banks will either exhaust their reserves or stop dishoarding even as mine production is falling.

-- Could the rise in bank-held gold derivatives be caused by "contracts from LTCM-like investment vehicles"?

Possible but unlikely. When mine production is falling and miners are buying back their hedges, who would sell gold in such amounts -- unless he was backed by a central bank? Indeed, in the Blanchard lawsuit in U.S. District Court in New Orleans, Barrick Gold, the biggest short in the gold business, has asserted that it is the agent of the central banks in the gold market. That is, Fed Chairman Greenspan and Barrick ADMIT there is collusion among central banks to suppress the gold price through gold lending AND derivatives. (Remember, Greenspan's famous remark about gold lending came in his explanation to Congress as to why no federal regulation of derivatives in gold was necessary, for the central banks themselves WERE the market in derivatives in gold.) The central banks are on the record here. What does it take to get people to hear what they're saying?

-- Who/what is, according to GATA, the beneficiary of a capped price of gold? Why is it a problem for Greenspan to cope with a high gold price? GATA can claim that the gold price is capped, but maybe everything becomes more clear when you provide us with the big picture.

The government currencies and bonds are the big beneficiaries of a capped price of gold, gold being the inverse of the value of those currencies and bonds. For more details on the "big picture," go here:

-- Can GATA explain why Greenspan emphasizes in his speech in Message 132429 that the US government holds reserves in the only medium it judges a "harder" currency: gold? If gold must be the US reserves, why is it valued at a ridiculous fixed price? Doesn't this look a bit odd? Why is it not valued at market prices?

I don't know about Greenspan, but the Reserve Bank of Australia has acknowledged that in the absence of fixed convertibility between gold and a country's currency, the only purpose of holding gold reserves is intervention in the currency markets. I don't know why U.S. gold reserves are not revalued to market prices. Some people have theories about that but this question really doesn't seem terribly important in the context of manipulating the market price of gold. Revaluing U.S. gold reserves to any amount would not necessarily have an effect on the manipulation of the gold market.

-- Has GATA done any research on the rumors that the Swiss National Bank is a gold buyer at the moment?

No. It's unlikely that the bank would be terribly candid with us or anyone on this point.

-- What's GATA point of view on Gordon Brown's role in the IMF-gold saga? Why was he in favor of selling gold before the last IMF meeting, and why was there radio silence on gold sales after the meeting ?

The British government has for years now taken the lead in talking and selling gold down. Britain may be partly serving as a front for the United States, and partly seeking to protect big British banks that are short gold. Why else sell so much at the bottom?

Look, guys, the essence of it all is this:

Central banks admit being in the gold market. In the Washington Agreement they said they were in the gold market to SUPPORT the price. But in his testimony to Congress, Greenspan said the central banks were in the gold market to SUPPRESS the price. Meanwhile most of the financial industry and mining industry affects to believe that there is a free-market price of gold. GATA wants to expose government policy toward gold and expose the mechanisms by which that policy is implemented surreptitiously, our purpose being to restore a free market in gold and achieve the accountability and restraint a free market in gold would bring to the world financial system.

If you think that governments are being candid about their policies toward the financial markets generally and toward gold particularly and couldn't possibly be doing more than they say they are doing, let's just agree to disagree. I will wish you the best -- especially because you will need it more than most.

USAGOLD Daily Market ReportPage Update!#1324935/24/05; 18:00:49">
The Daily Gold Market Report has been updated.

If you are considering investments in gold we invite you to">request our free introductory information packet detailing the products and services offered by USAGOLD ~ Centennial Precious Metals. We welcome your inquiry and look forward to working with you.

U.S. gold futures settled higher and above a fresh three-month low on Tuesday amid heavy volume dominated by contract rollover. Gold continued to mirror moves in the euro/dollar, with which it has a strong correlation.

COMEX June futures climbed 80 cents to end at $417.70, after trading from $416.20 -- its lowest mark since early February -- to a session high at $419.40.

Estimated final volume was gigantic at 135,000 contracts, against Monday's official count of 55,280 lots. Contract rollover from June gold into August futures before first notice day for delivery next Tuesday dominated dealings.

"I think we're at a low point here and the metals are ready to rally," said Turk.

"It's that the physical demand for actual metal at these levels is just so high."

Analysts believe support is strong in gold at $414-410.

Goldman Sachs economists said in a weekly commodities report that the dollar should weaken to $1.35 against the euro over the next three months to correct imbalances in the United States and globally.

"This view suggests that the fall in gold prices is likely temporary," Goldman said.

After gold closed, minutes from the May 3 U.S. Federal Reserve showed policy-makers noted a discernible upcreep in inflation measures recently, which made them conclude risks from accelerating prices were on the rise.

----(see url for full news, 24-hr international headlines)----

R PowellGold backed derivatives#1324945/24/05; 18:48:12

Hello Chris. Your words here...

"GATA's belief is that most gold derivatives are backed by central bank gold lending and that the central banks often work in the markets through intermediaries."

This may very well be true but is the rule rather than the except in almost all commodities. Farmers will sell their wheat, corn, soybeans, oranges, coffee, cocoa, sugar, etc. whenever prices are favorable. Many farmers are very knowledgeable + familar with this practice. Some are sophisticated enough to sell options to collect the premiums. During 2004 the prices of corn and soybeans were far higher in the early Spring (well before the 2004 harvested crop was even planted). I'd guess many farmers sold their beans at $8.00-10.00/bushel then and were happy they did when harvest came and beans were under $6.00/bushel. Same with corn. Or, perhaps they sold call options for those high Spring prices deciding to deliver their crop at those high "strike" prices if necessary. Obviously, it was not as prices crashed but the farmer who sold calls got to keep the premium collected from the sale of those options. Reverse the strategy for end uses of the commodity. Also, options sales are often simple hedging which is not designed to profit but to limit loses. Think of this as money spent to buy protection just as one spends money to buy homeowners insurance. I've paid this particular premium for insurance every year that I've owned a house. I've never once been disappointed that my house did NOT burn down or that someone did NOT sue me. I paid for insurance and lost the premium as events did require me to exercise the insurance coverage. My point is, that anyone with a physical commodity can sell the right to buy or sell that commodity for a certain length of time at a certain price. This is also quite common in commercial real estate. Why should gold or any metal holders not avail themselves of this source of income.

As for derivative options sales being backed with borrowed metal....some find this unacceptable. Often options are not backed by any physical commodity. These are called naked options. They do require margin and they are very risky but how does this differ from any other short selling, say that of equities?

I would think (and in fact do) that this practice occurs daily in many markets ....both newly initiated positions and offsets or the closing of old positions. Once the time limit for an option reaches expiration, the option is settled either by physical delivery or with a cash settlement. The latter here is by far the usual settlement so that the same metal may be used over and over and over again to underly a derivative just as a house or piece of land may be mortgaged, then sold to a new owner and mortaged again over and over.

And finally, that there usually exists more contracts and/or options on contract that total much more quantity of a commodity than physically exists (again whether it be corn, orange concentrate, cotton, or whatever) is NOT an uncommon occurance. Speculation provides liquidity in the markets with the speculator willing to assume the risk that the producer and/or end-user can not bear (most producers and commodity buyer need stability in prices more than windfall profits or rock bottom purchasing prices). This is the way it works and it has worked very, very well for a long time. I see nothing wrong or nefarious in your statement. And some think that gold is a static investment because it pays no interest! Not so, just not so without risk. Some use derivatives to offset risk. Some use derivatives to get paid to assume that same risk. Add in a high degree of leverage and you have a risky business, but only since it is highly leveraged.

FlaccusRan into this#1324955/24/05; 18:55:59

"After 7 years as our precious metals analyst, Andy Smith has decided on a change of career and will be leaving Mitsui Global Precious Metals in June. He will be joining a newly established commodity hedged fund so will still be involved with our markets, but from the "other" side."

---- Mitui press release

Can anyone explain why Smith's moving to a hedge fund would be construed as moving to the "other" side? Which side is which??

PRITCHO@ CHRIS POWELL - - - RE GATA -- ( REPLY)#1324965/24/05; 19:04:53

HI again Chris. It's 8.30 AM here & I'm just catching up on your response to my last post.I see other interest has been stirred making for lively debate.

In reply to your Message 132470 --I have no liking for banging my head against a brick wall!

You've managed to twist everything said --even inventing:
"but if you're saying that someone else should be in charge of or in control of money raised in GATA's name, that GATA should be putting money in escrow, we don't need that kind of help" . - - - HUH ?

What WAS said was that GATA seemed the logical choice to run & be in control of such a campaign --BUT it didn't seem interested.

With regards to cost,you've gotten pretty inventive racking up imaginary costs of hundreds of millions of dollars for ONE BIG Full page ad. Don't ever talk about Govt SPIN!

In ALL my correspondence with you I have advocated a Media Advertising campagne based on SMALL ads'strategically placed to get a HEADLINE across AND pointing to a WEB PAGE.
Why the opposite spin Chris? It doesn't have to cost a lot BUT for whatever reasons it's obvious that GATA is NOT INTERESTED.

I feel those in charge of GATA are content to stumble along preaching to the converted. Six years later & being sick to death of the ongoing GOLD & SILVER manipulation I want something more pro-active done.To turn that back on ME to do something is unrealistic. GATA has the goodwill & support of the largest group oF GOLD supporters------
YOUR MOVE --- I'll support!

(Last reply or comment in this current discussion)

R PowellChris#1324975/24/05; 19:10:45

Your statement here.....

"Indeed, in the Blanchard lawsuit in U.S. District Court in New Orleans, Barrick Gold, the biggest short in the gold business, has asserted that it is the agent of the central banks in the gold market. That is, Fed Chairman Greenspan and Barrick ADMIT there is collusion among central banks to suppress the gold price through gold lending AND derivatives."

When Warren Buffett decided to short the US dollar by investing in foreign currencies, I'm sure his broker(s) were acting as his "agent" when they initiated his buy orders. If he also shorted the dollar index, they were again his agents in filling this order, no? When Philbro bought 129.7 million ounces of silver during 1997-8 for Buffett they again were acting as his agent. How better to sell gold than through a large broker such as Barrick? Bank lending and/or selling contracts or derivatives is not illegal any more than Buffett or anyone else selling or buying. A broker acts on one's behalf, collusion implies that which is considered underhanded, unethical or outright illegal. Selling a possession is none of these, not even when one contracts an agent to transact the sale. The house analogy and realtors comes to mind.

The act itself of buying or selling is quite common and does not prove or imply intent much less price manipulation. There may very well be intent and/or collusion but, by itself alone, the act of buying or selling an item does not substantiate this charge. What proof does GATA offer that any of these transactions were intended for any purpose other than to make a profit or turn an asset into cash?

R PowellFlaccus#1324985/24/05; 19:21:04

Good question. It is my understanding of hedge funds that they will take either side of any trade and that whatever position they take is determined solely and entirely for profit. There are no political, ethical or moral considerations involved at all that I'm aware of, just the bottom $$ line. (G) They are the embodiment of raw, cutthroat, capitalism (investment firms) or perhaps that self-interest promotion that Ayn Ryan so favored.

Chris PowellIn reply to Pritcho and cousin R Powell#1324995/24/05; 19:43:30

For Rich -- GATA's complaint is not against futures markets in principle. We understand that the laying off of risk is an important function of the markets. We just want markets to be free, competitive, transparent, and without collusion. We have a right to this under anti-trust law. Governments act through intermediaries in the markets precisely to prevent transparency so as to enable surreptitious manipulation. Nor does GATA argue that Barrick shouldn't be allowed to enter the futures market; rather, we argue that Barrick should not be the beneficiary of surreptitious favoritism by the government when it plays the futures market, and that, if the government is to enter the futures market, it should do so openly. In a democracy, public policy should be ... public.

For Pritcho -- You wrote: "For what it's worth I've offered to put in money -- and I'm sure others would too (worldwide) IF a credible voice offered to hold the advertising kitty for such a campaign." By "a credible voice offered to hold the advertising kitty," I assumed you meant a party other than GATA. Hence my remark about escrowed funds. For the time being GATA has enough trouble raising money just to fund its ordinary operations; we're not interested in handicapping ourselves with escrow projects. As secretary/treasurer, it is all I can do to make sure that our regular bills get paid. If we become better financed, anything may be possible. If you mean that GATA should place small advertisements in a lot of little newspapers around the country or the world, referring people to our Internet site, we don't yet have the funds or the personnel to do that, and it probably wouldn't have much impact anyway. We want to reach the major players in the financial markets around the world. Those are the people who can change things in the gold market.

R PowellChris......#1325005/24/05; 19:46:12

We're (at least I'm) not trying to give you a hard time here. Your words here......

"If you think that governments are being candid about their policies toward the financial markets generally and toward gold particularly and couldn't possibly be doing more than they say they are doing, let's just agree to disagree. I will wish you the best -- especially because you will need it more than most."

Governments, as in politicians, "being candid about their policies"? Most governments make those before mentioned hedge funds look like upstanding moral, ethical promoters of the betterment of humanity. No, I believe governments firmly act as if the end justifies any means whatsoever, and it is scary what ends they deem so important and what price they are so willing to pay to achieve these (dubious) ends.

We can agree to disagree but perhaps when you have time and the inclination we could continue the dialogue. You might find we don't disagree much at all...but there are many issues that need clarification. Our differences may be more misunderstandings of statement than substantial belief. It is better clarification that requires discussion. We can agree to disagree later, if necessary. (G) Respond at your leisure, if you want.
Keep up the good fight!

mikalTo talk gold or not to talk gold, that is the question#1325015/24/05; 19:54:23

Nowhere is gold's ultimate 'value' more apparent than in
the alternating expression and suppression
of political and ethical discourse, such as ESF, PPT or Prez's Working Group on Fin. Markets.
In a family, such conversation, i.e. politics and/or religion can instantly rend asunder blood ties if ridicule, silence or being ostracized don't quell the offending tongue.
At work, one's job and personal safety are placed
at risk if one speaks out.
How then, is this forum is any different?

Chris PowellNo hard time#1325025/24/05; 20:00:28

Cousin Rich, there's no resentment on my part of any hard time here. This forum is my second home -- many thanks again to our generous, brilliant, and too modest host -- and I spend so much time here exactly because of my respect and admiration for its participants and what I have learned and continue to learn from them. I hope my most recent post below this one is as cordially responsive as it was meant to be. Let us be critical of government but never cynical about what it should and can be -- particularly American government. "We shall nobly save or meanly lose the last, best hope of earth."
GonlyoldLow Point of TPTB curve#1325035/24/05; 21:07:40

OK, I'm going to go out on a limb with my personal forecast. It appears that TPTB have allowed gold to slide down to about $417/oz. That seems to be the low end of their control cycle. So I would buy right now. Then wait until gold reaches about 450, then sell, then wait until it comes down to about 420 or so then buy and repeat as necessary. Follow my forecast at your own risk. I assume no liability whatsoever for my forecast: you're on your own. Now let's wait and see how this works out....
OvSGonlyold#1325045/24/05; 22:50:27

Great, then you'll make 5 dollars per
ounce before insurance and handling
cost and shipping. Good luck. OvS

TownCrierFlaccus, msg#: 132495#1325055/25/05; 00:38:11

(Mitui press release) -- "After 7 years as our precious metals analyst, Andy Smith has decided on a change of career and will be leaving Mitsui Global Precious Metals in June. He will be joining a newly established commodity hedged fund so will still be involved with our markets, but from the 'other' side."

Flaccus asks, "Can anyone explain why Smith's moving to a hedge fund would be construed as moving to the "other" side? Which side is which??"


You're in good company -- one of a few who seem to have a gift -- a knack for consistently asking very good questions. In addition to being the most natural way to gather information, I've also seen it done that the best way to bring to light a certain point is with a well directed, and sometimes "guiding", question.

If I were to venture an answer to yours, I'd say the issue of 'sides' here has to do with Andy's wing of Mitsui being on the side of the trading counter (as in, Over-The-Counter) as the market "maker" ("dealer" might be more technically correct) peddling an endless variety of POG-anchored financial hedging products among its clientele; taking a risk position with one and laying it off on another.

A quick aside: Enjoying fee- or commission-based profits, a bullion-banking derivatives dealer like Mitsui is happiest with the status quo. That is, it wants the price of gold to remain steady enough to ensure that otherwise offsetting counterparty positions don't suddenly tend to pile up with defaults all on the same side of its book. That's partly why they talk-down gold. Because low prices keep the rank-and-file Main Street investor disinterested, thus keeping pressures at bay which could otherwise bring about the much-feared volatility and defaults among the sector's counterparties and middle-men who dabbled in these affairs for
"fun and profits".

Apparently Andy is now going to be a Hedgie, which puts him on "the 'other' side" of the trading counter -- potentially as one of Mitsui's "fun and profit"-seeking clientele. Whereas middleman Mitsui has risk exposure from either side in the event of asymmetric defaults, Andy's new company will likely be one of the players taking a net position on one of those two sides -- hoping to be on the winning side, but also hoping that it doesn't win so big that the loser is unable to pay.

To bring this 'round to my favorite topic, that's why "EVERYBODY" fears the consequences of the paradigm shift into an international monetary system utilizing a "free gold" regime of reserves. Why, do they fear it? Because "nobody" in that group of players gets paid their winnings if the paper goes up in smoke as leveraged losers go down in flames.

Just a few of my feeble thoughts to help get the discussion rolling on good footing into a new day...


TownCrierThe Motley HEADLINE: Got Gold Fever?#1325065/25/05; 00:55:21

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CaradocVenezuela: a problem?#1325075/25/05; 01:30:55

Some of you might remember that my entry in the "End of Cheap Oil" contest pictured folks huddled around the woodburning stove they had jerryrigged into the fireplace of their McMansion while wondering whether their drafted offspring would return from combat in Venezuela. Since then, we've seen Venezuela negotiating to sell its oil to China and considering the pricing of oil in currencies other than the dollar. Now we have Iranian president Mohammed Khatami visiting Venezuela's President Chavez in Caracas.

I chose to include the al Jazeera link mostly for the photo of Chavez and Khatami together, although it also quotes Chavez: "Venezuela and Iran agree in firmly rejecting the imperialist policy of the United States."

Google has various links addressing Chavez's idea of getting Iranian assistance for establishing a nuclear powerplant infrastructure, but here are two:
Brazil says it doesn't like the idea...
A "Free Cuba" site quotes Doug Mackinnon in the Houston Chronicle of May 22...........
"Coupled with the disturbing news that Chavez might be trying to acquire nuclear weapons is the fact that Chavez, a dictator in all but formal title, just concluded a deal with the People's Republic of China to launch a telecommunications satellite for him. So great is Chavez' interest in rockets, space and missiles that the government of Venezuela has created a special commission to advise him on such issues. Chavez with a nuclear weapon is bad enough. Chavez with a medium-range ballistic missile just minutes from the southern United States is a disaster waiting to happen."
Another snip from near end of that article:
"I told the senior U.S. official that I thought Chavez posed a greater threat to our national security than Osama bin Laden or any terrorist operating out of the Middle East. He looked at me and said, 'You know, I agree with you 100 percent.'
...Chavez, Castro's puppet and a man who thinks he is channeling South American hero Simon Bolivar, may soon have his finger on the trigger of a nuclear weapon."

My opinion:
With North Korea's nukes being controlled by a pompadoured fellow who apparently thinks he's Elvis and with somebody who thinks he's Simon Bolivar trying to arrive at the same status in Venezuela, my hunch is that a lot of people will be surprized if/when the next major international event happens somewhere other than the Middle East. For whatever reason, a lot of the US's force projection capability (i.e., aircraft carriers and all their escorts) are arriving in Guam. Whatever is in the offing, be aware that not much technology is needed to launch a Chinese Hellfire missile. These nuclear-tipped babies will be hard to stop since they fly mere feet above the water while zigzagging their way toward their target.

Considering the implications of such things, gold seems an bargain at today's price and the idea that an ounce of silver costs no more than a top-of-the line cheeseburger is downright surrealistic.


TopazBond/SP500#1325085/25/05; 02:18:39

Just for a change, let's look at the Yield/SP diversion.
Note since firstly mid03 and then mid04 the game has altered somewhat as firstly a pseudo then a real "flight to quality" have developed.

Quality is of course highly subjective and whilst the current trend mimics both pre-crash action in the 30's and 80's, the Contrarian in me finds it hard to draw the naturally implied conclusions.

BelgianGood morning, Sir Randy.#1325095/25/05; 02:53:17

We are all still suffering from the original idea that the (former) dollar (unit of account) was (!) as good as gold.
But the "Petro"-dollar made one huge and fatal mistake >>>

- Cheap oil for cheap gold, "was" a great idea (ideal).
- But cheap gold also made that petro-dollar look strong.
- That strong dollar, permanently "abused" this privilege, worldwide, through the means of the $-IMS.

Today, oil(gas-resources) is evolving from a "product" to a "strategic weapon". This irreversable fenomenon is changing the very nature of the dollar-unit and the gold-pricing and consequently affecting the $-IMS.

Since 1985, Plazza accords, the Dm-ecu-euro unit has consistantly outrunned the dollar unit ! Poirrot 986 has a 25 years chart of the €-$ exchange rate + the IR-spread between € and $. Hope he can post it on the forum.
This chart simply evidences that the euro was consistantly stronger (above $-parity) than the dollar with a lower IR than the dollar.
W're talking about a 20 years period ! It is very significant that the petro-dollar permanently needed a higher IR + goldprice/pricing support + oil and reserve status...and yet remained *** -weaker- *** in exchange rate against the forming EMU (Dm > ecu > euro).
Please note, that with the present stable but stronger € versus $...Euroland has a surplus on its trade balance with the US !!!

Today, the $ and its $-IMS, continues to exploit abusively (selfisch) its granted privilege. Only a handfull of loyal $-system strong-holders were allowed to profit richly from the same $-privileges. Many others had to pay the many bills and got poorer as a result. The $-IMS has been, and is increasingly, unfair and rude. But since that's does not mean it will go on this same old way.

It is the "Big" picture that is fundamentally changing, regardless of the daily little confusing details, percepted as conundrums.

Oil(gas) wars - Currency ($-€) war - FreeGold - $-€/IMS !
That's what it is all about.

The past decades, regulated goldpricing was the fundamental on wich the whole $-piramide was constructed. A brand new, fundamentally differently concepted "building" open in full progress. A de-regulated goldpricing is the foundation. The new € unit of account will guard the house.

No more gold-dollar-oil (fixed) "standards" ! A floating goldprice...a free goldpricing is the ultimate goal. This goal is the one and only explanation for the many gold-derivative conundrums. See the latest statements from the Austrian NB on their gold ...sales or "commitments" (derivatives) !? Many gold-commiments are moving in the ESofNB-ECB-BIS triangle. Don't expect any insight into any of the details of this enigma. Because it is about Another IMS.

Small detail : In 1970 the US$ bond market was worth $770 Billion (B). This bond market has swelled/inflated to a volume of $40 Trillion (T) = multiplied by -50- !
World GDP = $40 Trillion
We are facing a Trillionesque debt-paper-story, whilst * -gold-wealth-* remains under an authocratic/absolutistic pricing regime >>> cheap gold = cheap oil = strong dollar.

How much more "debt" can such an artificially supported $-IMS carry !? Economically Unproductive debt.
Cheap gold is not enough anymore to have cheap oil. Oil (and related) have become weapons in a geopolitical context. Don't make any mistakes on this, dearest forumers.
Once the oil-owners have put their respective oil-weapons into place, they will fastly move away from the dollar and the Asian producer's forces will follow swiftly. That's why there is the "war on oil", that has entered a new new stage since 1990. And the IRs (spreads) conundrums are a weapon in the $-€ competition.

The goldprice/pricing controls will cease when the massive and fast increasing dollar-debt is no longer needed to be credible (credit-worthy).
Essential masses of Petro-dollars + Asian-dollars are NOT recycled anymore in credit units, but in tangibles. The excessive surplusses are pro forma wasted on keeping the $-IMS up and running, whilst the gold re-distribution keeps going up until FreeGold gives the planet an escape from the $-debt.

968The chart Belgian asked for :#1325105/25/05; 03:25:23

Belgian, can you please provide us the explanation of this chart ?
Topaz@G-Lox.#1325115/25/05; 03:33:14

If it wasn't for mentioning "sell" and "Gold" in the same sentence, the strategy outlined is pretty close to the mark.
A quick check reveals Gold "rallies" in delivery months ('cept Dec04) and "tanks" in non-dm's.

But, who's trading;-)

GoldiloxStrategy #132511#1325125/25/05; 04:37:52

@ Topaz,

You lost me. Could you elaborate which strategy you are referring to? or which post?

Topazoops, sorry Goldilox.#1325135/25/05; 06:23:40

My mistake, I'd confused you with Gonlyold.
Dollar Bill.,.#1325145/25/05; 07:40:11

Goldilox, as I pose questions around issues, also I post my own take. I dont think you missed it, but just in case......"But, my vote goes to the gold men, who in my idealized version, think that freedom is tied to an honest currency. And local economy."
USAGOLD / Centennial Precious Metals, Inc.Panics and crowding are activities best left to those "other" guys -- the ones who didn't diversify...#1325155/25/05; 08:22:02

TownCrierBelgian, nice harmonies#1325165/25/05; 09:01:07

We're singing from the same page, although I'll admit your vision and talent for striking the right notes are keener than anything I've yet been able to achieve.

In case your explanation ran too deep for some of the newly-arrived gold thinkers, my Monday comments following a Greenspan speech might be a helpful bridge -- a simpler stepping stone to reach your deeper treatement today.

(although only an excerpt follows, the full post is available at the archive-URL provided.)

TownCrier (5/23/05; 12:50:59MT - msg#: 132426)
Greenspan: Comments on historical pricing power (energy)

Greenspan said:
"Although OPEC production quotas have been a significant factor in price determination for a third of a century, the story since 1973 has been as much about the power of markets as it has been about power over markets.

"The signals provided by market prices have eventually resolved even the most seemingly insurmountable difficulties of inadequate domestic supply in the UnitedStates.

"The gap projected between supply and demand in the immediate post-1973 period was feared by many to be so large that rationing would be the only practical solution.

"But the resolution did not occur quite that way."

And as it turned out, Greenspan attributed the 'solution' as follows:

" The failure of oil prices to rise as projected in the late 1970s is a testament to the power of markets and the technologies they foster. Today, despite its recent surge, the average price of crude oil in real terms is still only three-quarters of the price peak of February 1981."

However, I would tend to suggest that perhaps the most significant "technology" in bringing about the U.S.'s desired pricing solution was the inovations among derivative instruments in the financial (and commodity) markets -- effectively a tradeoff of nominally "cheap" gold for nominally "cheap" oil which, despite the outward illusions of low price, was nonetheless a provision of tangible value (gold) in exchange for tangible value (oil) for the parties sharp enough to be in on the deal.

Buying gold outright with dollars at the cheap price (while it flows) puts you among the sharpies, even if you have no oil to trade.

Seemingly a long time in the making, the revaluation reckoning will come soon enough [in order to terminate the associated $-IMS asymmetries]. Have gold in preparation for the day.


GoldiloxVote Gold#1325175/25/05; 10:04:24

@ $Bill

And of course, on that point, we agree completely.

(:^) Goldilox

Bizarro-Greenspan Andy Boy switches teams#1325185/25/05; 10:18:57

What and who is the other side?

Perhaps an explanation of the "game" would help,

"What we see at present is a battle between the central banks and the collapse of the financial system fought on two fronts. On one front, the central banks preside over the creation of additional liquidity for the financial system in order to hold back the tide of debt defaults that would otherwise occur. On the other, they incite investment banks and other willing parties to bet against a rise in the prices of gold, oil, base metals, soft commodities or anything else that might be deemed an indicator of inherent value. Their objective is to deprive the independent observer of any reliable benchmark against which to measure the eroding value, not only of the US dollar, but of all fiat currencies. Equally, their actions seek to deny the investor the opportunity to hedge against the fragility of the financial system by switching into a freely traded market for non-financial assets."

Peter Warburton

GoldiloxOil, Inc.#1325195/25/05; 10:24:30


All kinds of developments on the energy front, but they are mostly smaller events that don't get much ink or time in the US corpmedia. Nevertheless, we find them significant because as goes energy, so goes our future. For example, people in Bolivia are rioting on a semi-regular basis because the country has really fallen under sway of foreign oil companies which are looking for control of Bolivia's natural gas resources.

Also of interest is the turning on of a 1700 kilometer pipeline to bring Caspian Sea oil to the West - a project which was reported to be one of Dick Cheney's favorites. Some are calling the region Pipelanistan...

Oil prices this morning are heading back toward [above] $50 a barrel, in part due to strength in Durable Goods reported today. Chalk up that 1.9% increase for April to demand for autos, airplanes, and appliances.

One final note about energy for this morning: You noticed that Warren Buffett is buying up an electric utility for his Berkshire Hathaway investors? Just as a semi-wild guess, I would not expect Buffett to buy something which didn't have pricing power in today's commoditized world, so there should be a great "hint" about the long-term energy price outlook. We read this as firm to much higher prices.


Interesting read over at Urbansurvival. It contains embedded links (at the site) for the individual story references.

Bizarro-GreenspanORO#1325205/25/05; 10:36:21

"As to the mechanism of pricing information transfer between the paper gold and physical gold markets, it is only possible so long as physical gold arrives at the marketplace to trade at par with the paper contracts - WHOM it is that does this is irrelevant to the behavior of the markets. That the ECB member central banks were supplying this physical gold liquidity at par with the paper would make the ECB (and EU and the euro) more suspect than the paper gold - future dollar exchange system they are trying to destroy."
GoldiloxNo Fake News!#1325215/25/05; 10:36:37


"Listeners and viewers are entitled to know who seeks to persuade them," noted the U.S. Federal Communications Commission, in a Public Notice issued in April 2005. Responding to rising concern over the common use by media of video news releases and audio news releases, the FCC's Public Notice acknowledged a problem plaguing news reporting around the country -- fake news.
The Center for Media and Democracy has been exposing VNRs and fake news for over a decade. Joining forces with the media reform group Free Press, we are now helping organize a citizens' campaign to say "No Fake News!"


Here's a group trying to limit government sponsorship of bogus news. Even if successful, they will probably never dig deep enough to affect the rampant BLS hedonics, fully protected by the "science of economics".

Also check their "Spin of the Day" page.

GoldiloxSilver bells#1325225/25/05; 10:39:35

Silver seems to be testing the waters an upward breakout again.
TownCrierGold Coin Shoppe -- Bulletin Board#1325235/25/05; 10:41:04

freshly updated!


GoldiloxOil Pricing is Back!#1325245/25/05; 10:43:56

Up $1.58 so far in today's trading, Lt. Sweet is again poking its head above the $51.00 mark and surveying the landscape.

CNBC tick for source.

geGreat Game Continues#1325265/25/05; 10:50:16

The Baku-Tbilisi-Ceyhan pipeline (BTC)has become operational. It is expected to reach full capacity within 6 months.

The oil does not pass Russian pipelines to reach the Mediterranean. This pipeline might be related to the timing of a new military move by the US. Taking some Mid East oil off the market might begin to look feasible to some people.

GoldiloxPUNK'D - John Mackenzie#1325275/25/05; 10:54:18


There are no real viable short term alternatives to cheap and plentiful, near surface crude oil. The Cheney Energy Advisory ‘Task Force’ has a plethora of brilliant ideas. For instance, the believe phasing out the $2,000 tax credit for hybrid vehicles, but keeping the $25,000 tax write off for Hummer or any other large gas guzzling SUV. This is policy, not strategy. It clearly favors the administrations ties to domestic ‘Big Oil’ conglomerates.

President Bush's message track speaks to environmentally responsible exploration and diversifying our energy supply by developing alternative sources of energy. 70 percent of Americans support a dramatic increase in government spending on renewable energy sources, yet the administration merely pays lip service to the idea while cutting alternative energy programs and subsidizing oil companies.

Policy may be designed to starve us all as it is difficult to fathom any basis for intelligent strategy from Vice President Dick Cheney's secret energy task force.

While Exxon Mobil reports the highest quarterly profit ever @ $8.42 billion and declining discoveries; many firms are reporting disappearing reserves. Royal Dutch Shell has admitted it overstated reserves by 20 percent in 2004.

We are now positioning to invade Iran and secure the bulk of the globes oil reserves within a small corner of the globe as our ‘American way of life is non-negotiable’ according to task master VP Dick Cheney. Welcome to the new world odor whereby the means justify the ends.

If only Americans understood how damaging the present policy is to our very futures. This remains as sad as it is pathetic. Interest rates are going to normalize, meaning they are heading far higher. Protect yourselves as the Federal Reserve is not about to stop printing worthless confetti, they're going to expand it wholesale and continue to hike rates for appearances to maintain flows. A piss poor policy designed to ruin us all, the strategy is up to you, no one else is looking out for you and yours.

Get GOLD, it is only going to go higher the rest of natural lives.


MacKenzie's latest editorial over at FSU takes the gloves off in describing the Scalia ordered "secret energy policy".

mikalA different look at downgrading#1325295/25/05; 11:02:01

Will America Lose It's AAA Credit Rating?
Reader Opinion

GoldiloxTop Weird Headlines#1325305/25/05; 11:12:08


We all can use some comic relief in the busy analysis of finance and manipulations. Not to offend anyone, of course . . .


Something Went Wrong in Jet Crash, Expert Says
[no, really?]

Police Begin Campaign to Run Down Jaywalkers
[now that's taking things a bit far!]

Miners Refuse to Work after Death
[no-good-for-nothin' lazy so-and-sos!]

Juvenile Court to Try Shooting Defendant
[see if that works any better than a fair trial!]

War Dims Hope for Peace
[I can see where it might have that effect!]

If Strike Isn't Settled Quickly, It May Last Awhile
[you think?!]

Enfield (London) Couple Slain; Police Suspect Homicide
[they may be on to something!]

Red Tape Holds Up New Bridges
[you mean there's something stronger than duct tape?!]

Man Struck By Lightning Faces Battery Charge
[he probably IS the battery charge!]

New Study of Obesity Looks for Larger Test Group
[weren't they fat enough?!]

Local High School Dropouts Cut in Half
[Probably won't change the head count !]

And the winner is....

Typhoon Rips Through Cemetery; Hundreds Dead
(Can you believe it?)

But my personal favorite from SA media:

Gold Mining in the Pits
(Is that COMEX?)

GoldiloxCredit Rating#1325315/25/05; 11:14:43

@ Mikal,

WOW. Strong commentary! It seems the pundits are spending less time "beating about the bush" lately.

Goldilox"Up into the close"#1325325/25/05; 11:18:47

Haven't heard these words in way too long, even if only a buck and change.
968Danger ahead for the world economy: OECD#1325335/25/05; 11:56:57

"But Europe's stagnation may be exacerbated if the United States fails to control its trade deficit, which would result in a depreciation of the American dollar. "Given the unsustainable US current account position, endogenous pressures for correcting existing imbalances will become ever larger. At some point, they may take the form of an abrupt weakening of the dollar with adverse consequences for the OECD area as a whole," it warned. "More concretely, a falling dollar would not only curtail net exports but also domestic demand in Japan and Europe where resilience is low and monetary and fiscal room for maneuver is limited. Although not the most likely outcome at present, such an unpleasant scenario is gradually looming larger," the report said. "Cooperative adjustment" to the value of some Asian currencies would help reduce the danger of any sudden drop in dollar value, the report said."

"Growth in the US has been forecast at 3.3% in 2006, down from 3.6% this year and 4.4% in 2004. The warning on the US trade deficit is the most strident yet from the OECD. Economists are particularly concerned about the OECD's prediction that the deficit will reach 6.7% of the US gross domestic product (GDP) by next year, or nearly $900 billion."
The OECD says it politly, but expects a dollar devaluation.

DruidGreenspan Misfires on Fannie, Freddie#1325345/25/05; 12:07:11


By Steven Pearlstein

Wednesday, May 25, 2005; Page E01

We now know that the Bush administration routinely suppresses dissident views, mischaracterizes staff-level analysis and stokes irrational fears to justify predetermined, ideologically driven policy positions.

Unfortunately, this cynical approach seems to have been adopted by Alan Greenspan in his crusade to privatize Fannie Mae and Freddie Mac -- a crusade that has now undercut the credibility and the independence of the Federal Reserve.

I have in my hand a report by the Fed professional staff titled, "Concentration of Risk in the OTC Market for U.S. Dollar Interest Rate Options." Until I inquired after it Monday, this report was not going to see the light of day, ostensibly because it is based on confidential information provided by Fannie, Freddie and the major dealers in interest-rate swaps. But it comes to three interesting conclusions, which I'll attempt to paraphrase using the Queen's English:

(1) The risks to the financial system posed by Fannie and Freddie's use of the derivatives market to hedge interest-rate and mortgage-prepayment risks are less than most of us thought.

(2) If either Fannie or Freddie were to fail, these derivatives markets would not melt down.

(3) The availability of these hedging instruments allows Fannie, Freddie and big banks to load up their balance sheets with mortgages and, indirectly, lower mortgage interest rates.

Druid: These studies are starting to come out in a timely fashion. Let the serious fingerpointing begin.

968A must read : The real problems with $50 oil !!#1325355/25/05; 12:28:01

The real problems with $50 oil
By Henry C K Liu

"Fighting for oil faces little popular opposition at home, even though for the United States the need for oil is not a credible justification for war. The fact of the matter is that the US already controls most of the world's oil without war, by virtue of oil being denominated in dollars that the US can print at will with little penalty."

"Fifty-dollar oil will buy the US debt bubble a little more time, albeit bubbles never last forever. But in a democracy, the White House is under pressure from a misinformed public to bring the oil price back down to $25, not realizing that the price for cheap oil can be the bursting of the debt bubble. Despite all the grandstand warnings about the need to reduce the US trade deficit, a case can be made that the United States cannot drastically reduce its trade deficit without paying the price of a sharp recession that could trigger a global depression."

"Current oil-price levels are a reflection of a fleeting inventory problem rather than a long-term pricing issue. There is of course no, and has never has been, a problem with the natural supply of oil. The world will still be awash with oil even after petroleum is rendered obsolete by new energy technology."

"There was solid evidence that the 1970s recycling of petrodollars, which mostly ended up in the dollar assets in the United States anyway, contributed to US inflation as much as the higher retail price of gasoline. It in essence siphoned off additional global funds to purchase higher-priced oil for investment in US real estate, which was the only sector the then unsophisticated Arab money managers thought they knew enough about to handle. By the 1990s, they were more sophisticated. Some had expected that a new injection of petrodollars would sustain the collapsing "new economy" equity market of the '90s. It did not work because, even at $35, oil was still behind its pre-1973 price relative to the peak Nasdaq in June 1999, the equivalent of which would bring $120 oil."

"Member nations had experienced a decline in the real value of their oil since the foundation of OPEC. Throughout the post-World War II period, exporting countries found increasing demand for their crude oil was rewarded by a 40% decline in the purchasing power in the price of a barrel of crude until March 1971, when the balance of power shifted. That month, the Texas Railroad Commission set pro ration at 100% for the first time. This meant that Texas producers were no longer limited in the amount of oil that they could produce. More important, it meant that the power to control crude-oil prices shifted from the US cartel (Texas, Oklahoma and Louisiana) to OPEC."

"The impact of low prices on the industry is significant. By October 1999, employment in oil and gas extraction was down 7.2% from 1997. Over the same period overall US employment was up 2.3%. That was an employment-rate gap of almost 10%. When the data came in for the rest of the year the rate gap widened even more. It would be even more extreme if the statistics could isolate oil extraction from natural-gas extraction. In many companies gas had been subsidizing oil, and gas was not doing all that well. The different campaign positions taken by the main candidates in the 2000 US presidential election, vice president Al Gore and George W Bush, the governor of Texas, began to make political sense when viewed with these data.

Oil-sector companies had been laying off less-experienced, lower-paid workers, but the cuts were moving up the experience ladder. If prices had not recovered as they did, the industry would have lost valuable human capital. Thus the producers' dilemma: lose talent, lose reservoirs, or lose the business. In many cases, it would be all three. That is why cheap oil may not be in the United States' national interest."

"The euro's continuing fall until 2002 when it bottomed at 1.1 to the dollar from its launching rate of 0.846 in 1999 dampened US multinational profits denominated in euros, which in turn hurt US equity markets. The lesson from this is that the trade deficit is not without benefits if it can be sustained. When the Japanese yen dropped to 147 per dollar in August 1998, it did not affect US export earnings much because of the large deficit in US-Japan trade. With the euro, it was a different story because US-European Union trade was relatively balanced. Also, it had been widely expected that the euro would be supported by the European Central Bank (ECB), so most US firms did not bother to hedge their euro earnings. In this case, derivatives would have saved the day. Thus structured finance is not always destructive. The high 2004 rate of 0.84 euro to a dollar did not reduce the US trade deficit."

"Fifty-dollar oil is not an economic disaster but it is a political problem."

"The only trouble is that $50 oil takes money from the pocket of consumers and delivers it to the oil producers (not just Arabs), who then reinvest it in Wall Street. The net result is a transfer of wealth from the "working families" of the world to the capitalists the world over. Consumer demand will shift, with more money spent on fuel and utilities and less for other types of consumption that improve the standard of living, but equity prices will rise because there will be more dollars chasing the same number of shares. What is more troubling is that the appreciation of the resultant enlarged proven oil reserves will fuel more debt at the same debt-to-equity ratio. The current structure of the overcapacity economy is such that more debt can only go to support consumption and speculative, not productive, investment, causing the debt bubble to be unsustainable."

"The fall of the euro prior to 2002 exacerbated Euroland's burden from higher oil prices, since oil is denominated in US dollars. With the fall of the dollar against the euro after 2002, the EU has been insulated somewhat from high oil prices. But $50 oil is too high for the EU."

"All central banks, except the US Federal Reserve, have a finite supply of US dollars. The Fed, under its own rules, cannot dump dollars into the market without raising interest rates, not to mention contradicting the US Treasury's policy of a strong dollar. When the ECB intervenes in the currency market, it buys euros with dollars to keep the former from falling in exchange value, in essence shrinking the euro-denominated economy, causing the euro to fall further in value. The bought euros held by the ECB must be unloaded to either the Fed or the Bank of Japan or the People's Bank of China, which then must invest or spend them in Euroland to counter the shrinkage of the euro-economy. But if investment opportunities in Euroland do not improve, then these euros must be held in reserves to collect interest, making it difficult for the ECB to raise euro interest rates, a move that is needed to strengthen the euro fundamentally."

"The new dollars held by the euro sellers, mostly Euroland residents and US and Japanese multinationals and exporters, must be spent or invested in the US or spent on oil, which, despite all the noise, remains only a minor drain in the flow of funds. All oil money returns directly to the US anyway. The unabated appetite for dollar-denominated assets determines the international flow of funds. Thus the only condition that will sustain a long-term rise in the euro's exchange value is the reduction of euros in circulation in the global financial markets. Everyone who finished Economics 101 knows what happens to an economy when money supply is reduced by fiat: recession. Thus for the EU a strong euro is not good news."

TownCrierFed pumps money...#1325365/25/05; 13:27:12

Today with the market in fed funds trading smartly in line with the FOMC's 3% target, the NY trading desk for the Federal Reserve System nonetheless felt compelled to inject a fresh $10 billion thru open market operations via overnite repos at an average rate of 2.939 percent.

More significantly in today's operations, the Fed also bought Treasury coupons outright for its own account, targeting the yield curve at maturities from Nov 2008 to August 2009, thus swelling the reserves of the banking system with nearly $1.2 billion in 'permanent' high-powered money -- lendable funds under the fractional-reserve multiplier.

Money is created so easily that savings in gold becomes a smarter move with each passing day.


USAGOLD Daily Market ReportPage Update!#1325375/25/05; 14:00:13">
The Daily Gold Market Report has been updated.

If you are considering investments in gold we invite you to">request our free introductory information packet detailing the products and services offered by USAGOLD ~ Centennial Precious Metals. We welcome your inquiry and look forward to working with you.

Wednesday Market Excerpts

May 25 (from DowJones) -- COMEX June futures made ground Wednesday, up $1.20 to $418.90, but was denied an extended press higher by position rolling out of the June contract ahead of June's first notice day next week.

Futures holders have to either roll their exposure out of the June contract before the end of May or accept delivery of the metal in physical form once the contract expires June 1.

With a majority of futures players either speculative in nature or using the futures markets as a hedge against physical exposure, most holders of June gold opted to sell that contract and rotate their exposure into forward months such as August.

This selling of June gold kept a lid on prices throughout the session, despite the gains being posted elsewhere in the complex.

Dealers agreed that more such position rolling should be seen over the coming days to keep June quotes from charging higher.

However, further U.S. dollar weakness is expected to offer a solid floor to gold and set the market up for a more substantial probe higher once the position shuffling has taken place next week, they added.

Potential upside targets for June over the near term include $420 and $422, while in August goals include $423 and $425. Spot gold pushed to a high of $419.15 Wednesday and is seen targeting $420 and $422 over the near term should buying interest pick up.

(from MarketWatch) -- James Moore of restated his view that "gold will probe lower" over the short term. "However, I still believe there is plenty of scope for gold to push higher later in the year," Moore said, standing by his upside target of $500 an ounce.

-----(see url for full news, 24-hr international newswire)----

TownCrierGold mining increasingly important for most indebted countries: says WGC#1325385/25/05; 14:17:13

LONDON : Gold mining has become increasingly important to the developing world, with production rising by 84 percent in heavily indebted poor countries (HIPC) in the decade to 2004, the World Gold Council said.

"Gold mining is of increasing importance to the developing world in terms of wealth, exports and infrastructure," said a report by the WGC -- a private organisation funded by the world's leading gold mining companies.

..."As a result of the rising output of gold from HIPCs, their dependence on gold exports has also increased substantially and gold is now one of the most important exports for HIPCs as a whole."

The report "shows just how reliant on gold mining highly indebted countries have become", WGC chief executive James Burton said.

"Studies indicate that each mining employee in South Africa supports on average up to ten people. Gold is generally associated with the rich and yet this latest report proves that, in relative terms, it is actually much more important to the poor."

Aside from export revenue, gold mining brought substantial improvements in physical, social, legal and financial infrastructure, the WGC said.

"The gold industry is of tremendous and growing importance to highly indebted countries and, in many cases, is directly assisting with the growth of both the industrial infrastructure and a skilled workforce," Burton said.

"As a result, the future wealth and development of the world's poorest nations is more dependent than ever on a stable international market for gold."

^------(from url)-----^

Amen. Set it free to do good work as an unmanipulated reserve asset in portfolios of all sizes -- from giant CBs right down to mice like me.


TownCrierThe Fed Is All Wrong About Inflation#1325395/25/05; 14:41:55

(MSN Money Markets Editor) 5/25/2005 -- For the last year, I've been convinced that inflation is back and getting worse. I can feel it in my everyday life. My favorite pizza guy raised his price for a slice by 20% last month. My kids' tuitions climbed 8% this year. Heating oil and electricity are more expensive. Breakfast cereal. Books. You name it, it costs more.

Yet for the last year, Alan Greenspan and the other members of the Federal Reserve's interest-setting body, the Federal Open Market Committee, have been telling me not just that there isn't any inflation, but that there really isn't any danger of inflation.

Well, I've finally figured out why they're wrong. It's not because government statisticians have cooked the books to keep inflation numbers low (although they have), or that the Fed governors are part of a conspiracy to cut the inflation-indexed payments going to retirees (although they may be), or that these folks are so out of touch with the real economy that they can't see what the rest of us feel in our everyday lives (although that's quite probably true).

No, the real problem is that the Fed is worried about the wrong kind of inflation.

You see, the kind of inflation that the Fed cares about -- and tries to fight -- is the short-term, cyclical kind. Prices jumped by 13% in 1979, for example, after a 9% increase in 1978, as members of the Organization of the Petroleum Exporting Countries (OPEC) ratcheted up the price of oil. So the Fed, under then-chairman Paul Volcker, drove U.S. interest rates up to 14.7% on three-month Treasury bills in 1981, throwing the country into a recession that did indeed put an end to double-digit inflation. By 1982, inflation was down to 3.87%.

But the kind of inflation that you and I feel right now isn't cyclical but what is called secular. My belief is that prices tend to move up in long, long waves that last anywhere from 80 to 180 years and contain many short-term cycles -- like the one that peaked in 1979. It's the duration of these waves of rising prices, rather than the magnitude of year-to-year increases in inflation, that's important.

Past price waves have been characterized by annual increases of as little as 0.6%. But applied over long periods, even that rate is enough to set economic expectations, to produce a strong sense that something has gone wrong, to create intolerable stress in the economy and to lead finally to a political and economic crisis.

If the history of prices is an accurate guide, we're now about 100 years into a wave that hasn't yet peaked.

David Hackett Fischer, Pulitzer Prize-winning history professor at Brandeis University, lays out the case for long periods of steadily increasing prices interrupted by briefer periods of price equilibrium in his 1996 book, The Great Wave.

What's fascinating to me about Fischer's price waves, which are very different from and much more convincing in my opinion than some long-cycle theories, is how much they explain about our current economy....

...An increase in the money supply kicks in to drive inflation higher after the initial demand-based inflation has set prices in motion. Governments typically attempt to combat rising prices by increasing the amount of money in circulation. That, of course, just adds speed to price increases. This is true even in the 20th and 21st centuries, where central banks may try to fight cyclical inflation by raising interest rates or slowing growth in the money supply, but where the economy as a whole keeps creating new money in the form of looser credit requirements or no-down-payment mortgages.

^------(see url for full article)----^

Reading further, it seems to me that what Fischer has partially discovered for himself is the phenomenon that some have already grasped as the general long-term trend in monetary evolution. And the price waves he sees as being a series of large cycles, is likely themselves just another set of cyclic blips in the long-term trend.

Please read, and understand the importance of striving for tangible wealth along the trend -- even at any given point among cycles and waves.


Goldilox"The FED has Inflation all Wrong"#1325405/25/05; 15:10:49

Sounds like the argument between "good' cholesterol and "bad" cholesterol. Inflation is "good" when it is well controlled robbery and the "right folks" make money, but "bad" when it is out of control and the "right folks" are losing money.

Sort of like "There is no RE bubble, just growth of assets."

That dog doesn't hunt.

Inflation is the invisble taxation it has always been.

TownCrierGoldilox, "good" inflation#13254105/25/05; 17:05:15

If it helps at all, think of "good" inflation (when the system is well minded) as the low cost we all pay for the convenience of and our desire for near-perfect liquidity (via our monetary units).

"Bad" (high) inflation represents abuses and/or misalignments somewhere along the line -- a particularly shrill warning that all is not well.

Either way, good or bad, money is an exercise in liquidity which inevitibly diminishes in virility over time. Gold, on the other hand, is slightly less liquid, however it more than makes up for it when employed as savings -- because due to its natural scarcity it become more potent over time.

The lesson is... spend money; save gold.


Belgian"Inflare"#13254205/25/05; 17:23:22

1929 Crash : Thousands of US banks defaulted
1990 GW I : Approximately 500 US banks defaulted.
2000-2003: US equity market lost as much as 90% of GDP (in 1929 that was only 60%)...and only 11 banks failed !?

Has the $-IMS reached perfection !? Can there be generally inflated through permanent unit of account depreciation, whilst the global economy as a whole grows fast and big enough to push the rising debt-berg forward !? Are btoad scale defaults a thing of the past !?

Or...has the massive derivatization become the perfect modern protector and insurer !?

Can the prize of our planet's economy fundamental - oil - rise with 3%, in a matter of minutes...without any significant disturbance !?

We don't even ask "what's going on" anymore...we simply watch and go on with our (economic) lives.

I keep calling these repetitive events, complete madness. The frequency of these exhuberances increases, whilst the western economies stagnate. The same West that put the $-IMS on its feet.

Today, the stealth hedge fund fear is being repackaged, by the mainstream financial media, and sold to the general public as... an "opportunity" ! Why worry about the kind of infla we are supposed to undergo ? It is the complete "system" that is rotting.

And then we have the intelligent Liu, suddenly reconfirming that the $-unit of account still controls the oilprice (and pricing) because oil is still invoiced in $. Liu reconfirms that there is no need for "war on/for oil". Jesus,...what happened with Liu ?

Today, when the Baku pipeline reached finally the Mediterranian sea,...the oilprice "devalued" its controlling dollar-unit by 3% in a matter of minutes. Funny that the Norwegian oilstate threw some oil-controlling $-units out of its oilfund. Apparently (!?) to ease the upwards pressure on its own currency. Funny world, imho of course.

The price of gold stayed where it was...and that's good for the poor countries that do mine the gold ! Thanks for letting us know, dearest WGC.

If oil can devalue the dollar so fast with so much ('99-$10 > '05-$51)...why does one need to store those oil-controlling $ units as a "Reserve" !? What kind of reserve is it that permanently depreciates faster than the amount of same $-reserves that can be added out of the surplusses, earned with hot sweat !? Nice,...very nice system, we have here. Perfectly regulated for collective impoverishment.

If the Western (saturated) economies continue to stagnate and incapable to produce "real-genuine" growth... Asian (unsaturated) economies are going to make firewood of the $-IMS. Trade-flows do alter and can do this very fast, if opportune. I'm still feeling extremely happy with my golden nesteggs next to me.

Federal_ReservesBel> Failed banks#13254305/25/05; 18:26:53

Interesting fact you bring up about fewer and fewer banks going bust. No other business has anywhere near that record! Why so? Its a fact that banking is a protected, sheltered industry, even has a committee in Congress to look after its needs. Who cares if a hamburger chain that employs thousands collapses, but when a bank goes bust folks get really concerned. The prevention of bank panic's is one thing the Federal Reserve is good at, fundamentally, it was the reason they were founded in the first place. Is the system safer? Well maybe not, we could still have a financial panic that has nothing to do with a series of commerical bank failures, at least at the start of it.
GonlyoldTPTB Curve Test Run#13254405/25/05; 21:54:10

OK, I decided to make a test run of my TPTB Curve. Today I purchased one 1 oz. Gold Eagle for $448.00: i.e., $30.00 over spot ($418) from a local coin shop. I don't expect to have to pay another premium when I sell because I intend to sell at a coin show where I'm usually paid spot. So I only have to get $30 more to break even (bad enough actually). The plan is to then wait for TPTB curve to reach $455 or so then sell and rebuy at $420. Not exactly high gains nor high stakes but it should be interesting. What the heck, let's see what happens. Stay tuned for further developments.
TownCrierChina drafts vision 2010 for cyclical economy#13254505/25/05; 22:04:07

China expects to have a complete and perfect system in place to facilitate the development of the cyclical economy by 2010.

...China will try to improve the efficiency of resources production and utilization in key sectors, represented by an array of enterprises...

Specifically, by 2010, consumption of every ton of energy and 15 important resources such as iron ore and non-ferrous metals should bring 30 percent more output than that in 2003. Every 10 thousand GDP should cost less energy by 17 percent.

In China's strategy of sustaining the growth through cyclical economy, resources saving is on the top priority. That means efforts on saving energy, water, materials and resources...

^-----(from url)----^

Given the nature of this planning, it is hard to imagine that the financial sector (note the recent steps regarding gold market liberalization) is not integrated into the large designs, or that China will be significantly bullied out of it's own timeline regarding the eventual yuan floatation.


TopazDollar/Gold/Bond/Oil.#1325465/26/05; 02:10:12

The Gold is looking a little "possessed" at present as shorts writhe and wriggle to extricate themselves from the June Contract prior to FND without ramping PoG.
As this version of Systemic nonsense develops and matures, it's not entirely left-field to imagine firstly a flight TO the pre-emminent Currency (Bonds AND Cash) ...then ultimately to the said Cash AND Gold.

Stage 2 will have a profound effect on PoG imo, and whats more ...we're almost there.

TopazLong (way down) Bond.#1325475/26/05; 02:44:17

Yes, we can see from the Chart this current build-up has real oomph ...the equivalent of a Union Picket-line bailing up management.
The Auction inspired price drop yesterday will be reversed by mourning and a true test of the lows develop in earnest.

Will AG capitulate or will he tough it out?

USAGOLD / Centennial Precious Metals, Inc.What you need to know before you buy your first ounce of gold...#1325485/26/05; 08:45:56

Q. In your book, The ABCs of Gold Investing: Protecting Your Wealth through Private Gold Ownership you start the chapter by saying "Who you do business with is one of the most important aspects of gold investing." Why is that?

MK. Most, if not all, of the progress an investor makes towards realizing his or her goals with respect to gold ownership hinges on that relationship. Unbiased, objective advice from one's gold advisor is a key element. So are market information and education. Pricing, product selection, fulfillment and on-going support also rely on that relationship. Above all, it is extremely important for gold buyers to match their objectives with the type of gold they buy. Positive results in all of those areas depend upon a strong relationship with a gold firm. That is why it is important to spend some time finding the right one.

Q. Can you briefly describe some of the pitfalls a beginner might be on the look out for?

MK. The biggest trap investors fall into is buying a gold investment that bears little or no relationship to his or her objectives. Take safe haven investors for example. That group makes up 90% of our clientele, and probably a good 75% of the current physical gold market. Most often the safe-haven investors simply want to add gold coins to their portfolio mix, but by the time they finish talking with a typical national firm, they might end up in a leveraged gold position, exotic rare coins, or being diverted into silver or platinum. Others drift into gold stocks or gold futures which in reality are proxies for real gold ownership and could actually act opposite the intent of the investor. There's nothing wrong with any of these non-physical investments per se, it's just that none of them is really a safe-haven. The investor should bear this in mind. The question investors must always answer for themselves is "How will this investment serve me should the economy or financial markets suffer a major disruption?"

TownCrierGold means an escape from poverty#1325495/26/05; 08:57:12

LONDON ( -- "The future wealth and development of the world's poorest nations is more dependent than ever on a stable international market for gold." This from James Burton, the Chief Executive Officer of the World Gold Council at the launch Wednesday) of its study "A touch of Gold: Gold mining's importance to lower-income countries".

...To give two examples; no gold mine production was recorded for Laos until 2003, when the Sepon mine opened. Last year output was four tonnes and gold accounted for 15% of Laotian exports. Until recently Laos's principal export has been electrical power to neighbouring Thailand.

In Honduras, production was only 400kg in 2000, when the first shipment was made from the San Martin mine. Last year production here, too, was four tonnes and gold accounted for 5% of Honduran exports. Low-income countries often depend on commodity exports, especially in land-locked countries whose neighbours may well not have the scope to purchase from a manufacturing base.

The report states that gold is Mali's leading export with 59% of goods exports in 2003; in Tanzania it accounted for 44% of total, Ghana 32% and Guinea 23%. A $10 fall in the price of gold would cause a loss of approximately $75 million in HIPCs’ export income. Among the countries considered by the World Bank to be moderately or severely indebted, gold was Kyrgyzstan's leading export in 2003, accounting for approximately 45% of total goods exports, as it was for Papua New Guinea (36%), the second most important export for Mongolia and Zimbabwe, with 20% and 11% of total respectively, and one of the two leading exports for Uzbekistan.

Despite the decline of the South African industry, gold remained until this year South Africa's leading export (13% of total in 2003) and also for Peru, where production has grown rapidly of late and now gold exports account for 17% of total. The relative strength of the rand and the increase in costs of raw materials such as steel and water, along with higher energy price means that the South African Chamber of Mines now estimates that half of all South African gold production is now marginal or loss making. Meanwhile, the 190,000 people employed in the South African gold mining industry directly or indirectly support two million people in total.

The impact is also significant on local industry. Gold miners typically source supplies locally where possible and employ local labour similarly. The impact of the industry is therefore strongly positive with respect to these countries’ balance of payments (despite repatriation of profits and payment of dividends). Royalties and tax income are an added bonus as well as the direct impact on infrastructure with respect, for example, to road and rail building, improved drinking water and, frequently, medical and educational developments. This is particularly important in Africa, where lack of infrastructure has been identified as a major hindrance to economic development. In addition the multiplier effect of the enhanced spending power of mine employees cascades through local industry.

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Own gold. It's good for the world, and good for you.


USAGOLD / Centennial Precious Metals, Inc.Choosing wisely where to buy...#1325505/26/05; 09:00:49

Q. What makes USAGOLD / Centennial Precious Metals different from its competitors in terms of its interaction with clients?

MK. Our business philosophy allows us to take a more laid-back approach. We don't employ a room full of brokers spinning the phones day and night. We don't have multi-million dollar advertising expenses dictating what kind of advice we give clients. This is all by choice. I decided long ago that I didn't want the headaches that go with managing a large number of brokers and the support staff and facilities required. At the same time, we get hundreds of requests each month for introductory information packets. We do not make cold calls. We do not work mailing lists. We do not call people at all hours of the day or night. We do not use marketing and sales gimmicks -- leaders, bait and switch, and the rest of it. We primarily work with clients who have discovered us, like what they see, and want to form a long term relationship with a reputable and reliable gold firm.

Q. Does the "laid-back approach" limit your business?

MK. Yes and no. In the short run, "yes." In the long run, "no." We probably lose a few prospects to the aggressive companies which use hard-sell tactics but we will not be changing our client-friendly approach. We know that not every prospective investor is going to become a client of USAGOLD / Centennial. However, we know that the client who chooses us is likely to be the type of client we are accustomed to doing business with. We work with a large number of professional people and business owners -- active, retired and semi-retired. In fact, we work with clientele that span the economic spectrum and all walks of life. Getting back to how our approach sets us apart from our competitors, we get quite a few disgruntled high net worth clients who come to us after being run through the mill by some of the boiler-room operations I've referred to earlier. They are usually grateful that they found us.

Q. And finally, is there anything else you would like to share with us?

MK. Fundamentally, we believe that we are here to serve the client. Anyone who has done business with us will vouch for the courteous and professional service he or she has received. Our staff is carefully chosen and it shows. We get referrals on nearly a daily basis and are kept busy with strong repeat business. I would also like to call attention to the solid informational services offered at this website. We believe that any of our clients or visitors will find USAGOLD head and shoulders above anything else out there. I would encourage anyone attending this site to have a look around. We also publish a very handy e-mail newsletter available to prospective clients. Above and beyond that, the most important thing is the way we treat our clientele. From first inquiry through order fulfillment, we want to make the gold investing experience as pleasant and rewarding as possible. We have a large and satisfied clientele and that's the way we want to keep it.

TownCrierEuro hit on tension over French referendum#1325515/26/05; 09:17:15

London - The euro slid against the dollar on Thursday ..."The euro has come under further pressure following the release of a report that states that (Sarkozy) has privately admitted defeat over the forthcoming referendum," HBOS currency strategist Steve Pearson said.

Former finance minister Sarkozy, who leads the ruling Union for a Popular Movement, told an ill-tempered cabinet meeting on Tuesday that he no longer believed the "yes" would win, a colleague told AFP.

"I keep on telling you that the thing is lost," Sarkozy was Wednesday quoted as saying in an angry outburst.

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Regardless of a yes or no outcome on the European Union constitution, the U.S. dollar shall remain FUNDAMENTALLY ill-suited for savings. Choose gold.


Great Albino BatHELP! The GAB needs HELP! Please help!#1325525/26/05; 10:00:55

Can anyone give me the facts regarding ECB reserves, and the portion of reserves which are in gold (and receivables in gold)?
Date: 00/00/05
That is: Paper Reserves xxx billions expressed in dollars.
Gold Reserves xxx billions expressed in dollars. (Including gold receivables) Marked to market.
Total Reserves xxx billions of dollars

With thanks,


TownCrierGAB, Eurosystem's international reserves#1325535/26/05; 10:19:48

As of the week ended May 20th:

Gold and gold receivables total EUR127.344 billion (based on the March 31st MTM EUR329.759 per ounce valuation).

The net position in foreign currency totals EUR159.6 billion (based on the March 31st MTM unit valuations of $1.2964/euro, also ¥138.44/euro, and EUR1.1657/SDR).


Great Albino BatMuch obliged, Towncrier!#1325545/26/05; 10:27:59

Thanks so much for the information, Randy!

Just what I needed!


Great Albino BatWhoops!!#1325555/26/05; 10:33:19

Towncrier, I think I made a mistake, and the data you have provided MAY not be what I am looking for.

I need the information for the ECB, the European Central Bank, and NOT the Eurosystem.

I know the ECB - the Central Bank - has reserves of some 755.8 tonnes of gold: 24,300,000 oz.

What I don't know is the level of foreign currency reserves which they hold or had at a particular date.

The Eurosystem data and the ECB data are two different things.

Can you still help?


mikalNew Au haiku #13255605/26/05; 11:30:10

Leap of faith charted.
Zig zag dash crouch bite repeat
Stalking gold's outback.

TownCrierGAB, yes, the ECB is a subset of the Eurosystem#13255705/26/05; 11:43:47

The consolidated Eurosystem financial statement that I quoted includes the reserves of the 12 member national banks in addition to the ECB itself.

I read your original post correctly, and it was my error to assume that you really wanted more (other) than the slender portion of data you specifically asked for.

I'll look into the component data. Thanks for your patience.


geGAB, is this good?#13255805/26/05; 11:44:38

The parent page was,

where ECB & Eurosystem are listed seperately. This was found by typing "ecb gold reserves", at Google. May be, Google is not such a bad investment, after all?